http://www.nytimes.com/2011/11/02/opinion/invitation-to-a-dialogue-renewable-energy.html?_r=1

In fact, his conclusions are so wrong that I spent my lunch break drafting a letter to challenge his twisted logic of fossil-fuel supremacy. Here’s my response to that letter which I also emailed to NYT (they’ll round up all letters and publish them in this Sunday’s Nov. 6 edition):

Dear Mr. Weinstein,

Your criticism of renewable energy sources is misplaced because it overlooks the simple economics of a learning curve for renewable energy technologies, and thus denies renewables a chance to be cost-competitive in the nearest future.

While some renewable technologies including solar energy garner greater support than would seem reasonable at times of austerity, this is an example of inadequate federal government policy rather than an indication of faulty fundamentals of renewable energy generation. With policy framework which reflects falling costs of generating solar energy, the US will be on its way to achieving solar PV grid parity in more locations, and sooner, then if the government decided to withdraw support as your letter suggests.

It is a fact that solar PV technology is constantly improved as it follows a learning curve in which more installed capacity translates into more efficient and cheaper panels. International Energy Agency estimates a learning rate of 20% for solar, meaning that historically every doubling of installed capacity resulted in a 20% decrease in PV module costs. This process is inevitably leading to a moment when solar PV will be cost-competitive with fossil-fuel generation without any subsidies, or at grid parity with them.

Grid parity for renewables will happen when the cost of producing a kilowatt-hour of electricity from a renewable energy installation equals the cost of producing a kilowatt-hour by a coal or gas-fired plant, which, despite its lower upfront costs, requires fuel input whose price is set to increase, according to industry consensus. However, the less we support renewables today, the further we postpone this moment into the future. In other words, we need to double the installed capacity to a point when renewables become economically viable without subsidy.

I spent four years going to college in Berea – a rural Kentucky town located right in the heart of Appalachian coal-mining industry. Berea’s students and locals have first-hand experience of mountain-top removal technique widely popular in coal mining in Appalachia, of associated environmental devastation and powerful stories of methadone addiction and abuse by coal miners who were physically disabled during work. Does Maguire Energy Institute offer helicopter tours over swaths of debris left after whole mountains are blasted with explosives during mountain top removal? It probably does not, as each and every member of its Board comes from oil, gas and coal industry and none from clean technology or renewable energy field. Environmental Club at Berea College, on the other hand, does offer such tours, and a life-changing experience is included in tour description!   

To me, shale gas and oil exploration and fracking are mountain top removal on steroids. When Rick Perry promises to create 2 million jobs by lifting federal restrictions on exploration and production, do not be impressed: cleantech can create more than that, without ever becoming permanently reliant on subsidies and doing no damage to the environment or people involved. 

The main cause for concern regarding the continuing success of this and other companies focused on oil substitutes is, well, oil prices. They must stay high enough long enough to send a strong signal to anyone who makes long-term infrastructure or energy investment decisions. Demand for oil is non-elastic in the short-run, and is more elastic over a longer horizon as people and companies need time to adjust their consumption away from oil towards other sources.  This is why  OPEC countries with greater oil reserves are not interested  in oil price spikes, which can literally wipe out those countries’ chances of extracting oil in the following decades.

Now think Southern Texas, where oil companies have recently discovered onshore oil field Eagle Ford, which together with 20 similar fields can increase the US oil output by 25% in the next few years (NY Times).  For the cleantech-savvy people, this is a step back. Increased production will depress oil prices for some time, postponing a transition to low carbon economy even further into the future. Drilling in Texas is already going full steam ahead. One of the arguments in favor of drilling you will hear on main street is the creation of 2 million jobs, directly and indirectly. Any kind of massive, technology- and labor-intensive activity will create jobs. If we invest into cleantech companies, those will….create jobs as well! The consequences will be different. To extract oil from Eagle Ford, developers need to use fracking – breaking up solid materials with water and chemicals may lead to water contamination. Cleantech and energy are exactly that – clean.  Interestingly, Texas is also home to a great deal of wind installed capacity in the US.

It feels like I have been wearing these dental braces forever. Finally, I am going to have them removed today. I got them about two years ago, after having waited since 1946. At that time, I was surprised to receive a phone call from a woman who told me, in a very serious voice, that my turn came up, when could I come to receive this “corrective dental treatment”?

To be honest, I did not even remember getting on the waiting list in the first place, even though my mouth always needed a little tidying up. At age five, my front teeth looked like an overcrowded class picture, with students half turned to the camera instead of standing straight. Then, after the war ended, there was no chance that the city which had been damaged so badly would allocate resources to sort out people’s dental problems.

Shurik, my good friend with whom I studied at the Conservatory, told me it would be a good idea to demonstrate “active participation in civic activities” lest the authorities start asking us all kinds of questions. So we applied to join the Party, and I became a regular at the library. It is possible that I got on the waiting list for braces then. What happened to Shurik? He got approved for Party membership almost immediately. After all, he studied percussions at the Conservatory, had a guttural voice and spoke in short sentences.

I never heard back from our local political officer regarding my application. But if you ask me what makes more sense in life, Party membership or a decent-looking mouth, my answer would be, it depends on your surroundings. Every morning, I drive a bread truck to bread stores around Odessa. I smile at dozens of pretty women who work at pastries. They smile back, more playfully than any girl I had met at the Conservatory, while they count loaves of bread and buns on my delivery rack. Some of them smile in a way that suggests they would not mind smiling at me after work, sitting on a bench in some park and sipping lemonade. If only I got this much attention from the Conservatory girls, I would probably be a professional piano player by now.

As I figured out two weeks into my current job, a smile could also help me get away with being late or forgetting my delivery confirmation sheet. I needed straight teeth, not membership in the Communist Party.

So when I wound up in a dentist’s chair and saw metal rods which would become a part of me for the next two years, it felt just right. The dentist was an old stout man, clean shaved and with a mole the size of a big raisin on his left ear. The mole looked like a bug that could fly away any moment.

It took me a while to get used to my braces. Girls at one bread store started calling me “nash krokodil’chik”, which sounded quite endearing. What is still a mystery to me is that this nickname stuck, and soon everyone at the factory called me “nash krokodil’chik”. The mysterious part being, these girls had never been to the baking factory.

Today is a warm April day and I am walking to the hospital. Third floor is where they have rooms filled with dentists pulling people’s teeth. But not mine.

Instead of walking, I float to the third floor effortlessly. The receptionist is a sixty-something woman who suddenly starts looking very busy as I approach her.

“Good morning. My name is Rosenfeld. I am here to see doctor Alekseev.” She raises her face from the notebook and looks at me. I can not see her eyes through her thick glasses. She puckers her lips and shakes her head slightly without saying a word.

“Albert Rosenfeld, braces.” I tap on my lower jaw to make the point. My gesture seems to stir her curiosity so she starts nodding.

“This is not possible. Doctor Alekseev died three months ago,” she says finally.

I was prepared to be told to wait. Fifteen minutes, maybe an hour. But I did not expect to hear this. I do not know what to say: “My condolences?” And is it too rude to ask who is going to remove my braces now? She breaks the silence again.

“If you were one of his patients, you would have been transferred to doctor Aleksandrov. We do not have any records for Rosenfeld. We can not give operations to patients who did not receive treatment with us before.”

A wave of frustration is making me hold my breath, as if my own body has to be completely still and breathless to process this news. I realize that I should speak up because this is a mistake, but I can not say a word. This is absurd. Yet I feel sad because something is lost, irreversibly.

The last time I felt this way was when my girlfriend Natasha broke up with me. The moment she told me we did not have to see each other anymore, I thought a power pole would knock me down right there, not because I wanted to die but to demonstrate that nothing lasts.

Finally I gather my breath.

“When I last saw doctor Alekseev in January, he told me to come back in April. I can show you my passport.”

“No, we do not have any records with your name. The hospital does not treat patients like you.” I notice a mole on her right ear, just like the one Alekseev had. “Tovarish Rosenfeld, you have to leave,” she puckers her lips again.

It is strange that she sounds like that woman who invited me in for treatment two years ago. I look at her mole again and realize that she will not change her mind. But if power poles are not forever, there should be a way in this universe of getting rid of my damned braces.

Bacton is an example of a dramatic shift in the British energy policy which resulted from a strong political commitment to energy security and competitiveness. This “dash for gas” ushered a transition from coal to gas, changing the share of natural gas in electricity generation from 1% in 1990 to roughly 40% in 2004[1]. As a result, greenhouse gas emissions from electricity production and manufacturing fell 8% during that time[2]. In this regard, the Bacton Gas Terminal and three dozen gas-fired power plants built since the early 1990s are a statement of the British government’s ability to transform its energy sector, which it did quite radically.

The worries of rising gas prices aside, “dash for gas” can help us address an important question about how a government can use its leverage with the energy sector in order to provide society with sustainable energy today and in the future.

When Margaret Thatcher’s administration liberalized the gas market in the late 1980s, it did not do away with regulation. Quite to the contrary, it created several new regulators, such as Ofgem, which facilitated the emergence of a large and liquid gas market boosted by an anticipated growth in gas demand. Today, stable cash flows from the British gas sector sustain adequate investments into gas generation capacity and transmission. For example, the National Grid reports that investments in its pipeline projects for the next decade have been completed as scheduled[3]. Policy design which is geared toward market liberalization but which also gives the governmental regulator a strong mandate to shape market forces is a good roadmap for future energy reforms.

The liberalizing EU electricity market has not been as successful in attracting investments into new and cleaner energy technologies. A more fierce competition in the wholesale electricity market is driving wholesale prices down, encouraging power producers to rely on the most cost-efficient (at this moment, fuel-based) plants for generation[4], at least in the short-term future. The effect of deregulation on retail prices has been ambiguous[5], yet there has been a growing demand for electricity in the EU. The mergers and consolidation of big utilities in anticipation of a single EU electricity market can weaken independent power producers which favor clean energy[6] and push renewable energy investment to the bottom of energy-related investment decisions.

This is not to say that big utilities are not spending money on new wind farms and solar installations. After acquiring power generators in Scotland and the US, the Spanish heavyweight Iberdrola committed to investing a large sum into wind farms and carbon capture in the UK[7]. Ironically, however, electricity market liberalization seems to have made it more difficult for smaller energy generators to enter the market.

To counter ever-growing demand for electricity and boost renewable energy, a government must take a more active role in managing and, eventually, reducing the demand for electricity. This new policy should go beyond the traditional demand-side management which often excludes energy efficiency measures which do not pay off in electricity savings in just a few years after implementation. Instead, a government should take a long-term view of the benefits of such action to the whole society, and distribute the burden for financing this policy accordingly. In other words, a reduction in demand should be financed by all taxpayers rather than electricity consumers.

Very few other sectors of economy tolerate active involvement of a government in controlling the demand. In the end, no producer likes to be told to produce and sell less for the sake of a fuzzy public interest some fifty years down the road. And yet such meddling can be justified if the whole system serves a purpose which its participants approve. Keeping longer waiting lists for costly non-emergency surgeries in countries with universal healthcare or requiring banks to educate their borrowers about the responsibilities of taking out a mortgage are governments’ efforts to curb healthcare costs or to protect consumers from predatory lending.

Taking on a sprawling electricity demand without alienating the utilities (which will be critical in implementing this policy) will require a lot of political savvy. But this might just be what we all need. Utilities view growing demand as a positive trend because their profits are tied to their sales. Connecting their profits to the number of customers served under a comprehensive energy efficiency program will move things in the right direction. Under a scheme proposed here, utilities will receive financing from the government to run demand-reducing programs. This will leave them with more cash to build new renewable energy capacity.

If these reforms work, there will be no single hallmark similar to the Bacton facility. Instead, we will live in buildings equipped with fluorescent bulbs and with washers switched on by smart grid meters and running during night time. Nothing breathtaking at first sight, this will be a sea change in regard to how much energy will be produced and consumed. And though some may argue that markets themselves are constantly evolving, “smart” animals best capable of innovation[8], a government is in a better position to drive this much needed innovation in a decisive manner.

There are two political parties, one of which reads the Constitution in such a way as to suggest that almost everything that happens on the federal level is against the Constitution or against individual liberty. This is more serious than just bitter partisanship. The Republicans, as long as they can back their arguments by ultra-conservative interpretation of this 200-year-old document, will continue to have a valid argument against ANYTHING that the Democrats want to do. The Republicans have hijacked the American Constitution. The Constitution became a liability which prevents  the country from making any progress in education, healthcare, or achieving equality.

The most recent issue that proves my point is the debate over healthcare law.  After the law passed both the Senate and the House of Representative, many people thought some states would try to prove this healthcare law unconstitutional. They were right. In Virginia, Attorney General Kenneth Cuccinelli filed a lawsuit against the federal government on account of healthcare law, and this Monday December 13, 2010 Virginia federal Judge Henry Hudson ruled that the requirement that all Americans purchase health insurance by 2014 is unconstitutional.

http://www.nytimes.com/2010/12/14/health/policy/14health.html?scp=1&sq=Judge%20Henry%20E.%20Hudson&st=cse

Both of these people are conservatives. The most upsetting thing is, the Republicans are rallying against the healthcare law after the Democrats included a market-friendly feature into this reform. The law would require individuals to buy their health coverage from one among many insurance packages, most of which would be offered by non-government owned insurance companies.  This sounds like trying to accommodate at least some of the Republicans’ concerns. And what do the Democrats get in the end? The federal judge’s rejection, based precisely on the idea that Congress can not require an individual to enter into a market transaction with a private company. The irony is, it was probably the Republicans who insisted that insurance companies and hospitals remain private entities! What is this:  a ridiculous amnesia on the Republicans’ part or a political and policy crisis? Or is the US becoming ungovernable, that is, unable to pass any meaningful, much-needed reform without taking two steps back?

One more thing. Many Republicans will claim that because they are involved in healthcare, they have a special insight into the issue. Some of these statements are a bit misleading. Take Rand Paul, the Republican Senator-elect from Kentucky. He runs his private ophthalmology practice in Bowling Green, KY. His campaign website states that this experience gives him the expertise and confidence to be involved into healthcare reform. I do not have any medical education, but isn’t it self-evident that a small private practice does not expose you to the stress and pressures of working as a therapist (or general practitioner) in a big hospital, where you can actually see many problems (and possible solutions) to the absence of universal healthcare coverage?

http://www.latimes.com/news/science/la-sci-mars-one-way-20101116,0,3966661.story

http://www.nytimes.com/2009/09/01/opinion/01krauss.html?ref=mars_planet

A friend joked that it would be almost the same as sending people to Australia, about four hundred years ago….clearly both trips have their challenges!

The suggestion to let people stay on Mars will give a rise to even more sci-fi novels. And since our knowledge of psychological changes in astronauts on a one-way trip to Mars is limited, there is no shame in using these space-themed sci-fi novels to map out what could happen to the astronauts’ psyche. Think of a real Robinson Crusoe on Mars coming live: http://en.wikipedia.org/wiki/Robinson_Crusoe_on_Mars

What I find the most fascinating is the qualifications that would make an astronaut fit for such a mission. First, these astronauts will probably have to be older, around 55-65, but not much older so they can survive the long haul. Still if you are 65 and are in a good condition, you can live up to 85 or 90….looking at the possibility of 20 years on Mars! Second, one of the selection criteria will be a psychological fit, so that the person can handle the trip and the new life with minimal difficulty. In other words, making sure you won’t go nuts on the Red Planet. But to want to live the rest of your life hundreds of light years away, you have to be really crazy about the whole idea! In Russian we have a story of Belka and Strelka, two dogs that were sent on a mission in space in 1960. There are stories, jokes and even a song about them, and they have become a staple of the Soviet Russian folklore. When I asked my mom why people did this to dogs, she said it would help us learn about the space – an answer that did not satisfy a six-year-old who thought that was just plain cruel.  The dogs did not choose to do it, but people can. So I wonder what it might feel like to make that decision, not that many of us will have to face this dilemma in their lives.  It is all incredibly interesting but I don’t think NASA can count on me to man (or rather, to wo-man) that mission.

The only thing that seems unrealistic is Carrie’s behavior as she and her husband Big try to figure out how to spend their time together now that they chose to remain a child-free couple.  Carrie thinks it is very important not to become a boring married couple. In her eyes, a new television that Big buys as a present for their second anniversary symbolizes all boring married couples. For Carrie, keeping the sparkle (not the television) is key to marital success, so she is against watching TV or eating food at home instead of going out.  What she really seems to want is her husband’s undivided attention, never to be shared with a TV or other women, like a hot Spanish banker played by Penelope Cruz. This sounds like a very selfish and unreasonable demand, but Carrie always freaks Big out with her unreasonable and somewhat selfish demands, so this is nothing new. She has already built a model of what their marriage should and should not be and now this model is not to be compromised. She is definitely a powerful woman because she thinks and acts independently, and more importantly, brings her own paycheck home. 

What is surprisingly disheartening, then, is that Carrie is so emotional and at the same time analytical in issues related to  marriage that she can not be happy with a solution “good enough” : she always strives for the best and can ruin the whole thing. She has all these competing ideas in her head which makes her a very interesting writer. But this also keeps her from making straightforward decisions or being decisive and steady in her marriage in general, and so it is Big who acts like a mature adult, steps in and makes things alright. After his wife goes away for vacation, meets and kisses her ex-boyfriend (and tells Big about that), he has the persistence and good faith to make up with her instead of acting hurt (which he certainly is).  (He works in finance after all, and can make decisions cold-heartedly).  

In a way, we are back to the traditional male-female roles in a family, as if there have not been fifty years or so of feminist movement – the stuff that all four Sex and the City girls appreciate. So the guys are still calling the shots, be it in the conservative Abu Dhabi where women are not allowed to show a lot of skin and where Samantha gets in trouble for  ”just kissing” a very attractive Dane on the beach, or in New York where Carrie and many other former single girls succumb to their fantasies and have to rely on an emphatic yet caring guy to make their relationships work.

Earlier this week I went to a conference on finance organized by the University College London Investment Society. It was a day-long event featuring directors of research departments and country directors of GS, Morgan Stanley, Societe Generale and JP Morgan, guys from hedge funds, and a whole army of investment bankers.  I thought it would be refreshing to get a perspective on the economic crisis from the people whose jobs have been most intimately connected to it. Except that it was not refreshing at all to hear all of them blame central banks (and European Central Bank in particular) for creating a huge money supply in the run up to the crisis and lowering interest rates below those that would normally prevail in the market. The amount of consensus within this industry amazed me. Of course I am simplifying each presenter’s speech, and of course there were some rare gems of self-criticism and rejection of aggressive proprietary trading.  The rest of it was smooth and a no-brainer. One participant repeated “Austrian School of Economics”  about twenty times to show his respect for a school of thought that rejects Keynes’ governmental spending and advocates a privatized money production (as opposed to  money supply controlled by central banks).  Another presenter focused on how important it is to mention your hobbies on your CV as you apply to be an investment banker. “I wrote that I life golf, and that helped me get my first job….”  Wait, doesn’t that sound a bit too familiar? Five years ago, I was an undergraduate student sitting at a resume-writing workshop in a small college in the US, and a guy from Cornell U business school told me exactly the same thing….the only difference being, it was fly-fishing.  The amount of groupthink in the finance industry, at least as represented at our conference, is incredible to me. Everyone tries to recommend that we read the same books “Liar’s Poker”, “Perfect Failure” as if there is some magic mantra that you can recite which will make you a better decision-maker…And don’t forget to watch the Enron play at the theatre this season.  I’m sure that all of these guys went to Cambridge, Oxford and really good business schools. For some reason however they imitated each other by attempting to add a unique quote, a hobby or a joke to their presentations, only to highlight their rambunctiously competitive personalities and shortage of originality.  

The only relatively independent mind that briefly appeared on the horizon was Savvas Savouri from the toscafund, a hedge fund that uses synthetic economic models worked out by Savvas and his team of 5 math egg heads to analyse and predict price movements (not to confuse with technical analysis). Savvas surprised everyone by saying that “in finance fuck ups a norm”, and that it is insane to allow people without solid degrees in finance and math to rise to the top of investment decision-making. His desire for more seriousness is appreciated. But when asked why he does not work to  transform this mess into a highly professional and serious deal, Savvas answered that he would rather make money by working within the system (that is achieving better returns with fewer resources) than openly working against the system. A very cool guy with an interesting vision though, making money by being a contrarian. It all ended with a panel of discussants musing over a question whether London is A Waning Financial capital. Guess what all five of them said. Of course it’s not!  This is so human nature but monkey nature, too.