“Cool It” Redux

It is worth seeing the commercial version of “Cool It.”  Hurry, though, since I don’t think 4 people in an audience at each showing will be commercially viable.  Ondi Timoner must have gotten more control over the final product than I thought she would.  The commercial version is quite balanced.  There are some fairly sharp digs at Al Gore and “An Inconvenient Truth,” but a recognition that Gore brought the topic of Global Warming to the forefront. Let me get some of the critiques out of the way:  There’s a little too much of “We’ve only seen a one foot rise in sea levels in the last century,” “… life is good with standards of living having risen substantially,” etc. In other words,  “We’ve jumped off the 50-story building and as we pass the 25^th floor things actually look okay.”  Bjorn Lomborg points out that there is a bell curve of potential global warming outcomes and the alarmists only use the low odds extreme possibilities to make their case for immediate action and large expenditures.  However, he turns around and uses the least possible impact of the current actions on temperature change and sea level rise to make his case for diverting resources away from climate change toward other pressing needs.  He is right regarding the need to address other issues, poverty, health, housing, etc., but, as Ned Babbitt points out in a comment below, Lomborg doesn’t provide a lot of documentation for the expenditure levels he calls for.  Those may exist in his book of the same name.  I could go on, but these are all just nits. Go see the movie!

Lomborg goes out of his way to affirm that he is a true believer in global warming, that man is the big contributor to the path we are on, and that we need to do something about it. However, he believes that the solutions being implemented, cap and trade, electric vehicles, windmills, solar PV are just not adequate today to deal with the problem and much of the dollars being invested could be put to better use. I have to agree except in the case of the transportation industry, where I believe the solutions are there—they just haven’t been implemented. Elsewhere, the technologies we are using today are just not adequate to solve the problems in an economic fashion without an explicit price on carbon. The documentary spends a fair amount of time on geo-engineering, which Lomborg thinks may be necessary as stop gaps because we won’t have developed the economic solutions that can move us away from a carbon-based energy system in the right time frame.  His call is for spending more of the money on new technologies and innovation and less on today’s implementation, and in the process freeing up capital to deal with the other needs of the global society. The documentary supports the case by taking us on a whirlwind tour of some of the new technologies in the developed world that could get us to the right solutions. Whether it is Nathan Myhrvold’s work on 4^th generation nuclear technologies, Stephen Salter’s work on wave energy or cloud whitening, or Hashem Akbari’s work on mitigating the urban heat effect, the journey through the new technologies is exciting and encouraging.  The solutions are there, in the lab, in prototypes or in a scientist’s head.

Unfortunately, most of the solutions don’t fit today’s venture capital model of low investment and quick return, which is still available in various aspects of the internet space.  The work that is being done is occurring in university labs based on government grants and other non-profit funding with the exception of the Myhrvolds of the world who are recycling the capital from earlier software/internet ventures into this new and exciting field. The other small exception is in those few cases where adaptation, primarily to rising water levels is already a requirement. The Dutch cannot really afford to take the chance that the low end of the distribution curve of climate change will be the end result. I don’t think the rest of the world can either.

We have to create the financing models that allow these innovations to progress to the next levels. Whoever does will own these technologies and the fruits of their implementation for their own geographies and certainly for the benefit of their own economies.  Lomborg’s whirlwind tour doesn’t get outside the developed world, but the innovation and implementation are occurring in the developing world at a startling pace as well. Go get excited by the view of what can happen as presented in “Cool It,”  and put some thought as to what needs to be done to move these innovations and others toward practical reality.

Do We Need a Price On Carbon?

In his January 10 Op-Ed piece in the NY Times, http://www.nytimes.com/2010/01/10/opinion/10friedman.html?scp=8&sq=tom%20friedman&st=cse, Tom Friedman makes several points about where things stand in the Energy Technology race and reaches the conclusion that China may be winning and will continue to win unless the US gets serious about energy legislation and carbon pricing. In recent days, starting with the State of the Union address, we have heard a bit more noise from the current administration on the energy front–nuclear power, additional subsidies, no capital gains on start-ups and maybe, a cap-and-trade system or some form of establishing a price on carbon. Maybe it will happen, and, maybe it is necessary for the developed world, where replacement of existing carbon-based energy is the principal requirement. In China, India, and much of Asia, new energy sources can be put in place to meet demand growth—a very different set of economics. And the markets are big enough to drive prices down a volume-related cost curve in addition to cost reductions from new technologies and systems. It allows room for more experimentation. It is a requirement if one really wants to be energy independent. Last year China did import 4.1 million barrels of crude oil a day, a little less than half of what the US imports. But this is likely to grow as auto sales grow, unless… See the April post, “China and Electric Cars—The Stakes Have Been Raised.”
China doesn’t appear to need a price on carbon today to look for alternative energy sources. It understands the relentless energy demand it faces as its economy grows and the pressure that would put on existing energy prices. And it understands, politically,  it cannot continue to pollute its air and water. In my visits there I have even seen some evidence that it understands the Climate Change risks from continuing CO2 emissions.

A brief story: In June, 2008, at a UNEP meeting in New York, I was asked if I could name one thing that one country could do that would accelerate the path toward alternative energy adoption and CO2 reduction. I responded “I guess the expected answer would be that the US should do almost anything. But since I do not think it will, my answer would be for China to institute a $50/Ton Carbon tax. This would accelerate the pace of change in China and would likely shame the rest of the world into responding in kind or with a serious cap-and-trade system.” Immediately the Chinese delegate asked to speak. She started with a very logical argument that China was in the early stages of entering the developed world with a low GDP per capita and such a tax would be a burden on many of the people finding their way into its new economy. However, she closed her statement by saying that China could not institute such a tax unilaterally (my emphasis). An interesting choice of words. The truth is, if China did institute an internal carbon tax, it would dramatically accelerate its alternative energy adoption and innovation. The US would spend way too much time figuring out how to respond and would then be in real trouble in Tom Friedman’s race.

At the moment, it is still a race. We shouldn’t require a price today on carbon to stay in the race. It should be apparent that the present value of tomorrow’s prices for carbon and the cost of climate change would justify alternative energy adoption and innovation today. Unfortunately, our system seems to require that the price be explicit before we really get serious. And, maybe, once the Western World as a whole has an explicit price, Asia will get explicit as well. Then we will see if it stays as a race between countries or simply becomes the race to save the planet.