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.