Cabbage Patch iPad

26 04 2011

The thing that pushed me over the edge this week was a fine blog  post by Elisa Wood.  My comment was that Gavin Newsom’s list of jobs created by resources including coal, nuclear, wind, solar, and EE, does not include return on investment.  Only EE has return on investment for the end user.  All other sources cost the end user, not save the end user money.  But this is not the topic of the day.

I am not a tech geek.  I just want things that are stable, reliable, and relatively fast and snappy.  I will pay for it.  I have long been out of college and therefore, time is scarcer than money so just give me something “fast” and reliable and I’ll gladly pay for it.

I also do not need, and in fact I do not want the latest and greatest thing.  Take Microsoft, which hasn’t had any substantial improvement to the Office suite for ten years – since they added the right-click menus.  It has become more stable and reliable in the past 15 years as reports we wrote used to become corrupted out of the blue and you couldn’t open them ever again.  Congratulations for this achievement!

I am not a Microsoft basher but I don’t think they have innovated (if I may use that as a verb) hardly a single thing.  Operating systems with graphical interfaces, mice, spreadsheets, word processors, web browsers, databases, and you name it; they didn’t develop any of these things and they comprise their bulk of gazillions in revenue and profit.  Microsoft is good at taking others’ ideas and packaging and marketing them, creating monopolies and crushing any competitors, or simply buying them out.  Like I said, I’m no Microsoft basher.

Apple on the other hand has been a major innovator with the Mac, Mac operating system, the iPod, and then really, really with the iPhone.  When the iPhone first came out, I thought “what is the big deal?”  It doesn’t even have buttons.  Then I experienced it as we work with clients who use them exclusively.  I look at my Microsoft kludge of a phone (again Microsoft following, not innovating) and think, wow, the iPhone is about 100x better.  (I now have a Motorola Droid which in many ways is better than the iPhone if you ask me, so my tech world is whole again)

At an AESP conference, I was fortunate to win an iPod touch, which is essentially the iPhone without the phone.  Other AESP-drawing winners of GPSs wanted to trade and I said get lost.  I’m giving this to my wife to replace her crappy iPod wannabee.  The iPod touch gave me hands-on experience with greatness.

Apple has built such a cult following that if they introduced a turntable, the iTable, people would camp out for a week just to be the first to get their hands on one of these 1960s makeovers.  They have already done this – it’s called the iPad.  It’s a ridiculous widget.  Why is it ridiculous, Jeff?

First, because it isn’t a serious business tool (yes, I will get to the consumer thing later).  Thinking we could use one of these possibly for field work surveys, I asked one of our iEverything business partners what he thought of this.  He said, no, it isn’t going to do well with spreadsheets or databases, if they can even be used at all.  It doesn’t even have ports like a USB connection for goodness sake.

Second, I was on a plane headed for somewhere sitting next to a guy watching a movie on an iPad.  I enlightened him by saying, “You know, they make these things that have a convenient platform to prop the screen up reliably for hands free movie watching.  You could just sit it on your tray and sit back and enjoy the movie.  It’s called a laptop computer.”

It’s a large version of a phone without the phone.  It’s a small computer with no capability.

Perhaps most ridiculous, I recall an article in The Wall Street Journal covering the various ways iPad owners can transport their iPads.  One solution was like a fanny pack with a big pouch in which you would carry the iPad along the small of your back.  Good grief!  Don’t use a computer bag.  That would reveal the stupidity of this device.

Conclusion: It’s a clunky, slippery, doohickey that is too large for your pocket, to small for a computer, and you can do little productive work with it.  The second conclusion is, Steve Jobs is a genius for generating a brand that will get people to buy anything with an i in front of it, by the hundreds of millions.

How do we do this with energy efficiency?  It has to have a strong element of “look at how great and cool I am”.  I suggest a web-based application that shows how rich you are becoming, in real time, as a result of your EE genius.  In one pane it would mimic a bank teller slapping down dollar bills as you stuff them in your wallet.  Once you accumulate a bulging wallet full of bills you trade them in for a hundred dollar bill.  You let the hundreds pile up on the counter.  After a while you swap currency for gold bullion and that starts stacking up on the counter.

In another pane you have a lot full of Prius and electric vehicles with dead batteries in front of a big box store called “Renewables R Us”.  As you accumulate enough savings and equivalent emissions of these cars / energy sources, King Kong circa 1976 walks onto the scene thumping his chest and roaring.  He picks up an electric vehicle and tucks it under his harm like a football and stomps off, maybe stepping on a couple screaming shoppers making their way to the store as they drop their iPads.  This would represent the equivalent Priuses taken off the road. Next time, Kong comes by but this time tripping on a Prius and falling face first crushing a dozen Nissan Leafs.  After doing the ceremonial thump and roar, he rips a solar panel off the roof and throws it across town, like the subway cars in the movie… followed by stomping off and squashing a few more shoppers.

The app should be exclusive to new chosen makes and models of devices and they are provided by the EE program as part of the incentive.  The devices are sleek and unique so everyone knows, that guy is cool and smart.  The devices would have functionality of iPods, phones, and laptops so they aren’t just a worthless status symbol.

So the next time you are sitting at the gate or in cattle class, your device is screaming – “look at how cool I am” while the inferior, insecure me-too stooge is gawking on, thinking, “Man that guy has some device!”

Copyright 2011


As gasoline prices are clicking past $4 across the country, citizens are crying to the feds to do something.  So what are both the President and Speaker talking about?  Eliminate subsidies for oil companies – as though this will bring down prices!  Again, politics rather than logic rule in Washington.  Prices are high and therefore the oil companies must be punished and somehow reducing profit will lower prices.  Good Grief! – popular with the lemmings but thinkers know better.

P.S.  I believe the “subsidies” they are talking about are tax breaks for depleting wells, which sounds to me like depreciation for assets of depleting value – like our office furniture and computers.  Anyway, let me say that subsidies should go, across the board, but office furniture and computers are the price of doing business and obviously affect profit so depreciation isn’t a subsidy, unless you’re a political hack.

written by Jeffrey L. Ihnen, P.E., LEED AP

B.A.N.A.N.A.S. – Go Bananas

12 04 2011

This was a dopey high school cheer of my older brother’s and sister’s sporting days in high school.  “Go bananas.  B-A-N-A-N-A-S.  Go bananas!”  How lame.  What does it mean?  I much preferred, “Watermelon.  Watermelon.  Watermelon rind.  Look at the scoreboard and see who’s behind.  You! You! You! You!”  This was always led by the rowdy crowd after the opposing team’s cheerleaders would do a dopey skit, like the banana thing.

One of the first posts I wrote was Renewable NIMBY, that people purport to be in favor of renewable energy unless they have to look at it or pay for it.  In case you’ve been cryogenically frozen since the 1950s, NIMBY means “not in my back yard”.  People really like renewable energy so long as somebody else pays for it and it’s installed in North Dakota, where not so incidentally citizens are experiencing a booming economy by exploiting energy production, mostly on private land.

Last week I became mentally unglued upon reading about environmentalists blocking a paper mill in Port Angeles, Washington, from using wood waste for its strong appetite for thermal energy (steam).  Nippon Paper has reduced its fossil fuel consumption by 88% and virtually eliminated the need for petroleum since 2000.  What a smashing success.  This is beyond President Obama’s wildest dreams for clean energy, reducing carbon dioxide emissions and dependence on imported energy.  Yet environmental groups including the Sierra Club are fighting to shut it down and send 200-plus decent people to the unemployment lines.

Do you consider yourself an environmentalist?  If you’re like me, the answer is, yes but I’m not in the whacko, nut-job category like these Port Angeles protesters are.

Port Angeles is of interest to me as I have visited there several times and I like it.  It’s the last substantial town on the Olympic Peninsula on the way to the Pacific Ocean.  It sits at the base of the Olympic Mountains and rain forests and other fantastic natural beauteous places abound all within an easy day-trip.  It has a fair amount of tourism, but also industry as well and real people.  Like many other industrial cities along the northern tier of states, it is struggling, and this sort of whacko “environmentalism” makes up a good share of the decay.

And consider sustainability, for which I recently read a good definition [paraphrasing]: leave the environment in as good or better condition than you found it, for future generations.  This Nippon case seems to be a poster child for this.  There is much logging on the Olympic Peninsula, from a renewable resource – trees.  They plant seedlings by the square mile growing into beautiful new forests absorbing tons of carbon dioxide.  Nippon uses the remains of local waste rather than fossil fuel to operate its paper plant.

One local whacko, a psychologist which seems to speak for itself, says the biomass plant is for pure greed at the expense of public health.  News alert: she has no idea what she is talking about.  What would she prefer?  Close the plant and landfill the logging waste?  I can all but promise you the emissions from wood waste will have less impact than using any other reasonable energy source.  It will not be like burning a pile of wet twigs and leaves like we used to for roasting hotdogs and burning our eyes out.  It will be clean.  It’s carbon neutral.  Emissions are regulated by the EPA.  Do you think the EPA, which puts carbon dioxide you are producing right now and every minute of the day in the threat category, is going to allow this or any other manufacturer to emit one billionth of the hazardous emissions required to give a mouse a headache?  I’ll let you know when I think the EPA is getting too slack.  That will happen when I return to earth as a Labrador retriever.

Some carpers on the same side of the political spectrum whine about greedy corporations sending jobs overseas.  Hmm.  I wonder how these Nippon-protesting whackos and their ridiculous protests play into this?  Consider how far into nutland this is.  At the UW-Madison, we just spent millions of dollars to convert a district steam plant from burning coal to biomass – the same sort of thing these people on the Olympic Peninsula are protesting.  If it’s good enough for Madisonians, trust me, it’s good enough anywhere.

NIMBY in some precincts is giving way to BANANA – “build absolutely nothing anywhere, near anything”… by whining halfwits and cretins killing our society – WHACKOS©.

written by Jeffrey L. Ihnen, P.E., LEED AP

Sane Personal Transportation

3 08 2010

A couple weeks ago I beat up electric automobiles for being overpriced and unpractical due to their short driving ranges and cripplingly long charge times.  This week I present a saner approach to substantial energy and emissions reductions.

The electric car is the equivalent of installing renewable energy sources before making conventional systems and technologies as efficient as possible in buildings.  Like buildings, we can cost effectively cut personal transportation energy consumption substantially, without sacrificing anything with readily available technologies – rather than pouring gobs of money into technologies that are just five years away from prime time; like they have been for the past 30 years.

Automobiles have gotten much more efficient over the past 20-30 years.  However, the miles per gallon have hardly budged.  Automobiles have grown continuously larger and more powerful.  The modern Honda Civic, for example, is much larger and probably heavier than the “larger” Accord from 30 years ago.  The modern version is most likely much more powerful as well.

Public enemy number one on this front is the explosion of the sport utility vehicle, which sort of peaked out just before hurricane Katrina, after which the $3-4 and upward gasoline prices caught peoples’ attention.  SUV buyers can be split into two groups: the family haulers and the egocentric.  A small group of SUV owners actually need it for regularly poor driving conditions (snow for instance) and/or towing.  Maybe we need to make SUV owners pariahs akin to smokers.  We’ll have parking lots, ramps, and garages that ban SUVs.  Or maybe we put scales where you pay the parking attendant and pay a tonnage penalty for overweight vehicles.   Or we could make the entrance to these spaces so small that only a Porsche 911 size car will fit through the gate.  Speaking of Porsche and SUVs, the Cayenne was an awful development.  How about LEED points for a SUV-free workforce?  I’m not so much in favor of these things although the LEED thing is intriguing.

I have been a big advocate of gas-electric hybrids since the beginning, especially for city driving applications where brakes are applied 40 times per mile.  My question though is, why do they make so many of them so goofy looking – like the Prius and the Insight.  Other models include hybrid versions of the common all-gasoline vehicles like the Civic, Camry, and Cadillac Escalade (which is a joke).  How about some sporty smaller cars like the Celica, 240 SX, Prelude, and Integra?  Unfortunately these reasonably-priced snappy fun-to-drive models are all defunct.

As a kid, I remember the late 1970s / early 1980s and the cars of the times.  When I was first old enough to drive, my older brother was nice enough to lend me his relatively new 1979 Mercury Cougar.  Look at that behemoth.   It had rear wheel drive and handled like crap.  The closest I ever came to an accident was driving this thing down a slushy road when I wandered out of the track.  Think of going down a waterslide trying to stop by digging in your fingernails.  The next year the thing was downsized by 50%.  The gas mileage probably doubled.  BTW, I don’t know why they put that woman on there.  The car is already hideous enough.  The last thing it needs is a supermodel next to it to make it look even worse.

Another blow to petroleum consumption could be dealt with the Diesel engine.  All else equal, the Diesel engine is substantially more efficient than the gasoline (Otto) engine.  Why?  It has a higher compression ratio, which generates a higher combustion temperature.  Like steam-driven power plants, efficiency is limited mostly by the highest temperature relatively cheap steel can withstand.

Later, after ditching the Cougar and suffering through three years with a 1983 Ford Mustang, I purchased a 1984 Ford Escort Diesel.  The Focus is the descendant of the Escort.  In fact, I think the big pitch for the Escort (gas version) was its fuel economy.  Most people I’ve talked to regarding the Diesel version are amazed to know there was such a thing.  Yes – 48 miles per gallon – 1984 – 27 years ago in car terms.  We don’t need rocket science or even some mythical magical battery.  We just need somebody with a brain promoting sane solutions to saving personal transportation energy.

Diesels faded from the American auto-makers’ lineups of cars for whatever reason.  General Motors somehow took a gasoline engine and turned it into a Diesel engine for its first shot at Diesel engines for light vehicles.  This was about 1982.  I remember driving my brother-in-law’s Diesel Silverado pickup truck and pulling a trailer.  It would literally take ¾ of a mile on flat terrain with no wind to get up to 55 mph.  It was the most pathetic excuse for a truck I had ever experienced.

I believe Volkswagen has offered diesel vehicles since way back.  To demonstrate how a sane approach to efficient transportation makes the insane look stupid, consider the Diesel versions of the VW Golf, Jetta, and Jetta wagon are rated at about 42 mpg, highway.  The tiny tin can lawnmower on wheels, the “Smart Car,” is rated at a pathetic 41 mpg.  You don’t even have room for an extra pair of shoes in one of those things.  They haul groceries as long as it is limited to Ramen noodles and canned tuna.

So how about these qualities to easily get to 60 mpg with virtually no sacrifice in performance, convenience, or ego:

  • Shrink cars back to where they were in the late 1980s with a proportional shrunken engine
  • Diesel engines
  • Hybrids
  • Styling that that doesn’t scream “I am a snooty college professor and I am better than you”.

These vehicles would result in SUBSTANTIALLY LESS EMISSIONS than a $40,000, 40 mile per charge ELECTRIC VEHICLE.  If you are thinking, “but we can power electric vehicles with windmills”, it doesn’t work that way.  Windmills and other renewable energy will always be fully utilized.  The incremental increase (or decrease) in electric consumption will come from conventional sources regardless of how you want to pretend you’re charging your batteries with a windmill.  In other words, electric cars will be charged with coal, natural gas, or nuclear power.

written by Jeffrey L. Ihnen, P.E., LEED AP

Greenpeace – Don’t Let Facts Get in the Way

27 04 2010

Back in the day when I was in the nuclear Navy, Greenpeace was not so infrequently pulling stunts like running their zodiacs up on the top of submarine hulls to make their unfounded statements of radiation releases to the environment.  Since 9/11, you can bet they stopped this practice.  Even back in the early 1990s the hatch was guarded by a burly guy sporting a short barrel shotgun with the largest shell chamber I’ve ever seen.  Stopping power.  The fact is, the US Navy runs the cleanest nuclear plants in the world with thousands of operating reactor YEARS and not a single significant release of radiation to the environment – including the couple submarines that were lost at sea.

I thought maybe Greenpeace had gone broke and out of business, but they are still hanging on or they emerged from bankruptcy.  My most recent spotting was their protesting large data centers being built by and running on “cheap” coal-derived electricity.   They are also complaining about the use of cloud computing, which is less expensive due to economies of scale, but these humongous data centers are purportedly located to burn cheap, dirty energy.

One specific data center mentioned in the above article, the first one actually, is Facebook’s new data center being built in Oregon, Prineville to be exact.

Before I rant and complain about things I generally make sure I have the facts straight.  Greenpeace not only has their facts wrong on this one, they’re not just a little wrong; they’re 180 degrees wrong.  These gigantic data centers are being located in the Pacific Northwest to have access to cheap HYDRO power, which of course has no emissions.

This is Bonneville Power Administration territory.  I was thinking BPA gets at least 50% of their power from hydro.  According to BPA’s annual report it’s 82%!   All you have to do is tune into this site to see there is a sea of hydro plants, a few natural gas plants, a few biomass, and they are adding wind power like crazy.  Believe me when I tell you, if there is one region on the planet that will avoid building coal plants at almost any price, it’s BPA’s territory.

Greenpeace has a credibility deficit similar to federal fiscal deficit.  If you’re going to hiss and moan about something, at least have iffy facts to back it up.  This is completely bogus.

But let’s take the next steps.  I’m no IT expert, but as the articles note, massive data centers for websites and cloud computing are built for economies of scale.  As with just about anything, economies of scale means tremendous opportunity for greater energy efficiency.  It means fewer servers more fully loaded, which translates to much lower server power and also much lower cooling cost.  It means massive facilities where it is possible to put in huge efficient chillers that literally use 1/3 the power of cheap and crappy packaged air conditioning units ubiquitous among “mom and pop” data centers.

What would Greenpeace have these data centers juice up with?  If a data center needs anything from a power provider, its reliability.  I attended a BPA conference about a year ago and one presentation was about the challenge of keeping the lights on with wind power that bounces all over.  In one stretch I recall, they had zero MW from wind for a stretch of 14 straight days.  No place on earth has sunshine around the clock.  Do people use Facebook after dark?  My guess is, yes.  If there is one place in the country that has a beautiful mix of renewable energy it is the northwest where they have hydro that it seems they can ramp power up and down in no time, and store hydro energy while the wind is blowing.  It seems to me that Greenpeace is bashing the best place on the planet to locate data centers.

I can think of some questionable complaints regarding the greenness of some of the tech companies cited: Google, Apple, Amazon, et al, but no sense in giving Greenpeace something remotely legitimate to protest.

BTW, you may be interested Bonneville’s video for safety with trees and high lines.  It’s on their news page.

written by Jeffrey L. Ihnen, P.E., LEED AP

Wind Energy and the Utility Business Model

20 04 2010

The masses want power on demand without interruption or failure.  They want it at a practically negligible cost and more so every year, they want it without emissions or other unpleasant byproducts.

In the upper Midwest, energy without emissions means wind energy.  Wind energy sounds great.  It’s “free”.  No emissions.  But it comes with a load of drawbacks compared to conventional sources of coal, nuclear, and natural gas.

First, utilities can’t count on it for peak load generation.  I searched a while for this and found nothing but the bottom line is there is no guarantee there will be any generating capacity from wind on a peak summer day.  Therefore, wind generation offsets zero conventional generating capacity.  It is essentially like buying an electric car for lower emissions but you have to keep your conventional gasoline-powered car for longer trips.

Second, wind generation is expensive.  At a cost of about $2,000 per kW nameplate generating capacity it is very similar to a coal-fired plant.  However, a quick analysis with a reliable online calculator indicates that the capacity factor, which is the average percent output of the turbine, is only about 30%.  (the wind doesn’t always blow 48 miles per hour)  This puts the installed cost of wind generation near triple the cost of conventional coal generation.

Third, the cost of wind energy doesn’t end with the fifty by seven foot deep wad of concrete supporting each turbine.  Wind farms are far from Midwest population centers because that’s where the wind blows and this puts them out of site of the people who want it but don’t want to look at it (or pay for it).  This requires substantial transmission costs with substations to step up voltage and transmission lines that run a minimum of $1 million per mile of transport – and this is for building transmission lines on farmland where it’s physically easy to do and there are no lawsuits because people in these areas have better things to do than file lawsuits to stop transmission construction.

Fourth, on average the wind blows the least when it is needed the most, in July and August.  On average, turbines deliver roughly half the energy in July and August compared to the winter months.

When these unpleasant facts are factored in, wind generation benefits boil down to eliminating fuel costs, which are a tiny fraction of conventional generation, and no emissions or other waste products.

What brings this to mind is this article recently published by the Cedar Rapids Gazette.  Alliant Energy / Interstate Power and Light has a rate case pending for a 14% rate increase to pay for the added wind generation capacity and the installation of a $188 million nitrogen oxides and mercury scrubbing system for their old Lansing plant.

One guy comments, “but I just don’t understand why you expect us as customers to pay for all these upgrades — the wind farm, all your safety upgrades and so on.”  Well who else is going to pay for them?  It isn’t going to come out of shareholders’ hides.  Utilities don’t build this stuff to make more money!

Utilities are fully regulated monopolies in Iowa and many other states.  Their ability to grow revenue and earnings is very limited.  Essentially, it is limited to load growth within service territory by existing buildings and by attracting new business with new facilities to their service territory.  In exchange for having a captive customer base, regulators, in this case the Iowa Utilities Board must approve changes in rates, which essentially translates directly to regulating profit.

Wind power and pollution controls cost the company hundreds of millions of dollars but add virtually no revenue or profit.  These upgrades wouldn’t occur but for public pressure and policy coming out of Des Moines and other state and federal capitols.

These expenses can’t come out of earnings because utilities need to raise capital to pay for this stuff.  To raise capital, they have to offer a competitive rate of return commensurate with the risk involved; thus, the rate case for higher prices.

Like Tom Aller, President of Interstate Power and Light, I am not denigrating or advocating green power and moratoriums on building conventional generating facilities.  The public just needs to know this stuff adds a lot of operating cost and the business model of utilities requires rate increases to fund these things.  If customers don’t like it, they better get involved in the political process and not let the Sierra Club have a monopoly of political ears.

By the way, the reason environmental organizations like Sierra Club are a big turn off to me is they are often political first and environmentalists second.  They are opposed to this rate increase.  Why?  Their mission is “To explore, enjoy, and protect the wild places of the earth; To practice and promote the responsible use of the earth’s ecosystems and resources; To educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out these objectives.”  I don’t see anything in there about controlling income in the private sector.  Moreover, the guy’s statement flies in the face of their mission statement anyway.  Higher prices mean less energy consumption, so why is he opposed?  Could it be… politics?  Or is he a “do as I say, not as I do” greenie?

Black Monday Stampede

10 03 2010

July 1992: Tickets for U2’s ZooTV show at RFK stadium in Washington, DC go on sale by Ticketmaster.  The tickets are snapped up in a few hours, as fast as the phone lines could handle the traffic.  This was before anyone knew what the internet was (no Al Gore jokes).  Fortunately, a second date was announced and the roommate waited for the crack of 12:00:00 AM for a shot at the second batch, successfully.

March 1, 2010:  Federally funded rebates become available for efficient appliances in Iowa and Minnesota.  Phone lines jammed with 10 times expected volume and internet traffic at 100 times expected traffic took down the website of the contractor running Iowa’s program in the first hour, within minutes of opening.  Ultimately, Iowa’s share of the funds was gone within 8 hours.  Minnesota’s program dragged on until the next morning.  It was a Wal-Mart-style black Friday digital stampede.  Thank goodness for (don’t use Al Gore jokes) technology – I didn’t see any reported injuries or fatalities.

Some of these federally funded appliance incentives run two to ten times utility incentives.  What were they thinking?  Combined with utility incentives the total can exceed 50% of the purchase price for crying out loud.  See “Policy to Curb Carbon” (government doesn’t know how to do energy efficiency) and “Incentive or Discount” (people trained to wait for handouts to buy).  This is pretty much a giant transfer of wealth from people paying taxes to people taking the rebate checks, and I don’t begrudge the people taking the money.

Apparently the people who designed these state programs, which are actually handouts at these rates, don’t understand the market and/or supply versus demand.  Obviously they gave away too much money and taxpayers got far less than they should have for their “investment” in terms of reduced energy consumption, emissions, and sales and in some cases manufacturing here in the states.

And to top off the environmental benefits of the appliance programs, participants are to send their old appliance to the scrap heap, with self-policing enforcement.  Who’s going to do that?  They will either end up with a second refrigerator or freezer in the basement or the old stuff will show up on Craig’s list.

Recall cash for clunkers last summer.  The intent there was to offer a total of $1 billion incentives, up to $4,500 per vehicle and it was planned to run from late July through November.  Within a week or two the billion dollars was gone and congress quickly shoveled in another $2 billion.  THAT was all gone by Labor Day.

While attending the International Energy Program Evaluation Conference in Portland, OR, last fall I was engaged in a small group discussion – was cash for clunkers a free rider?  A free rider is somebody who takes an incentive for something they were going to do anyway.  This is considered to be a waste of incentive money.  That’s arguable in this clunker case because it more than likely moved the purchase date forward for buyers, but I also think it’s the wrong question to ask.  The more appropriate question is, was it cost effective?

Answering the free rider question, Edmunds estimates that of the 690,000 cars purchased through the cash for clunkers program only 125,000 were incremental.  That is, only 125,000 transactions took place that otherwise would not have.  The rest just displaced a sale that was going to happen soon anyway.  Figuring in free ridership, the taxpayer cost per vehicle was $24,000.  And then consider this: the average trade-in value of the clunkers was about $1,500, which may be worth $1,800 for sale to the next guy.  All these cars were destroyed.  That comes to $1.2 billion in destroyed working assets.  So the feds spent $3 billion to increase profits by car dealers by perhaps $125 million and destroyed $1.2 billion in assets.  Annual energy savings for these 125,000 vehicles would be roughly $120 million.  And maybe the domestic automakers lost a little less money as a result of the program.  Woohoo!

To be fair, the cash for clunkers program may have resulted in the purchase of more efficient vehicles than would otherwise be purchased.  Hardly.  The average fuel economy of cars sold through the program was 25.4 mpg.  The corporate average fuel economy for cars is 27.5 mpg and with light trucks included, it is 23.5 mpg.  In other words, these “efficient” cars were essentially average.

And the doozer of them all: free golf carts thanks to tax credits and sundry other incentives for electric / high mileage vehicles. 

These aren’t incentives.  They are gifts from frugal people to people who probably don’t need this crap.  But good for them, I say.  You have to play the game that’s put in front of you.

What’s the Game?

1 12 2009

Hypothetical:  Our company has about 40 employees.  We’re going to split into 4 teams and have a tournament.  What’s the game?  We have cyclists, runners, a guy who thinks he can play golf, a guy who throws hammer but not when I’m around, skiers, people who fish, people who hunt, play cards, Sudoku, video games, Frisbee golf, and play board games.  We’ve played softball games (poorly) when the economy was good.

We have people who were born when I was in college.  We have people who were in college before I was in the first grade.  Female, male, burley, squirrelly, short, tall, and I’ll just leave it at that.

What’s the game?  Downhill skiing?  A century bike ride?  Marathon?  Pinochle?  Trapshooting?  Ice hockey?  Mini-golf?  Bumper cars?  Crossword puzzles?  Pong?

Have you figured it out yet?

I’m talking about cap and trade.  What are the rules and which companies and individuals are going to benefit and who is going to get creamed?  How on earth can this be developed equitably?  For years I’ve been proclaiming that when this bill is debated, it will be the mother of all lobbying efforts.  Yes there are bills already out there.  I spent 2-3 hours browsing Waxman-Markey until I was on the cusp of a seizure.  If you dare: I read peoples’ synopses of the bill and those aren’t clear either and they tend to be all over the place.  Regardless, this thing won’t go into law as written anyway.  There are other competing bills.  Whatever we end up with, if anything, will be “lobbied up” beyond recognition.

How does the game start?  Apparently, a large portion of the credits would be given away with a few being auctioned off by the government.  Do the freebies get distributed to the companies with the best and highest paid lawyers and lobbyists?  (the answer, at least in part is, for sure)  Does everyone get credits according to the trailing year’s energy consumption?  What about the misers who are already very efficient?  What about companies that have a legacy of spewing lots of emissions and are on the verge of building or buying a bunch of new plants or efficient equipment (such as certain utilities that tend to favor it)?  Will they get hit with a windfall profits tax?  Can I just take my money I’ve made with my manufacturing plant and quit and sell my freebie allotment on the “free market”?

Let’s get back to the portion that will be auctioned.  The energy market is very inelastic; that is, consumption changes little with price in the short term.  Sales of things that are necessities such as energy have little dependence on price.  For example, there is practically no relationship between gasoline prices and consumption.  When prices are high people keep driving, complain, and have less money to spend on other things.  Therefore, I would surmise that this auctioned portion is going to cost A LOT.  The EPA projects credits will cost $11-$15 per ton to begin with.  This is on the order of a penny per kWh – maybe 10% of energy cost.  This is either (1) not going to move companies to do much for energy efficiency or (2) at a more likely much higher cost, move companies to do something.  Something will include some combination of energy efficiency, raising prices on products and services, or offshoring to some “rogue” country like China or Mexico that has no cap and trade.

My interpretation from Waxman-Markey is that cap and trade applies to major energy users and distributers only, as far as I can tell: electric and gas utilities, petroleum, chemical, cement, silicon, aluminum, and other very energy intensive industries.  It seems to me if we wanted an effective “market based” solution, this would apply everywhere carbon is consumed.  What are electric and gas utilities going to do to reduce carbon?  Electric utilities will move away from carbon fuels over time – renewable, and realistically nuclear.  Gas utilities will… Gas utilities will… Sorry gas utilities.  Your days are apparently numbered.

Cap and trade sounds great because it sounds like a “market based solution” to reducing greenhouse gasses.  It reminds me of when we were considering designing and building a new office building for our company.  It was all fun and interesting until the hard reality of finding a decent place to build in or near downtown.  My guess is this dreamy cap and trade idea will hit a brick wall when it comes time to set up the game and rules.  I would suggest a different and more reasonable and realistic approach.  Next Time.

written by Jeffrey L. Ihnen, P.E., LEED AP