April 27, 2010

Will energy alternatives be too expensive? Feasibility vs Competitiveness:

Chemical companies like Dupont still use oil as chemical feedstock to make plastics, glues, etc because it is still cheaper than alternatives. Won't alternatives raise prices and therefore lower living standards?

Yes, but not much. There is a basic paradigm that's useful here: "feasibility" vs "competitiveness". In most industries a very small cost difference can make you uncompetitive. That means that slightly higher cost solutions will be avoided, which can give the impression that those solutions are higher cost than they are. On the other hand, if changes in the business environment (or natural environment!) change the costs of alternatives for everyone, suddenly alternatives can become acceptable in that industry.

So, for instance, recycled materials are in general slightly more expensive than virgin materials, plastic included. But, if oil becomes more expensive then recycled materials may suddenly become the standard. If something can be recycled with only 10% loss at each generation, that can reduce the consumption of virgin materials by 90%, with only a very small additional cost for the industry.

Similarly, electric vehicles cost more than internal combustion engines fueled by dirt cheap gasoline. But, they don't cost any more than ICEs when gasoline reaches $3 per gallon, a level we only reached relatively recently.

Another example: Observers of the coal indutry sometimes think that "The cheapest and best coal is gone." But the US has a lot of Illinois Basin coal, and it's both high quality, and from a larger perspective only slightly more expensive to handle due to it's sulfur content. In a competitive environment, it's winner takes all, and only slightly more costly sellers lose out completely.

So, we have to "think outside the box", and consider that we could have whole industries that eliminate oil entirely, at a cost which is surprisingly affordable.

Why didn't we do that a long time ago, then?

Because, change is painful, and we don't do it if we don't have to, as I talked about in my last post.

April 22, 2010

Will we prevent climate change?

I see huge amounts of disinformation in the media that discourage recognition of the seriousness of Climate Change. Most people seem to be in denial, and polls show that in the US that action to prevent CC is losing support.

Will we prevent climate change in time?

No, I'm pessimistic that we will. Basically, those who stand to lose because of change (either jobs, careers, or investments) fight change very, very tenaciously. They buy media outlets, they create think-tanks, they buy advertising, they buy politicians, etc, etc. The potential losers fight change with an intensity that is much, much stronger than the energy that comes from people who want change.

I see dramatic change to prevent AGW as pretty unlikely. OTOH, I'm a bit encouraged by this article:

"If you looked merely at the realm of politics, it would be easy to believe that the question, “Is climate change really happening?” is still unresolved....A spring Gallup study found that Americans’ concern over global warming peaked two years ago, and has steadily declined since.

But there’s one area where doubt hasn’t grown — and where, indeed, people are more and more certain that climate change is not only real, but imminent: The world of industry and commerce.

Companies, of course, exist to make money. That’s often what makes them seem so rapacious. But their primal greed also plants them inevitably in the “reality-based community.” If a firm’s bottom line is going to be affected by a changing climate — say, when its supply chains dry up because of drought, or its real estate gets swamped by sea-level rise — then it doesn’t particularly matter whether or not the executives want to believe in climate change. Railing at scientists for massaging tree-ring statistics won’t stop the globe from warming if the globe is actually, you know, warming. The same applies in reverse, as the folks at Beluga Shipping adroitly realized: If there are serious bucks to be made from the changing climate, then the free market is almost certainly going to jump at it.

This makes capitalism a curiously bracing mechanism for cutting through ideological haze and manufactured doubt. Politicians or pundits can distort or cherry-pick climate science any way they want to try and gain temporary influence with the public. But any serious industrialist who’s facing “climate exposure” — as it’s now called by money managers — cannot afford to engage in that sort of self-delusion. Spend a couple of hours wandering through the websites of various industrial associations — aluminum manufacturers, real-estate agents, wineries, agribusinesses, take your pick — and you’ll find straightforward statements about the grim reality of climate change that wouldn’t seem out of place coming from Greenpeace. Last year Wall Street analysts issued 214 reports assessing the potential risks and opportunities that will come out of a warming world. One by McKinsey & Co. argued that climate change will shake up industries with the same force that mobile phones reshaped communications.

More here: http://www.wired.com/wiredscience/2010/04/climate-desk-corporations-risk

April 10, 2010

Are Electric Vehicles inevitable?

Yes, says Eric Kriss (and I agree).

"A hundred years from now, historians may view the early evolution of the automobile as something of a happy confluence of unlikely events that could never be sustained; the electric car was completely inevitable, notwithstanding the gas-powered blip of the 20th century.

“You may find it remarkable,” a professor in 2108 might tell her (virtual) classroom, “but in 2008 everyone drove cars powered by petroleum engines so hot they could boil water and so poisonous they could kill you within the hour if left running in your closed garage.” But let's start at the beginning: 127 years ago.

The beginning

The first automobile, introduced at an 1881 exhibition in Paris, was – surprisingly – an electric one. But the internal combustion engine quickly eclipsed the electric motor due to the unique physical qualities of gasoline, refined in Russia for the first time in the 1860s. A German mechanical genius, Karl Benz, conceptualized the gasoline engine in the late 1870s, and just four years after the first electric car's premiere in Paris, the first gaspowered vehicle – a Benz, naturally – was introduced to the public, and the fledgling automotive industry never looked back."

See the rest here: http://fairislepress.com/dl.php?file=InevitableElectrics.pdf

April 7, 2010

Why do people resist change?

The coverage of the coal mining accident in West Virginia made me think about the fight to eliminate coal, and the resistance that has stirred up. Sometimes people suggest that resistance to change is just a lack of enlightened leadership and a reluctant-to-change populace, due to ignorance.

So, why do people resist change?

People are afraid of change, and with good reason. When new tech arrives, companies move staff, companies shrink, whole industries shrink and shift. Old careers become obsolete. People lose jobs, or their careers stagnate. Other people gain jobs, and do better, but there are winners and losers.

Change is good overall, but some people know they'll be hurt, and others are afraid.

Just one example: I recently read that coal mining jobs pay 3x as much as anything else available in the area. Despite the risks, and the environmental devastation, you won't convince most West Virginians that shrinking coal mining is a good idea.

Does that mean we shouldn't fight to eliminate coal? No. But it does mean we should be realistic about some people fighting back. We need to be compassionate, see their realistic fears, and find ways to help them, and convert them to...not allies, perhaps, but at least something other than enemies who will fight to the death with any weapon (votes, lies, etc).