Dear Socar

Dear Socar, Socar Public Relations and Socar of Georgia (if your website is working),

Normally when I put 50 lari worth of gasoline into my car, I get about half a tank. Earlier this week, I visited one of your affiliates in Tbilisi, paid for 50 lari of gas (the price per liter did not seem significantly different from the other filling stations nearby) and drove off. The needle eventually showed that I had gotten about a quarter of a tank of gas.

If I could remember exactly which affiliate I had this experience at, I would be able to avoid it. But it may just be easier to avoid Socar stations entirely. And to share my experience.

Sincerely,

Doug Merrill

Feed the techne

We had a presentation today from some impressively smart and determined people at Orangebox, a Welsh company that makes office furniture. Their ambition is to do ‘cradle-to-cradle’ (C2C) manufacturing; that is, manufacturing where a lot of the material you use to make your new products comes from your own older products, recycled. What makes this better than recycling, conventionally understood, is that if you know how a product is made, you know how to recycle it effectively. With conventional recycling, either the consumer or an open-to-all recycler has to attempt to separate out the various metals, polypropylenes, nylons, etc. and there’s pretty good evidence that they’re not up to it. For one, even a product as apparently simple as an office chair has upwards of a couple of hundred components. Worse, where dissimilar materials are bonded to each other in the way that they tend to be – if the manufacturer means those materials not to come apart – effective recycling is more or less impossible. The higher grade plastics get irretrievably contaminated through mixing with other plastics; then the only viable destination is the base of a traffic cone, or similar. Can you recycle a traffic cone base? No: the next stop is landfill. From LCD TV casing to landfill via traffic cones might be a ten year process. This is not really recycling.

Getting to be a cradle-to-cradle manufacturer is a challenge. You have to design products that are competitive in terms of manufacturing cost and quality, and which can be separated into their constituent parts when it comes time to recycle them, but which won’t fall apart in the hands of the user. You also need to know what those parts are made of. This is more of a problem than you might think. When you buy the feedstock for plastic components, you get shipped some boxes of granules; these, when heated appropriately, will flow nicely inside your stamping tool and set into the shapes you want. What’s in those granules? The manufacturer isn’t necessarily saying. To help get around this problem, there’s the interestingly named Environmental Protection and Encouragement Agency (EPEA). For a fee, EPEA will contact a materials manufacturer and get them to say, in confidence, what’s in their product. Without giving anything away, EPEA’s chemists will then say if that product is suitable for C2C manufacturing. As a work-around, this does seem to … work.

A while back, Dsquared suggested to me that the concept of embodied energy isn’t a goer. If your aim is to select products in the interest of sustainability, you have to contend with the possibility that you simply won’t know what the true embodied energy value of a product is. C2C manufacturing has a different emphasis. It aims at closed loops; all of the stuff just goes round and round.

Gazprom in Serbia: How’s that working out?

A year and a half ago, I wrote a post about the sale of Serbia’s oil and gas company, NIS, to Russia’s Gazprom. Here were the high points:

— Gazprom was able to buy NIS for much, much less than its real value — 400 million euros for a company whose value was estimated to be more than 2 billion euros.

— The reasons for this have never been made clear. It may have involved corruption and/or a political quid pro quo for Russia’s support on Kosovo. Or perhaps the last Serbian government was just really bad at negotiating.

— The purchase was made without competitive bids, even several other large oil companies expressed interest, and two publicly stated that they would bid at least 2 billion euros.

— The deal gave Gazprom 51% ownership, but included provisions that ensured its total control. For instance, the Serbian government — which owns the other 49% — cannot sell its shares to anyone without Gazprom’s consent.

— Gazprom promised to assume NIS’s debts, which are about 600 million euros, mostly owed to the Serbian government, and also to invest about 500 million euros in NIS.

— Gazprom committed to building the South Stream gas pipeline through Serbia — giving Serbia transit fees — and also building a large gas storage facility at Banatski Dvor.

Okay, so. All that was a year ago. Since then, the deal has been signed and finalized. Gazprom formally took over NIS early this year; six of the ten members of the company’s board of directors are now Gazprom appointees, as are the Chairman of the Board and the company’s new general director. Although it was the last (Kostunica) government that negotiated the deal, the current (Cvetkovic) government has accepted it; three of the four Serbian board members are politicians involved with the current government.

So how’s it working out? Continue reading

The invisible hand of letting people know who’s boss

Edward links downblog to a piece by Ronald Bailey in Reason magazine. My precis of Bailey’s thesis runs something like this. Having children, per se, isn’t so expensive. Educating them, on the other hand, is very expensive. This is because the levers of a modern, free market, rule of law, enforcement of contract society are complicated and you need a lot of training in order to know which lever to pull, and when. In actuality, lack of training generally leads to denial of access to said levers and hence a lifetime of poverty, and no one wants that for their child. Hence the expense of education deters prospective parents from actually going ahead and having children; this is the ‘invisible hand of population control’. And it’s a good thing! This is because no one wants a tragedy of the commons situation, like you’ve got in all those poor countries.

I can see the following problems with Bailey’s argument, in no particular order, and not worked through, since this is not an essay:

(1) There’s your local commons, and then there’s the global commons. Further, population and global resource depletion need not be coupled; the small population of a developed society may take more in the way of resources from the world than the much larger population of a less developed society;

(2) The length, complexity and cost of education need not be coupled to the total skill demand in a society; to take a picturesque example: piano tuning is a difficult skill to acquire, but it’s easy to imagine a society that generally prefers simpler instruments and has no pianos at all;

(3) In actuality, the length, complexity and cost of education is often to do with status display; in many (most?) societies, education is a positional good purchased by the parents;

(4) The cost of education need not be the only, or even the main deterrent to having children; it’s possible to find low birth rates in actual societies where most (or even all) formal education is state provided (and hence, obviously, the cost of that education is shared between all taxpayers);

(5) It’s fairly well established (I think) that freedom is not something that necessarily flows from rule of law and enforcement of contract; it’s possible to have a society where many citizens have relatively little freedom yet all contracts are honoured;

(6) In the context of (5) above, we should probably ask what Bailey means by ‘economic freedom’; his gist seems to be ‘those freedoms enjoyed by the better off’;

(7) A society where a majority composed of not so well off people is deterred from raising children – and where, by contrast, a few well off people have lots of children – is not necessarily a very nice society. I’d suggest there might be gentler ways of avoiding tragedy of the commons situations.

On being the right shape

Obsessing over strategic geography has a rather… twentieth century feel to it. Few now worry about the control of the Suez Canal, or the rights of warships to traverse the Bosphorus; far-flung scraps of land once valued as coaling stations and choke points are now important chiefly as tax havens and political distractions, and the various growths of Railway Imperialism have largely decayed back into the soil on which they were imposed. But there are a couple of areas that still pursue this approach to life. One, of course, is the subject of pipeline politics, amply discussed by m’colleagues, for example, here. Or here. Or here.

The other doesn’t get quite so much attention: Continue reading

gaseous Goodhart

China’s top climate change negotiator wants the Chinese export sector to be excluded from their targets, and “consumers to pay” instead. This is not good news.

For a start, the tactics. It means accepting the principle of letting some special interests off. We know, after all, that there will be the mother of all lobbying wars about this, all wanting their pet interest group to be left out. Therefore it’s best to hold a firm line as long as possible, minimising the damage. Also, even if this isn’t just special pleading, the output (no CO2 target for much of Chinese industry) is identical to the effects of special pleading. So it’s worth treating it as such until proven otherwise.

After all, if it proved to be honest, you can always make a gracious concession later; but you can’t take back concessions you made earlier so easily.

Secondly, there is no end to this argument. If they claim a right to export all they like and bill the customer for the CO2, then for this right to be effective, they must also have a right to import capital goods – machine tools, Siemens power stations, that kind of stuff. Wham, half the German engineering sector wants a note from mum too. What about the primary exporters? And come to think of it, if it’s the consumer’s fault, some of that responsibility must rest with the people who lent them the money…which for the dollar zone was the People’s Bank of China, State Administration of Foreign Exchange.

More seriously, it’s a really bad idea on the substance. The mechanism of action is something like this – imports containing a lot of embodied CO2 would be taxed and would cost more, so people would buy less carbony ones, and Chinese exporters would stop producing so much CO2. But it’s a very long set of tongs; too many moving parts. Unless the energy used in the product is a hell of a lot, the tax component won’t be that great compared to the range of prices for that kind of product. The exporter might not notice, or might attribute the drop in sales to something else.

Just taxing fossil fuel at the point of sale, already, has the huge advantage that it falls directly on the user, who has the most control over how much gets used, and it’s explicitly and unmistakably down to the fuel.

Further, how many SKUs (Stock-Keeping Units – individual products) does the Chinese export sector produce? It’s got to be in the tens of thousands at the least. Under this proposal, each one would have to be carbon-audited accurately and regularly and assessed for taxation on that basis. It is far from clear whether the importing state or the exporting state would do this. Just taxing fossil fuel, already, involves less than a dozen SKUs, which happen to be bulky, smelly, heavy, or black and dusty, and therefore difficult to hide on a big scale.

And every manufacturer would have a fine incentive to lie about the CO2 emissions associated with their product; if you can bring yourself to put melamine in the milk, you can surely lie about your electricity bill. It’s the worst Goodhart’s Law violation I’ve seen for a long time.

But here’s the really weird bit. Whether the CO2 tax is applied at source as a fuel tax or a cap-and-trade system, on crossing the border like a tariff, or at the point of final sale like VAT, the economic upshot is essentially the same; goods subject to it would cost more than goods not subject to it, and goods subject to it that contained more CO2 would cost more than ones with less.

Either yer man is hoping that the importing states wouldn’t bother to impose the tax, or else his argument is actually indistinguishable from the one he’s trying to shoot down – that there should be a tariff on goods from states that don’t implement a CO2 tax.

Alternatively, he’s just talking his book, setting a negotiating marker in a cost-free fashion. In which case, time to pick it up and run it back.

If this leaves you in need of an optimism fix, have a look at this GSFC feature. The “shorter”: ozone depletion would have made it unsafe to go out in the sun for as long as five minutes essentially everywhere by 2065, but we, ah, fixed it. (Via German ScienceBlogs; if you speak German there’s also a fascinating interview with Paul Crutzen here.)

More on ETS success

Various commenters suggested that the 3% cut in EU CO2 emissions was essentially down to the recession. Here’s a chart from the report I linked to, which gives a rather different analysis. I don’t have the underlying figures, so there are limits to how far I can critically engage. But the take-out is that fuel-shifting or saving driven by CO2 pricing and renewables development were much bigger contributors than change in industrial capacity utilisation, and better reliability at British and Spanish nuclear power stations was a surprisingly big factor.

Contributions to net CO2 emissions change in Europe

Europe Cuts CO2 by 3% in 2008

Perhaps no surprise with the doomflow of neganews slinking catlike through your windows, but it looks like the EU cut its emissions of carbon dioxide by 3% last year. Worldchanging quotes an analyst report that reckons this is attributable to the European emissions trading system. I’m not so sure; what about all the cliff-diving?

However, the target of 80% reduction by 2050 means an annualised cut of 1.95%. Who would argue with a fair wind?

Gas row latest: forceful European diplomacy

In a joint letter, Martin Říman, the Minister of Industry and Trade of the Czech Republic, and Andris Piebalgs, European Commissioner for Energy, have warned Moscow and Kyiv that the credibility of Ukraine and Russia as reliable partners would be irrevocably damaged should gas supply to European consumers not be immediately resumed.

I am sure that Sergey Shmatko and Yuriy Prodan, the relevant ministers, are trembling in their boots at the prospect. Totally sure.