Wednesday, December 05, 2007

Occassional Dimes

  • The Story of Stuff: One of the BEST online videos I have watched. An incredibly well-produced video addressing consumerism, industrial design, sustainability, and social justice. Its about 15 minutes long, but I highly recommend you watch it in its entirety.

  • Toxic Chemicals (The E.U. and the U.S.): As the child of Chemistry professors, I have always been aware of the role of chemicals in everyday products. In this episode of Fresh Air, author Mark Schapiro highlights the difference in regulatory philosophy between the EU and the US.

  • Biodiesel in SF: The City of San Francisco launches a program to collect cooking oil from participating restaurants. The goal is to make the converted biodiesel available to residents and eventually to power city-owned vehicles.

  • Fresh Pain For The Uninsured: In the past U.S. hospitals worked with uninsured patients and together both parties would agree on a reasonable payment plan. Recently, hospitals (including non-profit hospitals) have been selling patients debts' to "debt collection specialists", making healthcare debt subject to the same aggressive tactics found in the credit card, mortgage, and auto industries. Truly depressing article!

  • Five Easy Ways to go Organic: From the Dr. Alan Greene.

  • Fashion and Security: Combine the Japanese known security/crime phobia, their inventiveness, and the Japanese media hyping criminal incidents, and you get hilarious camouflage fashion!

  • Google Chart API: Really simple to use, I expect this to get some traction.

  • Previous Dimes can be found here.

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    Monday, November 26, 2007

    Quote of the Day

    From Dave Barry:
    We Americans live in a nation where the medical-care system is second to none in the world, unless you count maybe 25 or 30 little scuzzball countries like Scotland that we could vaporize in seconds if we felt like it.
    Previous quotes can be found here.

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    Tuesday, November 20, 2007

    Leadership, Home Sizes, and Buy Nothing Day

    We live in an age of excess, and nothing better captures this point than the average size of new homes. According to the U.S. Census Bureau, the average new home went from 1,100 square feet in the 1950's to 2,340 square feet in 2002. In the 1950's new homes averaged 290 square feet per family member, by 2003, new homes constructed averaged 893 square feet per family member! I'm proud to report that at about 450 square feet per family member, my 2-person household is way below the national average.

    A large house, no matter how green and energy efficient, is hard to justify in a world plagued with homelessness and crushing poverty. I tend to see this less as an environmental and more as a social justice issue. In the SF Bay Area, one frequently encounters well-meaning Liberals with strong environmental credentials, who are ensconced in large homes in trendy hillsides and neighborhoods. While the green movement is slowly going mainstream, social justice and simplicity have yet to be embraced by most Liberals.

    Home contractor friends have told me that 2500 square foot homes are way too big for most families. I suspect that a family of 4 can live comfortably in a 1500 square foot residence. So why do environmentally-conscious and well-meaning Liberals continue to live in large residences, located in affluent neighborhoods?

    One clue is to look at the primary residences of the leading candidates for the Democratic nomination for President. Edwards, Gore, Clinton and Obama, frequently champion anti-poverty and environmental issues, certainly more than their Republican counterparts. I'm not claiming that anyone who passionately fights for anti-poverty programs should take the vow of poverty, but these home sizes are incredible:


    (To enlarge an image, click on it.) To put the home sizes in perspective, I included the square footage of a regulation-size basketball court. Anyone who has walked around a basketball court knows that even a "half court" takes quite a bit of space. These home sizes are for their primary residences: Clinton, Gore, and Edwards own multiple homes. The Clintons have another 5000+ square foot residence in Georgetown, and the Gores have a luxury apartment in SF, and at least one other house in Tennessee. Obama's home sits on a 7500 square foot lot, and since I was unable to track down the size of his home, I used aerial photos to give a conservative estimate. The Clintons applied to have their home expanded, the above estimate takes into account the proposed thousand square foot expansion.

    People claim they need larger homes for when they have parties or events. My response is that they should rent out a ballroom on the rare occasions that they need to accommodate a large number of guests.

    Friends in the SF Bay Area constantly talk of the "strong field" of candidates, and I definitely sense a lot of excitement among Liberal professionals. I too will end up voting for the Democratic nominee, but based on the lifestyles they maintain, I am not hopeful that they can truly push through meaningful anti-poverty agendas. John Edwards' talk of the "two Americas" rings hollow -- does he really need such a mega house!

    Ironically President Bush, regarded as being pro Big Oil and pro rich, has a smaller residence than most of the leading Democrats. Clearly, home size is not a strong indicator for enlightened leadership! But shouldn't Democrats expects more (in this case less, is desirable) out of their leaders? Seriously, I look forward to the day when we elect leaders who not only promote social justice and simplicity, but have lives consistent with those values. (And no, I'm not voting for Kucinich.)

    As we celebrate Buy Nothing Day this Friday, my hope is that we take its message and try to practice it as best we can, throughout the year. With an economy heavily dependent on consumption and consumer spending, no politician will advocate and, based on the chart above, maintain a simple lifestyle. Change will have to come from American consumers.

    I remember being in a Clean Energy meeting at Google a few months back, and Googlers were emphasizing that by embracing renewable and efficient energy sources, "sacrifice" or the lowering of lifestyles, was not only unnecessary it was undesirable. I suppose if your main source of revenue is advertising, consumer spending/consumption is a natural consequence.

    Buy. Less. Stuff.

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    Sunday, November 18, 2007

    Palawan

    The SF Chronicle's travel section has a nice feature on Palawan:
    ... The wildlife, the terrain and the remoteness all suggested to me that this corner of The Philippines may be the latest frontier in the world of eco-tourism.

    ... My adventure began when I flew southwest from Manila to Palawan, the "last frontier" of the Philippines. If any place in the Philippines could become a famous eco-tourism destination, it is Palawan: While the island is 270 miles long by only 25 miles wide, its damp and tangled interior is literally a blank spot on current topographical maps.

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    Thursday, November 08, 2007

    Quote of the Day

    From Amma:
    Compassion is the language the blind can see and the deaf can hear.
    Previous quotes can be found here.

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    Wednesday, October 31, 2007

    Quote of the Day

    From Andrew Carnegie:
    This, then, is held the duty of the man of wealth: first, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds which he is called upon to administer ... to produce the most beneficial results for the community.
    Previous quotes can be found here.

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    Tuesday, October 23, 2007

    Quote of the Day

    From St. Francis de Sales:

    "Do not wish to be anything but what you are,
    and try to be that perfectly."


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    Monday, October 22, 2007

    Occassional Dimes

  • Tom Brokaw interviews Yvon Chouinard: The founder of Patagonia at the recent Google Zeitgeist! His fingers have never touched a keyboard, and he has never owned a cell phone. Personally I held off buying a cell phone until 2004 -- even then I did so only because I needed a work/office phone. I advise all you techno-geeks out there to watch this interview. Money quote: "We are no longer citizens of the world, we are consumers."

  • Leaving Microsoft to change the World: John Wood left a successful life as an expatriate manager for Microsoft to start the highly-regarded education non-profit Room To Read. The book traces Wood's journey from successful technologist to the current state of his successful non-profit. Non-profit employees and managers will benefit from the numerous tips and good practices that the author refashioned from his experience in the private sector.

  • City Bike Share: SF looks to implement a bike sharing system, similar to those found in European cities.

  • Dumpster Divers Go Mainstream In Thrifty Germany: Unfortunately available only to WSJ.com subscribers.
  • In many other countries, dumpster divers like Mr. Brylla would be written off as eccentrics. In Germany, he's just a normal 36-year-old graphic printer brought up to look down on wasting money on new things when sturdy old stand-bys are there for the taking.

    "Consumption is nothing good," says Mr. Brylla. "It brings evil into the world."

    Germans like Mr. Brylla are the retail trade's worst nightmare. They make enough money to buy the latest wares but choose to live in a free-of-charge economy. People who don't want stuff put it on the sidewalk. People who like it take it home.

    "It's the culture here in Germany," says Dora Fecske, a Frankfurt businesswoman. "Why trash something if it's still good?" She recently found a large wooden dining table in the street and carried it several blocks to her home with help from friends.

    ... The trend is stubborn, with deep roots in history. Germans save their money partly because war and economic disasters during the last century make them think the future will bring more rainy days.

    Today, even though the German economy is growing solidly and unemployment is falling, consumer spending is in the doldrums.

    Previous Dimes can be found here.

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    Tuesday, October 02, 2007

    Occassional Dimes

  • Randy Pausch's Last Lecture: Beloved Computer Science professor at Carnegie-Mellon, a pioneer in the field of computer graphics and animation -- he has advanced stage pancreatic cancer. What a moving video! Randy also maintains a chronicle of his battle with cancer.

  • Canada's Highway To Hell: This insightful feature article will surprise a lot of Americans -- it did me. Our neighbors up in Alberta are extracting large amounts of oil and destroying vast landscapes in the process. Oil in the tar sands is extremely difficult and energy-intensive to extract. The demand is fueled mostly by the US , but the question remains, why are the other Canadian provinces tolerating such destruction? If we, in the lower 48 states, can stop oil drilling in the Arctic National Refuge in Alaska, why are environmentalists up north so powerless? Perhaps its Canada's over dependence on mining and commodities ("... the GDP of energy-rich Alberta expanded by 6.8% last year, compared with Ontario's 1.9% and Quebec's 1.7%"). I definitely need to learn more about the Canadian environmental movement. We consumers need to be aware of where are oil comes from: 16% of oil imports are from Canada, already the largest source, and with expanded exploration of the tar sands, slated to get even larger.

  • 11 Item You Don't Have To Buy Organic: Dr. Andrew Weil has a list of fruits and vegetables that you can buy, conventionally-grown, if you are on a budget. Hat Tip to zaddik2004.

  • Alms and the Monks: An informative perspective on the situation in Burma, from the Southeast Asian Press Alliance.

  • The Bay Area and the Microcredit Movement: The SF Chronicle highlights several Bay Area companies, including a few based in Davis, at the forefront of the microcredit movement.

  • China Bloggers Stew About Olympic Pigs: In China some people would rather eat like Olympic pigs.
    In recent weeks, news that hogs are being specially raised to feed the athletes at the next year's Beijing Olympics has spurred an outcry on the Internet. The pigs are reportedly being fed an organic diet and getting daily exercise, treatment that has China's bloggers variously mocking, lamenting and raging online.

    "I would rather be a pig for the Olympics than a human in a coal mine!" wrote a blogger who calls himself Shiniankanchai, referring to the reported deaths of thousands of workers in China's mines so far this year.

    Shiniankanchai's sentiments soon spread to other blogs and to Tianya, the biggest Chinese-language Web forum. They reflect a growing frustration among ordinary Chinese with tainted food, dangerous or inhumane work environments and corrupt officials -- a frustration that is being expressed with increasing frequency.

    It's "just ridiculous!" said Jane Xun, a 24-year-old employee of a Shenzhen logistics company, in an interview after she posted her own online objections to the pig-rearing program for the Olympics. "It actually shows how serious the food-safety problem is. What am I going to eat?"

    ... But a program to raise pigs specifically to feed the Olympic athletes, both the Chinese and those from other countries, is seen by many citizens as a sign of mad excess and pandering to foreigners.

    Pigs are such an important commodity in China that the nation has a strategic pork reserve, a little like the U.S. Strategic Petroleum Reserve, to stabilize prices. China's pork reserve releases frozen meat and live hogs in a supply emergency. A recent jump in the price of pork after an outbreak of blue-ear disease among pigs played a part in pushing up China's inflation rate to 6.5% in August -- a serious concern for a government worried about an overheating economy, asset bubbles and a disgruntled rural populace.

    Coming in the wake of reports of tainted Chinese food and toys, news of the Olympic-pig project are adding fat to the fire for some citizens. The special pigs "show how serious our food safety issue is," Shiniankanchai commented in an Internet posting. "While the government is devoted to solving the athletes' pork-eating problem, common people are asking: How about the food safety problem for people living in this country?"

    The Olympics pork supplier, Qianxihe Food Group, or Lucky Crane, as the company brands itself in English, held a press conference in Beijing in August to announce the project. According to reports in the Chinese press, which widely covered the press conference, the company said its aim is to provide athletes with the purest of meat, free of any substances that could cause them to fail doping tests.

  • Previous Dimes can be found here.

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    Monday, October 01, 2007

    Thursday, September 27, 2007

    The State of the Housing Market

    Things are getting worse:
    Today's Census Bureau report on the number of new homes sold in August provides our first clear data for the impact on the housing market of the financial turmoil that began August 9. It is not a pretty sight.

    In a typical year, most new home sales occur between March and August. In each of those months we usually might expect 35% more homes to be sold than at the seasonal low in December. This August, home sales were actually less than in December, the first time that's happened in the 44 years these numbers are available.
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    Tuesday, September 25, 2007

    Voluntary Simplicity and a Billionaire

    Rumored to own only a single pair of shoes, Chuck Feeney was the founder of the highly successful retail chain, the Duty Free stores. Using the fortune he generated in the private sector Chuck Feeney should be a multi-billionaire. His co-founder, Robert Miller, enjoys the trappings of wealth, and lives the life of a billionaire, with the requisite socialite daughters ("The Miller Sisters").

    Its really interesting to contrast the lifestyles of these former business partners. Chuck Feeney gave almost all his money away to his charitable foundation, save for a few million he set aside for himself, his wife and kids. The amount he set aside was on the order of $2M to $5M, enough to live comfortably and with financial security, but nowhere near the fortune Feeney amassed in the private sector. Here are some excerpts from a recent review of Conor O'Clery's new book on Feeney:
    ... Until he was outed 10 years ago, New Jersey-born Chuck Feeney was the world's most profligate secret Samaritan. He remains, at 76, the most unusual. Eschewing all traces of luxe, the man who compiled what would today be worth $4 billion buys his suits off the rack, uses a plastic bag for a briefcase, sports drugstore spectacles, wears a $15 plastic watch, and flies coach. He owns no house and no car. He wonders aloud about the need for more than one pair of shoes. When he's in New York, he likes to dine on chicken pot pies at grubby midtown dives. "It has always been hard for me to rationalize a 32,000-square-foot house or someone driving me around in a six-door Cadillac," the publicity-phobic Feeney told Business Week in a rare interview in 2003. "The seats are the same in a cab. And you may live longer if you walk." As New York Times columnist Jim Dwyer once said, this is a man whose life is like Donald Trump's, only backwards.

    ... Feeney's early days in business were an exercise in frugality. He held meetings in coffee shops and had an entertainment budget of zero. With his business partner, Robert Miller, he built Duty Free Shoppers into an international behemoth. That part was known throughout the 1970s and '80s. What wasn't known until 1997 was that 15 years before, Feeney had decided to systematically give it all away. He had grown tortured about the state of the world and his having so much. In 1982 he secretly transferred his share of Duty Free to an offshore Bermuda foundation he'd set up named Atlantic Philanthropies. It was one of the biggest and most unusual philanthropic feats in history.

    Feeney was obsessed with concealing his identity and even keeping the endowment a secret from Miller, who revels in a life of ostentation and whose socialite daughters went on to marry a prince, a Getty, and a von Furstenberg. Any grant from Atlantic came with hyper-lawyered nondisclosure agreements and vows of secrecy. He agreed to this book only because the story was already leaking out, and he wanted to make sure the details were correct.

    ... As the father of the "giving while living" school of philanthropy, Feeney has had a great deal of impact in philanthropic circles. This carpe diem approach has influenced other super-philanthropists, including Bill Gates and Michael Dell, to donate their fortunes during their lifetimes as opposed to bequeathing riches posthumously. The philosophy goes against the grain of most American philanthropy, where charities limit annual giving to 5% of their endowments. In 2003, Feeney's Atlantic made a stunning announcement: It planned to spend itself out of business over the next 12 to 15 years, giving away $350 million annually to four causes: disadvantaged children, the care and treatment of the elderly, global health problems, and human rights.

    Feeney's spend-it-now philanthropy has also influenced others to better prepare their children for lives of privilege minus the psychological hex wealth can sometimes be. In keeping with his ideas that life should not be an acquisition spree and that work and a sense of purpose ultimately bring a richer existence, Feeney long ago bestowed modest sums on each of his five children. He did the same for himself. The worth of his stake today? $1.5 million. Feeney isn't just influencing current philanthropic practice. He's also picking up where Andrew Carnegie left off: As the legendary steelman said: "The man who dies rich dies disgraced."
    While the guy doesn't own a house, his foundation has modest apartments it rents for him in cities (including SF) Chuck likes to visit. Feeney has a great saying which I love to quote: "A man can only wear one pair of shoes at a time." I like the fact that after he set aside enough money to provide financial security for himself and his family, he decided to devote the rest of his life to helping others. His foundation has pledged to give away its assets over the next decade: which according to the estimates above translates to $3.5B. Feeney is a great role model for those who have enough disposable income to buy a much larger (or even a second) home. A simpler life devoted to service is ultimately more meaningful than a life spent in luxury. Owners of large homes should ask themselves, how many empty rooms does one really need? To borrow from Feeney: "A man can only be in one room at a time."

    I wonder about the entrepreneurs in the Bay Area, who start company after company, while amassing millions in the process. While its great they create jobs along the way, wouldn't it be amazing to have them eschew the for-profit rat race, and dedicate their time and energy to helping the less fortunate? Role models like Feeney may be what inspire some of these younger millionaires to choose service-oriented paths. While I admire Bill Gates and other high-tech philanthropists, I do think their life of luxury sends the wrong message to the next-generation entrepreneurs.

    Feeney's foundation, has collected recent articles about its founder. Read on, and be inspired.

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    Wednesday, September 12, 2007

    Occassional Dimes

  • Running the Numbers: Chris Jordan's amazing photos help us visualize a variety of social statistics (e.g. American children with no health insurance coverage in 2007).

  • Freegans: LATimes article on Freegans -- "the word combining "vegan" and "free" -- a growing subculture of people who have reduced their spending habits and live off consumer waste."

  • Supercapitalism: Fresh Air's Terry Gross interviews former Dept. of Labor Secretary, Robert Reich.

  • Energyville: Interesting online simulation from The Economist and Chevron. You get to be a city planner in charge of your city's energy portfolio. Nicely done.

  • Previous Dimes can be found here.


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    Thursday, September 06, 2007

    Equality == Freedom

    The Trap is a brilliant book on the challenges facing young Americans. First time author, Daniel Brook, has the right combination of personal stories, history, and statistics, resulting in a book I found hard to put down. Like the film Sicko, which used the stories of Americans with health insurance, The Trap tells the stories of elite school graduates who aspire to work in jobs that reflect their values and ideals.

    Take the case of Yale Law school students. Yale Law has a reputation of attracting a fair amount of idealistic students, most of whom plan to work in public interest law, non-profits, or the public sector. Because of their sensibilities, these students also plan to live in some of America's most expensive urban centers: New York City, San Francisco, DC, LA, etc. Between their 1st and 2nd (and their 2nd and 3rd) years, recruiters visit campus in droves, and they soon find out that the "idealistic" jobs pay about $40-$50K/year, while corporate and other private sector jobs pay more than twice that amount ($120-$200k). Some of the students may hold out, and take the lower-paying job of their dreams, but the combined weight of student loans, high rent, and marriage/kids, leave them little choice but to eventually take a higher-paying private sector gig. As the author points out, the Yale Law School Dean frequently tells students of the many alumni who call to tell him their high-paying jobs are depressing! While, corporate firms do some pro bono work, we know who butters their bread:


    The author also talked to a few "Ivy Leaguers" who chose jobs in non-profits or as public school teachers, precisely because those were the jobs they wanted. Again the combination of expensive but desirable locations, students loans, and family pressure, leads them to question whether their "dream" jobs are sustainable.

    What makes the book great is the way the author takes the stories of his fellow recent "elite school" graduates, and uses it to make the case that fundamental reform of the American economy will liberate people to pursue their true vocations. A citizenry free to pursue their desired professions, would unleash a wave of creativity and service that would benefit society. The lack of progressive taxation, universal healthcare, affordable childcare, housing and (higher) education, all but guarantees that most people will work within the corporate setting. The system is actually brilliantly rigged to favor corporations. Sell people the idea that capitalism gives them the freedom to do whatever they want, but rig the system so that all but a few can actually afford to do so.

    In Daniel Brook's assessment, Freedom and Equality go hand in hand. The classic liberal playbook is to cede the freedom argument to conservatives, while emphasizing the need for more equality. A society that provides affordable childcare, education and housing, universal healthcare, and progressive taxation, values equality. But imagine living in a society with exactly those elements in place. Wouldn't you have more freedom to pursue the line of work you want?
    We can have a democracy or we can have great wealth concentrated in the hands of a few. We cannot have both.
    The late US Supreme Court Justice, Louis Brandeis

    Rather than focusing on the exceptional individuals who resist the temptation to abandon their low-paying but highly fulfilling careers, the author argues we should work towards the types of reforms where the exceptions truly become the norm. A society that allows its citizens to pursue their true vocations promotes meaningful freedom. Our system gives us the freedom to purchase and consume as we please, but few of our fellow citizens can afford to pursue the jobs they really prefer.

    I plan to purchase several copies of this book and give it to my college age friends and family. Please read The Trap, I recommend it highly.

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    Thursday, August 30, 2007

    Occassional Dimes

  • The Farm Bill: Science Friday has a round table with Michael Pollan, Marion Nestle, and Sandor Katz.

  • DH Love Life: I really like Daryl Hannah's environmental videos. They are short, informative and entertaining.

  • Clean Tech Economics: A recent hour-long discussion on KQED's Forum.

  • Water Diaries: Award-winning radio program Living on Earth, compares water usage in the US and India.

  • The Devil Came On Horseback: A disturbing and deeply moving documentary about the catastrophe in Darfur.


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    Monday, August 27, 2007

    The Devil Came On Horseback

    There is finally a documentary that I hope will generate the momentum needed to put a halt to the crisis in Darfur. The Devil Came On Horseback follows one person's journey from the Marine Corps to full time activist and speaker. What makes the film so powerful is the graphic footage, photos and testimony that puts to rest any doubts about whether genocide is taking place. As the film documents, the Sudanese government and the Janjaweed are quite precise in their actions: villages are first bombed from the air, villagers brutally murdered, and huts are methodically and individually set on fire.

    While the Sudanese government and the Janjaweed are to blame for this unfolding catastrophe, pressure should be applied to
    • The Chinese government who manage/control 80% of the oil resources in Sudan.
    • The US government for declaring that a genocide is taking place, but failing to lobby hard for UN intervention. The Bush administration allegedly regards the Sudanese government as an important source of information about Al Qaeda, and is therefore reluctant to act aggressively. Please send a hand written note to your members of congress ASAP.
    • The Arab and Islamic countries, for not vigorously condemning and isolating the Sundanese government. Al Jazeera should be all over this issue with the same intensity that it covers events in the Middle East.
    The UN refuses to send peace keeping troops unless the Sudanese governments invites them in. Unfortunately, such an invite won't be sent anytime soon. The UN needs to send peace keepers now!

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    Thursday, August 23, 2007

    Credit Ratings, Mark-To-Market, and Quants

    Sorry for posting off-topic these days. The financial turmoil engulfing the markets is bringing back a lot of memories. I do think that folks interested in Green Biz need to have some understanding of what is roiling the markets. After all, a recession will hurt all of us.

    Back in the late 1990's I was the lead Quant for a small hedge fund, and was around for the 1998 financial crisis. I'm of course referring to the months in 1998 when LTCM caused a fair bit of panic in the markets. I have to say, that qualitatively speaking, what we are seeing is a lot more spooky that what we lived through back then.

    First off, in 1998 there was panic followed by the requisite "flight to quality", much like what we are seeing today. However, things seemed calm after a few weeks. Most of the damage was confined to LTCM (and some lesser known cohorts) who placed yield-arb trades involving illiquid foreign bonds. In fact, my memories of that period is filled with jokes and comments about how LTCM had it coming. The pent up resentment against LTCM's perceived arrogance was surprising. For the most part calm was restored in a matter of weeks. In the current crisis, Quants and other Wall St. professionals seem lost -- you get the sense that this will play out over months, and those months will be plagued by volatility and much nervousness.

    How did we get to this point? There are several excellent bloggers and columnists who have posted on this topic ( see [1], [2], [3]), and I recommend you read the links I just cited. In this post I'll attempt to list some of the issues I feel are worth emphasizing.

    The CDO's are a product of complex financial engineering, and by their very nature are quite opaque. They are structured credit products, broken up into tranches each of which is rated by a credit rating agency. But hasn't the securitization of loans been a standard practice for years? You take a hot potato (those risky loans), and pass it on to the next person in line. The answer of course is yes, but, the whole industry depends on the credit rating companies actually getting things right, or at least close to right:
    Here's the recipe for a CDO: you package a bunch of low-rated debt like subprime mortgages and then break the package into pieces, called tranches. Then, you pay to play. Some of the pieces are the first in line to get hit by any defaults, so they offer relatively high yields; others are last to get hit, with correspondingly lower yields. The alchemy begins when rating agencies such as Standard & Poor's and Fitch Ratings wave their magic wand over these top tranches and declare them to be a golden AAA rated. Top shelf. If you want to own AAA debt, CDOs have been about the only place to go; hardly any corporation can muster the credit worthiness to garner an AAA rating anymore. Here's where the potion gets its poison potential. Some individual parts of CDOs are about as base as bonds can be — some are not even investment grade. The assumption has been that even if the toxic waste bonds really stink, the quality tranches can keep the CDO above water. And life goes on.
    Imagine needing a loan for a house, and in particular needing a home appraiser to come up with a value for the house you are wanting to buy. Chances are your Realtor already knows an appraiser who probably will come through and appraise the house accordingly. If the appraiser doesn't come up with the right number, well, let's just say the Realtor won't be working with that appraiser much in the future. Unfortunately, the credit rating agencies are the home appraisers of the bond market. Either they come through with the desired rating (AAA baby!), or you just shop that CDO around to another agency.

    So while default risk is of minimal concern, the unraveling can be traced to the fact that these CDO's are being marked-to-market. Before the Bear Stearns hedge fund collapsed, the CDO's just sat in the books of all these funds. The collapse of the Bear Stearns fund forced people to grapple with mark-to-market values en masse.

    Because the CDO's raised questions about the credit quality of securities in general, the bond market has pretty much shut down. Loans are harder to come by, and the commercial paper market, which is an important financing channel for companies has dried up. Its hard to blame investors though. Even Hedge funds were raising commercial paper to finance currency carry trades and other leveraged positions. Understandably, in times of uncertainty, investors do not want their fortunes tied up in complex financial instruments..

    Its interesting to see European and other foreign banks get entangled in the US bond markets. In recent years, Foreign investors starved for extra yield started buying the same products (CDO's and other complex securities) as their US counterparts. The stuff was AAA after all, right? I have to give a shout out to bond salespeople on Wall Street. They are the best salespeople in the world, bar none. Seriously, these guys are paid to sell beaten down, toxic bonds for a living :-) Set them loose on a bunch of yield-starved foreign investors with AAA stuff to sell? Game over, deal closed.

    During the LTCM crisis, there was a lot of talk about how Quants were to blame for the mess. It turns out the bond arbitrage trades (based on yield spreads) that LTCM put in place, worked out quite well. IF you had the pockets to ride out the margin calls and the period when the correlations went to 1, you would have done fine. LTCM did not have the resources to see their trades through, but the folks who did, profited. I suspect that there will be quant traders in the same boat during the next several months.

    Quants in the credit rating agencies probably need to do some soul-searching. Either get the math right and don't succumb to external pressure, or get out of the ratings game.

    Let's get one thing straight: Quants are here to stay. If you need to hedge risk of any kind, chances are you'll need some serious quantitative firepower. My experience included work in designing quantitative trading strategies, valuation of structured notes, portfolio management, and risk management. In each of those areas, I believe extensive probability/stats/math background really comes in handy.

    Finally, a word about hedge funds. There are too many of them, and at their core, a lot of the newer ones seem to really have only one or two trading ideas to work with. There will be a cleansing period, and a lot of hedgies will fold. I remember taking solace in the fact that not only did we have several quantitative strategies to trade with, we had tons of markets to play in (commodities, equity indices, bonds, currencies, etc.). Diversification does not necessarily protect you in times of panic, like what we have now, but you feel better knowing you have several ideas at work increasing your chances at recovery.

    So what is an individual investor to do now. A few days ago I was quite gloomy, and I have to admit my outlook hasn't changed much. In a recent conversation with a friend who is the lead fixed-income quant for a major US bank, he seemed quite worried about the UK housing market. Investors in the UK are just as spooked:
    The most serious situation is in the UK, where the 3mths – repo rate spread has widened by 50bps to 100bps in the current environment practically equivalent to two BoE 25bps rate hikes in terms of market squeeze. In 1998, the same spread remained in the 15/35bps area during the crisis (was negative after the CBs interventions).
    When in doubt, and especially when the professional investors seem lost, Cash Is King!

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    Tuesday, August 21, 2007

    Quote for the Day

    From Bloomberg:
    ``I've never seen it like this before,'' said Jim Galluzzo, who began trading short-maturity Treasuries 20 years ago and now trades bills at RBS Greenwich Capital in Greenwich, Connecticut. ``Bills right now are trading like dot-coms.''
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    Sunday, August 19, 2007

    US Mortgage Market

    The current volatility in the World's equity markets is making a lot of folks nervous in the U.S. Most pundits believe that the Fed should ease rates because the main problem facing the economy is lack of liquidity, and that the crisis is due to the difficulty of hedging liquidity risk.

    I am a bit more pessimistic. I tend to subscribe to the school of thought that what we really have is a looming insolvency problem. I have been talking to mortgage quants and the report I consistently get is that we are about see a wave of mortgage rate resets in the last quarter of 2007, with the peak hitting in Q1-2008. These resets will lead to a lot of foreclosures as a record number of people will be unable to pay their readjusted monthly mortgage. The people who know mortgage data well have insolvency on their minds -- and they are paid to look at mortgage data very closely.

    Sure we have a liquidity problem, but I think that the credit rating agencies fell asleep at the wheel, and that led to too many easy loans. A quick examination of historical mortgage rates shows that we aren't exactly in a high interest rate environment:



    Note that the Fed's cutting of the discount rates has already resulted in drops at the end of above charts. More importantly, the spread between conventional 30 Year Fixed mortgages, and 1 Year ARM's is still quite narrow.

    So while I agree that we are facing a mini liquidity crisis, it is a reaction to the loose credit standards that were in place in the previous 2-3 years. I am a huge fan of Bill Gross, but I think prudent investors do know how to hedge liquidity risks.

    If you are a Green Industry entrepreneur, be prepared to face a weakened economy over the next several months. My overseas friends be warned: this is not going to be confined to the US. Corporate credit markets are feeling the heat, currency carry trades are being unwound, ...

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    Saturday, August 11, 2007

    Bicycle Musical Festival

    I had the pleasure of pedaling away for about an hour, to help power a concert put together by the Bicycle Music Festival. As we were finishing up our weekly trip to the Alemany Farmer's Market, we walked by just when they were setting up. It was fun alternating between two bikes and I am inspired to have a bike-powered power rig at home. At least so I can charge our cell phones on them.

    One of the bikes I rode was a cruiser straight out of Burning Man. It will be featured in an upcoming issue of MAKE magazine.

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    Thursday, July 12, 2007

    Occasional Dimes

  • micro-wind technology in San Francisco:
  • " ... the 34-year-old engineer has pioneered the city's first permitted micro–wind project, a six-foot-tall cylindrical turbine that currently sits on his roof and sends juice into the energy grid ... (it) generate(s) between 300 and 600 kilowatt hours of energy per year, or about 10 percent of a typical home's energy needs. ... A one-turbine system will cost around $5,000, though Pelman estimates that rebates will reduce the price by $1,500."
  • Coal In China: An audio slide show from NPR.

  • Health Care in the U.S.: Yet another great episode on Fresh Air. I was surprised to hear that Australia and Germany have Health Care systems that are similar to the U.S., and according to Jonathan Oberlander, both systems contain practices that could be replicated here.

  • Big Coal: Renewable energy supporters need to understand how the coal and oil industry work. Big Coal and Oil on the Brain are well-written guides to these incumbent energy sectors.

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    Wednesday, July 11, 2007

    Externalities: Coal and Wind Energy

    In a recent post, I highlighted mining and extraction costs ("externalities") associated with coal mining. In most countries coal is the dominant source of electricity. To effectively compete with the de facto source of electricity, supporters of renewable energy need to understand some of the externalities that are usually omitted when calculating the average cost of electricity from coal.


    "Clean coal" initiatives do address emissions, but as I argued in my earlier post, mining and extraction have not been accounted for in a systematic manner.

    On the emissions side, the most famous study on particulates was the decade-long EU study, ExternE ("the external costs of energy"):
    Human activities like electricity generation or transport cause substantial environmental and human health damages, which vary widely depending on how and where electricity was generated. The damages caused are for the most part not integrated into the pricing system. Borrowing a concept adopted from welfare economics, environmental policy calls these damage costs externalities or external costs. By societal welfare principles, policy should aim to ensure that prices reflect total costs of an activity, incorporating the cost of damages caused by employing taxes, subsidies, or other economic instruments. This internalisation of external costs is intended as a strategy to rebalance the social and environmental dimension with the purely economic one, accordingly leading to greater environmental sustainability.
    Thanks to the EU! Given the current level of influence of energy industry lobbyists in Washington, it is hard to imagine an equivalent Federal study being funded in the US. Nevertheless, US scientists have used the results of ExternE to estimate additional costs in the US.

    Coal and Air Pollution
    In what follows, we examine the costs due to particulates and air pollution ONLY: we do not include Mining (Environmental) and CO2 (Global Warming) costs. First an overview of the public health problems associated with particulates and air pollution (Williams, 2004):
    ... In recent years health damages, especially from chronic exposure to small particle air pollutants has been a focal concern about air pollution. Recent epidemiological research indicates major mortality impacts from long-term, low-level exposure to particulates — both particles emitted directly in combustion and sulfate and nitrate particles formed in the atmosphere from gaseous precursor emissions of SO2 and NOx. Lippman and Schlesinger (2000) survey the recent literature, concluding that the correlation of ambient particulate exposure levels commonly found in U.S. cities with increased human mortality and morbidity remains robust to all attempts to identify possible confounding variables.

    ... It is estimated that those in the US who have died from exposure to PM2.5 air pollution particles had their lives shortened, on average, by 14 years. ... the EPA projects that the Clean Air Act Amendments of 1990 will reduce the US death rate in 2010 by 23,000/y (EPA, 1999). But even with these laws in place, the premature death rate associated with residual small particle air pollution is significant. For example, Abt (2002) projects 6,000 premature deaths from emissions from 80 U.S. coal-fired power plants in the year 2007 (even accounting for new control technologies mandated by that year). These recent findings translate into much higher costs for air pollution damages than was the case for studies before chronic mortality impacts were taken into account.
    Williams takes the ExternE results, and adapts them to regions in the US. In the graph below, he compares different typed of coal generation plants to Natural Gas Combined Cycle (NGCC) plants:


    What the graphs says is that a clean coal plant is 50% more expensive than a comparable NGCC plant: for an NGCC plant the approximate cost for these externalities are about 40 cents/MWH. For the average coal plant, the externalities were 84 times more than an NGCC plant. Assuming coal is here to stay, at least for a long while, the public health implications of not switching to cleaner plants are immense! If the market were to price in the cost of these externalities, these older coal plants would be so much more expensive than renewables, they would have to be shut down.

    In the US, the reality is sadly as follows: The older coal plants were built years ago so their construction costs are fully paid for. Utilities who own these plants know that newer, cleaner plants would be much more expensive to build. Similarly, retrofitting older plants would cost serious money. A few million dollars spent on lobbying against clean air standards is peanuts, so the industry seems intent on devoting more resources to lobbying.

    ExternE and Wind Energy
    How does wind energy score on the ExternE study?


    Wind was the cheapest on both greenhouse gas and air pollution costs. Deployed clean coal technologies are still costly when it comes to greenhouse gas impacts. How does this translate into the cost (per KWH) of electricity?


    Graphing the results for the UK and for Denmark:




    reveals a different economic picture from what I portrayed in a previous post. In a future post, I will readjust those earlier cost graphs.

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    Tuesday, July 03, 2007

    Single-Payer Systems

    Sicko may be Michael Moore's best film yet, but I do not agree with him that a single-payer system is the way to go. Both the UK and France have a mix of public and private healthcare providers, while Canada is the poster child of a single-payer system. Interestingly short films to counter Sicko are starting to appear on YouTube, and organizations like Timely Medical Alternatives are being cited by opponents of a single-payer system.

    Moore cites the postal service and the school system as examples of where the government plays a large role, and concludes that the medical system is too important to leave to private entities. While I use the US Postal Service 90% of the time, I do like having the choice of using UPS or FedEx when I want to really track my packages (the US Postal Service tracking pales in comparison). Similarly, some parents prefer sending their kids to private educational institutions. Politically speaking, it is easier to sell a system that gives people choices.

    Ideally we make Medicare available to anyone who wants it, and let the HMO's compete with Medicare. The competition will make both systems more "customer friendly" and we all benefit from having a responsive system. I think most people will opt to use the Medicare system for all but a few of their needs, while some people will opt to go with HMO's completely.

    The devil is in the details of course. To lower costs, the US system needs to streamline its Information Technology and billing/claims systems, have meaningful TORT reform to lower malpractice insurance, lessen the grip of the AMA and allow foreign trained family doctors an easier path towards practicing in the U.S., allow Medicare to negotiate directly with pharma, etc. These recommendations alone imply going against lobbyists representing lawyers, doctors, and big pharma! Perhaps electoral reform (i.e. public financing of elections, instant runoff, etc.) is the necessary first step to have any meaningful shot at getting things done. Hmmm, electoral reform sounds like the perfect topic for the next Michael Moore film :-)

    At the end of the day, any national healthcare system has to scale to 300M people, and still pay for itself. Tax increases may need to be part of the equation. Immigration reform will need to be enacted: the U.S. has legal and illegal immigrants on a scale that other developed nations would have a hard time absorbing.

    Most importantly, as Michael Moore points out, there needs to be an adjustment in attitude in the U.S. We need to go " ... from a nation of me's, to a nation of we's".

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    Tuesday, June 26, 2007

    Global Exergy and the Asian Economies

    At this year's Foo Camp, I went to an interesting discussion on Global Energy led by Saul Griffith and Jim McBride. Using the work of Wes Hermann, they presented a first draft of a pretty compelling slide show, which one member of the audience suggested they call "A Convenient Truth". Wes Hermann has done extensive research on Exergy and how much of it is physically available. Saul and Jim want to make his work more accessible in the hope that it might shape energy policy.

    What is Exergy? We refer to the following definition from a paper of Wes Hermann:
    Exergy is used as a common currency to assess and compare the reservoirs of theoretically extractable work we call energy resources. Resources consist of matter or energy with properties different from the predominant conditions in the environment. These differences can be classified as physical, chemical, or nuclear exergy. This paper identifies the primary exergy reservoirs that supply exergy to the biosphere and quantifies the intensive and extensive exergy of their derivative secondary reservoirs, or resources.
    Wes Hermann not only calculates the available Exergy from most energy sources, he also determines where particular energy resources are most plentiful. ("How much solar energy can one generate if one blanketed the earth's ENTIRE surface with the most efficient solar panels?") In essence, Wes Hermann sets out to calculate the terrestrial potential from all possible energy sources. He concludes that Solar, Wind, and Nuclear (in that order) are the most plentiful. In addition, Hermann locates the best places to harvest each possible energy source. In the sample graph below, we have the Tidal Power available (in watts per sq. meter) across the planet:


    Similar maps can be constructed for other energy sources. In an ideal world, precious materials (e.g. silicon for solar panels) would be deployed in areas with the most potential (solar) Exergy.

    Starting from the current global Exergy consumption of 18TW, Exergy calculations should inform energy policy. The 18TW is set to grow as the India, China, and the Southeast Asian economies continue to develop. Using the U.S. as an example, economic growth is positively correlated to energy consumption:


    India and China's economies are growing at a steady pace, so the 18TW total Exergy consumed is sure to rise sharply:


    Just like energy consumption, Ecological footprints rise as countries (see Human Development Index) develop:


    The size of the populations of the fast-growing Asian countries means we need to pay attention to Exergy now!


    Of course the Indian, Chinese, and ASEAN economies may hit obstacles along the way, but sound energy policy suggests that we assume that they will continue to develop in a modest pace.

    Actually in another interesting discussion at FOO camp, Steve Hsu pointed out an interesting fact: historically, China's share of the world's GDP was quite high.



    Using PPP (purchasing power parity), China's share of the world's GDP may actually just be reverting to its historical values. Look for China's ecological footprint, and Exegy consumption, to keep rising. Unless we act soon, the current 18 TW global Exegy consumption will surely look small in a few decades.

    Tuesday, June 19, 2007

    The True Cost of Coal

    As far as electricity generation is concerned, Coal is the benchmark against which all renewable energy sources are compared with. In a previous post, I compared the cost per kilowatt hour (KWH) from a variety of renewables and concluded that coal is still much cheaper. In this post we will evaluate coal using the Triple Bottom Line and conclude that it is clearly a lot more expensive than it seems. It is important to evaluate the cost of coal more realistically before the developing world builds even more coal-powered generation plants.

    In thinking about coal, it is useful to separate the problem into two pieces: mining and extraction, and electricity generation. In a previous post, I examined technologies for coal-powered electric plants that use sequestration to ensure that emissions are captured and stored underground. None of the touted "carbon sequestration" or "clean coal" technologies have been deployed in a commercial plant and doing so would naturally add to the cost per KWH.

    The cost of mining and extraction is where traditional accounting falls short. First off, how is coal extracted?
    ... Early coal mining was almost exclusively done in deep shafts that led to thick (5-10 feet) coal seams, which were blasted and picked out and loaded on rail cars to be drawn out of the mine by mules. Miners worked in dark, dusty conditions always at the risk of fatal roof falls and methane gas explosions. Beyond the risk of sudden death or serious injury, miners also faced the prospect of black-lung disease if they spent years in the profession.

    Deep mining has indeed come a long way. Today, miners use a technique called long-wall mining, which involves a long (up to a mile) face of an underground coal seam which is dislodged by a saw that runs on tracks along the face. This method is much more efficient at removing thick coal seams than the old blast-and-pick method, and accounts for half to two-thirds of current Appalachian coal production. While some dangers are now less, current underground mining still results in fatal roof fall and explosion accidents.

    Surface mining, or strip mining, has become more and more popular in recent decades, especially in removing thinner seams of coal (as little as a foot thick). The most recent innovation in strip mining is known as mountaintop removal. It peels back a mountain, layer by layer, by alternately blasting the thick layers of rock away from the coal seams and then scraping the coal seam out and hauling it away in huge dump trucks. Much of the “overburden” rock (the non-coal layers) is pushed off into adjacent valleys. As much as 500- to 1,000-vertical feet of a mountain may be removed in the process and valleys are filled in to depths of as much as 500 feet by the rubble.
    The current approaches involve either removing entire mountain tops or dislodging mile-long underground seams! Unless the mining companies are voluntarily estimating the cost of these forms of environmental degradation, the cost of electricity from coal as quoted in media reports, is not accurate. The list of environmental problems associated with coal mining is depressing. Here is one I ran across from the Union of Concerned Scientists:
    MINING
    Altered landscapes. Surface mining in Appalachia often removes entire mountaintops and dumps the wastes into valleys and streams; between 1985 and 2001, more than seven percent of the region's forests were cut down and more than 1,200 miles of its streams buried or polluted. In addition, waste materials from underground mining are placed in large piles above ground, which can also scar the landscape and alter stream flow.

    Water contamination. Acids and toxic metals can contaminate surface and groundwater, harming aquatic life and rendering water supplies undrinkable.

    Safety hazards. Underground mining accidents result in many deaths and injuries, and coal dust inhalation causes chronic health problems. Black lung disease still kills about 1,000 former coal miners in the United States each year.

    PREPARATION
    Water contamination. Impurities such as acids and heavy metals removed from coal and stored in slurry reservoirs canleach into surface and groundwater.

    Safety hazards. Slurry reservoir dams can fail, flooding local waterways and putting both wildlife and downstream communities at risk.
    The main problem with both mountain top removal and long-wall mining is that landscapes are permanently altered as a result of coal mining:
    ... The coal in the Appalachian Mountains is hard to extract because it is buried under layers of shale and sandstone hundreds of feet thick. A few decades ago, strip miners would cut along the edge of a ridge side, then auger into a coal seam. But today, with bigger machines and little moral or regulatory constraint, coal operators simply blast away the entire mountaintop -- its forests, capstones, and topsoil -- so they can scrape out thin seams of low-sulfur coal. Nearly everything else is dumped into the valleys below, often burying pristine headwater streams. The resulting "valley fills" create the largest man-made earthen structures in the country -- huge treeless funnels that let mud and rainwater wash unimpeded through low-lying communities all across central Appalachia. The town of McRoberts, Kentucky, recently endured three "100-year floods" in 10 days. The water filled homes and carried away carports. When TECO Energy of Tampa, Florida, had leveled every peak around the community, it took the coal, took the profits, and left the people of McRoberts with crumbling homes, terrible roads, and a constant fear of being washed away in one’s sleep.

    According to the Environmental Protection Agency, in addition to the more than 700 miles of streams buried by valley fills, thousands more miles have been contaminated with sediment, heavy metals, and acid mine drainage, a toxic orange syrup that kills everything in its path. And these are headwaters, so their contamination affects all life downstream. In Letcher County, Kentucky, children suffer extremely high rates of diarrhea, vomiting, nausea, and shortness of breath, all of which can be tied to dissolved minerals in nearby streams. Presumably the Clean Water Act was established to prevent such degradation. But early in the Bush administration, coal lobbyist Steven Griles was named a deputy secretary at the Department of Interior. Officials changed one word of the act -- replacing "waste" with "fill" -- so that toxic mining debris could be dumped into rivers as benign fill material.

    There will soon be enough flattened mountaintops in Appalachia -- 1.4 million acres -- to set down the state of Delaware on former summits. Try driving across the 10,000-acre wasteland that surrounds Larry Gibson’s home on Kayford Mountain, West Virginia. Hundreds of people, like the photographer J. Henry Fair, make that trip every year to see, in Gibson’s words, "what hell looks like." Kayford Mountain, more than any place I know, illustrates the power and the willingness of some human beings to convert the natural world into money and "cheap energy" as quickly as possible. If that means the total destruction of an entire region, its people, and its culture, so be it.

    And yet the majority of Americans have never heard of mountaintop removal.
    One may be able to clean up coal-powered plants, but can one mine for coal without destroying the environment? Coal isn't as cheap as it appears, if anything the true cost of mining it probably makes it one of the most expensive energy sources. Using the Triple Bottom Line (People, Planet, Profits), coal costs a heck of a lot more than renewable energy sources.

    Summary
    Coal is touted as the cheapest source of (abundant) energy around, and in this post I argue that coal is actually quite expensive. From a power generation and emissions perspective, will "clean coal" and "carbon sequestration" be as cost-effective as current renewable energy sources? No commercial plants have been deployed so cost estimates are mere guesses at this point. Given the growth in coal usage in China and India, developing "clean coal" power plants is extremely important.

    More importantly, Coal is cheap because the environmental costs of mining and extraction are more or less ignored. How cheap would coal mining be if it were held to the standard that it should be?

    Hopefully the current excitement surrounding renewable energy, plus a heavy dose of energy efficiency and conservation will lead to less coal in the future.

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    Wednesday, June 13, 2007

    No Longer A Waste: Energy and Recycling

    The Economist had a recent article on municipal curbside recycling which laid to rest the question of whether recycling is good for the environment. Recycling involves trucks, other machinery and energy inputs, so a valid question is whether or not the amount of materials extracted justifies the amount of energy used in the process. Using the results from a recent study sponsored by the UK-based Waste & Resources Action Programme, the answer is recycling DEFINITELY pays off. The study is essentially a meta-analysis of about 55 respected Life Cycle Analyses from several countries.
    The UK’s current recycling of those materials saves between 10-15 million tonnes of CO2 equivalents per year compared to applying the current mix of landfill and incineration with energy recovery to the same materials. This is equivalent to about 10% of the annual CO2 emissions from the transport sector, and equates to taking 3.5 million cars off UK roads. ... The message for policy makers and practitioners is unequivocal. Recycling is good for the environment, saves energy, reduces raw material extraction and combats climate change.
    The article also includes interesting factoids, along with several graphs and metrics.


    The above graph is based on data from the OECD. Recycling Rates are defined to be the total (weight in tons) of all Recycled Municipal Solid Waste (MSW) as a percentage of Total MSW. In recent years, single-stream or co-mingled recycling has been used successfully to boost recycling rates. In single-stream recycling, a single recycling bin is provided and materials are separated by the recycling facilities. With an extremely high recycling rate of 69%, San Francisco is one of the most successful single-stream recyclers around. Through a combination of human and machine-automated separation techniques (Eddy-current separators), SF "... processes an average of 750 tons of paper, plastic, glass and metals a day."

    I used the colorfully titled 2006 State of Garbage in America to get a snapshot of the recycling rates by state. As a secondary metric, I will also look at the percentage of total MSW (municipal solid waste) which ends up in landfills. Using this metric, the Rocky Mountain Region performed horribly, with 86% of all MSW ending up in landfills:


    In New England, 36% of MSW is converted to energy thus only 35% of total MSW ends up in landfills. After recyclable materials are separated, the remaining suitable MSW are combusted and the heat generated is used to power steam turbines that generate electricity. In a previous post, I compared sources of electricity for a few key countries and noted that Denmark generates 3.6% of its electricity using MSW. These Waste-to-Energy facilities do create emissions, but the EPA considers the emissions from these primarily biomass derived materials, to be part of the "Earth's natural carbon cycle". Because of the variation in Waste-to-Energy facilities, there are possibly other environmental problems that accompany such facilities.

    I loaded the data and mapped the results at the State level. For recycling rates, higher rates are desirable. The West Coast states (CA, OR, WA) all recycled at least 40% of their total MSW:



    I'm astounded that in the year 2006, there are still states with single-digit recycling rates!

    For the percentage of total of MSW which ends up in landfills, lower rates are desirable. The New England States convert a large percentage of their MSW to energy so they have lower percentages ending up in landfills:



    CT converted a whopping 65% of its MSW to energy! To the extent that the low Landfill rates are driven by high Waste-to-Energy conversion rates, further studies on the environmental impact of such facilities should be conducted.

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