Economics – Page 126 – a sibilant intake of breath

The implied right to pollute

In today’s news, there is some talk about the new report from the National Round Table on the Environment and the Economy. Much of it has surrounded the possibility of a carbon tax as a vehicle for assisting the with reduction of Canadian greenhouse gas emissions. One comment from the CBC struck me as especially wrong-headed. In relation to a carbon tax, a person being interviewed said that it “would specifically impact western oil producers who might have to carry the brunt of such attacks.”

The fallacy here is that western oil producers have the right to emit as many greenhouse gasses as they like, for free. If your neighbour was running a pulp mill in his back yard, allowing toxic chemicals to ooze throughout the neighbourhood, nobody would call it an ‘attack’ when he was made to stop. Arguments implying that industry or private individuals have the right to impose ecological harms upon others need to be challenged in terms of fairness and ethics. Otherwise, they obscure the true character of the situation and help to perpetuate the status quo.

HVDC transmission for renewable energy

One limitation of renewable sources of energy is that they are often best captured in places far from where energy is used: remote bays with large tides, desert areas with bright and constant sun, and windswept ridges. In these cases, losses associated with transmitting the power over standard alternating current (AC) power lines can lead to very significant losses.

This is where high voltage direct current (HVDC) transmission lines come in. Originally developed in the 1930s, HVDC technology is only really suited to long-range transmission. This is because of the static inverters that must be used to convert the energy to DC for transmission. These are expensive devices, both in terms of capital cost and energy losses. With contemporary HVDC technology, energy losses can be kept to about 3% per 1000km. This makes the connection of remote generating centres much more feasible.

HVDC has another advantage: it can be used as a link between AC systems that are out of sync with each other. This could be different national grids running on different frequencies; it could be different grids on the same frequency with different timing; finally, it could be the multiple unsynchronized AC currents produced by something like a field of wind turbines.

Building national and international HVDC backbones is probably necessary to achieve the full potential of renewable energy. Because of their ability to stem losses, they can play a vital role in load balancing. With truly comprehensive systems, wind power from the west coast of Vancouver Island could compensate when the sun in Arizona isn’t shining. Likewise, offshore turbines in Scotland could complement solar panels in Italy and hydroelectric dams in Norway. With some storage capacity and a sufficient diversity of sources, renewables could provide all the electricity we use – including quantities sufficient for electric vehicles, which could be charged at times when demand for other things is low.

With further technological improvements, the cost of static inverters can probably be reduced. So too, perhaps, the per-kilometre energy losses. All told, investing in research on such renewable-facilitating technologies seems a lot more sensible than gambling on the eventual existence of ‘clean’ coal.

A grand solar plan for the United States

The latest issue of Scientific American features an article about a ‘grand solar plan.’ The idea is to install massive solar arrays in the American southwest, then use high voltage direct current transmission lines to transfer the energy to populated areas. The intention is to build 3,000 gigawatts of generating capacity by 2050 – a quantity that would require 30,000 square miles of photovoltaic arrays. This would cost about $400 billion and produce 69% of all American electricity and 35% of all energy used in transport (including electric cars and plug-in hybrids). The plan depends upon storing pressurized air in caverns to balance electricity supply and demand. The authors anticipate that full implementation of the plan would cut American greenhouse gas emissions to 62% below 2005 levels by 2050, even assuming a 1% annual increase in total energy usage.

The authors stress that the plan requires only modest and incremental improvements in solar technology. For instance, the efficiency of solar cells must be increased from the present level of about 10% to 14%. The pressurized cavern approach must also be tested and developed, and a very extensive new system of long-distance transmission lines would need to be built. While the infrastructure requirements are daunting, the total cost anticipated by the authors seems manageable. As they stress, it would cost less per year than existing agricultural subsidy programs.

Depending on solar exclusively is probably not socially or economically optimal. The authors implicitly acknowledge this when they advocate combining the solar system with wind, biomass, and geothermal sources in order to generate 100% of American electricity needs and 90% of total energy needs by 2100. Whether this particular grand plan is technically, economically, and politically viable or not, such publications do play a useful role in establishing the parameters of the debate. Given the ongoing American election – and the potential for the next administration to strike out boldly along a new course – such ideas are especially worthy of examination and debate. It is well worth reading the entire article.

Energy security and climate change

If you listen to the speeches being made by presidential candidates in the United States, you constantly hear two ideas equated that are really quite independent: ‘energy security’ and climate change mitigation. The former has to do with being able to access different kinds of energy (natural gas, transportation fuels, electricity) in a manner consistent with the national interest of a particular state. The latter is about reducing the amount of greenhouse gasses emitted in the course of generating and using that energy.

Some policies do achieve both goals: most notably, building renewable energy systems and the infrastructure that supports them. When the United Kingdom builds offshore wind farms, it serves both to reduce dependence on hydrocarbon imports from Russia and elsewhere and to reduce the link between British energy production and greenhouse gasses. Arguably, building new nuclear plants also serves both aims (though it has other associated problems).

There are plenty of policies that serve energy security without helping the problem of climate change at all. Indeed, many probably exacerbate it. A key example is Canada’s oil sands: they reduce North American dependence on oil imports, but at a very considerable climatic and ecological cost. Corn ethanol is probably an example of the same phenomenon, given all the emissions associated with intensive and mechanized modern farming. A third example can be found in efforts to convert coal to liquid fuel – a policy adopted during the Second World War by Germany and Japan when their access to imported oil was curtailed, but also an approach with huge associated greenhouse gas emissions.

Finally, it is possible to envision policies that help with climate change but do not serve energy security purposes. A key example is carbon capture and storage (CCS). Building power plants and factories that sequester emissions actually requires more energy, since it takes power to separate the greenhouse gasses from other emissions and pump them underground. If CCS technology allows the exploitation of domestic coal reserves without significant greenhouse gas emissions, both goals would be achieved, but CCS on its own contributes nothing to energy security.

The biggest danger in all of this is the unjustified muddling of two issues that are related but certainly not identical. It is simply not enough for developed states to ensure reliable and affordable access to fuels and power – they must do so in a way that helps to bring total global emissions in line with what the planet can absorb without suffering additional increases in mean temperature. Governments and private enterprises must not be allowed to pass off energy security policies with harmful climatic effects as ‘green.’

Three climatic binaries

One way to think about the issue of mitigating climate change is to consider three binary variables:

Cooperation
Expense
Disaster

By these I mean:

Is there a perception that all major emitters are making a fair contribution to addressing the problem?
Is mitigation to a sustainable level highly expensive?
Are obvious and unambiguous climatic disasters occurring?

These interact in a few different ways.

It is possible to imagine moderate levels of spending (1-5% of GDP) provided the first condition is satisfied. Especially important is the perception within industry that competitors elsewhere aren’t being given an advantage. Reduced opposition from business is probably necessary for a non-ideological all-party consensus to emerge about the need to stabilize greenhouse concentrations through greatly reduced emissions and the enhancement of carbon sinks.

It is likewise possible to imagine medium to high levels of spending in response to obvious climatically induced disasters. For instance, if we were to see 1m or more of sea level rise over the span of decades, causing serious disruption in developed and developing states alike. Such disasters would make the issue of climatic damage much more immediate: not something that may befall our descendants, but something violently inflicted upon the world in the present day.

Of course, if things get too bad, the prospects for cooperation are liable to collapse. Governments facing threats to their immediate security are unlikely to prioritize greenhouse gas emission reductions or cooperation to that end with other states.

We must hope that political leaders and populations will have the foresight to make cooperation work. It may also be hoped that the cost of mitigation will prove to be relatively modest. The issue of disasters is more ambiguous. It is probably better to have a relatively minor disaster obviously attributable to climate change, if it induces serious action, than the alternative of serious consequences being delayed until it is too late to stop abrupt or runaway change.

Drought subsidies

The Australian government is working on plans to revise drought payments to farmers. This is in response to the drought that has persisted for the last six years – long enough that people are wondering whether this is actually a ‘drought’ in the sense of a discrete and temporary event, or simply a reflection of the kind of future climate Australia can expect. Already, production of water-intensive cotton is down 66% from 2002 levels. The reduction in Australian agricultural productivity is also contributing to record increases in world food prices.

One question raised by all this is when governments should accept that an industry has become untenable. This has certainly occurred already in many fisheries, including the cod fishery in Canada’s Atlantic waters. Farming could become similarly untenable in many areas due to climate change or the increased need for water elsewhere. Politically, it is extremely difficult to tell people that their livelihood can no longer be sustained through public assistance. That said, such cutoffs are eventually required if public funds are to be spent efficiently on adaptation, rather than simply trying to perpetuate the status quo against worsening conditions.

Be grateful for bees

My favourite reading snack these days is soy-covered almonds. They have lots of delicious umami flavour. Recently, I was surprised to learn that 80% of the world’s almonds are grown in a 600,000-acre section of California’s Central Valley. Since almonds need to be pollinated by honey bees (apini apis) and there is only nectar available in that area when almonds are in bloom, the bees need to be trucked in from elsewhere. Every February, more than a million hives – containing 40,000 bees – get trucked in. By 2005, it proved necessary to import a 747 full of bees from Australia for the ‘pollination event.’

The mutual exposure of those two distantly separated bee populations results in the exchange of microbes and parasites. Therein may lie the cause of the North American Colony Collapse Disorder outbreak that began in 2006. Honey bees are also used to pollinate peaches, soybeans, apples, pears, cherries, raspberries, blackberries, cranberries, watermelons, cantaloupes, cucumbers and strawberries. There are dozens of others, ranging from those that simply benefit from the availability of pollinating bees to those (such as squash and vanilla) where the bees are absolutely indispensable.

Concrete’s climatic consequences

While aviation and ground transport get lots of well-deserved attention, in terms of their climate change impact, the concrete industry seems to get a lot less scrutiny. In a way, this is unsurprising; concrete is hardly glamorous stuff. At the same time, concrete production accounts for about 5% of all greenhouse gas emissions: mostly from the process of manufacturing clinker by heating limestone and clay. This is usually done using coal. The average tonne of concrete produced generates about 800kg of carbon dioxide: both as a result of the coal burning and the product of the chemical reaction involved (CaCO3 -> CaO and CO2, ignoring silicates). This figure does not include emissions relating to quarrying rock or transport.

Cement manufacture can be incrementally improved in three ways: by reducing the ratio of clinker to other additives, by making kilns more efficient, and by using fuels other than coal for the heating. All of these can make contributions, to a certain degree, but only a complete shift to biomass heating could have a terribly significant effect on greenhouse gas emissions (and that effect could be moderated by the emissions from transporting the biomass).

Demand for cement is growing at about 5% a year, and is partially driven by the construction of new hydroelectric dams and nuclear power plants. At present, the rate of demand increase exceeds the rate of efficiency improvements. As such, greenhouse gas emissions associated with concrete are increasing every year. The average North American home uses about 25 tonnes of concrete, mostly in the foundation.

George Monbiot discusses concrete in his book, focusing on geopolymeric cements as a solution. Carbon capture and storage (CCS) is theoretically possible, but with an added problem. Concrete plants must be sited near limestone quarries. These are not necessarily near the salt domes or aquifers where CCS can probably be most effectively deployed. Geopolymeric cements are similar to the pozzolan cement used by the Romans to build the roof of the Pantheon. They are made from clay, certain kinds of sedimentary rock, and industrial wastes. Producing them generates 80-90% less carbon dioxide. This is because they require a lot less heating and the chemical reaction that produces them does not generate CO2 directly.

The modern version of this material was only developed in the 1970s and has yet to be widely adopted. Partly, that is because of the cost of refitting existing cement works or building new ones. Partly, it reflects the hesitation of the construction industry to use new materials. Such objections can probably be most efficiently addressed through carbon pricing. If the concrete and construction industries were paying for those 800kg of CO2, the incentives they face would probably change decisively and fast.

Copper indium gallium selenide solar cells

Nanosolar, a company supported by Larry Page and Sergey Brin (the founders of Google), has announced that it will be selling thin-film solar cells profitably for $1 a watt. Apparently, the cells are printed with copper indium gallium selenide – an alternative to silicon. Cells based on the material can convert solar radiation to electricity with 19.5% efficiency. In theory, this material can applied to foil, plastic, glass or cement – producing electricity generating surfaces. It can also be made into more conventional panels of the sort Nanosolar is starting to sell.

In the 1950s, solar cells cost about $200 per watt. By 2004 they were down to $2.70. Further reductions could make solar power cost competitive with fossil fuels, potentially even in the absence of carbon pricing. Combined with either better storage (to moderate light/dark and sunny/cloudy cycles locally) or better inter-regional transmission (the sun is always shining somewhere), such cells could eventually make a big difference in the overall energy balance. Solar has been discussed here previously.

Shopping season

Stepping into any shop these days is a simultaneous reminder of many things: the insipidness of holiday music, our society’s unfettered embrace of mass consumerism, and the deadweight losses associated with gift-giving (as discussed previously). In many cases, gifts cost more to the giver than they are worth to the receiver. Even in cases where that isn’t true, the products received are often unnecessary. Arguably, the expectation of gift giving perpetuates harmful expectations about the nature of friendship, romance, and family.

Anyone feeling inclined to give me a gift is encouraged to make a donation to Médecins Sans Frontières or Amnesty International. In my own life, I focus primarily on efforts to improve the world through incremental regulatory change. It is also good to support the people doing good work actively and immediately, addressing suffering and injustice at the point where they exist.