Climate

Debunking Shellenberger & Nordhaus — Part III, What Californians know that S&N don’t

The kind of technological revolution called for by energy experts typically does not occur via regulatory fiat” — claim Shellenberger & Nordhaus. Actually, that is typically the only way it occurs. I defy anyone to name a country that has successfully adopted alternative fuels for vehicles without employing some kind of regulatory mandate.

This is also true in the electricity sector. Consider that in terms of electricity consumption, the average Californian generates under one third of the carbon dioxide emissions of the average American while paying the same annual bill.

Did they accomplish this by technology breakthroughs that S&N (mistakenly) say we need? Not at all. They did it by accelerating the deployment of boring old technology — insulation, efficient lightbulbs, refrigerators, and other appliances, light-colored roofs and so on– through tough building codes and intelligent utility regulations, especially ones that put efficiency on an equal footing with new generation. The result: From 1976 to 2005, electricity consumption per capita grew 60 percent in the rest of the nation, while it stayed flat in hi-tech, fast-growing California.

S&N think we must have a massive $30 billion a year government programs and clean technologies. A central argument of theirs is that “Big, long-term investments in new technologies are made only by governments.” This is perhaps half true, but 100% irrelevant. What we need is big, long-term investment in existing technologies — and that is made primarily by the private sector stimulated by government regulations.

Why isn’t government spending more important? Let me relate an eye-opening story from my time in government.

When I was at the Department of Energy in the 1990s, we partnered with GM, Ford, and Chrysler to speed the technological development of hybrid gasoline-electric cars, since increased fuel efficiency was (and remains) clearly the best hope for cutting vehicle greenhouse gas emissions by the year 2025. This partnership was part of an informal deal between the Clinton administration and the car companies in which we did not pursue fuel economy standards and in return the car companies promised to develop a triple-efficiency car (80 miles per gallon) by 2004.

Ironically, in the mid-1990s, the car companies were actively lobbying to cut funding for hydrogen car development and to shift that money into near-term technologies like hybrids. Even more ironically, the main result of our government-industry partnership (which had excluded foreign automakers) was to motivate the Japanese car companies to develop and introduce their own hybrids.

During the 1990s, the government — partnering with industry — spent money almost on a scale that S&N said we need to. But what happened?

In one of the major blunders in automotive history, GM walked away from hybrids as soon as it could–when the Bush administration came in–after taxpayers had spent over $1 billion on the program. The result: Toyota and Honda walked in. GM, which had had a technological lead in electric drives, let its number one competitor, Toyota, achieve a stunning seven-year head start in what will likely be this century’s primary drivetrain. GM was publicly criticizing the future of hybrid technology as late as January 2004, and announced later in that year a half-hearted effort to catch up to Toyota.

Let this history give pause to anybody who promotes a primarily technology-based solution to greenhouse gases emissions (and gasoline consumption) in the transportation sector.

Now let me take up the question from my previous post on S&N: Why don’t never-been-seen-before breakthroughs change how we use energy? Why don’t breakthrough energy technologies enter the market the way breakthroughs in consumer electronics and telecommunications seem to? If we focus on the two most important sectors for global warming, transportation and electricity generation, the answer is fairly straightforward: The barriers to market entry for new technologies are enormous. The entire electric grid–from power plant to transmission line to your house–represents hundreds of billions of dollars in investment, much of which has long since been paid off. We have coal plants and hydropower plants that are several decades old and still running. This keeps electricity widely available, and much lower in price here than almost any other industrialized country. And it keeps competing technologies at a permanent disadvantage — especially for utilities in states with regulations that only permit them to make profits by selling more electricity, not energy efficiency.

The entire gasoline fueling delivery infrastructure–refineries, pipelines, gasoline stations, and the like–also represents hundreds of billions of dollars of investment that assures widespread availability, low-price, and very tough competition for any potential alternative fuel. A comparable investment has been made in automobile manufacturing plants, a key reason why we have not seen a new American car company successfully launched for a very long time.

Perhaps the best example of a breakthrough that is changing the vehicle market is the nickel metal-hydride battery currently being used in virtually every hybrid gasoline-electric car today. The key to making hybrids work is the battery. Research on nickel metal-hydrides began in the 1970s. In the early 1980s, a U.S. company, Ovonics, introduced nickel metal-hydride batteries into the market for consumer electronics. At the Department of Energy, we were interested in hybrids in the mid-1990s because a few years earlier, Ovonics had developed a version of the battery for cars under a partnership with the government in the US Advanced Battery Consortium. (Yes, government technology partnerships have value.)

Hybrids were introduced into the U.S. car market by the Japanese car companies Toyota and Honda in 1997. Sales began to soar after 2000, thanks to improved engineering, high gasoline prices, and government incentives. Even so, in 2005, eight years after they were introduced into the U.S. market, hybrids were only slightly more than 1 percent of new-car sales — even with high oil prices and government subsidies. But here we want to know how long before a breakthrough significantly affects how we use energy or how much energy we use. So the question is–How long before hybrids reduce U.S. gasoline consumption?

Consider first that the average car now lasts for nearly 20 years, making it difficult for any breakthrough technology to have a rapid impact on the market. Second, consider that engine technology has gotten dramatically more efficient in the past two decades, but the average vehicle on the road has not gotten more efficient. Why not? The efficiency gains have been offset by increased performance (faster acceleration) and the increased weight of the average car (thanks to the growing popularity of sport utility vehicles and light trucks).

How soon will hybrids begin reducing U.S. gasoline consumption? The best answer is “maybe never.” Why should hybrids increase the average efficiency of the U.S. cars and light trucks any more than the steady advances in engine efficiency of the past two decades did? The good news is that hybrid drive-trains provide enough efficiency improvement and their electric motors develop such high acceleration that automakers have used the technology to raise both horsepower and fuel economy simultaneously. But a number of hybrid models have been introduced that achieve only a very modest efficiency gain. Moreover, vehicle efficiency must rise significantly over the next two decades just to keep gasoline consumption-and hence greenhouse gas emissions-constant, just to make up for the increases that would otherwise come from more and more people buying more and more cars and driving farther and farther.

If we want to reduce U.S. oil consumption and greenhouse gas emissions from cars, the most obvious strategy is the one that we already employed successfully to double the fuel economy of our cars from the mid-1970s to the mid-1980s-tougher government mileage standards. No other strategy has ever worked for this country.

And based on the experience of this and every other country, if we want alternative fuel vehicles to succeed in the marketplace, regulations will be as important if not more important than new technology.

Now I do support an increase in government spending on clean technology — I just don’t consider it the most important thing, as S&N do, but way down the list of policies, after a cap-and-trade system, tougher CAFE standards, changing utility regulations to put efficiency (and cogeneration) on an equal footing, and so on.

As long as S&N keep insisting we need breakthrough technologies, they are playing into the hands of delayers like President Bush who only want to talk about technology. I will discuss the many technology-related strawmen S&N create in Part IV.

If you want to read more debunking of S&N, here is Part I and Part II.

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12 Responses to Debunking Shellenberger & Nordhaus — Part III, What Californians know that S&N don’t

  1. Dano says:

    I’m confused why there is a “debunking” of people who want to get to the same place you do.

    I’m sure those who are new to this are confused as well, as here are two camps who – it appears – can’t agree on a path. Ding-dang librulls can’t never get on the same page.

    Well, says Joe and Jane Blow, get back to me when you figger it out, in the meantime I’ll drive Trevor and Britney to soccer practice in my big ol’ SUV and leave the engine running while there, as there’s WiFi leakage and I’ll e-mail my sister. You want to tax gasoline for something that makes me stop running my engine while I forward stale jokes to family and friends? Forget it.

    Good strategy. Sounds like a winner.

    I like your site and it’s bookmarked and I’m a frequent visitor, but your tactic here s*cks. Far better to acknowledge the common goal and work together rather than engage in a one-sided p*ssing contest, as I think you’re dribbling on your shoes. There is no reason why technology can’t be pursued while at the same time real smart people like you start educating society on how to stop wasting and buying cr*p they don’t need [and at the same time, economists figger out how to run the Murrican economy when people cut their consumption by 75%, hence the engine that runs our economy – buying useless trinkets – needs something else to do. What would that be…what would that beeeee….hmmm…maybe some kind of technology…

    Now please. Play nice and share. Stop bickering. Well, one-sidedly but still.

    Best,

    D

  2. Ronald says:

    I have to say I appreciate the, what i consider, straight talk. This stuff is not about feeling better, it’s about getting it right. We can’t just do something, because so many of those somethings are just smoke screens put out by companies to make money, politicians to get votes, or authors to sell books.

    Getting this right, how to prevent climate change, is just to important.

  3. Mark Shapiro says:

    As a long-time fan of both Joe Romm and Dano, I say they’re both right. (And for those of you who don’t recall the scene in “Fiddler on the Roof” where the villager cries, “But rabbi, they can’t BOTH be right!”, the rabbi replies, “Hmmm, you’re right.”)

    Come to think of it, trying to convince Joe and Jane Anybody to curtail fossil fuel consumption is a tough sell. Dano, I think Joe Romm is suggesting that techno-optimists like S & N slow down the process (even though California was successful years ago) by promising effortless fixes in the sweet by and by.

  4. Dano says:

    Mark, I agree with you, esp. that promises of manna from heaven don’t help the issue.

    Let’s restate the issue. S&N state:

    The only way to double global energy consumption while cutting global warming emissions in half is by developing new sources of clean energy.

    Why must we double? Why is it only? Why can’t we just reduce consumption? is what we are considering here.

    The inexorable I = PAT drives our policy-making, whether we explicitly acknowledge it or not. The doubling of energy consumption comes from both the P (human population) and the A (affluence). Affluence drives consumption and this rate of increase is an important multiplier for policy-making and resource management.

    In resource management we must also consider other types of energy in the I=PAT: chemical energy. Energy to grow crops. The Green Revolution, which is over, happened simply because of the application of N fertilizer and well water. India gave subsidized energy to drive wells. This is over, as resources are limited and gains are slowing (hence the technological fix sought in GM crops).

    But back to the issue of reduction. Socolow and Pacala’s wedges tell us (pg 2) that, for policy-making, there are a number of things we must do to stabilize CO2 output. Energy Efficiency & Conservation is one wedge of 7.

    S&P also conclude that:

    Achieving a flat trajectory for the next 50 years puts stabilization at 500 ppm within reach. It requires greatly scaling up several known technological approaches, but it does not require fundamental breakthroughs. (pg 4)

    I agree with this approach, with great concern however, as S&P themselves caveat:

    The fifty-year time frame, we believe, has much to recommend it. It is long enough to allow dramatic changes, and it is short enough to engage the world’s doers. [emphasis added]

    Engaging the doers.

    How do we engage the doers? We must allow them to make money while we decarbonize. S & N are pointing in a direction that allows folk to make money, while at the same time taking away denialists’ anti-Kyoto-type arguments. Our task here is to ensure the denialism industry has no ammunition to slow down policy-making solutions.

    Our bickering over whether we set a course at 130 degrees or 140 degrees slows us down and keeps us in port. We can be seen to untie and launch and motor through the harbor and go out to sea to the southeast, and then the doers can start doing, which will allow society to decide (informed by the doers and the scientists) which 5-degree increment in the southeast to go.

    Our fingers should be pointing at something on a drawing table, not at each other. THAT’s the slowdown in the process. S & N at least have an idea to start. Let’s work together to operationalize not marginalize.

    Best,

    D

  5. Joe says:

    Dano:

    I will address this in the next post — S&N have launched a counterproductive assault on environmentalists that play right into the hands of conservative deniers and delayers.

    Joe

  6. Dano says:

    Fine, Joe.

    S&N’s original thesis, remember, is that policy and regulation alone won’t do it. Reliance on such is the reason for the stagnation in environmental gains in the last few decades.

    The flap over their thesis continues, I see, but I agree with it.

    Best,

    D

  7. Earl Killian says:

    Since a graph can be more illuminating than words that describe it, I recommend page 12 of the following presentation to illustrate Joe’s point when he writes “From 1976 to 2005, electricity consumption per capita grew 60 percent in the rest of the nation, while it stayed flat in hi-tech, fast-growing California.”:
    http://www.energy.ca.gov/2005publications/CEC-999-2005-003/CEC-999-2005-003.PDF
    (This is from the California Energy Commission)

    The whole presentation is interesting, but I especially recommend, besides page 12, pages 3, 6-8, 14, and 17. Joe might want to look for the citation of his book.

  8. Earl Killian says:

    Joe wrote, “If we want to reduce U.S. oil consumption and greenhouse gas emissions from cars, the most obvious strategy is the one that we already employed successfully to double the fuel economy of our cars from the mid-1970s to the mid-1980s-tougher government mileage standards. No other strategy has ever worked for this country.” I agree that this is a short-term first step, but Joe forgot to mention the second step (which he does in his book), which is to make hybrids into plug-in hybrids.

    If you agree, please sign the petition at http://pluginpartners.org/ and also lobby your municipality to do the same.

  9. Earl Killian says:

    Dano writes, “S&N’s original thesis, remember, is that policy and regulation alone won’t do it.” I won’t speak for Joe, but my interpretation of his posts is that “policy and regulation” are necessary (and perhaps sufficient). That is the source of his obvious discontent with what S&N have written, since they basically argue against the one thing that is strictly necessary to solve the problem. I agree with this interpretation because (1) I believe the necessary technology to solve the problem has already been developed–only deployment is required, not further research, and (2) that without policy and regulation, business as usual will not produce either (a) deployment of the already-developed technology, or (b) deployment of future yet-to-be-developed technology.

    Your metaphor for this difference of opinion is course heading of 130deg vs. 140deg. However, others see it as a course heading difference of 90deg vs. 180deg. One makes forward progress, and one just moves sideways. That’s why it is not appropriate to take S&N’s thesis quietly.

  10. Earl Killian says:

    Dano writes, “Socolow and Pacala’s wedges tell us (pg 2) that, for policy-making, there are a number of things we must do to stabilize CO2 output. Energy Efficiency & Conservation is one wedge of 7.” I don’t think anyone here disagrees with this. Indeed, I hope that efficiency might be even more than 1/7th of the answer. Please read Joe’s book, Hell and High Water, where he sets out his own program:
    1. Launch a massive performance-based efficiency program for homes, commercial buildings, and new construction.
    2. Launch a massive effort to boost the efficiency of heavy industry and expand the use of cogeneration (combined heat and power).
    3. Capture CO2 from 800 new large coal plants and store it underground.
    4. Build it 1 million large wind turbines (or the equivalent in renewables such as solar power).
    5. Build 700 new large nuclear plants while shutting down no old ones.
    6. Every car and SUV achieves an average fuel economy of 60 miles per gallon.
    7. Every car can run on electricity for short distance before reverting to biofuels.
    8. We stop all tropical deforestation, while doubling the rate of new tree planting.
    This is a very sensible program. The only one that looks difficult to do today is number 8.

  11. Earl Killian says:

    Dano asks, “How do we engage the doers? We must allow them to make money while we decarbonize.” If you look at Joe’s 8-point program from Hell and High Water, it seems like it does engage the doers and let them make money while we decarbonize. Point 1 has already happened in places like California, and construction has been thriving here. Point 2 is similar to 1 for heavy industry. Points 3-5 are directed at the existing electric utilities. As regulated entities, they will make money on such a program, as will the companies like GE that supply them the technology. Points 6 and 7 are directed at the car companies, which have been losing money because they have made the wrong strategic decisions of late; this should help get them back on the right track. Only point 8 seems hard to turn into a money making opportunity.

  12. John Mashey says:

    Yes, Earl has it right, and the CA info is a reminder that there are no instant fixes, but especially, changing any large installed base takes time, which means you can’t delay. A lot of towns in CA are trying to do something now (mine is, even though it’s tiny), and people are getting more aware of Peak Oil and realizing that getting off it earlier is a a Good Thing for places that can do it.

    Regarding making money: the VCs are investing, and so are big, conservative engineering companies like Applied Materials (AMAT). Their chief solar guy, Charlie Gay, gave a nice talk over at SLAC earlier this year, including expected cost-reductions – no sudden drops, just the usual higher-volume => lower cost, over time.

    http://www.appliedmaterials.com/products/solar_3.html
    is a good place to start.; the machinery is very cool.

    As a reminder, anyone who’s ever done serious R&D management knows:

    1) First you do research, and forget about scheduling breakthroughs.
    This gets funded by government and sometimes big industrial R&D groups … although sadly, Bell Labs isn’t what it was when I worked there. Bunches of small efforts are usually better than one big one. Although Stanford takes flak for taking money from ExxonMobil … I’m personally glad GCEP is there.

    2) Then you do development, and VCs will fund some of that.

    3) And then you do deployment.

    Sometimes startups fail because they are doing research, not development, but didn’t realize it. Bad idea; VCs don’t usually invest in those (on purpose).