Financing hydrogen iron

A wonkish plan for problem industries in the energy transition.

We know how to make the electricity supply renewable. We know how to make land transport electric. Both are on track. But there are four problem industries where things are not so clear.

These estimates are not all for the same year and not strictly comparable, but they are good enough to make the point that to reach net zero emissions, the four sectors (together 20% of global fossil emissions) cannot be ignored.

The challenges are distinct but they have common features.

  1. Very plausible technological pathways exist to decarbonise. But these are not mature, and for the moment they are far more expensive than BAU.
  2. There is no guarantee or strong expectation that technical progress will ever eliminate the cost barrier, in contrast to electricity and land vehicles.
  3. The industries are typical of modern capitalism: they are international and oligopolistic, with a lot of trade, a handful of large companies, and a myriad of small ones.
  4. Their products and services rarely have plausible substitutes. (We shall see later on why this matters).

Points 1 and 2 mean that the issue for public policy is not R&D (pace all the Democratic presidential hopefuls) but early deployment.

Recall how we got to cheap wind, solar and batteries. It wasn’t a carbon tax, since that does not exist anywhere in the pure form. Partial cap-and-trade exists in the EU, but it has only just started to bite, after giveaway initial allocations. It was done by subsidies for early deployment to create economies of learning and scale:

  • In the USA, tax breaks for wind, solar, and electric cars; renewable obligations at state level.
  • In Europe and China, tax breaks, subsidies, and regulatory privileges for electric cars.
  • FITs and ringfenced auctions for wind and solar generation in Germany, other European countries, China and India.

The costs of FITs have been large in the past, though the cumulative liability (in Germany for instance) has now almost stopped growing as the few surviving FITs are near market rates. Well worth it of course, especially if you aren’t a German consumer.

The same principle holds for our four problem industries. Carbon taxes are politically toxic, and a coordination nightmare in globalised industries. So what’s the workable second-best kludge?

I’d like to float a possible solution. I’ll take steel as the example. The principle extends to the others ceteris paribus.


Unpublished Op-Ed

Mark Kleiman and I wrote this in February 2017, but never had it published. I thought that it might be worth posting at this time.

Some Words of Advice for Federal Employees

Receiving directives inconsistent with good government – if not worse – creates one of the most difficult situations a civil servant can face. As former Justice Department staffers, we have some advice to offer Federal employees when such situations arise, as they seem likely to do often under the current regime.

1.       When told to implement a policy that is counter to statute, regulation, or the stated and authorized goals of the agency, take good notes; such directives rarely come in writing. Then go back to your office and write down your understanding of the recommended policy, making sure you have correctly described what you were told. Then send that account as a memo to your superior.

2.       Whether or not you receive a reply, follow up with a detailed list of issues and concerns, both pro and con, involved with proposed policy or action. Describe them in full context and cite the relevant legislation, executive orders, and constitutional issues. Send that, too, up the chain of command.

3.       You may also be at the receiving end of threats or other problematic situations that are meant to intimidate you. Write a memo to yourself and share it with a trusted friend as soon as possible, to establish a time line.

4.       Do not use your office phone or computer (or cell phone while in the office) for personal reasons, least of all to complain about these situations, as this may open you up to attack. If your agency expects you to be available for phone calls and text messages around the clock, get a cell phone that you use only for official business. You might want to use a text messaging app that encrypts the message, and ask your recipients to do the same.

5. Maintain a contemporaneous, written log on a ruled ledger with a sewn binding, so removal of any page will show. Enter every meeting, call, and significant email on successive lines in ink, leaving no spaces. Fill in any space on the right with a slash, so nothing can be added. Note the date, time, attendees, subject, and conclusions. Absent minutes, no one else will remember what happened a day later, so your record will become dispositive. This approach, laborious though it is, can provide valuable protection for anyone from a GS-1 to a cabinet officer.

6. If you decide to talk to a reporter, get the ground rules clear first. “On background” means you can’t be identified, but your agency can; “deep background” means that even your agency isn’t mentioned.  Any communication to the press about official business not previously cleared by your agency’s public information office will probably put you out of bounds; consider whether you’re willing to take the consequences. If you’re later asked about whether you were the source of a story, either tell the truth (and be prepared to find a new job) or refuse to answer.

There are already reports that White House Chief Strategist Steve Bannon has taken steps to erase the paper trail behind various Executive Orders. All the more reason for career civil servants and the political appointees more loyal to the country than to the ruling cabal to make as much of a record as possible.

Michael Maltz is Emeritus Professor of Criminal Justice and of Information & Decision Sciences at the University of Illinois at Chicago. He was a research analyst with the National Institute of Law Enforcement and Criminal Justice during the Nixon administration and had to deal with some questionable directives.

Mark Kleiman was Professor of Public Policy at the New York University Marron Institute of Urban Management. He served as Director of Policy and Management Analysis for the Criminal Division in the Carter and Reagan Administrations, never receiving an improper order.

Getting biofuels wrong, wrong, wrong

The European Parliament is about to decide whether to stop counting forest biomass as a “green fuel”, that is, fuel having no global warming impact, and restricting that status to residues and wastes. This is important because their current rules do not assign a carbon cost to whole trees harvested for fuel and burned.  The theory behind the current rule is that the tree got its carbon from the air, but it’s deeply absurd; coal got its carbon from the air too. Forests store a lot of carbon, and putting it into the atmosphere is very much like burning fossil fuel; trees may be replanted and then may be allowed to regrow and recapture carbon, but for the decades that takes, the carbon from the harvest is in the air warming the planet.

Do you live in the EU? Know people who do? Find your MEPs here and give them a heads up, as the authors of the letter at the bottom of this page have done. This is important.

Let Trump do his job

I’m slow to outrage, but I’ve had it with the lying, fake-news press and the deep state apparatchiks that want to keep America ungreat. The president has stepped down from the comfortable life he earned by his unmatched business skill to serve us in the corrupt swamp of politics, but does he get help? loyalty? He does not, and we had better hope he doesn’t give up on us and walk out the door in frustration.

Democrats refuse to vote for the Republican health care plan he clearly instructed Ryan and McConnell to pass; is this any way to treat your leader? They endlessly refuse to confirm appointments on the thin excuse that Trump hasn’t nominated anyone for them.  How hard is it to pass a stack of confirmations with the names left blank for use as needed?  Is this the kind of obedience we expect of our lawmakers?

Don’t even ask about Mueller.

Most outrageous recently, and the main reason I’ve just hit the wall, is the constant sabotage of Donald Vladimirovich’s ability to get marching orders from his daddy.  Putin is better looking than Trump, his women are more beautiful and more accomplished, he’s more ruthless, he’s killed more people and enriched more of his gang members, and he’s stolen way more money.  For our nation to take direction from such a leader is probably the greatest gift Trump can bestow-of course he’s gone in the tank to him; how else is he supposed to know what to do day by day?-but at every turn, some treasonous, small-minded reporters interfere with the normal channels by which orders from Moscow could flow. The secret link through the Russian Embassy Jared creatively tried to set up, the secret meeting at the G20 dinner, the meeting Don Jr., Kushner, and Manafort took with 1 2 3  4  5 Russian messengers last spring, the tireless efforts of Flynn, and more: one after the other essential tool of governance torn from workable secrecy and left to dessicate and shrivel in public sunlight. Selling the presidency to Putin was the greatest deal the Donald ever made, and we’re stepping all over it.

Trump cannot be Trump if he can’t get confidential instructions from Putin, period, end of story. This treasonous undermining of basic governance tools by the press, and the leaking deep state fifth column, has to stop.

The London high-rise fire

The inferno in London is out, mainly because the entire flammable contents of the building have burned up.  Fire hoses cannot deliver water to the upper floors of such buildings, and the ladders trucks can bring to the scene don’t reach nearly high enough. Many more deaths will be recorded-I expect a toll in the dozens-as the search for the missing continues. Police and fire brigades told people to stay in their flats and close their doors rather than escaping, and those people have been incinerated. As the structure of the building, whether concrete or steel framed, has certainly been compromised, possible collapse will make it impossible to search for bodies for quite a while. [update 14/VII: they are using drones! Nature imitating art; the Economist big drone wrapup was published last week.)

How is such a thing possible?  Well, first we should note that dying in a fire is rare and getting more so in all industrialized countries: annual fire deaths per million in the US are only about 12, and remarkably, down by two-thirds since 1979. The UK is on a similar trend and about a third safer overall. We should also note, as more information about administrative and regulatory failures dribbles out, that this was housing for poor people.

The ways to avoid fire deaths are as follows:

  1. start fewer fires
  2. faster emergency response from fire brigades
  3. buildings that resist fire spread after ignition
  4. buildings that facilitate escape
  5. proper behavior by occupants
  6. better medical care for survivors

No. 1 is the biggie, and it has to do partly with electrical codes and enforcement, but progress in recent years has mainly to do with smoking, both less smoking overall and safer cigarettes. A third of residential fires used to be caused by cigarettes, usually dropped on upholstered furniture. Cigarettes used to be laced with enough saltpeter to keep them burning if not puffed on, so the tobacco company could sell another cigarette when one left in an ashtray consumed itself; at least in the US that’s no longer true. But fire can start in many ways; see 5. below.

No. 2 is occurring, because fewer fires mean engine and ladder companies are less busy, and because it’s politically difficult to close unnecessary fire stations. Nearly all engine and ladder sorties in the US now are actually medical calls.

No. 3 is a matter of codes and code enforcement: hour-ratings for partitions and doors, less flammable materials, UL listing for electrical components, etc. and honest, effective inspections to be sure that’s all happening. Otherwise known as job-killing regulatory government meddling in the free market, don’t you know. Here the US is disadvantaged by traditionally building with wood rather than masonry. It’s also a matter of the most reliable, proven, life- and building-saving technology, sprinkler systems; something the Grenfell Tower seems not to have had, even in the corridors and escape routes.

No. 4 involves a variety of features. Small things like an alarm system (have you checked the batteries in your smoke detectors lately?) and quick-release locks on the bars people in poor neighborhoods put on their first-floor windows matter. For larger buildings, it’s a matter of having two escape routes from every location, and one of these has to be protected from filling with the smoke that kills more people than heat and flame; an example is the exterior fire escape we see on older buildings. I was appalled to read in the Guardian that 1970’s high-rise UK buildings of the Grenfell era had  “one escape stair which is not designed for a mass evacuation, but is designed for a small number of people to get out whose individual flats are on fire”. No; two stairs, and one has to be open to the outdoors (sometimes an interior “fire court” open to the sky) at every landing. When I was working in architects’ offices in the 70s and 80s, this was completely standard practice. It still is. If you live in a high-rise, do you know how to get to your fire stairs in the dark? If not, practice.

Twenty-four stories is a long way to walk down in the dark, afraid, aroused in the middle of the night from a sound sleep, in pajamas or nothing, especially with terrified little children. I would not live above the twelfth floor of any building. I wonder if the people enjoying the view from high up in the fifty-story condo buildings popping up in New York think about this.

No. 5 includes some training (point the fire extinguisher at the base of the flames) and occasional drills, not filling your apartment with unnecessary inflammable stuff (what doomed the partiers at the Ghost Ship in Oakland), not storing the gasoline can for your lawn mower in the same room as a water heater, staying in the kitchen when you have a frying pan on the burner, and so on. And do you know where your kitchen fire extinguisher is, and how to use it, and have you checked the pressure gauge?

Where fire comes to your house from outside, as in Mediterranean climate landscapes that burn regularly and will do so more with climate change, you have to maintain what we call “defensible space” in California, and stay on top of it as grass and brush try to grow into it.

The Japanese have a long history of living close together in wood and paper houses, and cooking indoors on open charcoal fires, but their fire death record is not much different from other industrialized countries: this is assuredly the result of learning to respect fire, and that hibachi. It’s also socially unacceptable to have a fire in Japan, an expert in fire safety told me a few years back: if you do, even a small one, you probably have to leave your home and move to another city. The FEMA study linked above notes, interestingly, that incendiary suicides inflate Japanese figures.

Every catastrophe has multiple ’causes’, so there will be lots to learn about this one as the facts come in. Whatever they are, they will include irresponsible, probably corrupt, behavior by people who should have known better.

[update 14/VI] Useful stuff is beginning to come in.  Aside from the other terrible mistakes and oversights,  it appears the exterior cladding, a Chinese aluminum/polyethylene sandwich, is so flammable that testing in Australia was suspended after the first sample practically blew up in the lab. Here’s an excellent post-incident report from a very similar fire in Australia. It has everything:  ignition by cigarette, overcrowded units, cladding carrying the fire up the outside of the building…but also working alarms, sprinklers, and proper fire stairs for evacuation. Deaths and injuries: 0.

Why does art stupefy otherwise smart people?

What is is about art, that when smart, tough-minded people get near it, their brains turn to mush? I’ve worked in a museum and universities, and studied the former professionally: while management of the latter is often very feckless and lax, museums take the cake. Most recently, but not exceptionally, a board of trustees starring the business élite of New York City has managed to let the Metropolitan Museum of Art go seriously into the financial toilet, despite having assets worth at least $100 billion.

Today we have a lawyer, apparently capable of actual research and inference from evidence and writing literate English, proposing that artists should have a full value deduction for the untaxed value of gifts of their own work, something we fixed fifty years ago.  He managed to get that truly loony and regressive idea (like all deductions, this one is only valuable for successful artists who are already rich) past the editorial page editors of the New York Times. I can see them now, looking at this piece of copy and going all gooey-eyed and misty…”Art! Awww…we love art! Let’s print it!”

OK, Mr. Rips and NYT tough-minded skeptical journalists, how’s this idea?

Janet Napolitano

President, University of California

Dear President Napolitano:

Because of my great love and affection for the University of California, I propose to give half my working hours to Cal as pro bono work, and only take a salary for the other half. Now, I will need you to double my salary rate for the half time I’m on the clock, but this won’t cost you anything. What it will do is enable me to deduct my unpaid time against my new salary under the new rules, which will leave me with no taxable income at all: we can stiff the taxpayers for my whole tax bill! Naturally, I’m happy to give you a cut of this windfall, shall we say 20%: you make money, I make money, the students still get their courses…who could object to this?

I might add, doctors in our hospitals can really clean up this way; in fact anyone who works for a nonprofit or a government agency is looking at a historic opportunity to rip off the taxpaying public, and surely we’re as lovable and deserving as artists whose work sells for hundreds of thousands of dollars, and knowledge and health are as important as art.

Do we have a deal?

Very truly yours,

Michael O’Hare

[my coauthors and I get well into the weeds of this foolishness in Patrons Despite Themselves: Taxpayers and Arts Policy, if you want to follow up. Sheesh.]

Operational definitions

Kevin Drum is steamed about the larceny practiced by elements of the criminal justice system, from petty (charging arrestees for the “service” of booking, and then not giving all of it back),  to grand (the civil forfeiture scam by which the police can take your car-or your house-and keep it if someone in the station house is willing to say he thinks you, or someone, used them nefariously).

Kevin is entirely correct, but this ongoing outrage is overshadowed by the official massacre playing out in the Philippines, whose president was elected on a platform promising that people can be shot (and he boasts of having blown away a few citizens personally) if someone thinks they sell, or use, drugs.  Someone? Apparently this means the shooter, or some guy who told him something about somebody.

(We also have a case of nature imitating art here: the plot of Terry Gilliam’s immortal Brazil is set in motion when a fascistic, bureaucratic dictatorship arrests the wrong guy (who dies in custody) and feels obliged to return the arrest fees it collected to his family.  Brazil, I may note, is a bitter, dystopian, satire.)

The concept central to understanding this stuff is central to all hard science and underappreciated in social science, namely the importance of operational definition.  An operational definition is a assignment to categories, or a reported measurement, that includes the protocol-the operations-by which it was applied.  Example: the ‘height of a building’, for most purposes, doesn’t need to specify the measurement process. But for others, it’s important to specify whether it was observed by lowering a measuring tape from the top, by surveying instruments and trigonometry back to an identified monument of accepted altitude, or by carrying an altimeter to the top and reading it; each of these will give a different number. Responsible experimental scientists report the brand and model number of measuring equipment used in lab procedures, as well as (when it might matter) ambient conditions and what the mouse had for dinner.

Never mind that capital punishment for drug use, or losing your house for dealing, let alone a relative’s dealing, are savageries in and of themselves. The implicit operational definition of a drug dealer,  or  one whose house may be confiscated in the cases above is quite far from the one we normally use to shoot or merely mulct people, and the press has a lot to answer for when it says Duterte and his vigilante thugs have “killed drug dealers”. The operational definition of “a drug dealer” used to allot punishment in civilized countries includes a finding of “guilty” after a whole series of steps from arrest with Miranda rights provided, through chain-of-evidence records, and a trial with its own specified protocols.

Duterte isn’t ‘shooting drug dealers’; he’s shooting people asserted to be drug dealers by, apparently, almost anyone: the guy’s romantic rival or business competitor, or an undertrained, underpaid cop’s on-the-spot guess.  And our own cops aren’t confiscating “assets used in crime”, they are confiscating assets they covet when they are willing to make up a story. “Hey, you remember the guy we busted for meth two weeks ago [whose trial won’t start for six months]? His cousin has a nice new SUV, and car 233 was totaled in that wreck on the freeway.  I bet the cousin gave him a ride in it sometime; let’s go pick it up!”