While I've written before about the trouble in making solar competitive with grid power, this is not true when the grid is being blown up by geurilla fighters on a regular basis. Over the past couple of years, Bechtel has been paid over 2 billion dollars, mostly to try to rebuild the Iraq electrical infrastructure. Perhaps it's not their fault that power is only on in Bagdadh for 2 hours a day after these billions have been spent -- but their might have been a better way.
Environmental issues, energy and electric cars
Just on the heels of my prior post on the bad math often found around alternative energy, I see a Google Blog post on Google's solar installation. It claims Google with save money with their 1.6 megawatt solar installation.
I think it's important that we stop burning petrofuels or indeed any fuels and get energy from better sources.
But there's a disturbing phenomenon I have seen from people who believe the same thing too much. They want to believe so much, they forget their math. (Or I may be being charitable. Some of them, trying too hard to sell an idea or a product, may be deliberately forgetting their math.)
I see this over and over again in articles about photovoltaic solar, wind and other forms of power. They suggest you could put in a PV panel array for $20,000, have it provide you with $1,000 worth of electicity per year and thus "pay for itself" in 20 years. Again and again I see people take a series of payments that happen over a long time and just divide the total by the monthly or annual amount.
I've been thinking more about environmental economics since I blogged about retail carbon credits. I was surprised about how cheap (some would say unrealisticly cheap) wholesale credits are -- about $2.20 per tonne of CO2. (Update: This price keeps changing. The U.S. price is clearly out of whack down to just 25 cents per tonne in 2009. The European price has declined too, from $20/tonne when I wrote this to $14/tonne in fall 2009.)
Today, many of my friends have bought a car like the Toyota Prius, feeling they are doing their bit to help the environment by burning less gas. The Prius costs around $3,000-$6,000 more than a comparable old-style engine car (in part because high demand keeps the price high), and the savings on gasoline don't justify it on a financial basis unless you do nothing but drive all day. So the main reason to buy it is to help the environment and to make a statement before your peer group. The Camry Hybrid, which gets 32mpg instead of 23mpg costs about $5,000 more than the regular Camry.)
Problem is, there's an argument that you're hurting the environment, counterintuitive as that sounds. And no, it's not just the unanswered questions about recycling the fancy batteries in the Prius when they fade, where fairly positive results have been returned so far. Read on...
You may have heard of the idea of pollution credit trading. I've been pointed to two firms that are selling CO2 credits on the retail level for individuals, to offset the output from driving a car, heating a house etc.
I'll get into the details on how it works a bit below, but if you have a car like mine that is putting out 5 metric tons of CO2 each year, you can for a low price (about $50, which includes a whopping markup) pay a factory somewhere to cut their own output by 5 tons, meaning that net, you are causing zero emissions. Which means you are reducing total emissions by a lot more than you would by switching to a Prius, and you are doing it at a vastly lower cost. (This doesn't mean you shouldn't drive a Prius, it just means this is a lot more effective.)
Normally pollution credits are traded only by the big boys, trading contracts with hundreds or thousands of tonnes of emissions. The retail firms are letting small players get in the game.
This is a fabulous idea, in theory at least, and also a great, if sneaky gift idea. After all, if you buy the gift of not polluting for your loved one all they get is a bumper sticker and a good feeling. At least it's better than giving to The Human Fund in their name.
Here's the catch. I went and priced the credits, and while www.certifiedcleancar.com wanted $50 to credit my car, the actual price of credits on the Chicago Climate Exchange is about $2.16 per tonne of CO2, or about $8 for my actual output as they calculated it. One expects some markup, of course, and even some profit for the company selling the retail credits, but this is nuts. I called the other company, Terrapass and got reasonably frank answers. First of all, they claim they invest more in wind power and other truly non-polluting forms of energy more than they just buy carbon credits. Secondly, this is still a small volume thing, and most of the costs are not the credits, but the $20,000 or so to become a member of the exchange, or so I was told. And of course, in small volumes, administrative costs can swamp the real costs.
Another outfit I found is carbonfund.org which is non-profit and cheaper. In some sense since people buy these out of guilt rather than compulsion (they were meant to be forced on polluters to give money to non polluters and make a market) non-profit might make sense, but they are also supposed to be a real market.
Still, if I pay $50, I would love for my $50 to mostly go to reducing pollution, not mostly to administration. Usually when exchanges are expensive there are members who will trade for you at much more modest markups. The folks at Terrapass said they were not yet profitable at the current prices.
And it is such a good idea. Read below for more on pollution credits.