The environment – Page 136 – a sibilant intake of breath

Power plant economics

This useful post on Gristmill details the economics of power plants. It explains how costs are divided into four categories (fuel costs, non-fuel operating costs, capital recovery, and profits) and how some of these vary with commodity prices and output, while others are fixed. It makes an excellent point about the marginal effects of price changes. Basically, there is an incentive to run your plant whenever the hourly revenues exceed the hourly costs. Since the hourly costs are lower than the real costs associated with an hour of production (because of capital costs, etc), this creates a disincentive to build more capacity. The existing plants that have the option of selling for less than their true cost but more than their true costs will undeprice you. Nuclear plants are a special case of this:

The U.S. power grid has long relied on this bucket (central-station coal and nuclear, specifically) to provide baseload power. You’d be a fool to build these plants if you didn’t first secure guaranteed equity returns, but that’s what our regulatory model is really good at. Note that these plants actually have very high costs, but since they are so cheap to operate on the margin, they tend to depress prices for power on the grid once they are built. The interesting point of comparison here is with renewables — specifically wind and solar — which also have comparatively high capital costs, but very low variable costs. We frequently talk about wind needing over $100/MWh to pencil, but this is a cost discussion, not a price discussion. You may need over $100/MWh to justify the investment in a wind turbine, but a grid dominated by such units will put downward pressure on the prices for power due to it’s low variable costs — just as nuclear and coal have done for decades.

Clearly, these are the kind of second-order economic impacts that regulators need to take into consideration, if they are to help encourage the emergence of an efficient and low-carbon energy system.

In addition to considering the impacts of fixed versus variable costs, it probably makes sense for regulators to encourage profits from energy conservation. If all the benefit goes to the consumer and the producer suffers from reduced revenue, the incentives for improvement are curtailed.

Pay back the Joules

Pondering the question of international and intergenerational equity, one idea that occurred to me was some sort of ‘pay back the joules’ process. Basically, it would be an acknowledgement that the economic strength of some states has largely been based on the exploitation of non-renewable resources, to the detriment of those in other places. The basic idea of the scheme would be to be to ‘repay’ the same amount of energy, in the form of renewable generating capacity. The transfers would run from states that have used fossil fuels to those that have done so less, in proportion to the difference between the two. A state that had used X Joules of non-renewable fuels would pay half as much as a state that had used 2X Joules, up to the point where the gap between heavy and light users is eliminated

As described before, one barrel of oil contains about 1,700 kilowatt-hours (kWh) of energy. With similar figures for coal and gas, as well as data on total historical consumption, one could work out a total energy figure. It would then simply be a matter of multiplying the mean output of any renewable facility by its usable life. A 500 megawatt (MW) wind farm that lasts for 30 years will produce 131.4 gigawatt-hours (GWh): equivalent to 773,000 barrels of oil. One kilowatt-hour is 3.6 million Joules.

The plan would be one way to defuse the criticism that “the West got rich through dirty fuels, so we have the right to do the same.” It would also help to ensure that the developing world builds the right kind of infrastructure the first time, rather than having to replace most of it (and overcome all the special interests who will want to perpetuate it).

Fishing and restraint

Research being done off Lundy Island, in the United Kingdom, shows how quickly some marine ecosystems can begin to recover when fishing is discontinued. A five year old marine protected zone has resulted in the lobster population increasing sevenfold, as well as benefits to other species. This is consistent with the kind of larger scale recoveries that took place during the world wars, when the need for merchant ships and the dangers of war prevented most fishing fleets from operating.

It makes a person wonder what would be involved in producing a genuinely sustainable national fishery (trying to do the same in the open ocean is probably impossible for the foreseeable future, given the sheer number of unapologetically rapacious national fleets). One idea that comes to mind is this:

Ban all imports. This will ensure that all fish being sold were caught under the sustainable approach.
Restrict all fishing equipment (except safety equipment) to that which was available at the height of the age of sail. That means no diesel engines, no fish aggregating buoys, no satellite navigation, etc.
Set catch quotas at a level where marine ecosystems as a whole remains vibrant and robust.

This would make fish dramatically more expensive, probably reducing consumption considerably. Arguably, it would actually increase employment in the industry. It would also make the industry rather more interesting to those both within and without it. Fishing from wooden tall ships has a lot more aesthetic appeal and romance than smashing the ocean floor and stripping the sea with freezer trawlers.

Of course, the above is supremely unlikely to ever happen. The question, then, is whether we will ever be able to come up with a mechanism that provides society with fish in an ethical and sustainable way, or whether we will keep plundering the resource, earning poorer and poorer catches, until we must be satisfied with whatever worms and jellyfish remain.

Hierarchy of climate change uncertainty

When people say that ‘the science of climate change is settled’ they are often being problematically imprecise. Elements of the science are certainly settled beyond a doubt – for instance, the simple fact that adding carbon dioxide to the atmosphere raises global temperatures. Other elements are certain but less precise: overall warming of the planet will alter air and water currents, though we do not know exactly how. Still higher order questions have answers at lower levels of both precision and certainty.

This graphic sketches out a bit of what I mean:

Responding to climate change is perhaps the ultimate case of needing to make decisions under conditions of uncertainty. Simplistic conceptions of what it means for something to be ‘certain’ must give way to a more nuanced appreciation of the nature of knowledge and evidence.

Ways to spend money on climate change

Presented with the massive problem of climate change (including the possibility of extremely severe impacts) states with set resources and capabilities must choose between different kinds of responses:

Domestic actions to reduce emissions
Domestic actions to enhance sinks
Funding emission reductions elsewhere
Funding sink enhancement elsewhere
Investing in resilience, either general (emergency response) or specific (engineering measures to combat certain expected effects)
Helping others invest in resilience: either as compensation for past emissions, an inducement to take action, or out of compassion
Investing in future mitigation technologies
Amassing resources and waiting for greater certainty about what will happen

Choosing between these is very challenging and, realistically, we cannot expect governments to rationally and explicitly choose a strategy. Rather, an overall approach will emerge as a combination of semi-overlapping elements: some reinforcing one another and some conflicting. Furthermore, many choices will be made for non-climatic reasons. If we can spend $X in Canada, cut Y emissions, and employ 1,000 Canadians, we might find that option preferable to spending $X elsewhere to eliminate 100Y in emissions.

Multiple axes of uncertainty – about economic and technological development, future resource availability, total and regional climate change impacts, etc – further complicates the problem of prioritization. Economic analyses like the Stern Review argue that investing in mitigation urgently is a better choice than waiting or investing primarily in adaptation. Unfortunately, that is also the strategy with the most barriers. It requires taking somewhat costly action now, at a time when other states have not necessarily committed to equivalent behaviours.

Thankfully, there is the possibility that early action will have a signalling effect, showing that climate change mitigation is achievable at an acceptable cost, and that significant co-benefits can arise, such as advancing the transition towards a sustainable energy system built on renewables.

Green shifts and pine beetles

The July 5th issue of The Economist has two articles pertaining to Canada and climate change. There is one on the Dion carbon tax and another on the pine beetle infestation in our western forests. Both topics have come up here before, but remain pertinent and worthy of discussion.

The critical ongoing question in the first case is probably how effectively Dion will be able to build support for his plan. In the case of the pine beetles, it is probably the extent of the epidemic, as well as the volume of greenhouse gasses that will be emitted as a result. Despite considerable efforts to prevent it, the beetles have now become established in Alberta, having killed more than half the lodgepole pine in British Columbia. Natural Resources Canada estimates that the infestation so far will produce 990 megatonnes worth of emissions by 2020: equivalent to well over a year of total Canadian output. If they spread into the boreal forest, the ecological and climatic consequences could be massive.

How politicians think

The Oil Drum has an interesting post on the psychology of leaders, arguing that their mindset has important consequences in relation to how they evaluate long-term questions like the future of hydrocarbon resources. The argument there is being made about Peak Oil, but it could just as well be applied to climate change:

Our leaders base decisions on lawyer thinking.

The outcome of a trial is not based on the facts; it is based on what they can convince the jury the facts might be. Likewise the outcome of an election is not based on facts; it is based on what they can convince the electorate the relevant facts, issues and threats might be.

Politicians do not deal in facts. They deal in perception. After years of working this way it becomes a framework in which they think.

The basic point is similar to the old joke about how public figures use statistics rather as drunkards use lamp posts: for support rather than illumination. Furthermore, the awareness that other politicians and politically active groups and individuals will use statistics in this way somewhat debases numerical evidence as a form or empirical awareness about the world.

Another important point is made about the differences between political and objective reality:

Politicians tend to inherently believe that the outcome of an event will depend on people’s perceptions and beliefs about that event. Politicians have very little experience with situations where objective reality is more important to outcome than the subjective perception of the reality.

This tendency is especially damaging when it comes to climate change. Because it progresses at an uncertain rate, it may well be that climate changes slowly while the perceptions of most people remain fairly stable, then changes too quickly for anything low-cost and effective to be done. On a problem characterized by uncertain time frames and potentially strong feedback effects, we need to get out in front of the issue, rather than being led by public or elite political opinion.

Dyed panels for concentrating solar

A team from MIT may have developed a cost-effective solar collector system for buildings. It consists of panes of glass coated with particular dyes. Each pane collects light in a specific range of wavelengths and delivers it to a relatively small area of solar cells. As such, the technology would replace some relatively expensive photovoltaic components with cheaper glass ones. It would also do away with the need for moving sun-tracking mirrors.

As with many human innovations, there is a natural precedent. Photosynthetic pigments in chloroplasts help to capture the light used in photosynthesis. They too differ in colour depending on the peak wavelength being targeted, thus explaining why you can have your algae in red, brown, yellow-green, etc.

Unbalanced sea level rise

One intuitively expects that if enough of Greenland melts to raise global sea levels by, say, three centimetres, that rise will occur everywhere more or less simultaneously. Detlaf Stammer, of Hamburg University, has suggested otherwise. His research on meltwater data since 1948 shows that meltwater forms a ‘slow wave’ of “rising sea levels that gradually works its way south from Greenland, down the American coast, reaching the tip of southern Africa after about a decade.”

Fifty years after any Greenland melting occurs, Stammer’s model suggests that sea level rise will be thirty times greater around Greenland and the east coast of North America than it will be in the Pacific ocean. If true, this will have a big effect on the kind of climate change adaptation planning that needs to take place. Everyone is exceptionally worried about Bangladesh right now, but perhaps they should be more immediately concerned about Florida and the Maritimes.

American biodiversity

Over at Shifting Baselines, Josh Donlan has written a highly interesting history of American biodiversity, in the form of an open letter to the next American president. It touches upon the extinction of North American megafauna, philosophical questions about intrinsic value in nature, and then question of what should be done to protect the diversity of life.

It is long (for a web document), but well worth reading.