Author Archive for Steve Darden

Rocket Racing on the next 4th of July?

I hope so. So far the RRL has been long on hype, short on participation. Here’s an encouraging update at Space Prizes:

Rocket Racing League primed for blast off - Network World - This is a good time to get people thinking about the RRL, which is planning a big event at EAA AirVenture in a few weeks. From the AirVenture site:

The flight activities at EAA AirVenture will begin on July 29 with a single-ship demonstration to open the afternoon air show. On August 1-2, the first full demonstrations of the Rocket Racing League concept are planned, using large outdoor screens to showcase how competitors will fly a “raceway in the sky” via in-panel and 3-D helmet displays during actual competition. All of the flights will also highlight the innovations in aircraft and engine technology that makes this new competition possible.



Along with the public aircraft unveiling and demonstration flights, the Rocket Racing League is scheduled to make several other presentations throughout the week, including an evening program at EAA’s Theater in the Woods on Monday, July 28. During these presentations, the Rocket Racing League will present the “inside story” on the creation and development of this entirely new concept in aerial competition.

The carbon productivity challenge/ Curbing climate change and sustaining economic growth

McKinsey continues to publish more materials from their energy policy scenario planning. This one is subtitled “Curbing climate change and sustaining economic growth” — the emphasis is mine. Excerpt:

Any successful program of action on climate change must support two objectives—stabilizing atmospheric greenhouse gases (GHGs) and maintaining economic growth. Research by the McKinsey Global Institute and McKinsey’s Climate Change Initiative finds that reconciling these two objectives means that “carbon productivity,” the amount of GDP produced per unit of carbon equivalents (CO2e) emitted, must increase dramatically.

To meet commonly discussed abatement paths, carbon productivity must increase from approximately $740 GDP per ton of CO2e today to $7,300 GDP per ton of CO2e by 2050—a tenfold increase. This is comparable in magnitude to the labor productivity increases of the Industrial Revolution. However, the “carbon revolution” must be achieved in one-third of the time that economic transformation took in the Industrial Revolution if we are to maintain current growth levels while keeping CO2e levels below 500 parts per million by volume (ppmv), a level that many experts believe is the maximum that can be allowed without significant risks to the climate.

The macroeconomic costs of this carbon revolution are likely to be manageable, being in the order of 0.6–1.4 percent of global GDP by 2030. To put this figure in perspective, if one were to view this spending as a form of insurance against potential damage due to climate change, it might be relevant to compare it to global spending on insurance, which was 3.3 percent of GDP in 2005. Borrowing could potentially finance many of the costs, thereby effectively limiting the impact on near-term GDP growth. In fact, depending on how new low-carbon infrastructure is financed, the transition to a low-carbon economy may increase annual GDP growth in many countries.

If we do not increase our carbon productivity, the consequences will be stark, the report suggests. Meeting commonly discussed abatement target would require a per-person carbon budget of 6 kilograms of CO2e per day. If one had to live on such a carbon budget with today’s low levels of carbon productivity, one would be forced to choose between a 40 kilometer car ride, a day of air conditioning, buying two new T-shirts (without driving to the shop), or eating two meals. So without a major boost in carbon productivity, stabilizing greenhouse-gas emissions would require a major drop in lifestyle for developed countries and would hinder economic development in low income countries.

This is some of the best current work on policy options.

Nordhaus: The Challenge of Global Warming - Economic Models and Environmental Policy

I’ve referred previously to the Nordhaus research published last year [PDF of summary paper]. Neil Reynolds has a useful concise summary of key points in the July 2 Globe and Mail:

…In a brilliant analysis of carbon strategies - The Challenge of Global Warming: Economic Models and Environmental Policy, published last year - Dr. Nordhaus observes that the complexity of global warming rules out absolute certainty of any kind, whether academic or ideological. “Whatever goal we set will probably be incorrect.” Given this caution, it is essential to adopt a strategy that can be quickly adapted to changing circumstances and changing technologies, he says.

Dr. Nordhaus notes that a single technological advance in 2050, or in 2100, could render redundant trillions of prematurely invested dollars. This is one of the reasons why the most aggressive climate change strategies - the celebrated Stern Review proposals, the controversial dictums espoused by Al Gore - badly flunk the Nordhaus computer analysis test.

Chevy Volt: “…General Motors needs this car”

If GM was seeking to seize the world’s attention and upstage Toyota, it had succeeded, spectacularly. But now it had to build the car. …the battery for the Volt doesn’t yet exist, at least not at a mass-market price…

Just in time invention” — that’s GM’s challenge with the fast-track Volt project. The company has become committed to a new vehicle that could lose money on every sale, lots of money. The gamble is that volume and the learning curve will bring down the cost of the batteries so GM can sell the Volt at Chevrolet prices. I hope it works out — it would make GM a very different company than the loser it is today.

…In late March, at the New York auto show, I checked back in with Andrew Farah, the Volt’s chief engineer, and asked for an update. “Still just as bad as before,” he said. When I mentioned that another executive had said the underbody was a well-proven design that didn’t need much testing, he shot me a look of disbelief. “There’s a big gaping hole down the center of this car where the battery goes.”

All around us, at the Chevrolet stand, a crowd was forming. Volt fans from as far away as Arizona, Colorado, and California had made the pilgrimage to question the team about the car.

“Maybe what we’re going to learn out of this isn’t some technological thing,” Farah said. “Maybe what we’re learning is to be more comfortable with a higher level of risk.” I asked if he did feel comfortable with the risks the program was taking. He thought for a moment. “I realize there’s no other way to do it, so I am comfortable with it.” Was he holding up under the pressure? He thought again. “It’s my job to hold up.”

As the event began, I melted into the crowd. Next to me was a 23-year-old grad student who thought the car was historic; next to him, a 21-year-old network engineer who said he loved the car and would buy one now if he could; next to him, a 59-year-old foreman (and grandfather) who said, “I just want to be a part of this.” None of them were car people or GM people, at least not before the Volt. Glancing at the concept car on the dais, I realized I was looking at the Barack Obama of automobiles—everyone’s hope for change.

At the podium, Bob Lutz was saying, “I think the whole company has now learned the lesson that when you set out and do bold things, you win, and when you’re cautious and let someone else do the bold things, you lose.” The crowd applauded warmly. A voice called out, “You’re absolutely right, Bob!”

Lutz said, “It may be years before we make a dime on this product. Years! And the board said, ‘Don’t even talk about profitability. General Motors needs this car.’”

I didn’t know about Korean battery company Compact Power. If they can manufacture in quantity, the battery technical challenge may have been met — a safe battery that fits in the car. Cost? And the A123 design could be better…

During this visit, I found the technical center brimming with optimism, and the battery lab was no exception. One of two suppliers, a company called Compact Power (a subsidiary of a big South Korean chemical and advanced-materials company, LG Chem), had delivered two copies of its version of the battery, and on the bench they were testing brilliantly. “They may not look beautiful,” Turner said—the battery was a six-foot-long T-shaped object from which wires, clamps, and circuit boards protruded—“but as far as the data goes, they’re the best I’ve worked with.” Heat is a problem with lithium-ion batteries, but this one was staying cool even when run hard—and the cooling system had yet to be attached.

Moreover, improvements were being incorporated as fast as they could be conceived; the battery would be on its second generation in January, its third in June. “It’s incredible,” Turner said. “The design they’ve come up with for thermal changed 10 times before they delivered the first battery.” And all of this was before the arrival of a competing battery that might be as good or even better, designed jointly by the Massachusetts-based company A123 Systems and the German company Continental A.G. “We’re inventing and creating on the critical path,” Turner said. He was using the industry jargon for the countdown to production, when time is money and delays can cost millions. “I’ve got guys trying to release things before they’re actually invented.”

When Rauch returned to the battery project in February, things “the picture looked different”.

…And how was the project going? “I’d had nothing but phenomenal testing experiences last time you were here,” he replied. “This time I’m more humbled.”

Marty Feldstein on food and oil prices

The situation for oil is more complex, but the outcome for prices is potentially more favorable.

Unlike perishable agricultural products, oil can be stored in the ground. So when will an owner of oil reduce production or increase inventories instead of selling his oil and converting the proceeds into investible cash? A simplified answer is that he will keep the oil in the ground if its price is expected to rise faster than the interest rate that could be earned on the money obtained from selling the oil. The actual price of oil may rise faster or slower than is expected, but the decision to sell (or hold) the oil depends on the expected price rise.

There are of course considerations of risk, and of the impact of price changes on long-term consumer behavior, that complicate the oil owner’s decision – and therefore the behavior of prices. The Organization of Petroleum Exporting Countries (the OPEC cartel), with its strong pricing power, still plays a role. But the fundamental insight is that owners of oil will adjust their production and inventories until the price of oil is expected to rise at the rate of interest, appropriately adjusted for risk. If the price of oil is expected to rise faster, they’ll keep the oil in the ground. In contrast, if the price of oil is not expected to rise as fast as the rate of interest, the owners will extract more and invest the proceeds.

…Now here is the good news. Any policy that causes the expected future oil price to fall can cause the current price to fall, or to rise less than it would otherwise do. In other words, it is possible to bring down today’s price of oil with policies that will have their physical impact on oil demand or supply only in the future.

For example, increases in government subsidies to develop technology that will make future cars more efficient, or tighter standards that gradually improve the gas mileage of the stock of cars, would lower the future demand for oil and therefore the price of oil today.

Similarly, increasing the expected future supply of oil would also reduce today’s price. That fall in the current price would induce an immediate rise in oil consumption that would be matched by an increase in supply from the OPEC producers and others with some current excess capacity or available inventories.

Any steps that can be taken now to increase the future supply of oil, or reduce the future demand for oil in the U.S. or elsewhere, can therefore lead both to lower prices and increased consumption today.

U.K. gets serious about carbon capture and sequestration (CCS)

I’m happy to see this announcement by the U.K. industry secretary. Proving out CCS is my top priority — utility execs need to know how much it costs — both capital costs and operating costs. And of course we need to know if CCS works at scale - if we cannot count on it, we are in big trouble for future emissions.

· Four energy groups to bid for demonstration project
· E.ON’s Kent coal-fired station may use system

The government has stepped up the pace of change in the battle against global warming by announcing a shortlist of four bidders pre-qualifying for its carbon capture and storage (CCS) demonstration project and outlining a proposed new legislative framework for “clean coal”.

Among the bidders are E.ON, which wants to use CCS for its controversial Kingsnorth coal-fired station in Kent, and BP, which recently scrapped plans to develop a trial project in Scotland because ministers appeared to be moving too slowly to meet its own internal timetable. Scottish Power and Peel Power are also included.

John Hutton, the industry secretary, said CCS had the potential to capture 90% of carbon emissions from coal-fired power stations and its deployment would dovetail with a wider strategy which included renewable and nuclear generation.

Sadly, the U.S. has made no real progress towards proving CCS.

TED Talks top ten

TED has produced a very enjoyable highlights video of the top-ten TED presentations based on visitor downloads. The highlights video is also available in HD 480p.

Import Genius: real time trade data

Here’s another example of innovation - brilliant. Want to know the contents of every US-arriving shipping container?

…The latest: importgenius.com, the brainchild of brothers Ryan and David Petersen, with Michael Kanko. They exploit customs reporting obligations and Freedom of Information requests to organize and publish — in real-time — the contents of every shipping container entering the United States.

There’s a neat ticker on the bottom of their page showing a trickle of these data. Watch it for a few minutes: it’s mesmerizing and provides a sometimes beautiful window into the wonders of international trade.

How might these data be useful to firms? Well here’s an example: On May 23, Ryan identified a spike in imports of a new type of device from Apple, leading him to (correctly) predict the arrival of the new iPhone. Apple’s secrecy throughout its supply chain is legendary, but not even Steve Jobs dares lie to U.S. customs.

More from the Freakonomics blog.

Informed commentary on oil prices

Just an excerpt from Tyler Cowen — recommended and resource rich:

7. The bottom line is that when it comes to the key substantive questions about the oil market - why are prices so high — the correct answer is the Lachmannian one: “expectations.” If you push one step further on that, and try to evaluate or “source” those expectations, the correct answer is “we don’t know.” Jim Hamilton hints at some of this — and the imprecision of the “inventories” term — in this insightful post.

Floods — are of course Bush’s fault

In the wake of the floods that have devastated Midwestern America, a recent CNN headline read “Insurance not required, FEMA told flooded town.” Long story short, a number of people blame the government for their failure to insure their homes against floods because the government did not require them to do so. They “said they felt misled about the risks of not having flood insurance,” and thought that the risks were “miscalculated.” As a result, legislation is now being introduced to require that all people living in levee-protected areas have flood insurance.

The problem here is not that FEMA did a bad job or that the levees were improperly built. They were designed to withstand a hundred-year flood, and this one was simply bigger than that. There is no reason to think that the risks were miscalculated; even events with very small probabilities will happen sometimes. No, the problem is much deeper. The problem is that people are relying on the government to make their decisions for them; they live in a levee-protected town, but will only make the decision to buy flood insurance if the government tells them that they absolutely must do so.

This psychology of dependency, in which “the government” is responsible for anything bad that happens, is one of the most insidious results of a big government. If people did not expect the government to have full knowledge of possible disasters, perhaps more than 28 of the families in the flood zone would have taken the responsibility on themselves…

More…






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