My claim on FAME

India's electric vehicle policy is titled Faster Adoption and Manufacturing of Electric and Hybrid vehicles, abbreviated as FAME. This policy, which was originally launched in 2015, underwent a total transformation and was launched as FAME phase II just last month. I recently wrote an opinion piece in Business Line (link below), a leading Indian financial daily. But my claim to FAME is I have been at it since 2004, with one minor difference, I was working on policies towards Fatty Acid Methyl Esters or in popular terms biodiesel.

The full article is here LINK

Why it is time to usher the EV revolution and how

The full article is here.

On Tesla and Tariffs

Much to the chagrin of Econists the White House has imposed tariffs on steel and aluminum imports into the US. The tariffs are set at 25% and 10% on the two metals respectively. The relationship between trade and environment is fascinating and complex and above all hard to generalize. But here I just want to explore what it means for pollution from transportation. It is not obvious the these are connected right? But they are.

I will dispense with the environmental implications one can draw from Econ101 as to how this raises domestic price of these commodities and lowers the world price (as we are a large consumer) and it's attendant effects for consumption and pollution. Since steel and aluminum are very energy intensive, if this action does lead to a net reduction in global consumption and if it shifts production to countries with cleaner electricity mix, it could be an "unintended" benefit for the environment. But those are BIG IFS. For if you relax Econ101 assumptions and bring in exemptions to imports from specific countries which could mean we are just shuffling things around, game theory and  general equilibrium effects, it gets complicated very quickly. Economics of trade and the environment is, however, not my trade.

But what I do know is steel and aluminum have an important role in automakers achieving the stringent fuel economy standards put forth by Pres. Obama. Needless to mention, this is a regulation that the current administration is proposing abandoning. In any case, according to the US Department of Energy,  "A 10% reduction in vehicle weight can result in a 6%-8% fuel economy improvement. Replacing cast iron and traditional steel components with lightweight materials such as high-strength steel, magnesium (Mg) alloys, aluminum (Al) alloys, carbon fiber, and polymer composites can directly reduce the weight of a vehicle's body and chassis by up to 50 percent and therefore reduce a vehicle's fuel consumption."

At the same, it appears that aluminum-based materials are two to three times costlier per kilogram relative to steel. So whereas the pricey Tesla S relied more heavily on aluminum, the Tesla 3 which is a intended as a mass market car has a greater proportion of Steel. This means the Tesla 3 will be heavier for a given range  and will have to pay a greater fuel economy penalty.

In fact, the tariffs might be giving ammunition to auto makers to lobby harder for weaken the fuel economy targets. After this yet another depressing assessment, let me try to cheer you up with a couple of sunnier possibilities. One, steel makers have not been sitting idle hoping for political developments to regain market share in the auto industry. They have developed  advanced high-strength steel (AHSS), which according to the steel industry is cheaper and has lower life cycle emissions relative to aluminum. This coupled with improvements in power train technology and lighter batteries there might not be much penalty from reverting to steel. Last but not least, the tariffs on aluminum are set lower relative to steel.

If you accept that intentional harm is a given, then the fact there isn't additional unintentional harm is good news.

A bright spot in the US tariffs of solar imports

Today's hottest news relating to the environmental is the imposition of tariffs on imports of solar panels (along with washing machines) by the Trump administration. Ironically it coincides with World Economic Forum summit in Davos.

Per Econ 101 trade barriers cannot be good overall. While I do buy that, if we are to take anything away from the developments of late 2016 it is that thinking in overall terms is practically useless. What matters is who stands to gain (or lose) or are can be seen as gaining (losing). Domestic solar panel industry benefits while domestic solar panel consumers, retailers and installers lose. Government revenues increase due to tariffs and decrease due to reduced sales. The size of each is an empirical question. However, if the affected countries retaliate, there will be loses in the broader economy and this is what economists mean it cannot be good overall.

But let me talk about something I really know little bit better. Climate change is a global problem and while the world could use all the solar we can, in the near to medium term which is the time frame for this policy, it matters where it is installed. On the margin Solar is displacing natural gas in the US market and not coal. If the US is large enough a market, and it is, this should dampen global demand for solar which would lower global solar prices. This will boost demand from  developing countries.  If this can help delay or cancel investments in coal then both the global and local environmental benefits could be larger. So our president's policy might end up helping the poor countries he wants to limit migration from. Of course, you don't need have come this far to keep your chin up as there are reports out there that say this policy will not affect the global solar industry as much as it seems. Now what would be the point of saying this right up front.

You cannot take this to the bank

After spending three weeks in India and exposing my son to  pollution in the name of being sustainable (i.e, not Ubering or Ola-ing every where), I am all the more looking forward to the rapid diffusion of electric cars in our cities. So far I have read reports  that cite automakers, oil companies, transportation industry, consumers, investors, and ofcourse, policy makers. However, one group is conspicuous by it's absence from this list, Bankers. There was a time before 2008 when the phrase you can take it to the bank was worth the ink on which it was written but not anymore.

Apropos this criticism is the picture below from a Bloomberg report citing a Bank of America analysis about the future of oil demand.












I am not going to go into issue of peak oil demand for it is not a question of if but when, and I for one feel the when is not as near as it is made out to be but that is another topic. I refer to my earlier post on Peak Oil here.

Here, I really take issue with how two different phenomena -- share of EV sales and global oil demand over the three decades -- are juxtaposed in a misleading way and misinterpreted as an optimistic future when the actual story it tells is a depressing one for the environment! Notice that the primary y-axis (one on the left) runs from 0 through 100% while the secondary y- axis (one the right) runs from 96 to 106 million barrels per day. In other words, the right axis runs from 0 to 8%, which is the decline in oil consumption from it's peak in the late 2020's. What's more, oil demand is unchanged at 0% from 2016 through 2050. Just think about EV's rise to a 100% of car sales in 30 years time and oil consumption has not dropped one bit. This chart is not one you can take to the bank. For the sake of our own future let us hope that this projection is wrong.

May be I am being too harsh as this post is about bank analysts, a subset within those large institutions who perhaps are more guilty than the rest of their ilk for all that is wrong with them.  Unfortunately, one might find such misleading graphics in academic and scholarly journals as well, which was the point of my 2016 paper on "Peak Cropland". I argue, albeit using correlations only, that global crop acreage is set to keep growing.

Green Christmas tree options

Yesterday, I received a request from a environment and science reporter to comment as to which is better for the environment - real or artificial Christmas trees and I had 24 hours to respond. For once, I can empathize with people at Amazon fulfillment centers :-) Although I had not thought about this specific comparison, it being a perfect question for an LCA, I accepted the challenge of coming up with something interesting and overnight it.

At the outset, if someone feels they just want a real tree to get the real Christmas spirit, which no one argue with, then there is no need for further discussion. But say, one is interested in simply knowing the enviromental footprint of each. My plan is to hazard a calculated guess and my approach is to use as a spring board the paper versus plastic debate, which it feels like predates Christmas but is in the context of shopping bags or beverage/food containers.

Before jumping into the dry and boring mechanics of LCA, a first step is to see whether the two goods or products in question are functionally equivalent. If they are not, one needs to find a way to first make them comparable which in technical terms is called as System expansion or allocation. So needless to say we ought to be comparing two trees of identical dimensions and physical appearance.

Next, and right off the bat, there are no simple answers in an “overall” environmental sense, for what is “overall” is subjective. First, there are multiple different non-commensurate environmental burdens such as greenhouse gas emissions, criteria air pollutants, toxics, water pollution, and solid waste which have different impacts on human health and natural environment, and whose implications vary spatially and temporally. Next and on a related note, there are multiple different scarce natural resources consumed in the lifecycle of each including fossil fuel use, water use, land use. Finally, the sourcing of the natural resource (virgin vs recyled), the end-of-life  management practices (reuse, composting, recyling, landfill or incineration) and how much transportation is involved at different stages of the lifecycle all matter to the calculus. That said, evidence suggests that in general plastic outperforms paper with respect of almost every measure other than biodegradability. So after round 1 of this match, it is even-steven.

Now, what are the differences and similarities to the paper vs plastic situation. Artificial christmas trees are made of plastic (of which there are many different types by the way and each can be produced from different types of fossil fuels) while wood from different types of trees is the main raw material for paper. So, in translating from paper vs plastic, we can drop the environmental impacts associated with converting wood to paper, which is the main reason that paper comes out poorer compared to plastic except with respect to biodegradability. This alone means that the balance might significantly be tilting towards natural trees. Round 2 goes to real trees.

Next, people often cite transportation as big potential waste of a resource but in my experience, it is unlikely to tilt the calculus one way or another even shipping stuff from a point diametrically across the globe. Round 3 is even-steven

Having said that, I need to point out a potential issue in the literature on LCA of plastics. Plastics are derived from an incidental co-product of oil refining, namely Naptha, which is cracked (broken down) to ethylene, the basic building block for poly-ethylene i.e. plastics. An aside, increasingly ethane that accompanies natural gas extraction is becoming the source of ethylene and this is also cleaner. In any case, the key word is incidental, which means the impacts of oil extraction, transportation and refining should be attributed to gasoline, diesel, jet fuel and heating oil which are the main reasons we drill for oil. Round 4 goes to artificial trees

The next critical aspect is reusability. In the paper vs plastic case, even though plastic bags can be reused, they rarely are while paper bags are either  recycled or land filled. But artificial Christmas tress can last for years or decades and can be resold on craigslist and ebay while real trees tend to be discarded after one time use and tend to be landfilled or composted. My "guess" is if it is used for 5 times of so, the balance significantly tilts in favor of artificial trees. Round 5 - artificial trees big time and perhaps the knock out punch assuming they are reused multiple times.

This is the best my academic self can bring to say unambiguously without a full LCA. So, what should you do? As to what God wants from you, you know. For everything else, ask Alexa.

Digesting a study on meat and climate change

One benefit of writing a blog that no one reads is to be able to write at will. During my hiatus since the end of summer, I have been chewing on a lot of things. Interestingly, of all the things I bit, food seems the most nourishing for this post is about an article titled “Nutritional and greenhouse gas impacts of removing animals from US agriculture”. The full article from the Proceedings of the National Academies of Sciences is here.

The basic point it makes is that shifting to plant-only diet can meet our calorie needs with less environmental impact but will need supplementation of essential nutrients that are deficient in plant diets. This overall conclusion is completely intuitive and reasonable and not particulary striking. Also there are a number of limitations that the authors acknowledge themselves. Models are a simplification of reality and as a modeler  I don't know what it means to be one if I cannot see the limitation in any given model. So I am going to vicariously satisfy the pleasure I might have derived if I had been a reviewer of this manuscript.

But before I get to the limitations, let me say, there was one thought provoking insight buried inside. It is that while deriving calories and protein from meat is more land intensive, livestock production happens on relatively poor quality land and there is only a fixed quantity of good quality land suitable for crops. And so if we are to increase crop production to make up for the shortfall in meat, we have the tough task of growing crops on land not readily suited to farming and we therefore have to use a additional inputs - chemicals, water and technology to augment land quality, which will have it’s own attendant environmental implications. How big will this rebound in pollution be and how much will it offset the benefits of going vegetarian is an empirical question. This is a fascinating extension to this study worth delving into. Now, the concerns I have are the following.

First, I find the title of the paper misleading and inaccurate. The study is a descriptive analysis of the current environmental footprint of rearing animals for human uses. This is completely different from a predictive let alone prescriptive assessment of what would happen if we took any action to change the status quo. For small changes to the status quo, one can extrapolate from a descriptive analysis in a relatively straightforward fashion. However, small changes will have marginal impacts on the environment. LCA studies which are at the core of the claims  about GHG emissions in this PNAS paper cannot be extrapolated to derive the inferences that are implicit in this work. I am going reserve the more dry (i.e. methodological) details for another post. Clearly, the motivation of the authors is about informing actions that can bring about non-marginal or big changes. So object to the word impact in the title, a more apt title would be “Nutritional and greenhouse gas footprint of animals in US agriculture”

Second, agriculture no doubt has a big environmental footprint overall on the earth. However, greenhouse gas emissions are but one of the ways it negatively impacts the environment and agriculture is a much smaller contributer relative to fossil fuel use for non-agricultural uses. But agriculture is perhaps largest contributor to water pollution, soil erosion, flooding, human health impacts for farm workers, loss of biodiversity, etc. Indeed making agriculture more sustainable for these other reasons might have greater benefits, and of course, have attendant co-benefits for climate change albeit a purely climate focus might suggest different changes. In the current political and social climate, a strategy focused on tangible, immediate benefits might encourage people to incur costs that also have long term climate benefits. So it would be an opportunity lost if the wealth data this study has synthesized were not to be exploited to derive implications of a reduction in meat consumption for these other impacts and who knows we might find some trade-offs.

A third thing which strikes me is that there is no mention of ethics or moral implications of not eating meat or better less meat. It is fine for a scientific study, and by that I mean one that simply aims to explain and describe the state of a system to ignore inconvenient topics like ethics and morality. But these cannot ignored in a normative sense. However much the authors might try to be clear about the narrow scope and long list of limitations of their work, one can be certain that the vested interests, of which there is no shortage of, will exploit it to draw the wrong conclusions and obfuscate matters further. That is why I feel a focus on just GHG emissions is insufficient and could even prove counterproductive in the current climate. For instance, I am vegetarian and was raised so for religious reasons. But given my beliefs, if I were not a vegetarian, I am more likely to become one out of concern for treatment of farm animals and aquatic life rather than for the sake of reducing GHG emissions.

There is a lot of fascinating research now trying to ask people how they value the environment and what types of framing and messaging might nudge people in the direction of more environment friendly choices. That is why the awarding of the Nobel Memorial Prize in Economic Sciencest to Professor Richard Thaler for his work on Behavioral Economics is particularly timely. My take of behavioral economics is that misbehaviour is the norm and not the exception. That is people are people and people are not pre-programmed mechanical calculators. Back to the point, unfortunately, almost all this research in a sustainability context is focussed on only one set of activities such as electricity use, transportation choice, food or consumer goods. But I think we need to find out how people trade-off between making choices across these domains. Food, I think is incredibly complex and needs a truly interdisciplinary analysis because it is cultural, social, personal and less given to hedonic analysis, i.e. breaking down into attributes of calories, proteins and vitamins.  On the other hand choices for housing, cars and appliances is amenable to break-down of the value into attributes of cost, convenience, location, environment, etc. and we might have a easier task attacking each of these piece meal. Maybe I ought to drop cars from this list, something tells me taking cars away can be as touchy as denying meat, especially for those of us in America.

Carbon tax in toddler speak

One of the positive influences of parenthood on me is the habit of reading. Yeah, I will admit I was never much into books. In spite of gentle nudging by my parents, I was more concerned about soaking in the sunshine and intense heat of south India playing street cricket. So I am glad to start by taking baby steps. In doing so, I believe I found the perfect story to explain a carbon tax to my 4 year old son. If you think about it, kids books are all about sustainability - they teach respect for all life forms, not wasting stuff and being good citizens and they make it sound like fun, as I think sustainability should be. Not an onerous responsibility. But really, I can’t think of one good reason to bother my son with understanding carbon tax.  However, I do think the same story can help explain a carbon tax in toddlers' terms to grown ups.

Anyway, the latest book we checked out from our wonderful public library is a story about a near-sighted giraffe (Youtube reading of the book). Spoiler alert, I am breaking the suspense of the story here. It is about a Giraffe that can't see very well but one who refuses to accept the fact. So when he bangs his head on a tree, he gets a helmet instead of getting glasses. When he bangs his foot, he gets boots. When he falls into a hole, he starts carrying a ladder. When he sits down on a thorny bush, he ties a pillow to his back. You get the point.

So when we adopt every conceivable policy but a carbon tax to address climate change it is akin to the giraffe refusing to wear a glasses. Let me complete the story. The giraffe’s friends after watching him refuse their good advice resolve to help him one way or another. So one night when the giraffe is sleeping, a panther (or may be another species of big cat) stealthily plants a pair of glasses around the  giraffe’s eyes. In the morning, when the giraffe bends down to take a sip of water from a lake, he sees his reflection and realises how clownish he looks with a helmet, boots, pillow and a ladder on him. He gets rid of them and realizes how elegant he looks in glasses.

Unfortunately, one cannot plant a carbon tax on a society as stealthily as the panther did with the giraffe. Indeed, government cannot do what private companies such as banks are able to do with fine print, and rightly so. Of course, there is also some truth in that the fine print is itself a product of a complex regulatory landscape. On the contrary, they plant stuff on us more brazenly, when they saddle us with debt due to needless wars and weaponization, expensive healthcare etc. But I digress. So the experts need to find new creative ways to impress upon the citizenry and policy makers why a carbon tax is the elegant solution to carbon pollution.

Maybe I am putting the cart before the horse for I am working on the assumption that carbon pollution is a problem, which unfortunately is a big assumption for an unbelievable large section of american society.

(S)Peaking of oil

"The report of my death was an exaggeration" - Mark Twain

The stimulus for this post is this interesting talk by Tony Seba, and predictions about peak oil that I heard at recent workshop on transportation. I don’t have any materials to share from the workshop but this WSJ article presents similar points. Seba’s talk is mainly about the confluence of five major innovations - four technological - solar PV systems, battery technology, electric vehicles, autonomous vehicles and a fifth that is more institutional (academic jargon for business model), which is the ride-hailing industry (lyft, uber etc.) In fact, I had similar and optimistic yet different take on the combination of EV, AV and ride-hailing a year back.

Predicting peak oil, on the other hand, is a different proposition altogether. It has been a topic of intense analysis and debate for several decades now. Beginning with King Hubbert in 1950s, many geologists have been pessimistic about the long term prospects for cheap oil supply. Here is a link to a fascinating article in the magazine Scientific American from 1998. Peak oil claims rests on assumptions about depletion of reserves of "conventional" oil and the increasing amounts of energy (and therefore, cost) associated with extracting from depleted wells. Interestingly, economists were more optimistic and in any case the peak is not  important in and of itself as we would innovate our way out of the problem as oil price, the true indicator of scarcity, rises. And, of course, all the while climate scientists and environmentalists have been shouting (unforuntately, in vain so far) for absitnence, (ofcourse, from oil for the most part but not exclusively). But the peak oil prognostications of today are about an impending peak in the demand for (or more precisely consumption of) oil as opposed to peak due to depletion. The reason for this is exactly the kind of breakthroughs mentioned above.

If your day is made, then I recommend you read no further for I am going to spoil it. Sorry, but it is my job to call it as I see it. Don’t get me wrong. I would love nothing more than to solve externalities (jargon for pollution problems) and produce public goods (jargon for things like knowledge) with a business as usual  approach. But I know enough to not bet on it. In other words, I am not sure which among the two — peak oil supply or peak oil demand is better for the environment. 

A peak due to scarcity would mean that oil prices rise which would provide an impetus for renewables (which are costlier today because we do not see the full cost of oil) and at the same time make us more efficient in energy use. The flip side is that higher oil prices would also lead to innovation in finding more oil or converting coal and gas to liquid oil which is a very dirty process. It is a question of which of these two forces will win out. A peak in oil demand while it sounds good might be the proverbial Torjan horse. It might lull us into a sense of lazy optimism only for oil to strike back with vengeance. Here is why. 

1. Peak oil demand means that the price of oil keeps falling. At today’s price of $50 per barrel, we are all not exactly rushing to buy electric cars (of course, a few have plonked down $1000 to reserve a Tesla Model 3). As if life was not hard enough at $50/bbl, these technologies will now have to compete with ever cheaper oil. Likewise, solar and wind have to compete with ever cheaper coal and natural gas as we move to a renewable electric grid. 

2. Some contend that we did not stop getting around in horses because we ran out of them but that we discovered a superior alternative in oil and motorized transport. Other somewhat more trivial analogies might be that we did not run out of Kodak cameras, telephone lines, postal mail. In each case the product that displaced these were clearly superior and it did not take a government regulation to phase them out. There was also the famous Ehrlich-Simon wager about scarcity of important metals we know how that was settled. In any case, I am not convinced that batteries, solar electricity and electric cars are relatively as superior to today’s oil + internal combustion engines as oil was to horse drawn carriages. Agreed, an EV might be a smoother ride and range is unlikey to be an issue but is that nearly enough? Also autonomous and ride-hailing work is indifferent to propulsion technology.

3. Now, let me get off my smart horse and concede for a moment that EV’s and solar electricity are such a superior alternative that we will voluntarily stop buying internal combustion engine automobiles and combusting coal and gas. But that doesn’t mean the fossil fuel industry will shut shop and things will be hunky-dory. A bit of history would come in handy here. Before the 1970s, a substantial amount of oil was used for electric power generation and mind you burning oil for electricity is quite bad for both human health and climate change. This wasteful use of oil has since declined only because oil became scarce enough to justify it’s use only for transportation and as a source of back up and peak electric power and remote locations with little access to other energy sources. That said, in oil rich countries like Saudi Arabia oil is used profligately for baseload electricity. My spreadsheet tells me that at $20-$25 oil, oil-fired generation could come back in a big way especially in places where gas is scarce and coal is considered as dirty. What’s more at these prices we oil-fired generators might be able to afford $40 to $50 per tonne for either a carbon tax or carbon di oxide capture and sequestration.

I will conclude on a constructive if not entirely cheerful note. The solution is simple. Basically, we are faced with a leaky bucket and as we begin to fill it with cleaner water, it is all the more important that we also fix the leak. In technical terms, we need to put a price on pollution and make it not worthwhile to consume dirty fuels even as they become cheap. One way to do this is for the world to agree on capping global greenhouse gas emissions. I am optimistic that we will achieve this someday but will it be soon enough is anybody’s guess. In the meantime, there is no reason to not be excited about the coming technological disruptions.

Amazon and the urban landscape

Writing this blog helps me get something more useful out of my addiction of consuming news, which gets depressing by the day. But Professor Hal Varian himself thinks the best place to find ideas for research is the news and popular press rather than academic journals (link to his paper). So the idea for this post comes from a discussion on NPR a while back (link). It was on the unintended consequences of Amazon on cities. This reminded me of my own and only appearance on public radio till date (link) from about a year back talking about a related topic.

I work on LCA, which is largely, although not exclusively, about assessing the greenness of individual products or actions such as shopping online and more importantly, how does this compare to an alternative way of satisfying the need in question. LCA is not very meaningful in an absolute sense, it is only in a relative sense, i.e., when comparing alternatives. And so I have thus far only thought seriously about adding up all the pollution when you shop online vis-a-vis from a brick and mortar store. But this NPR program raised some really interesting and challenging issues both from an LCA and an urban sustainability standpoint. Online shopping is slowly but surely changing our landscape. For one, it is driving several types of retail stores to close down and this includes individually owned and outlets of large retail chains. Somehow, we tend to feel more badly about the former although the lives of employees in both is affected. At the sometime there is a boom in restaurants and bars (See this news article). It is hard to say how much of this because of rents being lower which is in turn driven by store closings, and how much is simply because of increase in demand for eating out and drinking. The two might not be unrelated. Amazon and online shopping is driving store closings and also freeing up money to spend on eating out.

So how do we begin to grasp the environmental impact of online shopping when there are all these ripple effects? LCA has a role here but this is a classic question for interdisciplinary research for understanding the environmental impacts requires a grasp of the economic implications. A great topic for research.