Wednesday, September 24, 2008

Global warming calls for global commitment and local action

Emission trading will not work!

We should recognize that a global emission trading scheme will only sabotage real efforts to reduce emissions. It's a scheme designed by neocons and polluting industries, who aren't interested in reducing emissions, but who seek to exploit the situation in order to sell nuclear plants to developing countries, which will have to be paid for with emission credits that will in turn let polluters in developed countries off the hook. The neocons see this as an opportunity to send troops abroad to supervise operation of plants and shipments of uranium, nuclear waste, etc. It's a recipe for dictatorship and for global economic, social and environmental disaster.

Global commitment, local action

Instead, we should reach a international agreement that makes more sense, and we should reach this agreement soon, at the latest in Copenhagen in 2009. This agreement should merely set binding annual reduction targets that each country should meet. This agreement should let decisions how to achieve those targets be taken locally, while preparing for trade sanctions against those who fail to reach their targets.

It should be left to local communities to each decide on the technicalities of how to reduce their emissions. After all, conditions differ from place to place; some technologies will work better in one area than in another area. There are many ways to, say, produce clean and safe energy; wind turbines may be attractive in some areas, solar energy may become more prominent elsewhere, while yet another area may predominantly exploit geothermal power; many areas may also prefer to import electricity. Similarly, hydrogen may well become the dominant way to power ships, while cars will predominantly drive on battery power in future.

What policies work best?

Meanwhile, we should be discussing what are the most effective policy instruments to both discourage sales of products that cause emissions and encourage sales of better alternatives.

Feebates are most effective

A framework of feebates is in my view most effective, each with fees imposed on a specific type of product and with proceeds in each case used to fund rebates on local supply of better alternatives. Such a feebate policy only needs to insist that alternatives are clean and safe - market mechanisms can best sort out what works best where.

A framework of feebates is the most effective way to facilitate reductions, because feebates have a double impact, in that they impose a fee on whatever needs to be discouraged, while then using the proceeds of these fees to fund rebates on better alternatives. Market mechanisms can best sort out which products deserve to get rebates.

Different areas can implement feebates in different ways. This flexibility makes feebates attractive for areas with unique circumstances that make a universal policy less applicable. Feebates can target whatever product causes most emissions in the respective area and establish a shift to the better alternatives available in each area.

Feebates are budget-neutral - proceeds of fees can accumulate in a trust, thus creating a pool of money from where rebates can be paid on a first-come-first-go basis. If needed, the trust can take out loans to ensure early payment of rebates.

Implementing FeeBates

Feebates are most effective when applied locally, i.e. by using the proceeds of fees collected in an area to support the better alternatives that are supplied in that same area. That way, most money will be used to make changes where they are needed most.

Instead of prescribing a specific technology, a feebate policy should simply encourage better alternatives, e.g. by insisting that alternatives should be clean, safe and otherwise acceptable to the community. A good feebate policy will optimize market mechanisms and respect consumer choice, which will further increase the overall effectiveness of the policy and minimize bureaucratic overhead.

Fees are best calculated as a percentage added to the price of a product. Similarly, rebates are best calculated as a percentage of the sales price. This also increases the effectiveness of the policy by minimizing bureaucratic administrative overhead.

Fees can be initially low, say 10% of the sales price. Especially when alternatives still have little marketshare, such a 10% fee will create a huge pool of money from where rebates can be funded. Rebates can then be high, say 50% or even more, to facilitate a gradual but swift shift to better alternatives. Once the shift takes place, percentages could change, i.e. fees could be increased, while rebates could decrease. This way, the feebate will phase itself out as the shift eventuates.

Proposed FeeBates

Over the years, I have proposed a number of feebates, including:

- a 10% fee on sales of new gasoline cars, with rebates on local sales of zero emission vehicles;
- a 10% fee on sales of fossil fuel, with rebates on purchase and installation of local facilities that produce energy in safe and clean ways;
- a 10% fee on sales of building and construction work that uses polluting concrete (i.e. that contributes to global warming), with rebates on local purchases of clean concrete;
- a 10% fee on sales of fertilizers, with rebates on local sales of agrichar (or biochar); and
- a 10% fee on sales of meat, with rebates and vouchers on vegan-organic meals served in local restaurants.

Sunday, February 24, 2008

The Distributed Grid

Electric vehicles can cut greenhouse gas emissions in two ways. They are clean and efficient. By acting as storage capacity, they can also make the electric grid more efficient.

Electric cars are also cheap to drive and to maintain, and they don't make much noise. They still are relatively expensive to buy, but automated production and economies of scale can overcome this hurdle and make electric vehicles cheaper than gasoline cars.

If the electricity came from coal-fired power plants, driving an electric car still causes less greenhouse emissions than driving a gasoline car. Electric cars have zero emissions and are also more efficient. Thermal efficiency of power plants is higher than the thermal efficiency of most gasoline cars. Much of the fuel burned in gasoline cars turns into heat. Electric cars use regenerative breaking and do not use their motors when waiting before traffic lights. Electric cars use energy more efficiently, especially in city traffic that causes most of the emissions.

Impact on the grid - Running our entire fleet of vehicles on electricity instead of oil would not put much stress on the electric grid. One study concludes that if we transformed our entire fleet of vehicles into electric vehicles, they would jointly consume only 20% of grid capacity.

We wouldn't even need much expansion of the grid in terms of extra capacity or transmission lines. The majority of vehicles could run on the idle capacity that is available in the existing grid. One study concludes that there is sufficient idle capacity in the grid to power 73% of light vehicles, i.e. cars, SUVs, pickup trucks, and vans, without adding generation or transmission.

Moreover, such a move would benefit the grid. Car batteries can contain many times more power than what cars need for their average daily travel. Cheap off-peak rates would make it financially attractive to charge batteries at off-peak times, over and above what the individual user consumed during the day. The surplus can then be fed back into the grid to help out with high demand at peak times. Net-metering at good rates could make this attractive, while the grid becomes more efficient, more reliable and less prone to outages and glitches.

New batteries for electric cars are light, safe and do not harm the environment. Batteries are on the market now that allow electric cars to drive for hours without recharging. While these batteries are still expensive - they can cost over $10,000 - and are hard to get, mass production can overcome these hurdles.

Most cars only drive short distances. Recharging them at home and/or at work would suffice in most cases. In case they needed extra power to travel longer distances, their batteries could also be recharged at other locations with the required outlets, e.g. gas stations, parking buildings or parking meters. New batteries are now on the market that can be recharged in minutes, they can last for over a decade and can be recharged thousands of times without degeneration. This would make recharging convenient and safe, compared to filling a car with gas.

We don't all need to buy new cars. Many existing vehicles can be converted into electric vehicles. With some financial assistance, the conversion cost can pay itself back over time through savings on the cost of driving and maintenance. For those who cannot afford to buy a new electric car, there are also initiatives such as Project Better Place that plans to offer electric cars at a cheap price, while making profits on services such as car maintenance, battery upgrades and recharging the batteries. In an effort to offset the company's greenhouse gas footprint, employers may also contribute through leasing arrangements and by making recharging facilities available at work.

Renewable energy looks set to become the dominant supplier of energy. Wind turbines are being installed around the world. This will increase the amount of surplus energy in the grid at night. Storing this surplus energy in the batteries of electric cars will increase overall efficiencies.

Owners of electric cars will consume more electricity (but no gasoline) and are more likely to get solar panels, for the savings as well as to help the environment. Similarly, as more of their staff start driving electric cars, businesses will be more inclined to get solar panels on the roofs of their buildings and car parking facilities.

Solar facilities typically include a battery. Car batteries could be used instead. Most cars are parked at home when people switch on their lights, air-conditioners and TV-sets. Similarly, the power needs at work coincide with cars of staff being parked there. Using the batteries of electric cars to store electricity can reduce the need for batteries in solar facilities and will thus reduce the overall cost of solar facilities.

Cost of solar power has come down over the years. As an example, Nanasolar now offers thin film material at under $1 per watt. This promises clean and safe energy that is price-competitive with power plants. It also becomes increasingly attractive for households and businesses to install solar facilities. Recognising the market opportunities and the financial incentives made available at different levels of government, there now are numerous companies offering to help people adopt green energy at home without having to make large investments, sometimes even without any upfront payments.

A FeeBate Policy can help facilitate the switch to zero emission vehicles and to clean and safe ways to produce energy. A FeeBate policy can include fees on gasoline cars, with the proceeds used for rebates on zero emission vehicles. A FeeBate policy can also include fees on fossil fuel, with the proceeds used for rebates on clean and safe alternatives, such as wind and solar facilities.

In conclusion, all this will lead to a more distributed grid, with numerous suppliers and with numerous places where electricity is stored. The grid now draws electricity from a relatively small number of large power plants, to supply electricity in an area. Renewable energy supplies only a fraction of power, most of it through hydro facilities. The existing grid looks much like a broadcasting network, with a relatively small number of broadcasting stations sending content one-way to the public. In future, the grid looks set to become more distributed, with two-way connections to most users, much like a multitude of users can send and receive information over the Internet.