The Unexpected Perspective
The Implications of Darwin and the Big Bang for Christians ... and Everyone Else

Perspectives

Countries like France and the United Kingdom will ban petroleum powered vehicles in a few years? Should the USA follow suit?

            The risk of climate change has a lot of people around the world scared.  Scared to the point that some governments are even planning to ban petroleum powered vehicles.  Both the France and the United Kingdom have recently passed legislation that will ban gas and diesel powered vehicles in 2040, a mere 23 years from now.  Norway and India plan to do it even sooner, as early as 2025. 

            Should the USA be doing the same?  Some people emphatically say we should, especially liberals and progressives.  Conservatives are equally emphatic that it shouldn't happen. 

            Like others, I want us to get as quickly as possible to a world in which petroleum powered vehicles are a distant memory, but placing governmental bans isn't the best way to get there.  Rather than imposing bans, governments would do much better if they instead focused their efforts on helping Silicon Valley create an electric powered future.  Let me explain why.

            The question of the best way to get to an all electric vehicle future actually is a great example of a bigger question: what is the proper role of government in fostering technological change?

            Let me begin by noting the two ends of the spectrum.  At one end are those who believe that governments should be leading the effort.  Those leaning towards that end of the spectrum tend to believe that the Federal government needs to be heavily involved in addressing climate change, coordinating efforts with other governments.  At the other extreme are those who believe that governmental efforts don't tend to be particularly effective.  Unfortunately, I believe many have mis-characterized the debate about the Paris Climate Treaty, claiming that if one believes in climate change, then one must believe in the Paris Climate Treaty, and if one doesn't believe in the Paris Climate Treaty, then one must be a climate change denier.

            That's a false dichotomy.  One can be 100% committed to fighting climate change without necessarily believing in the Paris Climate Treaty.  I'm one of those people.  It's not that I don't like the Paris Accord, it's just that I think it isn't going to solve the problem the way so many people think it will.

            Let me be clear, we absolutely need to solve the problem of climate change, so what's the best way to do it?  Instead of relying upon governmental mandates to abolish petroleum powered vehicles, I think we should our efforts on helping Silicon Valley solve the problem.  They have the means to get the job done.

            What I mean by this is that we should do everything we can to help Silicon Valley – and other entrepreneurial hubs both around the USA and around the world – to come up with solutions.  As part of that effort, governments at all levels should help to create the conditions that will help entrepreneurs in places like Silicon Valley succeed.

            So just what has made Silicon Valley, and other entrepreneurial hubs, successful?  It's a combination of the following factors: 1) strong, research based universities such as Stanford; 2) a community that encourages entrepreneurship; 3) a strong group of venture capital and angel investors; 4) a welcoming environment for well educated foreigners; and 5) an environment that encourages experimentation and rapid recovery from failure.  Silicon Valley has all of these things, in spades, but other such communities have emerged.  Interestingly, a strong one is now emerging in, of all places, Paris, France.

            How has government helped Silicon Valley and its counterparts?  Surprisingly, it's role has been both positive and negative.  On the positive side, the government has provided basic research funding to major universities such as Stanford.  It's also provided funding to help the Departments of Defense and Energy, as well as NASA.  These have provided positive spillover effects.  The other positive thing government has done is to encourage foreign students to attend US universities, then permit them to stay after graduation.

            But government has also had a negative effect on Silicon Valley.  It's a ridiculously expensive place to live, in part because zoning regulations have constricted the housing supply and driven up prices; and taxes in California are absurdly high.  Now, the government is going a step further by trying to restrict immigration, having the unintended effect of driving promising foreign students away from US universities. 

            What is Silicon Valley's role in creating the electric vehicle industry?  In a word, it's Tesla, founded by Elon Musk.  Musk is, himself, an immigrant to the USA who attended Stanford.  The company has revolutionized the industry by developing amazing new battery technology.  Of course, Tesla isn't the only company involved in this.  In fact, now that Tesla has taken the lead in the industry, the traditional auto industry is responding in kind.  All you need to do is look at the offerings of the major auto companies today to realize the landscape has dramatically changed, in just a few years.

            All electric and hybrid vehicles are growing rapidly, but they're still a pretty small portion of the overall market.  What assurance do we have that they'll become the dominant form of transport?  Don't we still need governments to ban petroleum powered vehicles?

            The reason I don't think governmental bans are the appropriate path to take is because they smack of "industrial policy" – the idea that government bureaucrats can sit in an office and determine what the economy should look like, and who the winners and losers should be.  The argument in favor of industrial policy is that government actions can help direct where the economy can and should be going.  Unfortunately, it doesn't work.  In fact, the Brookings Institution, a liberal leaning think tank, has done a study suggesting three key reasons why it doesn't work.   Unfortunately, as Brookings notes, industrial policy often has lots of unintended consequences. 

            One unintended consequence could be that government backs the wrong technology and/or the wrong company.  So we could end up eliminating petroleum powered vehicles, but then be stuck with lousy, underpowered electric vehicles that nobody likes: America's version of the Lada, the auto of the old Soviet Union (see photo above).  Bet you'd really be excited to have that vehicle in your driveway!  Governments have an awful record of picking winning technology for the marketplace.

            Better to have Silicon Valley get us to the electric-powered future, with government lending a hand. 

            But if government doesn't mandate the change, how do we know it will happen?  Moreover, if we don't mandate it, what might prevent it from happening?  In the case of electric vehicle adoption, there are four potential impediments: 1) range anxiety; 2) cost; 3) convenience; and 4) resale anxiety.  Let's consider each.

            "Range anxiety" is the fear that you'll run out of power while driving and won't have easy access to a recharging station.  Up until recently, all electric vehicles had a range of under 100 miles.  That's changing rapidly with newer models getting over 200 miles.  The related problem is a lack of charging stations, as well as the speed of recharging.  Mobile phone apps are beginning to appear that show a driver where the nearest recharging station is.  That should certainly help.  High speed recharging stations are also starting to appear.  New, home-based charging systems are also appearing.

            The second big problem is the cost of all electric and hybrid vehicles.  Up until now, they've simply cost too much, and adoption has been limited.  Yes, Tesla has a very high powered all-electric roadster, but you have to live in a fairly exclusive zip code to afford it.  Newer models, however, are appearing that will solve that problem. 

            While purchase cost has been an impediment, it's becoming very clear that the cost to power an electric vehicle is a good deal less than one with an internal combustion engine.  The US Department of Energy cost calculator compares the costs of gasoline versus electric.  At the time of writing, the US average cost of gas was $ 2.50/gallon.  The cost to drive an electric vehicle the same distance, however, was $ 1.21, less than half.  Maintenance costs on an electric motor are a good deal less than a gas powered engine. 

            Here's a quick analysis to compare costs.  The average American driver travels 12,000 miles/year.  According to the American Automobile Association, it costs the average auto owner 59.2 cents/mile, $ 7,104/year.  So for an electric vehicle to be competitive, it must cost less than that.  Using the cost calculator from the Department of Energy, the average cost to power an all electric vehicle the same average 12,000 miles/year would be $ 484.  The average automobile in the USA is 11.5 years old.  Assuming the average person owns a vehicle just 10 years, and the average electric vehicle cost $ 35,000 to buy, then the cost of owning and operating an all electric vehicle should be substantially less than the gas powered equivalent.

            The operating cost differential may create interesting new opportunities for electric vehicle leasing.  Instead of selling electric vehicles, entrepreneurs might take a page out of the Uber or Lyft playbook and lease vehicles by the mile.  In other words, rather than buying a vehicle, one might agree to purchase 12,000 miles of vehicle usage in a given time period, electric costs included.   With the upcoming advent of self-driving vehicles, that's probably just what Uber and Lyft will offer.  The lower per mile operating cost of the electric vehicle should pretty well assure adoption.

            Convenience is the third issue.  Unquestionably, it's still easier to pull your automobile up to a gasoline pump to refill it.  Recharging your electric vehicle is a little harder.  Hybrids provide an excellent interim solution to that problem.  Creating a broad network of high speed charging stations will take time, but appears on the horizon.  Tesla already has a network in place.  But the Uber or Lyft alternative could easily solve the convenience issue.  Why bother owning your car when you can call up any type of all electric vehicle from Uber or Lyft, have the vehicle at your home or place of business within five minutes, then simply pay by the mile?  What could be more convenient than that? 

            Not only that, but let's go back to the average cost of owning your gas powered auto - $ 7,104/year.  Let's assume you want to get that down to $ 6,000/year, a 15.5% reduction.  If you could contract with Uber or Lyft to provide you transport at 50 cents/mile, you'd get your cost reduction, as well as eliminate all the other hassles of auto ownership.  The question is, could Uber or Lyft make money?  If the power to go 12,000 miles only costs $ 484, and there's a robot driving the car, they should make a bundle if the all in cost is 50 cents/mile driven.

            The fourth concern is an interesting one.  Researchers several years ago found that resale value might inhibit the growth of electric vehicles.  This shouldn't be surprising for a very small market.  However, as the size of the electric market grows, it should be less and less of a problem.       

            The numbers cited above should make it abundantly clear that all electric vehicles make compelling sense.  We really don't need governments to ban gasoline and diesel powered vehicles.  Savvy consumers will produce the same result.   

            So I'm confident we can look forward to an electric vehicle powered future.  What is, however, a little less certain, is the power source of all that energy.  It won't be petroleum, but will it instead be coal and natural gas from the power plant?   Many people are very concerned that it will be the former.  I don't think so, and the reason I don't think so follows the same reasoning presented above.

            We really don't need governments to ban coal plants.  That's because the economics of renewal energy are far more compelling than coal.  We can ensure that if we focus on encouraging Silicon Valley to make ongoing innovations in renewable energy.  They've been doing it, and more won't hurt.

            At the end of the day, the solution to greenhouse gases is better technology, not more government.  The best role government can play is to help ensure the success of places like Silicon Valley, not by mandating what vehicles we'll drive, or what power sources we'll use.  If we focus on that, other things will take care of themselves.  Let the French and the Brits ban the internal combustion engine.  We'll still beat them.

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There may now be a realistic way to eliminate fossil fuels from electricity generation

           Tesla Battery Plant in South Australia (REUTERS)

            How do you eat an elephant?  Of course, one bite at a time.

            How do you solve the problem of greenhouse gases?  Maybe the same way you eat an elephant.   That may be an unexpected conclusion from the big news this week that Tesla has installed a gigantic battery in South Australia. 

            And it may represent another great solution to greenhouse gas emissions that has nothing to do with the Paris Climate Treaty.

            You probably heard that Tesla built the world's largest battery -100 MW/129 MWh – and capable of powering up to 33,000 homes.  Much of the announcement focused on Elon Musk's promise to build the entire plant in 100 days or it would be done at no charge to the South Australian government.  A pretty big claim, but Tesla did it.

            Great headline, but the real reason the plant is so newsworthy is because it provides a solution to the biggest problem of renewable energy – storage.  Solar and wind power have both now become very cost competitive.  But each has its own Achilles Heel.  In the case of solar power, it's the fact that the sun sets every day and can't power solar cells half of each day.  In the case of wind power, it's that while the wind blows strongly sometimes, its still much of the rest of the time.   So you can't count on either source much of the time.  Therefore, you can't make either solar or wind power the core of an electricity generating plan.  You have to depend upon greenhouse gas emitting fuels to provide the needed reliability.

            Until now.  The Tesla battery in South Australia may represent the key to making solar and wind far bigger components of our energy generation, maybe even the core.  The reason is because giant batteries such as the set up in South Australia provide a way to overcome the limitations of solar and wind power described above.   With effective battery storage, solar and wind power can charge the Tesla batteries, then provide battery power when either the sun doesn't shine or the wind is calm. 

            These batteries also can provide another important benefit: load leveling.  The amount of power required varies over the course of a typical day.  The demand is typically high during the day, when factories are humming and people are at work or school.   Conversely, energy demand is usually pretty low at 3 am when the average person is sound asleep.

            Peak demand differs around the country.  In places like Florida and Arizona, it typically occurs in the afternoon of hot summer days in July and August when air conditioners are blasting away.  Conversely, in New England it typically occurs in the early evening in January or February when huge amounts of power are needed for heating. 

            The electric utility, of course, has to be prepared for both the peaks and valleys.  Dealing with low demand at 3 am isn't a problem, but having enough capacity for the peak usage times is essential.   Up to now the typical electric utility had two options.  Option 1 is to build and maintain backup plants to provide power for these peaks.  Option 2 is to buy power on the open market.  Both options are often very expensive.

 

            Tesla style batteries now could provide a third option.  The batteries could be charged in the middle of the night, then drawn upon to cover peak demand.  The chart above shows the benefit of that.  You can see the traditional peak would be supplied by battery storage.

            This could be done by the electric utility for its entire system, but it could also be done on a smaller scale.  For example, individual businesses could buy batteries, draw power from the grid to charge those batteries in the middle of the night, then draw upon the batteries at peak times.  This could be especially beneficial to the business because it will reduce the "demand charge" that the business pays to the electric utility.

            Many people are not familiar with a demand charge.  While the average residential customer pays for the number of kilowatt hours (KWH) consumed, the typical business pays not only for KWH consumed, it also pays a charge each month for the peak amount of power consumed.  The company may only use this peak amount of power for a minute or two, but the electric utility charges for that momentary peak usage.  The reason is because the utility has to have its system prepared to deal with the spikes, irrespective of cost.

            Having a battery on site at the business could help to reduce that demand charge.  The company will still pay for the same number of kilowatt hours consumed, but the peak will be lower so the overall power bill will be lower.

            In the case of residential customers who have to pay a demand charge, the same thing is true.  Having a battery in the garage could be useful for smoothing out electric demand.  The other way it could be beneficial is if the electric utility charges different rates at different times of the day.  If power is cheapest at 3 am, when demand is low, the batteries can be recharged, then discharged again when demand is high and/or prices are highest.

            With Tesla style storage batteries, the entire electric grid could now theoretically run with solar and wind power as the core, and without any fossil fuels.  The Energy Information Administration of the US Department of Energy reports that the USA uses about 4 trillion KWH of electricity.  What would have to happen for the USA electric grid to eliminate all fossil fuels and rely strictly on wind, solar, hydro, and existing nuclear installations?  That would get the USA to zero emissions. 

            About 20% of electric power is generated either by hydropower or nuclear, meaning that 80%, about 3.2 trillion KWH, come from fossil fuels.  Assume that 60% of that consumption occurs during either daylight hours, or when the wind is blowing strongly, and the remaining 40% is when it's either dark or the wind isn't blowing.  That means that there would have to be 40% * 3.2 trillion or about 1.33 trillion KWH of storage.  All that storage would power the grid when the sun isn't shining and the wind isn't blowing.   

            The South Australian Tesla plant can store 129 MWh or 129,000 KWH.  Thus, it would take about 10 million of these South Australian Tesla plants to provide adequate storage so the USA could theoretically eliminate all greenhouse gas generating electric power.  This, of course, assumes no additional usage of electric energy to power Tesla automobiles or other electric vehicles.  Looks unrealistic.

            In other words, we have an elephant – the need for a massive number of battery storage units to permit the elimination of fossil fuels.  So how do we "eat the elephant"?  Obviously, one bite at a time.  Let's take a look at how the elephant might be sliced into reasonable bites.

            There are about 1,000 electric utilities in the USA that generate electric power.  Some are obviously larger than others.  That would mean the average USA electric utility would need about 10,000 of these Tesla South Australian plants.  Once again, probably unrealistic, at least in the short run.  However, in the longer run, it really isn't unrealistic.

Here's why.

            Electric utilities have built in incentives to build or buy assets.  That's because utility rate-setters set electric utility rates in part based upon the value of the assets the utility has in place times an allowable rate of return on those assets.  The thinking is that it will pay for the cost of the debt capital the utility has borrowed from banks and other institutions, as well as pay a rate of return on the capital invested by shareholders.  Other things being equal, utilities like to increase the amount of assets in place because it means they'll generate more revenue.

            If we want to eliminate greenhouse gases from electric power generation, we need to expand the job to include power storage, not just power generation and distribution.

            When you think about it, electric utilities should love the idea of building Tesla style battery farms.  Of course, one reason is the benefit of providing protection against blackouts, as well as load-levelling.  The utility will tout these benefits to the public, and everyone will sleep better at night knowing that when each of us plugs an appliance into the wall socket, it will likely work, and it won't cause a blackout. 

            But electric utilities should also love battery farms because they'll increase the revenue of the utility.  This is because the revenue the utility generates is partly a function of how much capital the utility has invested.  More capital usually means more revenue.

            The utility customers, of course, will be paying for these battery farms, but everyone really should be happy with this arrangement.

            But electric utilities, of course, only have so much capital.  The average electric utility generator will be able to afford many of these battery farms, just not likely an average of 10,000 each.  Moreover, it probably makes sense for electric utilities to focus their attention on building highly efficient solar and wind farms.  There's no question that large scale solar and wind farms are probably far more efficient than rooftop solar systems.  And the economics increasingly make large scale solar and wind farms highly attractive to utilities.

            But there are actually two different "elephants" here.  One "elephant" is how to generate enough wind and solar power to meet all power needs without relying on fossil fuels.  The other "elephant" is the one concerning how to store that power overnight or when wind power isn't available. 

            Once again, let's remember how to eat an elephant: one bite at a time, whether it's the renewal energy generation elephant or the renewable energy storage elephant.  When it comes to the storage "elephant", consider that individual consumers and businesses could also finance some of these battery farms.  Let's consider residential usage.  In 2016, the average residence in the USA used 10,766 KWH of electricity, or 897 KWH/month.  On a daily basis, that's about 30 KWH.  Assume, for a moment, that the average residence is on a grid that only has access to solar power.  Since the sun only shines about 12 hours/day, then the typical residence would have to draw in its 30 KWH during daylight hours, then drawn down the battery during the dark hours.  Batteries are available today that can handle that type of load in the average home. 

            Many people have outfitted their homes with solar panels and dramatically reduced their dependence on purchasing electricity from the utility.  Now with battery systems such as Tesla's, the homeowner could both generate his own power, as well as store it when the sun isn't shining. 

            Which is where things start to become problematic.  Many utilities see this as a threat to their traditional business models and have fought such systems.  Instead, many utilities have lobbied to maintain complete control over electricity generation.  In my mind, it's shortsighted, but a reality.

            The key takeaway, however, is that the Tesla South Australian facility points towards the possibility of moving to an entirely non-fossil fuel energy generation system.  When you factor in the potential of electric vehicles, it points the way to eliminate fossil fuel usage for automobiles and trucks, as well as electricity generation. Combined, that would represent more than 50% of all greenhouse gas emissions in the USA.  If and when that happens, the USA will largely have resolved its greenhouse gas emissions problem.

            The economics increasingly work in favor of renewables, so utilities should have plenty of incentive to build renewables plants.  Now we just need to make sure there are proper incentives to build the battery storage capacity that will permit the growth in renewables energy.

            Admittedly, that's a huge undertaking.  Two giant elephants.  Again, however, how do you eat an elephant: one bite at a time.  The Tesla battery plant points towards a way that the USA, as well as other countries, could pretty well solve the greenhouse gas problem by switching almost entirely to electric vehicles for ground transportation, and switching pretty much all electricity generation to renewables while maintaining current investments in hydropower and nuclear.  It could do this by creating the means to cut the elephant down into bite sized portions. 

            Yes, it sounds crazy.  But as an old friend of mine likes to say, the question isn't whether it's crazy, is it crazy enough?  I think it is.

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While the USA won't be part of the Paris Climate Treaty, we're still generating lots of creative solutions to the problem. Here are two of them.

            The USA is the only country that is unwilling to participate in the Paris Climate Treaty.  Sad.  But all is not lost. 

            In fact, it might be a very good thing, but not for the reasons you're probably thinking.

            Instead, even though the USA won't be part of the Paris Accord, we could still maintain the role we've had for the past twenty years: the world leader in reducing greenhouse gas emissions. 

            Huh?  How could that be? 

            The USA has led the world in greenhouse gas reductions over the past 20 years, most likely because lots of people have been working on all kinds of possible solutions, both government and private sector based.

            Let me suggest a couple of new ways we could maintain our role as the innovator in ways to solve the problem.

            Economists generally maintain that the best way to deal with global warming is to impose some type of a tax on carbon released into the air.  Assuming that carbon release into the air is a bad thing – in my mind, a more than reasonable assumption – then penalizing those who do it certainly makes sense. 

            The idea of a tax on carbon has been around for a number of years, yet few countries seem to want to implement such taxes.  Among those few that have that are the United Kingdom, Ireland, Sweden, Australia, and Chile.  Here's the complete list.  Australia had a carbon tax, but then got rid of it. 

            As a solution to carbon emissions in the USA, the typical carbon tax is pretty much "dead on arrival".  Republicans find tax increases, in general, to be distasteful, but your typical carbon tax is especially repugnant. 

            An alternative to a straight carbon tax is a carbon trading scheme.  This has been tried out in various countries.  Unfortunately, some of the trading schemes have been poorly thought through, and clever arbitrageurs have found ways to circumvent the intent of the schemes.

            These ways to reduce carbon emissions haven't gained the desired traction, so what else might be considered?

            How about instead of penalizing carbon emitters we find a way to reward them instead?  Sounds ridiculous, but bear with me, because I'm going to propose a way to reduce carbon emissions by providing an unusual incentive to those who are presently the worst offenders.

            Here's the basic idea.  Take your typical coal burning power plant in the USA.  In any given year, the power plant will burn a certain amount of coal to generate electricity.  My proposal begins the same place that the typical carbon tax does: calculate the total greenhouse gas emissions of the plant over a given period of time, likely one year.  A good estimate of this can be determined by taking the total megawatt hours generated by plant into a year, then multiplied by 1640.7.  The 1640.7 factor was calculated by the US Environmental Protection Agency.  Having calculated this, the next challenge is to place an environmental cost on each ton of CO2 emitted.  That number is variously estimated to be between $ 37 and $ 200/ton.  Having then determined that, the effective environmental cost of running the coal plant can be determined.

            Let's say that the last calculation yields a total cost of $ 100 million for running the coal plant.  Instead of penalizing the coal plant operator, I instead propose the following "reward".  To continue running the coal plant, its owner will then be expected to build a renewable energy facility somewhere in the world that costs the same amount as the emissions from the coal plant.  The coal power generator will own the new plant.  The company can build the renewables plant on its own, or have it built by another party.  Once complete, the coal power operator will be able either to operate the plant itself or sell it to another party.

            It may be unrealistic to expect the coal plant operator to spend that much on a clean energy plant each year.   Instead, I propose two possible solutions.  In the first, to continue operating the coal plant, the owner must build a renewables plant that can generate at least 5% of the capacity of the existing coal plant.  If the coal plant is operated for 20 years, it will mean the entire capacity of the coal plant will be replicated in renewables. 

            The second alternative is to require the coal plant owner to invest the same amount in a renewables plant that the coal owner claims in depreciation on the coal plant. A coal plant operator wants to claim as much depreciation as possible each year because that tends to reduce the tax burden without negatively affecting cash flow.  The bargain could then be, Mr. Coal Plant Operator, claim as much depreciation as you want, but you must offset that with an equivalent investment in renewables capacity … every year.

            What's the outcome of this?  First of all, the world will have just that much additional renewables capacity available.  It won't eliminate the original offending plant, but at least it will result in the addition of more clean energy.  In a sense, it's a penalty for the coal operator, but the coal operator can turn it into a financial win. 

            Faced with this, the coal operator has an incentive to build the best possible renewables plant that it can.  That's because if it chooses to sell the plant to a third party, it will want a very good plant so it can obtain the best possible sales price.  If it chooses to operate the plant, it will also want the plant to be very efficient because the coal company will want to make as much money as possible on its new investment.

            Let's try a real world example.  Duke Energy, one of the USA's largest utilities, and a major coal plant operator, owns a coal power plant at Belews Creek, North Carolina, not far from where my family used to live.  Belews Creek is rated to generate 2.24 gigawatts of power.  In 2016, it reportedly generated a little over 14 million tons of greenhouse gases.  If Duke is required each it operates Belews Creek to build a renewables plant, that means it will create a 112 MW solar or wind plant every year (i.e., a renwables plant that can generate 5% of the capacity of Belews Creek).  Cost of new plant construction will vary around the world, but a 112 MW plant would probably cost $ 100 - $ 150 million, something that's very realistic for Duke to be able to finance.  If the cost of the plant is $ 125 million, for example, that is equivalent to Duke paying approximately $ 7.81/ton of greenhouse gases emitted by the Belews Creek plant.

            Some environmentalists will howl, saying that this isn't getting rid of the original bad coal plant, and it's providing some type of financial reward to the coal operator.  Well, correct, the new plant won't get rid of the original coal plant, at least right away, but it will cause the coal operator to think very carefully about future coal plant investments.  This is because it will direct at least part of the coal company's capital budget to renewables.  It will result in greater renewables capacity, a definite benefit for all.  It will also force the coal company to devote managerial resources towards a renewables plant.  In effect, it will push the coal plant operator to direct future investments towards renewables. 

            The same principal might also be applied to other carbon emitting plants, for example, plants that burn oil: require the operator to invest in a renewables plant an amount each year equivalent to 5% of the generating capacity of the current plant, or the amount of depreciation claimed.

            If plant operators have to make these renewables investments each year, they'll effectively replace all of those greenhouse emitting plants within 20 years.  It will likely happen more quickly.

            Assuming this is a good idea, how might it be implemented?  It could be done on a state by state basis.  Alternatively, it could be legislated by Congress and apply to plants all across the USA.  Other countries could also employ the same strategy.

            Conservatives should like this solution because it does not involve any forms of tax.  It also doesn't stop companies from making decisions on their own.  It merely forces companies to make investments in renewable capacity, but the companies will own the improvements themselves. 

            Environmentalists should also like it, for two reasons.  First, it will force the companies creating greenhouse gases to make investments in renewables.  The companies otherwise might not make those investments.  Second, it will increase the overall base of renewables. 

            There's another interesting way to solve the problem, one that's more comprehensive than my idea.  It looks like a carbon tax, but it actually is a giant transfer payment, meaning the money collected as a tax is then re-distributed to someone else.

            The idea was developed by Ted Halstead and presented in his much watched TED Talk.  Halstead's idea is to impose a carbon tax, beginning at about $ 40/ton of greenhouse gas, then increase the "tax" each year.  You'd think that idea would be "dead on arrival", but there's an important twist.  At the end of each year, the amount collected in carbon tax is distributed equally to every US citizen.  Thus, it's not a tax, it's a giant transfer payment, much like Social Security.  It is definitely a clever idea and could be a great solution to the problem.

            There's something even more interesting about Halstead's plan.  It's a Republican one.

            Are either of these ideas panaceas?  Definitely not, but then the Paris Climate Accord isn't a panacea either, though you'd never know that based upon the hype surrounding it.  As Halstead noted in his TED Talk, even countries that are absolutely, totally committed the Paris Agreement – countries like Germany – are highly unlikely to achieve their greenhouse gas reduction goals.  It isn't for lack of desire, it simply is that government imposed mandates aren't likely to solve the problem. 

            Which is why it isn't necessarily terrible that the USA won't be part of the Paris Climate Treaty.  Apart from the Paris Treaty, the USA can pursue all kinds of alternative solutions, particularly market-based ones.  It already is, and while some people don't like to acknowledge it, the USA IS the world leader in greenhouse gas reduction.  As a government-based initiative, the Paris accord will likely lead to lots of top-down, government imposed solutions.  Some of those government imposed solutions will work, but lots will likely be pretty bad. 

            Yes, the USA is the only country not part of the Paris Climate accord.  But it could still lead the world in solving the greenhouse gas problem. 

                 

 

           

           

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Medical breakthroughs have brought some unintended consequences, but also some exciting though unexpected possibilities,

            Needless to say, improvements in medical technology and medical care are nothing less than astounding.   While in the past the cause and effective treatment of a broad range of diseases eluded even the best medical researchers, progress now seems to occur almost daily.  Yet even though there has been huge progress, surprises still abound.

            One of the best examples is in what has come to be referred to as the microbiome.  These are the trillions of bacteria that live within, as well as on the skin of, every human, as well as other animals.   In my last post, I discussed how medical researchers have concluded that bacteria in the vaginal canal appears to provide protection to the baby against obesity and allergies.  The evidence of this is that children born via Caesarian section tend to have a greater risk of obesity, the reason being because the C-section children weren't exposed to beneficial bacteria in the birth canal.

            Not only are there a significant number of important bacteria and other organisms in each of us, scientists are finding incredible genetic diversity therein.  In fact, it's hypothesized that the genetic information contained in the typical human microbiome is 150 times the genetic data in the typical human genome alone!  Realizing the potential, the US National Institutes of Health has established a Human Microbiome Project, likely modeled on the hugely successful Human Genome Project.

            Long before anyone knew there was something called the human genome, it was understood that the gut contains some beneficial things.  As far back as 1700 years ago, Chinese doctors – at least what they called doctors at the time – concocted what was euphemistically referred to as "yellow soup".  It was taken from a healthy individual and given to someone with diarrhea.   While it sounds disgusting, apparently it worked!  Independently of the Chinese, other "doctors" discovered that camel dung could effectively treat dysentery in humans.

The point of these three examples – the two treatments for dysentery/diarrhea and the apparent value of vaginal fluid in preventing obesity – is that microbiomes of healthy humans and other animals appear to provide significant health benefits.  When you couple these with the fact that there is such incredible genetic diversity in the human microbiome, it suggests that drug companies ought to look very closely at the human gut, and maybe even those of other animals, to find solutions to many maladies. 

            My wife, a nurse, always like to say that buried somewhere in the Amazonian rainforest is the cure for cancer.  Maybe so, but maybe it's much closer than that, as close even as the human gut.

            Makes sense, if we can just overcome our natural negative reaction to the "yuck" aspect of this.  A number of companies are investigating the possibilities.  The field has gotten so hot that a French venture capital firm, called Seventure, is focusing on microbiome related investments.

            One strategy goes by the name FMTS.  Some PR person deserves a big bonus for that, because FMTS is an acronym for fecal microbial transplants.  Sounds pretty awful, unless you happen to suffer from something called Clostridium difficile, or C. diff, a bug that causes very serious, even life threatening, diarrhea.  One novel way to address C. diff is using FMTS.  A company in Roseville, Minnesota called Rebiotix is developing a FMTS that is a standardized liquid suspension of healthy gut bacteria.  Another company called Seres Therapeutics, based in Cambridge, Massachusetts, is developing a FMTS for C. Difficile and also ulcerative colitis.

            Diarrhea is certainly an unpleasant affliction, but for most people it is a temporary problem.   A potentially more serious problem is tooth decay.  Nearly everyone has suffered this, and flinches at the thought of seeing a dentist to have cavities filled.  A possible solution is under evaluation by C3J Therapeutics, a company based in Marina del Rey, California.  C3J's strategy is to identify "good" bacteria from one part of the microbiome to create what is called an antimicrobial peptide aimed at Streptococcus mutans, the bug in our mouths that's believed to cause cavities. 

            Sometimes the cause of a health problem is that something important is missing, such as certain enzymes.  If the proper enzymes can be inserted, the problem may clear up.  To deal with this, another approach is to harness the power of certain viruses that occur naturally in the body and put them to work doing something else.  Blue Turtle Bio in San Francisco, and Synlogic

 in Cambridge, Massachusetts, are trying to get bacteria in the body to transport things like enzymes.

            As previously noted, scientists have identified a link between obesity, allergies, and the microbiome.  How about autism?  In fact, at least one company – Second Genome (www.secondgenome.com) in San Francisco – to see if there is in fact such a link.  If the link is confirmed, that would suggest the possibility of harnessing the power of a healthy microbiome to resolve the problem.

            There may even be a link between the microbiome and cancer.  At least there is the hope that the human microbiome can be harnessed to develop new oncologic drugs.  Perhaps the most exciting new develop in the treatment of cancer is immunotherapy.  This approach may be much more effective than traditional chemotherapy.  However, patients respond differently to immunotherapy, some very positively but some not so.  Interestingly, recent research, published in Scienceshows that human gut microbes can influence how the patient responds to immunotherapy.  One of the studies found that when patients were being treated with immunotherapies designed to block PD-1 and PD-L1 proteins, patients who were receiving antibiotics for unrelated issues responded less well to the immunotherapy treatment.  In other words, the antibiotics somehow had a deleterious impact.  The study also found that patients who had greater concentrations of a bacterium called Clostridiales responded better than those with higher concentrations of Bacteroidales. A second study showed that people who received antibiotics to treat infections shortly before or after starting immunotherapy did not respond as well to PD-1-blocking therapies. The researchers — led by cancer immunologist Laurence Zitvogel and cancer biologist Guido Kroemer, both of the Gustave Roussy Cancer Campus in Villejuif, France — also found that the presence of the bacterium Akkermansia muciniphila in both humans and mice was linked to better responses to immunotherapy.

            These studies appear to suggest two things.  First, the presence or absence of certain types of bacteria in the microbiome can influence the effectiveness of other treatments.  Second, the use of antibiotics, even ones unrelated to the primary treatment, can negatively affect treatment.

            Given that the microbiome seems to play an important role in human health, we may be witnessing a giant game of "unintended consequences".  As previously noted, bacteria in the gut may perform a range of regulatory functions.  Consider, however, what we've been doing over the past 60+ years.  Since the accidental discovery of penicillin in the 1920's, we've revolutionized healthcare through antibiotics.  Countless millions of lives have been saved because of antibiotics.  Where people routinely died from the sudden onset of an infection, the risk of that has dramatically decreased.   

            Antibiotics kill bacteria, usually very effectively.  We've, however, come to the realization that there are both good bacteria and bad bacteria, but antibiotics generally can't discriminate.  So while we've deployed a range of antibiotics against the bad bacteria, those very same antibiotics have also killed lots of good bacteria, setting up a whole bunch of unintended consequences.

            We've probably already dramatically altered our human microbiomes in lots of unexpected ways.  If the microbiome plays that big a role in human health, we may have already inflicted a lot of collateral damage.  There's already evidence that there have been lots of unintended consequences to the heavy use of antibiotics over the past 60+ years.  An excellent example of this is a CDC study that found that 71% of severe C. Difficile infections in children, ones that caused severe diarrhea, were traceable to improper use of antibiotics.

            There's an old saying, when the only tool you have in your toolbox is a hammer, every problem looks like a nail.  To a certain extent, maybe we've come to think of antibiotics as the only tool in arsenal, so too many problems have been "solved" with them.  If that's the case, then in a strange way, maybe it's actually beneficial that we're seeking increased antibiotic resistance, and more antibiotics rendered ineffective. 

            Well, in the short term, it's clearly not good.   In the longer term, however, it suggests that rather than try to develop the next generation of antibiotics, maybe we should focus our attention elsewhere.  That "elsewhere" could be the microbiome.  In other words, focus attention on how a healthy microbiome defends against disease.  The incredible amount of genetic material in the typical microbiome represents the result of millions of years of evolution.  If we gain a better understanding of how the healthy microbiome works, we'll gain more and more clues on how it can be harnessed to deal with disease.  Please understand, I'm not suggesting that we abandon antibiotics on a wholesale basis.  Far from it.  Instead, we need to avoid treating antibiotics as the "universal tool" in our toolbox and search for other approaches. 

            Yes, the cures to cancer and other diseases may well rest in the wilds of the Amazon, and other remote places, but those very same cures may reside just below our collective waistlines, too.

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Some exciting new research that might help prevent obesity, but probably won't

 

            Scientists have been discovering some interesting things about obesity.  In fact, whether a child is born naturally or via Caesarian section may play a very important role.  New research suggests that some simple steps taken during a C-section operation could make a lifetime of difference.  Unfortunately, it probably won't.

            Americans are well aware that the country is suffering the effects of an increasingly obese population.   It's well known that healthcare costs are skyrocketing.  While there are many reasons healthcare costs are out of control, one that is gaining increasing recognition is obesity.  

Medical experts have suspected for a while that those born via C-section – typically about 10 – 15% of births – tend to be more prone to asthma, autoimmune diseases, and obesity.  The question, of course, is why.  Once the "why" is understood, can something then be done?

            A theory that's emerged in the past few years is that one's microbiome – the constellation of bacteria each of us has both over and within our bodies – plays an important role.  The bacteria in our individual microbiomes have an influence on how food is digested, and there's evidence that many people are cursed by biomes that increase the propensity for weight gain.  To some extent, we inherit our biomes from our mother.

            As part of the birth process, it appears that at least part of the mother's microbiome passes to the baby.  But the outcome appears to be different depending upon whether there is a natural birth or a C-section.  Doctors and other medical researchers have determined that in natural birth, the baby picks up the mother's microbiome.  In contrast, children born via C-section seem only to pick up the microbiome of the mother's skin, so the C-section baby doesn't pick up as much protection.  The question is, why?

            Two hypotheses have been proposed.  One is that the C-section process itself somehow robs the child of the additional microbiome protection.  One theory is that as the baby passes through the birth canal, it gains protection, almost an "extra protective coating".  The other hypothesis is that the antibiotics used as part of the C-section surgery itself may kill off parts of the mother's microbiome that would otherwise be transferred to the baby.  An obvious way to test this would be to do some C-sections without antibiotics – a form of controlled experiment – but the attendant risks make that type of experiment unacceptable.

            Dr. Maria Gloria Dominguez-Bello has been performing some interesting experiments to try to figure out the answer.  In one set of experiments, she and her associates put a piece of sterile gauze in the vagina of the mother about one hour before the C-section surgery was to be performed.  The gauze was left in place until just before the surgery began.  Once removed, the gauze was placed in a sterile container.  After the baby's birth, doctors then swabbed the gauze over the newborn baby, beginning with the eyes and lips, then other parts of the body.  In effect, the goal was to simulate the "coating" of the baby's body with the mother's microbiome as the baby passed through the birth canal.

            Dominguez-Bello and her team studied 18 births.  Of these, 7 were born vaginally and 11 by C-section.  Of those born via C-section, 4 were exposed to the mother's vaginal fluid using the gauze and 7 were not.  The results?  The team tested the C-section infants and found that their microbiomes looked like those of the vaginally delivered infants, and contrasted with the C-section infants who were not swabbed.  This suggests that the trip through the birth canal makes a real difference.  The results were published in March, 2016. 

            Do the antibiotics of a typical C-section make a difference?  To test that hypothesis, Dominguez-Bello and her team conducted another study, published in Science Advances in October, 2017.   In this experiment, the scientists compared 35 natural mouse births with 34 births via C-section.  No antibiotics were used in the 34 C-section births.  It was determined that the C-section mice did not inherit the microbiomes of their mothers in the same way that the natural birth mice did.  Since no antibiotics were used, one can then rule out the possibility that antibiotics somehow killed off the "biome transfer" as an unintended side effect of the C-section.

            These are promising experiments.  The scientists, however, expressed a note of caution because the sample sizes were very small.  The preliminary conclusion is that the natural birth process does seem to confer a benefit on the baby, which seems to translate into a lower risk of obesity later in life.  Based upon the "gauze experiment", it might not be surprising to see "baby swabbing" as an additional procedure conducted as part of ordinary C-section births in the future.

            That might provide some benefits, but it certainly won't be a "magic bullet".  In fact, by the time the baby is about to be born, the "obesity dice" may already have been cast. The Harvard School of Public Health has identified three other key factors, each of which seems to come into play during pregnancy and before the birth event itself:

  • Maternal smoking
  • Gestational weight gain
  • Mother's blood sugar during pregnancy.

A meta-analysis of 14 pre-natal smoking studies found a 50% higher risk of obesity in offspring whose mother's smoked.  Likewise, the Harvard researchers also found that if the mother had excessive weight gain during pregnancy, the child was four times as likely to be overweight at age 3.  Blood sugar levels of the mother during pregnancy also seemed to predict excess weight in the child.

            Then there seem to be another set of factors that come into play after the baby is born, irrespective of whether the child was born naturally or via C-section.  Three post-birth factors appear to be most important:

  • #1: How rapidly the child gains weight after birth
  • #2: How long the child is breast fed
  • #3: How much sleep the child gets.

With respect to #1, researchers found that if a child gains weight too rapidly, there is a greater risk of later life obesity.  Breast feeding, as well as how long a child is breast fed, are also factors.  Breast feeding seems to reduce the risk of later obesity, particularly if it occurs for at least 12 months.  In terms of sleeping, the more sleep a child gets in the first year of life, the lower the risk of later obesity.

            Combining all of these factors together, a study called Project Viva found that the children whose mothers didn't smoke during pregnancy, did not gain too much weight, were breastfed for at least one year, and who got an average of at least 12 hours of sleep per night, had only a 6% chance of becoming obese.  Given that 10-15% of all births are by C-section, there's a good chance that 1% of those 6% might have become obese only because they were born via C-section. 

            Preventing obesity early in life certainly makes sense, but combining all of this together suggests that it won't be easy because there are so many possible factors involved, including pre-natal, the birth process itself, and post-natal.

            At the same time, with the possible exception of C-sections themselves, every one of the risk factors cited seems to involve fairly commonsense things that shouldn't be controversial, and should not be difficult to implement.  After all, it's common sense that:

  • Women who are pregnant should not smoke, should not gain too much weight during pregnancy, and should be careful about their blood sugar levels;
  • Mothers with infants should to take steps to avoid too much weigh gain in the child; should breast feed the child, preferably for a year; and should make sure the child gets at least 12 hours of sleep/might.

Except that it doesn't seem to be happening, at least for a fairly significant percentage of mothers.  The Project Viva data, cited earlier, suggested that only about 6% of young children should be obese.  Unfortunately, data suggest that over the past decade, about 17% of children are obese.  In the case of Latinos, it's around 21%.

            The rates of obesity seem to be increasing.  Data show that for children aged 6 – 11 years, the obesity rate has increased from 4% in the 1971-74 time frame to 18% in 2009-10.  For adolescents, it's gone from 6.1% to 18.4%. 

            So attention can, and should, be focused on getting children off to a healthy start in life, through proper pre-natal care, good birth care, and early life care. But if close to one fifth of adolescents are obese, we've got a problem that extends way beyond how mothers are caring for children through the first year of life.

            What makes this especially scary is when you consider the financial cost of obesity.  Most everyone realizes that waistlines are getting bigger, but how does that translate in terms of total healthcare spending?  Recently, it was estimated that fully 21% of medical spending in the USA is somehow related to obesity - $ 190.2 billion in the latest reported year.   To put that in perspective, this "obesity related healthcare spending" represents more than the entire economies of the majority of countries in the world!

            A good example of the problem is what happens when ordinary people show up at a hospital emergency room with chest pains.  If someone is overweight, the cost pretty much automatically goes up.  How much?  Here's a comparison of cost versus the cost of a person of normal weight:

- Overweight (but not obese)                          22% more

- Obese                                                            28% more

- Severely obese                                              41% more.

            Most healthcare spending is on the elderly.  Nothing surprising about that.  But think back to those statistics I cited earlier about the change in obesity levels over time.  Back in 1971-74, 4% of children were obese.  Four to five times as many are obese today.  If we're spending at our current rate on healthcare, and a fifth of spending is on obesity-related conditions, what's going to happen when the percentage of elderly people who were themselves obese as children quintuples? 

            I don't have an answer.  The Dominguez-Bello research cited earlier is certainly exciting, and may provide part of the answer.  I just think we need to realize there's no simple answer to the problem of obesity, but the problem is so big and scary, we need to find the answers to it. 

 

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Range anxiety continues to be a problem with electric vehicles. Wireless induction recharging may help to reduce range anxiety.

            One of the great fears about owning and driving an all-electric vehicle is running out of juice.   Most every driver has had the uncomfortable experience of seeing the gas gauge rapidly approach "Empty" and having to search for a gas station.  However, unless you're driving out in the country, a gas station is probably not too far away.  And if the dreaded event happens, and you do run out of gas, you can fairly easily get a container of gas from the nearest station, put it in your tank, then drive to the station.  A giant nuisance … maybe even a giant embarrassment … but actually pretty easy to resolve.

            But what if you're driving an all-electric vehicle?  There's no equivalent to a can of gas to stick in your tank.  So far as I know, no one makes a portable battery that you can attach to the car to give it enough fuel to get you to the nearest charging station.  And unlike gas stations, electric charging units are still not particularly commonplace. 

            Then when the driver is able to re-charge the vehicle, it takes a long time.  While the typical driver can put 15 or so gallons of gas in a vehicle in five minutes, re-charging an electric vehicle usually takes a minimum of 30 minutes at a high power charging station, and about six to eight hours if one plugs into an ordinary outlet.  The thought of spending 30 minutes in a charging station is very practical much of the time. 

            So it's quite understandable that lots of people are nervous about driving an all-electric vehicle for fear of running out of juice.

            It's an obvious problem, but maybe the real problem is that we're all working off of the wrong "mental model".  The "mental model" I'm referring to is the one about filling the tank of your auto with gas.  We're all in the habit of letting our gas tanks get close to empty, then refilling the tank until its full.  This model makes perfect sense when you think about the "nuisance factor" of putting petroleum in your auto or truck.  Filling the tank completely makes complete sense when the task is so annoying.

            But what if there was a different "mental model" about filling the tank?   The model I'm thinking about is related to the old riddle, how do you eat an elephant?  The answer, of course, is, one bite at a time.  If we apply this idea to putting fuel in your auto or truck, it would mean that we would add fuel to the vehicle a little bit at a time.  If it is a conventional vehicle, it would be as if you added one gallon of gas at a time.  Of course, it's pretty unlikely that you'll stop at a gas station fifteen different times, each time adding one gallon of gas, to refill the tank.  The same thing is true of an all-electric vehicle.  You're very unlikely to stop the vehicle, plug in to a charging station for a short time, then do that all over again a short time later.

            There's no way to get petroleum into your vehicle without attaching a hose to it, but there actually is a way to get electricity into an electric vehicle without attaching a cord to the vehicle.  As I'll show below, this could provide a convenient way to "eat the elephant", or recharge your electric vehicle.

            The idea is based upon the concept of induction.  Basic electromagnetic induction works by supplying power to a charging station that includes an induction coil.  The electric current causes the induction coil to create an electromagnetic field around itself   capable of transferring power to a second induction coil nearby.   Applying this principle, one can recharge an electric vehicle without plugging it in to the electric supply – cordless recharging.  The idea of wireless transfer of energy was first suggested more than a century ago by renowned inventor Nikola Tesla.

            Several companies now sell devices to provide cordless recharging.  One, named Evatran, sells a combination "pad" and "pickup" for between $ 2500 and $ 4000.  Another company, named Hevo, sells this for about $ 3,000.  The "pad" is attached to the source of the power supply.  The "pickup" is equivalent to the plug on the vehicle where one would normally plug in the power supply.  Electricity travels through the air from the pad to the pickup.

            Evatran was started in 2009 and the started selling its product to the public in 2014.

            BMW and Daimler, two of the big German automakers, have announced plans to develop wireless recharging systems, to be installed in a garage or carport.

            While it isn't an automaker, Qualcomm is reported to have developed a number products and tools that will be valuable in wireless recharging.

            How efficient is this "through the air" recharging?  Not quite as good as if a cord is involved, but it's pretty good.  When you plug in the power supply, you get about 95 to 99% efficiency.  In contrast, when you do it using an induction system, it's about 84 to 90% efficient.      

            The concept of "one bite at a time" re-charging is actually being used on some bus systems.  Milton Keynes, a town northwest of London in the UK, has one of its bus lines outfitted with induction charging.  Eight buses on Line 7 of the Milton Keynes system are all-electric, and each of the buses has been outfitted with an induction charging system.  When a bus reaches the end of the line and is ready to turn around, it pauses for two to four minutes for a quick recharge, then starts on another bus run.  Each bus is recharged this way throughout the day.

            The operators of the Milton Keynes bus system say they save about 80 cents/mile by running electric buses rather than diesel ones.  This is a combination of lower fuel costs and reduced engine repairs.  The eight electric buses on Line 7 run a combined 425,000 miles/year, so the marginal cost savings is about $ 340,000/year. 

            How much does it cost to install such a system?  Milton Keynes uses a charging system built by IPT Technology, a German company, and it costs about $ 130,000/charging pad.  Assuming one pad is placed at each end of the trolley line, the payback on any single trolley line is about 9 months, making this a very good investment.  The Milton Keynes bus operator is looking to convert other lines on the system.  Besides Milton Keynes, such wireless induction charging bus systems are run in Salt Lake City, five cities in California, and European cities such as Utrecht, Genoa, and Turin.  Los Angeles plans to install such a system next year.

            Wireless induction systems make great sense on bus lines, but could the same concept be applied elsewhere? I think the idea can also be applied to automobiles.  Now autos rarely travel along the typical fixed route of a bus, but I think the idea of periodic wireless recharging of autos and other vehicles, the core of the Milton Keynes system, is quite reasonable. 

            The obvious place to do this is in parking lots.  It's become increasingly common to see electric charging stations in parking lots, but it still requires one to attach a cord to the auto or truck.  Why not make it so the driver doesn't have to do anything more than park the vehicle in the space?  Wireless induction creates the possibility for that.  Here's how:

  • Imagine that the vehicle is outfitted with a standard "pickup".  It could be installed by the automaker.
  • Imagine, also, that the parking space has a built in "pad". 
  • The driver would park the car in the space.  He or she could then use a mobile phone app to instruct the pad to recharge the vehicle while it's parked.  Charging could be by the minute, with the "charging" charged to the driver's credit card.
  • Besides credit card billing information, the app could include instructions about whether the vehicle should be charged if peak load pricing is in effect.

More and more, drivers don't fumble for change on parking meters, choosing instead to pay for parking using a mobile phone app.  Why not do the same for electric charging?  Pretty much any parking space could be outfitted with a charging pad.

            The problem, of course, is who is going to pay to install charging pads?  How about the electric utility?  They have a natural interest in selling power.  But other parties could have an interest in selling electric power if they could be shown a way to make money doing it.  So how could someone make money selling power this way?

            Anyone who runs a business that has customers driving to store/office might want this.  Imagine having your customers park at your place of business, conduct business with you, then have the benefit of getting the auto at least partially recharged.  Doctors and dentists should love this.  I can't think of a time that I've ever been to a doctor or dentist and it took less than one hour.  In the space of one hour, my electric vehicle could at least be partially recharged.  Even if it recharges at the rate of a wall outlet, which usually takes 6 – 8 hours to recharge a vehicle, one could at least get a recharge of about 1/8 the total in an hour.  Typical electric vehicles now have a range of at least 250 miles, so one hour of recharging should provide at least an additional 30 miles.  If it's a fast recharger, it could easily completely re-charge the vehicle.

            Why might a business want to make this type of investment?  It might do it simply as a way to attract customers, but a more likely reason would be as a way to generate additional revenue.  The company could charge customers for electricity by the minute, the rate depending upon how fast the recharging system operates.  Presumably, it would charge a premium over what the driver would pay for electricity if he or she did the recharging at home, but because this is a convenience, most likely the driver will be willing to pay a premium. 

            Could wireless re-charging of vehicles be a viable business?  If re-charging pads can be sold for $ 2500 to $ 3000, I believe one can easily create a viable business with as little as $ 4.00 to $ 5.00 in revenue per charging pad per day.  This would be in addition to the cost of the power.  Assuming the charging station could be priced at $ 2.00/hour plus power, it would only need to be used 2 to 2 ½ hours each day.  Would drivers pay $ 2.00/hour to use such devices?  I believe they would, especially if they're concerned about running out of power.  Simple convenience suggests this makes a lot of sense.

            Alternatively, the electric utility might install these charging pads, then pay some type of rental fee to the owner of the parking lot.  Again, this could be a revenue opportunity for both the parking lot owner and the electric utility.  An electric utility might want to make these available, even providing the power for free at certain times of the day, simply to help reduce the load at other, peak times.  It's been reported that utilities in California are now experiencing excesses of power during the day due to solar installations, so providing free charging at certain times might benefit more than just the driver.

            Using the recharging service would be completely optional to the driver of the auto.  They key is to create a convenient, simple experience for the driver.  The ideal scenario is for the driver to park the car, the driver to use an app on his or her phone to instruct the charging device to recharge.  It might even be done more or less automatically.

            The core idea here is convenience and user experience.  The more that it can be made easy, the more likely is it for drivers to want to adopt electric vehicles.  The induction concept provides another way for the driver to avoid running out of power, and also a convenient way to add power.

            Induction based wireless charging will provide a convenient way to overcome the problem of "range anxiety", the fear of the car running out of juice.  It should provide one more way to make electrics the vehicle of choice in the days to come.

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Recent studies suggest it's more complicated than we thought.

            Hurricanes have definitely been in the news this year.  Storms named Harvey, Irma, and Maria did billions of dollars of damage.  We still haven't counted up the full cost.  Four weeks after Hurricane Maria tore up Puerto Rico, the vast majority of the island is still without power. 

            Without question, these were terrible storms.   Many quickly proclaimed that these storms must have been the result of global climate change, and the public should get prepared for many more.  But is that an accurate assessment?  The funny thing is that the same thing was said after Hurricane Katrina pounded the Gulf Coast in 2005, causing incredible destruction, including an unprecedented flood of New Orleans.

            And then another funny thing happened.  Not a single hurricane struck Florida, and not a single major hurricane (Category 3+) hit anywhere in the USA, for a decade. Of course, what about Hurricane Ike and Superstorm Sandy? Both were terrible storms, but Ike was Category 2 when it hit, and Sandy wasn't even officially a hurricane.  

            So what's happening?  Greenhouse gas emissions are causing changes in our climate.  I don't question that, but what that means seems to be uncertain.   That likely means even more uncertainty in the future, unless and until scientists gain a better understanding of the relationship between climate change and hurricane frequency and intensity.

            As a starting point for this discussion, consider how and why hurricanes form.  The most basic reason is because of a combination of warm ocean water and certain types of intense thunderstorm activity.  The rule of thumb is that the water temperature must be at least 79.5 degrees Fahrenheit to form and/or sustain a hurricane.  The absence of warm water seems to prevent hurricanes from forming and from sustaining.  That's why hurricanes break up when the encounter land.

            Water temperature in the Atlantic Basin didn't dramatically decrease during the years between Katrina and the 2017 hurricanes, so why did hurricane intensity go down?  Most likely because hurricane formation, strength and durability depend upon multiple factors, not just warm water and thunderstorms.  So let's take a look at what those appear to be.  I think you'll see that this is indeed very complicated, and thus we should be careful about our predictions of hurricane intensity due to global climate change.  With that in mind, let's take a look at what else may at play.

            One very key factor is what is called wind shear.  It has to do with differential wind speeds between the surface and up to the troposphere, around 40,000 feet above sea level.  Wind shear is a factor in both hurricanes as well as storms on land.  The interesting thing is that on land, wind shear can make storms more dangerous, especially with what are called supercells, but wind shear is probably the worst enemy a hurricane can have.  Wind shear, if it comes from a certain direction, tears hurricanes apart.  Interestingly, if the wind shear is from a north/south direction, it doesn't seem to affect the hurricane, but if it is from the east/west direction, it can be deadly.

            A 2007 study done by researchers at the University of Miami said that wind shear would likely reduce the frequency and intensity of hurricanes in the Atlantic Basin and the Eastern Pacific.  The data for the ten years up to 2017 seems to bear that out, at least for the Atlantic Basin.  At the same time, the Miami researchers said wind shear would likely have little effect on the frequency and intensity of hurricanes in the Western Pacific and Indian Oceans.

            Why the difference?  The Miami researchers hypothesized that this difference is due to what's called the "Walker circulation".  This phenomenon has to do with the interplay between a high pressure system that tends to reside over the Eastern Pacific and a low pressure one that tends to reside around Indonesia.  These two systems create a pressure gradient, and the interplay between the two is dynamic.  From time to time, the pressure gradient weakens, or reverses, and causes a phenomenon increasingly described in weather reports: El Nino.  Conversely, the Walker pressure gradient periodically strengthens, causing the opposite phenomenon: La Nina.  El Nino tends to warm the waters of the Eastern Pacific.  In the USA, the downside of El Nino is that there tend to be more tornadoes and other bad weather in the Southeast in the wintertime.  But the nice side benefit of El Nino is that hurricane activity in the Atlantic Basin goes down.  Conversely, in a La Nina, it tends to intensify.

            The Miami researchers hypothesized that Walker was weakening, suggesting more El Nino events.  That may have been happening over the past few years, and might explain the respite Florida had from hurricanes for ten years.  However, another study, called the Twentieth Century Re-Analysis Project, calls that into question.  The Twentieth Century Project has been accumulating world wide weather data for the period 1851-2014.  Researchers involved in the project say that they do not see any long term weakening or strengthening of the Walker circulation.

            In studying wind shear, other scientists have made another interesting observation.  It appears that where hurricanes are gaining their greatest intensity may be shifting.  Historically, hurricanes have been strongest in the lower latitudes, both in the Northern and Southern Hemispheres.  That makes intuitive sense because water temperatures closer to the Equator are likely to be more intense.  That's probably still the case, but peak hurricane intensity seems to be shifting away from the Equator, both in the North and South.  The cause of the move: wind shear.  The researchers found that closer to the Equator, increasing wind shear is weakening hurricanes, but farther away from the Equator, wind shear may be weakening, at least in a relative sense.  That would suggest that the latitude where hurricanes are most intense would be increasing over time.  In fact, the researchers note, that's what seems to be happening.  The bad news about that is that population centers in higher latitudes can expect more intense hurricanes over time, other things being equal.  Once again, however, the key variable appears to be wind shear.

            Why were Hurricanes Irma, and Maria so strong?  The evidence suggests that wind shear was pretty weak this year in the Atlantic Basin.

            Strong wind shear also seems to explain why hurricanes don't form in places like the South Atlantic.  Dr. Bill Gray, the noted Colorado State meteorologist who has long been an authority on hurricanes, said this is clearly the case for the South Atlantic.  Only one known hurricane, Hurricane Catarina, has formed in the South Atlantic, that being in 2004, even though water temperatures there are very warm.

            When it comes to hurricanes, wind shear may be our best friend, or at least the best weapon against hurricanes.  The good news is the hypothesis that climate change may be increasing wind shear.  In that case, higher water temperatures would be offset by increased wind shear.  That could explain why we had ten years of relative calm in the Atlantic Basin, bookended by several years of bad hurricane activity.

            But wind shear isn't the only variable to consider besides water temperature.  Another factor is what is called the Atlantic Multidecadal Oscillation.  Researchers such as Rong Zhang and Thomas Delworth have studied not only Atlantic Basin hurricanes but also rainfall in the Sahel region of Africa and the Indian Monsoon. Incidentally, Gilbert Walker of the "Walker circulation", described above, became famous because of his identification of patterns in the Indian monsoon at the beginning of the 20th century.  Zhang and Delworth, as well as others, have noted the relationship between these seemingly disparate weather events.  Thus, the frequency and intensity of Atlantic Basin hurricanes, as well as Sahel rainfall and Indian monsoons, may depend upon the Atlantic Multidecadal Oscillation (AMO).   What impact is climate change having on the AMO?  Unclear.

            But an even more intriguing, and recent, study suggests even another variable in determining hurricane intensity.  Earlier this month, Michael Toomey published findings online in Geology that about 12,000 years ago, Florida was ravaged by severe Category 5 hurricanes. The USA mainland was struck by Category 5 hurricanes only about four times in the past 100 years, but Toomey suggests it may have been worse back then.  Here's the amazing thing: Toomey says that the water temperature was likely lower back then. 

            How could that be?  Toomey believes that the hurricane suppressing effects of cooler water were outweighed by the side effects of slower ocean circulation. So the water might have been cooler even than now, but ocean currents were such that extremely powerful hurricanes ravaged Florida.

            That was 12,000 years ago.  What evidence does Toomey have?  He studied sediment cores of what are called Turbidites from the Dry Tortugas, a series of islands near Key West, Florida.  Turbidite is a rock that forms when sediments are disturbed and flow down across the ocean floor.  Turbidites are often the result of earthquakes, but there is no evidence of earthquakes in the Dry Tortugas, so there must be a different explanation.  Toomey believes the Turbidites were formed as the result of intense hurricanes.

            Toomey was able to measure the size of the Turbidites.  Those from about 12,000 years ago averaged 23 microns in diameter whereas more recent ones average 19 microns in diameter.  Micron size thus served as a proxy for hurricane intensity.

            What are we to conclude from all of this?  I think the key takeaway is that the effects of climate change are clearly complicated, maybe more complicated than we ever thought.  Once again, I am not denying that greenhouse gases are causing climate change.  However, what exactly is the relationship between climate change and hurricane frequency and intensity is up in the air.   Warmer waters certainly would suggest greater frequency and intensity, but as noted here, wind shear, ocean circulation, rain patterns on other continents, and the Atlantic Multidecadal Oscillation, also seem to play important roles.

            Given the reality of climate change, perhaps the best we can hope for is that climate change will affect wind shear, ocean currents and the oscillation in ways that will tend to reduce hurricane intensity and frequency.  In the meantime, when disasters like Hurricanes Harvey, Irma, and Maria occur, let's focus on helping victims.  We know what difference that will make.

            But even if hurricanes are becoming more frequent, and stronger, there are things we can and should be doing.  However, as I pointed out in a recent blog post, what we should be focusing on actually doesn't have anything to do with climate change.   That's not because climate change is unimportant (it is), just that we can and should focus on things we can more immediately control.  Those include strengthening building codes, controlling construction in flood zones, and stopping the artificial subsidization of flood insurance.  Doing those things will help us to control, or reduce, the cost hurricane damage.  We're not going to eliminate hurricanes, even if we completely eliminate climate change, but we can significantly reduce the cost of hurricane damage if we pursue some of these policies.

           

 

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The Underlying Reason We're Wasting Time When We Listen to the Predictions of "Experts"

            Ever wonder how predictions turn out?   When it comes to predictions about greenhouse gases, it's actually a case of great news and lousy news.

            First the great news:

  • Between 2005 and 2016, while the US economy grew by 17%, energy usage during that time actually was flat, yet CO2 emissions decreased by 14%;
  • Sulphur dioxide emissions have decreased by 82% since 2005;
  • Carbon dioxide emissions from coal are now back to the levels they were in 1978;
  • Carbon dioxide emissions related to electricity generation are down 25% from 2005 levels;
  • Energy costs now represent only 4.5% of household spending, the smallest share ever recorded.

Whether or not you believe in climate change (and I definitely do), you should find these data, as reported by the Natural Resources Defense Council, to be very encouraging.

            So what could be the lousy news?  It turns out the predictions made around 2006 for what 2016 would turn to be were wildly inaccurate.  Consider the chart above:

  • The 2006 prediction for CO2 emissions was 24% higher than the actual result, meaning that we actually reduced emissions substantially below where we expected;
  • The 2006 prediction for coal power generation was off by nearly half;
  • Installed solar and wind capacity turned out to be far higher than forecast.

This represented just a ten year prediction, and the prediction was pretty inaccurate.  Fortunately, it went in a favorable direction.

            These predictions are made every two years by the US government's Energy Information Administration.  Those who have studied the projections report that the projections are consistently wrong, sometimes spectacularly wrong.

            But it would be unfair for me to single out the people who made these energy predictions.  That's because the field of "lousy predictions" is quite crowded.  Consider some of the following:

  • A study done at Hamilton College in New York about the accuracy of the predictions of political pundits found those predictions were no more accurate than a coin toss. 
  • Governments tend to do a lousy job of picking high tech enterprises to back, what's sometimes referred to as "industrial policy".   Anyone remember the solar power company Solyndra?
  • If someone in 1987 was predicting what 2017 would look like, do you think they would have predicted any of the following:

          .. The demise of Japan as America's top economic competitor, replaced by China?

          .. The rise of the Internet, from an academic/military project almost to the     backbone of the world economy?

          .. The ubiquity of mobile phones?

          .. The growth of renewable energy?

          .. The reality of electric powered autos and airplanes?

Unfortunately, our record of making predictions about technology, as well as its impact on society, is about as good or bad as that of political pundits. 

            There is one big exception: Moore's Law.  Gordon Moore first formulated this "law" – that the number of transistors on a chip would double about every 18 months to two years – back in 1965, and the projections have been accurate for 50 years. 

            Which leads me to believe that the only three things we can really count on are the usual death and taxes, and also Moore's Law.  Most every other prediction should be taken with the proverbial grain of salt.

            Much beyond Moore's Law, our capacity to predict the impact of technology on our future is pretty lousy.  I think this observation can be applied across many technology topics, but I'd like to limit the discussion to greenhouse gases and global warming.  So what are the implications?

            The first, of course, is that we should take our forecasts of what the world will look like in 2027 and 2047 not with a grain of salt but rather with a heaping portion. Maybe we should simply ignore them.  Not because they were poorly constructed and not well thought out, and not because the underlying science is bad (it isn't), but rather because there may be simply too many variables.  Let's go back and consider why some of the 2006 predictions were so far off.

            One likely explanation is the large substitution of natural gas to replace coal in electric power generation.  The chart shows a giant substitution.  Why did this happen?  The key reason is because natural gas prices went down so much.  And why did those gas prices go down so much?  It was because of the fracking revolution. 

            Not many people predicted that.  Instead, you may recall, a few years ago there were predictions of "peak oil", meaning that the world was at, or near, its peak potential production of oil and that production would soon permanently decline.  I haven't heard much discussion of that idea recently. 

            Another is because wind and solar have had much greater acceptance than was predicted.  Hopefully, the current 2027 and 2047 are similarly understated. 

            The reduction in total energy consumed was definitely greater than expected.  One might argue that that was the result of lower than expected economic growth beginning in 2008.  Perhaps.  However, a more likely explanation is that business and industry continue to get more efficient.  The lean manufacturing revolution has certainly had an impact in that regard.  Another reason is because of the greater role of services, and relatively lower percentage of manufacturing, in the economy. The USA produces as much as it ever has, but it's doing it today with far fewer workers and other economic inputs.  Huge amounts of waste have been removed from processes.  Increases in efficiency explain why households are allocating a record low percentage of their budgets to electricity use.

            Not only do we do a lousy job of predicting the future, we humans also tend to do a lousy job of preparing for distant events.  Maybe that's because we're so good at responding to immediate threats and dangers.

            Why are we so good at responding to immediate threats?  It's because we're genetically hardwired to do that.  After all, when confronted with immediate threats, such as poisonous snakes and predatory animals, humans are very adept at rapid black and white thinking.  We may occasionally over react, but better to do that and still be alive than to under react and wake up dead.  Doubtless, a number of ancestors didn't respond quickly, and failed to pass their genes along.  We're the progeny of those who were very effective at responding to danger, real or perceived.

            But what's the typical reaction when the average person learns that something they're doing today could create a problem in ten, twenty or thirty years?  How most people approach diet and exercise should be instructive.  For most people, making changes to diet and exercise today in order to prepare for a problem that will likely occur in ten to thirty years doesn't get much response.  Do you really want to pass up that nice dessert after your dinner this evening in order to prepare for a potential problem with diabetes in 10 or 20 years?  Yes, a certain percentage of the population will do that, but most people don't. 

            Survival for humans, like all other species, has always depended upon successful reproduction from one generation to the next.  What might happen in 30 to 50 years just has never been relevant … until maybe now.  Genetically, however, every species is equipped to deal with only the next generation, not the distant future.

            So based upon all of this, when it comes to predictions about the future climate, I recommend the following:

Tune in ESPN's Sports Center or HGTV and Turn Off CNN, Fox, and MSNBC

            Why turn off CNN, Fox, MSNBC and their brethren?  Because based upon what I've pointed out, there's nothing particularly authoritative about what they're saying.  If their predictions are about as accurate as a coin toss, why not just get out your Ouija Board?  Notice, I'm not saying one network is right and the others are wrong.  The predictions of both progressives and conservatives are almost uniformly lousy.  Unless you're watching them for the pure entertainment value, if you want to watch politics, try C-SPAN. 

            Now if you're just watching TV for entertainment, consider what we do at my house: my wife watches HGTV and I watch SportsCenter on ESPN.  With hundreds of channels available, I'm sure you can find entertainment without the pretense of authoritative prediction.

            Now if you really do want to get the 2027 or 2047 predictions of the energy and climate parameters shown above, given everything I've said above, you may be searching for your version of the Holy Grail. 

            So does that mean everyone should just give up and tune out?  No, while we're pretty lousy at predicting the future, we're actually pretty good at creating it, if we focus our attention in the right places.  So with respect to climate change, what are those "right places"?  Let me suggest several of them.

#1: Encourage Funding of Basic Research, Technology, and Business Startups

            If you look back at why things didn't turn out, a key reason has to do with technological change.  Changes in fracking technology, as well as wind and solar technology, have profoundly re-ordered energy markets.  Then there's Elon Musk and Tesla.  Anyone want to claim they predicted that?  The investments that get made in technology will likely have a big impact over the next 10 to 30 years.  So how do we encourage this?  Here are several ideas:

  • Encourage funding of basic research at NASA and DARPA
  • Encourage basic research at universities and other institutions

Why NASA and DARPA?   Many technological innovations have been spun off from the space program over the past sixty years.  DARPA has conducted lots of research on behalf of the US military.  DARPA really did help create the Internet.  Both entities have produced impressive results that have been commercialized.  Moreover, both Democrats and Republicans seem to like NASA and DARPA.

            Another idea is to encourage business start ups.  Silicon Valley is, of course, the model here, and what's come out of Silicon Valley really impacted change between 1987 and 2017.

But we should be encouraging this all over the country.  A recent book by Ross Baird, entitled The Innovation Blind Spot, suggests that there's a great deal of innovation happening in places other than Silicon Valley, New York, and Boston, but we're overlooking much of it.   In fact, the next big idea may be from Santa Fe, not San Jose, if we would just pay attention.

#2: Focus Regulatory Change Efforts at the State and Local, Not National Level

            Unless you just arrived from Mars, you know that government at the federal level in the USA is grid-locked.    Each side blames the other one.  It's not likely to change any time soon.  Liberals and progressives have been whining that President Trump took the USA out of the Paris Climate Accord, and that there's a systematic effort afoot to deny climate change by the Administration. 

            Probably so.  So what are we going to do about it?  I say, stop whining and focus on what can be done.  Change may not be practical right now at the Federal level, but there's huge opportunity at the state and local level.  Here are some ideas:

  • Change building codes, which are local level, to encourage more environmentally friendly building materials.  We often forget that building materials make a huge contribution to greenhouse gases.  Lots of possibility here.
  • Take a cue from people like former New York Mayor Michael Bloomberg, who led a major effort while mayor to reduce greenhouse gases in New York.
  • Change how public utilities are regulated.  Most utility regulation is state and local.

#3: Find Ways to Incentive Businesses and People to Reduce Greenhouse Gases

            Recall how I noted that humans do a lousy job of reacting to problems that are 10, 20 or more years in the future, but that we do a great job reacting to the immediate things. 

That's part of the problem of getting people to be concerned about climate change.  But we humans tend to do a great job reacting to incentives that are right in front of our faces. 

            So if we want people to react to greenhouse gases, we're much more likely to get a response if we offer an immediate incentive that will bring long term benefits.  One possible incentive is to offer electric utilities a higher rate of return on wind and solar installations than fossil fuel ones.  Businesses, and individuals, react to incentives that are right in front of them, much more so than distant threats.

            Most likely, when we arrive at the year 2026, we'll find that the predictions we made in 2016 are significantly off.  If history repeats itself, we'll actually have constructed far more renewal energy capacity by 2026 than we've been predicting.  Even better, our CO2 emissions will be a good deal lower in 2026 than we've projected.  It's too bad we're lousy forecasters, but on the other hand, we've demonstrated that we're pretty good at creating technology that makes the predictions wrong.  So ignore the pundits and focus on the places where real change occurs.

 

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Lots of people are upset that President Trump is gutting the Clean Power Plan. Here are some practical responses to this.

            For many people, particularly environmental activists, the sky did really fall when US President Donald Trump took steps to gut the Clean Power Plan, the cornerstone environmental action of the Obama Administration.  On its face, the action looks like a body slam to steps taken to limit coal use in electric generation.  So if, like me, you're concerned about greenhouse gas emissions and global warming, what is the right response?

            The first thing I say is, time to stop whining about it.  The sky is not falling because of the Trump Administration's decision.  Instead, read on for some practical things that can be done.       

            Does Federal policy on climate really make that much difference?  I'm not so sure; and if it doesn't make that much difference, we should focus our attention on the things that really do make a difference.

            President Trump took his action to help save coal.  Scientific American reported that coal use was down 9% in 2016, the third year in a row that overall coal use has declined.  A good example of this trend is Duke Energy, a major electric utility in the Southeast.  Duke hs gone from 70% of electricity generated by coal in 2008 to 42% today.   So let's first ask, why is coal consumption going down?

             It's been declining for three key reasons: 1) Americans haven't been using as much electricity as before; 2) natural gas has become more competitive; and 3) alternative energy such as wind and solar have also become more cost competitive. While each of these factors is different, they share something in common: they're all about economics and have virtually nothing to do with Federal government policy.   

            So will Trump's new policy – gutting the Clean Power Plan – make a meaningful difference?  Many experts say that the trend away from coal is going to continue, even though President Trump effectively gutted the Clean Power Plan.

            So just why do I think Trump's decision will make a significant difference?  One part of the argument has to do with the plans of electric utilities themselves.  26 of the 50 US states sued to stop the Clean Power Plan from being implemented.  Presumably, these were the states controlled by Republican opponents of the Clean Power Plan, and skeptics of global warming.  Reuters did a survey of the 32 electric utilities that operate in those 26 states.  Here's what they told Reuters:

  • 20 said the Trump order will have no impact on their plans to reduce coal usage
  • 5 said they're reviewing the implications of the order
  • 6 provided no response
  • Only 1 of the 20 said it would prolong the life of coal facilities.

Even if the other 11 who were non-committal end up responding in a way favorable to Trump, nearly two thirds said they wouldn't. 

            I think one can make the argument that the Trump action against the Clean Power Plan is more sound and fury that signifies nothing. 

            But what if I'm wrong?  I readily admit, I could be completely wrong.  So assuming I'm wrong about the impact of Trump's action on coal usage, let me suggest five practical things that can be done to continue, even speed up, the demise of coal. Some of these may be a bit unexpected, but that's a key objective of this blog: provide unexpected perspectives on issues.  Here's what I think can be done:

#1: Promote Use of Fracking

            Promoting fracking may turn a number of environmental activists off.  I appreciate that, and I agree that fracking has environmental consequences, but promoting this in the short term makes great sense if your objective is to reduce greenhouse gases.  If you think fracking stinks, please hold your nose for a just a moment while I explain my thinking.        

            Let's go back to the two key reasons why coal is a dying industry: 1) improving economics for wind and solar; and 2) natural gas is more cost competitive.  The reason natural gas has become so cost competitive is because of the dramatic increase in supply in the USA.  That's due to one thing – fracking technology.  Admittedly, wind and solar are definitely more environmentally friendly that natural gas, but wind and solar cannot possibly replace coal the way that natural gas can, at least in the short term.  So for the short and near term, natural gas is a great alternative to coal.  Coal plants can be converted to natural gas, but you can't turn a coal plant into a solar or wind facility.  While it produces greenhouse gases, too, the greenhouse gas impact of gas is substantially less than coal.

            If you really don't like fracking, the next best alternative in the short term is to  import liquefied natural gas, especially from places like Qatar.  That however, has two huge disadvantages: 1) it worsens the balance of payments; and 2) it increases dependence on energy from the Middle East.  In comparison, promoting domestic fracking is one of the two best strategies for reducing coal usage.  The irony, of course, is that while the Trump Administration is trying to promote coal usage, its simultaneous promotion of the oil and gas industry works against coal.

#2: Promote Usage of Smart Metering by Utilities

            A second way to counteract the Trump action is to encourage electric utilities to expand usage of smart meters.  A smart meter can be remotely managed and can provide minute by minute information about electric usage.  Smart meters provide advantages to customers, utilities, and to the environment.   The advantages to customers include:

  • Far better data about usage
  • Useful data to help the customer adjust habits in a way that will reduce monthly bills
  • Reduce blackouts.

Smart meters are also very advantageous to the electric utility.  They:

  • Eliminate the need to send an army of people out to read meters
  • Provide more timely information about the electric grid
  • Permit the utility to utilize resources more efficiently
  • Permit dynamic pricing (i.e., different prices depending on the time of day)
  • Help avoid the cost of building new plants.

They're also beneficial to the environment because they reduce the need for new plants.

            Unquestionably, smart metering is something that's advantageous to consumers and the utility companies, themselves, and adoption should lead to reduced carbon emissions.  The even better news is that adoption has nothing to do with the Federal government.  The Trump action has zero impact on this.

            If smart metering is something that benefits companies and consumers alike, how do you encourage its adoption?  Get state utility commissions to provide incentives to companies to adopt the technology.  

#3: Get Investors to Pressure Electric Utilities to Switch Fuel Sources

            In the past few years, more and more companies have come under pressure from various advocacy groups, including investors, to change policies.  Climate change is an emerging area in that regard.  Interestingly, the Norwegian Sovereign Wealth Fund has been pressuring American utility companies not to build coal plants.  Why would this make any difference? 

            Norway has benefitted tremendously from drilling for North Sea oil.  Unlike citizens of most other countries with large oil deposits, the Norwegian government wisely established as sovereign wealth fund using royalties from North Sea oil.  The fund now has more than one trillion dollars in assets.  Needless to say, the Norwegian Sovereign Wealth Fund is a force to be reckoned with in investment circles. 

            Those concerned about greenhouse gas emissions will be pleased to learn that the Norwegian fund has been pressuring American electric utilities not to build coal plants.  Other investors and investor groups are doing the same.  If enough investors do this, I'm confident that electric utilities won't be building many coal plants, if any, irrespective of Trump Administration policy.  If your investors and customers pressure you to dump coal, doesn't matter much what the President thinks.

            Are there many investor groups that could put pressure on electric utilities to avoid coal?  I think there may be more than anyone realizes. 

#4: Encourage Foreign Investors, Particularly Canadians, to Keep Buying US Utilities

            Another unexpected approach is to encourage foreign companies, particularly Canadian ones, to purchase American electric utilities.  There are a number of reasons why it's attractive for Canadian companies to buy American electric utility companies.  In 2016 alone, three companies were purchased: Fortis bought ITC, Algonquin Power bought Empire District Electric, and Emera bought TECO.  None of these were particularly large transactions, but I expect that those opposed to greenhouse gases ought to be cheering each one.  The reason they should be happy is because Canadian companies appear concerned about greenhouse gases and don't want to invest in technologies such as coal.  Once again, this is something that will work counter to the Trump policy of encouraging coal consumption.

#5: Get Utility Ratemakers to Provide Higher Rates of Return on Alternatives

            The fifth strategy has the greatest potential to reduce greenhouse gas emissions from electric utilities.  Let me explain the basis for this.  Electric utilities are considered monopolies, and the price of electric service is normally set by state public utility ratemaking commissions.  Such ratemaking is done by the states, as opposed to the Federal government.  The rate that a utility may charge its customers is, generally speaking, governed by the following formula:

            R/kwh = O + (V – D)*r

where R = the electric utility's revenue

            kwh = total kilowatt hours

            O = operating costs of the utility

            V = amount of invested capital in the utility

            D = depreciation on the invested capital

            r  = allowable rate of return

Ratemaking for commercial and industrial customers is a little more complicated, particularly because of "demand" charges, but this simple formula should convey the core of the process.

            The allowable rate of return is determined by the public utility commission of each state.  My idea is to encourage these commissions to provide differential rates of return based upon the type of investment.  The idea is to offer the utility higher rates of return on more desirable forms of investment (e.g., wind and solar) and lower rates of  return on less desirable forms of investment (e.g., coal).  If electric utilities can earn higher rates of return on wind and solar and lower rates of return on coal, more than likely they will invest more in renewables and less in coal plants.  Again, these decisions are made at the state level, not Federal.

          Besides the fact that certain forms of energy are more desirable than others, is there any type of economic justification for this?  I believe the economic rationale for differential rates of return is the hidden costs of greenhouse gases.  Various estimates have been made of the cost of greenhouse gases.  Some have calculated it as $ 37/ton whereas others say it could be as much as $ 220/ton.  Let's assume, for the sake of argument, it's $ 100/ton.  Let's further assume that an electric utility has the choice of building one plant that is renewable and the other which is coal.  The two plants are projected to produce the same amount of electricity, but the coal plant will generate 10,000 tons of greenhouse gases/year.  Based upon the imputed cost of the greenhouse gases, that represents $ 1,000,000 in costs related to the greenhouse gases.  The state could encourage the company to build the renewables plant and split the $ 1.0 million in foregone cost of greenhouse gases, or $ 500,000.  If the cost of the plant is $ 100 million, it could increase the rate of return on $ 100 million by 0.5% (i.e., 500,000/$ 100 million).  The company and its shareholders would make the identical capital investment but would earn just that much more each year.  Likewise, the general public would benefit from the reduction in greenhouse gases. 

Thus, through the ratemaking process, the state could provide incentives to the company to invest in more efficient technologies by adjusting the allowable rate of return on the investment.   Of course, some would object, saying that electric utility rates would go up.  That's true, but I would make the argument that it would be a sign that consumers are paying the real cost of electricity generation.  Up to now, they haven't paid the true cost because the costs of greenhouse gases have been ignored.  Carbon taxes are a "no no", but a proxy for carbon taxes might be acceptable.          Differential rates of return could serve as a proxy for a carbon tax.

None of these ideas ought to be considered a panacea.   Instead, the point is to get everyone who is concerned about greenhouse gases to stop whining about what the Trump Administration has, or hasn't, done about emissions.  In the long term – meaning every four years – the public can express its opinion about what the Administration is doing.  In between, those concerned about things like greenhouse gases can, and should, use each problematic governmental decision as an opportunity to seek out an alternative.            

            Instead of whining about what "should have been", or "could have been", try to reframe the problem and consider it an opportunity to seek an unexpected perspective, and an unexpected answer.

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To help reduce greenhouse gases, hybrid electric aircraft are being developed; and they may have some unexpected benefits.

            It seems as though it was just yesterday that the idea of electric powered vehicles was a pipe dream, yet today both hybrid electric and fully electric vehicles whiz down ordinary streets in every town.  The same may soon be true for hybrid electric airplanes.  Airplanes? 

            Fully electric airplanes are already a reality, though not many people have ever seen one, much less flown in one.  In the summer of 2016 a plane called the e-Genius set seven new records as it flew over the Alps.  It was built by a team from the University of Stuttgart in Germany and flew non-stop for 300 miles at a speed up to 142 miles per hour.  That doesn't sound particularly impressive, until you also find out that it climbed to 20,000 in under two minutes!  That's notable for most any plane, but this one was all-electric!

            As with automobiles and trucks, battery technology has improved dramatically in the past few minutes, creating the possibility of hybrid and all electric vehicles.  However, it's one thing to use electric power to propel an auto or a truck, and something quite different to power an airplane.  This is because while the critical limiting factor for batteries in an auto or truck is cost, the limiting factor for an airplane is weight. 

            The challenge is to improve what's called the energy density of the battery.  Energy density is the amount of energy/cubic unit of the battery.  An important question to consider is, how many miles can the plane fly per pound of fuel or per pound of battery?  Today, it's estimated that 1000 pounds of jet fuel can take an airplane 14 times as far as 1000 pounds of battery.  The wings and fuselage must lift and propel the same 1000 pounds, be it fuel or energy, so the critical question is, which one can move the plane farther?  Right now, it's a slam dunk for jet fuel.

            Batteries, of course, keep improving.  Reports of the annual improvement vary, but a commonly stated number is 2 to 3 %.  Some quick math says that aircraft won't be able to have viable electric power propulsion systems for another 30 years.

            Despite that math, several companies say they'll have commercial hybrid electric aircraft available in just about 5 years.  If the energy efficiency math is correct, how is that possible?  The answer has to do with an entire "rethink" of the air transportation system.  You see, the expected appearance of hybrid electric aircraft in the next decade could change much more than just the propulsion system on the typical aircraft; and it just might usher in the latest example of what Harvard Business School Professor Clayton Christiansen calls "disruptive innovation".  Let's consider how this could happen.

            The Boeing 737, the workhorse short and mid-range aircraft of the past 40 to 50 years, probably won't have hybrid electric propulsion for another 30 years, maybe longer.  However, if some start up aircraft manufacturers have their way, you'll get your first ride on a hybrid plane in the early 2020's.  No, it won't be a 140 – 190 seat Boeing 737, or a Boeing 777, Airbus 319, or Airbus 380, it will likely be a 12 passenger seat plane.  The manufacturer?  A start up called Zunum Aero, located outside of Seattle. 

            Zunum recently released the following specifications for the plane they hope to begin flight testing as early as 2019:

  • 12 passengers (compared with 130 – 200+ passengers for the 737)
  • Take off distance of 2,200 feet (6,000 – 7,500 feet for the 737)
  • Flight range of 700 miles (3,500 to 3,800 miles for the 737)
  • Cruise speed of 340 mph (520 for the 737)

In terms of straight up comparison, we're talking two completely different birds.  The Zunum hybrid plane sounds like a toy compared to the workhorse 737, so why would anyone be impressed?

            Zunum, and possible "cousins" being built by companies such as Wright Electric, could be highly disruptive because they create the potential for an entirely new aviation market.  According to Clayton Christiansen, the Harvard expert, disruptive innovation tends to occur at the bottom end of the market.  The products can't compete with the incumbents because they're too small and have too limited a feature set.  The main market, and the marketplace leaders, tend to ignore these innovators at the bottom end of the market.  Eventually, however, the new entrants at the bottom end of the market become real competition for the main market.

            So how could hybrid electric aircraft be disruptive?  It's the classic one word answer for disruptive products: cost.  Zunum projects that its 12 passenger hybrid will be able to operate at a cost of $ 260/hour.  For anyone associated with commercial aviation, that's an astounding number.  The commercial sector tends to think in terms of ASM's, an abbreviation for available seat miles.  That's the number of seats on the plane times the number of miles the plane will fly, and those in the industry use ASM as a key metric.  Zunum projects that its ASM will be eight cents!  That's about one tenth the cost of a typical business jet today, meaning that Zunum could reduce the cost of a certain segment of aviation by an order of magnitude.

            So just how might a company disrupt commercial aviation with the hybrid electric engine?  By creating a practical alternative to the "hub and spoke" system that major airlines use.  Most people who fly commercially are familiar with hub and spoke.  Imagine that you're like me, a regular customer of United Airlines.  I live in the Tampa Bay, Florida area and fly to lots of places.  When I get on a United Airlines flight in Tampa, invariably I will fly either to Houston, Washington, Newark, Chicago, Denver, or San Francisco.  Most of the time my final destination isn't one of those six cities, but I won't get to my final destination without connecting through one of those hubs. 

            Pretty much every major airline uses a "hub and spoke" system, so most every airline also flies its passengers through hubs.  They're highly efficient, and permit the average passenger to fly to a large number of destinations at comparatively low cost.  What's not to like?  Plenty!  The big problem with "hub and spoke" is that it makes the trip just that much longer, and increases the potential for delays, lost luggage, and every imaginable form of aggravation.  Instead of one unpleasant plane ride, you get two or three!

            So hybrid electric aircraft, with a dramatically different cost structure, could create lots of new possibilities.  One can see right away two great potential benefits:

  • Commercial flights from lots of additional airports
  • More direct flights rather than connections through a hub, meaning much shorter elapsed time from origin to destination
  • The potential to simplify the process of getting on and off a plane
  • Much lower cost.

Consider that today, only about 2% of airports have commercial flights.   The fact that these new hybrid planes can take off on a 2,200 foot runway means far more airports could have commercial flights.  Use of smaller aircraft, with a much lower breakeven cost, means the possibility of far more "point to point" flights.

            The idea of replacing "hub and spoke" isn't new.  Various entrants to commercial aviation have been trying to do this for years.  One very promising entry was DayJet, a Florida based airline startup in the early 2000's.  Unfortunately, it hasn't worked.  DayJet took off and very soon landed in Chapter 7 bankruptcy liquidation.  But DayJet couldn't benefit from the expected economics of some of these new hybrids. 

            Of course, the new planes are still under development, but here are some possibilities to consider:

  • A trip from San Jose, California to Los Angeles presently takes about 4 hours and 40 minutes when flying, and costs about $ 160. 
  • Zunum expects it can reduce that trip to 2 hours and 15 minutes at a cost of $ 120, a third less.  It isn't that Zunum's plane will be flying faster (it won't), it's that smaller airports can be utilized. 

Rather than fly through big airports like LAX in Los Angeles, why not go out to a small local airport, park your car, then just get on the plane, maybe even without going through TSA?  Sign me up!  That's always been the great appeal of private aviation, just that you had to have at least $ 20 million in your bank account to participate.  Smaller, slower planes such as the one Zunum is promising could provide the tortoise to commercial aviation's hare, to borrow from Aesop, and make this available to everyone else.

            Hybrid aviation should often one other important benefit not yet mentioned.  In fact, this other benefit has been the real driver of the industry: lower carbon emissions.  Aviation is a major contributor to greenhouse gases worldwide, and it's expected to get much worse over the next 30 years with continued aviation expansion.  Hybrid technology, then all electric, could have a major impact on aviation-caused greenhouse gas emissions.

            Please remember, these aircraft are still under development so don't plan on booking a ticket any time soon, unless you happen to be a test pilot.  But they could have a dramatic impact on aviation, not simply because they should produce significant reductions in carbon emissions, but mainly, and unexpectedly, because their dramatically different economics could really change flying.  They could, in the parlance of Clayton Christiansen, be "disruptive innovators".   Not quite, but soon, ready for take off.

 

 

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Carl Treleaven is an entrepreneur, author, strong supporter of various non-profits, and committed Christian. He is CEO of Westlake Ventures, Inc., a company with diversified investments in printing and software.

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