Is the Future Ahead of, or Behind, the US?

Two days after Christmas and the front page of the New York Times is the gift that just keeps giving.

In Germany, The Times reports, they are building houses that remain warm simply via passive solar, massive insulation (and heat exchangers, for fresh air) and retaining the heat generated by people and appliances. According to the article, these houses generate all the heat and hot water the occupants need, using about the same energy as a hair dryer. Cost of building isn’t much above standard construction, a premium of between five and seven percent. The European Union (those brazen communist bureaucrats!) is considering making new buildings meet the same passive energy savings standards by 2011.

In the US meanwhile, we get two front page pointers to stories further on which focus on rather more primitive power production issues: one is about a return to heating homes using coal. Cheaper, more plentiful, domestically produced at a more stable price than oil, coal for home heating was up 9% in 2007 and another 10% in the first eight months of 2008. What’s not to like?

In answer to that question—putting aside that pesky global climate change and the spewing of toxic chemicals and fine particulates into the air—there’s another story further on: the Tennessee Valley Authority (TVA) has reported the largest coal ash spill in US history. Coal ash sludge, containing thallium and lead, has burst out of a holding pond at a coal fired power plant on the Emory River, about forty miles west of Knoxville, contaminating the river and engulfing nearby roads and railroad lines. Initial reports had the amount in the neighborhood of 1.7 million cubic yards; the update better than triples this to 5.4 million—particularly interesting given that the TVA had previously reported the total contents of the waste pond to be less than half that amount.

Hard to read this little trifecta of articles and not come away thinking that some societies are moving forward, into the post-fossil fuel future. . . while others are sliding (or actively swimming) backward, into the toxic muck of 19th century technology.

Hard not to ask: WHY???

The Dark Side of the Street

We were awakened Thursday night by what sounded like gunfire, and turned out to be tree limbs, and entire trees, coming down in an ice storm. Friday morning we had no electricity, Massachusetts was under a state of emergency, and the governor had called out the National Guard to help clear the streets and give utility workers access to downed power lines.

Driving into Cambridge for meetings that day was like going from Kansas to Oz. It was overcast but fairly balmy; no ice in sight; and the general response was, “Emergency? What emergency?”

Three days later and the Sunday New York Times has nothing to say about Massachusetts, though the NYT Company also owns the Boston Globe (and execrable local paper, the Worcester Telegram and Gazette).

Across the street, the lights are on, as they have been the whole time. My side of the block, however, and the side of the adjacent street that abuts my backyard, remains dark. It’s like one of those Twilight Zone episodes in which the aliens perform psych experiments to see how fast community will break down.

No one on the light side of the street has been across to ask how we’re doing, or perhaps offer us some ice. Instead, I’ve been shoveling ice-encrusted twigs off our driveway, to try to stave off the warming and rotting of the food in our refrigerator.

The next door neighbors we talk to have left for a hotel, as, it seems, have a good number of our other power-starved brethren. We’re sticking it out because of a technological quirk that has kept us warm and supplied with hot water. We have an old steam boiler, retrofitted for natural gas: the only electricity our system needs to run is the DC circuit for the thermostat; there’s no pump or blower to circulate hot air or water, no compressor to inject fuel oil. As long as the gas stays on, we’re okay. Without it, we would have had to drain the pipes and leave.

We broke into one of the emergency supply boxes in the basement: the LED headlamps are goofy but functional; the hand crank radio doesn’t have much range; candles work. My daughter is in something of a panicked and cranky state of tech withdrawal, “I NEED to check my email!!”

So out we went to the local library on Saturday, foraging for wireless, adding a list of local WiFi hotspots to our emergency information list while we were at it.

On the way home I passed a convoy of Humvees, a couple of them jungle-camo green, the rest desert sand. Good to see and yet a little chilling as well.

Not much worth crabbing about global climate change here: it’s December in New England; there’s ice; let’s move on.

But the impact of the storm does point to a couple of matters of energy and economics that bear a little scrutiny.

Our power grids, both local and national are in terrible shape and getting worse.

Part of this is a matter of deregulation: when electricity was a regulated monopoly, the same company that produced your electricity also “transported” it. That company had a vested interest in maintaining the grid. Tighter regulation, moreover, meant that it was compelled to do so by more meaningful oversight. Not so, on either count, anymore.

The grid maintainers now do as little as they can get away with doing. It’s inefficient to keep an overly large supply of repair and maintenance crews on staff when they will “hardly ever” be put to work. That logic works fine right up until the point when rare weather events cause the “statistically insignificant” deaths of the frail and more isolated people whose utilities suddenly stop working for a few days—instead of a few hours—at a time.

The matter of corporate resilience and redundancy begs the question of more local and personal back up systems. I have not yet descended to the 1970s level of survivalist paranoia (a basement bomb shelter stocked with krugerrands, ammunition, and a year’s worth of military rations) but I’ve been trying to be prepared for the advent of less reliable utility systems.

A more decentralized power grid would do a lot in that regard. Never mind my fantasy of a zero energy home; if I had enough of my own electricity to just run my refrigerator, I’d be in much better shape.

To do that via small scale wind or solar, it would be useful to have some kind of storage system, a battery bank or perhaps a tank to store hydrogen. A backup system could also use natural gas to power a fuel cell; the dirty way to do this would be to just have a backup generator, burning gasoline, diesel, or natural gas.

Having alternative power for just a few hours a day would be tremendously useful in an emergency—you can run the fridge for just on hour or two a day and keep things cold; you can recharge batteries.

Building grid resilience and local backups like this might be a good way to jump start a small scale alternative energy infrastructure. Since most states now mandate net-metering, for the 99% of the time when there is no emergency, these small scale projects would be feeding energy back into the grid, reducing the need on the part of the utilities to build more generating facilities, paying consumers a monthly dividend that buffered us against higher energy costs.

Of course, it could be argued that we are heading into a period when energy and/or weather related emergencies will be far more prevalent. Which would make alternative sources of energy and better grid resilience that much more crucial. . .

The Auto Chiefs Do DC II

The last time the Auto Chiefs Went to DC they flew in separate private jets, couldn’t explain with any specificity what they were going to do with billions in bailout money (“just fork over the dough and keep quiet and nobody gets hurt”), and while two out of three agreed that taking a salary cut might be reasonable penance for presiding over the meltdown of one of America’s core industries, the third (Ford’s Alan Mulally) told Congress—politely of course—“no, I’m good where I am.” (Where he was being a $2 million annual “base salary,” although CNN reports that when you factor in a variety of bonuses, he was paid $28 million for his first four months at Ford.)

So. . . for “The Auto Chiefs Do DC II,” slated to premiere this week: Chrysler’s Nardelli is walking from Detroit to DC in a brown Franciscan robe with a hemp rope belt, barefoot, of course, with UAW members scattering broken windshield glass in his path; GM’s Rick Wagoner is coming to town having ridden the 500+ miles on a donkey, in farmers overalls with patches on the knees and Depression-era shoes (holes in the soles; no socks); Mulally has chosen to drive (or, rather, be driven) in a Ford Escape hybrid SUV (for which Ford pays technology licensing fees to Toyota, BTW).

I may have some of the details slightly wrong. . . (although not in Mulally’s case). But you get the point. They are REALLY SORRY they gave the impression that they were too big for their britches. And they are strongly committed to giving whatever impression their PR people tell them will get them money.

Oh, and the $25 billion GM needed a few days back? That’s now $34 billion.

And they have a plan too: they’re going to fire lots of people, close lots of factories, cut benefits both for retirees and for people who continue working in the industry, and maybe even build more efficient cars that people want to buy (or import them from their European subsidiaries, sorta like the way Lee Iacocca saved Chrysler from Japanese competition, by importing Mitsubishis and re-badging them as Dodges and Chryslers).

So glad sanity has returned to the American automobile industry.

We can all relax now.

Sometimes the Anti-Regulation Crowd Has a Point

New York City mayor Michael Bloomberg has made a number of admirable stabs in the direction of creating a greener New York. He hasn’t always succeeded and he hasn’t always been helped by the state (which nixed congestion pricing for cars in midtown) or the feds (who just quashed the requirement that we move to hybrid taxis).

The recent experience of the Episcopal General Theological Seminary in Chelsea suggests that Mayor Bloomberg would help his own agenda if he could clear some cobwebs from —and create some efficient interconnections between—a variety of city bureaucracies.

The Seminary has been trying to replace its heating and cooling systems with geothermal power: safe, clean, efficient, and close to free once you’ve paid off the (substantial) capital costs. To do this, they need to drill a number of very deep wells, to tap the groundwater under Manhattan (drill there, drill quick!). The system is online, though not yet complete.

So far, according to the project manager, quoted in the New York Times, they have gone 50% over the initial budget estimate, and taken three times as much time as they should have. They ascribe both of these problems to the inefficiencies of the 10 regulatory agencies from which they required permissions.

I am in favor of the MTA making sure that a drill bit doesn’t tear through the roof of the A Train. And I’m inclined to see most anti-regulatory quailing as the self-interested cant of cynical ideologues (I know, lets deregulate the financial sector! That’ll work out really well!).

But when the response of the city Department of Transportation, after a three month delay, is reported to be (again from the Times) that they can’t report on status, because the project “has no status,” when their answer to what can be done to get the project moving? is, “you can’t get it moving,” well. . . sounds like a regulatory failure to me.

Automotive Bailouts: The Neverending Story

With GM now having elbowed its way to the front of the queue, The Detroit Three—with barely a burp or a thank you for the $25 billion they were just given to cajole them in the direction of cars efficient enough to perhaps help them survive—are back at the government nipple.

GM claims, with some credibility, that it has only months to live if it doesn’t get another cash infusion and fast. The combination of pathos and avarice is fascinating. I’m reminded of that sweet little plant in Little Shop of Horrors—the one that needed human blood (oh just a LITTLE more) to survive.

I don’t think many civilians, myself included, know what the bankruptcy of one or more of the Detroit Three would look like (I’m seeing more and more publications adopt this over Big Three, for obvious reasons).

Speculation ranges from a hardnosed: not much; Toyota would buy the viable factories and the number of vehicles sold, and auto workers employed, in the US would remain more or less the same.

To. . . apocalyptic: The. World. Will. End.

I don’t have any philosophical problem with government intervention. Within reason, and under the right circumstances, I don’t have any problem with government loans or subsidies. I have a great deal of sympathy for the plight of the line workers, both those directly employed by the industry and in the ancillary industries that domestic auto manufacturing supports. All of that said, it isn’t clear to me who, if anyone, would be meaningfully helped by another bailout or series of bailouts.

It has been alleged that almost a third of health care spending in the US every year goes to the last thirty days of life. Granted we don’t have little readouts on our foreheads that tick down those last thirty days; one could go through fifteen days of expensive and intensive intervention and then live another twenty years in decent condition; a good percentage of the time, however, that money and those efforts end up being thrown at people who clearly have no meaningful chance of recovery, and no meaningful chance of a decent quality of life if they do recover.

Similarly. . . Well going back more than thirty years now, the American automobile industry reminds me of those cancer patients still smoking by holding the cigarettes to the holes in their throats. Doesn’t make sense to give them money for cigarettes; not clear that having them on oxygen is good for them or for anyone within the blast zone either.

David Halberstam pointed out one evocative example more than twenty years ago, in “The Reckoning: How Japan Beat the United States in the Auto Industry War and Rewrote the Rules of International Business Competition.”

The short version is: In 1958 Ford invented E-Coat painting technology (give paint a positive charge; give auto body parts a negative charge; you get full coverage in every nook and cranny and substantially increased rust resistance). This quickly became the industry standard, foreign and domestic. Ford, however, took until 1975 to get the technology into *half* of their factories; it wasn’t until 1984—more than 25 years later!—that they finally upgraded every one of their plants.

Can American industry innovate? Yes. Are they willing to invest in the future at the expense of this quarter’s profits? Detroit hasn’t been much inclined in that direction for quite some time now.

Airlines mostly keep flying through bankruptcy; retail chains also, for the most part, remain in business as they work through Chapter 11; not clear why the same would not be true of the Shrinking Three.

I oppose capital punishment and can’t therefore in good conscience advocate for executing a large swath of the American Automotive Nomenklatura (although we might consider this a form of euthanasia). If the federal government is to step in (which seems all but inevitable): 1. Executives should have their epaulettes torn from their shoulders, their ill-gotten gains stripped from their Swiss bank accounts, and be shown the door—Lead Parachutes for Everyone! 2. Everything possible should be done to safeguard the pension and medical benefits of retirees. 3. The government should have its loans secured by the companies’ assets. 4. There should be ironclad fuel economy standards imposed on the industry.

President-Elect Obama says he wants to rejuvenate the American Economy by getting us off imported oil and facilitating the growth of a sustainable transportation and industrial infrastructure. Well, Green Power to him! He’s likely to be involved in an automotive bailout even before he takes office. If he does what he’s said he wants to do, I’ll be very happy.

Ban the ‘Vette?

I read a review of the forthcoming 2009 Chevy Corvette ZR1 Sunday morning. A mere $105,000; 638 horsepower; and a side order of GM has been talking about merging with either Chrysler or Ford, as they (pretty much all) burn through their remaining cash at an accelerating rate.

Why combining several hidebound, sclerotic, failing companies into a larger (hidebound, sclerotic) company would be a good idea is a mystery to me.

How producing another gas vaporizing vehicle—turn on the stereo in this thing and you’ve burned at least half a gallon—is going to help one of the Shrinking Three US automakers is also a little opaque.

I do understand the appeal of muscle cars—though more the Mustang than the ‘Vette.

But I have to admit that my first, nanny-state, impulse was “this shouldn’t be legal.”

You could tax the hell out of this car; push it from $100K to $200K.

You could put a governor on it—sell people a muscle-bound, mid-life crisis sports car with the speed capped at 55MPH.

But why not: Just. Say. No.

Kind of un-American, I know.

But we do ban things now and again, and often that’s a matter of degree: most people would put a muzzle-loaded, black powder musket under the Second Amendment’s “right to bear arms.” Very few (there’s a couple in every bunker, of course) would extend this to cover personal ownership of a full auto, sixty caliber machine gun.

I can see why you might want to shoot the occasional goose, using the musket; I don’t recognize the right to shoot down an entire flock of geese (or even the irritating 80s band, A Flock of Seagulls) using the machine gun.

Interestingly (and, as far as I’m concerned, appropriately) there’s more and more regulation of engines on the (very) small end of the spectrum. The EPA is finally going to force lawn mowers and the like to comply with more stringent emissions guidelines. And, in an increasing number of places, gas leaf blowers are being outright banned (more often for noise than for emissions, but both issues are being discussed—as is the banning of gas mowers).

We know, of course, that the best, safest, most efficient thing to do is to regulate markets as little as possible—preferably not at all.

That always yields the greatest result for the greatest number of people right?

Just look at Wall Street!

Oh wait. . .

Cry for U.S.: We’re Argentina

Through about the middle of the last century, Argentina was one of the wealthiest countries in the world. In the post war period, however, the country went from riches to rags; not the direction you expect, or hope, to see such changes take.

In significant part, this slide was the result of poor economic decisions (too much borrowing, not enough repaying; sound familiar?), a bloody series of coups, and a military more concerned with internal rather than external enemies (they began disappearing and torturing alleged enemies of the state in secret prisons; sound familiar?).

But the other key piece is that the products that had made the country wealthy—the export of beef and grain at the top of the list—slid in value as competition increased. The country needed to diversify and invest in changing key sectors of the economy.

It didn’t.

Not soon enough. Not fast enough.

Sound familiar?

We wrote that $25 billion check to the American automobile industry a few days back—another loan.

But Congress was only able (finally!) to renew the anemic tax breaks that have (intermittently) sustained the alternative energy industry in the US, by folding it into this week’s bailout of Wall Street, and adding a “sweetener” that provides support for “alternative” energy sources like oil sands and liquification of coal.

Meanwhile, Warren Buffet just bought a chunk of a Chinese company that manufactures lithium ion batteries for electric cars. They’re looking to bring both the batteries and the cars here.

I’ll confess that I haven’t read Tom Friedman’s “Hot, Flat, and Crowded.” But the subtitle, “Why We Need a Green Revolution—And How it Can Renew America” tells me everything I need to know.

We’ve wasted decades stuck in the idiot conviction that “we can’t afford alternative energy technology.”

Whether that was ever true or not, it’s not true now: we can’t afford not to pursue alternative energy technologies.

And while we dither, squabble, and chant about offshore drilling, China and India are moving to develop these alternatives:

Buffet isn’t investing in China to make a philosophical point; he’s investing to make money.

Our recent appeasement of India’s nuclear industry is unfortunate; China’s rising militarism is worrying; but the greater threat is that we will end up buying rather than selling the technologies that will make possible our surviving (start with that) and hopefully prospering into the next century.