NRDC blogs about a new study on federal use of discount rates in calculation of carbon costs, which suggests we grossly underestimate the present value of reducing emissions. Did you even know that the feds had put an internal price on CO2? They behave as if it costs $21/ton to emit. But that’s based on a discount rate of around 3%, which is the highest rate OMB suggests using for inter-generational costs. Part II of the very detailed NRDC post is here.
When the facts don’t tell your story
Chris Mooney was out in Boulder last week talking about his most recent book, The Republican Brain. I went to a two day workshop he ran at Caltech with Matt Nisbet several years ago on climate communication, and it was really good, so I was interested to hear what he’s been thinking about lately. It sounds like the basic idea of the new book is that the liberal-conservative dichotomy is fairly persistent and widespread in humanity, though it’s been expressed differently throughout the millennia in different cultural contexts. I think that several of the underlying characteristics of Mooney points out interact in our financially driven political landscape in an interesting (and distressing) way. Given that:
Liberals:
- are more tolerant of ambiguity — they don’t need there to be One True Answer to every question.
- are more open to and even desirous of new experiences, and thus willing to accept the possibility or necessity of change generally.
Conservatives:
- are more sensitive to issues of insubordination — to anything that upsets established hierarchies or trusted authorities.
- place a high priority on in-group cohesion, whether it be a religious community or patriotism for the nation state.
Thus, we find that liberal groups are willing to accept the need for change and innovation, but tend to defeat themselves through in-fighting — they have a hard time staying “on message”, and will often get lost bickering in the weeds of policy detail, while their conservative opposition takes a simple, one-dimensional position, sticks to it, and wins.
Conservative groups on the other hand are more defensive and cohesive. They can effectively vote together as a bloc, because naysayers from within their ranks tend to be punished quickly and severely, even whey they’ve got the facts on their side.
These dynamics suggest to me that any time an incumbent monied interest is not well served by new facts (think Big Tobacco or King Coal), their best hope is probably to ally themselves with conservatives preferentially. This is different than what most industries do most of the time. Given how cheap it is to influence policies and elections through lobbying and campaign contributions — the ROI is enormous on these activities — most industries simply donate to everyone, and thus maintain their access and influence.
Why would this asymmetry be advantageous? Because if you can frame the issue at hand it conservative terms strongly enough, then it’s possible to trick conservatives into insulating themselves against facts that threaten their cohesion around the issue. Up to a point, they’re willing to dismiss new information if it means bucking their political in group or trusted authorities, and they’ll do it as a bloc.
Everybody is prone to confirmation bias, but it’s much harder to get liberals to take up a causeen masse simply because it sounds like something they ought to agree with. Instead you get internal disagreement — Mooney used the idea that vaccines cause autism as an example of an issue that hits some liberal buttons, and has some passionate activists around it on the left, but which won’t be taken up broadly, because it’s not supported by facts, and the left is willing to disagree with itself.
Many policy issues really aren’t intrinsically liberal or conservative — certainly there’s no shortage of ways to frame climate change as something conservatives would want to avoid — but once a particular frame has taken hold, it’s very difficult to dislodge. This makes it imperative for interests not served by new facts to pre-emptively frame their position in conservative terms, and to do everything in their power to make sure that frame sticks.
And then the waiting game begins. How long can they keep the facts from overwhelming the position they’ve put forward? How can they gracefully exit, without make it obvious they’ve duped a huge fraction of the electorate into supporting them illegitimately? For liberals, this ironically makes it all the more important to frame fact-based issues early, in terms that are attractive to conservatives. We need to get better at developing pre-emptive consensus.
Oh, right, and we need to amend the US constitution to overturn Citizens United too.
Could utility ratepayers be paid to accept fuel price risk?
Risk isn’t free; it’s a traded commodity with a price. Most prudent financial entities with a lot of exposure to the prices of natural resources try to manage unpredictable fluctuations in those prices by trading in risk. Producers worry about prices being too low; consumers need to protect against prices being too high. Risk trading (hedging) allows the two types of parties to share these risks, and so create a more stable market overall. Stable prices are good for business. You can plan around them in the long term, even if they end up being a bit higher on average.
In regulated electricity markets like we have in Colorado, fuel price risk often ends up being borne primarily by the rate payers rather than by the utility companies. In theory, state regulators ought act on behalf of the public (energy consumers) to accurately represent their tolerance of or aversion to risk in the resource planning process. Historically, the implicit assumption has been that the rate paying public is fairly risk tolerant, i.e. very little has been done from a regulatory point of view to avoid the potential detrimental effects of future fuel price volatility. This is a historical accident. Until recently, we didn’t have much choice in the matter. Of all the major sources of power available a century ago when we began electrifying society, only hydroelectric is similar in terms of its capital and operating structure to distributed renewables like wind and solar. All three have relatively large up front capital costs, and low ongoing operating and maintenance expenses. But for most of the time we’ve had electricity, most of that electricity has necessarily been dependent on fossil fuels, and so the question of whether or not customers wanted to take on the risk of future fuel cost fluctuations was immaterial. Fuel was the only option for expanding our electricity supply once we’d tapped the easily accessible hydro — if you wanted lots of power, it simply came with fuel price risks. This is no longer the case. Today, we have options that trade off between cost and risk, but so far as I can tell we haven’t done a good job of talking about the entire spectrum of possibilities. Broadly they seem to fall into four categories:
- Traditional fossil fuel-based power, that exposes rate payers to the full range of future price fluctuations.
- Capital intensive, fuel-free power like wind, solar, enhanced geothermal and hydro which have a range of prices, that are very predictable over the 20+ year lifetime of the capital investment.
- Fossil fuel-based power that is aggressively hedged, in order to protect rate-payers against future fuel price fluctuations.
- Fuel-free power with predictable future costs, combined with someone else’s fuel cost risks, which rate-payers would be paid to take on.
The first two options are the most commonly discussed. The third — hedged fossil fuels — is becoming somewhat more common, with some public utility commissions requiring the utilities they regulate to dampen fuel cost fluctuations. However, they generally do not require the utilities to hedge to the point where the risk profile of the fossil fuel option is similar to that of fuel-free power sources. This is what makes the fourth option interesting.
Continue reading Could utility ratepayers be paid to accept fuel price risk?
Even The Economist thinks cars are in decline
Don’t Expect Driving Rates to Rise Again, says that eco-leftist rag… The Economist. People don’t want to spend more than 30 minutes each way commuting, and you just can’t give very many people access to that much opportunity within 30 minutes of travel in a sprawling urban geography. Certainly not cost-effectively. Demographically, cars are becoming something that old people like. Now, if only we could convince China to leapfrog the whole car culture and go straight to Cities for People… lots and lots of people.
Cargo cyclists replace truck drivers
In livable, human-scale cities, a lot of cargo can be moved more efficiently by bike. The EU is funding a pilot project called CycleLogistics to collect data on just how effectively human powered cargo can be scaled up. With modest electrical assistance, loads can scale up to as much as 250 or even 500 kg, and stay human scale. It’ll be very interesting to see the results.
Minneapolis eyes way to push utilities to be greener
Minneapolis is Xcel’s home town, and a much bigger market than Boulder. The city is now talking about allowing their franchise agreement to lapse, in order to pursue more aggressive renewable energy policies than state law will allow if they’re served by the monopoly utility. The article gives a nod to Boulder’s votes over the last two years to explore the alternatives to franchise agreements, including the formation of a municipal utility. It’s great to see another much larger city looking at its options, and as far as pushing the overall utility business model to change, it’s great to see this happening within Xcel’s service territory. There’s a threshold out there somewhere, beyond which the current arrangement is no longer stable, and even the utility will start begging for something different. The faster we can get there, the better.
Why Are Residential PV Prices in Germany So Much Lower Than in the US
A presentation from Lawrence Berkeley National Labs, exploring Why Rooftop PV is so much cheaper in Germany than the US. Their feed-in tariff started out quite generous, and has declined predictably over the last several years, which has resulted in the rooftop PV market growing enormously, while installers have been forced to dramatically reduce costs. To the point where today, it’s about half the cost per-watt-installed to get PV in Germany that it is in the US. The physical hardware is the same price, but the process is much easier, and the businesses involved in it much leaner. Good old fashioned German engineering at work, but in the policy realm.
How Green Was My Lawn
The NY Times has an OpEd on how we need to enlist the suburbs in the fight against climate change: How Green Was My Lawn (not very). The author notes that the environmentalist movement of the 1970s arose largely from within the ranks of the suburbanites, and that the modern climate movement does itself no favors, politically, by consistently pointing its many fingers at the sprawling, car and oil dependent developments in which many to most Americans live today. No doubt. Unfortunately, the persistence and proliferation of suburbia precludes so many cheap and effective means of reducing emissions that it’s insane to take it as a given. It’s not just oil for the cars. It’s the need to go far, and go fast, in a large private vehicle, regardless of what it runs on. It’s the expense of making suburban homes a factor of 10 more energy efficient compared to doing the same with row-houses that share walls. It’s the inability to share almost anything in a suburban context — the per-capita need for stuff is enormous when you have to own it all instead of accessing it as a service. It’s the unnecessarily vast amounts of concrete, steel, asphalt and copper in all the infrastructure required to support those dispersed dwellings.
And all for what? To support a transient cultural expectation. A particular ephemeral vision of affluence, which is itself largely born of government subsidies of and mandates for the creation of sprawl over the last 60 years. A century from now, if we successfully meet the climate challenge, we’ll look back at how we made a fetish of the single family home with the three car garage, and lump it in with the widespread use of DDT that inspired Rachel Carson, or the cancer-causing X-ray machines we used to have in shoe stores, or the way Victorian women would wear corsets so tight they couldn’t breathe, even sometimes having a couple of ribs removed to enhance their narrow waists. Suburbia is a fad, a phase, a peculiar addiction with very serious side effects that we can no longer ignore. It may be politically inconvenient, but the imperatives of the suburbs are almost entirely at odds with the imperatives of addressing climate change, and you cannot argue with the sky.
Designing Feed-in Tariffs
NREL took a nice long look at different ways to design feed-in tariffs (PDF) in July of 2010, based on the past decade’s worth of experience, both in the EU and several US states. It’s 144 pages long and aimed at policymakers… so, not exactly light reading. But if you really want to know how these things work (or fail), it’s great.
Renewable Energy Policy by Paul Komor
I just finished reading Renewable Energy Policy by Paul Komor (2004). It’s a little book, giving a simplified overview of the electricity industry in the US and Europe, and the ways in which various jurisdictions have attempted to incentivize the development of renewable electricity generation. The book’s not that old, but the renewable energy industry has changed dramatically in the last decade, so it seems due for an update. There’s an order of magnitude more capacity built out now than ten years ago. Costs have dropped significantly for PV, but not for wind (according to this LBNL report and the associated slides). We’ve got a much longer baseline on which to evaluate the feed-in tariffs and renewable portfolio standards being used in EU member countries and US states. I wonder if any of his conclusions or preferences have been altered as a result? In particular, Komor is clearly not a fan of feed-in tariffs, suggesting that while they are effective, they are not efficient — i.e. you end up paying a higher than necessary price for the renewable capacity that gets built.  This German report suggests otherwise, based on the costs of wind capacity built across Europe. Are the Germans just biased toward feed-in tariffs because they’ve committed so many resources to them? NREL also seems to be relatively supportive of feed-in tariff based policies, but maybe this is because the design of such policies has advanced in the last decade, better accounting for declines in the cost of renewables over time, and differentiating between resources of different quality and utility.