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Friday, December 18, 2009

Pricing Water For The Poor

Ideas & Opinions
Megha Bahree, 12.10.09, 10:40 AM EST
Forbes Magazine dated December 28, 2009

Asit Biswas says the global water crisis is a self-inflicted wound.

Asit Biswas loves to tell the story of the Phnom Penh Water Authority. It was 1993 and a new manager, Ek Sonn Chan, had been appointed to the then bankrupt utility. Of the water that it piped from its reservoirs, 72% disappeared without ever being paid for. Chan decided to chase down errant customers, among them all of Cambodia's government agencies and the Army. When asked to pay up, the officer in charge pulled out a gun. Chan retreated but went back the next day with a handful of journalists in tow. The general once again pulled out his gun. Chan cut off the water supply. The next day the Army paid its dues, and all the other agencies followed. Today the utility is flush with cash, and there is clean drinking water--the kind that can be had straight from the tap--available through the city, around the clock.

As governments across the world, and especially the developing world, worry about a looming water crisis, Biswas dismisses it as a self-inflicted wound. The problem we have, he says, is not scarcity but mismanagement. The solution to shortages is simple: "Water must have a price. Anything that is free won't be used prudently."

Biswas, 70, runs his own think tank, the Third World Center for Water Management, in Mexico City. The center gets its revenue from contracts to advise governments on water management as well as contributions from foundations and aid agencies. Given his blunt talk about water mismanagement, it's a wonder he has any paying clients at all, but he manages to pull in enough--out of fear of kidnapping threats, he won't say how much--to operate on a million dollars a year and support a full-time staff of six, adding researchers as projects require them.

Of the fresh water available today, 70% is used in agriculture, 16% in industry and 14% by households. A recent study by McKinsey predicts global demand for water will increase 40% in 20 years, and in the most rapidly developing countries it will go up by 50%. The areas that are heavily dependent on agriculture and have some of the poorest farmers, like India, sub-Saharan Africa and China, would likely be affected the most. By 2025, according to a World Economic Forum report, water scarcity could affect annual global crop yield so much that the equivalent of 30% of today's global cereal consumption would be lost, even as demand for food increases.

Calm down, says Biswas. "There is enough water until 2060," he says. "Water isn't like oil in that once you use it it breaks up and can't be reused." Water can be reused umpteen times. Improved technology has reduced the cost of desalinating seawater and treating brackish water. More efficient industrial processes--partly driven by a higher cost on usage--are also reducing water consumption in, for instance, steel plants. The main problem, he says, is that water management in most countries is abysmally poor. Governments, however, are not in the habit of attributing shortages to their own ineptitude. They are more likely to describe the problem in apocalyptic terms.

"There's a lobby that says water is a human right [and hence it should be free], and that's baloney," says Biswas. "Food has been declared a human right, and people still pay for it. So why shouldn't they pay for water?"

The poor do pay for water--pay dearly, in fact, for bad water. Where clean piped water isn't available, families in the Third World buy it from water vendors, sometimes a jar at a time. From Manila to Mexico City, they pay between 8 and 15 times as much per gallon as people in wealthy nations and get water of vastly inferior quality, Biswas says.

His solution: tiered pricing. Water should be priced based on monthly usage, with different rates set for different quantities used. A poor household would get a basic allotment at a low fixed rate but would get bumped up into the next higher rate category if it went over that amount even slightly. The next category would have a higher allotment of water usage, at a higher price. This kind of pricing would not only bring users from the gray market onto the meter at an affordable price, but would also give utilities enough cash to improve their supplies. In Phnom Penh, for instance, a household that consumes 2,000 gallons per month or less pays a subsidized rate. This water takes care of drinking, cooking and some hygienic needs. (An average household there has eight people.) Households in the next bracket up pay two times as much for all their gallons used.

While the global average for unaccounted-for water--that is, the difference between the amount of water that's pumped from the reservoir and the amount that is billed for--is about 30%, Phnom Penh has brought it down to 7%, much lower than, for example, London's 27%. New York City claims 6% is unbilled.

Biswas, who grew up in Orissa in southern India, graduated from the Indian Institute of Technology in 1961 with an M.A. in water resources engineering. With few job prospects in a then closed economy, he went to London with $12 in his pocket, the maximum allowed in foreign exchange. Within three days he'd found a job in Liverpool to design dams, but he had to take an advance on his salary to buy his train fare. A year later he joined Queen's University in Canada as a visiting professor. In 1968 he joined the Canadian Civil Service, at its request, to conduct water studies for the national department of natural resources. From the late 1970s he was an advisor to Mostafa Kemal Tolba, the executive director of the un Environmental Program, until founding the water management think tank in 1998.

Biswas blames part of the world's water problems on political interference. India, for instance, under the tutelage of the World Bank, instituted in the 1970s a policy of free electricity for farmers. This was a precondition for loans from the bank to develop the nation's agricultural sector. However, once the farmers got this electricity, the pumps were running nonstop, drilling deeper wells and depleting the water tables. Now, after decades of free electricity, farmers do not want to pay.

Rather than giving water or electricity away, Biswas says, the better way to help farmers is to help them get more crops per drop. This could be done by educating them on the ideal amount of water required for their crops, providing them with higher-yielding seeds and better fertilizers.

The other part of the solution is to improve roads, trains and storage bins so that less of the crop is wasted. India is the world's second-largest producer of cereals and vegetables, but half its output is lost before it gets onto the consumer's table. India processes (freezes, cans or dehydrates) only 2% of its fruits and vegetables, a tiny fraction in comparison with China (23%), the Philippines (78%) or the U.S. (65%).

Governments "should be thinking of increasing availability of food per person," Biswas says. "A country like India has very limited extra good land available, but let's look at other options and not be obsessed with the current trend that we need more water and land to produce more food." The world can keep up with its historical rate of increase in food production of about 2% per year, he thinks, through technological gains. For example, the International Rice Research Institute in Manila is working on rice strains that can stay in floodwaters for three to four weeks, while some companies are developing crops that will be drought- and pest-resistant, and even crops that can grow in saline water.

"Most of my clients realize they cannot continue business as usual," he says. Indian Prime Minister Manmohan Singh told him that one of the critical issues on his agenda was water security, especially for the poor, since agriculture contributes a significant 18% to the GDP. In the Indian state of Gujarat the chief minister has been gradually increasing the price of electricity for farmers, and the state utility is finally breaking even after years of running in the red. Singapore's former prime minister Lee Kuan Yew made water a priority, and today the city-state treats all wastewater and desalinates seawater.

Ideally, water, or any scarce good, should be priced at its marginal cost. If the last gallon supplied costs a penny to acquire and deliver, then every gallon should be priced at a penny, even if some of the supply can be had for free. That kind of pricing is, however, politically unrealistic. The next best thing, Biswas tells his clients, is to charge an amount that covers at least the operation and maintenance costs of the water utilities and over a period of time progresses toward marginal cost pricing. "The universal access to clean water will never be realized if water supply is free or heavily subsidized," he says.

By the Numbers: Unaccounted-For Water

City: Amount Lost (%)

Singapore: 5

Phnom Penh: 7

New York: 6

London: 27

Thursday, December 3, 2009

The coming energy revolution

Smart-grid techwill bring huge savings to companies, but who foots the bill?
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By Rachael King

updated 9:50 a.m. ET, Thurs., Oct . 15, 2009

Food producer Cargill is taking a carving knife to its electricity bills. At a plant in Springdale, Ark., where the company handles about 50,000 turkeys a day, electricity bills run more than $2 million a year. But Cargill thinks it can cleave $680,000 from the total by using its own generators on high-demand days.

The secret behind this money-saving plan lies in what's known as the smart grid — a wholesale revamp of the system that distributes energy to homes and businesses around the country. Government bodies and utility providers are in the early stages of this multibillion-dollar upgrade to transform the existing grid into a two-way network where power and information flow in both directions between the utility and the customer, not just from the provider to the user.

Done right, the revamp will cut bills, reduce consumption, give users more say in the kinds of energy they use, and even let customers produce their own energy and sell it back to power providers. "What's going to happen with the smart grid is that we're going to create a network that's larger than the Internet," says Guido Jouret, chief technology officer for the emerging-technologies group at Cisco Systems (CSCO), one of the many companies working on the technology needed to modernize the electric grid.

A $20 billion market in five years

The Electric Power Research Institute, a nonprofit research and design group, estimates that it will cost $165 billion, or roughly $8 billion a year for 20 years, to create the smart grid. The market for the gear needed to overhaul smart-grid communications alone may reach $20 billion a year in five years, Cisco estimates. Other technology companies developing smart-grid software and hardware include IBM (IBM), Oracle (ORCL), Google (GOOG), and Siemens (SI).

The tech sector's interest is fitting considering the similarities between the energy-grid upgrade and the computing revolution of the 1980s that saw hulking, centralized mainframes give way to PCs. The existing U.S. power grid dispenses electricity but is limited in its ability to gather intelligence from end users—hence the monthly visit from a meter reader. Now utilities are replacing outmoded meters with so-called smart meters that foster a back-and-forth between customer and utility. In much the same way PCs opened the door to third-party software and services and use of the Internet, smart meters are paving the way for tools and services that make the system more responsive to shifts in energy demands.


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Cargill is counting on smart-grid tech to lower its bills. Many utility vendors set rates for industrial customers based on peak-use patterns. So in a common practice known as peak-shaving, Cargill taps its own generators to keep its 365,000-square-foot Springdale plant cool on summer's hottest days rather than use energy from its electricity vendor, PowerSecure (POWR). The challenge is determining when peaks occur. PowerSecure keeps close tabs on Cargill's generators, as well as fluctuating electricity prices, and when it can tell that rates are on course to pass certain preset thresholds, it fires up Cargill's generators remotely.

Easier to opt for solar or wind

In the future, Cargill may choose to run its generators more often and sell power back to the utility when prices are high, says PowerSecure CEO Sidney Hinton. While Cargill's utility provider doesn't currently purchase energy generated by customers, other utilities, including PG&E (PCG) in California, have begun buying solar energy generated by customers on corporate campuses and residential rooftops

Is shale an answer to the energy question?

New technology opens vast stores of natural gas, and the land rush is on
Floor hands and engineers adjust a motor used for directional drilling on a natural gas drilling platform on December 18 in the Barnett Shale in Fort Worth, Texas.

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By Steven Mufson

updated 7:01 a.m. ET, Thurs., Dec . 3, 2009
The first time Chesapeake Energy tried to buy mineral rights from Diana Whitmore, a 74-year-old retired real estate broker in southern New York, it offered her $125 for every acre of land plus a 12 percent royalty on whatever natural gas it extracts.

Nearly two years later, she's still holding out. Along with hundreds of other landowners, she has joined a coalition that is negotiating with nine oil and gas companies. The latest offers in the area are running as high as $5,500 an acre with 20 percent royalties.

"It's what's really going to turn this whole place around," said her son Daniel Fitzsimmons, who has since helped form the Binghamton Conklin Gas Lease Coalition.

This corner of the state is at the forefront of an old-fashioned land rush that has implications far beyond Conklin, N.Y. Oil and gas companies are vying to stake out territory where they can tap natural gas trapped in shale rock. Just a few years ago, the industry didn't have the technology to unlock these reserves. But thanks to advances in horizontal drilling and methods of fracturing rock with high-pressure blasts of water, sand and chemicals, vast gas reserves in the United States are suddenly within reach.

Half greenhouse gases of coal
As a result, said BP chief executive Tony Hayward, "the picture has changed dramatically."

"The United States is sitting on over 100 years of gas supply at the current rates of consumption," he said. Because natural gas emits half the greenhouse gases of coal, he added, that "provides the United States with a unique opportunity to address concerns about energy security and climate change."

Recoverable U.S. gas reserves could now be bigger than the immense gas reserves of Russia, some experts say. The Marcellus shale formation, stretching across swaths of Pennsylvania, New York and West Virginia, has enough gas to meet the entire nation's needs for at least 14 years, according to an estimate by two Pennsylvania State University experts. Just in Broome County, N.Y., where Fitzsimmons lives, shale gas development could create $15 billion in economic activity, according to consultants hired by the county.

The country is carpeted with shale gas plays, including the Barnett in Texas, Fayetteville in Arkansas and Haynesville in Louisiana. Since 2000, gas from shale has grown from less than 1 percent of the nation's production to about 10 percent, according to the consulting firm PFC Energy, and it's picking up fast.

That's changing the energy and economic landscape from Broome County to the Gulf of Mexico. It could mean lower prices and reassurance to homeowners who heat with gas, or towns and companies with vehicle fleets running on the fuel. As winter begins, the price of natural gas is about a third of the level it was 14 months ago. Storage facilities are bursting.


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Oil shale future for U.S.? New rules are in place

With new supplies, the country will be less vulnerable to disruptions from Gulf Coast hurricanes and need to rely less on imports. Already, deliveries of liquefied natural gas from places such as Qatar, Nigeria and Trinidad are down 58 percent in 2008, idling costly U.S. terminals.

Transforming debate
The prospect of new gas supplies at stable prices is also transforming debates over climate change. It deals another blow to proposals for new coal plants. And because gas plants can be switched on and off quickly, unlike coal and nuclear, natural gas could supplement wind and solar power facilities, whose output varies with the weather.

"Natural gas can serve as a bridge fuel to a low-carbon, sustainable energy future," said former Colorado senator Timothy Wirth, now head of the U.N. Foundation. Indeed, this year, coal use is down about 13 percent, while electricity demand has fallen only 5 percent and natural gas use has remained about steady.

But the prospect of widespread shale gas drilling is also driving wedges in the environmental community. Many environmentalists have sounded alarms about the chemicals that drillers use to fracture the rock and the danger of natural gas or other substances contaminating water supplies. A video posted on the Web shows a man in Fort Lupton, Colo., lighting a fire with the tapwater in his kitchen sink -- although it isn't clear what caused that problem.

Residents of New York City, which draws drinking supplies from a large watershed that reaches up to the Catskill Mountains, have protested, and Chesapeake Energy has voluntarily announced that it would not drill in the watershed. Gov. David A. Paterson (D) has declared a moratorium on drilling until the state's Department of Environmental Conservation issues rules, which are open for public comment. A raucous meeting in Manhattan last month ended before even a third of the people who wanted to comment got a chance to speak.

"This is probably the biggest thing to happen to the state of New York since the initial clearing by settlers," said Wes Gillingham, executive director of the Catskill Mountainkeeper.

Wednesday, December 2, 2009

Steel town plans return to its green roots

University, high school students help out with renovation, river projects
Vandergrift, Pa., has few streets with right angles, as per the designer's vision.
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Keith Srakocic / AP

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updated 4:21 p.m. ET, Sat., Nov . 28, 2009
VANDERGRIFT, Pa. - Imagine: It's 1895. A steel baron hires New York's Central Park designer Frederick Law Olmsted to build a town in western Pennsylvania where mill workers can live, work and play. By the turn of the century, Vandergrift's rounded buildings and roads flow along the contours of the Kiskiminetas River.

Reality: Pretty much all that's left of that town is in the imagination.

So 114 years later, Vandergrift residents — from baby boomers who grew up during the town's heyday to students as young as their grandchildren — are reviving Olmsted's vision and making the community environmentally sustainable for the 21st century and beyond.

Their goal is to attract people to live or shop in the boutiques of the quaint town of just 5,000 people — which lost residents, jobs and allure along with steel.

From bringing back green spaces paved-over for parking to seeking how to harness electrical energy for the town from the fast-flowing river, Vandergrift is investing millions toward environmentally sustainable revitalization — a concept gaining popularity in Rust Belt towns that have few viable options for renewal.

"This community is such a wonderful template for demonstrating (sustainability) not just for themselves, but, I think, way outside of Vandergrift," said University of Pittsburgh professor Lisa Mauck Weiland, looking over the skeletal wooden remains of what was once a JCPenney. The building is now the object of a "green" renovation with the input of students from Pitt and a local high school.

While many communities are embracing sustainable revitalization, Vandergrift's strategy is all-encompassing: to create an energy independent, ecologically low-impact, economically viable town from the ashes of its postindustrial wasteland. It aims to renovate buildings with sustainable materials, from carpet textiles to solar roof panels. A farmers market has been expanded. Trees are being planted and green spaces recovered.

Perhaps the most ambitious is the river energy project. With Weiland's guidance and a grant from the National Science Foundation, University of Pittsburgh students are seeking to exploit the hydrokinetic forces of the Kiski River to offset energy costs downtown, without building dams or coal-burning electrical facilities.

Sustainability fits Vandergrift well. Olmsted, known as the father of American landscape architecture, made the town's design one with nature — the philosophy he used when planning the U.S. Capital grounds, the lush green campuses of Boston and Stanford universities, Central Park's 843 acres of woodlands, lawns and ponds — as well as distinctive parks in Boston, Detroit, Milwaukee, Chicago, Atlanta, Louisville, Ky., and Buffalo, N.Y.

Olmsted's theory was that every urbanite, regardless of status, needed a sanctuary. He designed Vandergrift, 35 miles northeast of Pittsburgh, with no right angles, instead following the curves of the river. He also used curving paths to blur movement among pedestrians and hedges to buffer commercialism. Street corners and the buildings on them were rounded. Parks dotted the hilly landscape, and the town was walkable.

"The town is set up and has the same layout as Olmsted designed it," said Ashley Bistline, a 17-year-old senior at Kiski Area High School, who is participating in the JCPenney renovation. "That in itself is enough of an attraction."

The decrepit former department store is not unusual. Many original buildings are in disrepair. Urban islands of grass and flowers are now concrete parking lots. Vacant storefronts and boarded-up buildings dot a main street that is just a whiff of the packed sidewalks, restaurants and boutiques of yesteryear.

Like most other Pittsburgh-area Rust Belt towns, Vandergrift's fortunes dissolved along with the steel industry. In 28 years, the town's population dropped from more than 6,800 in 1980 to barely 5,000 in 2008. By 2000, a quarter of the residents were over 65 and almost 16 percent lived in poverty — about 4 percent higher than the national average.

Memory runs deep in a town with a high elderly population. In the late 1980s a group formed to oppose demolition of the Casino Theater, built in 1900 to feature vaudeville shows. Volunteering labor and funding, they renovated the Greek Revival-style building where school shows and occasionally movies are now featured as the lobby is redone.

Since then, a flower shop has filled a fully restored main street facade, other construction is under way, and the idea of creating downtown residences is being explored.

Meade Jack, president of the Vandergrift Improvement Program, wants sustainable concepts throughout downtown, beginning with the JCPenney — a building the size of four NBA basketball courts — that will get a nearly $2 million, five-year "sustainable" renovation.

"I think a lot of people have forgotten about it. They've written it out of their lives," Bistline said. "That's why we're doing the project, to bring people back to the town."

Ford Fusion Hybrid - Car and Driver Evaluation

2010 Ford Fusion Hybrid
Click to enlarge picture

Ford Fusion Hybrid

It's an unlikely claim, but the Ford Fusion hybrid is in fact the most advanced car on this list. Through the body of this unpretentious family sedan runs the sturdiest bridge between the tech of the 20th century and that of the 21st.

The Fusion's hybrid powertrain is so refined and compact that it's almost not there, but the driver-selectable, power-tracking gauge display gives the game away: It is Donkey Kong addictive, challenging its driver to run on electric power all the way up to a possible 47 mph. This is a boon to both car guys and the unafflicted — you can drive it for fun (a hybrid first) or for mileage (a class-leading 41 city/36 highway), which is also fun.

On the subject of in-car entertainment, Ford's Sync system offers Sirius Travel Link, featuring weather, sports, traffic info, even movie times. This is the car as home computer, only voice controlled, organizing data for the driver and keeping distractions to a minimum.

That both of these elements function so seamlessly is the essence of the Fusion hybrid experience. It undersells itself in a decidedly un-Prius-like way, but its modesty can't obscure its greatness. Fuel-economy numbers, handling, ride, interfaces — there is only virtue, no vice, making the Fusion hybrid the most mainstream and thus the most important alt-fuel vehicle on the road. It decouples fuel economy from economy-car ennui. We admire it as much for what it isn't (polarizing, showy, cramped) as for what it is. And it is both fun to drive and interesting to drive, offering up new definitions of performance and entertainment.

VEHICLE TYPE: front-engine, front-wheel-drive, 5-passenger, 4-door sedan
BASE PRICE: $28,350
ENGINE TYPE: DOHC 16-valve 2.5-liter inline-4,156 hp, 136 lb-ft; AC permanent-magnet synchronous electric motor, 106 hp, 166 lb-ft; combined system, 191 hp
TRANSMISSION: continuously variable automatic
DIMENSIONS: Wheelbase: 107.4 in, Length: 190.6 in, Width: 72.2 in, Height: 56.9 in, Curb weight: 3800 lb
FUEL ECONOMY: EPA city/highway driving: 41/36 mpg

Tuesday, December 1, 2009

A uranium shortage could derail plans to go nuclear to cut carbon emissions

Green.view

Fuelling fears
Nov 30th 2009
From Economist.com

A uranium shortage could derail plans to go nuclear to cut carbon emissions

THERE is an awesome amount of energy tied up in an atom of uranium. Because of that, projections of the price of nuclear power tend to focus on the cost of building the plant rather than that of fuelling it. But proponents of nuclear energy—who argue, correctly, that such plants emit little carbon dioxide—would do well to remember that, like coal and oil, uranium is a finite resource.

Some 60% of the 66,500 tonnes of uranium needed to fuel the world’s existing nuclear power plants is dug fresh from the ground each year. The remaining 40% comes from so-called secondary sources, in the form of recycled fuel or redundant nuclear warheads. The International Atomic Energy Agency, which is a United Nations body, and the Nuclear Energy Agency, which was formed by the rich countries that are members of the Organisation for Economic Co-operation and Development, both reckon that, at present rates, these secondary sources will be exhausted within the next decade or so.

Once every two years the two agencies publish what is considered the best estimate of global uranium stocks, “Uranium: Resources, Production and Demand”, colloquially known as the Red Book. It estimates that there is enough unmined uranium to supply today’s nuclear power stations for at least 85 years for less than $130 per kilogram. But Michael Dittmar, a researcher at the Swiss Federal Institute of Technology in Zurich, thinks they are mistaken. He has studied the uranium supply and argues, in a recent series of papers, that shortages will drive the nuclear renaissance to an untimely end.

Dr Dittmar has unpicked the most recent Red Book numbers on primary production and asserts that they are founded on an alarmingly weak basis. The Red Book is compiled from questionnaires, each of which is handled differently in the countries to which it is sent. The forms might be completed by any number of different government agencies, with added input from mining companies. All, of course, will have their own agenda about the matter. He concludes, “The accuracy of the presented data is certainly not assured.” Dr Dittmar goes on to speculate about the accuracy of a great many figures, both of the amount of uranium that is known to exist, and estimates of how much more might be available. He predicts that shortages of uranium could begin as early as 2013.

For its part, the World Nuclear Association, a nuclear-industry body, argues that if uranium becomes more expensive, mining companies will devise cleverer ways of extracting it—from rock, other elements or even from seawater. Its estimates put the demand in 2030 at anywhere between 42,000 and 140,000 tonnes.

Although your correspondent suspects that Dr Dittmar is probably being overly pessimistic, he is inclined to agree with him that the Red Book’s precise assessments of what will be economically sensible over 85 years are far from accurate. But there are two other factors that could come into play. One is that there may eventually be enough economic incentive for the countries with weapons stockpiles of uranium to release much of it for warmth and peace.

The other is that the International Energy Agency thinks that nuclear power could more easily weather a storm in fuel markets. A 50% increase in the price of uranium would, the agency predicts, cause only a 3% rise in the cost of the electricity it generates, compared with 20% for coal and 38% for gas.

Either way, none of the figures take into account nuclear “new-build”. Where there is an economic incentive to extract more of a resource, industry has a long history of developing technology to do it. Just do not bet on electricity from nuclear power ever becoming too cheap to meter.