What’s Mine Is Yours (2011)

With a title that even Karl Marx would be slightly embarrassed to print, I had to fight my prejudice that this book would be a socialist manifesto to turn every town into a commune (which contrary to popular belief, I am not wholly in favour of and this is not wholly a book about).  What I found was a refreshing examination of how technology is enabling consumers to create more sustainable forms of consumption and civic life.

Authors Rachel Botsman and Roo Rogers make a compelling argument that the emergence of online social networks, a renewed belief in the importance of community, increasing environmental concerns and cost-consciousness are moving us away from a top-heavy, centralised and controlled form of consumerism towards one of sharing, aggregation, openness and cooperation.

If in the twentieth century individuals were defined by credit, advertising and what they owned; this a vision of the twenty-first century in which we will be defined by reputation, by community, by what we can access, how we share and what we give away.

The central thesis is not that we need to pick between owning and sharing, but that the relationship between physical products, individual ownership and self-identity is undergoing profound evolution.  More prosaically: we don’t want the drill; we want the hole.

The Growth of Consumerism

In order to convince us of the controversial position that the consumerism train is out of control, the book goes to some pain to trace consumption trends since the 1950s.  While the depiction of early forms of advertising as being solely to sell liberation to housewives via ownership, and trying to link disposability with convenience, is a little reductive and unnecessary, the book does identify several interesting themes and statistics.

It is advanced that there have been four main forces that have fed hyper-consumption:

• the power of persuasion;
• the buy now, pay later culture;
• the law of life cycles; and
• the ‘just one more’ factor.

In support of these forces we can see that between 1989 and 2007, credit card debt nearly quadrupled, soaring from $238 billion to $937 billion.  This leads to the over-simplistic assertion that the more credit we have, the more stuff we can afford to buy, the more resources are consumed and the more waste is created.

I won’t argue with the logic of this position, only the banality of spelling it out in such painstaking detail.  Nonetheless, it is thought-provoking to note that:

• the average person in America and Britain discards his or her mobile phone within eighteen months of purchase;
• if you ‘upgraded’ to every new iPod that had come onto the market from 2001 to 2009, you would now own eighteen iPods;
• during the twentieth century, the average human lifespan in the U.S. increased by more than thirty years.  In contrast, over the last fifty years, the lifespan of everyday ‘durable’ goods including refrigerators, toasters and washing machines has decreased anywhere between three and seven years; and
• there is now more than sixteen square feet of shopping centre for every man, woman and child in the United States.

We get it.  Since the end of World War II, the Western world has been having a whale of a time buying things we probably don’t need.  Author Douglas Rushkoff enjoys much more philosophical phrasing in his book, Life Inc., when stating “Each home was to be its own fiefdom.  Self-sufficiency was part of the myth of the self-made man, so community property, carpools or sharing of almost any kind became anathema to the suburban aesthetic.”

Waste

But consumption isn’t really the problem; it’s how we make those goods and what we do with after their useful lives that is more troublesome.  Consequently, the following fun/soul-destroying facts are presented in order to highlight the amount of waste generated by modern forms of production and consumption:

• the amount of waste matter generated in the manufacture of a single laptop computer is close to four thousand times its weight;
• in Britain, every man, woman and child in the country combined produces enough waste to refill London’s Royal Albert Hall every two hours;
• according to the EPA, only 30 per cent of this rubbish is recycled or composted, 13 per cent is incinerated, and the other 57 per cent ends up in landfills;
• in 2004 the world crossed the media-loving line, as the average home actually had more televisions than people in it;
• environmental thought leader, Paul Hawken, estimates that for every 100 pounds of products made, 3,200 pounds of waste are produced, a 32-to-1 ratio; and
• most of us retire some fourteen hundred items of clothing before the age of 17.

All of that is seriously staggering (and, if you disagree, I’d suggest you’ve probably just heard this message so many times before that it’s just beginning to sound like white noise).  But the point was mercilessly driven home by revelation of the size and effect of the Great Pacific Garbage Patch.

The Great Pacific Garbage Patch is the largest landfill in the world.  It’s a floating stew of 3.5 million tonnes of garbage festering within the North Pacific Gyre.  This is a man-made island, 90 per cent of which is plastic (the remaining 10 per cent being chemical sludge and debris), containing everything from bottle caps and toys to shoes, cigarette lighters, toothbrushes, nets, wrappers, takeaway containers and shopping bags from all corners of the world.  It’s an ode to our recklessness.  While the plastic is ‘photo degraded’ by the sun, this only breaks the plastic down into smaller lentil-sized plastic polymers, known as nurdles, that even the most voracious bacteria cannot break down.

We have now reached the point where plastic nurdles, of which there are roughly 5.5 quadrillion in the Great Pacific Garbage Patch, outweigh surface plankton six to one in the middle of the Pacific Ocean.  Furthermore, in combination with other patches, these areas now cover a shocking 40 per cent of the sea.  That’s a quarter of the earth’s surface.

The Great Pacific Garbage Patch is a hideous illustration of the way we’ve ignored the negative consequences of modern consumerism.

Collaborative Consumption

Assured now of the size and severity of the task in problem, the authors act with expert timing to introduce of the book’s driving philosophy: Collaborative Consumption (or, as I’ve always thought of it, the “sharing economy”).

Collaborative Consumption includes: sharing, bartering, lending, trading, renting, gifting and swapping, redefined through technology and peer communities.  Its stated aim is to enable people to realise the potential benefits of accessing, not necessarily via owning, all the products and services you could want or need, while at the same time saving money, space and time; making new friends; and becoming active citizens once again (sounds easy enough). 

However, the fact is that social networks, smart grids and real-time technologies are making it possible to leapfrog outdated modes of consumption and create innovative systems based on shared usage.  In time-honoured fashion we’re taking the traditional and antiquated ideas of looking out for each other, being thrifty and caring for what we have, and bring them back to prominence.  In combination, the authors argue that these systems have the potential to provide significant environmental benefits by increasing use efficiency, reducing waste, encouraging the development of better products, and mopping up the surplus created by over-production and –consumption.

To put some meat of this rather skeletal idea, we can identify three distinct Collaborative Consumption Systems (CCSs):

1. Product Service Systems (PSSs)
2. Redistribution Markets
3. Collaborative Lifestyles

Product Service Systems mark a fundamental movement away from the individual ownership and resource lock-up.  Rather than selling a customer a product, the focus is on considering a customer’s use of the product, or the result they wish to obtain, and leasing the product often in combination with providing a service.  A classic example of this is a service like Zipcar, where you can hire a car from any number of widely available parking lots (50% of Londoners are supposed to live within a 5 minute walk of a Zipcar parking lot and the cars are unlocked via your ‘Zipcard’ rather than the car keys), drive for a flexible amount of time and then return the car (all without even talking to another human).  Somebody else is responsible for the financial burden of acquiring and maintaining the asset, and in return for a small payment, the utility of the product is leased as a service.   

The obvious environmental advantage of this system is that an individually owned product with often limited usage is replaced with a shared service that maximises its utility and ensures its maintenance (it is estimated that every car-share vehicle on the road replaces seven to eight owned vehicles, as people decide against owning or buying a second or third vehicle).   Usage PSSs such as this have the potential to disrupt many traditional industries centred on exclusive ownership such as electronics, durables, fashion, appliances, children’s toys and household tools, while also turning on its head the concept of planned or perceived obsolescence.

The authors illustrate that, if you are like most people, you may use a power drill somewhere between six and thirteen minutes in its entire lifetime.  And yet, supposedly half of all US households own their own power drill.  Again, we don’t want the drill; we want the hole.

The second system, Redistribution Markets, harks back to an older mentality that things with utility are not to be thrown away.  Where previously it was time-consuming and potentially expensive to marry the disposer of a particular item with its acquirer, sites like Freecycle and Craigslist are showing how the internet can be used to create vast, decentralised systems of redistribution that are predominantly self-organised and free.

This system has the obvious environmental benefit of decreasing the demand for the manufacture of new products which in turn lowers associated emissions and resource use (plus, I hear “upcycling” is a word that makes hipster females weak at the knees – not that I would know about that).

The third system, Collaborative Lifestyles, is altogether more difficult to define.  Think of it as a catch-all for communities and systems that are developing in order to increase efficiency and utility and more freely distribute the labour required to perform tasks. 

A good example is crowdsourcing, a concept coined by Jeff Howe as the “act of taking a job traditionally performed by an agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call’.  It is now a well-documented phenomenon applied to the creation of collective repositories of content (Wikipedia), products (the T-shirt company Threadless, where all the designs are created by the user community), new business ideas (Proctor & Gamble’s Connect & Development) and even problems such as climate change (MIT’s Climate Collaboratorium).  Here we often see unintended environmental benefits.  Think of how fewer encyclopaedias are printed now that Wikipedia is at our fingertips or how many fewer car or aeroplane journeys need to be taken now that we have so many wonderful work collaboration tools.

Each of the three systems above then generally operates via one or more of the following revenue models: 

• Membership (Zipcar (charges $75 to become a member then $8 per hour) and Bag, Borrow or Steal – a service allowing users to rent designer handbags for the evening)
• Service fees (Airbnb and Zopa – a peer-to-peer lending site)
• Micropayments for usage (BIXI – Montreal’s cycle hire scheme (much like London’s Boris Bikes, Paris’ Velib and Denver’s B-Cycle.  As an aside, in 2014, bike sharing became the fastest-growing form of transportation in the world) and BabyPlays – a toy leasing company)

Where previously these ideas could not achieve the requisite economies of scale to be profitable, due to data sharing, social networks and smart phones we can now match supply and demand through a nearly instantaneous mass synchronisation of wants or needs in which both sides always gain (data protection/”big brother” concerns aside).  Furthermore, we’re distributing the intelligence required to set up these platforms such that these are no longer the exclusive business models of IT experts.  As Thomas Goetz, the executive editor of Wired magazine commented, “Open source is doing for mass innovation what the assembly line did for mass production”.

Consequently, we’re now seeing an explosion of Collaborative Consumption businesses and initiatives that are improving our access to good and services, reconnecting us with our communities and each other, while also reducing our impact on the environment.  Some of my favourites picked out from the book include:

• A programme in the UK called Landshare, and similar schemes in the US such as YardShare, SharedEarth, We-Patch and Urban Gardensphere, that connect gardenless would-be growers with unused spare land, as well as people with extra time or skills who want to help.
• IBM, Xerox, Sony and Dow have banded together to form the Eco-Patent Commons, which releases environmentally beneficial patents to the public domain for anyone to use so long as they have the goal of fostering new innovations and protecting the environment.
• PSSs for solar energy such as Citizenre and SolarCity. Given that it costs anywhere between $20,000 to $40,000 to install a solar panel system on the average home, it’s easy to understand why the price tag dampens interest. Plus, it isn’t the solar panel itself that people covet.  It’s the clean electricity and the immediate cost savings.  These companies tap into this demand by installing, monetising and maintaining solar panels on a customer’s property but retaining ownership of the equipment, absolving homeowners from the stress and costs of getting it fixed or replaced when it breaks down.  These companies also overcome the lament that “it’s too complicated” by handling state and local incentive and rebate programmes.   As Lyndon Rive, CEO of SolarCity, writes, “People want to go green, but they won’t do it if it costs than an arm and a leg.  Even the extreme environmentalists can’t justify it”.
• Toy subscription services such as MiniLodgers, Busy Bee Babies (Scotland) and DimDom (France) took me completely by surprise.  I had failed to consider how quickly children get bored with toys and just how wasteful the buying cycle is.  By leasing toys on demand, not only does it reduce the number of toys a consumer needs to buy, if any, but the usage of one toy is maximised.  Also, these distribution channels become integrated with the product manufacturers themselves.  Consequently, it is in their best interest to make their products as durable as possible to handle multiple users and heavy usage.  And of course this service also prevents the toys children outgrow or don’t use from being thrown away and ending up as landfill, and perhaps becoming another piece of floating plastic in the Great Pacific Garbage Patch.
• Timblerlands’ Earthkeepers 2.0 footwear is the shoe for life.  It is made of wholly replaceable and customisable component parts.  Rather than buying another pair of walking boots each time they wear out, simply replace the worn segment (perhaps in a new style or colour).  The worn component is then returned to the company who then reuse the materials.

And these ideas aren’t flippant. There are real, positive environmental impacts when compared to the previous methods of consumption.  The authors report that if Netflix members drove to and from the rental store, they would consume 800,000 gallons of petrol and release more than 2.2 million tonnes of CO², emissions annually.  And these numbers are based on Netflix subscription numbers in 2011, when they were still posting DVDs and before the majority of members began to consume their service via online streaming.  Furthermore, a  study conducted by Intel and Microsoft comparing the environmental impact of various forms of music delivery showed that purchasing music digitally reduced the carbon footprint and energy usage associated with delivering music to consumers by 40 to 80 per cent compared with buying a CD at a retail outlet.

Of course, these business models are not without their challenges.  All three systems require two key elements that will be hard to generate.

Critical mass: any system will fail if there aren’t a relatively large number of users compared to the service it is trying to provide.  This is because a large number of users provide a satisfactory level of choice and the convenience that causes the switch from the established alternative.  Systems that don’t achieve critical mass will probably be poorly utilised and short-lived.

Perhaps even more importantly, the whole ethos of Collaborative Consumption is built on Social Capital: the trusts, norms, and networks that can improve the efficiency of society by facilitating by coordinated actions.  If I don’t trust that you will return what you’ve borrowed or that you are looking to cheat the system, then the system itself breaks down.  Fortunately, we have seen a lot of evidence to indicate that peer review systems are an incredibly powerful tool in compelling conformity to the rules of a group.  For any one that’s ever bought something on eBay, or hailed a ride on Uber you implicitly understand that I’m watching you, you’re watching me and that you need to cultivate and maintain your reputation if you want to be a long-term member.  Intuitively, it makes sense that forms of consumption with near-instantaneous cross feedback and review will actually achieve much greater levels of customer satisfaction than more traditional models.

The authors predict that soon there will be a service that aggregates your reputation across all the Collaborative Consumption platforms of which you are a member.  Could a reputational bank account be worth more than your credit score in the future?

Conclusion

Why is it that we spend so much time teaching children how to share their toys nicely but for adults sharing becomes a loaded concept?  We share our roads, parks, schools and other public services, but we draw the line in other areas of our life, such as personal belongings.

One of the problems with Collaborative Consumption is the stigma attached to it.  Do I have less status if I don’t own what I have?  Do I want to share with people I don’t know or like? Do I trust you not to ruin a shared good or service?  How can I trust that things will always be available as and when I want them?

Some of these questions you’ll have to ask yourself.  Others are questions that are going to become increasingly redundant as the technology improves.  What is beyond doubt is that this is happening.  And it’s good for the environment.  And for our communities.

The book itself was not the best text I’ve reviewed on this blog (in fact it borrows a lot from two other books that I’ve already reviewed: Cradle-to-Cradle [link] and Natural Capitalism [link], which were written many years before – I’m sure Botsman and Rogers would call that Collaborative Authoring).  In technical depth and expertise it left quite a lot to be desired.  However, in collating so many fascinating examples, I became truly excited about how technology is helping us treat the environment, and each other, with more respect. 

Let me be clear though, Collaborative Consumption is not the answer to our largest environmental challenges. It is a movement within the larger movement.

Yet, it is genuinely engaging because it’s disseminating responsibility for a large problem and creating a broader base which can aggregate all our individual decisions into something more meaningful.  Additionally, it’s happening under our noses and it feels as if it has a real momentum and a sense of inevitability about it.  But most importantly, it helps to address the age old issue with top-down environmental policy.  As John Porritt (former head of the Ecology (now Green) Party) famously summarised, “By being over prescriptive you become your own worst enemy and force people into even more defensive and negative behaviour.” 

Consequently, how do you address the public and inspire sustainable behaviour without being negative or dogmatic?  Sharing what we have sounds like a fine start.

Paris Agreement (2015)

On 12 December 2015, after 13 days of intense negotiations, the world’s leaders emerged from the depths of Paris’s basement meeting rooms to triumphantly declare that they had done it.  They had signed “a deal to save the world”!  Francois Hollande puffed out his chest and proclaimed that, “history is here”, while Barack Obama stressed the importance of securing agreement on such an “urgent and potentially irreversible” issue.

But behind all the hyperbole and media fawning, what has the UN Framework Convention on Climate Change actually agreed in the newly adopted Paris Agreement and how effective could it be at curbing climate change?

Well, to properly judge the Paris Agreement, I think we have to start by revisiting its grandfather: the Kyoto Protocol.

Background

(Disclaimer: this is based on my research on climate change negotiations since 2009)  

The Kyoto Protocol was signed in 1997 to limit global greenhouse gas concentrations to a level “that would prevent dangerous anthropogenic interference with the climate system”.  Posturing aside, this meant that the 83 signatories were committing to prevent the world’s atmospheric concentration of greenhouse gases from exceeding 450 parts per million (ppm).  In turn, this boiled down to a commitment by the developed countries to reduce their greenhouse gas emissions by 8% by 2012 and 20% by 2020 (all the figures were calculated using 1990 as the base level).  However, research indicated that 450 ppm would still represent up to a 78% risk of exceeding a 2°C rise in global temperatures – the threshold at which there was a scientific consensus that things would get pretty bad.

Consequently, Kyoto was roundly denounced as a watered-down version of what would be needed to genuinely address the wider threats posed by climate change.  The failure to get the US, China and India to bind themselves to any legally required emissions reduction targets greatly diminished its efficacy.  Infamously, the U.S. and Australia signed Kyoto but never ratified it (meaning, it never became domestic law so the countries’ citizens couldn’t force their governments to keep their international promises).  

Nevertheless, Kyoto must be viewed historically as an essential first step that endorsed the scientific consensus and solidified the sense of collective responsibility that surrounded climate change (lest we forget how large and vocal the climate change sceptics and deniers were).

The reason the history books will record Kyoto as a failure is primarily due to external influences, as the first commitment period, 2008-2012, was derailed by the global financial crisis.  A clear focus on economic recovery led to an almost ubiquitous failure to meet national emissions reduction targets that then dampened the enthusiasm of subsequent efforts and talks.

 

In 2009, the Copenhagen climate summit ended in a deadlock.  In 2010, the Cancun summit could only secure a collection of voluntary pledges.  As the world’s economy was crashing, so were countries’ desires to curtail their emissions (especially if they could gain short-term profit from emissions intensive industries).  In 2011, Canada withdrew its agreement to Kyoto as reports found greenhouse gas emissions were 20% above the 1990 baseline.  Canada’s economy was flagging and the tar sands, an extremely emissions intensive form of energy, represented a tremendously plentiful natural resource that the nation could call upon to boost their economy.  Promises regarding the environment be damned.

Public confidence and commitment to Kyoto took a further nosedive in 2012.  By May 2012, Japan, Russia, Canada and the US had all stated that they did not plan to sign up to the second commitment period (2013-2020).  Attempts were made to resuscitate Kyoto by extending the first commitment period through 2015, and though the move was successful, momentum had seriously waned and a new agreement, reflecting the reality of a greatly changed global economy, was badly needed.

So, what were the issues holding things up?

Originally, the most contentious points had always been around “burden sharing”.  Addressing climate change is primarily about investing in renewable energy and energy efficiency.  But that doesn’t come cheap.  Developed countries had to face two stark realities.  Firstly, developed countries have been responsible for almost all of the greenhouse gas emissions to date.  Secondly, developed countries have a greater ability to pay for climate change mitigation and adaptation efforts.  Consequently, it has consistently been argued by the developing countries that the EU and US should shoulder the vast majority of the financial burden (this became known as the doctrine of “common but differentiated responsibility”). 

This doctrine was largely reflected in Kyoto.  The EU and US accepted their increased responsibility and paid disproportionately more than the likes of China and India. 

However, small movements in proportional responsibility caused disproportionate tension due to the stagnation of the global economy (rather than any vehement ideological disagreement, as had sometimes been reported in the media).  A percentage point here or there meant millions, if not billions, in spending increases, imports or exports.  Given the contractionary fiscal policy that almost every government in the world implemented in 2008, the benevolence required to fix a global problem in a competitive world became alarmingly (but understandably) sparse.

The tide began to turn in 2014 when both developed and developing countries were coming out of economic hibernation. The unlikely allies of the US and China set the stage for more fruitful talks when Presidents Obama and Xi Jinping signed a joint pledge.  The pledge stated that the US would cut greenhouse gas emissions by 26-28% below 2005 levels by 2025, and China would increase its non-fossil fuel share of all energy to around 20% by 2030.  Given that these heavyweights had shaken hands before getting in the ring, the Paris talks appeared much more optimistic.

Consequently, when talks began in Paris on 30 November 2015, debate had moved away from the issue of who should pay and onto the issues of how to pay and how to verify that countries were using the funds properly.

Momentum had well and truly shifted once the “High Ambition Coalition” was formed.  Consisting of the EU, the US, Canada, Brazil and the vast majority of island nations (who stand to suffer the worst effects of climate change), the High Ambition Coalition pushed for reform on four key issues.  They wanted the Paris Agreement to:

1.     be legally binding,

2.     set a clear, long-term goal on climate change that is in line with scientific advice,

3.     introduce a mechanism for reviewing countries’ emissions commitments every five years, and

4.     create a unified system for tracking countries’ progress on meeting their carbon goals.

Nonetheless, India and China still represented formidable opposition as they, justifiably, banded together to resist any overly burdensome restraints on the economic expansion of developing countries.

The Paris Agreement

So with that bit of rough and ready context, I want to take a look at some of the more important articles in the Agreement to consider where the balance was struck and whether we’re approaching a fair, effective and enforceable global plan that can combat climate change.

Article 2 – The Overall Target

Article 2 reflects the entire Agreement in a microcosm.  Article 2 is a marked improvement in ambition and understanding, as compared to its Kyoto predecessor, but is also a sad indictment of how progress has floundered in the last decade. 

The new wording states that the Agreement aims to strengthen the global response to the threat of climate change by:

“holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels…in a manner that does not threaten food production”.

Firstly, we can immediately see that there is a clear emphasis on the temperature here, where the Kyoto wording used a more vague reference to “dangerous anthropogenic interference with the climate system” and concentrations of greenhouse gases in the atmosphere.  Limiting the atmospheric concentrations of greenhouse gases does address the problem, but it is a prescriptive method to drafting (theoretically, the atmospheric concentration of greenhouse gases could be very high and the temperature needn’t rise, e.g. spraying the atmosphere with sulphur could reflect the sun’s heat and cool the planet).   However, by referencing temperature, the drafting links more directly to the desired outcome.  Consequently, the Agreement is clearer, the application is wider and its message is much more resonant and easy to communicate.

Secondly, the pursuit of 1.5°C is a drafting achievement to be celebrated.  Few spectators thought such an ambitious target would be included.  Its inclusion reflects a global consensus about the severity of the problem and a foothold for future talks. 

However, you don’t need to be a legal scholar to see that it is the 2°C target that will be legally enforceable, while the 1.5°C target is merely aspirational and therefore holds no real value beyond window-dressing and political point-scoring. 

Consequently, we’ve moved from a “2°C” benchmark to a “well below 2°C” benchmark.  Another step in the right direction, but such ambiguous language provides next to no ability to enforce the increased ambition.  The world is already 1°C warmer than pre-Industrial levels and limiting climate change to “well below” 2°C will require that global carbon-dioxide emissions peak well before 2030.  That would represent a rate of “decarbonisation” (a word not found in the Agreement, thanks to the sensitivities of Saudi Arabia) far greater than the world has yet seen. 2°C remains the high water mark that signals catastrophic consequences: billions in mitigation and millions in refugees.

Thirdly, the addition of the “food production” caveat is a sensible addition.  In the early 2000s the US began repurposing corn in order to produce ethanol / biofuel (which has slightly lower emissions than regular petroleum gasoline).  The problem being that producing ethanol takes disproportionately large amounts of corn and the US produces approximately 40% of the world’s corn.  Consequently, the global supply of corn as a food source (for both humans and livestock) plummeted, prices soared and the world’s poorest and hungriest people were unable to afford this very basic ingredient.  The Agreement now guards against such cannibalistic approaches.  Climate change initiatives are redundant if they lead to hunger or deprivation.

Lastly, Article 2 restates the irrefutable (but hopefully not permanent) position between developed and developing countries’ responsibilities:

“The Agreement will be implemented to reflect equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.”

Article 4 – Target Setting

Article 4 contains the meat of the actual plan.  How are we to reach the Article 2 objective?

“Parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recognising that peaking will take longer for developing country Parties…so as to achieve a balance between anthropogenic emissions by sources and removals by sinks…in the second half of this century.”

This is a stark contrast to Kyoto.  At first glance, I thought this article was disappointingly full of loose language and escapable commitments.  However, the more I consider it, the more I believe it to be a wise reaction to how Kyoto played out, and a continued recognition of humanitarian objectives in the developing world.

Firstly, in comparison to Kyoto, target setting has moved from being a centralised process to being decentralised.  Where Kyoto mandated static targets for each country, Paris essentially takes a very ‘hands off’ approach, in which each country sets its own targets, with almost absolute discretion, in accordance with its own unique set of circumstances.

Whether this is overly optimistic and naïve or necessarily non-prescriptive is an important question.  In my opinion, this is a necessary reaction to the global financial crisis and Kyoto fallout.  Climate change agendas cannot be imposed from the top down.  Economies and governments need flexibility.  We saw that the rigidity of the internationally set Kyoto emissions reduction targets simply meant that, whenever things got difficult, parties just jumped ship.  Consequently, what we have now is a much looser framework, but a much clearer vision.

Secondly, developing countries should be afforded greater leniency in terms of emissions.  In a perfect world we could demand that no more dirty infrastructure be built.  In developed countries we see the lack of energy infrastructure as the perfect environment for a clean energy infrastructure.  The reality is that the developing world has billions of people living in poverty.  An overly prescriptive approach would fail to respect the suffering of those in need right here, right now.  The developed world improved living standards using fossil fuels, to deny the developing world the same opportunity would be hypocritical. 

So what is it that each country must do?

Each country must:

• set national targets regarding absolute emissions reductions, financial contributions and mitigation efforts;
• monitor and report on the achievement of those targets in line with the new rules regarding transparency and accounting; and
• meet at least every five years to revise the targets upwards.

Article 9 – Finance

“Developed countries Parties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation with their existing obligations…Other Parties are encouraged to provide or continue such support voluntarily.”

In practice, this requires $100 billion per year to flow from developed countries to developing countries by 2020, with the sum to be revisited in 2025.   This is amounts to maintenance of the status quo, which is disappointing.  However, unlike Kyoto, this is a minimum amount, building in flexibility for greater contributions as economic conditions improve.

Unfortunately there is still blind treatment of rich but still developing countries such as Bahrain, Qatar, Saudi Arabia, Singapore and South Korea, etc.  To enforce identical financial obligations on all developing economies is as patently ludicrous as saying that sub-Saharan Africa is the same as China.  I recognise that politically it was always going to be tough to get those nations to sign up to more binding financial commitments, but this represents a failure to secure commitment from some of the world’s leading emerging economies. 

Article 14 – Stocktaking

If Paris is to be a long-term success, article 14 contains the vital mechanism to ensure collective vigilance.  Article 14 mandates that all countries must come together to perform a “global stocktake” every five years, in which, the signatories will assess the overall progress towards achieving the purpose of the Agreement and its long-term goals.  The first such global stocktake will be in 2023.

However, these stocktakes will not be merely procedural matters, India has already spoken out about its fears that the concession that developed countries will be allowed to peak their greenhouse gas emissions sooner than developing countries, implies that developed countries will be allowed to grab a disproportionate amount of the global carbon space at the first stocktake, thus inhibiting economic development via fossil fuel means.  Consequently, the process is threatening to become extremely politicised.  Rumours persist that India will make a unilateral declaration of its requirements for carbon space prior to the first meeting, threatening the legitimacy of a global carbon budget before its even begun.

Article [x] - Liability and Compensation

One thing that was explicitly excluded from the Agreement, was the issue of compensation for countries adversely effected by climate change.  The small Island Nations pushed hard but ultimately failed to include a deal in which historical emitters would be liable for future compensation claims (e.g. for destruction of property, loss of profits, etc.) where climate change could be proven to be the primary cause.

As wholesome as this would have been for the Island Nations that are rightly terrified about what climate change may do their economies and people, this was always going to be a huge stretch.  The historical emitters have already accepted the lion’s share of paying for the mitigation effort.  Setting a precedent that these countries would be liable to pay compensation claims for damage caused by climate change, would be tantamount to writing a blank cheque.  Article 9 goes some way towards covering the expenses that Island Nations will face; time will tell if that amount is sufficient, however, damages may very well equate to double compensation.  Furthermore, the Agreement contains several carve outs for the Island Nations that reduce their obligations and liabilities.

Conclusion

I think by now you’re sensing that I’ve seen a lot of good and a fair amount of bad in the Paris Agreement.  Consequently, I’ll summarise by laying it out my personal views:

Wins:

• 196 countries have agreed to this draft deal.  While the deal is not to be signed until 22 April 2016, this represents more than 100 new signatories as compared to Kyoto.  Importantly, it has re-engaged the world’s large defectors: the US, Canada, Australia, Russia, China and India.
• The drafting has improved and expresses a clearer vision of how to combat climate change and the urgency with which it must be done.
• A clear response to Kyoto’s failures.  By empowering countries to set and monitor their own targets, the Agreement is a lot more flexible, which should improve commitment.

Losses:

• With increased flexibility comes limited legal enforceability.  Consequently, the deal hinges greatly on trust between nations.
• A failure to secure financial obligations from the rich developing countries.
• Countries can still walk away if it gets too difficult, as Article 28 allows for countries to withdraw three years after signing.

I wrote my law school thesis on whether the Kyoto Protocol provided an adequate basis from which modern economies could begin to transition to a low-carbon economy.  I wasn’t satisfied then and I’m not satisfied now.  However, the Paris Agreement represents a tremendous step forward from the Kyoto Protocol.  The reality is that economic compromises must be made in order to address climate change.  In an über-competitive world that will always be an exercise in brinksmanship, pushed by those with the strongest economies, the greatest domestic political will or those in danger of suffering from the worst consequences; and dragged by those whose economies need fossil fuels or whose political climate does not afford long term planning.  Consequently, I am pleased that the Agreement reflects that the climate change agenda exists within a multifaceted political and economic world but also that we must watch each other in order to make the necessary changes.

What we’ve ended up with is an agreement that has rightly or wrongly devolved the power of the UN and trusted that, given that right economic and political conditions, every country will find it in their own self-interest to move to a low-carbon economy.  I believe that is sound reasoning.  Whether that reasoning will become reality before we hit 2°C, is a gamble the world’s leaders have just bet the house on.  

Innovative Houses: Concepts for Sustainable Living (2014)

Is it possible for each of us to produce as much energy as we use?  Could well designed homes enable each  us to do so for the same price as a traditional home?  Well, that has been the objective underpinning "net-zero" design principles since the idea's first incarnation as the “Passivhaus” project in Germany in the 1990s.  Modern construction, energy, telecommunications and design technologies are now beginning to work in tandem to deliver self-sustainable housing.  In Innovative Houses: Concepts for Sustainable Living, Avi Friedman (an architect) uncovers some of the newest principles and practices that are making "net-zero" a potentially ubiquitous practice.

Sounds good, but what possible reason could you have for wanting to build such a thing (besides achieving new levels of pretension at your next Shoreditch supper club)?

Well, net-zero houses divert the generation of power away from conventional, polluting power plants and into local, more sustainable and cleaner methods.  They drive down consumption of both energy and resources and inspire an ethos of collective and individual responsibility in a society that is still geared towards unsustainable mass consumption.  Plus, in my opinion, they’re really cool.  They often incorporate the most cutting-edge technologies and contemporary design principles in order to create a home or office that looks and feels genuinely modern and creative, whilst continuing to serve that larger societal and, often economic, need.

With that in mind, I’ll share and comment on the major net-zero design considerations raised by Friedman.  Hopefully this blog entry will be one of my more practical pieces and should be informative for anyone interested in designing a net-zero home or office, or anyone just trying to reduce the energy consumption or environmental footprint of their home.

In order, I’ll be looking at:

• architecture and orientation,
• energy and resource efficiency measures,
• implementing on-site renewable energy, and
• other sustainability considerations and trends (e.g green roofs and home farming).

In addition, I’ll be including photos of some of my favourite net-zero homes featured in the book.

Architecture/Orientation

One of the central tenets of a net-zero building is that you don’t actually have to put in much energy, or prevent much energy from escaping, if you design it in order harness natural sunlight and airflow.

Aspects such as the building’s dimensions and site orientation are critical to taking advantage of passive solar gain, natural daylight and indoor airflow, which can all help to regulate internal temperature for free and without energy consumption.  There are also much larger decisions that designers must consider before even purchasing a site, such as: the local wind patterns, sun orientation, topography, the ground depth of winter frost and shadows cast by other buildings and trees.

Principally, a building should be orientated so that it has the elongated side facing south (or north in Southern hemisphere).  Facing true south, rather than magnetic south, is highly recommended, but the orientation can vary by up to 20 degrees with minimal effect on solar input.  This orientation allows that building’s side to gain energy between 9 a.m. and 3 p.m. during the cold season.  In summertime, when the sun is high in the sky, it still moves along a southward arc in the Northern hemisphere.  According to the California Energy Commission (2011), by designing a house to take full advantage of the sun’s heat, energy consumption can be reduced by 30 to 40 per cent.  In colder climates, however, such an organisation can reduce the heat load by up to 60 per cent.

The south-facing façade should contain large windows for ease of solar exposure.  In contrast, the opposite façade should have fewer openings and more insulation in order to minimise heat loss.  To reduce the heat loss from the northern façade, it is recommended that only 5 to 10 per cent of its surface should be fenestrated. 

Primary living spaces, such as living rooms, kitchens and bedrooms, which require the most heat and light, should be placed along the wall with the highest sun exposure (and should be top-lit by an opening, which doubles as a wind catcher and light funnel).  Secondary or less used spaced, such as utility rooms and stairs, should be located on the north side.

Designing a house to have windows near the ground and others near the top of a room improves natural ventilation and high ceilings also encourage airflow, which can then be seasonally controlled.

Designers can then use two types of thermal reservoirs to reduce heating and cooling needs: green roofs and/or basement crawlspaces.  Both methods rely on absorbing heat during the day, thereby keeping the house cooler, and releasing that heat at night to keep it warmer. 

Since mechanical heating and cooling systems usually account for around 55 per cent of overall household energy consumption, net-zero housing is smart in first utilising these natural (and free) methods for reducing demand.

Energy and resource efficiency

Nonetheless, natural sources are unlikely to be able to satisfy heating and cooling needs all year round, in all climates.  Consequently, we always need to think about how we can increase the efficiency of the energy and resources we do use.

Lumber, iron ore and fossil fuels are among those materials whose stock is rapidly disappearing, but which remain crucial to the construction industry.  The need to develop housing prototypes that consume fewer resources and recycle others during their fabrication and occupancy is an urgent priority.  Homes need to intelligently regulate the energy they use, take advantage of the sun for energy generation, use construction products made from recycled material and be water efficient.

To that end, adjusting your thermostat is hopefully going to become one of those archaic behaviours of a bygone era.  We now have sun, wind and heat capacity calculating software that communicates with smart thermostats and energy usage readers in order maximise the efficiency of your heating and cooling systems (with minimal input from the user).  You may have noticed that these devices have quite recently reached a tipping point with companies like Google and British Gas developing and aggressively marketing home smart meters that can be controlled from anywhere, through your phone (“Nest” and “Hive” being their respective companies/products).

In terms of actually heating and cooling your home, it is important to maintain airflow throughout the structure using suitable heating ventilation and air conditioning (HVAC) methods or heat-recovery ventilation (HRV).  These appliances recover the heat as it flows outside and transfer it into the new, fresh air that is entering the building.  This is a very efficient method to reduce wasted energy through heat loss.

For heating considerations, there are multiple air and water methods that you can choose from, such as baseboard heaters, fossil fuel central heating systems, active thermal solar heating and geothermal heating.  They can be combined with others such as HRV and designed for passive solar gain. 

For ventilation, you can choose from central duct, passive circulation and simple ductless convection systems.  These can be enhanced through the usage of the thermal chimney effect, the ridge-and-soffitt vent system, grille selection, underfloor displacement ventilation and filter selection.  For air conditioning, it is advisable to use passive cooling options – such as natural and artificial shading, thermochemical glass, the thermal chimney effect and geothermal cooling, among others – prior to resorting to costly energy consuming technologies.  Once passive air-conditioning systems are introduced, there are numerous methods to choose from for active air conditioning.  They range from individual space coolers, such as window units, to central AC systems and are selected on the basis of efficiency and cost.

Further green technologies are maturing and gaining greater market share, such as: biomass boilers, rainwater collection systems, a multitude of water efficient appliances and phase-changing materials (primarily embedded within walls/insulation) that absorb heat in the day and release it at night.

Water is an often overlooked resource.  However, research has shown that homeowners can make incredible reductions in use by focusing on increasing appliance efficiency and decreasing flow rates.

Conventional toilets currently account for 27 per cent of total water usage, so modernising your toilet is actually an investment that usually has a very short payback period.  Waste-water recovery systems perform the same functions as the HRV mentioned above but for water, by transferring heat from used water into potable water before it flows into the sewage system.

Furthermore, there is a clear effort to utilise “grey” (recycled/unfiltered) water for uses where strict cleanliness is not necessary.  Consequently, grey water harvesting and recycling systems take water from the shower, sinks and laundry and use it to either flush toilets or irrigate outdoor vegetation.  Cisterns also allow homeowners to collect and distribute up to 1.42 ltr (0.375 gal) of rainwater per 0.09m² (1 sq ft) of the catchment’s area, per 2.5 cm (1 in) of rain fallen.  This collected water, rather than water supplied via the mains, can then be used for similar purposes.

On-site renewable energy

If you’ve followed the plan so far, you’ll have a home or office that has a greatly reduced need for energy.  However, what energy you do require, you’ll still be drawing from the grid, so we’re still short of being net-zero.  Consequently, on-site generation of energy is necessary.

First, it is important to decide whether the dwelling will be off-grid – using batteries to store energy for low production times – or grid-tied – in which case the dwelling can draw from and give back to the local power grid.  Unless you’re some kind of eccentric billionaire who can afford to live in the remote wilderness, you’ll probably want to be grid-tied.

Solar and wind are the obvious scalable renewables most designers go to.  An area of 144m² (1,551 sq ft) of photovoltaic (PV) panels has the potential to provide all of the energy needed by the average four person household.  The efficiency and cost of solar PV panels continues to drop (see “Swanson’s Law”, which has accurately forecast since 1976 that the price of solar PV panels will drop by 20% for every doubling of the units shipped worldwide – meaning at current rates, the price halves every 10 years).  Nonetheless, it is unrealistic to expect everyone to have the space, capital and climate to power their home this way.

Consequently, it is best to combine electricity production methods (solar PV, wind turbines or whatever suits your location and budget) with other heat-production methods such as geothermal pumps and solar hot water vacuum tubes.  While such heat-production systems do not actually produce electricity, they are valuable in reducing the amount required to heat the dwelling, making electrical production more effective.

The takeaway message is that there is no one-size-fits-all solution to on-site renewable generation.  It needs to be tailored to meet specific energy requirements for specific budgets in specific climates.  The good news is that there’s a plethora of options out there and their prices are all dropping over the long-term (even if the short-term drop in oil prices causes them to look relatively less attractive). 

Other sustainability considerations and trends

Pre-pack houses/ use of space

Populations around the world are more densely packed than ever.  Added to the fact that bespoke construction and relocation costs are more expensive than ever, and it is a logical progression that net-zero homes can now be bought flat-pack for easy construction and deconstruction/relocation.  Consequently, we’ve recently seen that in Japan, more than 120,000 houses per year – one third of all newly built homes – are made in factories using online customisation.

Furthermore, design firms, like the Netherland’s DAAD Architecten, are attempting to tackle the issue of lack of space by exploring untapped urban areas such as rooftops.  Their project, Lighthouses, is an attempt to solve living congestion in urban areas by designing houses that can easily be placed on top existing buildings (obviously it would be up to you to find the location and negotiate a price and a right of way up to the rooftop).

They look a bit peculiar, but the exploitation of these previously unused spaces could rejuvenate a housing markets in thousands of cities across the world where the shortage of space makes housing prohibitively expensive for so many.  Furthermore, if we make sure that it’s a net-zero home being placed there, we’re addressing two problem at once.

Similar in principle to that idea is the German architect Werner Aisslinger’s project, Loftcube, which offers a dwelling that suits people with a ‘nomadic’ lifestyle and allows for temporary stays in dense urban areas.  When you move, it moves.  While economically it makes sense to occupy unused real estate in urban locations, the Loftcube is, more romantically, a transportable penthouse that can be placed on rooftops, or other terrain such as mountaintops, islands and in forests.  This approach decreases waste and cost over the long run.

Green roofs

Green roofs not only look cool, but they are also (as mentioned before) a great way to absorb heat in the day time and release heat at night.  Furthermore, they turn a previously unused space into a recreational area and/or area for growing your own food.

It is possible to build green roofs on either flat or pitched roofs.  While flat roofs are the most common type, the pitch roof design is also a viable method that has been used for centuries.  The common flat roof can incorporate rooftop terraces and gardens, but this version is typically more expensive due to the complex systems and membranes required to waterproof and drain water.  The other version is simpler and easier to build as the natural slope easily drains off excess rainwater to prevent leakage.

Designing with nature

When designing and building with nature, the key consideration is the preservation of flora and fauna.  Constructing with minimal disruption to forests, for example, leads to advantages such as enhanced air quality, protection from the elements and storm water retention.  Furthermore, having large trees around the house reduced overall energy consumption by up to 25 per cent due to shading and protection from the wind.

Xeriscaped outdoor spaces

The core objective of xeriscaping is water conservation through the creation of water efficient landscapes. Chiefly, this involves planting native species with deeper roots that can survive primarily on rainwater and grouping plants by reference to water demand.   

Edible landscaping

The recommended size of an edible portion for a one-family garden varies from 55.7 to 111 m² (600 to 1,200 sq ft) depending on how active the homeowners plan to be.  If this kind of space is unavailable (which is quite likely), then there are two commonly used types of vertical farming.  The first is a simple method in which vine-like plants grow upwards using string, walls or fences.  The second consists of a layered garden in which crops are planted in two or three levels.  Using this method, where the plants that need more water are placed on the lowest layer where water permeates slowly, even modest size gardens can be used to harvest a reasonably large amount food.

Reinventing Fire (Part Two) (2011)

While the energy efficiency measures detailed in part one of the review are admirable and necessary, the shift that is about to occur in electricity production and distribution is potentially even more important and thus, I think, deserving of its own review.  Though dramatically increased energy efficiency in buildings and industry is predicted to keep overall electricity demand flat or declining for the next few decades, even as we electrify vehicles, the distribution of ubiquitous, clean and renewable energy would be nothing short of a technological and geopolitical revolution that could negate the need for energy efficiency measures.

History

In order to understand why today’s inefficient, insecure and environmentally degrading system is holding us back, it’s important to understand its roots.  Modern electricity production is a 120-year-old story, driven by the complex interplay between the laws of physics, the principles of prudent engineering, the evolution of technology and shifting economics and regulation.

It began with a legendary debate between two of the fathers of the electricity industry, Thomas Edison and George Westinghouse.  In the 1890s, they disagreed on the best method for transmitting electricity – direct current (DC) or alternating current (AC).  Eventually Westinghouse prevailed, laying the foundation for the centralised architecture that dominates the AC electricity system today.  Following this, many cities sought lower prices and a high quality of service by granting non-exclusive franchises to competitors in the same region.  However, as companies invested and competed to serve the same customers, this competition often led to the duplication of plants and wires, which had high fixed costs.

Consequently, due to the nature of these investments and decreasing cost of production per kWh produced, electricity was declared a “natural monopoly” where regulation should play the role that competition fills in the free market: “control of entry, price fixing, prescription of quality, and conditions of service”.  As a result, the question became not whether but only how to regulate the electricity sector.  Legalised monopolies “eliminated investors’ fears that utilities would lose market leadership” and reduced competition for capital and the cost of needed funds.

Fast-forward to the current day, where legalised monopolies still prevail, day-to-day demand is first met by using generators with the lowest operating costs.  These generators are commonly called “baseload” plants because they are used to meet the lowest expected level of continuous aggregate demand.  Traditionally, baseload plants have been coal and nuclear plants, which are costly to build but cost only a few cents per kilowatt-hour to run, and which operate more efficiently at a constant high output.  When demand rises moderately – so-called shoulder demand – operators tap higher-operating-cost generators.  When demand peaks, operators may need to use the costliest-to-run generators, typically combustion turbines.  These generators are flexible, able to start up quickly and to ramp electricity production up and down rapidly to meet fluctuating demands.  This is why we see a constant fluctuation in electricity supply and prices.

To date, this has culminated in a regulatory structure that rewards building a large asset base and selling more electricity.

Problems

At first glance, using large, centralised sources of electricity and rewarding producers and distributors for selling more can appear to be unproblematic.  However, Lovins and his team rightly illuminate three key problems with this model that greatly affect its long-term sustainability: carbon emissions, in-built inefficiency and a lack of competition (not to mention fuel security and the exacerbation of geopolitical tensions).

At present, I don’t feel much needs to be said about carbon emissions.  It has been well documented that the unnecessary long-term use of fossil-based fuels presents risks to the global environment too grave to ignore.  It suffices to say that according to the RMI, on our current path, expected growth would drive up the electricity sector’s carbon emissions 38% by 2050, to levels nearly 600% above Kyoto protocol reduction targets.

The current centralised, fossil-fuelled electricity system also promulgates a series of storage and transmission loss inefficiencies.  Electricity is the only important “energy carrier” that cannot yet be easily and cheaply stockpiled or stored.  Therefore, electricity must be produced and used at the same instant; it is the ultimate perishable commodity.  Lovins makes the point that two-thirds primary fuel is discarded as waste heat or used internally before the electricity leaves the power plant.  

Furthermore, each hour a 1 GW coal-fired plant burns 500 tons of coal and uses 25 million gallons of cooling water.  Consequently, large centralised power generators use swathes of other precious resources and consistently decrease in effectiveness the further they are situated from the consumer.

Regarding lack of competition, it should be noted that the vast majority of electricity sectors in the world remain largely regulated industries in which protected public utilities dominate the market.  While capitalist economies the world over hail competition as the driving force of innovation, the electricity sector has succeeded in convincing the public that this is a vital service which cannot be privatised despite bloated profit margins and chronic under-funding in new technologies.  In such an environment, incremental progress trumps innovation, avoiding risk is the watchword, and protecting the status quo has become the norm.

Before moving to discuss renewable energy, I want to address what many view as half-way houses for the electricity industry: nuclear and carbon capture sequestration (CCS). 

Many advocate such a switch, however Lovins produces a cogent argument that nuclear is just not economically viable.  In the three years following August 2005, when nuclear power enjoyed the strongest political and policy support, and most robust capital markets in history, none of its 34 proposed U.S. projects was able to raise any private financing despite federal subsidies rivalling or exceeding their construction cost.  The market verdict is similar in other countries.  Of the 64 nuclear power projects that were under construction globally in 2012, all were in centrally planned power systems, mainly run by authorities with no private funding.

This is mainly due to the popular notion that no other source of the energy is so prone to catastrophic failures that cause massive financial losses.  In the wake of the Fukushima disaster in Japan in 2011, Tokyo Electric Power Company posted a $14 billion loss.  At present, a fifth of the world’s reactors are based in significant seismic zones. 

Fundamentally, though, nuclear power had been overtaken in the marketplace long before Fukushima, just as its U.S. orders had collapsed from poor economics a year before Three Mile Island.  Its costs and risks are simply unattractive to investors.  In time I genuinely hope this can change as the potential of nuclear energy dwarfs that of any other energy source (and that is just talking about nuclear fission; if we ever crack nuclear fusion it would be hard to charge money for electricity it would so abundantly available), however, at present it is not a viable candidate when compared to the more mature, safe and investor-friendly renewable energies I will discuss.

Like nuclear power, CCS could be used to eliminate carbon emissions but also faces challenges from its high costs and uncertain performance, which limit its access to capital.  Issues regarding how to store the captured carbon emissions with appropriate safeguards and liability protection mean it is unlikely to be cost-effective enough to keep coal-fired power plants economically competitive in the short or medium term.  Furthermore, moving towards nuclear and/or CCS does nothing to address the critical issues of fuel security, financial stability, and above all competition.

Opportunity for decentralised renewable electricity

In energy production and consumption the electricity system is facing a convergence – some would say a perfect storm – of changes including technology development, reliability and national-security concerns (prolonged electricity blackouts are just as economically serious as oil interruptions), and environmental issues that together create some of the largest opportunities for innovation and investment seen since the industry got its start over a century ago.  And the market is already reacting.  Half of the world’s total 2008-2010 additions of generating capacity were renewable. 

Renewable markets are now immense, global and dominated by developing countries, and will become increasingly so.  Through 2035, official projections say China and India will together add nearly twice as much new capacity as the U.S. and Europe combined, continuing to drive renewable markets.  China is now the world leader in five renewable energies and is aiming for them all.

As discussed in part one of the review, the way we consume energy is about to become radically more efficient.  Information technology providers are quickly infiltrating the electricity business with products that greatly enhance the level of information supplied to customers, utilities and even energy-using devices (I refer back to the Buildings section in part one of the review).  Passive consumption of electricity is on the brink of a radical shift.  Advances in smart-grid technologies that combine IT with the electricity grid are enabling bidirectional control, distributed intelligence, two-way communication, ubiquitous real-time price information, and demand response.

Regulatory solutions

Beyond the economic and technical challenges facing the industry, regulatory and institutional shifts must occur that quite clearly challenge a lot of powerful vested interests.  Electric utilities’ business models and regulatory structures will need to be reformed to level the playing field between investments in supply- and demand-side solutions, and between non-renewable and renewable, and centralised and distributed, options.

Regulators need to share benefits and costs equitably between customers and shareholders and to hold utilities to standards of investment and operation that are far more ambitious.  Achieving a transition to a largely renewable and distributed future will require transparent, fair, and non-discriminatory rules that ensure the safety and reliability of the grid while minimising barriers to entry.  These rules critically affect project economics and, in turn, scope of competition.

At a national level, a first important step would be the widespread adoption of policies that reward utilities for efficiency rather than the bulk amount of electricity sold (here I echo the points made in the discussion of “decoupling” policy in part one of the review).  At a local level, liberalisation of the rules affecting small-scale distributed resources (for example the permitting and inspection procedures for home rooftop solar systems) would open investment in a diverse array of new electricity markets and increase competition.

Furthermore, rewarding utilities for cutting bills, not selling more energy, aligns their interests with customers’ interests and society’s larger goals.

There may even be a whole new business model: acting much like the internet service provider, the utility could be the open source for myriad power generators and other companies, allowing these providers to get their electricity and services, like demand response, to customers on the utility’s new supergrid.

Commercial solutions

If you’re sold on the reasons for changing, and the regulatory environment that would encourage such a change, I’d like to outline in more detail some of the outstanding commercial projects that Reinventing Fire advocates.

But even if you’re not sold, it is important to realise you are swimming against the tide.  If you’re one of the nation’s largest emitters, it doesn’t matter whether you believe human activity is changing the earth’s climate; it matters only whether you think your emissions might be restricted or taxed.  Very few nations around the world are not embracing a long-term strategy towards taxing carbon emissions more heavily.  That’s why we’re seeing the world’s largest oil and natural gas producers investing in large renewable portfolios; in order to at least hedge bets.

It just so happens they’re also great investments too. While renewable technologies generally have had higher capital costs than fossil-fuelled power plants, their fuel is free, their energy price is locked in for decades, and their capital costs are falling.  However, these investments generally come in two different varieties with very different investment profiles: distributed and large-scale renewables.

-         Distributed solutions:

“Distributed” usually means dispersed geographically and connected to the distribution system rather than the transmission system, so the resources are nearer customers, saving grid costs and reducing losses and failures.  But “distributed” resources are also often modular – made in small, similar chunks that can be linked together.

Consequently, distributed resources avoid the losses of delivering power.  Also, distributed resources’ combination of short lead time and small unit size reduces financial risk by building capacity in increments more closely matched to changing customer demand, easily ramping investment up or down as new demand information unfolds.  This more interactive, informed, rapidly evolving electricity system is not centrally planned from the top down.  

Lovins details a number of distributed projects that outline how new energy solutions are moving away from the public sector:

o   Chicago’s 108-story Willis Tower is now exploring the possibility of becoming the nation’s largest vertical solar farm;

o   A superefficient, affordable housing development in Sacramento, CA, will use a first-of-a-kind private, commercial microgrid to manage and distribute intelligently the generation and storage of solar power among 34 single-family homes.  The project, known as 2500 R Street, aims to achieve net-zero efficiency levels, with each home generating as much clean energy as it uses;

o   The global distributed-generation market grew 91% in 2010 to $60 billion.  In the past decade, micropower has more than swapped with nuclear power their respective shares of global electricity production, and in 2008 micropower provided roughly 90% of the world’s additions of electricity generation.

o   Seattle-based start-up Clarian Power even offers a novel solar panel system completely bypassing the normal connections to the utility’s grid.  You simply plug a cord from the PV solar system and its accompanying “SmartBox” into any wall outlet in your house, and its microinverters let electricity from the solar panels flow to all household lights and appliances, using only existing wiring.  Some of these firms are remarkably innovative.  SolarCity, SunRun, Sungevity, SunPower and a growing collection of other competitors offer rooftop PV panels for zero money down – eliminating the sticker shock that frequently deters customers.

           -          Large-scale renewable solutions:

Long have large-scale renewable projects been the fantasy of clean energy advocates, however, fervour for their investment is diminishing after years of political stagnation.  While multi-GW-scale PV farms are already planned in the Chinese deserts and have been proposed in North Africa, and California, these are necessarily centrally-planned projects.  These projects should continue to be encouraged due to their incredible potential to provide ubiquitous clean energy, however, they share few of the advantages that make distributed power so commercially appealing.  Firstly, they suffer similar transmission losses to traditional power plants.  The enormous proposed solar park in the Sahara would lose almost half its produced energy in transmission when delivering to Europe.  Secondly, the cost and financial risk is far too large to allow agile investment; these are large, long-term bets that don’t appeal to the majority of investors and consequently require major public backing.

Nonetheless, large-scale renewables should be developed in order to replace current baseload coal facilities.  The more agile and scalable distributed sources should be developed in order to meet shoulder demand and to spur innovation and investment.

Risks

Reinventing Fire is not oblivious to the risks inherent in such a transition and the RMI team deliver a healthy dose of reality by presenting opportunity and challenge in equal measure. 

Firstly, harnessing distributed, renewable power sources would require siting and building 116 million MW-miles of new high-voltage transmission lines, costing an estimated $166 billion before 2050 (and that’s just the book’s U.S. estimate).  

Furthermore, a system dominated by renewables has security and reliability risks.  More inputs and greater dependence on IT and smart-grid technology will increase cybersecurity threats to the system.  Any electricity scenario dependant on the frail aerial arteries of the transmission grid – without the ability isolate demand centres from grid disturbances – carries a national security risk.

Another challenge is the potential for public resistance.  PG&E, one of the U.S.’s leaders in smart-grid deployment, has experienced considerable customer backlash, largely based on (misguided) concerns about the health effects of electromagnetic radiation from smart metres.

Some households and small-business operators simply may not be interested in a more active, technology-intensive system, or they may not want what some see as “big brother” technology in their homes.

Financial capital is an obvious bottleneck.  Investment will fail to flow in the direction of renewable projects so long as state subsidies continue to prop up the oil industry (artificially deflating their price and distorting the market).  While immediate withdrawal would punish those on low income with more costly energy bills, plans need to be agreed to sunset all state support of non-renewable sources over the next decade.

Perhaps most crucially, the perception that the green economy is the pet project of the privileged seriously undermines the message and distorts the value proposition of making such a transition.  Without a long-term, focused government that can deliver the necessary regulatory structures and the social and environmental reasons for doing so, the ability of a green economy to reinvigorate national infrastructure to create a more open and legitimately competitive society will never be realised.  That starts with us; that starts with political pressure.

Conclusion

The challenges outlined above make clear that this is not a plan without risk.  However, Reinventing Fire has delivered the most comprehensive and ambitious plan for a green economy that I have ever read.  Six main criteria should gauge success in the new electricity sector: affordability, technical feasibility, security, reliability, environmental responsibility and public health, and public acceptability.  Reinventing Fire’s plan works on all above the criteria.

By focusing on the four sectors of transportation, buildings, industry and electricity, a complex and daunting problem now appears to have a clear solution.  By reframing the environmental agenda as a commercial opportunity, entrenched political positions are dissolving and emotion is being replaced by common values and pragmatism.

Rapid innovation, combined with society’s need to reduce fossil-fuel use, has created a golden opportunity to reinvent the electricity system – to the great advantage of clever and agile businesses and nations.  As Thomas Edison exclaimed to Henry Ford in 1931: “We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy – sun, wind and tide…I’d put my money on the sun and solar energy.  What a source of power!  I hope we don’t have to wait until coal and oil run out before we tackle that.”

Score: 95/100