The current state of Maharashtra politics should give you some idea of what will happen when, courtesy global warming, drought stalks the BIMARU states. The overuse of groundwater and the disappearance of glaciers, which will cause flooding as well as drought, will make our brethren continue to migrate within the country.
Where will they go? The coastal states which have rather more rainfall, and are anyway economically more developed.
What will happen? Look at the extreme actions of the Shiv Sena and the MNS when all that is at stake is the 'appropriate' distribution of the spoils of development and wealth creation and project that onto a day when it is a matter of who starves and who lives.
Monday, September 28, 2009
Sheer laziness and intellectual dishonesty is holding back the world
I was once an American. Yes, dear reader, I can state that as a fact. Reason:
1) I looked at my household energy bill for 2004 and ran it through the US energy department calculator at http://www.epa.gov/climatechange/emissions/ind_calculator2.html#c=homeEnergy&p=reduceOnTheRoad&m=calc_currentEmissions. I shoved in 4000 units (that is what it was) and Lo! it was 44,267 pounds (they still use them, therefore so will we). That is horrendously more than the 28,750 that is the average for the US. But we have to make a correction - in the US electricity is not the only source of energy - direct heat from oil or gas is used to heat water and the house. In India, by contrast, a/c's are run from electricity.
2) I added fuel oil as the source of heat to the calculator taking the average American five person home to 50,750 pounds of carbon.
3) To be fair I added the gas used for cooking, 1,460 pounds to my total. I will add this to the US total because their gas numbers are confusing as it is used both for cooking and heating, so it is fairer to use my number.
Total me: 45,727.00 lbs
Total average joe: 52,210 lbs
No real difference.
The new me (see earlier blog), who lives just as well as before, uses just 1500 units = 16,600 lbs of carbon.
That's the laziness - its just too much work to make people change.
And the dishonesty? For amusement I switched in the same calculator to using money as the unit, and not units of electricity. 1500*8.33 (our avg rate in Mumbai)/48=260.31 as the monthly bill. That produces a reading of 27,170 lbs of carbon.
16,600/27,170*8.33=5.09 is the average price of US electricity.
Were they paying 8.33 the cost per month per family would rise from US 175 (average)to 8.33/5.09*175=286 USD per month or 1,332 per year. That is 2.66% of median US pretax household income. Would a change in electricity price change behaviour?
Yes it would, and drastically, when one takes as a proxy the change to driving and car buying habits that took place when petrol went from 2.00 to 4.00. Assuming 20 miles to gallon as an average the hit to a two car household putting 25K miles on the clock was about 2,500 per year.
Conclusion: Electricity induced carbon is seriously mispriced in the US versus Mumbai. Wildly mispriced if one takes into account purchasing power parity.
Of course it is even more mispriced in Mumbai versus the free power that farmers get in the Punjab.
That is just household use; in car use I remain firmly American when in India because of the lack of public transport and the lack of pavements on which to walk.
1) I looked at my household energy bill for 2004 and ran it through the US energy department calculator at http://www.epa.gov/climatechange/emissions/ind_calculator2.html#c=homeEnergy&p=reduceOnTheRoad&m=calc_currentEmissions. I shoved in 4000 units (that is what it was) and Lo! it was 44,267 pounds (they still use them, therefore so will we). That is horrendously more than the 28,750 that is the average for the US. But we have to make a correction - in the US electricity is not the only source of energy - direct heat from oil or gas is used to heat water and the house. In India, by contrast, a/c's are run from electricity.
2) I added fuel oil as the source of heat to the calculator taking the average American five person home to 50,750 pounds of carbon.
3) To be fair I added the gas used for cooking, 1,460 pounds to my total. I will add this to the US total because their gas numbers are confusing as it is used both for cooking and heating, so it is fairer to use my number.
Total me: 45,727.00 lbs
Total average joe: 52,210 lbs
No real difference.
The new me (see earlier blog), who lives just as well as before, uses just 1500 units = 16,600 lbs of carbon.
That's the laziness - its just too much work to make people change.
And the dishonesty? For amusement I switched in the same calculator to using money as the unit, and not units of electricity. 1500*8.33 (our avg rate in Mumbai)/48=260.31 as the monthly bill. That produces a reading of 27,170 lbs of carbon.
16,600/27,170*8.33=5.09 is the average price of US electricity.
Were they paying 8.33 the cost per month per family would rise from US 175 (average)to 8.33/5.09*175=286 USD per month or 1,332 per year. That is 2.66% of median US pretax household income. Would a change in electricity price change behaviour?
Yes it would, and drastically, when one takes as a proxy the change to driving and car buying habits that took place when petrol went from 2.00 to 4.00. Assuming 20 miles to gallon as an average the hit to a two car household putting 25K miles on the clock was about 2,500 per year.
Conclusion: Electricity induced carbon is seriously mispriced in the US versus Mumbai. Wildly mispriced if one takes into account purchasing power parity.
Of course it is even more mispriced in Mumbai versus the free power that farmers get in the Punjab.
That is just household use; in car use I remain firmly American when in India because of the lack of public transport and the lack of pavements on which to walk.
Sunday, September 27, 2009
The load matters - but not in the way you think
Some recent reports of studies (sorry the real thing is locked away by academic publishers and I do not have access) estimate that up to 3% of assets vanish every year into the pockets of the brokers and bankers who make up the financial services industry.
At the same time, until last year, a great many countries and industries were posting record growth.
Either that growth was not real, though it is hard to miscount aeroplanes, or the economy needs a lot less capital that it is raising.
Toss the bankers for sure. But give a thought to whether economic productivity has really risen wildly (as it should have given all the new stuff that has been invented and reduced in cost over the last 20 years) and we have not seen the results because the dough was stolen by the banks.
At the same time, until last year, a great many countries and industries were posting record growth.
Either that growth was not real, though it is hard to miscount aeroplanes, or the economy needs a lot less capital that it is raising.
Toss the bankers for sure. But give a thought to whether economic productivity has really risen wildly (as it should have given all the new stuff that has been invented and reduced in cost over the last 20 years) and we have not seen the results because the dough was stolen by the banks.
Guardian 10:10, the ease of cutting carbon and why standards matter
The Guardian is signing people up to cut their energy use by 10% in 2010. Sounds like a lot? Its dead easy for most people; we have managed to cut our household energy usage by about 50% in one year and cut our otherwise large travel footprint by taking longer trips and using trains to cut flights. (Checked old bills and we are now using about 1,500 units per month, down from 3,500 units before the changes were made - at an average price of 8.33 per unit, up from about 4.20 in 2004).
Our cost of cutting household energy use was high - with paybacks in the many years if one looks at the full cost of each item. However, all this was done as part of a renovation and the marginal costs of double versus single glazing, direct drive versus standard a/c's are paid back very fast. There is virtually no wait for payback on roof insulation and cfl's.
Even so, the main items we changed were a/c's and bulbs. We changed all the a/c's though many are used only a few times a year. Had we changed only the ones used every day, and the bulbs, and double glazed the windows only in those rooms the TOTAL cost of those would be recovered every two years, based on the figures above.
The business I run has chopped energy usage per unit by around 50% as well in the last few years; we will make another big cut later this year when we replace an inefficient a/c system.
The point is that for established countries to make swingeing cuts is not hard and does not take much money at all; our problem in India and China is that we are adding people.
Not all the cuts above cost money. The per unit reduction in the business was a consequence of more modern machines that produce more while they save, and the energy efficiency aspect is a free ride.
In the business, though, it is about lack of money - should I put money into growth or into energy efficiency. For years the answer was growth; now that the system is old enough to cost production downtime when it fails the answer changes. I could replace the old system with a similar one and it would cost less than an energy efficient system, and that is what a lot of people will do.
The quickest way to meet all our goals is to implement really high energy standards for everything in every country. Why phase in the end of the incandescent bulb? Do it now. Why allow inefficient compressors to be sold? Why allow single glazed windows to be installed?
All this inefficiency is defended in the name of choice. It is a false choice that forces consumers to buy what is against their long term interests to safeguard the short term profits of business.
Our cost of cutting household energy use was high - with paybacks in the many years if one looks at the full cost of each item. However, all this was done as part of a renovation and the marginal costs of double versus single glazing, direct drive versus standard a/c's are paid back very fast. There is virtually no wait for payback on roof insulation and cfl's.
Even so, the main items we changed were a/c's and bulbs. We changed all the a/c's though many are used only a few times a year. Had we changed only the ones used every day, and the bulbs, and double glazed the windows only in those rooms the TOTAL cost of those would be recovered every two years, based on the figures above.
The business I run has chopped energy usage per unit by around 50% as well in the last few years; we will make another big cut later this year when we replace an inefficient a/c system.
The point is that for established countries to make swingeing cuts is not hard and does not take much money at all; our problem in India and China is that we are adding people.
Not all the cuts above cost money. The per unit reduction in the business was a consequence of more modern machines that produce more while they save, and the energy efficiency aspect is a free ride.
In the business, though, it is about lack of money - should I put money into growth or into energy efficiency. For years the answer was growth; now that the system is old enough to cost production downtime when it fails the answer changes. I could replace the old system with a similar one and it would cost less than an energy efficient system, and that is what a lot of people will do.
The quickest way to meet all our goals is to implement really high energy standards for everything in every country. Why phase in the end of the incandescent bulb? Do it now. Why allow inefficient compressors to be sold? Why allow single glazed windows to be installed?
All this inefficiency is defended in the name of choice. It is a false choice that forces consumers to buy what is against their long term interests to safeguard the short term profits of business.
Friday, September 25, 2009
Fat and climate change - one and the same
O!bama announced yesterday that the Climate Summit in Copenhagen is not a venue for a deal - it is the beginning of a long process. Why do I think nothing will come of various efforts to reduce global warming? For the following reasons:
1) There are parts of the US that believe they will gain from global warming, so no real need to do anything. Think a warm and sunny Minnesota. Since they may well be right in their analysis their reps in Congress ain't gonna toe no hairshirt line.
2) Americans are fat and happy in general, and not renowned for thinking in generations. Plus, they move a lot and do not see themselves as rooted in any one geographical spot, so there is no reason to defend any one part of the US over any other. The seaboards are ravaged by storms? Move to Minneapolis - it was good enought for Mary Tyler Moore. It may make sense to invest in Midwestern real estate.
3) The matter of fat. For years we saw the US mass(es) struggle to ditch their excess weight. Sadly the latest diet shake cannot make up for driving everywhere and scarfing Big Mac's. When that realization dawned there was much looking for a pill to cut fat, because, hey, the American way of life is sacrosanct. Quite a bit like looking for ways to sequester carbon from coal plants. When that did not work did the change of lifestyle that is required to boot fat come back into vogue?
4) The utterly pragmatic fat American (and they are now the majority) decided that the right way to deal with the problem is to vilify the thin minority (genetically programmed to bust fat, shallow and concerned only with looks) and to worship at the altar of chunk. So we have plus size models, a new TV show that embraces a fat lawyer etc.
5) Getting thin is a personal goal where success can be felt and measured minute by minute by every one who manages some change. Lifestyle changes could not be managed by the US mass for something so tangible. What makes you think the same changes (and they are the same changes - walk more, change the temperature settings in your house, eat less meat and junk food) will be implemented to help someone you do not know in a plague ridden country far far away, where people anyway croak at 40, in a time when you will be dead and gone.
Fatties in frocks are here to stay. Given the likely rise in global temperatures the frocks will be minimal. I am not sure I want to stick around to see massive mama's in mini skirts.
1) There are parts of the US that believe they will gain from global warming, so no real need to do anything. Think a warm and sunny Minnesota. Since they may well be right in their analysis their reps in Congress ain't gonna toe no hairshirt line.
2) Americans are fat and happy in general, and not renowned for thinking in generations. Plus, they move a lot and do not see themselves as rooted in any one geographical spot, so there is no reason to defend any one part of the US over any other. The seaboards are ravaged by storms? Move to Minneapolis - it was good enought for Mary Tyler Moore. It may make sense to invest in Midwestern real estate.
3) The matter of fat. For years we saw the US mass(es) struggle to ditch their excess weight. Sadly the latest diet shake cannot make up for driving everywhere and scarfing Big Mac's. When that realization dawned there was much looking for a pill to cut fat, because, hey, the American way of life is sacrosanct. Quite a bit like looking for ways to sequester carbon from coal plants. When that did not work did the change of lifestyle that is required to boot fat come back into vogue?
4) The utterly pragmatic fat American (and they are now the majority) decided that the right way to deal with the problem is to vilify the thin minority (genetically programmed to bust fat, shallow and concerned only with looks) and to worship at the altar of chunk. So we have plus size models, a new TV show that embraces a fat lawyer etc.
5) Getting thin is a personal goal where success can be felt and measured minute by minute by every one who manages some change. Lifestyle changes could not be managed by the US mass for something so tangible. What makes you think the same changes (and they are the same changes - walk more, change the temperature settings in your house, eat less meat and junk food) will be implemented to help someone you do not know in a plague ridden country far far away, where people anyway croak at 40, in a time when you will be dead and gone.
Fatties in frocks are here to stay. Given the likely rise in global temperatures the frocks will be minimal. I am not sure I want to stick around to see massive mama's in mini skirts.
Tuesday, September 22, 2009
They really are different
Although she claimed to love her diesel-engine car, she always complained about it (which should have given me a clue about marriage). The Mercedes was smelly, hard to start — when the engine was cold, you had to wait for the glow plugs to heat the combustion chamber — and it chug-chug-chugged. This was not the car to bring to a bank robbery.
The above is from an NYT review of new diesel cars which, the car reviewer (I kid you not) quoted above happily says is now an obsolete view.
And we are waiting for these antediluvians to take the lead on global warming.
The above is from an NYT review of new diesel cars which, the car reviewer (I kid you not) quoted above happily says is now an obsolete view.
And we are waiting for these antediluvians to take the lead on global warming.
Monday, September 21, 2009
The Great Indian Middle Class
It really does exist and, even when blessed with modest means, is successful and entrepreneurial.
I recently received a poison pen letter from an ex-employee who quit and wanted to come back. Rather than asking for his job back, which we would have been delighted to give him, he decided to write us a poison pen letter damning all his former compatriots and praising to skies his now absent self.
Among the charges that he levelled at people were the sizes of their brokerage accounts. I was amazed, though not shocked, as none of them was 'disproportionate to their known sources of income'.
The well employed are obviously saving away, and in financial assets to boot.
This bodes well for growth.
I recently received a poison pen letter from an ex-employee who quit and wanted to come back. Rather than asking for his job back, which we would have been delighted to give him, he decided to write us a poison pen letter damning all his former compatriots and praising to skies his now absent self.
Among the charges that he levelled at people were the sizes of their brokerage accounts. I was amazed, though not shocked, as none of them was 'disproportionate to their known sources of income'.
The well employed are obviously saving away, and in financial assets to boot.
This bodes well for growth.
Thursday, September 17, 2009
The world's shithouses
Indians shit in the great outdoors because they have no sanitation. While not excusable it is at least understandable.
In the US, meanwhile, the government condones the spraying of shit on fields as a means of reducing the cost of various already subsidized meats - subsidized not by minimum prices but back lack of EPA controls, lack of slaughterhouse laws, lack of feed laws. This practice makes their citizens sick, though not on the scale that our lack of sanitation makes our citizens sick.
Of course, the shit could be composted and used in an environmentally friendly manner but hey, that would be organic farming. Uncle Normie (Normal Borlaug, father of the green revolution, RIP) says that does not work. It certainly goes against the agrochemical industry's interests, so there.
Don't believe me? Take a look at the NYT article below.
http://www.nytimes.com/2009/09/18/us/18dairy.html?_r=1&hpw
In a sense we in India are lucky that we have not built our sanitation systems yet. It is possible to have paying shithouses, as opposed to paying for them (see our Sulabh Shauchalayas) though sadly not in cities.
Take a look at the following link, and if that is no longer available, google 'separating toilets'. While you are at it take a look at 'compost'.
http://www.abc.net.au/rn/science/earth/stories/s17821.htm
In the US, meanwhile, the government condones the spraying of shit on fields as a means of reducing the cost of various already subsidized meats - subsidized not by minimum prices but back lack of EPA controls, lack of slaughterhouse laws, lack of feed laws. This practice makes their citizens sick, though not on the scale that our lack of sanitation makes our citizens sick.
Of course, the shit could be composted and used in an environmentally friendly manner but hey, that would be organic farming. Uncle Normie (Normal Borlaug, father of the green revolution, RIP) says that does not work. It certainly goes against the agrochemical industry's interests, so there.
Don't believe me? Take a look at the NYT article below.
http://www.nytimes.com/2009/09/18/us/18dairy.html?_r=1&hpw
In a sense we in India are lucky that we have not built our sanitation systems yet. It is possible to have paying shithouses, as opposed to paying for them (see our Sulabh Shauchalayas) though sadly not in cities.
Take a look at the following link, and if that is no longer available, google 'separating toilets'. While you are at it take a look at 'compost'.
http://www.abc.net.au/rn/science/earth/stories/s17821.htm
Crap and Trade - China and India warned over emissions
http://www.ft.com/cms/s/0/f67dd2d4-a22a-11de-9caa-00144feabdc0,dwp_uuid=a6dfcf08-9c79-11da-8762-0000779e2340.html
The above link refers to the bad things that will happen to trade with India and China if they do not knuckle under to the Great Polluter. In the same article a representative of the Great Polluter also says that it will not matter even if the US does not make any progress in its pork laden Great Emission in the Sky legislation, or whatever they call it.
The above link refers to the bad things that will happen to trade with India and China if they do not knuckle under to the Great Polluter. In the same article a representative of the Great Polluter also says that it will not matter even if the US does not make any progress in its pork laden Great Emission in the Sky legislation, or whatever they call it.
Monday, September 14, 2009
Maybe infrastructure is not always good
We all know about the ghost fleet but the story below is wonderful in its tabloid style.
http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession.html
What is more interesting is the following:
World trade wills shrink, because a lot of it was driven by non economic reasons. Its a bet I am willing to make; a lot of the establishment will not agree but most will agree that trade is not going to recover forever to the levels of the past.
That makes a great hole in the infrastructure to facilitate trade that has been, and continues to be, a hallmark of much far eastern investment. Not just the ports, but also all those 40 lane highways in China will likely go to waste....
Luckily we in India did not listen excessively to the pundits and have continued to build infrastructure to demand rather than to spec.
The Worli sealink is a good case in point. It is only half finished, with its second set of lanes still being built. Even so, it does not seem very full even at rush hour - nothing like the GW Bridge in New York.
In many ways the choices we make in India are the sum of thousands of private sector bets; and very few private sector bets, except in low value added sectors, have been made for exports. The average Indian businessman does not believe in the power of exports except as a necessary evil; very little fixed investment caters to exports. Perhaps we should listen to them and can the pundits?
Which means a very different set of policies will be shortly required for our external sector - oil being the major determinant and the rupee rate the outcome.
http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession.html
What is more interesting is the following:
World trade wills shrink, because a lot of it was driven by non economic reasons. Its a bet I am willing to make; a lot of the establishment will not agree but most will agree that trade is not going to recover forever to the levels of the past.
That makes a great hole in the infrastructure to facilitate trade that has been, and continues to be, a hallmark of much far eastern investment. Not just the ports, but also all those 40 lane highways in China will likely go to waste....
Luckily we in India did not listen excessively to the pundits and have continued to build infrastructure to demand rather than to spec.
The Worli sealink is a good case in point. It is only half finished, with its second set of lanes still being built. Even so, it does not seem very full even at rush hour - nothing like the GW Bridge in New York.
In many ways the choices we make in India are the sum of thousands of private sector bets; and very few private sector bets, except in low value added sectors, have been made for exports. The average Indian businessman does not believe in the power of exports except as a necessary evil; very little fixed investment caters to exports. Perhaps we should listen to them and can the pundits?
Which means a very different set of policies will be shortly required for our external sector - oil being the major determinant and the rupee rate the outcome.
O! perfidious Cathay
1) The Chinese are getting frisky on our borders.
2) The Chinese leadership is accusing we Indians of being jealous of China. Of Dim Sum definitely, but one reason for 'annexing' bits of 'China' was to get our own supply of Chinese cooks, socialize them in our curry environment and create Chindese cooking, and we have done that. So there.
2) The Chinese leadership is accusing we Indians of being jealous of China. Of Dim Sum definitely, but one reason for 'annexing' bits of 'China' was to get our own supply of Chinese cooks, socialize them in our curry environment and create Chindese cooking, and we have done that. So there.
O! perfidious Cathay 2
1) The Great Chinese Leadership has recently announced all sorts of concessions for the Chinese IT services industry and has begun discussion with major multinationals for them to take take advantage of these.
4) These MNC's are US companies, so take advantage they will:
A) It will be cheaper and
B) US company bosses like to deal with like. Dictators with dictators. Why should they put up with the whining of a Premji moaning that his employees insist on being paid more because of rising productivity when they can have their partners shoot a few cybercoolies to keep the wage rate in place in China?
Time for the Indian IT industry to retool, or retooling will be forced upon it. And not before time as we need to release our cybermundu's to more productive work.
Time in fact for us to improvise and invent the IT equivalent of Chindese cooking (see previous post)
4) These MNC's are US companies, so take advantage they will:
A) It will be cheaper and
B) US company bosses like to deal with like. Dictators with dictators. Why should they put up with the whining of a Premji moaning that his employees insist on being paid more because of rising productivity when they can have their partners shoot a few cybercoolies to keep the wage rate in place in China?
Time for the Indian IT industry to retool, or retooling will be forced upon it. And not before time as we need to release our cybermundu's to more productive work.
Time in fact for us to improvise and invent the IT equivalent of Chindese cooking (see previous post)
Friday, September 4, 2009
Hot Air Predicts Hot Times
Mr. Ramesh showed a steady hand on the tiller when he released India’s emissions forecasts for 2030. Only one of the five studies showed India’s per capita emissions for 2030 to be close to China in 2008, and none came close to even the best of the developed world. One was in fact modestly below the global 3MT per person that is supposed to halt climate change; the highest barely scratched 5MT, a level below today’s China. In the meantime China has insisted that its already high total and per capita emissions levels will grow till 2050, so the role of villain is cast for the climate change yakfest in Copenhagen.
Even the highest of the five studies gets to about 5MT per person is well below the best that the Americans are offering for their economy in 2030, which currently runs at 20MT per person. And the second highest estimate is by McKinsey and Co., so the uber capitalist US cannot object to shoddy, government led work. Jairam, well done on the PR wars which we have until recently been losing.
This is not about PR, but about the sad reality that climate change is here and is it here with a vengeance. It will not go away because there is no way that emissions will be cut quickly enough to make it go away. They cannot be cut because the economic, physical and political structures of the largest polluters are dysfunctional. It will not go away because there is already evidence of feedback events such as methane release from permafrost which will only make things much worse.
Let’s calculate. At the moment total GHG’s are about 30 Bn MT per year (back of the envelope). We get to 6, the Chinese get to 12, total 18. But the world needs to get to 15 to keep climate change below 2 degrees. So we and the Chinese still have to cut, and by the way the rest of the world, including the US, Europe, and Japan has to cease to exist because there is no room for them.
Climate change there will be; the problem is that we do not know how severe. What we do know is that India will be hit hard, and we had therefore better have a plan in place to mitigate what we know will be a slowly unfolding disaster. As with all long running disasters there will be blips of hope. Sell into these but do not be fooled into thinking the disaster has passed, unless we can find a way to make our society sustainable with huge changes to our climate, most notably a serious drop in annual rainfall and a depletion of ground water; plus the Chinese may cut off our rivers….
Mr. Ramesh and his crew, and the PM, have said that these peer reviewed studies do not reflect a business as usual view, and that sophisticated models have been used and have incorporated the effects of new technologies, paradigm shifts such as forest management and a load of other pap.
On the surface that looks correct. Today’s Indian per capita emissions are about 1.5 MT per person (there is even dispute around that number). Assume growth of 8% per year for 21 years to 2030, in line with GDP forecasts and we get 1.5*1.08^21 or 7.55 MT per person, except that population in 2030 is supposed to go from 1.15 Bn to 1.53 Bn, so on that calculation per capita emissions should be 33% higher i.e. 7.55*1.33 = 10.05MT. Against that ‘business as usual’ expectation of 10.05MT per head, forecasted emissions of between 3.0MT and 5.0MT look heroic.
But wait a minute, recalculate at a start point of 1.2MT and the 10.05MT becomes 8.04MT. Ah, the magic of compounding. There is plenty of other conjuring in these studies as well, mostly of the voodoonomics variety.
Digging around briefly in the methodology and the econometrics, dauntingly full of equations and correlations and other economic mumbo jumbo, I found the following nuggets.
1) Three of the five models that produced the lowest results did the following: 1) started with a lower base than 1.5, and 2) introduced economy-wide productivity improvements of 3%. Recalculate my back of the envelope model using base 1.2 and adjusting for productivity, and we get (1.2*(1.08-1.03)^21)*1.33 = 4.45 MT per person, right in the middle the 5 high-priced, high-work, forecasts.
2) The two higher output models, including one by McKinsey, did not use a productivity factor but were instead ‘ground up expert based’ where they used their knowledge of current industry trends in power hogging sectors to project efficiency. Hold left ear with right hand after passing behind back of head. Because they are based on the current knowledge of consultants in the here and now, they provide for lower productivity growth. It’s a bit like sitting in 1980 and predicting the future of IT based on the idea that minicomputers rule. I opt for the PC revolution and think that 3% productivity growth is a no brainer; actual per capita Indian emissions will be closer to the lower studies because recent Indian productivity growth has been at or better than 3%.
3) All the models use various assumptions for oil and gas prices and for the INR/USD exchange rate. Do you know anyone who has ever got those two elements right for 21 years on the trot? George Soros will give him a job.
Sadly, therefore, while they predict a reasonable trend, they do not do very much better than my little model above. But they are peer reviewed, as were the papers and models used as the backbone of the securitization spree that has left the world a bit poorer than it could have been.
We can safely assume that these models do indeed embed business as usual, just a more efficient business as usual which is something that one would rather expect at the beginning of the 21st century, when all eyes are on energy efficiency. For a ‘proof’ check QED on http://meanperson.blogspot.com/.
All that this hoopla predicts is merely the energy efficiency of India, assuming that we will take our place as a consuming nation, consuming more and more as we grow richer, with the objects of that consumption being the same as currently consumed in richer countries, just made better, faster and cheaper.
How 19th century. It is as if India decided in an age of Microsoft to be not Google, but US Steel. China has done the US Steel bit already, and has locked itself into an infrastructure heavy and low value added externally driven high pollution growth model from which it cannot escape because of institutional and monetary reasons. We know how US Steel ended.
This lock in is the same thing that has happened to the US and to the rest of the developed world, though some countries, mostly densely populated and rail friendly (Japan, Korea and Europe) generally have infrastructure and monetary systems that could adapt quickly and relatively cheaply to a low carbon imperative. That is why these countries accept high reduction targets and sit on the sidelines waiting to see what the big polluters will do.
They will do nothing much for years, so India has to take unilateral steps to protect itself. Paradoxically, these very steps will give even more room for the dysfunctional to spew. It doesn’t matter – where would you rather work? Google or USS?
India therefore has to do a mix of things, some proactive and most for danger avoidance. The former are acts that will make things better, and the latter as those which we have to avoid, so as to not lock ourselves into structures that cannot become GHG efficient. We must avoid building the wrong infrastructure now, as we really begin our development, because that infrastructure will still be there and spewing gases 50 years from now. To replace it with better product will never make sense economically or politically. Coal power, cars and suburban living are the long term killers and ought to carry health warnings.
Herewith my two pice worth or what should work:
1) Agriculture needs to be rescued by doing four things:
a. Move to (at least semi) organic farming as soon as possible, including multi-cropping and lots of local water storage. This will:
i. increase incomes of farmers even if the terms of trade between town and country do not change.
ii. increase employment in farming because organic farming substitutes labour for pesticides; this reduces our need to create entry level jobs by doing low value added manufacturing for Walmart.
iii. reduce water use, waste and pollution and also once again make our land fair.
iv. increase forest cover.
1. Driving through most of India in May is to recall the US dustbowl of the depression. 45 years ago parts of North India looked like Switzerland.
v. We can also use organic agriculture standards to lock out imports without busting through WTO rules so long we tax our own pesticide and fertilizer laden produce equally.
b. Get road connectivity, power and the internet to our villages in order for those economies to grow in situ around a cluster of large towns and cities. Connect those large towns by rail. This will also stop the overcrowding of our old cities of Mumbai and Delhi.
i. The old argument for cities as a place for the clever to gather is kind of old given connective technologies like the mobile and the internet.
c. Blow away the traders and middlemen and agricultural transportation rules that impoverish farmers, gouge city people and make 30% of our crop go waste. We can decide who gets the bounty, town or country.
2) Use all the local gas we have to produce power; not fertilizer. The latter is robbing our tax revenues and laying waste to our land. We can buy plastic and other shippable stuff that is made with gas from the Arabs. This way we do not lock ourselves into long lived coal fired plants that are really bad for us (GHG’s, particulates, ash and radiation are just some of the problems).
3) Set petrol and diesel prices and city car access charges at nose bleed levels. This is not anti poor as the rich will use enough for us to collect a lot of tax which can be used to better highways and public transportation. The trucking industry can afford a tripling of diesel price if we go inter-modal and increase truck size and speed up journeys by cutting all the useless border checks and corruption that slow our transport sector to a crawl.
4) Go for solar thermal and forget other alternative energy technologies, especially wind, because India is a pretty wind free country.
a. The whining about needing technology to go green applies mostly to cars which are devilishly difficult to turn green.
b. Solar thermal made by Indians using only public domain material will at most be 5% less efficient than the state of the art stuff being used in the US.
i. Indian prices, if one compares boilers (the active ingredient in solar, so to speak), are 40% of US prices; we should be able to do solar at an efficiency adjusted 50% of US cost.
ii. Order BHEL to make off the shelf 5MW solar thermal power plants available and ship them off to villages where there is not enough industrial night demand to matter that Solar without storage works only till about 9 pm on a sunny day. Lights and fans can be made very energy efficient and run off inverters, a commonplace in rural India already. No one in rural India will complain about guaranteed 12 hour power.
iii. When storage to run solar 24 hours (expensive stuff) becomes reality we can buy the technology, or maybe we won’t need to because we will have enough gas power to get us through the night.
5) Mass transit, mass transit and mass transit. Rail, rail, rail. And give a thought to pavements which are eco friendly diabetes reducers as they promote exercise and use no energy.
6) Do not change our labour laws to make them excessively employment friendly, because there is nothing that destroys the environment faster than labour intensive modern industry. We are not talking of M Gandhi’s charkhas when we extol the virtues of T shirt manufacture. We are talking of water intensive cotton, power intensive spinning, pollution intensive dyeing. The energy used to make a square metre of cloth is about the same as in four litres of petrol; that is without the stitching, distressing, washing, containerising, shipping to store etc. Put cheap labour into the fields instead.
7) Many of these steps will cut our usage of imported oil hugely helping to repair our balance of payments and increasing the value of the rupee, which will not need to be low because we will not need to peddle T shirts.
a. World trade will wither in terms of value, but not its efficacy, if anything at all like the true price of transport GHG’s is charged to shipping. Anyway much of the current reason for excessively high world trade has to do as much with outsourcing pollution and reducing the share of labour in Western industry’s cost structure (behave, or you’re Bangalored) as with relative cost. Higher costs and a rebalancing of capitalism with work together to cut trade.
b. The only things worth shipping will be expensive things, which is as it should be. We should therefore concentrate on making expensive things for export.
Follow this list and everyone in the world will want to invest in India. The evidence is conclusive that what is required for growth is investment, labour and a (historically domestic) market – trade has not been shown to matter one whit to economic growth.
Let them come, but allow only equity, or rupee debt, not debt in foreign currencies. There will be no Dutch disease here because even a doubled currency cannot make this country uncompetitive, so long as we start the rise now, so that entrepreneurs create businesses that will thrive with a strong currency. And every time there is a run on the currency outside investors will pay, making them very, very careful about what they do. Just look at China, afraid to beat up the dollar too much lest they lose their bundle.
We will get to a very European standard of living on quite low power, but we will do so with the dough in our pockets to buy our way out of some of the problems that are inevitable with climate change.
Even the highest of the five studies gets to about 5MT per person is well below the best that the Americans are offering for their economy in 2030, which currently runs at 20MT per person. And the second highest estimate is by McKinsey and Co., so the uber capitalist US cannot object to shoddy, government led work. Jairam, well done on the PR wars which we have until recently been losing.
This is not about PR, but about the sad reality that climate change is here and is it here with a vengeance. It will not go away because there is no way that emissions will be cut quickly enough to make it go away. They cannot be cut because the economic, physical and political structures of the largest polluters are dysfunctional. It will not go away because there is already evidence of feedback events such as methane release from permafrost which will only make things much worse.
Let’s calculate. At the moment total GHG’s are about 30 Bn MT per year (back of the envelope). We get to 6, the Chinese get to 12, total 18. But the world needs to get to 15 to keep climate change below 2 degrees. So we and the Chinese still have to cut, and by the way the rest of the world, including the US, Europe, and Japan has to cease to exist because there is no room for them.
Climate change there will be; the problem is that we do not know how severe. What we do know is that India will be hit hard, and we had therefore better have a plan in place to mitigate what we know will be a slowly unfolding disaster. As with all long running disasters there will be blips of hope. Sell into these but do not be fooled into thinking the disaster has passed, unless we can find a way to make our society sustainable with huge changes to our climate, most notably a serious drop in annual rainfall and a depletion of ground water; plus the Chinese may cut off our rivers….
Mr. Ramesh and his crew, and the PM, have said that these peer reviewed studies do not reflect a business as usual view, and that sophisticated models have been used and have incorporated the effects of new technologies, paradigm shifts such as forest management and a load of other pap.
On the surface that looks correct. Today’s Indian per capita emissions are about 1.5 MT per person (there is even dispute around that number). Assume growth of 8% per year for 21 years to 2030, in line with GDP forecasts and we get 1.5*1.08^21 or 7.55 MT per person, except that population in 2030 is supposed to go from 1.15 Bn to 1.53 Bn, so on that calculation per capita emissions should be 33% higher i.e. 7.55*1.33 = 10.05MT. Against that ‘business as usual’ expectation of 10.05MT per head, forecasted emissions of between 3.0MT and 5.0MT look heroic.
But wait a minute, recalculate at a start point of 1.2MT and the 10.05MT becomes 8.04MT. Ah, the magic of compounding. There is plenty of other conjuring in these studies as well, mostly of the voodoonomics variety.
Digging around briefly in the methodology and the econometrics, dauntingly full of equations and correlations and other economic mumbo jumbo, I found the following nuggets.
1) Three of the five models that produced the lowest results did the following: 1) started with a lower base than 1.5, and 2) introduced economy-wide productivity improvements of 3%. Recalculate my back of the envelope model using base 1.2 and adjusting for productivity, and we get (1.2*(1.08-1.03)^21)*1.33 = 4.45 MT per person, right in the middle the 5 high-priced, high-work, forecasts.
2) The two higher output models, including one by McKinsey, did not use a productivity factor but were instead ‘ground up expert based’ where they used their knowledge of current industry trends in power hogging sectors to project efficiency. Hold left ear with right hand after passing behind back of head. Because they are based on the current knowledge of consultants in the here and now, they provide for lower productivity growth. It’s a bit like sitting in 1980 and predicting the future of IT based on the idea that minicomputers rule. I opt for the PC revolution and think that 3% productivity growth is a no brainer; actual per capita Indian emissions will be closer to the lower studies because recent Indian productivity growth has been at or better than 3%.
3) All the models use various assumptions for oil and gas prices and for the INR/USD exchange rate. Do you know anyone who has ever got those two elements right for 21 years on the trot? George Soros will give him a job.
Sadly, therefore, while they predict a reasonable trend, they do not do very much better than my little model above. But they are peer reviewed, as were the papers and models used as the backbone of the securitization spree that has left the world a bit poorer than it could have been.
We can safely assume that these models do indeed embed business as usual, just a more efficient business as usual which is something that one would rather expect at the beginning of the 21st century, when all eyes are on energy efficiency. For a ‘proof’ check QED on http://meanperson.blogspot.com/.
All that this hoopla predicts is merely the energy efficiency of India, assuming that we will take our place as a consuming nation, consuming more and more as we grow richer, with the objects of that consumption being the same as currently consumed in richer countries, just made better, faster and cheaper.
How 19th century. It is as if India decided in an age of Microsoft to be not Google, but US Steel. China has done the US Steel bit already, and has locked itself into an infrastructure heavy and low value added externally driven high pollution growth model from which it cannot escape because of institutional and monetary reasons. We know how US Steel ended.
This lock in is the same thing that has happened to the US and to the rest of the developed world, though some countries, mostly densely populated and rail friendly (Japan, Korea and Europe) generally have infrastructure and monetary systems that could adapt quickly and relatively cheaply to a low carbon imperative. That is why these countries accept high reduction targets and sit on the sidelines waiting to see what the big polluters will do.
They will do nothing much for years, so India has to take unilateral steps to protect itself. Paradoxically, these very steps will give even more room for the dysfunctional to spew. It doesn’t matter – where would you rather work? Google or USS?
India therefore has to do a mix of things, some proactive and most for danger avoidance. The former are acts that will make things better, and the latter as those which we have to avoid, so as to not lock ourselves into structures that cannot become GHG efficient. We must avoid building the wrong infrastructure now, as we really begin our development, because that infrastructure will still be there and spewing gases 50 years from now. To replace it with better product will never make sense economically or politically. Coal power, cars and suburban living are the long term killers and ought to carry health warnings.
Herewith my two pice worth or what should work:
1) Agriculture needs to be rescued by doing four things:
a. Move to (at least semi) organic farming as soon as possible, including multi-cropping and lots of local water storage. This will:
i. increase incomes of farmers even if the terms of trade between town and country do not change.
ii. increase employment in farming because organic farming substitutes labour for pesticides; this reduces our need to create entry level jobs by doing low value added manufacturing for Walmart.
iii. reduce water use, waste and pollution and also once again make our land fair.
iv. increase forest cover.
1. Driving through most of India in May is to recall the US dustbowl of the depression. 45 years ago parts of North India looked like Switzerland.
v. We can also use organic agriculture standards to lock out imports without busting through WTO rules so long we tax our own pesticide and fertilizer laden produce equally.
b. Get road connectivity, power and the internet to our villages in order for those economies to grow in situ around a cluster of large towns and cities. Connect those large towns by rail. This will also stop the overcrowding of our old cities of Mumbai and Delhi.
i. The old argument for cities as a place for the clever to gather is kind of old given connective technologies like the mobile and the internet.
c. Blow away the traders and middlemen and agricultural transportation rules that impoverish farmers, gouge city people and make 30% of our crop go waste. We can decide who gets the bounty, town or country.
2) Use all the local gas we have to produce power; not fertilizer. The latter is robbing our tax revenues and laying waste to our land. We can buy plastic and other shippable stuff that is made with gas from the Arabs. This way we do not lock ourselves into long lived coal fired plants that are really bad for us (GHG’s, particulates, ash and radiation are just some of the problems).
3) Set petrol and diesel prices and city car access charges at nose bleed levels. This is not anti poor as the rich will use enough for us to collect a lot of tax which can be used to better highways and public transportation. The trucking industry can afford a tripling of diesel price if we go inter-modal and increase truck size and speed up journeys by cutting all the useless border checks and corruption that slow our transport sector to a crawl.
4) Go for solar thermal and forget other alternative energy technologies, especially wind, because India is a pretty wind free country.
a. The whining about needing technology to go green applies mostly to cars which are devilishly difficult to turn green.
b. Solar thermal made by Indians using only public domain material will at most be 5% less efficient than the state of the art stuff being used in the US.
i. Indian prices, if one compares boilers (the active ingredient in solar, so to speak), are 40% of US prices; we should be able to do solar at an efficiency adjusted 50% of US cost.
ii. Order BHEL to make off the shelf 5MW solar thermal power plants available and ship them off to villages where there is not enough industrial night demand to matter that Solar without storage works only till about 9 pm on a sunny day. Lights and fans can be made very energy efficient and run off inverters, a commonplace in rural India already. No one in rural India will complain about guaranteed 12 hour power.
iii. When storage to run solar 24 hours (expensive stuff) becomes reality we can buy the technology, or maybe we won’t need to because we will have enough gas power to get us through the night.
5) Mass transit, mass transit and mass transit. Rail, rail, rail. And give a thought to pavements which are eco friendly diabetes reducers as they promote exercise and use no energy.
6) Do not change our labour laws to make them excessively employment friendly, because there is nothing that destroys the environment faster than labour intensive modern industry. We are not talking of M Gandhi’s charkhas when we extol the virtues of T shirt manufacture. We are talking of water intensive cotton, power intensive spinning, pollution intensive dyeing. The energy used to make a square metre of cloth is about the same as in four litres of petrol; that is without the stitching, distressing, washing, containerising, shipping to store etc. Put cheap labour into the fields instead.
7) Many of these steps will cut our usage of imported oil hugely helping to repair our balance of payments and increasing the value of the rupee, which will not need to be low because we will not need to peddle T shirts.
a. World trade will wither in terms of value, but not its efficacy, if anything at all like the true price of transport GHG’s is charged to shipping. Anyway much of the current reason for excessively high world trade has to do as much with outsourcing pollution and reducing the share of labour in Western industry’s cost structure (behave, or you’re Bangalored) as with relative cost. Higher costs and a rebalancing of capitalism with work together to cut trade.
b. The only things worth shipping will be expensive things, which is as it should be. We should therefore concentrate on making expensive things for export.
Follow this list and everyone in the world will want to invest in India. The evidence is conclusive that what is required for growth is investment, labour and a (historically domestic) market – trade has not been shown to matter one whit to economic growth.
Let them come, but allow only equity, or rupee debt, not debt in foreign currencies. There will be no Dutch disease here because even a doubled currency cannot make this country uncompetitive, so long as we start the rise now, so that entrepreneurs create businesses that will thrive with a strong currency. And every time there is a run on the currency outside investors will pay, making them very, very careful about what they do. Just look at China, afraid to beat up the dollar too much lest they lose their bundle.
We will get to a very European standard of living on quite low power, but we will do so with the dough in our pockets to buy our way out of some of the problems that are inevitable with climate change.
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