Technological bumps along the road…

If Kevin Rudd really is serious about committing Australia to cuts of between 25 and 40% of emissions by 2020, we’re going to need every trick in the book to get there. To radically cut our carbon emissions over the course of a few decades will be easy. To cut them radically over a decade and a bit will be much tougher.

While the political drama of the Bali summit is fascinating, it might be an opportune time to point out the difficulties that we will face in making big cuts in a big hurry. On Robert Rapier’s excellent R-squared energy blog, he tells the tale of one renewables startup that’s entered Chapter 11 Bankruptcy as they’ve struggled to make their technology work.

If you read the thread and the comments, one thing that becomes crystal clear is that one needs to heavily discount the most optimistic claims of the corporate backers of new technology until they’ve actually demonstrated it. One commenter on the thread describes his experience evaluating a new startup:

I am evaluating a VC proposal. (Can’t go into details but you would know the name of the company if I told you.) The proponents want to dazzle us with BS and sophisticated economic analysis. But they make some egregious errors.

One they assume their project starts up, on time, on budget and runs AT capacity on day 1 and continues to operate 365 days a year for 25 years. They sell their product into a premium margin – which remains throughout the life of the project. At full production, they would command a 30% market share (as if their competition won’t react to them). They heavily leverage the project and claim project returns on only the equity portion, as if they could borrow all the money they wanted. They don’t account for physical inventory. (Although they include financial working capital.) Their cost projections reflect 2004 prices and don’t account for nearly doubling of costs in the last 2 years. Their permitting schedules are hopelessly optimistic. The project schedules allow no time for decision making (gaining shareholders approvals, etc.).

If you read the press releases on this company you would think they were God’s gift to the dim witted energy industry.

Some of the carbon-cutting technologies under development will undoubtedly succeed. More will fail. Trying to pick and choose the ones that will, such as the new proposal from the coal mining unions for a a clean coal target similar to the MRET, is just asking for trouble.

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Posted in environment, science
15 comments on “Technological bumps along the road…
  1. Verdurous says:

    Fortunately, the biggest gains do not come from new technology.

    Energy efficiency will be the quickest and easiest pathway to large scale emission reductions. We just need a clear price signal to push things in the right direction. Waste is all around. These gains can use existing technology, not some fanciful “clean coal” which is presently science fiction.

    There is nothing to be afraid of in big cuts. We should be far more afraid of not acting fast enough.

  2. Agreed, Verdurous – at least, up to a point.

    But even once we’ve replaced our lightbulbs with fluorescents and LEDs, put insulation in the roof, replaced the electric hot water system with something more efficient, put in a front-loader washing machine and a new dishwasher, and swapped the Prado for a Prius, we’ll still be emitting far too much greenhouse gas.

  3. Paul Burns says:

    There are problems at the most basic level. I live in a very nice rented flat which has 3 ordinary light bulbs which I’ve changed to those curly LE ones I got for free from Country energy, but I have 2 fluorescent lights its nbot up to me to change. Its up to the landlord. I haven’t put LE bulbs on the front and back porch lights cause trhey’ll probably get knocked off.
    I’ve also put on a water saving shower head.
    I turn off all my power ponts when I’m not using them, except the TV/DVD and my electric clock, ’cause that causes me too many problems. You can’t buy non-electric clocks nowadays, at least not in Armidale. I’ve tried desperately, before I succumbed to the electric one. Along with recycling, I’m doing all I can, but part of it is beyond my capacity as a renter.For example, I can’t get solar hot water, though I’d like to, for cost as well as environmental reasons.
    I can’t be the only person in this position.

  4. Paul: rented accommodation is one of the bigger problems for improving energy efficiency across the board. That’s why there’s a role for governments mandating energy efficiency standards for rented accommodation.

    As for your hot water, do you have gas or electric? If it’s gas, the additional gains from solar are very marginal.

  5. Jamie Riches says:

    I agree with the problems of rental accommodation, but from the other perspective. We rent our home out since moving overseas and we’ve had to replace an aging hot water system. If we lived there, it would be a lot more tempting to consider solar, as the reduced power consumption, and hence power bills, would work to offset the high initial cost. However, as a landlord it just didn’t make sense. The initial cost was high, the benefit of lower power costs would go straight to the tenant, and I didn’t feel that I could increase the rent on the basis of having a solar hot water system. In the end we went with an electric system (no gas at the property) and just tried to get the most efficient one that we could afford. As for the role of the government in mandating energy efficiency standards for rented accommodation, that may be true, but if the costs in doing so are high, they will end up in the rent that is charged.

  6. As for the role of the government in mandating energy efficiency standards for rented accommodation, that may be true, but if the costs in doing so are high, they will end up in the rent that is charged.

    Undoubtedly. But the theory is that most of these changes are cost-effective, so the net expense to the renter won’t go up much. I believe that Labor was also planning to offer subsidies for the installation of such.
    In any case, the government promised to ban standard electric hot water systems, so you won’t have a choice next time; it’ll either be solar or a heat pump system.

  7. bahnischba says:

    From memory emissions were scheduled to grow about 20% by 2020. Hence a 25% reduction is closer to a 40% reduction against BAU. So it’s a big ask.

    Robert, I seem to recall that Geodynamics are hoping (and planning) to have a ‘Snowy Mountains’ size facility available by 2015, and if they do they should be able to role out more ‘Snowies’ from there.

    A caution is that they haven’t crossed the ‘proof of concept’ hurdle yet. It seems that they drilled a 4k hole into the hot rocks to put the water down and then another to get it back up again. But some silly clown dropped a well cap down the hole. They tried to drill around it, but couldn’t and so had to drill a whole new hole.

    On the positive side, they’ve changed CEO, bought a fancy new drilling rig with real grunt, hired a competent driller and Origin Energy has moved to a 30% holding, giving them the necessary financial muscle and a pathway to distribution.

    In my book it’s still speculative (I bought a few shares) but there’s a reasonable chance they could make a contributuion within the time-frame.

  8. Paul Burns says:

    Robert,
    My flat is all electric. I made sure it was because of the utterly exorbitant cost of gas from Kleenheat which has a virtual monopoly in Armidale

  9. Michael D says:

    Paul – You could always go on 100% green energy as well. This at least is something all renters can do.

    I am also right in presuming that any upgrades to a rental property would be tax deductible by the owner?

    I’m trying to convince my landlord to install some blinds on a floor-to-ceiling glass wall that we have. With tall ceilings, its going to very expensive to keep warm in winter. (i’m in melbourne.)

    Also, with the recent report that cost of retail elec will go up from next year, would be nice if the premimum on green didn’t also go up. But that is perhaps optimistic. Of course, all those who installed solar and reduced consumption will be enjoying the reduced payback time.

    http://www.theage.com.au/news/NATIONAL/Power-bills-to-rise-by-up-to-176/2007/11/30/1196392062791.html

  10. As you might remember, Brian, I also have some shares in Geodynamics. Your summary is about right.

    We’d better hope it works, and not just for our portfolio values…

  11. Paul Burns says:

    Michael,
    Will investigate going 100% Green with Country Energy.
    Re. heating. I use an electric oil heater, medium size. It costs about an extra $100-120 over winter. So far as I’m aware its greenhouse emissions are lower than bar and fan heaters and its a lot cheaper and keeps the flat warm to hot in the Armidale winters.
    Because of global warming the winters generally are not as bitterrly cold as they used to be 30 years ago when I came up here, but they’re still pretty terrible.
    Have only been in Melbourne in summer, so I casn’t compare.

  12. aidan says:

    Robert,

    Have you looked into the SunCube technology developed by Green and Gold Energy? This is he outfit that was started by the Greg Watson who appeared on The New Inventors with his Sunball in 2005.

    Seems like a smart idea to minimise the expensive bit (PV cell) and just concentrate more light onto it.

  13. aidan: Not in detail, no.

    The problem with any concentrating solar power system is that they essentially don’t work at all if it’s cloudy.

  14. adam says:

    i am so happy to see that everyone is doing something. responsibility abounds, and i am cheered that people support sense :^)

    but none of it will matter, including my own actions (such as never learned to drive or drove a car in my life, walked everywhere, ate local organic, lived close to work etc) or even discussing how to change our personal power supply, unless we cut out emissions by the big polluters in mining and resources.

    these industries eat dirty coal power alive, and still want more. but the amount of dirty energy that resource and mining industries use, versus their actual GDP contribution and employment numbers, verges on the ridiculous.

    there’s some massive cuts waiting to happen through staged winding down of these industries… it’s time for some responsible action here, rather than sandbagging old industry with misguided protectionism.

    and for those predicting social doom if we limit the amount of resources extracted, just think about what the resulting resource limits would do for the efficiency and viability of our recycling technologies, btw… now there’s a cash cow in the making.

    if we shift now, develop the new markets, and change as required, we can lead for a change. let’s go.

  15. Adam: the trouble is that those industries won’t go away. In a lot of cases, they’ll just shift to China where the energy efficiency is even worse.

    Let’s no overgeneralize. If the aluminium smelters got their energy from renewables, it wouldn’t be an issue.

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