Selected category: Technology

What Night-time Lights Tell us about the World and its Inhabitants

Night viewMost people are familiar with the iconic image of North Korea at night—Pyongyang stands as a beacon of light amid of what looks almost like a large body of water—but what is, in fact, land draped in complete darkness. That imagery revealed details about what was previously unknowable due to the country's cloak of secrecy—its meager electricity use and level of poverty. My colleagues Daniel Zavala-Araiza, Gernot Wagner and I took an even deeper look at how well night-time lights can account for other measures of socio-economic activity in a new article published today in the journal PLOS ONE.

I got interested in what these images could tell us back in 2012 when I started attending the Geo for Good conference, an annual event hosted by Google where nonprofits and researchers learn how to use geospatial tools such as Earth Engine. Gernot, Daniel and I started wondering what interesting applications we could explore with night-time lights data, and see what we could learn by examining the entire 21-year record of the National Oceanic and Atmospheric Administration’s Defense Meteorological Satellite Program (DMSP) at the country level. We took that dataset and compared it to a much wider scope of other datasets. By using a distributed, parallelized platform such as Earth Engine, the scope of this research and our analysis is able to be larger than prior studies.

The prevalence and magnitude of night-time light is an alternative, standardized, and relatively unbiased way to gather information about important socio-economic indicators like CO2 emissions, GDP, and other measures that would in some cases be unknowable. For example, these data helped estimate the size of the informal economy of Mexico in a 2009 study by Ghosh et al.

We’re hoping that by combining all of these methods, data sets, and tools, researchers can develop an even better understanding of how we relate to the environment, so we can ultimately become better stewards of it. Google Earth Engine, Hadoop and Spark are powerful examples of such tools —our hope is that our fellow researchers will ask and pursue new questions, so we can advance the conversation even further.

Also posted in International, Uncategorized| Leave a comment

The United States Could Lead the Next Tech Revolution by Investing in Clean Energy

New Risky Business Report Finds Transitioning to a Clean Energy Economy is both Technologically and Economically Feasible

In the first Risky Business report, a bi-partisan group of experts focused on the economic impacts of climate change at the country, state and regional levels and made the case that in spite of all that we do understand about the science and dangers of climate change, the uncertainty of what we don’t know could present an even more devastating future for the planet and our economy.

The latest report from the Risky Business Project, co-chaired by Michael R. Bloomberg, Henry M. Paulson, Jr., and Thomas F. Steyer, examines how best to tackle the risks posed by climate change and transition to a clean energy economy by 2050, without relying on unprecedented spending or unimagined technology. The report focuses on one pathway that will allow us to reduce carbon emissions by 80 percent by 2050 through the following three shifts:

1. Electrify the economy, replacing the dependence on fossil fuels in the heating and cooling of buildings, vehicles and other sectors. Under the report’s scenario, this would require the share of electricity as a portion of total energy use to more than double, from 23 to 51 percent.
2. Use a mix of low- to zero-carbon fuels to generate electricity. Declining costs for renewable technologies contribute in making this both technologically and economically feasible.
3. Become more energy efficient by lowering the intensity of energy used per unit of GDP by about two thirds.

New Investments Will Yield Cost Savings

Of course, there would be costs associated with achieving the dramatic emissions reductions, but the authors argue that these costs are warranted. The report concludes that substantial upfront capital investments would be offset by lower long-term fuel spending. And even though costs would grow from $220 billion per year in 2020 to $360 billion per year in 2050, they are still likely far less than the costs of unmitigated climate change or the projected spending on fossil fuels. They’re also comparable in scale to recent investments that transformed the American economy. Take the computer and software industry, which saw investments more than double from $33 billion in 1980 to $73 billion in 1985. And those outlays continued to grow exponentially—annual investments topped $400 billion in 2015. All told, the United States has invested $6 trillion in computers and software over the last 20 years.

This shift would also likely boost manufacturing and construction in the United States, and stimulate innovation and new markets. Finally, fewer dollars would go overseas to foreign oil producers, and instead stay in the U.S. economy.

The Impact on American Jobs

The authors also foresee an impact to the U.S. job market. On the plus side, they predict as many as 800,000 new construction, operation and maintenance jobs by 2050 would be required to help retrofit homes with more efficient heating and cooling systems as well as the construction, operation and maintenance of power plants. However, job losses in the coal mining and oil and gas sectors, mainly concentrated in the Southern and Mountain states, could offset these employment gains. As we continue to grow a cleaner-energy economy, it will be essential to help workers transition from high-carbon to clean jobs and provide them with the training and education to do so.

A Call for Political and Private Sector Leadership

Such a radical shift won’t be easy, and both business and policy makers will need to lead the transition to ensure its success. First and foremost, the report asserts that the U.S. government will need to create the right incentives.  This will be especially important if fossil fuel prices drop, which could result in increased consumption.  Lawmakers would also need to wean industry and individuals off of subsidies that make high-carbon and high-risk activities cheap and easy while removing regulatory and financial barriers to clean-energy projects. They will also need to help those Americans negatively impacted by the transition as well as those who are most vulnerable and less resilient to physical and economic climate impacts.

Businesses also need to step up to the plate by auditing their supply chains for high-carbon activities, build internal capacity to address the impacts of climate change on their businesses and put internal prices on carbon to help reduce risks.

To be sure, this kind of transformation and innovation isn’t easy, but the United States has sparked technological revolutions before that have helped transform our economy—from automobiles to air travel to computer software, and doing so has required collaboration between industry and policymakers.

We are at a critical point in time—we can either accelerate our current path and invest in a clean energy future or succumb to rhetoric that forces us backwards. If we choose to electrify our economy, reduce our reliance on dirty fuels and become more energy efficient, we will not only be at the forefront of the next technological revolution, but we’ll also help lead the world in ensuring a better future for our planet.

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The Atlantic's year-end feature "Hope & Despair"

Lucy Nicholson / Reuters / Zak Bickel / The Atlantic

Lucy Nicholson / Reuters / Zak Bickel / The Atlantic

Reason for despair: Climate change. It’s the perfect problem: more global, more long-term, more irreversible, and more uncertain that virtually any other public-policy problem facing us. Climate change is a lot worse than most of us realize. Almost regardless of what we do on the mitigation front, we are in for a whole lot of hurt.

On the policy front, we have now talked for more than 20 years about how we need to turn this ship around “within a decade.” Not unlike the ever-elusive fusion technology, that hasn’t happened yet. Global carbon emissions declined slightly this year—for the first time ever without a global recession—but the trends are still pointing in the wrong direction. Worse, turning around emissions is only the very first step. It’s not enough to stabilize the flow of water going into the bathtub when the goal is to prevent the tub from overflowing. We need to turn around atmospheric concentrations of greenhouse gases. That means turning off the flow of water into the tub—getting net emissions to zero and below. It doesn’t help our efforts that many people seem to confuse the two. A study involving over 200 MIT graduate students faced with this same question revealed that even they confuse emissions and concentrations—water flowing into the tub and water levels there. If MIT graduate students can’t get this one right, what hope is there for the rest of us?

Reason for hope: Climate change. Many signs point to some real momentum to finally tackle this momentous challenge.

The Paris Climate Accord builds an important foundation. It enables transparency, accountability, and markets to help solve the problem. Many governments are moving forward with pricing carbon: from California to China, from Sweden to South Africa, we see ambitious action to reign in emissions in some 50 jurisdictions. Meanwhile, lots is happening on the clean-energy front. That’s particularly true for solar photovoltaic power, which has climbed up the learning curve—and down the cost curve—faster than most would have expected only five years ago. That has also provided an important jolt for sensible climate policy. Then there’s R&D for entirely new technologies. Bill Gates leading an investment coalition with $1 billion of his own money is only one important sign of movement in that direction. The excitement for self-driving, electric vehicles is palpable up and down Silicon Valley, to name just one potentially significant example. In the end, it’s precisely this mix of Silicon Valley, Wall Street, and, of course, Washington that will lead—and, in part, is already leading—to the necessary revolution in a number of important sectors, energy and transportation chief among them.

Excerpt from The Atlantic's year-end feature on Hope and Despair: "Can the Planet Be Saved?"

Also posted in Cap and Trade, International, Politics| Leave a comment

Biking and Renewables

Illustration by Kelsey King/Ensia

Illustration by Kelsey King/Ensia

There’s nothing quite like biking down clogged city streets, weaving in and out of traffic. For short distances, it’s faster than driving. It’s liberating. It’s fun.

It also makes it painfully clear that most roads aren’t made for bikes. Make one mistake, and you might end up dead. If you do everything right and the 4,000-pounder next to you makes a mistake, you still might end up dead. Few regular urban cyclists remain entirely unharmed throughout the years: A broken bone (“cut off by a van”), a scraped shin (“car door”), or perhaps simply drenched on an otherwise dry road (“I avoided the mud puddle; the car didn’t”).

Blame it on my day job, but as I was cut off by yet another driver fixated on his phone while cycling to work, I got to thinking that this is how wind and solar electrons must feel as they try to navigate the electric grid. There, too, the infrastructure and rules were designed for the conventional, fossil fuel-based generators, not their smaller, greener counterparts.

We need to get off gasoline-powered vehicles, the same way we need to get off fossil-powered electricity. Biking alone, of course, can’t eliminate fossil fuel-based transportation. It’s a niche alternative that chiefly works in densely populated cities filled with environmentally concerned citizens. What works in Berkeley, Boulder, Brooklyn and Boston won’t work everywhere. Neither can trains, by the way, another favorite of environmentalists. Most U.S. cities have a lot of catching up to do with their European counterparts, but, if anything, it will be electric vehicles that will truly help us make this transition.

Similarly, wind and solar can’t singlehandedly eliminate fossil fuel-based electrical generation. They have great potential, much more so than biking ever will. But there, too, are limitations — chiefly the (eventual) need for storage to eliminate all fossil fuel-based generation: coal, petroleum and natural gas.

Meanwhile, there are great benefits to pushing both green technologies. Biking helps get previously sedentary drivers to move, which, in turn, extends their lives and decreases societal health care costs, assuming injuries can be avoided by appropriate bike infrastructure. Every dollar invested in that infrastructure can pay for itself many times over.

Something similar holds for subsidizing infrastructure for renewables (and, for that matter, some energy efficiency measures). The reduction in the large and risky global warming externality typically offsets the costs of subsidies and other sensible policy interventions. Many of the right policies are indeed being put in place.

Still, some traditional utilities continue to fight the integration of rooftop solar and other renewables, the way New York City did with bikes in 1987 when it tried to ban them altogether from midtown Manhattan. Today, New York is decidedly friendlier to cyclists, with Mayor Michael Bloomberg adding over 300 miles of bike lanes to city streets, and a popular, still-expanding bike share program. Renewables, for their part, are increasingly welcomed onto the grid, with increased open access and grid management tools aimed at integrating intermittent renewable energy sources. Much more needs to be done.

Getting the Job Done

There’s one more parallel that might well dwarf all else: Biking for biking’s sake is fun on a sunny Sunday afternoon. On a Monday morning, when it’s about getting to a meeting on time and looking professional, transport choice comes down to getting there reliably, quickly, cheaply and without sweat stains.

Electricity is no different. Solar panels may be an interesting, even fun, choice for some. The feeling of energy independence and doing good is a bonus. But many times, it doesn’t matter where electrons come from, just that they do — reliably, cheaply and cleanly.

The ideal policy solution for energy is as clear as it is seemingly difficult to implement: Pay the full, appropriate price for electricity at the right time and place, including currently unpriced environmental costs. Once every electron comes with the appropriate price tag, the solar panel on your roof — or the solar farm down the road — may well carry the day. Or it might not. That’s OK, too. Having the right energy mix matters more than any one technology. The energy system is a system, after all.

Biking, too, is but one form of getting around. Appropriate gas taxes, congestion charges and parking fees help incorporate the full costs of gasoline-powered engines and encourage more alternative modes of transport — from electric vehicles to public transport and bikes. Meanwhile, outright subsidizing those alternative modes is surely the right step. Pushing those alternatives at scale is as sensible as pushing renewables, especially when it also means moving closer to the ideal pricing policies in the first place.

But pushing biking or any one form of alternative transport is no end goal in itself. At the end of the day, it’s about getting from A to B. That means — as it does for energy — getting the entire system right.View Ensia homepage

Published on Ensia.com on October 1st, 2015.

Also posted in Energy efficiency| Leave a comment

Reconsidering the Rebound Effect

By Kenneth Gillingham, David Rapson, and Gernot Wagner.

The Rebound Effect and Energy Efficiency PolicyThe rebound effect from improving energy efficiency has been widely discussed—from the pages of the New York Times and New Yorker to the halls of policy and to a voluminous academic literature. It’s been known for over a century and, on the surface, is simple to understand. Buy a more fuel-efficient car, drive more. Invent a more efficient bulb, use more light. If efficiency improves, the price of energy services will drop, inducing increased demand for those services. Consumers will respond, producers will respond, and markets will re-equilibrate. All of these responses can lead to reductions in the energy savings expected from improved energy efficiency. And so some question the overall value of energy efficiency, by arguing that it will only lead to more energy use—a case often called "backfire."

In a new RFF discussion paper, "The Rebound Effect and Energy Efficiency Policy" we review the literature on the rebound effect, classify the different types, and highlight the need for careful distinction between causal links—which are indeed worthy of the “rebound” label—and mere correlations, which are not. We find, in fact, that measures to improve efficiency, despite potential rebound effects—are likely to improve welfare, generally.

Among the key questions about the rebound effect are a) whether the net benefits of energy efficiency increases are positive (for a costless improvement, the answer is almost certainly "yes"), and b) whether the increase in demand for energy services uses so much additional energy that it leads to greater, rather than less, demand for energy itself (the answer is almost certainly "no").

Our findings are clear: while it is possible for rebound effects to be large in some settings, there is no reliable evidence supporting rebound effects so large that improving energy efficiency leads to more energy use. Backfire is theoretically possible, but even the theoretical predictions rely on channels that are either a) second-order in magnitude (and thus unlikely to overwhelm primary effects), or b) lacking in empirical evidence of their existence and magnitude. Globally, we have little reason to worry about backfire. While there is much uncertainty about the size of the so-called "macroeconomic rebound" (how re-equilibration of markets and such hypothesized effects as induced innovation from the energy efficiency improvement may lead to a rebound), we consider a plausible upper bound of the total effect to be in the range of 60 percent (that is, 60 percent of the potential energy savings will be lost to rebound), with most studies pointing to a smaller effect.

Regardless of its size, we find that the rebound effect is very likely to be welfare-improving. In fact, in the extreme, energy efficiency improvements that come about from innovations or otherwise have no cost are unequivocally welfare-enhancing. If the improvements come with costs, such as air pollution from more driving or more expensive technology, those need to be weighed against the energy savings, emissions savings, and welfare benefits from the policy.

In short, undue emphasis on backfire is a mere distraction. Or as we put it in a recent letter to the editor of the New York Times: energy efficiency improvements such as "LEDs alone won’t solve global warming or global poverty, but they are a step in the right direction for both."

Published on Common Resources. The RFF Discussion Paper is here: "The Rebound Effect and Energy Efficiency Policy."

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The Silver Bullet Of Climate Change Policy

From Forbes.com:

By Bob Litterman and Gernot Wagner

Whenever the conversation turns to climate change, someone is sure to opine that there’s no silver bullet. The issue is simply too complex to have one solution. When you focus on all the changes that need to occur to reduce greenhouse gas emissions globally it seems like a multifaceted approach is the only way forward.

Most of the world’s vexing problems share that feature. Mideast peace, nuclear non-proliferation, Eurozone stability, and plenty of other national security problems have no single right plan of attack. Some past plans might have brought us tantalizingly close to a seeming solution, but then reality started interfering once again, reconfirming the complexity of it all.

Climate change must surely be in that category. No single country, no single technology, no single approach can seemingly solve this one for us once and for all. Picking a single technology will almost inevitably end in some form of disappointment. Bureaucrats, the saying goes, ought not to try to pick winners. Leave that to venture capitalists for whom failure is a way of life. For every Apple and Facebook, there are dozens who never make it out of the garage. And clean technology doesn’t yet even have a single Apple and Facebook as the standout approach revolutionizing the field.

It turns out, though, that how you frame the issue is crucial. If you think like an engineer there are dozens of challenges. If you think like an economist, there is one. It’s guiding the ‘invisible hand’. How can you create the appropriate incentive to decrease the pollution that’s causing climate change? For that, the government need not be in the business of picking winners at all. What it should—and can—do is identify the loser that’s been clear for decades: greenhouse gas pollution. And the solution is equally clear: create incentives to reduce emissions by pricing it. If we make this one change, most other actions that are needed will follow.

That’s what the European Union has done by capping carbon emissions from its energy sector, including large industrials, covering almost half of total carbon emissions. That’s what California is doing with over 80 percent of its total global warming emissions. It’s what China is experimenting with in seven city and regional trials, including in Beijing and Shanghai. All these systems put a price on greenhouse gas pollution.

On the other side of the ledger, there are still much larger incentives to consume fossil fuels in many other countries. The International Energy Agency estimates that global subsidies are well over $500 billion. These subsidies, which incentivize emissions, sadly dwarf the paltry incentives to reduce them. Free marketeers, small government advocates, and others who dislike distorting government subsidies should be appalled at the tax money poured into fossil fuels.

There’s one simple principle that’s been around in economics for so long that no economist worth his or her degree would question the conclusion: increase the price, watch the quantity demanded go down. It’s such a universal truism that economists call it the “Law of Demand.” Generations of graduate students have estimated the effects of price on demand for anything from the generic widget to demand for car miles driven. People may be irrational at times, but one thing that we know for sure is that they respond to incentives.

Everything we know from decades of the study of human behavior would lead us to believe that carbon pollution will go down as the price on emissions increases. The only interesting question is by how much.

The prescription then for anyone seriously concerned about climate change is simple: price carbon to the point where its now unpriced damages are incorporated into the price, and get out of the way. It’s simple. It works. It’s conservative to the core.

It’s also a silver bullet solution if there ever was one.

Bob Litterman is a Partner at Kepos Capital, LP. Gernot Wagner is a senior economist at the Environmental Defense Fund.

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