World is Green

Taking from where the Nytimes suggested the increase in public transport usage in America, Krugman says that:

But … as of 2005, only 4.7 percent of American workers took mass transit to work. So even a 10% surge in mass transit ridership would take only around half a percent of drivers off the road.

The point isn’t that nothing can be done — it’s just that serious reductions in driving would require a lot of long-term rearrangement of the way we live. It will come — but not quickly.

More on comparisons between, US, Canada and Europe,

A tale of three cities

What’s more, as far as I can make out from the data, a lot more Canadians than Americans (as a percentage of the population) have switched to public transit over the past year; because the system is there, they have more flexibility.

All in all, this comparison is a reason not to believe apocalyptic warnings about the long-run effects of energy scarcity: there’s a lot of substitution possible. America’s main problem is that we have a capital stock — cars, public infrastructure, and housing — designed for dirt-cheap oil. And the transition may be nasty.

The Nytimes writes that:

With the price of gas approaching $4 a gallon, more commuters are abandoning their cars and taking the train or bus instead.

Sreenivas Ghatty points me to a interview with Thomas M. Connelly, Executive Vice President & Chief Innovation Officer of DuPont. The main important part of the interview is the discussion on the food vs fuel debate in bio fuels.

But how is it that DuPont, which thinks much ahead of others, was caught on the wrong foot on this issue of using food crops?

It is not a question we did not recognise. We thought the timescale on which we will move there would be different. Keep in mind, for example, that certain other agricultural commodities were trading at low prices for decades. And frankly, many farmers were looking for additional markets for their products.

So while we recognised that in time the supply trends would become a limiting factor, that the grand plan would accelerate in a matter of five years we never anticipated. We thought it would be at least ten years. The pace at which this has been progressing has been surprising to us.

I think it is because of the global emphasis on climate change, run up in the prices of petroleum. All these are pushing us to non-food crop sources of carbon material for the production of fuel.

I should say we anticipated the direction but not the speed at which we would reach there.

This is the interesting part. How fast the food prices have gone up and the increasing ban on exports from various countries. In some cases, countries like India are ready to sacrifice growth to curb food inflation.

Carbon trading scheme to exceed federal bonds

Anthony Collins…

“The value of the permits is likely to be issued over the first 10 years [and] is likely to exceed $100 billion,” he said.

“That’s going to be larger than the value of Commonwealth Government bonds on issue today.”

Harold Lubansky has suggested a radical way to control inflation in Australia and at the same time fund green projects.

From The Age:

Mr Lubansky proposes the creation of a National Climate Change Savings Scheme into which Australians earning a net income of $38,000 a year or more would contribute.

Instead of the Reserve Bank needing to lift interest rates in a bid to control inflation, the central bank would be given powers to order a payment into the climate change fund.

“What it does is work to soak up excess liquidity. Raising interest rates limits the amount we have to spend, spending less elsewhere decreases the pressure on supply and that decreases the upward pressure to raise prices. This would act similarly,” Mr Lubansky said.

Under the Lubansky proposal, those earning $38,000 a year would be charged $250, or 0.66% of net disposable income, instead of paying 0.25% more on their mortgage. It rises to $2500, or 1%, for those earning $250,000 a year.

Unlike mortgage repayments which are never seen again, the money paid into the fund would be returned to individuals to spend on legislated carbon abatement measures such as solar panels, the differential cost on hybrid cars and infrastructure for green power.

I am not qualified enough to comment on this but it does sound an innovative way. Any comments?

Source: The Economist

 Andrew Leonard on the first carbon taxes in the world in a discussion on carbon sequestration.

 So imagine our surprise upon learning that Norway’s state-owned oil company, StatoilHydro, has already sequestered some ten million tons of carbon dioxide offshore, in a sandstone formation 1000 meters under the seabed, near the Sleipner offshore gas platform. StatoilHydro started burying CO2 beneath the ocean all the way back in 1996.

How prescient! But perhaps not so surprising. Norway first imposed a stiff carbon tax of $50 a ton on its oil and gas industry in 1991, providing a significant impetus for the industry to minimize its emissions.

1991! In the United States, a “carbon tax” is seen as a death knell for any politician so foolhardy as to endorse such an economy-killing idea. The people would never stand for it, and the energy industry would fight to the death to stop any such madness.

Funny thing, though. Finland instituted a carbon tax on fossil fuels in 1990 — the first country to do so. Norway and Sweden followed in 1991, and Denmark and the Netherlands in 1992.

And somehow, all those nations have managed to survive.

But what I take away from the combination of Borenstein and Wheeler’s paper is that in choosing between various kinds of renewable technologies, figuring out the carbon dioxide price point at which a particular renewable source of energy becomes cost-competitive with a fossil-fuel energy source is critical. If it’s $600 per ton, forget about it. If it’s $30, full speed ahead.

Andrew Winston on two studies on the cost of carbon required to make solar competitive.

The basic idea: Boosting the cost of anything containing carbon – the main greenhouse gas – would compel industries and consumers to seek cheaper alternatives. They’d switch to cleaner fuels or consume less – either by adopting more efficient technologies or simply reducing their activity. Presumably, the alternatives would be better for the environment.

The problem: No government appears willing to impose a cost high enough to actually change behaviour. And while several industry groups argue pricing carbon is a good idea, their enthusiasm is less than it seems.

For more, The Oil Drum.

Economic incentives are strong motivations to change the behaviour of consumers. One such incentive is being rolled out in South Australia.

The SA government has passed the Feed-in-tariff bill in both the houses and this has led to an opportunity to increase the solar power installation in households across the state.

What is the feed-in-tariff. According to Wikipedia:

A Feed-in Tariff (FiT, FiL, Feed-in Law or solar premium^[1] is an incentive structure that boosts the adoption of renewable energy through government legislation. The regional or national electricity utilities are obligated to buy renewable electricity (electricity generated from renewable sources such as solar photovoltaics, wind power, biomass, and geothermal power) at above market rates.

This difference in price covers the cost disadvantages of adopting renewable energy sources, and the rate differs between the different forms of power generation.

In SA’s case, the legislation covers for solar systems installed by small customers (this includes households and small businesses). The legislation ends on 30 June 2028 giving a period of 20 years from this June to recover the cost.

The legislation mandates energy retailers to pay these customers a charge of $0.44 per KwH compared to the current cost of $ 0.18 per KwH for energy in South Australia for energy usage in excess of consumption. In European schemes and other countries, the charge is mandated for all energy created by the solar systems.

In addition to this there is the  Photovoltaic Rebate Program (PVRP) by the Federal government which provides $8/W of installed capacity upto a maximum of $8,000 or 1KW of installed capacity.

This can be enhanced by the Renewable Energy Certificate (RECs) which provides you with a “carbon credit” for the renewable energy used. REC is created for each megawatt-hour of eligible renewable electricity generated or deemed to have generated. The price of RECs change on a daily basis. These can be used for Solar, wind or small hydro electric. They can also be used for Solar hot water systems. You can find the registered list here.

Various government rebate information can be found at the Solar Shop.

In the end, what is the payback for solar systems?

A sample solar power payback calculated by Eenrgy matters which show a simple payback period of 13.69 years without the feed-in-tariff. A more detailed and better analysis is conducted by Mike Bassett-Smith and Shane Robinson of Powersmart NZ. This was conducted for NZ which take into account one-on-one price provided by the utility (no feed-in tariff), no federal government rebate, no RECs but consider the reduction in electricity costs and increased value of property. The result: a payback in 10 years. Mike worked in the investment banking industry before founding Power Smart and he basis his product (grid connected solar systems) as an investment with comparable returns to a government bond and other investments.

It will be really interesting to see the real pay back in South Australia for a similar analysis.