Category Archives: energy

Will insurance companies do what planners can’t?

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A major long-term trend that planners should care about is adaptation to climate change.  There are some examples of plans being made, but as with any climate change-related topic, US planners and politicians are slow on the uptake.  Adaptation could mean changing how we build storm sewers to handle more frequent extreme rainfall, or it could mean something as drastic as abandoning large areas of coastline.  Fast Company asks whether insurance companies (and the premiums they set) might just do that for us.

The prospect of billions upon billions of dollars in physical and economic damages from a single storm is enough to make one wonder whether we should stop building on the coasts altogether.

That’s the scenario hedge fund manager and catastrophe bond pioneer John Seo had in mind when he predicted in the current issue of Foreign Policy that “a decade and a half from now, a single hurricane or earthquake will come with a potential price tag of $1 trillion or more. Imagine a world in which economic damage equivalent to that caused by a major war or the detonation of a midsized nuclear weapon in a major city could materialize with a warning of only a few days.”

The numbers back him up. According to a 2008 study of the world’s largest port cities by the OECD, 40 million people are at risk of flooding, and total economic exposure is $3 trillion, about 5% of global GDP. By 2070 those numbers are expected to rise to 150 million people and $35 trillion, or 9% of GDP. Most of that growth will occur in Asia, where a major typhoon rolled through the Philippines and shut down Hong Kong’s financial markets this week before making landfall on China’s Hainan Island.

The prospect of a single storm practically bankrupting their industry has not been lost on insurers or their odds-makers. In June, Risk Management Solutions received permission from Florida regulators to update the risk models insurers use to set policy prices. The new models increased Florida’s potential hurricane losses by 6.5%, with damages in inland areas soaring as high as 90%. As Reuters dryly noted, “analysts say that the U.S. model changes could give insurers a strong incentive to raise prices.”

But raise them to what? Because not only is the potential for destruction increasing, but so are the frequency and intensity of storms as well. A study released earlier this month by Ceres, a consortium of public interest groups, found that by and large insurers believe in climate change–and believe it will increase their losses. Allstate CEO Thomas J. Wilson recently told analysts the company is saying goodbye to the “good old days” and is now “running our business as if this change [in extreme weather] is permanent.”

I wonder whether having insurance companies speak up about climate change will change the debate.  I kind of doubt it.  It might be better to think ahead about vulnerable areas and start planning ahead, but I can only imagine the backlash that would create.  Of course, insurance companies slowing price people out is also a form of central planning, but one that doesn’t need to take into account equity or other public goods.

Going green but getting nowhere

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A sobering Op-Ed by Gernot Wagner in the NYT.  This link deserves it’s own post.

Leading scientific groups and most climate scientists say we need to decrease global annual greenhouse gas emissions by at least half of current levels by 2050 and much further by the end of the century. And that will still mean rising temperatures and sea levels for generations.

So why bother recycling or riding your bike to the store? Because we all want to do something, anything. Call it “action bias.” But, sadly, individual action does not work. It distracts us from the need for collective action, and it doesn’t add up to enough. Self-interest, not self-sacrifice, is what induces noticeable change. Only the right economic policies will enable us as individuals to be guided by self-interest and still do the right thing for the planet.

Every ton of carbon dioxide pollution causes around $20 of damage to economies, ecosystems and human health. That sum times 20 implies $400 worth of damage per American per year. That’s not damage you’re going to do in the distant future; that’s damage each of us is doing right now. Who pays for it?

We pay as a society. My cross-country flight adds fractions of a penny to everyone else’s cost. That knowledge leads some of us to voluntarily chip in a few bucks to “offset” our emissions. But none of these payments motivate anyone to fly less. It doesn’t lead airlines to switch to more fuel-efficient planes or routes. If anything, airlines by now use voluntary offsets as a marketing ploy to make green-conscious passengers feel better. The result is planetary socialism at its worst: we all pay the price because individuals don’t.

It won’t change until a regulatory system compels us to pay our fair share to limit pollution accordingly. Limit, of course, is code for “cap and trade,” the system that helped phase out lead in gasoline in the 1980s, slashed acid rain pollution in the 1990s and is now bringing entire fisheries back from the brink. “Cap and trade” for carbon is beginning to decrease carbon pollution in Europe, and similar models are slated to do the same from California to China.

Alas, this approach has been declared dead in Washington, ironically by self-styled free-marketers. Another solution, a carbon tax, is also off the table because, well, it’s a tax.

Never mind that markets are truly free only when everyone pays the full price for his or her actions. Anything else is socialism. The reality is that we cannot overcome the global threats posed by greenhouse gases without speaking the ultimate inconvenient truth: getting people excited about making individual environmental sacrifices is doomed to fail.

British Columbians are happy with their carbon tax

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From the Vancouver Sun,

Residents of the sole North American jurisdiction with a carbon tax don’t seem to mind their singular tax status, a new poll suggests.

The Pembina Institute reported on Thursday that 74 per cent of residents of British Columbia, where the provincial carbon tax gets another uptick today, believe either that the tax has been positive for the environment, or feel neutral about it.

The poll was conducted in April by Strategic Communications with a sample of 830 British Columbians, and bears a margin of error of 3.4 per cent, 19 times out of 20.

“According to the poll, the majority of British Columbians (69 per cent) are worried about climate change and most (70 per cent) want the province to continue showing leadership on the issue without waiting for other jurisdictions to take similar steps,” says a news release accompanying the poll.

By 2012, a typical motorist would pay about $140 (Canadian) more annually with the tax.

Study: city dwellers produce as much CO2 as countryside people do (but urban form still matters)

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A new study of two metro areas in Finland proclaims to “illustrate that the influence of urban density on carbon emissions is insignificant”.  This study was published in Environmental Research Letters.  You might remember other studies that seem to indicate the opposite.

The idea that urban form has a significant impact on emissions and therefore should be considered during planning and land use decisions is embraced by many urbanists, environmentalists and scholars.  Others disagree with this position, saying us “sanctimonious urbanites“ may be overplaying our hand.  I don’t think this latest report really does anything to resolve the “GHG blame game” (or, as I prefer to call it, an accurate accounting of externalities).  In fact, if you look at the data, it supports the notion that land use and transportation decisions and patterns have a significant impact on emissions.  While trying to avoid sanctimony, let’s look at the details.

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Location Efficiency is More Important than Home Efficiency for Energy Savings

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An EPA-supported study shows that if you’re concerned about energy use from urban development (in this case, residential buildings), you should look at location efficiency first, rather than building efficiency.  The study describes location efficiency this way:

Housing that is located in a walkable neighborhood near public transit, employment centers, schools, and other amenities allows residents to drive less and thereby reduces transportation costs.  Development in such locations is deemed to be “location efficient,” given a more compact design, higher-density construction, and/ or inclusion of a diverse mix of uses.

As the graph above shows, locating housing in location-efficient neighborhoods has a greater impact on the combined housing-transportation energy use than improving the performance of buildings and automobiles.  EPA says that locating homes in these areas, where some automobile trips can be replaced with transit or other transportation modes, lead to reductions in household energy use of 39 to 50 percent.  While I’m a little hesitant about the study’s assumptions of a 45 percent reduction in vehicle miles in TOD neighborhoods, the larger point is still valid: location has a large impact on energy use by urban development, larger than is often assumed, and deserving of more attention than it’s given.

The study uses energy consumption data for housing and transportation that was collected as national averages, not for any particular location.  The “energy-efficient” homes data was based on Energy Star homes.  So, of course, results from specific regions or cities may vary.  Also, Energy Star is not the most energy efficient way to build a home, but it’s relatively affordable and has large market share compared with other home rating systems.

While location efficiency may be more important than building efficiency in terms of energy savings, it’s obviously a more complicated and politically charged topic than building energy efficiency.  Improvements to buildings bring nearly immediate and focused benefits to owners, while decisions about density and location have benefits which are more widely distributed and whose paybacks accumulate over a longer period.  Matthew Lister, who works for the firm that prepared the study, told Environmental Building News we shouldn’t just focus on the energy savings, though:

“The underlying story is about quality of life.” The choice to live in a densely settled, mixed-use neighborhood, Lister argues, is not just about saving money or even the planet; it’s about “less time in the car and access to more choices,” as well as more work opportunities. The report also touches on social equity, he said. “People have to drive further and further out so they can afford a house,” but then end up “shackled to two car payments,” which raises the effective cost of their housing.

Road Trains Tested In The Real World

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Road Train Test

Road trains (also called vehicle platooning) are convoys of semi-autonomous vehicles with a professional driver in the lead vehicle.  The Safe Roads and Trains for the Environment initiative (SARTRE) describes road trains as:

…a convoy of vehicles where a professional driver in a lead vehicle drives a line of other vehicles. Each car measures the distance, speed and direction and adjusts to the car in front. All vehicles are totally detached and can leave the procession at any time. But once in the platoon, drivers can relax and do other things while the platoon proceeds towards its long haul destination.

Road trains were actually tested in the real world by Volvo, who is part of the SARTRE team, in December.  They cite the benefits of road trains as numerous:

Platooning is designed to improve a number of things: Firstly road safety, since it minimises the human factor that is the cause of at least 80 percent of the road accidents. Secondly, it saves fuel consumption and thus CO2 emissions by up to 20 percent. It is also convenient for the driver because it frees up time for other matters than driving. And since the vehicles will travel at highway speed with only a few meters gap, platooning may also relieve traffic congestion.

There are some potential downsides to road trains as well, but ideally they can deliver many of the benefits of intra-city transit without some of the drawbacks.  Really road trains are just a stepping stone to fully autonomous cars, and caveats of same apply here as well.

The Rest Of The Story On Robot Cars

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The City Fix scooped me on using the Johnny Cab image, but tribute must be paid to such a forward-looking film.

The internet seemed to resound with almost unmitigated delight when Google announced their progress on driverless cars last week.  German scientists see a “golden future” for their driverless vehicles.  There are, however, some key implications that are being missed about what it means if our cars are driven by robots.  I’ll preface the rest of this post by saying that I think the benefits of robot cars probably outweigh the drawbacks.  However, robot cars are not a panacea, and we shouldn’t overlook unintended consequences.

David Levinson at The Transportationist does an excellent job summarizing why robot cars matter, but in my opinion doesn’t go far enough explaining the potential downsides.  Here are some of my thoughts on why we should adopt robot cars carefully, even with their myriad advantages.   Continue reading →

What locations in the Twin Cities are eligible for LEED ND: Part 1

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In a previous post, I talked about the news that HUD will begin scoring grant applications based on location efficiency, and using the LEED ND rating system to do so.  While it is not yet clear what exactly HUD means by this, we can do our own exercise to look at the ND system, compare it to the existing built environment and see what locations in the Twin Cities might be eligible.

This isn’t just about HUD and their projects, it is a way of determining what the best locations are for new development that would ensure compact, contiguous development that makes the most efficient use of infrastructure and has multiple transportation options.  Or in other words, it’s a method to begin planning a more sustainable region.

Before the analysis, a little background on LEED ND is appropriate:

The rating system is divided into five topic areas:

  • Smart Location and Linkage
  • Neighborhood Pattern and Design
  • Green Infrastructure and Buildings
  • Innovation and Design Process
  • Regional Priority Credit

The first three topic areas have prerequisites, or requirements that a project must meet in order to be eligible.  All the topic areas have credits, from which a project proposer can choose to achieve to meet the various certification levels (Certified: 40, Silver: 50, Gold: 60, Platinum: 80).

While the LEED ND system is long and complex, there is really one topic area of the five in the rating system that deals with location and what land is off-limits versus eligible: Smart Location and Linkage (SLL).  In this topic, there are five prerequisites and nine credits.  For the purposes of this exercise, we’re going to be looking at just the prerequisites for LEED ND SLL, because once you get into credits, you have to start making lots of assumptions about how the project will be designed and what features it will contain.  In addition, the other four topic areas deal primarily with the design of the project, or what is inside the project boundary, something we can’t know until a project is proposed.  We want to know just what locations are at minimum eligible, and that means focusing on prerequisites in SLL.

Read on for the details of Smart Location and Linkage and the results.

Continue reading →

IBM’s CityOne game is like a serious SimCity

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In Fall 2010, IBM is releasing CityOne, a game that lets you play a city planner, facing the real issues confronted by modern cities.  From Fast Company:

The game’s premise is based on the real world: Cities already consume 75% of the world’s energy and cause 80% of its carbon emissions. And they’re growing at a blistering pace: The world’s urban population is expected to double by 2050. So cities have to grow smarter if they’re to support the massive population migrations that are happening worldwide.

CityOne is much like Sim City, only the problems are scarily real, ranging among energy, water, banking, and retail. So, for example, one day you might get hit by a rapid increase in water usage due to population growth–while you’re still losing 40% of your water supply to leaky pipes. (This is actually reality, in decrepit megalopolises such as Mumbai and Mexico City.) To fix that problem, you’ll have to carefully install a real-time water management system. Or, to encourage growth in small-businesses, you’ll have to set up an infrastructure of mobile payments, dynamic invoicing, and micro-lending.

The website looks pretty cool and is filled with some interesting facts on infrastructure problems faced by cities.  The only downside: you can’t unlease godzilla-style monsters on your city.