Fairhaven, The River

The good, bad, and the ugly

Summary: Examples of good climate investment and a bad investment.  Unfortunately, the environmentalist hucksters are pushing the bad investments constantly.  The crony capitalists are doing worse.

The good

This summer the Tower 55 project got funding.  It's a $90 million construction job fixing a major railroad bottleneck, eliminating mutual traffic interference with local highways, and improving traffic flow for rail and roads.  It will be $40 million of government funds (for the highway work) and $50 million in private funds (for the rail, environmental, legal, admin, etc.).  Esitmated carbon reduction is 180 million lbs, giving a cost of $1000/ton for carbon reductions.

There are many projects like this, both large and small: CREATE, Heartland Corridor, TIGER,...

The bad

I reviewed the financial proposals for a local solar power park.  This will be a $12 million investment, paid for primarily by tax credits on the contruction (3 million) and green energy credits for electricity production (9 million).  The unadjusted revenue from power generation basically covers the operation and maintenance costs.  It will eliminate 3 million lbs of carbon, giving a cost of $8000/ton for carbon reductions.

There are far too many projects like this being pushed.  In terms of both economic impact and climate impact, this money should go the projects like Tower 55.  But this one will probably be funded.  The environmentalist hucksters want publicity, shiny toys, etc.  Actual climate impact comparisons are not part of their creed.

The ugly

The extensive corruption and mismanagement of government agencies and funds is surfacing with new stories weekly from the US, India, and elsewhere.  Crony capitalism is well entrenched and has found many ways to extract money from environmental concerns.

Part of dealing with this is to always ask "what will the cost per ton of carbon reductions be?"  Cost must include construction costs, subsidies, tax credits, incentives, etc.  Look at the total social cost.  Then compare projects.  For organizations with a track record, also compare their original estimates with the actual results upon project completion.  It's a modest step that is easy to explain and easy to justify.  It's enough to make a big shift away from bad projects to good projects.

A note on energy efficiency

I haven't ranted much lately about energy efficiency for the simple reason that it's becoming widely adopted and its saving a lot of energy.  The eco-activists are still unhappy.  I've even read some VC complaining bitterly that people are spending their money on energy efficiency rather than the VC's new alternative energy thing.

Press coverage is rare because the buyers are doing this to save money, so why waste money on PR efforts?  Sometimes you do get energy control companies that think the PR is worthwhile, especially for famous buildings.  But most of the saving is from small renovations and replacement of facilities and equipment.  Those don't make the news.

So it was nice to see the net effect is large enough that it now sometimes makes the news.

Hurricanes and Global Warming

Since there is a hurricane approaching the US coast, it's time to finally write this one.

A few years ago a paper was published in Nature that basically said:

If A, and B, and C, .... then there would be more hurricanes globally.

This is a fairly typical structure for a hypothesis.  But it struck me as odd that it was published in Nature.  Simple hypotheses like this are usually published in more specialized journals where they can attract the interest of other specialists who can contribute analysis of the proposal and data to confirm or deny the hypothesis.  The synchronized PR campaign and publicity explained this anomaly.  I've seen this before where a hypothetical is used as the basis for political campaigns. 

This particular hypothesis included two initial hypotheticals:

1. It hypothesized that hurricane frequency and intensity would increase if the temperature gradient between equator and poles increased.  This is not proven.  There are theoretical reasons that this might be the case, but there are others that would indicate the contrary.
2. It hypothesized that global warming would increase this temperature gradient.  Again, there are good theoretical arguments for and against.

After lots of publicity came the big lie, and it's a whopper.  It's another example of facts being irrelevant.  Examination of global hurricane data shows no significant change in hurricane frequency.  At the same time the press were bellowing about the increase in hurricane activity, the actual level was slightly below average.  The difference was that Katrina and a few other hurricanes hit the US.  That generates lots of publicity.

There is a recent increase in North Atlantic activity, which definitely excites lots of publicity.   There are claims that this is evidence for global warming, but the hypothesis was about global affects, not a local Atlantic effect.  The North Atlantic variability is a known weather cycle, although the underlying physics remain a mystery.  The current higher levels were first predicted in a 1955 report to the US Insurance industry.  The only reason it's a surprise to the public is the unwillingness of the public to hear the associated message about the dangers of building in dangerous locations.

But this all has nothing to do with the understanding, reality, or characteristics of global warming.   The absence of a global increase in hurricanes does not mean there is no global warming.  It might mean that global warming does not increase the temperature gradient, or that increased temperature gradient does not increase hurricane activity.

This could have been a quiet internal working paper.  But instead it was turned into a big political campaign, complete with misrepresentation of the paper, the real data, etc. 

2009 Paper Recycling

About a year ago I was wondering how the recession would affect paper recycling in the US.  The answer is that it probably increased recycling percentages.  The 2009 figure was 63.4% recovered paper, up a lot from 2008's 57.7%.  I guess people took advantage of every opportunity to save pennies.  Now I get to wonder whether this will stick.  The long term trend has been an increase of about 1% per year since 1970, with noticeable flat spots and jumps in recycling.

I wouldn't be surprised to see the percentage stay flat for a few years.  The economic recession did reduce paper production, making it easier to collect the 64% because new factories and systems were not needed.  Instead production could shift from lower percentage facilities to higher percentage facilities.  I also expect it to continue to increase as more people and commercial users learn techniques to gather used paper with less inconvenience and cost.  Their experience will show that there are definite financial benefits to well organized recycling efforts, and this experience will continue to spread.

CFLs are succeeding

The latest NEMA numbers for CFL sales indicate significant success.  Unfortunately, the press release doesn't do the numbers for the press, and the press and public are innumerate.  So they are interpreting the numbers as indicating problems.

The past three years have shown CFL sales at 28, 20, and 24% of total bulb sales.  This is after a fairly rapid ramp up from a few percent.  This indicates a huge success, but that is obscured by the difference in bulb lifespan. 

Consider a steady state situation where half the use is CFL and half the use is incandescents.  CFL's last 8 times longer than incandescents.  So for every CFL that needs replacing, there will be eight incandescent replacements.  That's an 11% market share for CFLs.  The following matrix shows the bulb sales share for different steady state situations, with both a five and eight times life (because for several years there were quality problems with some of the CFL makers).

Expected CFL sales percentage

Market penetration	5* Longer	8* Longer
50%	0.19	0.11
60%	0.23	0.16
70%	0.32	0.23
80%	0.44	0.33
90%	0.64	0.53

If the present situation is steady state, the current sales percentage would mean 60 to 75% of installed bulb usage is CFLs.  If lifespan is 8 times longer and current installed bulb usage is 50%, then installed usage increased by 13% last year to 63%.  Either way these numbers indicate a substantial success for CFLs.

(This analysis does not incorporate the lag effect from longer life.  CFLs sold this year will not need replacement for several years, which means that each sale that replaces an incandescent means no bulb sale at all for a few years.  This will also cause a temporary dip in CFL sales as they replace the incandescents but don't yet need replacement themselves.)

Public acceptance of CFLs

I see a new push of frivolous polls about the public attitudes toward various energy efficiency activities.  I call them frivolous because they seem designed to confuse rather than inform.  They paired questions like "Is it good to walk to work?" (lots of yes answers) with the responses to "Do you walk to work?" (lots of no answers).  It's impractical for people to change this sort of behavior.  They have to change jobs, relocate, or both to make this kind of change.  Substantive change will take many years.  This makes questions like these frivolous.

More serious and accurate answers are available for some kinds of behavior.  For example, the statistics for CFL usage can be obtained with accuracy by looking at sales data.  People may lie and polls can only statistically sample at best. Actual sales figures are available.  Unfortunately, 2009 is not yet published, but you can see a serious change start in 2005 and accelerate through 2007.  The energy impact is larger than the graphs would imply.  CFLs last 5-10 times longer than incandescent sales.

Those graphs are also normalized to 2006.  In 2006 the actual CFL bulbs sold was about 100 million, and the actual incandescent bulbs sold was about 1,600 million.  So that gradual drop in incandescent bulbs sold is actually a large reduction.  The 24% CFL sales means continued substantial erosion of incandescent sales.  The longer life should also result in both  incandescent and CFL sales dropping.  There are early hints of that in the 2008 data.

There is an new example of how the Congressional micro-management and mercantilism can be counter productive.  The DOE just this month issued the regulation allowing stimulus funding to be used for purchase of CFLs.  There are no US makers of CFLs, so the "buy american" portions of the spending bills has prevented use of stimulus money for their purchase.  Now it is permitted.

Another profitable Amtrak extension

It appears that the incremental extensions to existing Amtrak routes are showing "profits".  The cost accounting structure for Amtrak costs are sufficiently complex that I feel it necessary to put that word in quotes.  But it's clear that these are at least cash flow positive.  The most recent is the extension of some NE Corridor runs into Virginia.  I hope that they are in fact self sustaining.

Second round rail transportation grants are more intelligent

The first first round of federal transportation grants was mostly PR and favored consulting grants, together with lots of federal employee funding.  More than half is for bragging rights over whose passenger trains are fastest.  These are a good way to funnel money to civil servants, consultants, and publicity agents.  This is all crucial to the re-election campaigns of congressmen who need that PR and public support.  But they are not what has been demonstrated to maximize utility.

The biggest improvement for the dollar comes from eliminating bottlenecks.  The Acela does not hit any speed records.  It spends most of its time running at 200 kph or below.  It made its big gains through taking slow turns a little faster, eliminating stops, better acceleration and braking, and eliminating the engine change in New Haven.  This cut the NYC-WAS time by about 30 minutes (with no change to top speed compared to the predecessor Metroliner), and the NYC-BOS time by about 1 hour.  Analysis of schedule impact continues to show that the biggest wins will be through upgrading the very slow track and signaling on NYC to New Haven, and through replacing worn out bridges and sections that require go slow orders.

Similar improvements in California have dramatically increased capacity and ridership in both the LA-SAN traffic and OAK-SAC traffic. 

Perhaps a third of the first round of grants went to this kind of project.  They tend to be small, plebian projects that add sidings, straighten track, bypass bottlenecks, add overpasses, etc.  Only the locals notice the improvement.  These are hard sells to national politicians.

The second round seems to have done much better.  The details are in their report (PDF).  In addition to eliminating passenger bottlenecks, it is funding many projects that eliminate freight bottlenecks and road-rail interference.  Replacing some at grade crossings with overpasses can eliminate long traffic delays on the roads and allow heavy freight traffic during commuting hours.  Both sides win.  The Long Beach port improvements several decades ago were the first to exploit this kind of improvement.  The CREATE project around Chicago is the current largest of these coordinated projects.  There are several smaller such projects also in progress and an East Coast corridor analysis looking at a huge series of bottleneck improvements for the Virgina to Massachusetts corridor of rail, road, sea, and air traffic.

Hope and enthusiasm vs reality

CNet reports big increases in the (very small) market for small wind systems.  This seems likely to be another case of hope and enthusiasm that is not justified by the reality.  The ever pragmatic Dutch have done a study of a dozen different small wind systems (report in Dutch, article  in English).  The result is that the Dutch will not subsidize or give special rates to small wind systems.  They do have special deals for the large wind systems.  But the economics are so poor in terms of cost per KWh or per ton of CO2 saved that they will not encourage small wind use.

Small wind will continue to have uses in special situations where they are the best economic choice.  But the romantic push for small wind all over suburbs does not make sense.

More eco-news, implementation and management skill matter

The implementation and management of various eco-projects also matter a lot.  Among the various recent articles in Financial Times is one that describes the ongoing failure of the methane recovery systems from pig manure in Mexico.  I've mentioned the various successes in South Asia and elsewhere with these systems.  They are very important in many developing countries.  The technology itself was shown to work in Mexico, with a few successful systems.  But, construction quality problems, intertie and related problems wth the electrical grid, and other management problems have resulted in most of the systems not working. 

There has been a similar shift in the small locomotive industry.  The Green Goat hybrid locomotives have run into serious problems.  A problem with the batteries led to a major recall that drove the manufacturer into bankruptcy.  They've since been purchased and may recover, but  genset locomotives have taken 2/3 of the market.  The hybrid approach of batteries and one large engine is not superior to the approach of having 3 smaller engines and only running as many as are needed.

In both cases the concept was sound, but you need good management and implementation as well.