Category Archives: Profits/Economy

Geoengineering solutions to climate change

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SuperFreakonomics was a good read and was my first ebook. I read it on the PC and iPhone using Amazon Kindle.

Their chapter on Global Warming had some interesting solutions from Intellectual Ventures on climate change. Here is the idea.

1. What is geoengineering?

“Geoengineering” describes how the earth’s systems can be influenced by engineering solutions. There are many historic examples of how humans have used technology to change geological systems. From using fire to drive game to building irrigation for agriculture, seeding clouds during droughts, reversing the Chicago River to building the Hoover dam, the term can encompass all sorts of ideas. Today, options discussed often include large-scale engineering of the environment in order to combat or counteract the adverse effects of human-induced changes in the atmosphere and climate.

2. Why is Intellectual Ventures researching geoengineering technologies?

Intellectual Ventures looks at hard problems facing the world and brainstorms ideas and technologies that can lead to better solutions. Global warming is a very significant problem, but it won’t be solved with old ideas and old technology alone. We believe that the solution to this crisis will involve new ideas and new technologies.

Intellectual Ventures recognizes that the process of bringing new global warming ideas to the surface can be challenging and controversial. But as an invention company, we believe research needs to be done now, rather than after the full complications of global warming are upon us.

3. What makes Intellectual Ventures’ approach to climate change different from the research that is already being done elsewhere?

Some people think that global warming can be solved purely by policy means: taxes, renewable requirements, or cap-and-trade systems. While such moves may be helpful, we are not convinced that they are sufficient for several reasons.

The first is that current climate science cannot say with certainty what level of CO2 can be tolerated by the climate system without severe consequences. Some scientists believe that even the current level of CO2 is dangerously high, while others are relatively comfortable with far higher levels. This matters because the more sensitive the climate is to CO2, the quicker and deeper cuts in emissions must be in order to avoid harmful environmental changes. We may be lucky, and the climate system may be relatively tolerant, or we may be unlucky and find that the necessary cuts must be deeper, or occur quicker, than the world can manage to do.

Second, there has been more talk than action. The world has made little progress in curbing large scale emissions of CO2 and other greenhouse gases. In order to make meaningful cuts in CO2 emissions there would need to be comprehensive and effective international agreements in place. So far, these have proven elusive.

Third, the task of retooling our energy infrastructure away from fossil fuels is a massive task, which is going to take a long time to accomplish. Indeed most of the world has not even made a meaningful start. New technology will speed the transition to a carbon-free energy infrastructure, but it is hard to estimate or have confidence in that can be accomplished quickly.

Fourth, and perhaps the most important, by the time if we should discover that the factors above are not favorable – and serious environmental harm starts to occur, it will be too late for conventional approaches to work. Once there is too much CO2 in the atmosphere, even if you stop emissions entirely, you will have problems for many decades to come. It is possible that this unhappy situation will not occur, either because the climate can tolerate a lot more CO2, or because the world achieves very significant emission reductions. However, if we do find ourselves in a bad scenario, geoengineering is one of the few alternatives for reducing harm to both human society and the environment.

Carbon emissions and basic algebra

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When the countries around the world announced emission reductions, cuts, plans the media cheered. However, if we all did some basic algebra it would be different.

For example, the US announced its plans based on 2005 rather than the 1990 conventional numbers used in Kyoto. Why? Because US emissions grew a lot from 1990 to 2005 and reductions from a large base is easier. Australia is using 2000.  China uses 2005 and India another number. So every country is talking a different benchmark. So, we cannot actually compare.

May be we should GDP per capita as a benchmark.

On the second set of numbers.  US announced reduction in carbon emissions and China, India announced carbon intensity reductions. Both are as different as apples to oranges. But the press misses this. For an example check out the Ny Times. Just to clarify, I support the carbon intensity focus of the developing countries. My gripe is with media reporting.

Some good analysis from Matthew Khan,

I am happy to hear that China has pledged to reduce its carbon intensity by 40% by 2020 but does this guarantee a smaller global carbon footprint? Recall that carbon intensity = tons of CO2/GNP. China’s economy has been growing by 8% per year. Make the big assumption that this average growth rate will continue until 2020 and ignore compounding. So, in ten years their economy will be 80% bigger and their carbon intensity will be 40% lower than it is now. So, according to my logic relative to today, China’s total carbon emissions will be .6*80% or 48% higher. From Al Gore’s standpoint, is that progress? At the same time that President Obama is pledging a 20% reducing in CO2 emissions (under these growth assumptions), China’s government is pledging that their emissions will be 48% higher.

Carbon models and economic models

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Don’t count on the economists to have a good “Computable General Equilibrium” model to yield valid estimates of how each nation’s economy will evolve in the presence of a carbon tax. If we introduced uncertainty into our models the confidence intervals would be huge. But today a group of economists are getting rich peddling their “scientific” models as truth in predicting very difficult policy counter-factuals.

The modern economics profession has made great progress estimating partial equilibrium relationships. See almost any NBER applied micro paper to get a taste of this. We have made much less progress on multi-sector dynamic general equilibrium models with endogenous innovation, irreversibilities, learning and uncertainty. Introduce all of these bells and whistles and you have the issue of climate change. Now economists like to be quoted and we are self confident but if we currently do not have good answers to policy questions should we follow the Nobel Laureate Robert Lucas and modestly say; “I don’t know”? If we follow this path, we are well aware that some bozo out there will fill our place offering the politicians an even sillier answer. So, we must pick our poison.

via Environmental and Urban Economics: Copenhagen and International Carbon Politics.

After the Nano, TATA releases the cheapest water purifier in the world at Rs.1000.

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Pure water is one of the world’s most precious natural resources. With much of India’s population denied access to safe drinking water, the delivery of safe, convenient and affordable water purification is one of the biggest social and technological challenges in the country today.

Responding to this challenge, Tata Chemicals today unveils ‘Tata Swach’ – a unique and innovative water purifier. Requiring no energy or running water to operate, an early version of the product first saw the light of day as part of the Tsunami relief efforts. Today, the replaceable filter-based product, which is entirely portable and based on low-cost natural ingredients, delivers safe drinking water at a new market benchmark of Rs30 per month for a family of five.

Speaking at the launch, Ratan Tata, Chairman, Tata Sons, said: “Safe drinking water is the most basic of human needs. The social cost of water contamination is already enormous and increases every year. Although today’s announcement is about giving millions more people affordable access to safe water, it is an important step in the long-term strategy to find a solution to provide affordable access to safe water for all.”

Tata Swach is the result of years of collaboration between several Tata companies, including TCS, Tata Chemicals and Titan Industries. Based on an innovative concept developed by the TCS Innovation Labs – TRDDC, the Swach technology combines low-cost ingredients such as rice husk ash with superior nanotechnology. The efficiency of the product has been rigorously tested to meet internationally accepted water purification standards.

Water-borne disease is the single greatest threat to global health, with diarrhoea, jaundice, typhoid, cholera, polio, and gastroenteritis spread by contaminated water. According to a 2007 United Nations report, half of the world’s hospital beds are occupied by patients suffering from water-borne diseases. In India, such diseases cause more than 1.5 times the deaths caused by Aids and double the deaths caused by road accidents.

via Tata group | Tata Chemicals | Media releases | Tata Chemicals launches ‘Tata Swach’.

Copenhagen Prediction Market (COPPM)

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Despite the general optimism in the lead-up to the conference, the chances of such deal still look to be at long odds. But if you want to play the climate change market, in the absence of our own ETS, there is a way. The UNSW Centre for Energy and Environmental Markets and legal firm Baker & McKenzie have set up a Copenhagen Predictions Market, in which participants using “experimental dollars” (E$s) can bet on a range of outcomes, such as deadlines for legally binding agreements, aggregate reduction targets, and the long term stabilisation target.

You can bet on an outcome of less than 10 per cent, between 10 and 15 per cent, between 15 per cent and 20 per cent, and so on. UNSW expects the price of these shares to vary as new information about negotiating positions becomes available. You can even bet on individual country reduction targets, including for Australia, and the design of REDD mechanisms (reducing emissions from deforestation and degradation) and the future of the CDM (clean development mechanism) market. There are no fees, and no real money at stake, but the three winners in each category will each get a prize.

via COPENHAGEN CALLING: Rudd’s cool reception – Giles Parkinson – News – Business Spectator.

Do we need to change behaviour at all?

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I have been writing about how Kevin Rudd’s plan to introduce carbon trading included payments to millions of households on the increase in expenses. I suggested that was the wrong thing to do and that we need to change behaviour of consumers to solve this.

What about the other side? What if the emissions reductions are possible through large systemic changes in electricity production, energy efficiency at the business level etc and leave the consumers out of it directly. Consumers will still pay for the increased business costs through increases in product costs however, that is dependent on the market (which is somewhat free in Australia).

In a way the business guys are better at doing this than each individual consumer. Let them sit back and have fun and pay a bit more in product expenses.

What say?

The best camera business model

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Well, Chase has just shown the way forward. Raised the bar a skyscraper’s height, but still, he has shown how to take the new media of social networking  and create something financially rewarding AND actually meaningful because people responded, en masse, to participate. And anytime you can create a community around something you have shown that you are doing something worth doing.

We all need to pay attention to this development. I mark it as the most significant synthesis of new media thinking and action within the photo community since… Photoshop?? Well, you can decide if I’m smoking something or not for yourself, but please check out what Chase is doing, it’s truly groundbreaking.

via DOUG MENUEZ 2.0: GO FAST, DON’T CRASH.

Audi clean diesel sedan wins ‘Green Car’ award beating the Prius

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Audi’s latest clean-diesel sedan, launched in the United States just last month, was named Green Car of the Year at the Los Angeles Auto show on Thursday, upsetting Toyota's popular Prius hybrid for the award.

The Audi A3 TDI, a premium hatchback that gets 42 miles (67.6 km) to the gallon on the highway, is the second clean-diesel vehicle in a row to claim the prize bestowed each year by Green Car Journal magazine. Last year's winner was the Audi A3's corporate cousin, a Volkswagen Jetta. Volkswagen AG (VOWG.DE) owns Audi.

Other finalists for this year's award included the Volkswagen Golf TDI clean-diesel, the Honda Insight hybrid, Ford's Mercury Milan hybrid and the Prius.

via Audi clean diesel sedan wins ‘Green Car’ award | Reuters.

Gaming the CDMs and carbon trading

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Under the CDM, the United Nations awards carbon credits to emissions-reducing projects in the developing world. When credits are sold on to rich countries, the buyers can count them towards their Kyoto emissions targets. Supposed to kill two birds with one stone – reduce emissions and transfer money and technology to the poor – this was, however, never likely to work.

The CDM inherits the UN’s suffocating bureaucracy, so smaller projects struggle to gain approval. But more important than what it keeps out is what it lets in. The criterion of “additionality” is supposed to rule out projects that would not be undertaken without CDM payments. Not only is this counterfactual approach utterly unverifiable; it is also an ideal target for gaming.

The Chinese wind farms are a case in point: Beijing allegedly lowered their subsidies to make them eligible for CDM. The accusation plays right into the hands of the opposition to emissions cuts in the US. Congress threw out Kyoto because China and India were let off without obligations. A US public convinced that poor countries game the system would kill any prospect for a Copenhagen deal.

via FT.com / Comment / Editorial – Anticlimatic policy.

What the iPod tells us about Britain’s economic future – Telegraph Blogs

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First, nationality matters. While the iPod is manufactured offshore and has a global roster of suppliers, the greatest benefits from this innovation go to Apple, an American company, with predominantly American employees and stockholders who reap the benefits… Apple keeps its product design, software development, product management, marketing and other high value functions in the U.S. This is not necessarily because the U.S. work force has superior capabilities in all of these areas, but because Apple has developed very specialized knowledge and ways of doing things that reside within the company and would be difficult to transfer to external locations.

Second, innovation matters. The producers of high value, critical components capture a large share of the value of an innovative product… For the 30GB Video iPod, the highest-value components are the hard drive and the display, both supplied by Japanese companies. Thus Japan captures the next largest share of the value of the iPod, thanks to its companies’ strengths in those technologies. US chip makers such as Broadcom and PortalPlayer [one might also add Wolfson of Edinburgh which provides the audio codex chip] provide less costly inputs, but earn high margins and thus bring additional value to the U.S. By contrast, Inventec, which was actually responsible for assembly of this iPod (the activity that most people think of as “making” a product), earns a relatively modest share of its value. So in general, the greatest value from providing inputs to an innovative product goes to the countries whose firms provide critical, differentiated technologies.

Third, trade statistics can mislead as much as inform. For every $299 iPod sold in the U.S., the politically volatile U.S. trade deficit with China increased by about $150 (the factory cost) plus the cost of shipping. Yet the value added to the product through assembly in China is at most a few dollars. Even if we included the direct labor involved in making various parts and components in China, it would still add only marginally to China’s share of the value.

via What the iPod tells us about Britain’s economic future – Telegraph Blogs.