HIGH POTENTIAL: HOW A FRAMEWORK OF CRITERIA FOR AN INTEGRATED ENERGY SYSTEM CAN INITIATE A SUSTAINABLE ELECTRICITY GRID AND TRANSPORTATION SYSTEM by Arnold Lindsay Elias B.A., the University of Victoria, 1990 M.B.A., the University of British Columbia, 1993 A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE STUDIES (Resource Management and Environmental Studies) THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) February, 2010 Arnold Lindsay Elias, 2010 ii ABSTRACT We are facing a global crisis in our energy generation and transportation sectors. Coalescing environmental and social problems are caused primarily by inappropriate fossil fuel use and land-use practices. Electrification of urban vehicles can help to solve these problems in conjunction with novel policies. However, the full dimensions of integrating plug-in vehicles into existing grid and transportation systems are inadequately considered to substantially address the critical issues we face. This problem is the result of entangled economic, cultural and technological issues that have not been considered in an integrated manner, together with the varying potential of emerging vehicle technologies. Technologies must meet social uptake and socio-environmental needs as well as the usual economic, efficiency and emissions requirements. I contend that evaluating the electricity grid and the transportation system as an integrated energy system can lead to increased efficacy of renewable energy solutions and help to avoid inappropriate policy and investment choices. I advance a framework of critical attributes to identify the enabling technologies required to sustainably integrate the electricity grid and transportation system. The alternative, I maintain, is a monolithic and disconnected system that will be expensive and ultimately unsustainable. In this dissertation I consider the transportation pathways that lead towards a sustainable energy system. Two important systems emerge from the comprehensive requirements for an integrated and sustainable energy system: the hydrogen fuel cell and the plug-in hybrid electric vehicle model. I utilize economic, social and environmental criteria to compare these two approaches to identify the appropriate technology pathway. The result, from a transportation perspective, is a credible path towards a sustainable energy system. My analysis shows that a plug-in model demonstrates crucial techno-economic, social and environmental advantages over the hydrogen model. Utilizing an appropriate policy structure, the plug- in hybrid electric vehicle model, in combination with intelligent grid systems, can initiate a cultural paradigm shift that can naturally evolve into a sustainable and integrated energy system. (316 words) iii TABLE OF CONTENTS ABSTRACT .................................................................................................................................. ii TABLE OF CONTENTS ............................................................................................................... iii LIST OF TABLES ........................................................................................................................ vi LIST OF FIGURES...................................................................................................................... vii LIST OF TERMS ....................................................................................................................... viii LIST OF ACRONYMS.................................................................................................................. xi ACKNOWLEDGMENTS............................................................................................................. xiv CHAPTER 1 – INTRODUCTION AND OVERVIEW........................................................................ 1 1.1 Dissertation Statement .................................................................................................................... 1 1.2 Problem Context ............................................................................................................................. 2 1.3 Research Questions ......................................................................................................................... 4 1.4 Research Agenda ............................................................................................................................ 5 1.5 Methods .......................................................................................................................................... 8 1.5.1 Literature Review.................................................................................................................... 8 1.5.2 Tri-Partite Method................................................................................................................. 11 1.5.3 Dialogue with Experts in the Field........................................................................................ 13 1.6 Chapter Organization .................................................................................................................... 14 CHAPTER 2 – THE PROBLEM / SOLUTION MATRIX ............................................................... 15 2.1 The General Dilemma................................................................................................................... 15 2.2 The Urban Transportation Problem .............................................................................................. 17 2.3 Technology Choices for the IES ................................................................................................... 19 2.4 Four Drivers for Change ............................................................................................................... 21 2.5 Climate Change Impacts from Fuel Choices................................................................................. 22 2.6 Emission Impacts .......................................................................................................................... 25 2.7 Current Supply Issues ................................................................................................................... 28 2.8 Land Use and Planning Issues....................................................................................................... 33 2.9 The Scope of the Solutions ........................................................................................................... 34 2.10 Technology Solution Pathways................................................................................................... 36 2.11 Electrification and the Integrated Energy System....................................................................... 38 2.12 Evaluation Frameworks .............................................................................................................. 41 2.13 The STEP Model......................................................................................................................... 43 2.14 Summary..................................................................................................................................... 45 CHAPTER 3 – TECHNICAL AND SUSTAINABILITY CRITERIA................................................. 48 3.1 Minimization of Emissions of GHG and CAC ............................................................................. 48 3.2 Considerations for Long Term Fuel Security................................................................................ 52 3.3 Compatibility with Current Infrastructure..................................................................................... 58 3.4 Efficiency...................................................................................................................................... 59 3.5 Lifecycle Approach to Technology Assessment ........................................................................... 61 3.6 Availability in the Near Future ..................................................................................................... 61 3.7 Other Technical Criteria................................................................................................................ 63 3.8 Summary....................................................................................................................................... 64 CHAPTER 4 – A CRITIQUE OF INAPPROPRIATE MONETARY ASSESSMENT.......................... 65 4.1 Technology, Value and Price ........................................................................................................ 65 4.1.1 The Nature of Value.............................................................................................................. 67 iv 4.2 Cost-Benefit Constraints ............................................................................................................... 72 4.3 Submerged Values ........................................................................................................................ 74 4.4 Efficiency and Social and Environmental Value .......................................................................... 76 4.5 Energy System Options and Costs ................................................................................................ 80 4.6 Costing Sustainable Technologies—Distinctions in Evaluation ................................................... 82 4.7 Valuing Risk ................................................................................................................................. 85 4.8 Preferences.................................................................................................................................... 89 4.9 Stated Preference Methods............................................................................................................ 92 4.10 Monetization, Value and Contexts .............................................................................................. 94 4.11 Summarizing Value and Monetization........................................................................................ 98 CHAPTER 5 – NON-MONETARY APPROACHES TO ASSESSMENT .......................................... 99 5.1 Limits to Commensurability ......................................................................................................... 99 5.1.1 New Dimensions to Commensurability............................................................................... 101 5.2 Adaptation, Mitigation and Evolution......................................................................................... 105 5.3 Examples of Submerged Value................................................................................................... 108 5.3.1 Anaerobic Digestion............................................................................................................ 108 5.3.2 BC Hydro IEP Example ...................................................................................................... 110 5.4 Commensurability, Ethics and Social Perspectives .................................................................... 111 5.5 Non-Monetary Approaches to Submerged Values...................................................................... 113 5.6 Technology Evaluation Under Uncertainty................................................................................. 119 5.7 Commensurability, Pluralism and Conflict ................................................................................. 121 5.8 A Differentiated Proposal for Estimating Value ......................................................................... 124 5.9 Integrating Approaches to Value ................................................................................................ 127 5.10 From Full Value to Social Uptake ............................................................................................ 129 CHAPTER 6 – TECHNOLOGY ADOPTION............................................................................... 131 6.1 Introduction................................................................................................................................. 131 6.2 Decision-making Perspectives .................................................................................................... 133 6.2.1 Adoption Program Example................................................................................................ 136 6.3 Social Marketing......................................................................................................................... 137 6.4 Voluntary or Regulatory Instruments.......................................................................................... 141 6.5 A Glance Back ............................................................................................................................ 144 6.6 Framing an Enabling Policy........................................................................................................ 147 6.7 Technology Diffusion ................................................................................................................. 149 6.7.1 Market Distortions............................................................................................................... 151 6.7.2 Diffusion Models ................................................................................................................ 153 6.8 Mainstreaming Sustainability ..................................................................................................... 158 6.9 Lock-in and Path Dependence .................................................................................................... 160 6.10 Technology Adoption ............................................................................................................... 163 6.11 Choice Factors .......................................................................................................................... 165 6.12 Conclusion ................................................................................................................................ 168 CHAPTER 7 – EVALUATING TRANSPORTATION TECHNOLOGIES FOR AN IES................... 172 7.1 Overview of the Technologies Selection and Evaluation Process .............................................. 172 7.2 Overview of Hydrogen Fuel Cell Vehicles (HFCV)................................................................... 173 7.3 Overview of Plug-in Hybrid Electric Vehicles (PHEV) ............................................................. 175 7.3.1 Energy Storage .................................................................................................................... 176 7.4 Preparing to Use the STEP Model .............................................................................................. 177 7.5 Evaluating Sustainability and Compatibility with Infrastructure ................................................ 178 7.5.1 Conclusions for Sustainability and Infrastructure Compatibility ........................................ 181 7.6 Evaluating Energy Efficiency, Capital Costs and Operating Costs............................................. 181 7.6.1 Efficiency ............................................................................................................................ 181 7.6.2 Costs.................................................................................................................................... 185 v 7.6.3 Conclusions for the Evaluation of Efficiency and Costs ..................................................... 186 7.7 Evaluating Social Value and Submerged Values ........................................................................ 187 7.7.1 Social Value ........................................................................................................................ 187 7.7.2 Submerged Values............................................................................................................... 189 7.7.3 Conclusions for the Evaluation of Social and Submerged Values ...................................... 190 7.8 Evaluating Social Uptake............................................................................................................ 191 7.8.1 Costs and Attributes ............................................................................................................ 191 7.8.2 Conclusion for the Evaluation of Social Uptake ................................................................. 192 7.9 Direct Results of STEP Comparison........................................................................................... 193 7.10 Strategic Potential of STEP Results .......................................................................................... 195 7.11 PHEV: An Enabling Technology in an Integrated Energy System........................................... 197 7.12 Policy Context and Opportunity................................................................................................ 198 7.12.1 A Hierarchy of Modes....................................................................................................... 198 7.12.2 Cost as an Opportunity for Funding Sustainable Transportation ...................................... 199 7.12.3 A Policy Value Proposition............................................................................................... 201 7.13 Policy for an Advanced Integrated Energy System Economy .................................................. 204 CHAPTER 8 – CONCLUSION ................................................................................................... 212 8.1 Summary of Contributions.......................................................................................................... 212 8.2 Summary Discussion .................................................................................................................. 213 8.3 Policy for Sustainability.............................................................................................................. 216 8.4 Transportation Policy and Social Goals ...................................................................................... 218 8.5 Appropriate Technology and Resource Use................................................................................ 220 8.6 Conclusion .................................................................................................................................. 222 BIBLIOGRAPHY ...................................................................................................................... 224 APPENDIX 1 – BIOGAS, AN EXAMPLE OF SUBMERGED VALUE ........................................... 239 APPENDIX 2 – APPROACHING BARRIERS TO RENEWABLE TECHNOLOGIES ..................... 243 APPENDIX 3 – TRANSPORTATION TECHNOLOGY OPTIONS ................................................ 249 APPENDIX 4 – TRANSPORTATION OPTIONS MODEL............................................................ 251 APPENDIX 5 – FUEL SECURITY.............................................................................................. 257 APPENDIX 6 –THE ELECTRICITY GRID ................................................................................ 259 APPENDIX 7 – THE TRANSPORTATION SYSTEM................................................................... 264 APPENDIX 8 – DEMAND CHARACTERISTICS......................................................................... 267 APPENDIX 9 – ENERGY CARRIERS, STORAGE AND COMPONENTS ..................................... 270 APPENDIX 10 – INTERMITTENCY, STORAGE AND INTELLIGENT GRIDS............................. 277 APPENDIX 11 – PHEV AND THE HIERARCHY OF MODES IN A SUSTAINABLE TRANSPORTATION SYSTEM................................................................................................... 283 vi LIST OF TABLES TABLE 2.1 CHARACTERISTICS OF TRANSPORTATION DRIVE OPTIONS........................................................... 20 TABLE 2.2 ELECTRICITY GENERATION COSTS WITH EXTERNAL IMPACT COSTS ........................................... 28 TABLE 2.3 GAS AND OIL RESOURCES IN EQUIVALENT UNITS ....................................................................... 30 TABLE 2.4. HISTORICAL AND PROJECTED ENERGY CONSUMPTION ............................................................... 32 TABLE 4.1 REVEALED AND STATED PREFERENCE DIFFERENCES................................................................... 91 TABLE 5.1 SUMMARY OF ENERGY PORTFOLIO ATTRIBUTES ....................................................................... 118 TABLE 6.1 TECHNOLOGY ADOPTER CATEGORIES ....................................................................................... 134 TABLE A2.1 - BARRIERS AND OBSTACLES TO RENEWABLE ENERGY DEPLOYMENT IN THE EU .................. 243 TABLE A8.1 EMISSIONS: COMPARING 1994 AND 2003 CANADIAN EMISSIONS............................................ 269 vii LIST OF FIGURES FIGURE 3.1 TRANSITION PATHWAYS TO A SUSTAINABLE ENERGY................................................................ 54 FIGURE 7.1: COMPARISON OF CURRENT EFFICIENCIES OF WELL-TO-WHEEL, SELECTED TECHNOLOGIES .. 183 FIGURE 7.2 POTENTIAL FUTURE EFFICIENCIES FROM WELL-TO-WHEEL FOR SELECTED TECHNOLOGIES ... 184 viii LIST OF TERMS Clean Development Mechanism Collaborative program to reduce GHG and assist developing nations increase sustainable technology use through project partnerships with developed nations. Contingent Valuation A direct method asking people how much they would pay or accept for a particular environmental service. Demand-side Management (DSM) The use of technologies and strategies to reduce use of energy. Energy Density Energy capacities per unit of volume (volumetric) or mass (gravimetric). Energy Services Energy services are activities or specific functions such as lighting, heating and transportation power, targeted to and compensated for by end-users. Fossil Fuels Secondary resources from earlier solar vegetative and possibly geological processes and extraterrestrial sources already stored as hydrocarbons, such as coal, oil and natural gas. Greenhouse Gases (GHG) Gas emissions that increase atmospheric heat retention. Grid The electricity network system from generation and transmission to power management, control systems, distribution and end use. Hedonic Pricing A specific type of TCM applied to a single site or case. Power Density Power capacities per unit of volume or mass. Renewable Energy Technologies (RETs) Usually refers to supply-side technologies that draw on primary replenishable natural resources such as solar, wind, biomass and geothermal. Renewables, renewable energy and RETs will be ix used interchangeably to describe renewable energy technologies. Renewable Portfolio Standard (RPS) A requirement that a minimum percentage of each electricity generator's or supplier's resource portfolio come from renewable energy. Reserves A range of categories from proved reserves to probable reserves; commercially recoverable amounts. Resource Unproved quantities. Satisficing A decision-making strategy which attempts to meet criteria for adequacy, rather than identify an optimal solution (Wikipedia). Service Model The service model is the full range of attributes delivered to users to meet a range of economic, social and personal wants and needs. An example would be a transit service model that provides bus routes, costs and schedules. The role of the service model, within economic constraints, is to best meet the requirements of various users and perform beyond this to engage new users. At a deeper level it is the acceptance of these needs and wants as a range of attributes and norms that plays an important role in how transportation and energy services are chosen. To shift choices towards the social and economic uptake of sustainable options requires a deep understanding of the service model and a systematic categorization of the service model features that can be delivered to users. Sustainable Energy Technologies These could include technically non-renewable resources, such as fusion sources, that have very long-term capacity whose outputs do not compromise either human or ecosystem survival. The difference between these technologies and renewables, as defined in this paper, is that renewables utilize resources that are being renewed at a similar rate to the rate of use of that resource. x Practically, these are either of solar or geological origin. Transitional Energy Technologies Technologies that are greenhouse gas neutral but have other outputs which negatively impact human or ecosystems. Transportation System For the purpose of this dissertation, the ground transportation system including road and rail systems for transporting both goods and people. Travel Cost Method (TCM) Method for determining value of untraded items, such as recreational resources. This is one of the main indirect approaches to valuation. Well to Wheel An energy efficiency estimate from source to final use. In transportation the energy transferred to a vehicle's wheels as a percentage of the embodied energy in oil from the oil well. xi LIST OF ACRONYMS $/kWhr ..........Dollar Cost per kilowatt-hour AD..................Anaerobic Digestion AT ..................Active transportation AER ...............All Electric Range BAU ...............Business as Usual BEV ...............Battery Electric Vehicle BIV ................Building Integrated Voltaics BPL ................Broadband Power Line CAC ...............Criteria Air Contaminants CARB ............California Air Resources Board CAPM ............Capital Asset Pricing Model CBA ..............Cost-benefit Analysis CCS................Carbon capture and sequestration CDM .............Clean Development Mechanism CEA ...............Cost Effectiveness Analysis CHP................Combined Heat and Power CNG ..............Compressed Natural Gas CO2e .............Carbon Dioxide Equivalence for Gases and Aerosols CV .................Contingent Valuation DOE ..............Department of Energy (USA) DSM...............Demand-side Management EOR................Enhanced Oil Recovery EPA ...............Environmental Protection Agency EV .................Electrical Vehicle FCV ...............Fuel Cell Vehicle GDI ................Gas Direct Injection GHG ..............Greenhouse Gas xii GVW..............Gross Vehicle Weight GWh...............Gigawatt hour HFC................Hydrogen Fuel Cell HFCV ............Hydrogen Fuel Cell Vehicle HEV ...............Hybrid Electric Vehicle HVDC ............High Voltage Direct Current ICE .................Internal Combustion Engine IEA.................International Energy Agency IEP..................Integrated Electricity Plan IES..................Integrated Energy System IPCC ..............Intergovernmental Panel on Climate Changer IPP..................Independent Power Producers IT....................Information Technology JI.....................Joint Implementation Li-ion .............Lithium-ion (battery) LDV ...............Light Duty Vehicle LNG ..............Liquid Natural Gas MAUT ...........Multi-Attribute Utility Theory MCDT............Multi-criteria Decision Theory MDV ..............Medium Duty Vehicle MSW .............Municipal Solid Waste MW ................Megawatt NOx ...............Oxides of Nitrogen NPV................Net Present Value OEM...............Original Equipment Manufacturer PAYD.............Pay-As-You-Drive PM .................Particulate Matter PV .................Photovoltaics PEV................Plug-in Electric Vehicles PHEV .............Plug-in Hybrid Electric Vehicles xiii ROI.................Return on Investment RPS ...............Renewable Portfolio Standard: a mandatory fraction for renewable energy RF...................Radio Frequency SER ................Social and Environmental Responsibility SOV................Single Occupancy Vehicles SOX ...............Sulphur Oxides STEP ..............Sustainable Transportation Evaluation Process T&D ..............Transmission and Distribution TDM...............Transportation Demand Management TOD ...............Transportation Oriented Design TOp ................Transportation Options Model V2G................Vehicle to Grid V2H................Vehicle to Home WACC............Weighted Average Cost of Capital WTA ..............Willingness to Accept WTP ...............Willingness to Pay xiv ACKNOWLEDGMENTS It is my pleasure to thank those who made this dissertation possible. I would first like to thank my supervisors, John Robinson and Bill Rees, for their kind efforts in guiding me through the academic process and reviewing various drafts of the dissertation. I also greatly appreciate the assistance of my supervisory and mentoring committee members, Les Lavkulich, Andrew Feenberg and Iain Taylor. I would particularly like to express my gratitude to Les for his extraordinary efforts to help me through the doctoral dissertation process. A special thank you goes to Jim Thompson, Barbara Evans and others at the Faculty of Graduate Studies at UBC for their help in steering me through the conclusion of the dissertation process. I have also had a large number of useful interactions with colleagues, experts, friends and specialists in the many fields that were woven together to create this dissertation. I thank all who have added to this dissertation, while accepting responsibility for any errors that may be present. Finally, my undying gratitude goes to Barbara Bibeau and to my wife, Ann Taylor, for editorial assistance beyond the call of duty. 1 CHAPTER 1 – INTRODUCTION AND OVERVIEW 1.1 DISSERTATION STATEMENT There is a developing consensus that human society is confronted with multifaceted problems arising from a profound dependency on fossil fuels1. The two principal users of fossil fuels are the electricity grid and the transportation system. There is a growing awareness that both are not sustainable. Current vehicle fleets are particularly unsustainable due to their emissions and their dependency on limited oil reserves. They dominate the land base and the cultural environment within our cities. Urban light duty passenger and freight vehicles are a principal part of this problem, and they also have the greatest potential for resolution. This dissertation focuses on the problems related to the use of fossil fuels by light duty urban vehicles, the technological solutions to these problems, and the resulting policy opportunities to beneficially transform our cultural landscape. From the limited options available, I propose that electrifying urban transportation offers the highest potential to reduce fossil fuel problems and provides the greatest societal benefits of any currently available technological pathway. I further propose that this integration of the electricity grid and urban transportation systems requires a holistic approach that considers broad social and environmental contexts, congruent with economic and technical constraints. Further, when investing in technology choices for this integrated energy system, the same considerations must be applied. This dissertation proposes a framework of criteria to evaluate the technologies that are best suited for the integration of the electricity grid and transportation systems. Such a framework must include social and environmental values and be comprehensive in scope. This process evokes new attitudes to value and policy development capable of assisting a cultural transformation towards energy and transportation sustainability. 1 This large field of inquiry ranges from global IPCC reports to local impacts 2 1.2 PROBLEM CONTEXT Urban vehicle fleets, primarily light and medium duty vehicles (LDV and MDV)2, have become indispensable as the primary mode of transportation in most modern economies. This dependency includes a reliance on increasing amounts of gasoline and diesel from crude oil, and the presence, construction, maintenance and growth of a vast and expensive road and parking infrastructure, all of which create a multitude of problems. To communicate the range of problems clearly, simply and comprehensively, I characterize them as four driving forces: 1. Climate change 2. Emissions and wastes harming human and ecosystem health 3. Energy and resource supply impacts and security 4. Land use, outmoded infrastructure and ineffective planning practices These four “drivers” must be dealt with simultaneously to solve the problems created by urban transportation. Answering the four driver problematique will require the application of a host of strategies, including pricing, policy and regulatory tools, social marketing and educational programs, to reduce fuel use and transform our cities. In addition, an overarching principle is the overall maintenance and improvement of social and environmental systems, access, equity and quality of life. These strategies and principles can be applied to changing what I define as three aspects of human endeavour: behaviour, technology and infrastructure. To solve our urban transportation problem, we must: 1. Modify our behaviours to reduce vehicle use; 2. Change our technologies to minimize fuel consumption and use the most sustainable technologies and vehicles possible; and 3. Transform our infrastructure by building our cities to maximize more efficient transportation modes. 2 This dissertation is primarily concerned with the passenger and delivery vehicles that make up most of urban fleets and such terms as light duty vehicles, urban vehicles and fleets are used to convey this. 3 These three aspects require concerted and coordinated effort to make transportation more sustainable. All three offer dramatic opportunities for change. I focus on technology change as the transformational activity most likely to yield successful results and to catalyze overall societal change in a timely manner, by precipitating change in the other two aspects. The technological opportunities are limited to: improving the efficiency and cleanliness of current technologies; using biofuels; converting coal to transportation fuels; and electrification. Current technologies can be improved, but there are limitations to efficiency gains and, ultimately, fuel. Biofuels raise complex ethical issues concerning agricultural sustainability and food and fuel choices, although algae may offer long term potential. Clean coal technologies are at the early development stage and likely to be expensive. Of these options, I propose that electrification of the vehicle fleet presents the greatest opportunity currently and over the next decades. However, electrification of the transportation system is not solely a technical course of action. I envision electrification as a cultural process of which an Integrated Energy System (IES) is a primary outcome3. An IES is a model for sustainability that, if successful, will affect the vehicles we use, the environmental regulations we implement, the energy and economic policies we engage in and our land use decisions. This expanded conception of electrification considers not only technical and economic factors, but also the broader social and environmental characteristics of technology choice. Such a systemic approach is aimed at addressing and satisfying our social objectives, and gaining public acceptance and social uptake to more rapidly advance urban transportation sustainability. 3 My term, the “integrated energy system” (IES) is used in this dissertation to refer to a model that includes much of the land transportation system and the electricity grid. This system uses electricity to fuel transportation but consists of a broad cultural system that includes technical, social, and environmental processes and contexts. 4 1.3 RESEARCH QUESTIONS The current urban form forces a dependency on light duty vehicles; this situation will prevail for the foreseeable future and therefore will take time to resolve. My interests focus on the opportunity to make these vehicles more sustainable in a timely fashion, while recognizing the need to minimize vehicle use as part of the strategic process. Can vehicle sustainability catalyze solutions to the overall problem? Recognizing the urgent need for a societal transition toward sustainability and the challenges this presents, the questions this dissertation asks are: 1. Given our current sustainability concerns and the failure of past transportation technology decisions, can electrification replace fossil fuel use for urban vehicle mobility? If so, how can an integrated energy system succeed in directing our policies towards a more sustainable society? 2. What tools should we use to evaluate new transportation technology options so that important technical, social, environmental and economic requirements are addressed, in order to optimize the cultural transition to electric drive and an IES? This dissertation is part of a newly emerging realization that there are critical synergies to be gained from electrifying transportation. Specifically, opportunities exist for key technologies—intelligent grids and electric drive systems—to integrate and synergize, creating a feasible model of energy sustainability that can be characterized as an integrated energy system. This linking of energy and transportation systems requires careful assessment of social and environmental objectives as well as techno-economic considerations. I conceive the IES, as a new and comprehensive model of the energy system, to include social and environmental goals as key elements of good policy making. Constructing the IES model will require harmonizing the best available technologies. To produce the maximum benefits to meet our social and environmental goals, an evaluation framework of a core set of criteria is developed and then applied to key technological solutions presently under development or entering the marketplace. 5 1.4 RESEARCH AGENDA Technological change is a necessary part of building sustainable transportation systems. Traditional technical and economic approaches to determining technology choice, while important, have not taken into account essential values that should be incorporated into decision and policy structures. This deficiency is one reason why we have largely failed to meet our social and environmental goals when shaping policy, because we simply have not included many of these concerns in the decision-making process. When making technology decisions, a range of social and environmental values must be considered by incorporating these issues into every step of the conceptualization, research, and assessment processes. I identify a range of values, from health, safety and aesthetics to the conditions necessary for the uptake of technology. Without integrating such values in technology choice, we continue to run the risk of making policy a technical cost-benefit exercise rather than a process for meeting cultural goals. From the potential transportation approaches, I identify and investigate electrification (the use of the grid) as an optimal general strategy for building a sustainable transportation system. From this I develop two frameworks, the Integrated Energy System and an assessment tool, the Sustainable Transportation Evaluation Process (STEP), to help address the above deficit by including and utilizing broader social and environmental concerns. I analyze the potential to use grid electricity for urban vehicle drive as the keystone of a successful IES. While the IES is a comprehensive approach to electrification, it does not currently identify the mix of technologies that are required to make it function optimally. To ascertain these technologies requires a thorough understanding of what is available now and into the future, through research of the academic, technical and policy literatures and other relevant sources. When selecting technologies, it is also important to consider social and environmental goals and the challenges of technology uptake and implementation. To maximize the potential of the multi-faceted concept of an IES, we need to develop a new evaluation process or tool to select the successful combination of technologies that would populate 6 the IES. This more inclusive approach leads to the development of criteria to build an evaluation framework, which can be applied to the key technology options in order to choose the most appropriate one. Therefore, the primary task of this dissertation is the development and application of such a framework to assess the technologies for the IES. It is also a tool for identifying technologies that have the promise to effectively leverage change and to act as catalysts for social and economic sustainability. Sustainable Transportation Evaluation Process = STEP The acronym STEP, derived from the terms above, is used for convenience to describe the evaluation framework developed by this dissertation. STEP uses a number of criteria that reflect the needs for long term transportation capacity and ease of implementation into current technological, economic and social systems. 1. Environmental sustainability and ability to fit current infrastructure 2. Efficiency, and capital and operating costs 3. Social and submerged values 4. Social uptake and strategic potential (policies for financial and regulatory means) There are only a limited number of technical options that can be utilized to increase the sustainability of vehicle fleets. I examine these available transportation technology solutions and their potential for expansion and sustainability. From the various technologies available, including those options which draw from the grid, two are identified for evaluation: Plug-in Hybrid Electric Vehicle (PHEV) and Hydrogen Fuel Cell (HFC). These two are selected because they: • are the most advanced technically • are capable of meeting sustainable urban transportation needs • are potentially useful in an IES • may be available soon. I develop an overview of these two technologies and then assess them using the STEP tool. I also explore the potential benefits of the IES approach and its implications for 7 progressive policies to assist a general paradigm shift to transportation sustainability. The application of STEP reveals the complex dimensions of the IES, and the constraints and opportunities that arise when choosing one technological path over another. For example, it reveals how prospective changes to current vehicle fleets can be used as an opportunity to build policy to influence behaviour—how people use vehicles and their choice of modes—as well as to compel change in the underlying transportation infrastructure. Of the two assessed technologies, the hydrogen fuel cell (HFC) already has significant representation in both research and policy communities, is well funded and well known to the general public. On the other hand, the plug-in hybrid model was virtually unknown before 2006, while the majority of this dissertation was being written. It has, however, become well known today—a testament to the rapidity of change in this field. Most advocates see plug-in hybrids as a specific transportation technology, and not as an enabling technology for an extensive systemic approach to electrification, the IES. The Integrated Energy System proposed in this dissertation adds substantially to the vehicle- to-grid (V2G) model initiated by Willett Kempton4 and other subsequent technical approaches to electrification5. The V2G model envisions a reciprocating use of vehicles to draw energy and release energy from and to the grid. While this is the basis I use to advance a comprehensive and feasible model of a sustainable energy system, the success of the IES is not dependent on the V2G process. The IES structure I propose, which includes advanced vehicles as an enabling technology, also builds on existing efficiency studies of different energy pathway models6. PHEV and HFC are tested to see if they meet the necessary criteria for light and medium duty urban fleets and for a role in a 4 Willett Kempton and Jasna Tomic, “Vehicle-to-grid power fundamentals: Calculating capacity and net revenue,” Journal of Power Sources, 144, no. 1 (1 June 2005): 268-279. 5 Alistair I. Miller, “A Historic Perspective on the Future Cost of Off-Peak Electricity for EV”, AECL, Conference Proceedings PHEV 2007, Winnipeg, MB. http://www.pluginhighway.ca/PHEV2007/proceedings/PluginHwy_PHEV2007_PaperReviewed_Miller.pdf 6 Researchers that look at lifecycle analysis of different energy pathways for vehicle technologies are predominantly identifying key roles for Hydrogen, Hybrids, PHEV and EV. See L. Gaines, A. Burnham, A. 8 sustainable transportation portfolio that includes other more desirable modes such as active transportation and transit. The needs are so great, the costs associated with error are so high, and the transition required so fundamental in nature—requiring as it does an entire societal transformation—that a sustainability strategy relying on traditional notions of “market forces” to accomplish the adoption of sustainable technologies would be entirely inadequate. Policymakers, industries, utilities and investors will need to evaluate all claims for sustainable transportation and energy against comprehensive and dynamic criteria to determine the best way forward. The evaluation framework developed and tested in this dissertation may be a useful general tool to assess technologies and technology pathways. 1.5 METHODS 1.5.1 Literature Review If freight and passenger vehicles of the future are to rely on electricity to power them, then the source of that power and the systems that supply it are of critical importance7. This dissertation draws on the broader sustainability literature to contextualize transportation and vehicle topics. It takes an applied approach to this topic that requires trans-academic and interdisciplinary research drawing on several literatures. A key contribution is the bridging of gaps in these literatures on the dissertation topic. The literatures include those concerned with: • Energy sustainability • Transportation and electricity grid technologies • Economics and valuation studies • Social and cultural studies 7 Rousseau, and D. Santini. Sorting Through the Many Total-Energy-Cycle Pathways Possible with Early Plug-In Hybrids. Center for Transportation Research, Argonne National Laboratory, 2007. 9 • Technology diffusion • Evaluation framework studies The literature on sustainability is extremely broad and includes such authors as Costanza, Daly, Rees, Metz and a great many others. This general literature sets the context and rationality for sustainability, as well as illustrating particular topics in transportation and vehicle technology and raising new paths of enquiry. Five strategic technical approaches can be found in the literature for transitioning towards energy sustainability8: 1. Development and integration of renewable energy supply; 2. Reduction of demand through sustainable technological and systemic efficiency; 3. Reduction of demand though behavioural change triggered by technological change; 4. Sequestration of fossil fuel greenhouse gases (GHG) and control of other pollutants; and 5. Utilizing transitional carbon-free non-renewable energy sources9. This dissertation examines the first three approaches, and other approaches are considered as required. Writers of interest on sustainable technology issues include Sawin, Martinot and Sorensen, as well as specialists in specific technologies. Conventional economic writers consulted include Pearce and Kammen. Shimon Awerbuch contributes a valuable analysis on financial approaches to risk and energy 8 Developed from such comprehensive works as: Metz, B. et al, Intergovernmental Panel on Climate Change, Working Group III, Climate Change 2001: Mitigation: contribution of Working Group III to the third assessment report of the Intergovernmental Panel on Climate Change (Cambridge; New York, Cambridge University Press, 2001); and S. Rayner and E. L. Malone, Human Choice and Climate Change (Columbus, Ohio: Battelle Press, 1998). 9 Nuclear fission (e.g. Pebble Bed Reactors), fusion and, occasionally, large hydroelectric are considered as transitional technologies based on technology and resource use impacts for reasons explained in Chapter 2. 10 supply. New approaches to valuation are developed from Spash, O’Neill, McMurtry and O’Connor, among others. Consumer demand is fundamentally linked to supply and efficiency solutions, and therefore change requires an understanding of the social dimensions of technology choice10. Technology change, such as energy efficiency measures, can contribute to behavioural change, although often in subtle and unpredictable ways. Technology uptake can initiate additional social change as new information and experience are integrated into culture. This can result in catalytic developments that transform both culture and technology11. The consideration of the socio-cultural aspects of technology choice is exemplified in the work of Rayner, Malone, Granovetter and Swedberg. The concept of IES as a means to sustainability has received very little attention. As a result there are large areas of research required, particularly in the cultural and policy areas. While white papers and speeches from this dissertation at numerous conferences over the last four years12 are one of the main bodies of work on the topic, the dissertation subject has many underpinnings in a well developed technology diffusion and renewable energy13 literature. Technology diffusion is reviewed through such leading authorities as Nakicenovic, Grèubler and Geroski. Finally, the general understandings on evaluative frameworks derive from Kuhn and Georghiou, while specific approaches draw from a wide range of authors in distinct 10 S. L. Batley, D. Colbourne, P. D. Fleming and P. Urwin, “Citizen versus consumer: challenges in the UK green power market,” Energy Policy, 29, no. 6 (May 2001): 479-487. 11 T. P. Hughes, Networks of Power: electrification in Western society, 1880-1930, Baltimore: Johns Hopkins University Press (1983). 12 PHEV 07 (http://www.pluginhighway.ca); TAC Annual Conference 2008 keynote (http://www.tac- atc.ca/english/resourcecentre/readingroom/conference/conf2008/sessions/e_session001.htm); 2005 UM conference, Renewable Energy use in Transportation (http://home.cc.umanitoba.ca/~bibeauel/cec/cec.html); PHEV 09 (http://www.emc-mec.ca/phev/en/home_en.html); etc. 13 Renewables policy and technology analysis authorities include Shimon Awerbuch, Janet Sawin, Eric Martinot, B. Sorensen. E.g.: B. Sorenson, Renewable energy: its physics, engineering, use, environmental impacts, economy and planning aspects (San Diego, Calif. New York: Academic Press, 2000). 11 fields, including technology diffusion studies, from Moore14 to Chelimski and the National Research Council. I have consulted significant literatures on such topic areas as the mitigation of climate change and fossil fuel impacts, renewable, clean and high efficiency energy systems, power management technologies, sustainable transportation modes and technologies, and efficient and demand-side technologies. The academic literature is supplemented by a review of trade journals on these same subjects and an overview of emerging technological potential15. The author also draws on longstanding experience in the transportation and renewable energy field. As this dissertation utilizes a trans-disciplinary approach to solve a real world problem, it taps a broad and complex web of social, technical, economic and supporting knowledge areas. A key contribution is the study of the relationship between technical and social valuation. To illustrate the relevant interactive forces and their implications, diverse disciplines such as cognitive psychology and philosophy are also drawn upon, with reference to metaphors and models that can be used to re-formulate the problem/solution matrix. Sociological and philosophical approaches to technology are also consulted. 1.5.2 Tri-Partite Method There are alternatives to fossil fuels. I evaluate the positive options for vehicles use that can also have the largest beneficial effect on society. Technology, as currently applied, has become a large part of the problem, and therefore adapting technology must be a large 14 National Research Council (NRC), “Energy Research at DOE: Was It Worth It?” National Academy of Sciences, 2001, section 2: 13-19. 15 For example the potential development of very cheap solar energy using electrostatic vapour deposition see Xianghui Hou and Kwang-Leong Choy, “Synthesis and characteristics of CuInS2 films for photovoltaic application,” Thin Solid Films, 480-481 (1 June 2005): 13-18. Also safe inexpensive batteries (such as magnesium, zinc air or lithium iron phosphate) with high energy and power densities could functionally eliminate fossil fuel reliance in almost all energy sectors. See: Aurbach, Doron et al, “Solid-State Rechargeable Magnesium Batteries,” Advanced Materials, 15, no. 7-8 (2003). 12 part of the solution. I also considered the three core elements of “good science” in academia as identified by Costanza16. 1. Envisioning how the world works and how it ought to work 2. A systematic analysis appropriate to and consistent with the vision 3. Implementation appropriate to the vision. As Costanza emphasizes, “scientists generally focus on only the second of these steps, but integrating all three is essential to both good science and effective management”17. This idea is core to the general structure and focus of this dissertation. Therefore, I examine how technologies fit the requirements for a sustainable, cost-effective, efficient and achievable IES. To complete this analysis, I utilize three methods: 1. I develop a broad context that frames the problems of and solutions for fossil fuel use. From this I develop a framework of multiple criteria that technologies and their systems must meet to be achievable and sustainable. The focus is on the vehicle technology options that can function sustainably in an integrated energy system. 2. Each of the criteria is investigated in detail. Standard economic cost-benefit factors are considered using research, capital costs and efficiency in order to compare options. Non-monetizable social and environmental characteristics of technology uptake are identified and combined using a multi-attribute approach. 3. The criteria used and attributes required to select appropriate vehicle technology systems are applied to assess which system promises the best policy directions and overall societal outcomes. This tripartite process outlines the technologies and their interlocking relationships, the multi-dimensional shape of the process, and most importantly, which technologies can 16 Costanza, R., “What is ecological economics?” Ecological Economics, 1 (1989), 1-7; and Costanza, R., “Visions, Values, Valuation, and the Need for an Ecological Economics,” BioScience, 51 (2001), no. 6:459. 17 Ibid 13 realistically meet the requirements for adoption in a sustainable and IES. The process demonstrates that technologies exist as a part of social systems, and that these larger frameworks, complex models of interconnected social and technological elements, must be examined together to develop realistic policy decisions. The comparisons of two promising models, hydrogen fuel cell vehicles and PHEV, are a direct result of the literature and the criteria and attribute analysis. The dissertation relies on the existing literature on fossil fuel resources, transportation technologies and the mitigation potential of renewable and clean energy technologies, as well as their implementation issues. Combining a comprehensive overview and a focused technology study, this dissertation attempts to address issues of context and core detail respectively18. 1.5.3 Dialogue with Experts in the Field Transportation and energy technologies are being infiltrated rapidly by Information Technology (IT) systems, not simply by the use of computer chips, but also by the application of intelligent systems to automate and optimize operational processes. This process is in very early development—in many cases at the conceptual stage. Concurrently, new “smart” technologies are being developed, from renewables for the grid to fuel cells, batteries and control systems for vehicles. As a contributor to this process, I have been able to talk with many of the technical and policy experts in the field. Discussion with experts in diverse technology fields, including Andrew Frank,19 Jasna Tomic and Willett Kempton20, helped augment some of the technical and economic understandings presented in this dissertation. 18 Richard J.T. Klein, E. Lisa F. Schipper and Suraje Dessai, “Integrating mitigation and adaptation into climate and development policy: three research questions,” Environmental Science & Policy, 8, no.6 (December 2005): 579-588. 19 Professor Frank, the father of the modern PHEV, heads plug-in hybrid research at UC-Davis and is the lead advisor on the subject to the US Congress and US President. 20 Kempton is the originator of the Vehicle to Grid concept. 14 1.6 CHAPTER ORGANIZATION Chapter Two examines the complexity of the energy and transportation sustainability problem as a prerequisite for developing corresponding solutions. I examine the specific issues of urban vehicles and the main technological approaches and choices for lowering emissions and approaching sustainability. The IES model is defined, developed and discussed as a unique opportunity and unifying approach to electrification. Sustainability criteria are developed for technology selection in order to populate the IES using STEP. From Chapters Three to Six inclusively I formulate, investigate and rationalize the specific criteria that will be incorporated into STEP. In Chapter Three the technical and sustainability criteria are developed for STEP. Chapter Four discusses monetary and efficiency requirements, examining alternative economic approaches to difficult-to- monetize values, critiquing the traditional methodologies and exploring the overall issues of monetization. In Chapter Five, the complex issues of non-monetizable valuation are investigated. Chapter Six examines the issues of technology diffusion and social and political uptake. Current thought on the social aspects of technology diffusion and uptake are examined, with historical examples. Chapter Seven uses STEP to evaluate hydrogen fuel cell and plug-in hybrid vehicles. These technology systems were previously assessed, from the emerging technology choices, as having the greatest potential to maximize social, environmental and economic benefits by being part of an IES. I then examine how the outcomes address the problematique and apply to future policy directions and actions. Chapter Eight summarizes the outcome of the evaluation process and the policy conclusions and contextualizes the dissertation within the larger field of sustainability. 15 CHAPTER 2 – THE PROBLEM / SOLUTION MATRIX 2.1 THE GENERAL DILEMMA The world today is dependent on fossil fuels. At the same time, the growing use of fossil fuels, primarily in energy generation and transportation, is a major contributor to large and diverse pollution and GHG emissions impacts21 and climate change. In global footprint analysis, the ecosystem area required for CO2 absorption from anthropogenic sources, primarily fossil fuels, make up over half the per capita average footprint22. As some future transportation fuels may be continued to be produced from fossil fuel, it is critical to understand the issues surrounding fossil fuels and their alternatives. The burning of fossil fuels and the cumulative effects of fossil fuel extraction processes23 result in a broad range of impacts that affect every aspect of biological life. Climate change is already causing documented species extinctions and migrations that are dispersing the ecosystem communities of life24. The health effects alone on human populations, particularly children and the economically disadvantaged, are significant25. The unprecedented scale and breadth of these collective impacts endangers the global community and, if we stay on our present course, will severely test how contemporary 21 Ibid. and Victor G. Gorshkov, Anastassia M. Makarieva and Vadim V. Gorshkov, “Revising the fundamentals of ecological knowledge: the biota-environment interaction,” Ecological Complexity, 1, no.1 (March 2004): 17-36. 22 Mathis Wackernagel, C. Monfreda, and D. Deumling, “Ecological Footprint of Nations”, Redefining Progress Sustainability Issue Brief, November 2002 Update. Also: Jonathon Loh, ed., Living Planet Report 2002, World Wildlife Fund. 23 The oil and gas industry in the U.S. alone creates more solid and liquid waste than all other categories of municipal, agricultural, mining, and industrial wastes combined. O'Rourke, Dara and Sarah Connolly, “Just Oil? The distribution of Environmental and Social Impacts of Oil Production and Consumption,” Annual Review of Energy & the Environment, 28, no. 1 (2003): 587. 24 Fossil fuel impacts are implicated in the break-up of ecosystem communities, see: Carly J. Stevens et al “Impact of Nitrogen Deposition on the Species Richness of Grasslands,” Science, 303 (2004): 1876-1879. 25 Respiratory implications are discussed in Richard Duke, Robert Williams and Adam Payne, “Accelerating residential PV expansion: demand analysis for competitive electricity markets,” Energy Policy, 33 no. 15, October 2005, pp 787-800. 16 societies, governments and corporations will endure26. Emissions continue to grow rapidly in Canada. Although some EU nations now appear to be close to achieving Kyoto compliance27, much of the world, including Canada, seems unable to meet even the minimal emission levels agreed to in the 1995 Kyoto Protocol. Fossil fuel impacts are being investigated in ecosystems around the globe and profound and negative effects are being recognized locally and regionally as a result of the high level transfer of airborne pollutants, both aerosols and particulates. Some outcomes, such as increasingly warmer climates in northern latitudes, could be seen as apparently beneficial, but these “benefits” are accompanied by the destruction of local ecosystems by disease vectors, uncertain rainfall and temperature patterns. The speed, scale, uncertainty and intensity of these impacts, as well as the loss of ecosystem diversity and the risk of these systems experiencing threshold collapses to lower entropic levels, are part of a larger catastrophe in the making28. It appears that we are in uncharted territory as we unconsciously and perhaps irreversibly alter the systems that support life on our planet. While coal is the primary fuel for producing electricity, oil and gas are the fuels that drive much of industry and transportation. These fuel resources are concentrated in relatively limited geographic areas and are subject to political, geological and transportation risks. For transportation, the point at which oil demand exceeds production capacity, known as peak oil29, will signal increasing prices that could only be relieved through combined demand reductions from conservation, efficiency gains and technological substitution. 26 While the cost benefit ratios of compromising ecosystem services against social good are hard to calculate and vary by location they are generally in favour of mitigating greenhouse gas, particularly for the poor, See: David Pearce, “Managing Environmental Wealth for Poverty Reduction, Poverty and Environment Partnership MDG7 Initiative”, Economics 2005: 18. 27 Report from the Commission of the European Communities, Progress Towards Achieving the Kyoto Objectives, (2006) Brussels, 27.10.2006. http://eur-lex.europa.eu/LexUriServ/site/en/com/2006/com2006_0658en01.pdf 28 World Resources Institute, Millennium Ecosystem Assessment 2005–Synthesis Report (Washington DC: Island Press, 2005). 29 A classic study is: C.J. Campbell and J.H. Laherrère, “The End of Cheap Oil”, Scientific American March 1998: 80-86. Recent studies include: Robert L. Hirsch, Roger Bezdek, Robert Wendling, “Peaking of World Oil Production: Impacts Mitigation and Risk Management”, DOE Assessment Report, February 2005 17 The risk of higher prices or supply disruptions for transportation affects every sector of society. The growing reliance on and resulting emissions from fossil fuel use arguably is the major contributor to this intensifying and multilayered crisis. This reliance is the result of increasing population growth and increasing per capita use of energy. When we consider all the impacts of a fossil fuel-driven industrial society and the processes by which ecosystems maintain themselves, we are left with a disturbing conclusion: our present use of fossil fuels is dangerously undermining the structures that maintain all aspects of life, society and economies30. 2.2 THE URBAN TRANSPORTATION PROBLEM Modern societies are profoundly dependent on fossil fuels for providing transportation, particularly moving people and goods in urban areas using personal and freight delivery vehicles. At the same time, the current use of these vehicles is unsustainable31. Impacts from the use of oil, the paving over of land for roads and parking, and congestion from the increasing use of private vehicles all contribute to this long-term problem. While oil is currently the primary fuel for urban transportation, the supply is becoming more uncertain. Potential shortages or extreme price fluctuations of these fuels will cause disruptions to every aspect of the supply chain, from food production and industrial activity to the movement of goods and people. A burgeoning literature on the potential for “peak oil” makes clear that unless new pathways are found for long-term energy sustainability, our present industrial society has poor prospects32. 30 The 2005 UN Study with 1,300 scientist contributions from 95 countries studied a broad range of core human well-being and natural capital issues. It has shown that the long-term effects of climate change, largely triggered by fossil fuel use are one of the main drivers that could lead to overall global collapse. UN Millennium Ecosystem Assessment. 2005a. Millennium Ecosystem Assessment–Synthesis Report. Washington DC: World Resources Institute 31 J.H. Kunstler, The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-first Century (New York: Grove Press: 2005). 32 Ibid. 18 As a result, alternative fuels and methods of powering vehicles are under serious investigation. The viable options for new technology pathways to replace current vehicle systems are limited. Current gasoline and diesel vehicles can be made far more efficient, biofuels can replace part of this fuel supply, coal can be converted via the Fischer- Tropsch or other methods into transportation fuels or vehicles can use grid electricity33. All of these options would continue to use fossil fuels, including, in some cases, non- traditional transportation fuels, such as coal. This requires an understanding of potential transportation fuel sources and their possible impacts. For example, if electricity is to be an important transportation fuel, then the impacts of coal use for electricity production must be considered. Whatever the technologies and fuels of the future, we must clearly understand their impacts as well as their benefits. Increasing use of land for transportation purposes displaces natural ecosystems, farmland and urban space. In cities, many of which are built on extremely fertile and bio-diverse sites, much of the land base is dedicated to transportation use. This varies based on urban densities and planning. Dispersed land uses—popularly termed “suburban sprawl”— necessitate energy-intensive motorized travel. Present suburban patterns will demand ever-more energy inputs and will not remain viable with greater competition for energy and space in the future. About 25% of GHG emissions in Canada are from the transportation sector34, a majority of which are from light duty passenger and freight vehicles. The term LDV specifically refers to class 1 and 2 vehicles with a GVW of less than 8,500 pounds (3,855.5 kg). In this dissertation, this term, along with “the automobile”, urban vehicles and city fleets, is used to describe private passenger vehicles and delivery vehicles used in urban settings. These are the majority of vehicles that occupy city and municipal streets and are the main 33 John J. Marano and Jared P. Ciferno, “Life-Cycle Greenhouse-Gas Emissions Inventory For Fischer- Tropsch Fuels,” U.S. Department of Energy National Energy Technology Laboratory, June 2001. 34 Transport Canada, “Transportation in Canada 2006” http://www.tc.gc.ca/pol/en/Report/anre2006/Chpt-5e.htm 19 focus of this dissertation. Understanding the scope and dimensions of the sustainability problem and clearly defining the details to be addressed are critical to success. Identifying the optimal solution requires an analysis of the problem set that is clear, concise and comprehensive. 2.3 TECHNOLOGY CHOICES FOR THE IES From a purely technical perspective, the IES is transportation’s use and possible return of energy to the grid. It may take some time to fully develop the capability to share energy supply and demand through advanced storage capability. However, there is potential capacity in the transportation sector to support grid supply. Stationary storage can complement this support, at additional cost, as in-vehicle energy storage should be pre- existing, feasible and available. Technically, the storage/return process is dependent on several factors, including the overall efficiency of the conversion or storage and release process, its robustness and longevity, and the overall cost of such systems per unit of capacity. What is important is that the technologies are able to function effectively, and to integrate with grid and transportation systems, while providing benefits for both. The candidate technological systems must be efficient, cost-effective, sustainable, and take into account social values. I have identified the key technical requirements for transportation technologies as: lower levels of emissions than current technologies; long-term supply potential; and the storage capacity to accumulate, store and eventually feed back power into the grid. Only three major types of systems meet these basic technical conditions for supply and demand sustainability: battery electric vehicles (BEV), Hydrogen Fuel Cell Vehicles (HFCV) and PHEV. Battery technologies are considered an extension of the PHEV model, where the gas engine gradually becomes smaller and eventually disappears. Other types of fuel cells, such as methanol, may also be contenders, but are less advanced and can be represented by HFC. I have listed the three contenders below in Table 2.1, along with other advanced transportation options, such as the internal combustion engine (ICE), for comparison (See Appendix 3). These ICE are not conventional technologies, but 20 represent the most advanced engine technologies available. Some outlier technologies, such as compressed air vehicles, are absent because of limited applicability and data35. Other technical approaches, such as energy transformations (including the Fischer- Tropsch process) are not considered, as they are energy demanding and produce high levels of emissions. Biofuels are referenced, although they can satisfy only a part of current needs sustainably. Algae may also offer future potential. The technologies are introduced with general initial ratings for efficiency, emissions and research and development maturity. TABLE 2.1 CHARACTERISTICS OF TRANSPORTATION DRIVE OPTIONS TYPE OF ADVANCED VEHICLE POWER UNIT ENERGY EFFICIENCY EMISSIONS LEVEL: GHG / POLLUTANTS R&D LEVEL Diesel ICE (ICE-D) Medium Medium / Medium Medium to High Gasoline ICE (ICE-G) Low/Medium Medium Medium to High Battery Electrical Vehicles (BEV) Very High Zeroa (renewables) to Low (fossil) Low to Medium Full or blend bio-diesel ICE (ICE-BioD) Medium Low / Medium Medium to High Bio-fuel gas or blend ICE (ICE-BioG) Medium Low / Medium Medium to High Hydrogen fuel cell vehicle (FCV-H2 Low to Medium Zero (renewables) to Medium / High (fossil) Low to Medium Plug-in Hybrid (PHEV) High Zero to Medium Medium to High a For both GHG and Pollutants by category for renewables or fossil generated in 2005. This table was generated with the assistance of Dr. Eric Bibeau, University of Manitoba. What Table 2.1 illustrates is that PHEV and EV are more efficient than other alternatives, although PHEV, while more advanced technically, are dependent on duty cycle. HFCV 35 P. Denholm and G.L. Kulcinski, “Life cycle energy requirements and greenhouse gas emissions from large scale energy storage systems” Energy Conversion and Management, 45 (13-14), pp. 2153-2172 (2004); R.M. Dell and D.A.J. Rand, “Energy storage: A key technology for global energy sustainability”, Journal of Power Sources, 100 (1-2), pp. 2-17 (2001). 21 and EV can deliver zero tailpipe emissions, but the energy source of the generation mix is the main variable. PHEV and HFC are the models selected for evaluation using STEP. The two candidate technologies considered here appear to meet the basic economic, environmental and social requirements. They each potentially provide multiple solutions that can integrate the electricity grid and the transportation system to produce a future sustainable energy system. These technologies are the key vehicle drive components of the IES and are tested against the criteria sets developed throughout this dissertation. The plug-in hybrid model has only in recent years become well known to the public whereas hydrogen is well known and has a large critical mass of research expertise. These options have the potential to interact with intelligent grids as well as to perform in a future V2G model36, within an IES. They are overviewed in chapter 7 and evaluated using STEP in sections 7.5 to 7.9. 2.4 FOUR DRIVERS FOR CHANGE Clearly there are many reasons to change our vehicle driving practices. A wide and diverse body of literature, including scientific consensus from the Intergovernmental Panel on Climate Change (IPCC) and other scientific bodies, is that GHG from fossil fuel use are the principal contributor to climate change37. Fossil fuel use produces airborne pollutants, recently termed “Criteria Air Contaminants” (CAC), which are a range of gaseous contaminants including ozone and harmful particulates38. CAC negatively impact human and ecosystem health in a wide variety of ways. As well there are large waste streams and pollutants from the production of fossil fuels and the operation of automobiles. As described in Section 2.2, fuel supply risk and land use planning issues 36 Willett Kempton and Jasna Tomic, 2005: 268-279. Also W. Kempton and Steven Letendre, “Electric Vehicles as a New Source of Power for Electric Utilities,” Transportation Research, 2, no.3 (1997): 157-175. 37 Metz, et al, IPPC, 2001. 38 Criteria Air Contaminants (CAC) are defined by Environment Canada: http://www.ec.gc.ca/cleanair- airpur/Criteria_Air_Contaminants-WS7C43740B-1_En.htm 22 are other primary reasons a shift in transportation practices is necessary. As we consider these primary drivers for change and their potential solutions, an opportunity also exists to maintain and enhance social equity and access to transportation. If we examine the literature, we see that these “drivers” encompass many different disciplines. The problems are complex and interrelated. It is useful to create a model of the problem that is both simple enough to grasp and complex enough to effectively reflect the reality of the situation. To that end, I have developed four primary drivers that effectively define the transportation problem, ranging from fossil fuel use impacts, emissions and waste products, to fuel supply and land use. These drivers simply and comprehensively capture all of the key problems of urban vehicles. This approach touches on all of the relevant issues in a model that can be understood by all stakeholders. The four drivers may be summarized as: 1. Climate change 2. Emissions/pollutants harming human and ecosystem health 3. Energy supply risk 4. Land use and planning issues These four drivers for change involve a range of different traditional disciplines, each providing their independent and differing solutions, but which are also highly interactive and must be understood and addressed together to meet the complex and uncertain problems we face. This is difficult because of the specialized and linear approach favoured by academia, business and government. However, for the purposes of this discussion, I consider them separately in sections 2.4 through 2.7 below. 2.5 CLIMATE CHANGE IMPACTS FROM FUEL CHOICES Transportation can be fuelled by any energy source, but the current primary energy source is oil. Other fossil fuels such as natural gas and electricity (often from coal) are being considered and marginally used, but these sources vary in their impacts and potential for 23 use. The scientific consensus is that GHG largely from fossil fuels are the leading cause of climate change, and that this will continue to have enormous global consequences39. Ice core data reveal that CO2 levels in the atmosphere are unprecedented40. Fossil fuel use is the major source of new anthropogenic GHG introduced into the carbon cycle. The body of literature on this topic ranges from the reports of the IPCC to United Nations and academic papers. This general literature suggests that the impacts of anthropogenic GHG will affect human societies and ecosystems profoundly. Such impacts are already occurring in unforeseen and alarming ways and the latest understanding is that climate change is proceeding much faster than predicted by the IPCC41. Oil is the current transportation fuel of choice because of its portability, energy density and ease of use. Oil has been internationally traded for many decades, providing about 40% of global energy and grid electricity42. Like other fossil fuels, the output of CO2 from oil is directly related to the amount of fuel utilized, but other GHG contributions, such as ozone and nitrous oxide, vary by engine type and condition. GHG emissions per unit of energy supplied vary by fossil fuel type. Emissions from oil are higher than from natural gas but less than from coal per energy unit produced. Energy generation from coal produces more greenhouse gas emissions and pollutants per MWhr of energy generated than from any other fossil fuel. It remains the primary source of soil and water acidification. Conventional coal technologies are cheaper to operate and as such are the primary option for many developing countries where much of the future increases and shortages in 39 Globally, carbon dioxide produces about 55 % of anthropogenic greenhouse gas (GHG) impacts, CFCs (chlorofluorocarbons) 25 %, methane 15 %, and nitrous oxide about 5 %. Energy sector fossil fuel contributions in Canada are 81% of overall GHG emissions: Environment Canada. Canada's Greenhouse Gas Inventory 1990-2003. Greenhouse Gas Division, 2005a. Ottawa, Ontario. 40 As early as 1999 definitive ice-core data showed record high CO2: J.R. Petit et al, “Climate and atmospheric history of the past 420,000 years from the Vostok ice core, Antarctica,” Nature 399: 429-436, 1999. 41 Metz et al, IPCC, 2001. 42 International Energy Agency and Organisation for Economic Co-operation and Development, World Energy Outlook to the Year 2030 (Paris, IEA: OECD, 2004). 24 energy generation are occurring43. There is some research funding for clean coal but policy and planning decisions are principally based on low cost, and largely ignore the mitigating potential of alternatives such as distributed combined heat and power (CHP) and renewables44. Coal is also the fossil fuel of choice for baseload electricity, which requires an inexpensive and reliable fuel supply where hydroelectric and nuclear are absent. Coal can be used as an automotive fuel using the Fischer-Tropsch method to convert it to a liquid fuel which produces high levels of GHG45. Coal will be the most challenging electricity-producing resource to replace or sequester as its use continues to grow rapidly, particularly in developing countries like China. Although research efforts towards producing clean coal are ongoing, it will take years to yield successful commercial results, if this is even possible on a large scale. The primary problem in this regard is the sequestration of GHG at a reasonable cost. Enhanced Oil Recovery (EOR), practised in North Dakota’s gasification plant as well as the EnCana field in Weyburn Saskatchewan46, is one example of possibly low cost sequestration. Options such as mineralization, biological treatment and in-ground sequestration as carbon hold some promise, but these options make coal generation far more expensive and probably uncompetitive with renewables even in the near future. In any case, capture of GHG, primarily CO2, from fossil fuel emission, is likely to be expensive; it may, however, provide an interim solution. Only nuclear energy, natural gas and hydroelectricity generation can produce the scale and dispatchability47 of coal for current systems. Nuclear energy generation emits very low GHG emissions per energy unit produced, on the order of 4% of coal on a life cycle 43 World Coal Institute, Coal: Secure Energy (World Coal Institute, 2005). 44 Distributed renewable generation options in: Awerbuch, Shimon, “Restructuring our electricity networks to promote decarbonisation,” Working Paper 49, Tyndall Centre for Climate Change Research (2004). 45 Marano and Ciferno 46 Eliason, D. and Perry, M., “CO2 Recovery and Sequestration at Dakota Gasification Company” (Dakota Gasification Co., October 2004). 47 Dispatchability is the ability to call on for power within a reasonable timeframe. 25 basis48. However, this does not necessarily solve the problems identified by two other drivers: fuel supply and emissions and wastes. Nuclear energy generation has poor public acceptance and has been historically more expensive, with additional safety, security and waste disposal costs that need to be addressed and resolved in terms of public perception. Natural gas has about half the carbon emissions per unit of energy generated when compared to coal. It has some regional application for baseload generation depending on resource location, but it also has multiple demands for industrial, commercial and residential use that will reduce the longevity of its supply. Gas resources are unevenly located geographically and are harder to transport over water, although stocks are similar in quantity to oil49. Large hydroelectric dams are limited by terrain and water supply. There is a ceiling to new hydroelectric supply and future uncertainties with water resources in some regions from climate change impacts. Relative GHG production per unit of energy can be compared using tools such as RETScreen and GHGenius50. The production of biofuels is also problematic in that fossil fuel inputs are required for manufacture, including vehicle fuels and electricity from the grid. Because of the numerous input factors and technologies involved, the benefits of biofuel over conventional fuel can vary widely by production facility, ranging from marginal decreases in carbon production to substantial savings in emissions. 2.6 EMISSION IMPACTS The refining and end use of fossil fuels, through generation or by consumption, produce a well-known spectrum of pollutants. CAC are impacting human and ecosystem health. Suspended Particulate Matter (PM), especially less than 2.5 nanometres in diameter, has 48 Nuclear energy generation produces at least 4% on a kilotonne per Terawatt hour (kt/TWh) basis. 49 Campbell and Laherrère, 1998 50 A leading tool for project and emissions comparisons is RETScreen available from Natural Resources Canada. http://www.retscreen.net/ang/home.php. GHGenius can be used to evaluate the emissions from transportation fuels, see: http://www.ghgenius.ca/ 26 been implicated in respiratory and cardiac problems51. Pollutants such as sulphur oxides produce acidification of airshed soils and inland waters located downstream from coal burning generation plants. Fossil fuel exploration and extraction also produce a range of upstream to downstream impacts52. Even CO2 acts as a pollutant, creating warming and acidification of the oceans from additional CO2 absorption. Acidification is a prime example of unforeseen emission impacts. It affects coral reefs and marine shell animals by corroding shells and calcium accumulations and inhibiting further growth53. We are learning that CO2 can act as a catalyst, increasing mortality by intensifying the toxicity and effects of other emissions54. Other natural cycles are also being disrupted by fossil fuel burning. Nitrogen deposition, primarily from coal-fired plants, has been implicated in the disruption of European grasslands by lowering biological diversity–and ecosystem resilience–by favouring a few species over others55. The effect of continuous nitrogen deposition, which may interact with increases in CO2, is leading to a radical shift in the distribution of plant species. Emissions from passenger vehicles, freight and aircraft are growing rapidly, despite advances in energy intensity56 and efficiency57. The projected increase in emissions from air travel alone is expected to dwarf other sources because of the volume of these emissions. Because these emissions are deposited at high altitudes, their overall impacts 51 Respiratory implications are in Duke et al, pp 1912-1929. 52 For an analysis of oil industry impacts alone see: O'Rourke et al. 53 Royal Society, Ocean Acidification Due to Increasing Atmospheric Carbon Dioxide (Cardiff, UK: The Clyvedon Press Ltd, 2005). 54 Mark Jacobson (Stanford University), “Carbon Dioxide Emissions Linked To Human Mortality,” Science Daily, 4-5 (January 2008). 55 Stevens et al. 56 Energy intensity is energy used per unit of production – in this case horsepower per unit of fuel. 57 Emissions are growing. See: The Centre for Sustainable Transportation, “Sustainable Transportation Performance Indicators,” (Toronto, 2002); and Wolfgang Orasch and Franz Wirl, “Technological Efficiency and the Demand for Energy (Road Transport),” Energy Policy 25, no. 14-15 (December 1997): 1129-1136. 27 are exacerbated58. By its very nature, transportation has very few point source emissions that can be sequestered, as tail pipes and exhausts are highly distributed, and controls would have to be systematic. Many of these emission impacts result in a multiplicity of downstream human health problems. The direct effects of pollution are more easily recognized than the indirect effects of climate change on health. Direct effects include the growing rates of cardiac and respiratory diseases, mercury poisoning and other pollution effects, including endocrine disruption, the presence of cancer markers and progression to cancer from exposure to air pollution59. Additional impacts include increases in a range of disease vectors, changes in agricultural crop output, water shortages, floods and waterborne diseases60. Transportation emissions play a large role in contributing to these impacts which may result in unknown tipping points, imposing a runaway change in climate. Table 2.2 compares the primary generation cost of different energy supply options with conventionally calculated external costs, primarily emission costs affecting human and ecosystem health. The limited externalities considered do not include risk issues and a range of social and environmental costs that will be outlined in later chapters. The lack of inclusion or difficulty in appropriately valuing such externalities remains a critical problem when selecting technology pathways and individual technologies. 58 R. N. Colvile, E. J. Hutchinson, J. S. Mindell, and R. F. Warren, “The Transport Sector as a Source of Air Pollution,” Atmospheric Environment 35, no. 9 (2001): 1537– 1565. 59 Reviewing Frederica Perera’s work on pollution and cancer markers: see Stefano Bonassi and William W. Au, “Biomarkers in Molecular Epidemiology Studies for Health Risk Prediction,” Mutation Research/Reviews in Mutation Research 511, no. 1 (March 2002): 73-86. 60 Francesco Bosello, Roberto Roson and Richard S.J. Tol, “Economy-Wide Estimates of the Implications of Climate Change: Human Health, Ecological Economics,” Ecological Economics 58, no. 3 (25 June 2006): 579-591. 28 TABLE 2.2 ELECTRICITY GENERATION COSTS WITH EXTERNAL IMPACT COSTS Source Generating Cost (cents/kWhr) External Costs (cents/kWhr) Total Costs (cents/kWhr) Coal/lignite 4.3–4.8 2–15 6.3–19 Nuclear 10–14 0.2–0.7 10.2–14.7 Natural Gas (new) 3.4–5.0 1–4 4.4–9.0 Biomass 7–9 1–3 8–12 Hydropower 2.4–7.7 0–1 2.4–8.7 Solar (PV) 25–50 0.6 25.6–50.6 Wind 4–6 0.05–0.25 4.05–6.25 From: Janet Sawin, 2002. “Charting a New energy Future”, State of the World 2003, Worldwatch Institute 2.7 CURRENT SUPPLY ISSUES Most scenarios examining global oil and regional natural gas resources are beginning to predict peak production in the near future, which will create serious fuel supply disruptions61. These disruptions may be contingent on demand variability and political and technological factors, and be independent of total resources available62. Supply disruptions will have serious implications for all sectors, from the movement of goods and persons to agricultural production and food supply. Energy supply security issues alone outweigh most other global problems. One estimate of the total annual costs of simply keeping the sea-lanes open for oil from the Middle East to the U.S. is $55 to $96 billion per year63. The seriousness of the supply issues, particularly for oil and natural gas, periodically enters both the public discourse and 61 Campbell and Laherrère. See also the latest: Department of Energy, “Energy Information Administration Report,” International Energy Outlook 2009 (IEO2009) 62 Ugo Bardi, “The Mineral Economy: A Model for the Shape of Oil Production Curves,” Energy Policy 33, no. 1 (January 2005): 53-61. 63 International Center for Technology Assessment (CTA), “The Real Price of Gas,” Report Number 3 (1999). In a 2005 update the range of military costs were estimated to be between $48 and $113 billion. 29 government and industry discussions, based on price fluctuations. The need for a secure and reliable oil and gas supply is crucial for transportation in modern economies. Supply shortages will cause severe social and economic disruptions as prices rise and activities such as transportation and agriculture become economically less viable. Resource development is becoming an increasingly risky procedure as increasingly only difficult and currently inaccessible resources remain for future extraction. Most fossil fuels require a lengthy and complex process of extraction beginning with exploration, which can result in actively producing wells or mines. Reserves are often expressed in terms of years of supply at current production. For example, the International Energy Agency (IEA)64 and the World Coal Institute65 show proven reserves based on current production at 164 years for coal, 67 years for natural gas and 41 years for oil. Gas and oil reserves have higher energy densities, (energy content by volume or weight) than coal. They are more flexible in use and more readily converted to other fuels and products without energy and emission penalties. These and other factors push increases in demand, which results in constant exploration and the exploitation of remaining reserves. Table 2.3 shows the gas consumption and potential gas resources for North America and the world in comparison to global oil data. 64 International Energy Agency and Organisation for Economic Co-operation and Development, 2004. 65 World Coal Institute, Coal: Secure Energy (World Coal Institute, 2005). 30 TABLE 2.3 GAS AND OIL RESOURCES IN EQUIVALENT UNITS Natural Gas North America N. America Oil Equivalent* World World Oil Equivalent* Oil Data (comparison) Consumption 1996 18 Tcf 3 Gboe 80 Tcf 14 Gboe 23 Gb Produced 1,230 Tcf 224 Gboe 2,200 Tcf 400 Gboe 761 Gb "Reserves" 152 Tcf 28 Gboe 4,800 Tcf 870 Gboe 800 Gb Undiscovered 168 Tcf 30 Gboe 2,250 Tcf 410 Gboe 189 Gb Remaining (Res. + Undis) 320 Tcf 58 Gboe 7,050 Tcf 1,280 Gboe 989 Gb Ultimate 1,550 Tcf 282 Gboe 9,250 Tcf 1,680 Gboe 1,750 Gb * 5.5 Mcf = 1 boe, or 5.5 Tcf = 1 Gboe. Tcf = Trillion cubic feet Gboe = Billion barrels oil equivalent CH4 (Natural Gas) From: Campbell and Laherrere 1998 With increasingly depleting resources a large and variable literature has developed on the topic of peak oil production, from both academic and popular sources. The resulting rise and fall of production curves is typified by Hubbert’s classic bell curve depiction66. Increasingly technological advances may reshape the production curve to plateau and crash in a different and more catastrophic manner than the standard bell curve. This, according to Bardi67 and others, is because higher prices drive increasing use of advanced technologies to maintain production levels and allow a distortion of the production curve to mask the Hubbert’s peak curve. At some point the limits of innovation and low resource availability, no matter the cost, conspire to create a diminishing production ceiling and oil production begins to collapse rapidly. This eventual threshold collapse is followed by a radical and permanent decrease in oil production. If this is the case, there 66 These range from the realistic Deffeyes prediction of 2009 (Beyond Oil: The View from Hubbert's Peak) through Campbell and Laherrere’s middle-of-the-road forecast (2010-2020) to the latest optimistic 2000 USGS report (2013 to 2037). A current work is Robert L. Hirsch, Roger Bezdek, Robert Wendling, Peaking of World Oil Production: Impacts Mitigation and Risk Management (DOE Assessment Report, February 2005). Recently a number of oil geologists have revised these projections to 2006 as the peak year. 67 Bardi, 53-61. 31 will be many warnings in the shape of periodic oil shocks, which will appear as escalating oil costs and supply failures that will finally result in an irrevocable and catastrophic permanent decline in oil availability. Such a threshold collapse may be initially indistinguishable from oil shocks and occur with little warning, allowing no time for market adjustments. However, the supply problem is extremely complex and may not simply be a question of a lack of fossil energy resources. Oil shocks and growing intermittent supply disruptions may also be the result of social, political and economic forces which complicate energy forecasting. Resource conflicts are likely to grow even more intense and will be triggered not only by energy shortages but by geo-political and economic factors. The inter- relationships between fuel supply, climate change and emission effects will be influenced by such concerns as population increases and movements, water deficits and growing energy use and social expectations. The combination of social and environmental disruptions due to climate change will interact with oil and gas supply disruptions and price fluctuations to create antagonistic impacts68. Catastrophic weather-related events and climate change impacts have strong effects on demand and supply factors. When we look to the future, the economic projections are alarming. According to the DOE International Energy Outlook (Table 2.4), growth in energy demand is expected to increase by 54% over the 24-year period from 2001 to 2025, while oil demand increases are expected to be 57%69. World energy consumption is rising due to increases in populations and access to energy. 68 Social disruptions can be the product of climate related impacts from such factors as water shortages, flooding, storm damage and sea level rises. These can cause the widespread movement of peoples and disruptions of service locally and globally. 69 Gas increases are even higher at 67%. Energy Information Administration, “The Energy Information Administration Report #: DOE/EIA-0484 (2004) Appendix A,” The International Energy Outlook 2004. 32 TABLE 2.4. HISTORICAL AND PROJECTED ENERGY CONSUMPTION World Marketed Energy Consumption, 1970-2025 1970 206.7 Quadrillion BTUs 1975 242.8 1980 285.1 1985 311.1 1990 348 **Datum rounded off 1995 368.4 2002 412 **Datum rounded off 2010 504 Estimate 2015 553 Estimate 2020 598 Estimate 2025 645 Estimate From: The International Energy Outlook 2005 Report #:DOE/EIA-0484 (2005) July 2005 On the supply-side, the demand projections coupled with declining new reserve confirmations lead to rapidly declining reserve life in most sectors. This is a worldwide phenomenon for gas and oil, the most portable, energy-dense and flexible-in-use fossil fuels, for which there currently appears to be no viable substitutes for transportation uses. There was less than 2% spare global oil output capacity in the spring of 200570 in the face of steadily growing demand, slowly increasing production capacity, and falling reserves. There are no simple answers for fuelling transportation and energy services. In a scenario where transportation options rely on a shifting mix of fuels and electricity for energy, the efficiency of the transportation option and the supply source of that energy will determine the relative sustainability of those systems. For further discussion of energy supply security see Appendix 5. 70 “Report on Oil,” Business Week, June 16, 2005. 33 2.8 LAND USE AND PLANNING ISSUES Urban light and medium duty vehicles dominate our cities. The conception, design and planning of our cities are entirely subordinate to the presence and the role of the automobile. This has resulted in a number of interesting perspectives on the domination of the automobile and has produced concepts such as “Motordom”71, the cultural and technological domination of most of modern societies by the automobiles. This concept extends to the psychological domination of the automobile and the mythological position it has with regard to essential values such as freedom and fundamental rights of possession. Other than urban cores that pre-date the automobile, our cities are largely built to accommodate the prerogatives of automobiles at the cost of transit, cycling and pedestrian liveability. Private vehicle use incurs environmental and social costs that include: • Inappropriate land use and the loss of natural ecosystems and farmland; • Vehicle safety and health issues; • Economic opportunity costs; and • Limited access to transportation for disadvantaged groups. Land use outcomes, primarily from sprawling suburban developments and the construction of related infrastructure for transportation, are using up the best agricultural soils, as these roads are usually built and concentrated around the favoured locations where people have settled. Dispersed land use requires people to travel ever further distances, and as a result more fossil fuels are used in the process. Roads also displace and break-up some of the most diverse ecosystems. A large percentage of urban and suburban land is used for transportation. How many of these roads and parking spaces are really necessary, and how communities can be designed to minimize the use of vehicles and maximize active transportation and transit, are principally planning questions? If we 71 Peter D. Norton, “Street Rivals: Jaywalking and the Invention of the Motor Age Street,” Technology and Culture, 48, no. 2, April 2007, pp. 331-359. 34 can build communities that allow easy access to most destinations, then the use of private vehicles and the infrastructure they depend on can be drastically reduced while maintaining or even improving quality of life. 2.9 THE SCOPE OF THE SOLUTIONS The above summary of the drivers for change describes the shape of an unacceptable and seemingly intractable problem of providing transportation services without producing undesirable environmental, social and economic impacts. It also illustrates how the cumulative effects of fossil fuel use are producing unpredictable networks of serious and widespread problems that may be impossible to adapt to and difficult to predict. From an evolutionary perspective, I argue that we are engaged in three categories of human activity: behavioural, technological and infrastructural endeavours, which are increasingly inappropriate to our environments. The activities in these categories are interactive and need to evolve, through choices, to more appropriately address our current crisis. A full understanding of the scale of the problem is hard to grasp, and the full scope of the comprehensive and coordinated actions required to mitigate the impacts of fossil fuel use remains as yet unknown. Although the solutions may be difficult, long-term and expensive, they promise to be less detrimental than the dire consequences of inappropriate action or inaction. As a heuristic, recent work by World Bank economist Nicholas Stern has estimated the cost of mitigating climate change at between 1 to 2 % of global GDP, while the cost of no action would be 5 to 20% of global GDP72. What used to be called “no regrets” policy essentially argues that in fact the savings from transforming how we manage transportation, such as becoming more efficient in the face of rising costs, may, on a lifecycle basis, create widespread economic and social benefits, rather than costs73. A critical difficulty is to 72 N. Stern, The Economics of Climate Change: The Stern Review (Cambridge University Press, 2007). 73 F.Krause, Solving the Kyoto Quandary: Flexibility with No Regrets, El Cerrito, International Project for Sustainable Energy Paths (2000). 35 reverse institutional and cultural inertia or resistance to the adoption of new behaviours and technologies, in order to embrace the cultural and infrastructural changes they entail. To maintain or improve economic and social equity, financial mechanisms will be necessary to balance out transition costs as transportation systems are transformed. The negative impacts of fossil fuel for transportation may be resolved through a combination of behavioural, technological and infrastructural changes. Behavioural change involves changing the thoughts and actions of drivers and riders. Examples of behavioural change include using pricing, regulations or social marketing to encourage car drivers to take the bus, cycle, or forego unnecessary trips. This is a difficult area in which to effect change. Issues that need to be addressed include deep-rooted cultural inertia, the development of significant social and political capacity, and demonstration of the benefits of alternatives. Technological change includes increasing the efficiency of existing technologies, the introduction of new technologies or a shift to technologies that utilize improved fuels. While technology change is viewed by many as strictly a technical process, it incorporates social capacity and uptake issues that are not often considered in the change process. Infrastructural change requires that we plan our cities in a way that minimizes the need for trips and reduces the distances travelled, and to substantively include highly beneficial modes such as walking, cycling and transit. It is as necessary as the other two categories, but usually operates on longer time scales. Technological change can arguably be more rapidly implemented than the other types of activity, such as behavioural and infrastructural action. We live in an era of rapidly changing technologies which have enormous popular appeal to deliver personal, social and economic benefits. Technology change also initiates behavioural and infrastructural change, and can leverage these categories to produce fundamental societal shifts towards sustainability. This dissertation focuses on selecting the most appropriate technological 36 options to achieve this end, with the understanding that these options can catalyze cultural imperatives to instigate a more rapid and holistic shift to sustainability. We must then ask what role technology can play to address each of the four drivers, and how is it to be understood and evaluated. 2.10 TECHNOLOGY SOLUTION PATHWAYS Solution pathways for urban vehicles are limited due to the demanding power requirements of mobility. I identify and group together four possible pathways that have some potential viability: • Increasing the efficiency of current drive systems • Shifting to biofuels • Direct conversion of more plentiful fossil fuels to transportation fuels • Electrification of transportation using energy from the electricity grid All of these options have some potential to reduce overall emissions and increase supply security and lifetime, but they all have problems. While we can, and should, continue to increase the efficiency of vehicles that run on oil or natural gas, there are finite limits to how efficient they can become, while they continue to be reliant on limited oil and gas resources. This is certainly an important interim strategy that can have additional payoffs for the other pathways by, for example, reducing the need for biofuels in a fuel engine. Shifting to biofuels has some gains in efficiency, but there are land use issues that include water use, the maintenance of soil fertility (I propose the term “Peak Soil” to describe that effect), and competition with food production. There are better efficiencies from cellulosic crops and waste biomass, but all these approaches have limited potential next to electricity74 and are challenged to replace more than a few percent of the current use of transportation fuel. In the future, biodiesel produced from algae or other micro-organisms 74 J. E. Campbell, D. B. Lobell, and C. B. Field, “Greater Transportation Energy and GHG Offsets from Bioelectricity Than Ethanol,” Science, 324, no. 5930 (22 May 2009), pp 1055–7. 37 may be able to produce large quantities of fuel, but this is currently far from realization, and there are uncertainties as to the capability of such nascent technologies. The direct conversion of more plentiful fossil fuels to transportation fuels, such as converting coal to oil through such processes as the Fischer-Tropsch method, has been used for decades. Oil is produced more efficiently at larger scales and generates large carbon and other air contaminant emissions on a life-cycle basis75. There are options for sequestrating these emissions, similar to what is required for clean coal, but these technologies are still at the primary research stage and the process may be expensive and inefficient. Electrification appears to offer the best option—one that is implementable immediately. It has few technical barriers and offers potential for significant reductions in fuel use and emissions over the long term. When coal is used to generate electricity, fewer emissions are produced than from fuel conversion76. Additionally, electricity can be produced from renewable sources, such as hydro or wind, which have extremely low emissions and produce far greater efficiencies than biofuels by unit of fuel or by acre of land used77. Electrification includes a range of potential technologies and systemic pathways to implementation. The options range widely from compressed air vehicles and different kinds of fuel cells to plug-in hybrids and electric vehicles. Currently most of these technologies are limited to duty cycles that are for the most part urban. Electrification is the solution pathway selected in this dissertation as the best strategic option for technological change. There have been some recent developments in electrification technologies, but the progress and the issues have been largely technical, and to some extent, environmental. The social aspects of this cultural shift to 75 John J. Marano and Jared P. Ciferno, “Life-Cycle Greenhouse-Gas Emissions Inventory For Fischer- Tropsch Fuels,” U.S. Department of Energy National Energy Technology Laboratory, June 2001. 76 Ibid 77 V. Fthenakis and H.C. Kim, “Land use and Electricity generation: A life cycle analysis,” Renewable and Sustainable Energy Reviews, 2008. 38 electrification of vehicle fleets, including uptake issues, have thus far been inadequately discussed in the literature. I present the concept of an IES as a model that offers a more holistic view of electrification, one that adds social and other non-technical issues to the existing technical and economic discussion. 2.11 ELECTRIFICATION AND THE INTEGRATED ENERGY SYSTEM The main users of fossil fuels are the electricity generation sector (the grid) and the transportation sector, which together are by far the largest industrial grouping in the world78. These sectors have been extremely successful in providing the driving power that has resulted in a high material quality of life and consumer choice for modern industrial society, and every aspect of modern life is implicated. For the purposes of this dissertation, I characterize an IES79 as a composite of the electricity grid and the land transportation system in North America80. While off-grid systems, particularly those with intermittent power sources, can act as small scale versions of the systems outlined in this dissertation, I generally exclude remote power systems, aircraft and maritime transport, as these systems, (with few exceptions such as “cold ironing”—the use of shore power for marine vessels)81, are disconnected from the electricity grid. From the perspective of an IES, the use of electricity to power vehicles could create synergies that minimize fossil fuel use to produce an array of social benefits. In time, this transformation of fuel 78 Soares calls the electricity utilities “the largest sector in most of the industrializing world today.” Soares, C., Environmental Technology and Economics Sustainable: Development in Industry (Boston, Mass., Butterworth-Heinemann, 1999), 113. See also: H. Miller and J. Sanders, “Scoping the global market: size is just part of the story,” IT Professional, 1, no. 2 (Mar/Apr 1999): 49-54. In Canada energy businesses account for 6.8% of the GDP and 16% of total investment. See Energy Council of Canada 2003, web site, http://www.energy.ca. Worldwide it is one of three great industrial sectors (the others being the connected automotive and chemical sectors). 79 The rationale for the integration of the generation and transportation system is discussed further on. The supply and emission issues are deeply connected and that connection is cemented when we look at widespread electric vehicle use dependent on the grid. 80 US electricity industry value in 2000, $224 Billion. Energy Information Administration, Electric Sales and Revenue 2000, http://www.eia.doe.gov. 81 Air Resources Board, California Environmental Protection Agency, “Evaluation of Cold-Ironing Oceangoing Vessels at California Ports” (March 6, 2006). http://www.arb.ca.gov/ports/shorepower/shorepower.htm#Documents 39 infrastructure in Canada could affect 86% of transportation energy use, almost all of which is fossil fuel based82. In North America, an IES that is comprised of the transportation system and the electricity grid has many benefits from the perspective of the four drivers described previously. First, electricity grids and transportation systems have commonalities from a “four drivers” and a policy perspective. They provide the most essential services and are highly distributed and accessible geographically. This parallel structure allows ready access to the electricity grid for transportation electrification. It also allows great potential synergies in load balancing and energy savings to be gained. For example, Kempton has calculated that in the U.S. the passenger transportation fleet has more than three times as much potential power supply and more than eight times as much load capacity as the electricity grid83. Vehicle engines are expensive and inefficient to run continuously relative to utility generators, but there is sufficient capacity to effectively meet expensive short-term peaking needs using electricity storage in the transportation sector84. This is clearly dependent on market penetration of vehicles with electricity storage and plug-in capacity and on advances in battery technology so that there is minimum battery degradation and cost to owners. At high levels of market penetration PHEV, HFCV using electrolysis, and pure electric vehicles—which are now collectively called Plug-in Electric Vehicles (PEV85)—can provide regulatory and other services for the grid along with add-on stationary storage. Even though mobile storage is likely to be more expensive than stationary storage, it will 82 Out of 2,361 PJ of transportation energy use in Canada in 2003, 2,033 PJ or 86% was land based passenger and freight use. Natural Resources Canada, Office of Energy Efficiency, Energy use data handbook (Ottawa: Natural Resources Canada 2005). 83 Kempton and Tomic, “Vehicle-to-grid power implementation: From stabilizing the grid to supporting large-scale renewable energy,” Journal of Power Sources, 144, no. 1, June 2005. 84 Ibid and Kintner-Meyer, M, K Schneider, and R Pratt. Impacts Assessment of Plug-in Hybrid Vehicles on Electric Utilities and Regional US Power Grids. Part 1: Technical Analysis. Department of Energy, Pacific Northwest National Laboratory (PNNL), December 2006. 85 I originally coined the term Plug-in Vehicles (PV) to cover any vehicle that recharges from the grid but is un-tethered or disconnected from the grid while in operation but PEV has increasing acceptance. 40 be a sunk cost and readily available in many situations to deal with peak demand. Such a demand response may only need to utilize a portion of the vehicle fleets’ capacity to deal with grid service needs and eventually peak demand. An IES can resolve many of the grid regulation, generation and transmission challenges that electricity networks face. These resolutions can also viably address the problem of supply reliability86 (for example, recent large scale blackouts). Additionally, pure electric drive mobility is extremely efficient and therefore less costly than other options, as will be demonstrated in Chapter 7. The scope of these efficiency gains and the possible scale of application will be important to consider and quantify. While there are many possible solutions to fossil fuel overuse, some strategies, such as biofuels, have relatively minor potential, while others, such as an IES, have definite paradigm-shifting possibilities. An additional synergy and benefit is the ability of such a system to implement and integrate renewables on a large scale. Until now, there have been few incentives for this, partially due to cost factors, but also due to unfamiliarity with renewables and distributed energy in organizational cultures, particularly in the utility sector87. Matching energy storage capacity in the transportation system to new intermittent renewable resources can substantially increase reliability and lower generation and Transportation and Distribution (T&D) costs. This is exemplified by energy storage and response capability from V2G models88. Battery architectures and specifications are just beginning to be capable of meeting the performance needs for storage and release of energy. High levels of energy storage, whether mobile or stationary, offset the need for current peaking and spinning capacity. This fully utilizes existing baseload power and potentially allows the addition of any level of new intermittent renewables. 86 L. L. Lai, Power System Restructuring and Deregulation: Trading, Performance, and Information Technology (Chichester; Toronto: Wiley, 2001). See also: U.S. Department of Energy. National Transmission Grid Study. Secretary of Energy, DOE, 2002. 87 Awerbuch, 2004. 88 Kempton and Tomic, 2005b, 268-279. 41 Finally, the cost savings and efficiencies gained from this approach could significantly reduce reliance on fossil fuels. Many types and categories of vehicles can be fuelled from the grid using off-peak or new intermittent power. This could reduce oil demand to the point where cellulosic bio-fuels, which have the potential to supply about 5-6% of current transportation usage, can supply a larger proportion of fuel needs. As a result, transportation energy supply could be made secure and inexpensive, even with overall or time-of-day increases in electricity rates for vehicles. Fully utilized generation plants, with point source emissions, have higher economic incentives to becoming “cleaner” in the short to medium term. The positive geo-political implications of energy integration are considerable, ranging from increased energy independence and reductions in military spending and conflict, to a radical shift in global economic policy and security requirements, which includes reducing the expense of keeping oil lanes open from the Middle East. The potential supply interruptions from the anticipated peaking of oil supplies coupled with increasing demand from large developing economies, such as China and India, can also be reduced or even avoided89. The significant cuts to emissions and pollution, the dramatic lowering of energy costs and increasing energy security are three major potential benefits of transportation energy integration. The actual development path for an IES will require meeting specific technical criteria as well as environmental, economic and social requirements. The technology arrangements required for achieving this unification of transportation and electrical power systems are complex, but are quickly becoming realizable, and are likely to produce profound changes in the structure of both systems. 2.12 EVALUATION FRAMEWORKS The concept of utilizing criteria for evaluation purposes is not new and there are complete disciplines and over 100 journals that deal with some aspect of evaluation structures and 89 Hirsch et al. 42 frameworks. In many cases these methods are applied to scrutinize organizations and programs for accountability, often emphasizing stakeholder input90. These examples are useful to shape the construction of the framework used here, but they differ in that most evaluations are performed for very specific reasons and concerns, including: • Accountability purposes for organizations • Program evaluation • Largely quantitative measurement • Assessing subject, discipline, topic or interest area (e.g. aid) • Addressing specific concerns by region or location • Developing performance indicators etc. • Assisting multi-stakeholder input evaluation In addition to stakeholder involvement, some frameworks perform specific, self- explanatory roles, such as: participatory evaluation, stakeholder-based evaluation, empowerment evaluation, and utilization-focused evaluation91. Technology evaluation is typically performed through cost-benefit analysis and similar methods identified in Chapter 4. The evaluation process I propose to utilize incorporates comprehensive criteria for technology choice in an evaluation framework. Criteria should be as simple as possible while comprehensively capturing all relevant issues. In this literature there is noted difficulty with achieving complete or even accurate evaluation92. Comprehensiveness is relative and all evaluation frameworks, including the one developed in this dissertation, can only be considered “good enough” at best. The goal of the framework presented in this dissertation is simply to improve technology choice by 90 J. Reed, G. Jordan, and E. Vine, Impact Evaluation Framework for Technology Deployment Programs (Washington, DC: US Department of Energy, 2007). 91 Essentially an assessment of how useful a process or program is. See: M.Q. Patton, Qualitative Research and Evaluation Methods (3rd ed.) (Thousand Oaks, CA: Sage, 2002). 92 Ibid 43 including variables that are important to the selection process. Many variables, such as the submerged values I will be discussing, are often missed. Evaluation frameworks are important tools for systematizing complex and unique attributes and values for specific purposes93. Typically evaluation frameworks assess past performance. They are not typically used to forecast or select technologies and technological pathways, but are useful in demonstrating the breadth and variety of evaluation procedures. The evaluation process of “foresight” looks forward in time to develop scenarios and strategies94 and is the most similar to the evaluation framework used here. As well, foresight has a role as a policy tool and is built on a rationale—an argument for policy change—such as the four driver model used here as a heuristic tool95. Further, it can engage social and environmental contexts to integrate broader cultural trends into the evaluation process to achieve a specific goal. Overall, the framework to be developed here seeks to identify the requirements for a migration path towards a sustainable transportation culture without causing undue harm to stakeholders and societal actors. It does this by considering the viability of technologies, economic constraints on technology development and uptake, and the complex conditions of enveloping social and environmental contexts. 2.13 THE STEP MODEL To evaluate technology choices for the IES, I first build a framework of relevant criteria that flows directly from the problem and solution matrix that has been developed to this point. I construct an evaluation tool that can evaluate new technologies for use in the IES by formulating the relevant criteria, social, economic, environmental, and technical 93 Ibid 94 Luke Georghiou and Michael Keenan, “Evaluation of National Foresight Activities: Assessing rationale, process and impact,” Technological Forecasting and Social Change, 73, no. 7 (September 2006): 761-777. 95 Ibid 44 factors into a new template. This evaluation framework can be used to address technology assessment deficits and is proposed as: Sustainable Transportation = STEP Evaluation Process Clearly transportation technologies must demonstrate potential for environmental sustainability. Essentially, the measures of success derive from how well technologies solve the problems expressed in the four drivers in a timely, cost-effective manner while integrating with existing systems and maintaining social equity. Therefore they must minimize fossil fuel use and physical footprint, while being technically viable and capable of connecting to current behavioural and infrastructure needs as seamlessly as possible. They must meet efficiency requirements and, as a result, overall lifecycle cost requirements that make such projects economically viable. The transportation technology must also meet environmental, social and institutional cultural needs and reflect values such as safety and aesthetics. Finally, any technology must have broad public and political appeal. Any chosen technology must have the potential to blend into policy requirements for overall transportation needs. It should also be easily understood while being comprehensive and offer more co-benefits than other options. These requirements must be grouped and summarized in a framework that is easily understood while being as comprehensive as possible. Therefore, STEP should incorporate a range of criteria that can be applied to technologies that have the promise to advance transportation sustainability and act as a catalyst for long-term social and economic progress. I organize the key measures that address the problems of unsustainability in categories for STEP. I have formulated here four categories of relevant criteria for evaluating transportation technologies for an IES. 45 Criteria STEP uses: 1. Environmental sustainability and ability to fit current infrastructure 2. Efficiency, capital and operating costs 3. Social and submerged value 4. Social uptake and strategic potential (policies for financial and regulatory means) The criteria are to be researched and understood thoroughly in order to apply them to the selected transportation technologies. The tool will be developed keeping in mind the goal of populating the IES with LDV technologies that meet the STEP criteria within an IES model. While STEP may have broad application for other purposes, it is used here to select technologies that work for and match the breadth of the IES, including social and environmental considerations. 2.14 SUMMARY Urban transportation problems are chaotic, complex and growing. Mitigating anthropogenic fossil fuel emissions is an extremely challenging problem. The development of the four drivers provides the framework to understanding these issues in a comprehensive manner, recognizing that there are clear linkages among the four drivers for transforming the transportation system. Because these four driving forces are interdependent, it is critical that they be considered together, in academia or in policy making when developing solution pathways. For example, while fuel supply and security issues are critically important, resolution by some methods can further increase emissions, such as fuel switching to oil sands petroleum or Fischer-Tropsch fuels. Focusing primarily on securing energy supply can result in larger GHG and associated gaseous and particulate emissions from the utilization of secure fuel sources, such as coal. Even a fleet of electric vehicles largely running on renewables is not sustainable, if it is not appropriately priced and connected to land use decisions and equity. Reliance on such 46 solutions could plausibly minimize climate change and emission problems, but can result easily in higher levels of congestion and, with more land dedicated to roads and parking, can contribute to greater urban sprawl. Fossil fuel impacts from energy systems are vast in scope and critically urgent, but overall inertia and forces for maintaining the status quo are equally substantial and firmly entrenched. Part of this entrenchment has to do with the overwhelming capital costs involved in making a transition to sustainability. This transition is currently driven by oversimplified roadmaps of “clean coal” and renewables—what I call “the sustainability as usual” proposition—that do not take into account the need for resiliency and flexibility. The cost of achieving a sustainable energy system by 2030 using traditional models is estimated to be about $16 trillion U.S.96. To put this in perspective, this is equal to about one third of the gross Domestic Product of the world in 200597. A major factor is the slow rate of capital stock turnover98. As well, there are equally large technological and social critical masses and learning processes to be managed and overcome. Issues of supply and demand can limit technology uptake in two ways. First, research, development and production capacities can have limited responsiveness to economic and policy incentives. The development of appropriate technologies at competitive prices takes time, as does stock turnover and the integration of new technologies into existing infrastructure. The four driver model is a useful heuristic tool for understanding these problems in a manner that can be easily applied to policy development. However, policies should remove rather than support barriers to new models of engagement and utilize natural synergies that can minimize transition and development costs. 96 International Energy Agency and Organisation for Economic Co-operation and Development, World energy outlook to the year 2030 (Paris, IEA: OECD, 2004). 97 United States Central Intelligence Agency, World Factbook, 2006. 98 Stock turnover refers to the rate of capital stock replacement for buildings, equipment, and vehicles. See H. Jacoby and I. Wing, “Adjustment Time, Capital Malleability and Policy Cost,” The Energy Journal Special Issue: The Costs of the Kyoto Protocol: A Multi-Model Evaluation, May, 1999: 73-92. 47 Second, there may be limits to social capacity to absorb change. There is a natural fear of unknowns, such as the loss of jobs and business opportunities, and there will be transition costs. The nature of technological change and stressors on social inertia can impose limits on the uptake of new technologies and systems. The problem, therefore, becomes far more urgent because of the inherently incremental nature of infrastructural and social change, even when there are episodic leaps in uptake. The IES is advanced here as a concept that integrates the social and environmental aspects of an energy system with technological and economic elements. The electrification of transportation is more than simply the implementation of a technical and economic system; it is also part of a cultural shift. Cultural and environmental factors and conditions must be part of the decision process when making technological decisions. When evaluating the technologies to populate the IES, an evaluation framework that incorporates a comprehensive response to the four drivers is necessary. STEP is the evaluation framework developed in this dissertation to assess the technologies and the technological path that best meets the problems of the four driver model and offers the best opportunity for sustainable transportation. Because of the interdependence of the four drivers, decision-makers must balance the requirements of these four different areas to find an optimal solution. This solution is likely to appear sub- optimal for any or all of these drivers independently. We cannot focus on just one driver, such as climate change or peak oil; emissions and supply problems must be treated together with land use issues. We will need to find a specific remedy to the full range of issues we face. 48 CHAPTER 3 – TECHNICAL AND SUSTAINABILITY CRITERIA This chapter develops a technical understanding of the technologies necessary for an IES. It establishes the technical and sustainability criteria to be used to evaluate candidate technologies for the IES that may meet the goal of resolving the four drivers. To develop an appropriate and resilient set of criteria, comprehensive knowledge of the vehicle energy supply and vehicle technologies is required. It is also important to understand and apply a lifecycle approach to the technologies to be assessed, specifically the fuel pathways for PEV selection for the IES, which can potentially tap any source of energy. These criteria make up the first group of requirements to be identified for STEP, to be applied specifically to the choice of vehicle drive technologies. In succeeding chapters, criteria will be developed for the economic, non-monetary valuation and technology uptake factors. From a technical and sustainability perspective, there are a number of requirements for selecting technologies to solve the four driver problems and to meet current transportation needs. These criteria are listed below and discussed in the subsequent sections: 1. The technology minimizes GHG and pollutant emissions. 2. The technology utilizes long term fuel supplies. 3. The technology integrates with current infrastructure. 4. The technology is efficient (and hence economical) on a lifecycle basis. 5. The technology is achievable soon. 3.1 MINIMIZATION OF EMISSIONS OF GHG AND CAC Transportation emissions of GHG, carbon and CAC can be minimized through the reduction or elimination of fossil fuels in vehicles, and through mitigating or removing GHG and CAC emissions when generating electricity for vehicle use. Strategies for sustainability such as transportation demand management and fuel conservation have 49 great potential99, but as this dissertation focuses specifically on technological strategies, these behavioural approaches are not discussed. Energy and material demand reductions through behavioural change entirely complement other approaches and are, in fact, a first choice. However, behavioural change remains challenging for decision and policy makers and publics. Most strategies for reducing fossil fuel use have a mixture of behavioural, technological and infrastructural elements. One transportation example is telecommuting, the concept of working from home using sophisticated tools to create a remote office. This apparently behavioural strategy is also dependent on significant technology and infrastructure. Similarly, cycling can eliminate emissions but requires dependable bicycles, safe and convenient bike path infrastructure, and quality facilities for most new users to feel adequately serviced. While there may be a role for “doing without” and choosing emissions-free travel, this will be limited to certain activities and population segments. Most travellers will want a service model that can be partly provided through technology. Any technology selection approach will have behavioural and infrastructural constituents and implications, and may have a significant role in triggering the other elements. There are a number of technological pathways that can reduce emissions. The main strategies are: the improvement of current technologies; conversion of coal or natural gas to transportation fuels; increased use of biofuels; and electrification of transportation. CO2 emissions are directly tied to fuel use and, while efficiency gains in engine and drive technologies have increased power per unit of fuel used, increases in engine size, the growth in number of vehicles on the road and kilometres driven have increased overall emissions. On the other hand, some GHG have been reduced significantly. The Montreal 99 Demand-side Management (DSM) holds underutilized potential. However, research is showing that both institutional and private consumers are not as responsive to voluntary demand-side initiatives as performed, even those that are informational or use subsidies. These programs were previously thought to be highly effective by utilities and governments; for consumer behaviour see David S. Loughran and Jonathan Kulick, “Demand-Side Management and Energy Efficiency in the United States.” The Energy Journal, 25, no.1 (2004). Also for the transportation sector, Orasch and Wirl. 50 Protocol100 has been even more successful than the Kyoto Protocol in regulating gases such as ozone depleting substances and other gases which are potent contributors to climate change. Arguably the Montreal Protocol will produce over ten times the mitigation capacity of the Kyoto Protocol, even if all Kyoto targets are met101. This makes it by far the most successful climate treaty ever implemented and an example of successful policy. Other conventional technological approaches include particulate filters for diesel vehicles. GHG emissions such as carbon particulates have a significant impact on lowering albedo (or reflectivity) and increasing the melting of polar caps and heat capture of terrestrial areas. These are being addressed through transportation regulations, such as the Environmental Protection Agency (EPA) and California Air Resources Board (CARB) mandates for 2007 diesel vehicles, which are gaining wide acceptance102. CAC emissions, particularly NOx and SOx, are being very successfully reduced in vehicles through improvements in fuel quality and engine technologies. Further advances in current technologies are likely, but ultimately these are limited by the very fact that fossil fuels are the primary energy source. However, these improvements can be integrated with hybrid and plug-in hybrid technologies. Beyond improving current technologies, other technical approaches include converting coal to transportation fuels, increasing the use of biofuels, and electrification. As mentioned in Chapter 2, there are emission and cost penalties for converting coal to liquid fuels. Cleaner methods may be found, and using coal to generate electricity may be a 100 See United Nations Environment Program, Handbook for the Montreal Protocol on Substances that Deplete the Ozone Layer - 7th Edition (Kenya: UNON, 2006). http://ozone.unep.org/Publications/MP_Handbook/index.shtml 101 Donald Kaniaru, Rajendra Shende and Durwood Zaelke, “Landmark Agreement to Strengthen Montreal Protocol Provides Powerful Climate Mitigation,” Sustainable Development Law and Policy, VIII, no. II, Winter 2008, p. 46. http://igsd.org/docs/SDLP%20Climate%20Law%20Reporter%20winter08.pdf 102 EPA car and light truck emission standards can be resourced from: http://www.epa.gov/oms/standards.htm California ARB information: http://www.arb.ca.gov/msprog/truck-idling/truck-idling.htm 51 more efficient method for powering vehicles once PEV are more efficient, cost competitive and commercially available. Biofuels have also been examined in Chapter 2, and while current options are limited in scale because of production limits per acre of land, there is hope for second generation cellulosic processes and micro-algae. The timeline for ramp-up and high levels of production is uncertain, but there is potential for biofuels to complement other technologies, such as improved engines, converted fossil fuels and PHEV. Electrification has great potential for reducing emissions. If we examine the potential reductions from the perspective of electricity grid operations, then renewables, cogeneration and clean fossil fuel generation options—particularly under higher energy price regimes—are the most likely candidates103. Supply side technologies such as wind, small hydro and solar thermal are commercial and cost-competitive in specific situations where high quality resources exist. More cost-effective renewables are being developed that can tap more diffuse resources, such as regions with lower wind and lower solar insolation. Solar photo-voltaic, co-generation and a range of other supply-side technologies are showing much greater promise as new technologies develop, volumes increase and costs decrease. As a result many renewables are now becoming commercially viable. Demand-side technologies, from ground source geothermal to high efficiency electric motors and LED lighting for vehicles, have made great strides in efficiency and technology substitution104. Overall, however, technology penetration generally remains low and commercial uptake is persistently slow for several reasons, including first cost and financial and institutional barriers. The issues are the interdependent factors of efficiency, operating cost and capital cost, the subject of the next chapter. 103 Martinot. 104 Loughran and Kulick. 52 When we look at ways to reduce emissions from urban vehicles, the greatest potential exists in migrating transportation to electric drive. Battery technologies can currently provide only short-range electric vehicles suitable for urban use, not the more flexible vehicles with the mileage range which drivers expect for multi-purpose use. However, battery capability and affordability are increasing rapidly, and PHEV and fuel cell vehicles may provide alternatives until EV are marketable for general purposes. Transport electrification may use any fuel supply, but these must be sustainable—which means long-term clean fuel supply and vehicle technologies that also minimize or eliminate emissions. A reduction in fossil fuel use and emissions directly impacts the issues of fuel supply and security and dependency on off-shore sources. 3.2 CONSIDERATIONS FOR LONG TERM FUEL SECURITY Fuel security is an important criterion for assessing transportation technologies and is perhaps the most recognized issue in sustainability, usually from the perspective of peak oil. For future transportation choices we need to consider fuels burned directly by vehicles and those used to generate electricity for vehicle use in the transportation fuels of the future. I will look at the possible migration paths from fossil fuels to renewables. The IES can have a group of supply paths with varying constraints and potentials. The primary energy supplies, with examples, are: • Fossil fuels: Gasoline, diesel (fuel oils), natural gas, coal • Renewable electricity: Hydro, solar, wind, biomass • Renewable fuels: Ethanol, biodiesel and methanol from biomass, direct hydrogen generation from biomass, pyrolysis processes and methane from anaerobic digestion • Transitional technologies: Nuclear fission and fusion (when commercial), clean fossil (with sequestration) These are the potential sources of transportation fuels and electricity. Energy can be interchanged between some of these categories, but usually with significant economic, 53 emissions and energy conversion costs105. Such costs can be prohibitive due to operating losses, the specific chain of activity from research to commercialization, and the capital costs of conversion technologies. The lifespan of any supply-side technology is dependent on the availability of a given resource to feed that technology. Fuel conversion capability may provide additional resource supply, but only modifies the lifespan of those technologies. An example is the use of stranded gas to provide fuel for oil extraction from oil sands. As the gas is used up, other fuels, from pipeline gas to nuclear, will be needed to provide the energy source to convert bitumen to oil products. Other examples include the Fischer-Tropsch method and pyrolysis to produce liquid transportation fuels. I suggest, therefore, that as premium resources are exhausted, technologies must be adapted to work down the carbon chain to more carbon intensive fuels. Thus, the emissions of both GHG and criteria air pollutants may increase because of additional inefficiencies in conversion. This concept may be applied to renewables with more limited resources, such as wind, which will need higher capital and energy investments to tap increasingly lower quality resources as the premium wind sites are taken. When considering future pathways for implementation, we refer to three of the four drivers described earlier: GHG, criteria air contaminant emissions and supply disruptions, in Figure 3.1. Together, emissions on the vertical axis, and resource supply lifetimes on the horizontal, are a simple way to describe the overall sustainability of supply-side energy technologies. The arrows in Figure 3.1 demonstrate the mandatory migratory pathway of technologies based on supply and impacts over the long term, during which 105 For a reference treatise on renewables and efficiency factors see: B. Sørensen, Renewable Energy: Its physics, engineering, use, environmental impacts, economy and planning aspects, (San Diego, CA, New York: Academic Press, 2000). 54 time it will become imperative that technologies produce minimal impacts and have long- term supply. FIGURE 3.1 TRANSITION PATHWAYS TO A SUSTAINABLE ENERGY Figure 3.1 differentiates and illustrates four technology groups that cover all fuel source and generation options. It traces pathways from the least to the most sustainable options, the end goal of sustainable energy generation for the energy and transportation sectors. Land use impacts, technological maturity, and technology uptake could also be 55 considered as attributes against resource supply and emissions in Figure 3.1. The first group representing high emissions and low resources is conventional fossil fuel technologies, currently the majority of energy sources. These produce most of the emissions and impacts that contribute to both climate change and pollution problems. They have limited resource supplies, ranging from just a few years to a century or two at current rates of increasing consumption106. The continued use of coal is currently necessary, but untenable over the long-term without effective sequestration. In Figure 3.1, the two transitional technology groups, “Clean Technologies” and “Renewable Transitional Technologies" are distinctly different. Clean fossil fuel powered generation may theoretically produce almost zero emissions by extracting most or all outputs as usable products and sequestering CO2107. These technologies have limited resource life-spans, the same as conventional technologies, at comparable efficiencies, because they tap the same fossil resources. There are several small-scale carbon sequestration projects that have been running for years108, but in general such technologies are mostly at the research and development level. It is difficult to know if large-scale sequestration can be done economically beyond the small amount of potential EOR109. Nuclear fission and fusion are the two “Renewable Transitional Technologies” that have similar characteristics as they appear to produce no GHG. However, on a life cycle basis, capturing all inputs, GHG emissions from nuclear generation average about 65 gm CO2e/kWhel, about 11% of the best fossil fuel generation, but about double most renewables110. As well, the financial costs of nuclear generation, again on a life-cycle basis, have been very high, although this may improve with newer reactor designs. The 106 Metz et al, IPCC, 2001, pp 235-7. 107 The US Department of Energy (DOE) has a zero emissions coal program, FutureGen that produces electricity, hydrogen, and mineral and chemicals while sequestering CO2. It is slated to be online between 2013 and 2015. See: http://www.fossil.energy.gov/programs/powersystems/futuregen/ 108 There is a successful sequestration project in Weyburn, Saskatchewan (as well as Norway and elsewhere). http://www.fossil.energy.gov/news/techlines/2004/tl_weyburn_phase2.html 109 EOR is the pressurizing of oil and gas fields to enhance production, in this case using waste CO2. 110 M. Bilek, C. Hardy, M. Lenzen and C. Dey, Life-Cycle Energy Balance and Greenhouse Gas Emissions of Nuclear Energy in Australia (ISA, University of Sydney, Australia, 2006). 56 still unresolved waste disposal problems associated with nuclear fission pose serious human and ecosystem health issues, but may be eventually resolvable. However, nuclear fusion—depending on the type of containment systems currently under development—is likely to be much less problematic when available, in terms of potential impacts111. Sources of fuel available for fusion are virtually unlimited—many orders of magnitude greater than fission resources, even if breeder reactors are used112. Fusion still remains at an early research stage, but if it can be developed with minimal impacts, it may realistically be considered a renewable. It is not otherwise considered here. Renewables are technologies with minimal emissions or impacts and with energy resources that are available over very long temporal scales. Figure 3.1 demonstrates the potential technology adoption pathways for energy supply technologies, which inevitably must conclude with renewables. To achieve true sustainability—the long-term capacity to provide appropriate levels of energy services with minimal impacts—both emissions and supply issues must be satisfied. Technologies that cannot strictly meet these two primary criteria can and should be characterized as transitional. Renewables are developing slowly, as they require innovative techniques to tap dispersed but long-term resources113. They work well with mobile and stationary energy storage. The use of transitional technologies may be an appropriate strategy as part of the migration process to renewables114. There are, however, two real dangers. One is that true fossil fuel sequestration will be so expensive that coal generation plants will fall far short 111 Alloys used in secondary containment for fusion are subject to irradiation and embrittlement. Depending on the alloys low level radiation decommissioning waste last years to decades. See K. Broden and G. Olsson, “Final disposal possibilities of radioactive waste components from ITER,” from 22nd Symposium on Fusion Technology, September 2003, Fusion Engineering and Design, 69, no. 1-4: 695-697. Also: L. K. Mansur, A. F. Rowcliffe, R. K. Nanstad, S. J. Zinkle, W. R. Corwin and R. E. Stoller, “Materials needs for fusion, Generation IV fission reactors and spallation neutron sources - similarities and differences,” Journal of Nuclear Materials, 329-333, part 1, August 2004, pp 166-172. 112 Ibid. Breeder reactors, and reactors utilizing nuclear waste (http://www.caesar.umd.edu/) have much longer lasting fuel supplies 113 The cost of Solar PV is lowering. First Solar: http://www.firstsolar.com. NanoSolar sells at $1/Watt. 114 Mark Jaccard, Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy (Cambridge University Press, 2005). 57 of being clean, which will open the door to widespread “less dirty” coal use, an undesirable situation115. The second is that reliance on a “clean” fossil fuel pathway will become an end in itself and divert funding and scarce resources (in this case scarce “social capacity”) for renewables by taking attention away from fuel security. Transportation options include a shift from oil to biofuels, electricity, methanol, hydrogen and other energy carriers. The electricity grid, in some cases with increased generation, can provide electricity or the energy necessary to produce these fuels. Therefore transportation options become dependent on and critically intertwined with issues of electricity production. It is likely to take a great many decades to move to a global energy system that is primarily renewable due to the long stock turnover periods for technologies and infrastructure, and the technical difficulties in tapping dispersed renewable resources. As well, the structure of the grid is likely to be transformed from a hub-and-spoke standard to a distributed model. It therefore becomes critically important that current large-scale technology and infrastructure decisions be made with an understanding and respect for long-term sustainability issues and possibilities. The apparent lack of public and political will to identify and fully support an appropriate research-to- commercialization chain aggravates this technical problem. Electrical supply sustainability requires reliable energy generation with as few emissions as possible from resources with very long-term supply. There are still barriers of technical capability and capital costs when extracting renewable resources. Transitional supply technologies with lower emissions are likely to be necessary, even in a best-case scenario, until renewables and alternatives can fully take their place116. In such scenarios 15-20% of generation is new renewable (excluding large scale hydro-electricity) with clean fossil, hydroelectric and possibly nuclear making up most of the supply. The conversion of 115 Celia, M.A. and S. Bachu. “Geological Sequestration of CO2: Is leakage Unavoidable and Acceptable?” Proceedings of the Sixth International Conference on Greenhouse Gas Control Technologies, ed. Gale, J. and Y. Kaya. NY: Pergamon, 2003. 116 Ibid. 58 conventional fossil generation to transitional technologies may be necessary due to the scale and the type of radical transformation required of the energy system, the need to continue producing power without serious disruptions, and the intermittent nature of wind and solar renewable resources. From a technical perspective, it appears that intermittency can be overcome with mobile and stationary storage, but this still has to be tested. The availability of resources varies with the dispersal of the resource, geographic location, type and utilization potential. Renewables are typically dispersed and some regions have poorer resources, such as wind or sun, than other regions. To make the business case for these disparate sites and regions, technologies require high efficiency and low cost. Efficiency and operating cost are therefore again linked, and this is examined in the next chapter along with capital costs. Location can influence distribution potential of renewables and fossil fuels, although premium fuels such as oil, and increasingly liquid natural gas (LNG), can be shipped greater distances. New technologies such as High Voltage Direct Current (HVDC) transmission can wheel (or transmit) electricity long distances with lower line losses. See Appendix 9, Energy Carriers, Storage and Components, for more information on alternatives to fossil fuels. The fuels for the vehicles of the future can come from any source and the efficiency of conversion to transportation fuels will be critical. Electricity offers a universal energy carrier that is easy to move and efficient, but is challenging to store—although there are ongoing and rapid advances in this field. 3.3 COMPATIBILITY WITH CURRENT INFRASTRUCTURE New transportation technologies that are relatively compatible with current infrastructure, while satisfying other relevant criteria, will be much easier and less costly to implement than those requiring massive new construction of unfamiliar infrastructure. New fuelling systems are one example of a potentially costly and unfamiliar infrastructure. Current transportation fuel systems are extremely complex and include wells, pipelines and tankers (both truck and rail) as well as dispensing stations. Replacement supply chains for 59 biofuels and synthetic fuels will include producing farm infrastructure, refinery delivery and refining systems and delivery to blending plants and retail fuel depots. Hydrogen will require specialized production, storage and fuelling facilities. Future transportation systems will have to consider, against benefits, the cost of infrastructure transitions as part of the overall cost of implementing new fuel and vehicle technologies. For example, a transition to a distributed electricity grid from the current centralized system, built to incorporate renewables, CHP and other efficiency developments, will be costly. The benefits include a highly efficient and resilient grid that will flexibly include multiple sources of supply and have a relatively short payback. 3.4 EFFICIENCY The efficiency of a technology measures its energy output as a percentage of its energy input. Therefore, the higher the efficiency of a technology, the less fuel input it will require, and hence the smaller negative impact it will have in terms of fuel supply and emissions. In addition to the efficiency of individual vehicles, there are important systemic efficiencies to be derived from the IES in the case of electrified vehicles of various types, from hydrogen fuel cell vehicles to EV. There are large efficiency gains and emission reductions that are achievable from the transportation sector, which makes up about 34% of CO2 emissions and 39% of direct energy use in Canada117. Transportation energy intensity118 has increased, but so has average engine size and distance traveled per capita. Despite this, the net effect is a small reduction in transportation’s share of emissions119, partly due to growth in other sectors. The staged transition of the transportation sector to electricity through electric drive offers 117 Transportation data in: Transport Canada, Defining Sustainable Transportation, 2005. 118 The ratio of energy use to such factors as GDP or distance 119 The Centre for Sustainable Transportation, Sustainable Transportation Performance Indicators (STPI), (Toronto, 2002). 60 the greatest potential benefits via PEV120. Reduction in emissions can also be achieved by reducing or levelling power generation through load balancing and energy storage. The value of renewable energy increases significantly when it can be balanced, stored and redirected back into the grid at peak demand periods with minimal losses. This dynamic grid and transportation system will take time to achieve because of the research and development required for inexpensive advanced batteries, ultracapacitors and other methods of load balancing and storage for both mobile and stationary applications. Grid peak demand is only a small percentage of the total energy supplied to consumers, but requires large, expensive, minimally-used peaking and spinning reserve generation facilities to service demand peaks that typically only occur for short durations121. A plug- in electric vehicle fleet with electricity power storage can meet peak and spinning power requirements for the grid, allowing utilities to focus on providing baseload power122. If such fleet capability can exist at low cost with advanced and durable storage, then stationary energy storage becomes a complementary but additional cost that would have to demonstrate better value on a per kWhr basis than mobile storage. A PEV fleet can also provide additional and valuable ancillary and regulatory services that improve reliability and power quality, while greatly reducing reserve generation requirements. As an example, early estimates of the income stream to an average PHEV owner for these services alone ranges from several hundred dollars to USD$4,800123. In addition, capture and release of energy along with power management, weather modeling and time-of-day pricing can solve many of the intermittency problems from renewable generation. This encourages a high level use of renewables in any generation mix with significant economic returns. The efficiency gains from such synergies influence operating costs, emissions, public acceptability and the choice of one technology path over another. 120 L. Gaines, A. Burnham, A. Rousseau and D. Santini, Sorting Through the Many Total-Energy-Cycle Pathways Possible with Early Plug-In Hybrids (Center for Transportation Research, Argonne National Laboratory, 2007). 121 Lai 122 Kempton and Tomić, 2005b. pp 280-294. 123 Ibid 61 3.5 LIFECYCLE APPROACH TO TECHNOLOGY ASSESSMENT When assessing impacts and benefits, it is important for overall cost, efficiency and emissions comparisons to use a lifecycle approach. This includes upstream costs prior to power generation facility or refinery stage, and downstream costs from the generation facility or refinery to the final user. As an example, U.S. oil drilling creates more waste by volume than all other U.S. municipal, residential and industrial sources combined124. Similarly, fossil fuel exploration and production impacts include accessing and damaging ecosystems and biodiversity worldwide, while incurring high energy and materials costs. Such costs and impacts should be incorporated into the assessment of any technology. Impacts increase as industry is forced to process poorer resources, such as oil shales and sands. Capital costs for energy generation are typically a small part of the lifetime costs of energy generation for fossil generation125. However, fuel costs are far greater for fossil fuel generation than for renewables, per unit of energy produced126. Renewables are not subject to long-term fuel supply risks. Their production produces lower emissions and requires fewer materials and less energy, per unit of energy output. It is therefore important to compare life cycle analysis of energy use and emissions when selecting technology pathways and the individual technologies that populate these approaches. 3.6 AVAILABILITY IN THE NEAR FUTURE The immediacy and the severity of the problems portrayed by the four drivers require that technological solutions be available as soon as possible. Timeliness of implementation is therefore an important criterion for the selection of technological solutions. There are very few technological systems which can displace fossil fuels and exploit the synergies 124 O'Rourke et al, p 587. 125 R. Dones and R. Frischknecht, “Life Cycle Assessment of Photovoltaic Systems: Results of Swiss Studies on Energy Chains,” Environmental Aspects of PV Power Systems, Appendix B-9 (Utrecht, The Netherlands: Utrecht University, Report Number 97072, 1997). 126 Solar p.v. panels typically take 2-4 years to produce enough energy to payback the embedded energy cost used to manufacture the panel. http://www.spec.bc.ca/article/article.php?articleID=488 62 inherent to the integration of the electricity grid and transportation system. Significant research is being done in technical areas, including supply-side renewables and clean technologies. On the transportation side, the focus is on advanced engines and management systems, fuel cells, batteries and ultracapacitors127. These technologies range in maturity from the fundamental research level (e.g. nano-technology materials research) to the fully commercial level (e.g. road testing batteries). They have the potential to capture, store and use surplus electrical production capacity and to act as a reserve power source, while cutting emissions from transportation and electricity generation. A concrete example of an integrated and renewable energy system is Calgary’s light rail system, an electric system that is essentially powered by wind energy. Electrification of many types of vehicles, from grid-tied to plug-in designs, is being conceived as a solution to a range of transportation problems. Vehicle manufacturers are starting to recognize this and commercial plug-in hybrids and electric vehicles will be available this year from several manufacturers, while commercial hydrogen vehicles are some years away. The infrastructure for PEV can be a standard plug or, for rapid charge situations, higher voltage (known as level 2 or 3) charging systems. If these vehicles begin to draw from the grid in increasing numbers in a few years, then regulations and policies will be needed almost immediately. Electrification is a revolutionary opportunity which requires new rules, regulations and strategic policies before the technologies become widely available. This key aspect and contribution of the IES is discussed later in the dissertation. The best transportation options will be those that minimize emissions by providing the greatest efficiencies, and have the potential to both draw energy from and feed energy back to the grid on demand. Plug-in electric vehicles, while technically proven, must be broadly commercialized and competitively priced, and must meet market needs of both 127 For analysis of ultracapacitor requirements and standards for viability met by 7 manufacturers see: Cyrus Ashtiani, Randy Wright and Gary Hunt, “Ultracapacitors for automotive applications,” from “Selected papers from the Ninth Ulm Electrochemical Days,” Journal of Power Sources, 154, no. 2, March 2006: 561-566. Toshiba, Altairnano and many other companies produce advanced batteries, some rapid charge, that meet current PHEV and EV requirements for power, energy density, temperature and lifespan. 63 consumers and institutional decision-makers. Some technologies, such as hybrid drives, are acceptably commercialized now, and have some regulatory, marketing and financial processes in place in order to further develop their markets. The success rate for new technological approaches will be dependent on the capacity of those technologies to meet and exceed a combination of market and public good conditions. Many potential technologies, such as cellulosic biofuels, advanced batteries, ultracapacitors and methanol or hydrogen fuel cells are only at the research or prototype level. While their principles may be well-proven, their commercial outcomes still have unknown efficiency, capital and operating costs, and unidentified operational standards and specifications. Energy storage technology remains the most critical factor to be resolved for plug-in vehicles. See Appendix 9 for more on storage technologies. 3.7 OTHER TECHNICAL CRITERIA The technical requirements for electric transportation drive technologies are highly constrained as the challenges of mobility are greater than those of stationary uses of electricity. Mobile fuel use requires high energy density (the ratio of energy to weight) and power density (power capacity). Safety and technical features, such as technical familiarity and refuelling convenience, are essential. Life cycle efficiency and cost remain key issues, but robustness, longevity and the capacity to integrate into mass production processes are important. Other technical criteria for these new technologies include: • Long lifespan • Safety • Technical integration into existing systems with low additional costs • High recyclability with low economic, energy and environmental costs • Durability and ruggedness under real life conditions • Straightforward, efficient and economic prototyping and manufacturing • Mass production capability 64 • Application-specific constraints such as energy and power density needs, heat management, vehicle service capability, manageable reactive power needs, etc. Candidate technologies can be evaluated with respect to the above requirements, under current and future situations, for their comparative advantage in an IES. 3.8 SUMMARY In this chapter I have outlined the key technical criteria for energy system sustainability that answer the four drivers. Technologies can be comparatively evaluated for emissions, resource supply, efficiency, availability and compatibility with existing infrastructure. A simple but novel map of the technological pathway to sustainability provides a rationale for integrating renewables. Technology choice is based on sustainability and technical capability, which have impacts on the costs and benefits for consumers and institutional decision-makers, including transition costs. We have seen that the movement away from fossil fuel use is the key criterion for both emission reduction and fuel security, and, therefore, for a successful technology. In the medium term, emission reductions from transitional technologies can also provide interim solutions. Winning technologies must be feasibly available in the near future with potential for excellent performance over time. They must optimally fit with existing infrastructure and have the lowest possible emissions while having a long-term fuel supply. Few technologies meet all these criteria. There are specific combinations of technologies that can achieve technological sustainability in a timely manner. Electrification appears to offer the best combination of these required characteristics for urban fleets. 65 CHAPTER 4 – A CRITIQUE OF INAPPROPRIATE MONETARY ASSESSMENT 4.1 TECHNOLOGY, VALUE AND PRICE The future configuration of the energy system, including potential transportation energy sources, will be the result of ongoing long-term investment choices involving substantial global assets. In addition to the primary problems of GHG, CAC and energy security, there are internal problems within electricity grids that will steer these decisions. Transmission systems are in crisis, and even renewable energy is being “dumped” in some places, as in Texas, because of antiquated transmission capacity. In many areas the choices for new generation are complicated by load servicing and electricity network support requirements128. The sustainability debate for energy can be characterized as between the reliability of fossil fuel and nuclear facilities—with their emissions and safety issues met—and the unknown risks of large amounts of renewables. While the intermittency of a high renewables scenario is seen as a serious systems problem, clean fossil and nuclear are likely to be expensive, even if feasible. As well, internal network crises and the reality of service disruptions, which may increase due to climate change, put additional time and risk pressures on the grid and make more urgent the selection of an appropriate mix of technologies for a future energy system. Transportation systems are also facing a different kind of crisis as vehicle traffic grows globally. As engine efficiency has increased, emissions per unit of energy have decreased, but this has been offset by increases in engine size and power129 and the multiplier effect of more vehicles on the road. Infrastructure costs are spiralling beyond affordability as new lanes and roads are needed for increasing traffic, while maintenance of existing infrastructure is backlogged in many jurisdictions. As a result, congestion and air pollution are increasing, resulting in a range of health problems from asthma to cardiac 128 U.S. Department of Energy National Transmission Grid Study Secretary of Energy, DOE, 2002 129 Richard Gilbert, ed., Centre for Sustainable Transportation, “Sustainable Transportation Performance Indicators,” Sustainable Transportation Monitor, 11, June 2005, p. 3. http://cst.uwinnipeg.ca/documents/STM11E.pdf 66 problems. As well, the increasing use of vehicles to replace walking and cycling produces additional health problems including obesity. Finally, increasing amounts of land are taken up for additional lanes that service low density suburbs with high road infrastructure needs. Strategic solutions for the grid and transportation system are theoretically arrived at through policies and regulations, social marketing130 and technological solutions. As mentioned before, policy and educational strategies are dependent on the existence of behavioural, technological and infrastructural choices—and these are recursive elements. Policy approaches that rely on market forces to produce technical innovations and solutions must be able to identify those technological processes in order to understand and support them once they arise. Market forces may not drive us in the direction of sustainability, but towards short term convenience. As well, market driven policy approaches are unlikely to be rapid enough by themselves to resolve issues on the scale of climate change. The research process likely cannot be hastened over a short period of time in response to market signals, but it can produce results with such signals and proactive long-term support. Support will be required to develop and operationalize sustainable technologies because of long scale technological and cultural learning curves. As discussed in Chapter 6, fully fledged, legitimate options and solutions are required for committed buy-in from consumers and decision-makers. Hybrid vehicles are a good example of a technology that has had rapid uptake when made available and supported with financial incentives. However, random market processes for technology uptake alone can be haphazard and slow to materialize—too slow, in light of the critical situation triggered by fossil fuel overuse. In Chapter 3, I pointed out that the new technologies for the energy system must meet the criteria of being technically viable, with efficiency and operating capabilities for 130 Philip Kotler and Nancy Lee, Marketing in the Public Sector: A Roadmap for Improved Performance (Wharton School Publishing, 2006). 67 advancing sustainability. Life cycle technology costs should be as low as possible to upgrade and transform systems, while meeting technical standards and lowering or eliminating emissions. However, technologies must also satisfy the range of criteria that express user expectations, including monetary and other value issues. Technological change and social transformation are not discrete processes: learning by doing and the knowledge gained from technical change can help advance sustainability objectives. Industry has long been aware that intangibles such as brand and business culture can be worth as much as physical assets. Firms are now aware of the economic benefits from sustainability practices, energy efficiency and new technologies that increase corporate profitability and brand. However, such monetizable and non- monetizable values often remain highly entangled. These changes will be implemented only if we can develop a common vision and begin to develop and implement the options. To consider the best path forward from a valuation perspective opens up a large number of possibilities, if we care to be comprehensive in our valuation. Comprehensiveness will not require that we are accurate to several decimal points, but that we include all of the foreseeable cost and benefit issues and concerns that are important to the selection process of sustainable energy technologies. 4.1.1 The Nature of Value How do we develop criteria for determining the value of different technologies and systems? Valuation is a complex, controversial and fundamental requirement for technology choice. Value shapes not only price, but also important constituents of how individuals, institutions and societies ultimately choose new energy technologies or support their innovation value chains131 and developmental pathways. Price is a general 131 See M. E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York, London, Free Press; Collier Macmillan, 1985), for a description of conventional value chains as connected activities that produce added value. The innovation process can be seen as such a value chain from initial concept to commercial use. 68 term for the monetization of a subset of value. It can be expressed as either a financial cost, or, progressively, as a comprehensive asset or liability utilizing whole cost accounting methods to evaluate project viability. In either case, not all values can be expressed numerically or monetized, although non-monetizable attributes are routinely and arbitrarily turned into financial entities in an expansion of accounting practices. It is this accounting “fiction”, well recognized in theoretical accounting, which can displace other notions of value132. A chasm exists between values appropriately monetized and those that defy monetization. There are different dimensions of value that clearly run on different quantitative and qualitative axes. The cliché that “quantitative approaches are often precisely wrong and qualitative ones can be vaguely right” expresses the sentiment. The first, while highly mathematized and precise, reduces value to a narrow focus that can be very useful for some purposes. However, it may be incapable of accounting for important social contexts that influence or even reverse conclusions when entered into the mix. Qualitative approaches, by contrast, aim to be comprehensive and inclusive, but can lack clarity as they contextualize values more broadly133. The desirability of certain features for society can be very difficult to define let alone value monetarily. I propose the term “submerged value” to help to understand these non-monetizable and incommensurate134 values and to examine strategies for their inclusion in decision-making (see Section 4.3 below). These two different dimensions of value will be examined separately, monetization and its limitations in this chapter, and incommensurability in the following chapter. 132 The literature on theoretical accounting has important perspectives on the nature of value and how human systems have captured, abstracted and produced surrogates for value in economic and accounting systems to functionalize and systematize value. Garry D. Carnegie and Brian P. West, “Making accounting accountable in the public sector,” Critical Perspectives on Accounting, 16, no. 7 (October 2005): 905-928. 133 Crosby, A.W., The Measure of Reality: Quantification and Western Society (Cambridge: Cambridge University Press, 1997), 1250–1600. 134 As incommensurable meaning lacking a basis of comparison in respect to a quality normally subject to comparison: http://www.merriam-webster.com/dictionary/incommensurable 69 The term “values” can also be used to express inherent beliefs. The difference between “value” as discussed so far as an attribute and “values” is varyingly understood in the large and diverse literatures that discuss this topic135. For the purposes of this dissertation value is primarily considered as a beneficial attribute, rather than an inherent component of a belief system. However, it is difficult to avoid the continuum of interlocking and integral understandings of this seminal term, which range from existence values, independent of human preferences, to values that are integral to subjective experience136. Much of the literature is concerned with the nature and role of values in decision-making and the relationship to altruism and ethics, and these meanings are not separated out. Therefore, the term is used somewhat loosely with the understanding that the primary purpose of examining value in this dissertation is to more fully assess technological options and their role in fulfilling societal and environmental needs. Market factors, primarily costs, are used as key determinants in the choice and deployment of transportation technologies. Technology costs are a product of underlying forces such as efficiency and technical maturity. Price captures many characteristics and is used ubiquitously, particularly as an argument of last choice. It is often used as a convenient rationale for justifying a course of action. Valuing intangibles assists in establishing perceived value, an important determinant of what publics, governments and institutions will pay for certain choices and courses of action. However, complex social, environmental and institutional contexts determine these values—they do not exist in a vacuum as numbers. To monetize is to create a financial entity where none intrinsically exists. Triple bottom line accounting is an attempt to apply the rules and structures of profit-maximizing businesses to organizations with social mandates, as a means of valuing social and environmental attributes. Paradoxically, this attempt can inappropriately refocus these organizations and their valuation processes as financial 135 A summary of the thought on environmental value can be found in: L. Kalof and T. Satterfield, eds, The Earthscan Reader in Environmental Values (London: Earthscan, 2005). 136 T. Dietz et al, “Environmental Values,” Annual Review of Environment and Resources, 30 (2005): 335- 372. 70 entities if social and environmental aspects are monetized137. Even technological choices have substantial social and environmental implications that are beyond the metrics of mainstream economics and accounting. If renewables can demonstrate sufficient technical performance, reliability and economic viability, will the market be up to the task of technology adoption? A number of factors compromise the view of a purely technically driven decision-making structure. Cultural deliberation can, over the long term, change understanding, valuation and values. Certainly a function of introducing submerged value into the discourse is to enhance deliberation and encourage comprehensiveness. The more the issues are revealed and contextualized, even outside the decision and hence the regulatory structure, the more likely it is that the full range of values can be considered in the decision-making process. The complex discourse that the incorporation of diverse and varying values can create concerning technology uptake processes can enrich our current instrumental approach to technology. It makes explicit, and hence malleable, the specific issues, from hegemonic to ecological, surrounding a transformation of the socio-technological world138. Writers, such as Ostrom, have suggested that the commons, or common pool of resources139 (in the emissions and climate change case), are the recipients of “submerged” costs140 while providing socio-economic benefits. Many ecological writers, from Aldo Leopold to Bill McKibben, would also argue that the full range of these submerged values must be made explicit to the degree that it is possible to engage in a 137 There is a literature in the theoretical standpoints of accounting, which critically examines the expansionism of accounting practices and the practical application of economics into the realms of art, culture and the environment. See Carnegie and West. Ironically, the examination of the fundamental theories of accounting is some of the most interesting and penetrating work on the philosophy of value, but unfortunately a peripheral (if important) argument to this work. 138 Feenberg has suggested the need of a method for implementing this type of transformation. Andrew Feenberg, “Marcuse or Habermas: Two Critiques of Technology,” Inquiry, 39 (1996): 45-70. 139 The terms refer to different scales and formulations of commonly held resources. Elinor Ostrom, Joanna Burger, Christopher B. Field, Richard B. Norgaard, David Policansky, “Revisiting the Commons: Local Lessons, Global Challenges,” Science, 284 (1999): 278-282. 140 As in a loss of submerged values. 71 comprehensive dialogue. The wealth of these dialogues can ultimately help to alter how we impact the commons. New sustainable technologies allow us to remediate or mitigate negative effects on the commons while also creating new social and economic value, part of a paradigm shift to new ways of living. Communicating and eliciting such potential values becomes part of the strategy for implementing such technologies. Values can be normative, relational and relative, even extremely subjective and irrational. Psychological theories for which there is strong empirical evidence—such as cognitive dissonance141—and related neurological studies, demonstrate that rather than making decisions in a rational manner, we rationalize after making almost instantaneous emotional decisions. If decision making is based more on rapid emotional responses than rationality, then effects on market decisions and structures are broad and unpredictable. In philosophy, by contrast, values can be seen as more stable. Dietz et al have collated human responses to value that range from altruistic to egoistic and from change-accepting to change-resistant142. Understanding value, along with other learning processes, such as cultural and technological learnings, is critical to how sustainable technologies are perceived, as well as their practical deployment. Technologies with demonstrably comprehensive profiles and well-developed discourses, including those on value and capability, will be more likely to be successful with decision-makers who have limited time, knowledge bases and budgets143. 141 Here the applicable idea of cognitive dissonance is the persistence in beliefs that are consonant rather than dissonant with existing personal beliefs or self concepts. The landmark work is: L. Festinger, A Theory of Cognitive Dissonance (Evanston, Ill.: Row Peterson, 1957). A more contemporary work is: Carol Tavris and Elliot Aronson, Mistakes Were Made (But Not by Me) (Harcourt: May 2007). 142 Dietz et al. 143 Drucker suggests replacement technologies must be many times better than incumbents to compensate for embedded social inertia and economic and structural advantages and to achieve market penetration. P. F. Drucker, The New Society: The Anatomy of the Industrial Order (New York: Harper, 1950). 72 4.2 COST-BENEFIT CONSTRAINTS Underlying constraints, such as regulatory, pedagogical and social forces, already shape and restrict markets. This is a general caveat for any policy study, however comprehensive it may attempt to be. There are complex variables that affect technology choice in the real world of utility and transportation decision-makers and consumers. Complex political and interest-driven goals and agendas vary enormously by locality, political jurisdiction, changes in media coverage and fluctuating public popularity. Institutional directives are themselves complex, with conflicting individual agendas often unrelated to organizational objectives of profit, brand and public good. Cultural specifics can skew or block change for their own reasons, however beneficial change may appear. These factors are, in fact, a description of the dynamism and competitive nature of culture, and like the stock market, are unpredictable and are external to the analysis in this dissertation. We can isolate some of the criteria we apply to technology choices when identifying whether a technology is viable, efficient, cost effective and socially acceptable, and meets environmental standards. However, there are no methods that can predict the choices of a dynamic culture. No study can analyze the entirety of culture, and then only as a survey of perceptions. Such factors remain outside of this dissertation. We can only analyze the options as comprehensively as possible, develop viable implementation pathways and support the best technology in conjunction with policy processes. Within the cocoon of culture or markets, pricing, efficiency and other valuation processes have key influences on the measure of technologies and their social uptake potential. Efficiency and economic value are important criteria for comparing those technologies that can help address our current set of problems. The methods available for assessing these factors are important parts of the complex technology decision-making process with respect to energy sustainability. However, it is well understood here that full cost assessment alone will not determine technology choice and that technology choice on its own is only one factor driving cultural change. 73 Nevertheless, how technology options are compared will still play an important role in determining what technologies, markets and decision-makers will accept. Different assumptions and values for variables produce very different results. There is wide disagreement and a divisive debate on the viability of biofuels, hydrogen, and even electricity, based on cost and efficiency variables that this dissertation examines in part identify the best way forward. Using primarily cost-benefit methods, in contrast to striving to account for all social and environmental values, will produce radically different choices and attitudes towards potential transportation choices. As well, full valuation processes can help to spread the knowledge of technology options in practical ways that lead to demonstrations and commercialization. The technology choices that social actors make can drive new social learnings and cultural change. In turn, cultural acceptance and social capacity are critical to further technology uptake. There is a recursive and complex relationship between technology and society that can reinforce and support very different technological paths and very different futures. The choices being made now in the crucible between centralized and distributed technology choices, and between business-as-usual and sustainable approaches, will have historic repercussions. Currently, economic and engineering approaches that favour cost-benefit models determine the choice, scale and design of generation facilities. These are still the default approaches to valuation even when considering new clean technologies, renewables and high efficiency demand technologies. They may not be appropriate as the only measure of technology choice, but are the yardstick for implementation. For supply-side technologies, long-term capital and operating costs and efficiency dominate evaluation processes. These values are important parts of any assessment process for physical infrastructure as well as for new social infrastructure and technological systems, but clearly they are not the whole story. New energy technologies tend to have declining costs, which may take place in a smooth or irregular manner. Because decisions are sometimes made years in advance of actual construction, rapid cost changes may skew the cost-benefit model or favour delaying investments in innovative energy technology 74 assets. Even other monetary factors, such as risk issues, are often poorly included in the decision structure. New technologies such as hydrogen fuel cells and the plug-in hybrids are both good examples of electric final drive technological systems that have the potential to transform the energy system. The technology choices made in the near future will have long term implications from both a technological and a societal perspective because of the very large and prolonged infrastructure investments required, as well as the resulting social learnings and shifts in institutional behaviour. These complex and critical implications force us to go beyond simple cost-benefit models to develop more inclusive evaluation frameworks for making better technology choices under great uncertainty. 4.3 SUBMERGED VALUES There are social and environmental costs and values that must be factored into technology evaluation if it is to be comprehensive and appropriate. These values, considered as externalities in economics, are usually unrepresented or misrepresented, as they are difficult, if not impossible, to monetize effectively. I use the term “submerged” to represent such values, and to convey the idea that they have deep and hidden features and attributes intrinsic to culture. Despite their marginalization, they retain significance to individuals and communities. These attributes may have intrinsic value, but they may also reveal characteristics involved in social uptake and choice. The word “submerged” here replaces such terms as “exogenous” and “intangible”, which respectively either marginalize and position these values outside the central discussion, or infer that they can be safely ignored as imprecise or ethereal, rather than as what ultimately supports all economic activity. Because current paradigms externalize or trivialize these central values, a credible paradigm shift is needed to raise such supporting values into decision- making discussion. As well, the generic phrase “social and environmental value” is replaced by the term “submerged value”, to express key understandings: that these values are both concealed in more technical and scientific decision processes, and also key criteria for choice. 75 This choice of language also reflects a point of view that contextualizes social and environmental values as deeply appropriate elements, rather than viewing them as problematic and inconsequential factors in a technically and economically centered discussion. The use of the term “submerged value” further fits the brief discussion, later in this chapter, of a valuation process that attempts to formalize a narrative approach as a simple means of including these values. A narrative approach will only be initiated as illustrative in this dissertation, as effective narrative precision will be the result of a complex and long-term dialogue with many interest groups. Submerged values do need to be clearly structured and demonstrated; otherwise, systemic arrangements, inertia and competing interest groups’ agendas will overwhelm them. One can conceptualize this process as a new language for the two non-financial bottom lines that are otherwise often inappropriately converted into financial entities. Identifying them explicitly is one step in the process of developing broad and inclusive criteria. The benefit is to make more explicit the social and environmental concerns that will have to be met to achieve appropriate technological change and overall sustainability. Awerbuch, a leader in the field of financial accounting for renewables, recognizes that sustainable technologies “will probably not be fully understood or properly valued without a new, appropriate vocabulary of benefits.”144 Therefore, a strategy such as making submerged values explicit has an additional benefit in the analytic approach to incorporating risk and considering strategic options. Certainly as our knowledge grows in terms of valuing renewables, we may find better mechanisms to replace existing valuation procedures and for quantifying what has been previously either misjudged or ignored. In the human rights literature, Ignatieff argues that biased systems are balanced by creating an opposite but temporary inequity to shake out the embedded and concealed systemic injustices145. In a similar way, a shift in the way the energy system is conceived requires a push to temporarily elevate the worth of submerged values to reveal large potentials of 144 Awerbuch, 2000: 1023-1035. 145 M. Ignatieff, The Rights Revolution (Toronto: House of Anansi Press, 2000). 76 hidden and important values that are available from new technological approaches and paradigms. With the preceding sections in mind, I examine several spheres of influence where the economic costs and benefits of an IES can easily be misconstrued, leading to erroneous investment decisions. Even when we disregard submerged values, the use of different valuation processes will produce radically different results when comparing new sustainable technological systems with conventional technologies. The reasons include not only the results of natural variations in assumptions and methodology, but also the inclusion or exclusion of arguably monetizable factors such as risk. 4.4 EFFICIENCY AND SOCIAL AND ENVIRONMENTAL VALUE Efficiency and economic cost have been identified in earlier chapters as the two most important technical criteria for an integrated and sustainable energy system. Efficiency influences price, capacity, emissions and viability. Energy systems benefit from having the highest possible technical efficiency because this core factor affects operating costs and emissions. However, renewables typically have no fuel costs, and low maintenance and other operating costs; therefore efficiency is less important in the case of renewables. As renewables are generally new technologies, capital costs can also be largely reduced with innovation and efficiency gains in the design-to-manufacturing chain. Energy and economic costs are important life cycle costs. They are useful comparative measurements for use in social marketing towards demand management. Technical efficiency can also benefit access, equity and other submerged values by decreasing costs and environmental impacts and enhancing the viability of a system. Lower operating costs are clearly beneficial for reducing overall life cycle costs and supporting the transformation of the grid. In conjunction with policy, lower or more stable costs for energy services can increase accessibility for all income sectors and help social equity, as energy costs represent a higher proportion of low-income outlays. A combination of market and policy decisions will determine how surplus value can be 77 allocated to benefit the public good. The degree to which a range of generation energy sources and transportation fuel options can mitigate fossil fuel use is dependent on the degree of efficiency. With decreasing supply, a lack of improvement in efficiency results in increases in supply effort to meet demand, greater fuel and financial risk, and greater emissions with resulting social and ecosystem health impacts. Even so, it is important to remember that efficiency is only one part of a large portfolio of interconnected solutions that ultimately must include demand reductions. In the case of new transportation options that call on the grid, it is even more important that they be highly efficient, because of the constraints of mobile technologies. Lower efficiency energy technologies will increase emissions either by greater fossil fuel use or displacement effects in other jurisdictions. In electricity generation, the total of capital assets in place is relatively fixed: new assets require long-term planning and often remain in place for decades. Some types of generation, like gas turbines, are relatively quick to bring into production, sometimes within two years. However, these are used primarily for peaking uses, because of gas market costs and the future fuel price outlook. Even where there is some excess capacity in coal-based facilities, there will be a need for new baseload generation, which typically comes from the cheapest possible sources. This is likely to be primarily coal or nuclear, if the case can be made that nuclear power is cheap and clean146. Because of the long planning horizons for baseload power, growing demand and a current lack of efficiency gains, commitments forced on new generation may be inappropriate. The inability to capture the gains from technical efficiency and DSM is resulting in growing energy use from per capita demand increases and growing population. Therefore, new demand from the use of inefficient grid-connected or grid-dependent transportation technologies, particularly if large in scale, would force a more hasty long-term construction of new generation facilities. The rapid increase in demand from both 146 The developed case for nuclear (and coal) is beyond the scope of this dissertation. 78 inefficiency and normal growth of energy demand could coerce utility decision-makers to use coal—with which they are familiar—as the perceived consistently cheap, large scale and reliable option, and not wind or other renewables. Gas may be the choice for peaking power and rapid deployment, and where suitable sites are available, nuclear and hydro facilities will be installed. Even renewable portfolio standards (RPS)—the mandated percent of new renewables to be built—may not survive the onslaught of baseload necessity. Displacement effects, the shifting of demand to other jurisdictions with a different generation mix, may only add to this problem. The displacement effect in hydro jurisdictions means importing energy, which is usually coal-based, or that fossil based jurisdictions must produce more high emissions electricity that originally came from hydro. Cumulatively, inefficiency can have a large role in dictating the type of energy supply that is built and the footprint of new transportation technologies. Even in the hydroelectric provinces, inefficiency would reduce electricity for export or require energy imports, which, if made up by the typical generation mix, are largely fossil fuelled. Very high efficiency is critical for cost, emissions and social and environmental benefits. Even small differences in efficiency can have enormous effects, such as added costs or energy disruptions, when extrapolated to global electricity grids and transportation systems with values in the trillions of dollars. The stakes are high, and for all the above reasons in a “business as usual” (BAU) situation, the current answers point to coal being the dominant new source if efficiency stays low and demand high. Disadvantaged groups pay disproportionately for inefficiency as life cycle costs are higher and they tend to live closer to external “bads”, such as air pollution. They cannot afford or access the financing mechanisms that will allow them to purchase or use efficient technologies and systems that have higher first, or initial, costs. From leaky houses to old gas-guzzling cars, the poor do indeed inherit the earth in the form of the worn purchase choices of the rich. Therefore, the initial choices made by the more privileged and the first adopters are the key targets for social marketing, which we examine under technology adoption in Chapter 6. 79 Energy efficiency should be calculated over the supply-chain from resource extraction to final use. When dealing with non-renewable resources, such as coal, the standard criterion is usually the exergy, or the capability to do work—the available energy present in the fuel. For renewables, such as solar or wind energy, it would be the energy available per square meter of solar cell deployed or kinetic energy directed at the diameter of a wind turbine’s blades. The ability to extract some portion of that energy for useful work then becomes the technical efficiency of that resource expressed as a percentage. For renewables, technical efficiencies are only important in relation to life cycle cost compared to other technologies. Similarly, losses in transmission and transportation are calculated as losses in efficiency. Demand technologies will also vary in efficiency. Thus the overall efficiency of an energy service becomes contingent on the individual technologies and the number of steps employed. The primary objective, when comparing technologies for efficiency, is that methods are equivalent for data production across the whole, or parts, of the energy conversion chain. Efficiency can be rated fairly easily for individual components and for overall systems. Differences inform us of the relative effectiveness of the individual technologies and systems. Typically, measures of “well to tank” should use similar supply pathways for comparative purposes. Efficiency in current technologies, including their ultimate realizable efficiencies, becomes a key criterion for technology selection: it will influence emissions, capital and operating costs, and overall future usefulness. After the requirements for technologies to tap a useful resource or provide a useful service, to be technically realizable, and meet sustainability goals, efficiency becomes an important requirement. It shapes both price and social uptake, but does not assure uptake. For example, highly efficient technologies, such as combined heat and power (CHP) and geothermal, have low life cycle costs, but because of their high first costs, they have been relatively slow to be adopted. Ironically, efficiency can usually be calculated accurately, while price, usually considered a precise number, may be the softer, more qualitative attribute. 80 4.5 ENERGY SYSTEM OPTIONS AND COSTS The transition to a sustainable energy system will require the largest technological transition ever attempted by humanity. One approach147 proposed by some leading sustainability researchers includes centralized large fossil facilities with sequestered emissions, some hydro and renewables, and possibly nuclear plants. One could consider this the business as usual sustainability path. This path has many diverse problems including no reduction—in fact a rise—in the need to replace and increase transmission capacity. The issues of waste disposal and security have yet to be addressed effectively for nuclear power. Even advanced reactors, such as pebble bed designs, require some form of disposal as well as eventual decommissioning, and half-life periods are as long as 100,000 years for some high level waste. The best proposed waste disposal sites, such as Yucca Mountain in Nevada, remain controversial148, as do reliable methods for transportation and security. Security concerns and risks of nuclear proliferation round out the risk profile. A key part of this baseload generation option is carbon sequestrated coal-fired power. This is at an early stage of development, although some pilot projects have proceeded. The types of solutions available suggest that sequestration is likely to be more expensive than most renewables149. As well, the problems of fossil supply lifespan, to say nothing of extraction and transportation impacts, would have to be resolved. Even the most efficient combined cycle generation facilities at the mine mouth will be expensive when emissions are sequestered. There are a limited number of EOR opportunities for sequestered carbon and ultimate storage capacities are not high next to the steady increase in emissions. The costs of transmission and sequestration for a centralized model will be very high, and to be deployed on a large scale this model is, like nuclear fusion, a risky experiment for 147 Mark Jaccard. 148 For official information on Nuclear waste options see the US Department of Energy: http://www.ocrwm.doe.gov/. For information on the controversy see: http://www.yuccamountain.org/ 149 Celia and Bachu. 81 producing clean and inexpensive power. Together, coal and nuclear can be seen as one pathway that favours large scale centralized generation and requires a vast number of new plants at high cost if safety and low emissions criteria are to be met. Ironically, the more that renewable energy generation and demand management goals are successful, the more likely transitional strategies such as sequestration can play a role. EOR and other sequestration methods will require time to be developed and utilized, but can assist a more orderly transition to renewable generation. The transition from a centrally controlled hub-and-spoke system, which exists today, to an intelligent distributed peer-to-peer system, will have costs, but these are likely much less than building out clean coal and nuclear scenarios. Early calculations show order of magnitude benefits over costs for intelligent and distributed renewable systems. For example an electrical engineering study at the University of Minnesota150 suggests that a self-managing and “self-healing” distributed smart grid in the United States would take ten years to deploy and cost between $10 billion and $13 billion a year to install—one seventh or an eighth of the current annual cost to society of power interruptions alone, which are estimated at over $80 billion per year. The return on invest (ROI) would be approximately one and a half years and the savings approximately $670 and $700 billion over ten years151. Critical transmission and generation upgrades that require enormous investments are necessary across North America. Smart distributed systems can both pay for and help relieve transmission bottlenecks, as supply can be produced or stored locally, even at each consumer’s location. An intelligent grid will have some resemblance to the Internet and deliver differentiated levels of power reliability and security. The transition to a basic distributed system required to integrate some level of CHP, renewables and clean technologies, will involve major capital investments, but will resolve several cost issues, including operating costs. 150 M. Amin, “Challenges in reliability, security, efficiency, and resilience of energy infrastructure: Toward smart self-healing electric power grid,” Power and Energy Society General Meeting: Conversion and Delivery of Electrical Energy in the 21st Century, 2008 IEEE (20-24 July 2008): 1-5, 151 Ibid. 82 Despite the transition costs, distributed systems tend to provide much better business and employment opportunities over the centralized model. As an example, social benefits from distributed generation, such as wind turbines, include a larger number of jobs, more developed community infrastructure, and higher local property tax income and farm income over coal, all of which contribute to the wellbeing and revitalization of rural communities152. This also bodes well for rural self-reliance and regional food security. Clearly, this scenario radically reduces GHG and local emissions. However, the significance of other benefits, such as minimizing fuel consumption and human and ecosystem risks, remain poorly understood in relationship to complex social and environmental contexts. 4.6 COSTING SUSTAINABLE TECHNOLOGIES—DISTINCTIONS IN EVALUATION Renewables are assessed by comparing financial costs and benefits against other technologies. Usually conventional and simple monetized value is expressed as installed cost of power ($/kW), or an all-in cost per kilowatt-hour of energy ($/kWhr) that includes capital and operating costs over a defined life cycle term. There are a number of different ways to look at cost against benefits or expected payback. A simple method is to consider how long an investment takes to pay back capital and interest charges. Such ROI scenarios are usually expressed in years. One of the most widely used techniques is cost- benefit analysis (CBA), an engineering and economic approach from the early part of the last century, which monetarily balances the relationship between costs and benefits. A second related approach is cost effectiveness analysis (CEA), a comparative analysis of alternative outputs, originally developed for the health sector153. These engineering and economic practices have been used successfully for over a century. They are practical 152 Mark Diesendorf, “Comparison of employment potential of the coal and wind power industries,” International Journal of Environment, Workplace and Employment, 1, no.1 (2004): 82 - 90. 153 P. W. Abelson, Cost Benefit Analysis and Environmental Problems (Farnborough, UK: Saxon House, 1979). 83 methods of evaluating technologies where social and environmental issues are not directly affected. The first criterion used to evaluate the potential of new sustainable technology choices is price. Price may have many components in new technologies, such as renewables, because many of these technologies are still maturing. These can be briefly broken down into the following segments: • R&D costs • Development of manufacturing systems and costs to commercialization • Development of new infrastructure costs • Capital costs for installation of systems • Operation, including maintenance and any fuel costs. Depending on technology maturity, these primary categories will not apply to all renewables. The R&D to commercialization requirements for wind are ongoing, but as the technology matures this becomes less critical, while small new innovations, manufacturing scale and efficiency, become more important. Similarly, plug-in hybrids and electric vehicles are currently being commercialized, but with ongoing research in most components, particularly energy storage and control systems. There are several complex components in the research to commercialization chain. Cost effective development of manufacturing processes and the ability to build robust, well- designed products is an important, but not well-known process set that can make or break technology acceptance in the market. Similarly, the cost of new infrastructure to support new technologies can be a “deal breaker”. As noted, the consideration of capital and operating costs becomes the sine qua non of technology decision-making. Operating fuel costs are not an issue with renewables, but are as important a factor as energy efficiency, for fossil fuel using and nuclear technologies. These are the core economic costs broadly used in technology assessment. Benefits are compared against these costs in monetary terms. Such factors usually include increases in jobs and local economic activity, with attempts to include other exogenous factors. 84 These are important calculations, but they miss many essential issues, such as fuel risk alleviation, that have less tangible costs and benefits. The limitations of these methods mirror the limits of monetization: many characteristics, qualities and values are considered incommensurable or have large unknown quantities. As well, even the best future pricing models and methods of evaluating renewables, as currently used, are dependent on historical assumptions and do not consider future conditions and unexpected dislocations. A clear example is the future fuel risk issue connected to the current fluctuation and plausibly escalation in fuel prices. When peak oil occurs, there will be an escalation in fuel costs, as well as social dislocations, which will have far greater impacts than the small percentages generally allocated for fuel pricing risks based on the historical record. These potentialities are poorly considered in conventional CBA154, but could have considerable financial implications. More comprehensive methods, such as multi-factorial life-cycle analysis or a multi-attribute utility theory (MAUT), assign weights to differing social and environmental attributes, including risk, which will be examined in the next section. Monetization has limited ability to measure important exogenous and intangible attributes, which I have characterized as submerged values. Many of these non- conventional benefits and costs are inadequately represented. Methods for monetizing submerged values will now be discussed, while in the next chapter those techniques that take a supra-monetary approach will be examined. Environmental economics has gradually recognized the need to include exogenous and intangible values155. Despite Harold Hotelling’s early work in natural resource economics, the valuation of environmental amenities by the new discipline of environmental 154 Fuel Risk issues in valuation see Awerbuch, 2000: 1023-1035. 155 H. E. Daly and K. N. Townsend, Valuing the Earth: Economics, Ecology, Ethics (Cambridge, Mass., MIT Press, 1993). 85 economics began only in the late 1960s156. Submerged values, which are only partially described in economic terms as social and environmental externalities, are now part of an inclusive valuation principle among environmental economists, but not as a rule among engineers. However, in both of these disciplines the emphasis is on measuring these values largely in monetary terms. Ecological economics has taken a different route, one that considers economic activity as a subset of social activity, itself contained within the ecosystem. It differs from other economic approaches in that it is more open to non- monetary approaches to value and rejects the idea that there are always substitutes for primary resources. 4.7 VALUING RISK Most capital projects in the energy sector are evaluated by some variant of CBA, primarily in monetary terms, and risk elements are occasionally folded into this structure. A number of full cost accounting approaches, including environmental economics, attempt to deal with the problematic issues of social and environmental values. The basic framework endogenizes the external considerations of societies and environments into the central clearinghouse of the market. Its metrics are the aggregated assessments of individual perceptions of non-market value, or resulting analysis of price differences brought about by non-market factors. CBA is not the preferred approach here as it fundamentally undervalues new technologies by poorly accounting for submerged costs and risks. Accounting methods such as “Social Cost Accounting” and “Full Cost Accounting” have been used in some sectors (such as forestry) to attempt to deal with this problem and include externalities and intangibles. Even so, these more inclusive approaches tend to undervalue new and disruptive technologies because the paradigm under which they operate is inappropriate, and therefore understandings based on their use remain one-dimensional. In the example of 156 M. L. Cropper, Valuing Environmental Benefits: Selected Essays of Maureen Cropper (Cheltenham, UK; Northampton, MA: Edward Elgar Pub., 1999). 86 biogas, benefits such as soil fertility maintenance, the control of weeds and disease vectors157, and other complex environmental and social relationships are unaccounted for, although they may easily exceed the value of energy produced. The evaluation of energy generation is, in this case, only a part of the picture and reflects a specific cultural perspective that misses the deep importance of maintaining supporting systems, from soils and diversity to human health. The first major factor ignored by the above approaches is direct risk from fluctuations in fuel cost, which can mean considerable additional costs. Second, the contribution of new and diverse technologies to risk abatement, in the areas of the cost, robustness and reliability of the grid, for a whole portfolio of technologies in use, is also not included. If risk is not included in the analysis then the cost of renewables is comparatively overstated, as they have no traditional fuel risk. Third, exogenous values can be compromised or disregarded, although these factors are given some consideration in full costing approaches. Finally, private discount rates are applied to these projects rather than social discount rates. Awerbuch suggests that the following four factors must be addressed to provide a better evaluation process:158 • Direct financial risk • Portfolio risk abatement • Exogenous variables • Application of social discount rates Well-established principles from financial models, such as the Capital Asset Pricing Model (CAPM), Weighted Average Cost of Capital (WACC), and Portfolio Theory are far more useful than cost-benefit approaches in modeling energy pricing. CAPM essentially requires that the expected return on an asset be equal to the risk-free rate 157 See biogas section summary in chapter 5. 158 Awerbuch, 2000: 1023-1035. 87 calculated by standard cost-benefit models, plus an additional risk premium. The usual equation is: Ra = Rf + βa (Rm- Ra) Where Ra = return on asset; Rf = the risk-free rate; βa = Beta or risk measure; and Rm = market return. The tendency among energy analysts is to consider that long-term fuel contracts avert the risks of fuel costs. This is not quite correct, as long-term fuel contracts only include a cost for conventional risk factors, which are based on the actuarial construal of historical events and future risk as they become known. However, even long-term fuel contracts are short next to the lifespan of generation facilities which range from 20 to 60 years or longer. More importantly there are a considerable number of risks that are unknown in scale, such as peak oil and gas, or geo-political and socio-economic events that have unknowable impacts, such as military conflicts and epidemics. An example is the 9/11 event, which had profound influences on security and the movement of goods and persons. Markets and models such as CAPM cannot determine some future risk, and therefore the best risk reduction strategies are through portfolio diversity. However, CAPM can deal with existing trends and factor in various scenarios for issues such as peak oil. The theoretical accounting literature has made the claim that while CAPM is ideal, or normative in the philosophical sense, it is therefore of limited usefulness from an instrumentalist perspective159. However, there are strong pricing signals from CAPM, as one of the best tools we have, suggesting that incorporating future fuel risk costs alone can make wind and solar technologies cost competitive now160. 159 Elton G. McGoun, “The CAPM: A Nobel Failure,” Critical Perspectives on Accounting, 4, no. 2 (June 1993):155-177. 160 Awerbuch, 2000. Fuel risk estimates are far greater than generation costs. 88 Intermittency is another risk factor that creates uncertainty for the grid power supply. One can consider intermittency as a series of non-traditional, short-term fuel risks. Supply security and reliability can be high once mechanisms for dealing with intermittency are developed, as previously noted, including large-scale or distributed storage and integration with biomass, hydroelectric and “clean coal”. Time-of-day effects, such as the advantageous correlation of sunlight and high temperatures with peak power requirements for air conditioning, make solar photovoltaic cost competitive in those situations. The uncertainty of intermittency is largely resolved in these complementary cases. The critical barriers are not technological issues, which are challenging but achievable, but institutional culture and lack of understanding of the opportunities and benefits. Intermittency may trigger higher time-of-use rates, but this is acceptable if base rates can remain stable and options for conserving energy and decreasing costs become more accessible and affordable. Using WACC, Awerbuch161 proposes that risk values be considered in the case of photovoltaics as well as social and environmental externalities. Awerbuch calculates these at over 2.5 times the capital cost of installation on a per kW basis162. Portfolio Theory, used extensively in finance, simply states that diversification can lower risk while optimizing return. A diversified portfolio of energy supply and use systems will be more robust and reliable. What this means in a practical context is that diverse generation supply on a distributed grid will face less risk and reliability issues than the current centralized monolithic hub-and-spoke model. Further, a diversification of efficient and renewable technologies becomes the best option for new and replacement facilities. If intermittency can be addressed as suggested, a mixed renewable and “clean” transitional conventional portfolio becomes not only a viable goal, but also a powerful solution to the problems of fossil fuels. It will require a high degree of technical management, but much 161 Ibid 162 S. Awerbuch, “Issues in the Valuation of PV/Renewables: estimating the present value of externality streams with a digression on DSM.” Proceedings: National Regulatory Conference on Renewable Energy, Savannah, GA. National Association of Regulatory Utility Commissioners, DC, October 1993. 89 of this can be regulated and automated by building inexpensive processors into each component of the grid, from generators and substations163 to consumer appliances. Also, a diverse portfolio can include a specific mix of high efficiency models of clean CHP and renewables, as appropriate in different jurisdictions and under differing conditions. The conceptual framework that is implied by diversification and decentralization is disruptive in that it challenges the corporate social structure and existing technical and business arrangements. Even the initial conditions and basic information on the kinds of technical structures so far outlined are only now beginning to infiltrate utility and regulatory cultures. These sectors are typically conservative and cautious about new approaches that may compromise reliability, security and economic circumstances. But small groups and individuals within these cultures are becoming aware of the alternatives to the existing centralized, large scale and potentially vulnerable system164. Further work in demonstrating value that internalizes risk issues and the robustness and reliability to be gained from a portfolio approach will be very useful in communicating alternative visions that also incorporate sustainability. Risk is a large topic, which, while remaining undefined, has a huge impact on the future viability of the energy system. Incorporating and expressing risk also connects the value issues (discussed in this and the following chapter) to the technology uptake topics covered in Chapter 6. 4.8 PREFERENCES There are two general approaches used in economics to estimate exogenous values: revealed and stated preference, or indirect and direct measurement. Revealed preference methods, when examining actual behaviour, measure how much consumers value a social or environmental attribute by their actions. For example, lower prices for houses near industrial areas express the cost of being on such streets. A transportation and energy 163 Amin, M. 164 The author regularly speaks to utilities and utility groups and produces studies on these topics to bring utilities to these new models of the electricity grid. 90 example may be the premium people pay for environmentally friendly items such as hybrid vehicles or solar PEV units over conventional technologies. This method can be used to monetize aspects of market goods in the energy system and value chain. Preferences and specific market values are revealed through data for comparable consumer items with different social or environmental attributes. There are several approaches to comparing market value, from Travel Cost Methods such as Hedonic Pricing, to more direct approaches, such as willingness-to-pay or willingness-to-accept forms, for example, Contingent Valuation (CV)165. Why are identical houses in different neighbourhoods valued and priced differently in the market? There may be many entangled reasons for this difference in value, such as neighbourhood status, air pollution and noise levels, all which can confound the analysis. There are also a limited number of such attributes that have direct market analogues, which limits the extensive use of revealed preference in valuation. Market valuation of non-market goods only works where such goods have attributes that are distinct and comparable to market goods. Stated preference methods, on the other hand, use survey methods such as questionnaires, focus groups and interviews to acquire a monetary value for qualitative characteristics or specific services. The stated preference approach essentially asks a sample group, usually from the general public, what value they place on a specific attribute or characteristic that has no defined market value. Specifically, a consumer may be asked what they are willing to pay (WTP) for the existence of an intangible value, or what they are willing to accept (WTA) as a cost. How much they are willing to pay or accept in return for gaining, or losing, respectively, an environmental attribute. WTA usually produce higher values, as people are willing to pay less than they will accept as a cost. An example of the two methods would be how much an individual will pay to prevent a specific amount of air 165 CV is used to determine the value of non-market environmental goods with use and non-use values–that is environmental benefits that can be used or benefits that occur from simply knowing the resource, a species or ecosystem, exists. CV asks respondents what they would pay. See glossary for full definition 91 pollution occurring in their neighbourhood from electricity generation or vehicle tailpipes (WTP), or the amount they are willing to accept as a payment for a specific increase in pollution from these sources (WTA). The differences between revealed and stated preferences are demonstrated in Table 4.1. The comparative advantages and limitations of the methods are discussed in the next section. TABLE 4.1 REVEALED AND STATED PREFERENCE DIFFERENCES Revealed Preference Data Stated Preference Data Based on actual market behaviour Based on hypothetical scenarios Attribute measurement error Attribute framing error Limited attribute range Extended attribute range Attributes correlated Attributes uncorrelated by design Hard to measure intangibles Intangibles can be incorporated Cannot directly predict response to new alternative Can elicit preferences for new alternatives Preference indicator is choice Preference indicators can be rank, rating, or choice intention Cognitively congruent with market demand behaviour May be cognitively non-congruent Adapted from: Qualitative Choice Analysis Workshop, Econometrics Laboratory, University of California at Berkeley, 22-24 May 2000 (http://elsa.berkeley.edu/eml/qca_reader/9.combin.pdf) CV is a specific and primary WTP survey method for estimating environmental non- market goods, but the methodology is equally useful for social goods. It relies on what people say they are willing to do in specific scenarios (hence contingent on situations), not what they actually do, which is a criticism of the method166. 166 O'Neill J, Spash C L, 2000, "Conceptions of value in environmental decision-making" Environmental Values 9: 521 – 536. 92 Contingent Valuation is used in a number of methodologies as a social and political tool to recognize social and environmental value. Such values can then be used to calculate carbon offset pricing, for permit or tax purposes, or for comparative pricing of renewables (per kWh), which is used for cost-benefit comparison. As an example, CV is used in the ExternE (External Costs of Energy) methodology as a means of costing externalities. It has been widely used since 1991 in the EU and also internationally. It models an “impact pathway”, from pollution release to final impacts, to identify different categories of impacts, which are then evaluated using standard willingness-to-pay methods for improved environmental quality167. This disaggregation of the process allows more accurate evaluation. However, there are considerable uncertainties in cost estimation for WTP, even admitted by practitioners. While the technique is considered adequate to provide subsidy pricing for the costed benefits of externalities, it does not necessarily cost these benefits accurately, or consistently. 4.9 STATED PREFERENCE METHODS For stated preference methods, there are many concerns connected to framing the issues and correlating with actual events. The imprecision of these processes is highlighted by the value gap, the so-called endowment effect, between willingness-to-pay and willingness-to-accept168. Many factors, such as personal bias or poor contextualizing of the issue by the questioner, can contribute to difference in how value, in the largest sense, is construed, making it challenging to find and then tease out specific values for specific attributes. The effects of proximity to a local natural resource, and local knowledge among respondents, as well as differences in general knowledge, can also skew how values are understood and expressed. How questions are designed and the context provided for either saving or paying for public goods contribute to the necessary social 167 Wolfram Krewitt and Joachim Nitsch, “The German Renewable Energy Sources Act: An investment into the future pays off already today,” Renewable Energy, 28, no. 4, April 2003: 533-542. 168 Kathryn Zeiler and Charles R Plott, "The Willingness to Pay/Willingness to Accept Gap, the Endowment Effect, Subject Misconceptions and Experimental Procedures for Eliciting Valuations,” American Economic Review, 2004. 93 framing, which is important as a range of values can be elicited from the same person. The primary problem is the gap between self-reported behaviour and observation of actual behaviour. This gap exists because of the greater difficulty of gathering actual behavioural results, increased costs, the observer effect (the impact of observer intervention) and because many changes have yet to occur, or occur in situations that are difficult to observe. Another issue is the embedding or scalar effect, which is also known as “part-whole biasing”. Respondents will typically value a small part of a benefit, for example maintaining a known nearby unspoiled lake, at almost the same level as they would value keeping all of the lakes in their region or country pristine169. A bias towards a general topic will affect responses to parts of the topic. So while progressive economic approaches such as CV, which uses concepts of willingness-to-pay and willingness-to- accept, can be useful, in some cases they can be highly variable in both scalar assessment and precision170. Arguments to advance CV essentially attempt to correct such effects by educating respondents towards better responsiveness to the evaluation process by providing them with “unbiased” information, particularly contextual knowledge on scale and intensity of effects. Attempts by economists to correct this scalar misperception and other inaccuracies through the “education” of respondents are not looked on fondly by those in disciplines such as sociology and anthropology171. Some individuals and groups express very different values for the same services and benefits, and there are protest and untruthful responses as well as a genuine gulf between response and actual choice172. Individual concerns, especially if surveys are framed from an individual perspective, may 169 R. J. Kopp, W. W. Pommerehne, et al., Determining the Value of Non-Marketed Goods: Economics, psychological, and policy relevant aspects of contingent valuation methods (Boston: Kluwer Academic Publishers, 1997). 170 Ibid 171 Kenneth J Arrow, Robert Solow, et al., “Report of the NOAA Panel on Contingent Valuation,” Federal Register, 58, no. 10 (January 1993): 4601-14. 172 A classic example is the colour selection of iPods by focus groups that over the long-term concluded that yellow was the most popular colour for consumers. When given a free iPod on the conclusion of the process the majority chose black. 94 also differ substantially from social concerns, such as the difference between an individual’s personal goals and how they would like their society to develop. The impact of energy technologies that promote sustainability for natural environments and social systems is similarly difficult to assess when using revealed and stated preference methods. The technologies are new and opinions on benefits, cost and hence value may be polarized, and respondents may have little knowledge on the topics. Too little may be known about long-term social and environmental costs, even by experts. This is a general risk problem that applies across all types of valuation for new attributes. Therefore, it appears that while an estimated value can be gleaned from human behaviour using revealed preference methods, it is too narrow in scope to be inclusive of submerged values. Among other factors, only limited behavioural activities are available for analysis and such activities may only represent very limited groups and perspectives. Confounding factors can also muddy value estimates, and where multiple effects on value exist, these can be hard to separate out in order to allocate value. Stated preference methods, on the other hand, can be tailored to meet the data requirements, but there can be considerable problems with framing and overall accuracy. It is quite possible that valuation estimates will be out an order of magnitude or more. 4.10 MONETIZATION, VALUE AND CONTEXTS Price is often seen as the most important criterion for implementing new energy technologies. It is assumed from basic economic principles that technological viability, efficiency and a competitive price are the basic reasons for technology adoption. While these are major factors, market distortions, a complex web of subsidies, sunk costs and embedded research, development, commercialization and marketing also play an important role. These latter factors refer to the entrenched research and development advantages, and the complex structural support systems developed around the commercialization process of existing technologies, sometimes referred to as lock-in. Such advantages are usually built up over years, often partially paid for by public funds. Additionally, well-established government and market relationships solidify the existing 95 structures of access, funding, and advantageous regulations by sector and even industry, for example, through the use of fiscal instruments, such as exploration credits and flow through shares. These advantages are in turn deeply embedded in social contexts, interest group lobbying and personal agendas, any of which on their own can influence rational technological decisions. In this rich social and political context, price can have many characterizations from a simple up front cost of installation, to a whole cost life cycle analysis, with all possible attributes and influences costed or priced. However, when cost-benefit analysis (or even a more complete whole accounting approach) shows viability or even great desirability, technology uptake can still be slow or non-existent173. An example, low temperature geothermal space conditioning, can produce better life cycle returns on investment than other options but has only minor market technology uptake. This is partly due to ROI, financing and first cost issues that consumers are averse to and, to a lesser extent, to how long term benefits are understood. Price is a key factor for technology adoption, but even price is embedded in a social, informational and political structure174. Monetary comparisons of renewables with large hydro, coal or gas using metrics and measurements from a centralized power generation model miss many critical values, contexts and a range of risk factors. This is particularly true of the keystone transportation technologies examined here. While risk analysis is reliant on historical data, there are methods to incorporate risk understanding and mitigation. The CAPM portfolio approach exemplifies the benefits from generation asset diversity, which is not part of current pricing models. Traditional cost-benefit approaches to valuing the social and environmental costs and benefits therefore misprice the valuation of renewables and sustainable technologies. Other approaches to energy resources, such as CV, rely on such 173 Stephen J. DeCanio, “The Efficiency Paradox: Bureaucratic and organizational barriers to profitable energy-saving investments,” Energy Policy, 26, no. 5: 441-454. 174 This is a primary social perspective taken up in this dissertation, which opposes mainstream economic views. This understanding underlies such major environmental compendiums as Rayner and Malone. 96 assumptions as comprehensive consumer information and an explicit understanding of social and ethical frameworks. There is also an assumption that these factors are captured in consumer preferences or social choices175. When CV or similar methods are used to calculate submerged values, then a monetary value will be assigned for costs and benefits. For the reasons outlined so far, these monetary values may range from imprecise to wholly inaccurate. A large number of social and environmental values and risks can be overlooked. From an economic perspective, these final monetized values are used in policy-making to compete in what is essentially an auction process for technology operationalization. However, it is clear from actual performance that social and institutional arrangements and relationships often intervene in or distort this process176. Additionally, pricing and efficiency models based on historical past performance can be mistaken in their assumptions for the future, particularly due to unpredictable future events. Therefore, there are a large number of additional risk issues that are not addressed or managed. Other monetary approaches differ in principle and differentiate issues such as economic substitution. As noted in section 4.7, ecological economics reject the potential substitution of primary resources with other yet un-named substances177. Efforts from ecological economics to evaluate the services produced by nature can be seen as an attempt to understanding the scale of environmental services and the potential costs of losing these services rather than conclusive monetization. Ironically, monetization creates a financial entity out of nature and its services, and if the intentions of such work are misunderstood, 175 Even when such assumptions as complete and perfect information from all actors are ceded, other theories that posit simply adequate knowledge or such concepts as satisficing are used. These more realistic approaches are however still temporary and inadequate for properly understanding incommensurate valuation. At the same time as monetization is viewed as hard, cold-blooded and precise, non-numerical methods are disparaged as “soft” or “unscientific”. Without adequate context monetization can be “precisely wrong” while more-often social methods are at least “vaguely right”. 176 This is one of the main topics of M. J. Piore and C. F. Sabel, The Second Industrial Divide: Possibilities for prosperity (New York: Basic Books, 1984). 177 R. Costanza and International Society for Ecological Economics, An Introduction to Ecological Economics (Boca Raton, Fla: St. Lucie Press, 1997). 97 promotes a system where commensurability of value and the substitution of primary resources are possible. To avoid this dilemma I suggest that the value of natural services could be added to market value, using algorithms to avoid double counting of shared worth, to combine both human and ecosystem services and benefits. Combining these values may more realistically approximate the actual natural and human value, and I argue that this is a legitimate approach. While there is logic to adding economic and social value, expressed by market price, and the value of environmental services, this approach would not likely be accepted by economists or land developers for the primary reason that it may price many real estate assets out of the reach of development. The public and policy-makers still have large knowledge deficits where environmental issues are concerned, particularly with respect to the interactions of complex energy and land use variables. Monetizing submerged values through the use of survey methods may produce limited use valuation. In a complex world of multiple draws on scarce attention178, issues may be of secondary importance next to the immediacy of life concerns. With powerful industrial interests now broadcasting their own, often contrary, perspectives and versions of environmental and energy topics, there is a growing polarization on environmental issues. In 2001, support for appropriate measures and results in environmental policy was, at best, occurring as a parallel process disengaged from far more politically powerful “mainstream” issues179. This has changed somewhat— an indication of the rapid change we are witnessing—but information, as the product of the popular media, is often conflicted and inaccurate180. Added to this potential for disinformation are the inertia and embedded economic, organizational and structural biases of industrial and policy organizations, which mirror the embedded biases towards 178 I use the term “scarce attention” as the idea that the individual and social world is in a competition for attention. Jack Manno also develops a similar concept in J. Manno, Privileged Goods: Commoditization and its impact on environment and society (Boca Raton, FL: Lewis Publishers, 2000). 179 Policy parallelism and policy disenfranchisement convey how submerged values can often be automatically disenfranchised from policy debate and how this is essentially structurally enframed. 180 Not using plastic bags may be seen as worthy as not driving an SUV but vehicle choice has orders of magnitude greater impacts over plastic bag use, the latter likely having larger aesthetic and visual impacts. 98 incumbent energy and transportation technologies. The transition to a sustainable energy system will, therefore, be partially dependent on how we interpret social and environmental values. The rapid mainstreaming of these issues into public and industrial policy is one of the greatest challenges of our time. 4.11 SUMMARIZING VALUE AND MONETIZATION Many values—efficiency, capital and operating costs, and some risk issues—can be monetized relatively successfully and used for comparative purposes. As noted in this chapter, many of these important values, particularly risk and life cycle assessment values are commonly not incorporated into the decision-making processes that determine what technologies are supported. Many non-market values are possibly monetizable, but can be poorly incorporated into such decisions. As a result of this and entrenched cultural and technical forces, technological decisions can easily be misguided and the understanding and execution of technological evolutionary processes inhibited. Beyond this, some values are incommensurable and it will require new or alternate approaches to bring these submerged values to the decision table, the topic of the next chapter. Understanding, formulating and communicating the social and environmental values delivered by new technologies and processes will be a necessary part of this process. Without the incorporation of these very real but submerged and unconsidered attributes, the role of appropriate new technologies, such as renewable energy generation and Plug-in Vehicles, will be further delayed when they are most needed. 99 CHAPTER 5 – NON-MONETARY APPROACHES TO ASSESSMENT 5.1 LIMITS TO COMMENSURABILITY The full dimensions of a sustainable and integrated energy system and its impacts on culture and behaviour cannot be easily understood in strictly monetary terms. The transition to an IES will be an iterative and recursive process requiring new theoretical and practical approaches that include broad social and environmental concerns. We are tasked with providing energy and transportation services for human well-being without compromising the environmental and social structures that support well-being. This will require new approaches to assessing value as a critical part of decision making. In Chapter 4 I proposed that not all values can be converted to monetary terms. Some values are incommensurable—they cannot be compared, or at least reduced, to a standard metric. The values of the complex underpinnings of the biosphere, from diversity to natural services, are examples of this principle. While many in the environmental field agree with this in theory, they may retain an underlying conviction that we can eventually learn to monetize almost everything181. This conviction is a reflection of our Cartesian heritage, its linear thinking paradigm, and our human need for simplified and unified metrics to comfortably explain the world and make informed and logical decisions. For example, in neoclassical economics, natural resources such as water and air must be priced to give them economic value, and hence, consideration in the human world. Many analytical methods have been developed to deal with these ranges of values that are difficult to quantify, from exogenous variables to informal knowledge. Mathematical treatments include data mining, fuzzy set theory, possibility and probability theory, and a range of other theoretical treatments182. From a practical perspective these strategies help 181 D. W. Pearce and E. Barbier, Blueprint for a Sustainable Economy (London: Earthscan, 2000), 51-83. 182 Shinya Kikuchi, Mechanisms of Natural-Language Data Processor and Its Use in Transportation Analysis (Virginia Polytechnic Institute and State University, 2007). 100 us to proceed with our projects with a calculated or a placeholder value that conditionally attempts to answer the messy questions surrounding cultural and environmental values. However, by using erroneous values embedded in an inappropriate paradigm, we may get the answers we expect, but not the answers we need in order to more appropriately solve the problems we face. Even if submerged values are monetized through the best available and most complete techniques, these estimates can be highly variable due to assumptions and methods used. Inaccurate monetization also blinds us to new ways of looking at the problems. Ironically, calculating more precisely in monetary terms those incommensurable values we consider important to our decision-making may take up far more time than developing or using effective qualitative methods. That we may be capable of monetizing better and more broadly is less important in the current sustainability crisis than finding a more fruitful way to convey value and understand the issues183. In the longer term, recognizing widespread incommensurability not only forces us to stop computing all values in monetary terms; it also opens us to new understandings. First and overall, the assessment of submerged values operates on a completely different qualitative dimension than monetary valuation, and is therefore poorly understood as a psychological and neurological function. At a psychological level, it appears to be a subjective, and thus personal and varying, assessment of the value of different material and cultural goods. Even the most stable market value is simply a consensual agreement between buyers and sellers, and as some things, such as human life, are never (or should never be) traded, they should not be limited to a monetary value. From a neurological perspective, the human mind apparently does not put a value on prospective actions or pathway choices184. The mind does not work in that manner, and our valuation and decision mechanisms are logical overlays on quite a different physical reality. In general, 183 Fruitfulness is a core value of good science, according to Kuhn (the others are accuracy, scope, consistency, and explanatory power), in the evolution of science. T. S Kuhn, The Structure of Scientific Revolutions (3rd edition) (Chicago: University of Chicago Press, 1996). 184 C. Padoa-Schioppa and J.A. Assad, “Neurons in the orbitofrontal cortex encode economic value,” Nature, 441, no. 7090 (2006): 223-226. 101 the very act of quantification is a leap of faith that assumes reality has temporal and spatial uniformity185. Some factors, such as distance and time, appear to meet this test, but others, such as virtue and grace, have resisted quantification since the earliest attempts by scholars at Oxford in the fourteenth century186. The social and environmental consequences of the choice of technological pathways have dimensions that include aesthetic sensibility, ecological diversity, existence values187 and cultural form. Second, such values change and differ by locality, culture and the stakeholders’ understanding of spatial scale188. Features near and familiar, such as a backyard, are much larger and more important than distant or unfamiliar ones, such as a provincial park. Submerged values are fluid and labile because they can be personally and culturally specific. That these values are pluralistic, subjective and relative suggests that they cannot be represented by a standard metric. Third, historical information used to appraise risk or value cannot include unforeseen events or the convergence of occurrences that can radically shift current values. The problems arising from fossil fuel use are now changing how we view the world. Terrorist acts, market collapses, corporate corruption, war and political sea-changes are all examples of changes in the social environment that have led to the re-evaluation of how we see security, brand value (e.g., greening corporations) and social services. 5.1.1 New Dimensions to Commensurability The structure of decision-making regulations and policy, drawn from value assessment, is based on a historical paradigm. It is naturally slow to respond to divergent and disruptive events and processes, because it takes time to shift to new understandings and approaches. Developing and assessing new types of energy technologies that tap different 185 Crosby. 186 Ibid 187 Simply, existence values are values independent of human value—the intrinsic value of existence. 188 Lars Hein, Kris van Koppen, Rudolf S. de Groot and Ekko C. van Ierland, “Spatial scales, stakeholders and the valuation of ecosystem services,” Ecological Economics, 57, no. 2 (1 May 2006): 209-228. 102 resources and provide different types of services requires a new kind of approach, a paradigm shift, to understand and assimilate them189. It is, by definition, difficult to outline the dimensions of a new paradigm even if that developing paradigm is the necessary basis for moving towards sustainability. The shift to an intelligent, integrated and sustainable energy system that this dissertation advances and develops is at its earliest stages. This cultural paradigm shift impacts and is impacted by our technology and policy choices in ways we cannot yet comprehend190. While I focus on technologically initiated change, the behavioural and infrastructural changes both extend into and interact strongly with technological change. The initiation and composition of change arises from existing and potential social capacity and other social sources and forces. The historical development of three centuries of utilitarianism promotes the view that the natural world and its species are resources for human use and ingenuity, not necessarily with intrinsic value191. Similarly, the benefits of specific types of social organization and capital192 are largely left out of the appraisal. Conventional economic rationality considers that, unless priced, the benefits and services of nature are free, trivial or non-assessable, and therefore with little impact on policy evaluation193. The challenge is that price is a necessary mechanism to denote value, and that submerged value must be quantified. However, this approach is simply the wrong tool for the job. Broadening the understanding of value and the structure of value relationships in the public and scientific 189 Kuhn. Kuhn’s evolutionary approach to science is more Lamarckian than Darwinian, as will be discussed later in this chapter 190 Ibid. 191 Intrinsic or existence value can be considered from at least three different perspectives: as non- instrumental; as value beyond anthropomorphic reach; and as synonymous with “objective”. J. O'Neill, Ecology, Policy, and Politics: Human Well-Being and the Natural World (London; New York: Routledge, 1993), 102. See also Joan Martinez-Alier, Giuseppe Munda and John O'Neill, “Weak Comparability of Values as a Foundation for Ecological Economics,” Ecological Economics 26, no. 3 (1 September 1998): 277-286. 192 An example may be pre-contact aboriginal social organization and communitarian ownership. 193 Rees has suggested that if nature’s contribution is considered free it is both over-utilized and not part of policy approaches, see: W. E. Rees, “Can Economic Logic Mitigate Biodiversity Loss and Resolve the Sustainability Crisis?” Excerpted from “Conventional Economic Logic: The Bane of Biodiversity and Sustainability?” White Paper Presentation, 2004. 103 debate may be critical to implementing appropriate technology systems in response to the drivers for change in the energy system. It may also be an important and required step in developing sustainable ways of living. O’Neill suggests194 that social meaning and its relational aspects are simply not commensurate with the algorithmic logic of economics, that they make these methods illusory, and that this is an outcome of a “cramped and mistaken” understanding of rationality195. There is a surety and over-simplicity to widespread quantification that is contrary to the messiness of reality. O’Neill further suggests that the whole question of commensurability is the result of consideration in a vacuum devoid of social meaning and value196. He argues that price is not neutral and that in a WTP argument, the question of whether, for instance, thirty pieces of silver was an accurate value for Christ’s life or whether Judas should have gone for more, is irrelevant. The value of one human’s commitment to another is in an entirely different dimension, like so many social and environmental qualities. In such cases the very monetization process becomes anathema. There are many values imbued with social and natural meaning that cannot be monetized and commoditized, as Manno has suggested in response to the commoditization of social and natural values197. The application of monetary values does not imply commensurability, a point made as far back as Aristotle198. Rather, it is an outcome of an enframed technical and economic perspective to quantify as much as possible: a type of quantitative imperialism199. Entire disciplines and numerous methods have been developed to convert so-called “intangible and exogenous” values to a common monetary 194 O'Neill, 1993. 195 Ibid 196 Ibid, p.118-122. 197 Manno. 198 A. Nichomachean, trans. T. Irwin, Ethics, (Indianapolis: Hackett, 1985). 199 As described before, enframing is a process of valuing nature as standing resources. Ben Fine, “Economics Imperialism and the New Development Economics as Kuhnian Paradigm Shift?” World Development 30, no. 12 (December 2002): 2057-2070. 104 or numerical value200. Such approaches derive largely from examining preferences, either as compared to market transactions or by the concretization of social concerns into monetary terms. It begs the question: If every stated preference query in such studies had an option box that clearly stated that putting a monetary value on a submerged value was unacceptable, what results would we get? If monetization techniques are inadequate in some cases, how are we to compare diverse and seemingly ephemeral social and environmental attributes? When describing the effects of different technologies on societies, it makes sense to see economic value as embedded and contained within social structures. We can describe the potential impacts and effects in narrative terms, in addition to cost-benefit scenarios. For example, we have good indications that compared to large-scale generation, distributed renewables can increase jobs and local economic development, revitalizing communities and increasing self-reliance. Critical mass and social and economic multipliers can then develop urban and rural societies201. The paradigm shift in technologies, and therefore behaviours, affects land use and population distributions that ripple out across societies. As well, there can be positive fundamental changes in food security and national security, and the distribution of knowledge and knowledge workers202. In such scenarios social and economic costs and benefits that are difficult to evaluate in advance can occur as a result of technological changes that produce broad social change. The extent of such effects is difficult to predict precisely, but we can see large differences between the centralized and distributed models of the grid described throughout this dissertation, and these differences can be described in social and narrative terms. 200 Ibid 201 Jane Jacobs, The Nature of Economies (New York: Modern Library, 2000). 202 Ibid 105 5.2 ADAPTATION, MITIGATION AND EVOLUTION The process of comprehensively assessing those factors affecting choice shifts us from narrow quantitative approaches to include broader contexts203. Evaluation of different choices by individuals and organizations is extremely complex, and there are many large and divergent literatures on this topic, in cognitive science, decision theory, psychology, economics and neurology, among others. It is the utilitarian rationale204, however, from Jeremy Bentham to John Stuart Mills, that is still the common approach to directing value and decision making in technology studies. It supports decisions that, from economic and social perspectives, bring the most good to the maximum number of people. When considered in the light of modern ecological thinking, however, the utilitarian perspective is limited and lacks context. It may not deliver results beyond narrow spatial and temporal limits, as it does not recognize the interdependence of the human species with its environment and the intrinsic value of environmental services and other species. To include the larger environmental world, perhaps I can reframe the concept to: ‘Provide the greatest opportunity for the long-term benefit of complex evolutionary diversity to the maximum number of species.’ This idea underscores the co-dependency of species and systems, and promotes the resilience and risk abatement features of diversity. Our complete dependence on healthy ecosystems is not a central understanding, nor a priority, of economic thinking and industrial society. If the central tenets of the theory of evolution hold, perhaps nature already achieves the goal of maximizing life opportunities and diversity through adaptation to all available niches—in itself an optimizing and comprehensive valuation process. The economic directives of the human species has subverted this natural optimality (in the sense that it is unsustainable), and we are in a process of rapid evolution with respect to dynamic and swiftly changing niches. As part of natural processes, the 203 Rayner and Malone. 204 J.S. Mill, Utilitarianism (Parker, Son, and Bourn: London, 1863). 106 operation of economic markets simply becomes a subset of adaptation and evolutionary theory205. In time, will natural forces balance inefficient and unsustainable behaviour? The end-game experience of epidemics and ecological and social catastrophes, on the way to an unattainable ideal of market-imposed sustainability, will not be a pretty picture. Even the strictest advocate of the dominance of markets should not want to risk social and/or environmental upheaval and collapse to support a theoretical position, although ironically such events may be rationalized ex post facto as the result of interference in markets. Newer and better systems and mechanisms may well arise as market adjustments bring out the best technologies and better ways of living—the role of markets should not be ignored. But what is the price for the evolution of social and technological systems to sustainability—to a long-lived, dynamic stability—largely by means of the markets? A well-known economic proverb declares that a rising tide will raise all boats, which can be interpreted to say that market mechanisms, left to their own devices, will raise all standards. But this is not evidenced by the reality of billions of people and numberless species who don’t own a piece of flotsam, let alone a boat, who will simply be submerged in the calamity of a rising tide, or more precisely, the tsunami of rising sea levels. Without access to the basic resources of water and fuel, those left out of the ‘free’ market will face starvation, war, endemic disease and irreversible ecological destruction. Under the circumstances I suggest it may be a grave mistake to trust market forces as a sole or even important mechanism for meeting global and long-term societal needs. Might there be a more productive way to think about these issues that could develop a larger consensus? Conceivably, we could adapt and change our systems and processes to temper and manage the potential for cataclysmic consequences. One can see here the intimate relationship between mitigation and adaptation. It is my suggestion that mitigation becomes pro-active adaptation. These two approaches can be thought of as end points for a range of intermediate activities. Some of these adaptive processes will occur 205 Jacobs. 107 automatically and may in fact, already be out of our control, such as coral bleaching and the resulting changes to reefs. However, many others will require long-term human choices on a societal and global scale206. If these decisions are to be made, then they should be made with the most complete information available. They should be made with the most inclusive systems of valuation possible and with the inclusion of the largest set of values, as in the life cycle analysis in the example of biogas (see 5.3 below). These systems of valuation should include all of the factors that make a sustainable continuation of the highest level of well-being mutually possible for humans and ecosystems. As we are ultimately dependent on an impenetrable diversity of species and ecosystem relationships, it would appear wise to include all that we can possibly include. Economic and technical factors are important considerations, but social and environmental values may be fully as important for identifying appropriate technologies and ways forward. There are many reasons why social and environmental attributes have been missing from the debate on the long journey towards an ultimately sustainable energy system, but the issue of comparability stands out. The dominant mechanism for decision-making, particularly in technology choice and implementation, is cost-benefit analysis or some variant borrowed from engineering literatures. While the theory is logical—balance costs and benefits to find the best option—the practice is anything but logical. The enframed techno-economic perspective treats all of nature as standing resources207. The narrow technical approach is fundamentally unfriendly to the social and environmental values and complexities of the natural world, and resists inclusion of these values. Can we represent the robustness of diversity, which ultimately supports the biological world, in a cost-benefit analysis? The option of a mistaken hard dollar value or an ineffectively noted soft value, which can be ignored when decisions are made, is no choice at all. This is a fundamental irony of the pervasive techno-economic paradigm. 206 Rayner and Malone. This is the theme of this series, a standard reference of ecological social choices. 207 M. Heidegger, The Question Concerning Technology, and Other Essays (New York: Harper & Row, 1977). 108 The system built to compare costs and benefits, when missing fundamentals and enframed in one paradigm, simply reiterates the values of that paradigm. It is often easier to quantify than to attempt the more challenging processes of evaluating and narrating complex and less comprehensible risks and values—which perhaps explains the growing tendency to quantify in academia. Either a value or price is established, often inappropriately and inaccurately, or it risks being disregarded—the imposition of an accounting mind-frame on the whole world. To include submerged values will be challenging in this conceptual structure, and likely impossible to apply with any degree of precision. The reality is that dominant perspectives are unlikely to change, other than through a long slow process of evolution or by the unfortunate exigency of crisis. 5.3 EXAMPLES OF SUBMERGED VALUE To clarify and make tangible many of the above concepts, I summarize two examples below: biogas and the use of a multi-attribute utility theory for energy generation planning. These examples demonstrate two very different types of energy generation that could be used for transportation, and how difficult it can be to monetize some social and environmental benefits. 5.3.1 Anaerobic Digestion208 Anaerobic Digestion (AD) or biogas is an example of an energy technology that eloquently demonstrates benefits across the entire issue spectrum (see Appendix 1 for a more detailed examination). Biogas facilities can deal with all organic parts of the waste stream, including sewage, municipal solid waste (MSW), household, farm and industrial organic waste209. The reactors can be simple single household units or large and highly complex bio-electro-chemical industrial designs. Either can produce dispatchable power with more than 95% availability and distributed carbon-neutral, load or peak demand 208 Information in this section is extracted and synthesized from: A. Elias, “Biogas Use and Acceptance,” UBC, 1992; available as a separate paper. 209 Elizabeth C. Price and Paul N. Cheremisinoff, Biogas: Production and Utilization (Ann Arbor: Ann Arbor Science Publishers, 1981). 109 power, which is highly complementary with intermittent wind, solar and other renewable power. Outputs can be biogas or any number of fuels depending on bacteria used210. Fuel supply and price risk is minimal to non-existent. Yet, like geothermal, capital costs are high, and there are new learning curves for operation that require training and agency support to effectively develop the resource. Many of the potential social and environmental benefits of biogas remain unvalued. Like many renewables, biogas has high infrastructure costs and low operating costs. Anaerobic Digestion generates energy in the form of heat and electricity, biogas or bio-hydrogen, the latter useful for transportation. It also produces large amounts of high quality weed-free and disease-free soil amendments to help break nutrient overload and soil depletion cycles. Additionally, air, soil and water pollution, along with the aesthetic, health and social impacts from solid waste can be effectively managed. In developing world situations, disease cycles are broken and endemic diseases can be eradicated. Food security can be improved with the availability of soil amendments and the mitigation of soil degradation and pollution. Biogas income, and air, water and soil benefits help make rural communities viable and liveable. Social and environmental benefits include decreases in urban migration and the retention of important rural skills. These types of advantageous attributes, often worth many more times the waste and energy benefits, are rarely assessed when making implementation decisions. They are not monetized in the cost-benefit analysis that decides energy choices, development and policy. Cost-benefit analysis of biogas reactors typically only consider waste-handling costs and energy generation rather than a multi-benefit high efficiency process that values waste and preserves natural capital and cycles. Full consideration of benefits may paint a very different picture of the value of this technology. Biogas may be a useful example for understanding the breadth of submerged values. 210 Gene Logsdon, “Producing Ethanol from Solid Waste,” Biocycle, July 1991 pp. 71-2. 110 5.3.2 BC Hydro IEP Example A contrasting example of assessing technology implementation is the technology planning process for the 2006 Integrated Electricity Plan (IEP) for BC Hydro, where a multi-attribute utility theory approach was used in the planning process211. Multiple attributes with different measurement units were compared to see how they met select objectives. Different attribute classes were weighed and compared. This is an advanced valuation process, but one where known technologies, such as fossil generation and large hydro, were evaluated more favourably than lesser known technologies, even when there was a limited basis for this appraisal212. In this case, while the calculations were accurate, there were issues with the structure of the framework and basic assumptions. For example, the BC Hydro IEP assessment of a high temperature geothermal facility specified land impacts of several thousand hectares. This was the entire area of the geothermal field, although actual land and road impacts were only a few hectares. At the same time, the “Site C” hydroelectric project on the Peace River showed no land or road impacts as a run of the river project. In reality, at least several hundred hectares of land would be impacted. With the same logic used for the geothermal impact area, the entire upstream watershed of the Peace River would have had to be included, an area of possibly millions of hectares. When assessing wind farms, similar assumptions and rationales were utilized. All the land in the license area is considered impacted even though almost all of it was available for multiple usages. This skews the analysis. Mistaken assumptions, even in a sophisticated multi-attribute evaluation approach can produce results that are the opposite of the actual situation. Such biases and misunderstanding of the values involved may not be deliberate, but they demonstrate that attempts to evaluate a new technological paradigm utilizing the metrics and understandings of an old paradigm are fraught with dangers and inconsistencies. 211 For types of attribute assessments see B.C. Hydro. 2004 IEP. HD9685.C33B32 2003 and BC Hydro 2006 Integrated Electricity Plan <http://www.bchydro.com/info/epi/epi43498.html> 212 Ibid 111 5.4 COMMENSURABILITY, ETHICS AND SOCIAL PERSPECTIVES There is a persuasive literature that has examined economic perspectives and how they function, or malfunction, within complex social systems213. Economic tools can work effectively in many situations, including evaluating sustainable technologies, but these tools are encumbered with unspoken agendas and biases, or submerged predispositions. The current dominant techno-economic perspective is entrenched in cost-benefit analysis and reductionism to monetary terms. While broadly accepted, it is not any more objective and unbiased than any other perspective, and is, according to McMurtry and others, a specific choice of a moral and ethical framework214 that excludes much of what an individual would value for his/her society and environment. The economic view can, like any other perspective, be seen as a subjective calculation ultimately based on specific moral assumptions. For example, the use of any reasonable type of discount rate to evaluate the present cost of future value will discount the future to zero beyond forty or fifty years215. Social discount rates are designed to counter this, but when set low enough to produce some value for the future, these minimal rates are too low to be acceptable for business transactions. The future, beyond a few years, then becomes of little or no value. The past fares equally poorly except as predictive ammunition. The assumptions and results of such ahistorical techniques arguably operate inadequately on limited timeframes, such as the business and political cycle. Even techniques within economics, such as diminishing discount rates, cannot substantially change general moral assumptions and outcomes unless they are set to levels which most in the field would find ineffectual. 213 Olav Velthuis, “The Changing Relationship between Economic Sociology and Institutional Economics: From Talcott Parsons to Mark Granovetter,” American Journal of Economics and Sociology, 58, no. 4 (October 1999): 629-649. 214 J. McMurtry, Value Wars: The global market versus the life economy (London; Sterling, VA.: Pluto Press, 2002). McMurtry sees the assumptions of neo-classical economic perspective as a moral position and an ideology. 215 Clive L. Spash, Greenhouse Economics: Value and ethics (London; New York: Routledge, 2002). Spash argues that neoclassical economic thought is a very specific moral view and a highly subjective set of assumptions, which however mathematically tweaked to explain economic behaviour, only distorts the picture. 112 With the issues of incommensurability in mind, there are two basic approaches to developing a comprehensive evaluation system to address inappropriate monetization. First, existing economic methods can be complemented with corrective additions to their systems that integrate submerged values in a non-monetary, specifically sociological or ecological, manner216. Unfortunately, the economic sociology school of thought has yet to resolve such issues as the division of labour between economic sociology and economics, and both remain disconnected from each other217. Still, there may be possible transitional approaches to developing the adaptive changes required. Integrating economic sociology approaches, including institutional perspectives, with economic and socio-economic methods, is a possible way forward. The key recognition must be that economic mechanisms are enfolded within considerable social and environmental structures, and this is just as true for the sustainable energy and transportation field. A second tactic is to develop an independent, stand-alone alternative that can integrate as many relevant approaches as possible, including purely quantitative and interest-based economic methods. This approach calls for an independent methodology of valuation as exemplified to some degree by economic sociology218, one that substitutes rather than complements. Such an approach may be realizable under conditions that are increasingly urgent or important. Two prime examples are war-time conditions and the space-race, where sweeping change was needed to achieve key goals, otherwise constrained by embedded monetary and efficiency biases. Where a goal transcends purely economic criteria, other values can come to the fore, with economic and financial values becoming part of the portfolio of attributes in the new system. A growing realization of the inappropriateness of economic thought for some values, and dissatisfaction with inaccuracy and lack of applicability, may help to promote social approaches to value and choice. In such cases, submerged values become the higher priority attributes. This is 216 Velthuis, 629-649. 217 M. S. Granovetter, and R. Swedberg, The Sociology of Economic Life (Boulder: Westview Press, 1992). 218 Ibid, and A. Etzioni, Essays in Socio-Economics (Berlin; New York: Springer, 1999). 113 necessary to shake out embedded values that are resistant to exposure and debate because they have been overlooked and miscalculated for so long219. Against this is the overly simple convenience and surety of the economic perspective. It can be argued then that as we enter into increasingly urgent situations, even more emphasis should be given to the important drivers of climate change, human and ecosystem health, energy disruptions, land and equity issues in both the energy grid and transportation system. The approach taken here, in response to the above framing of the problem attempts to balance cost, environmental and social acceptability, and technical capability. Such a balanced approach would look at value factors as social choices220. To perform their missing roles, submerged values must be evoked or elicited and they must be effectively communicable to a range of decision-makers from publics to governments. 5.5 NON-MONETARY APPROACHES TO SUBMERGED VALUES There are many variations of a few methods that can be used to assess and convey social and environmental value in non-monetary form. The problems of moving beyond the narrow constraints of economic measurement include functionality, credibility and utilization. Can non-monetary methods be a useful part of a functional process of decision-making? Are they considered credible tools applicable to decision-making? If the goal is to make the best technology choices, how important is it that evaluation processes are accountable and transparent to bias? Clearly, new and existing methods must meet similar criteria for technology assessment: they must be viable and effective. They must add to the understanding of evaluation methods for technologies. We are in fact examining a second order process: evaluating methods for valuing technology. New methods, even if they are proved to be functional, useful and credible ways of assessing submerged values, will need time to become acceptable. 219 This is an important issue in rights studies such as affirmative action. Inequality remains embedded, concealed and pervasive without a fundamental rebalance and shake-up of existing systems. See Ignatieff. 220 Rayner and Malone. 114 A more pragmatic tactic may be to ask what alternative approaches can aid and complement monetization. Monetization alone cannot convey the multiple and broad dimensions of environmental and cultural values, although its methods are important. Equity and ethics are good examples of the challenges and complexity of integrating these issues. The early work of Maslow and others suggests that physical and economic needs must be satisfied prior to meeting social, environmental and spiritual needs221. Starving people are not concerned with philosophical discourse or with sustainable development. Their immediate needs must be met first222. On the other hand, we also know that, beyond the provision of basic services, happiness is not correlated with wealth. Issues of ethics and equity are drawn into the debate when we discuss submerged values. The question can be reversed: what sociological frameworks can incorporate economic methods? Clearly, descriptive and narrative elements will have to be included to communicate effectively the importance of submerged values. Multi-criteria decision theory or analysis (MCDT) is a widely utilized tool that can be broadly employed to incorporate multiple perspectives in a transparent process, or to achieve multiple goals in complex situations223. MCDT can aid in valuation, but is utilized more often in integrating multiple perspectives and objectives to achieve cooperation and collaboration. Such decision methods use expert opinion, stakeholder input or any mix of perspectives and consultative processes to find common ground. Multi-criteria approaches can be used to reduce qualitative information to heterarchical relationships or ordinal preferences. There are numerous more holistic processes, such as Integrated Assessment, Social Multi-Criteria Evaluation, Participatory Approaches and a host of 221 The classic: A. Maslow, Motivation and Personality (New York: Harper & Row, 1954). 222 M. Hagerty and R. Veenhoven, “Wealth and Happiness Revisited: Growing national income does go with greater happiness,” Social Indicators Research, 64 (2003): 1–27. 223 There are several related approaches which can be described such as multi-criteria decision analysis, multi-attribute utility theory, the analytic hierarchy process, and fuzzy set theory–see J. Dodgson, M. Spackman, et al, DTLR Multi-criteria Analysis Manual (UK: National Economic Research Associates, 2001), http://www.communities.gov.uk/documents/corporate/pdf/146868.pdf, for overall technical description, or Afgan and Carvalho, pp 1327-1342, for an example of multi-criteria analysis as applied to renewables. 115 varying but essentially similar methodologies224. These rely on different ways of having population samples or participants express, describe and evaluate different preferences for decision making. Such values can be categorized in different ways, and a range of options may be monetarily or hierarchically rated, depending on weighting techniques. In MCDT approaches, optimization has given way to satisficing225 or meeting some minimal level of one key criterion while meeting lower levels of other criteria. Essentially, satisficing recognizes the bounded rationality of consumer decisions and seeks acceptable solutions. While qualitative data can be quantified in limited ways to reveal correlation and other relationships, there are issues with the data collection process. As noted before, the framing of a question can influence its outcome. There are many ways in which collected data can be inaccurate, due to bias or lack of knowledge or lack of attention in answering questions. MCDT therefore retains many of the problems of cost-benefit approaches, but nevertheless has improvements from the application of multiple approaches and criteria to produce hierarchical results. There are several examples of tools that use principles similar to MCDT. When the U.S. National Research Council evaluated the effect of funding programs for research and development of new energy technologies, it attempted to be more comprehensive in its analysis by capturing specific exogenous variables226. Some measured attributes were environmental, knowledge and security benefits, as well as the potential (or “options”) benefits of technologies that were not competitive under current circumstances, but had “options” under changed circumstances. 224 European Conference of Ministers of Transport, Assessment and Decision Making for Sustainable Transport (ECMT Publications, distribution OECD Publications Service, Paris, 2004) 225 Herbert Simon, “Satisficing is a decision-making strategy which attempts to meet criteria for adequacy, rather than identify an optimal solution.” from Organizations by Herbert A. Simon and James G. March (New York: Wiley, 1958). 226 National Research Council (NRC), 2001, section 2: 13-19. 116 NATA (the New Approach To Appraisal)227 is a transportation analysis approach that compares solutions against available alternatives. A full range of alternatives is examined: from taxes to demand management, to utilizing different modalities—not just road improvement228. Five dimensions are appraised in the process: environment, safety, economy, accessibility (including social inclusion) and integration. NATA has been criticized for erroneous internal assumptions that bias outcomes, and we can see a pattern here that includes the IEP process at BC Hydro. For example, when used in the UK for comparing road use against cycling or transit use, travel time saved for drivers is rated at a higher value than travel time saved for cyclists and transit users. Drivers are assumed to be of a higher socio-economic class and their time is accordingly worth more. As a cyclist’s time is considered to be of lower value than a car driver’s, the overall value of use for freeway building is much easier to justify. The deeper underlying rationale is that car drivers make a greater economic contribution to the economy than cyclists, rather than actually being a cost to the economy229. This socio-economic assumption has no basis in reality, and can be thought of as a group bias (I coin the term “groupism”), with similarities to sexism and racism. None of the multiple appraisal processes are free of subjective inaccuracies, because of easily distorted social and environmental variables. There is overlap and similarity in the various decision methods that are applicable to submerged value comparison in STEP. The primary reason for the overlap is that they all try to evaluate the same attributes but in different ways. Factors such as the value of a clean environment, safety, security, access to power and social equity have been considered using such methods. Economic approaches, when used in these methods, do not address the issues of incommensurability, and even when qualitative methods are 227 Department for Transport, “A New Deal for Trunk Roads in England: Understanding the new approach,” (Transport White Paper, United Kingdom, 1998). 228 Department for Transport, “Guidance on the Methodology for Multi-Modal Studies,” (UK Department of Transport, 2000). 229 Jonathan Leake, “The Road Fix,” New Statesman, August 9, 2007. http://www.newstatesman.com/200708090012 117 used they are prone to underlying assumptions, biases and interpretations—which can cumulatively weight one option, or set of options, over another. MAUT approaches to value are applicable to sustainable technologies as new attributes can be characterized in their own terms. MAUT approaches utilize stakeholder input to balance and allocate importance and value to different issues or characteristics. The process is open-ended and can be designed to capture any number of technological and social change attributes. It is one of a variety of techniques that are beginning to be used as integral or complementary methodologies for assessing technology decisions. In some cases MAUT is additional to economic analysis, and in others price data is considered as one or more attributes within a decision structure. Attributes are examined by category to create hierarchical or ordinal lists of key issues. There are different methods for calculating a hierarchical list within a category and also between categories. For example, land impacts may be considered and weighted as more important than fisheries impacts, even though unit measurements may not be comparable. As previously noted, MAUT was used in the preparation of the 2004 and 2006 IEP for British Columbia Hydro. The actual attribute categories and weightings were prepared by BC Hydro for adaptation by groups of industry stakeholders and academic experts. The example below in Table 5.1 is taken from the 2004 IEP. 118 TABLE 5.1 SUMMARY OF ENERGY PORTFOLIO ATTRIBUTES Key Performance Attributes Attribute Unit of Measure Objective Net present value (NPV) Discounted cash flow of total cost less export revenues in real F2003 dollars1 Minimize ratepayer costs Reliability planning criteria Meets Criteria Yes/No Secure and reliable supply Private sector involvement Percentage of new energy provided by private sector. Percentage of new energy owned by private sector IPP involvement Clean target Percentage of newly acquired energy (GWh) that meets the definition of B.C. Clean Energy 50% Clean Target Supplementary Attributes Attribute Unit of Measure Objective Rate impact 20-year change in rates net of inflation relative to the first year Minimize ratepayer costs Dependable capacity Megawatts (MW) installed capacity. MW dependable capacity Secure and reliable supply Diversity Number of new resource types Secure and reliable supply Employment Temporary/construction (person-years). Long-term (full-time equivalents) Social responsibility Greenhouse gases and local emissions GHG: tonnes of CO2 equivalent Local Emissions: tonnes of nitrogen oxides (NOx), sulphur oxides (SOx), and particulate matter (PM) Social and Environmental responsibility (SER) Footprint Hectares of total surface area affected by a Portfolio SER Communities Qualitative comments with respect to affected communities, First Nations and stakeholder feedback Social responsibility From: BC Hydro IEP Attribute Table p. 21 2004 IEP230 The advantage of MAUT-like categories is the flexibility to consider specific attributes as needed for assessment. The disadvantage, persistent for methods that do not use a single metric, is comparability between attributes. For the purposes of assessing sustainable transportation technologies, the major criteria categories can be expanded to: technical viability and efficiency; sustainability; cost and submerged values; and social uptake. Each of these can have several subcategories. In Chapter 7, I have chosen to use 230 BC Hydro Integrated Energy Plan (IEP) 2004. 119 analytical data where calculable and available to compare two distinct technological paths in each category. Descriptive and narrative methods are also used to provide social and environmental context to supplement the technical, economic and financial analysis by borrowing from methods such as MCDT and MAUT. All the above non-monetary approaches to submerged value are flexible and all have complex and different information requirements, which can be challenging to satisfy231. Despite the best attempts and methods for assessing qualitative attributes, there are some fundamental problems that arise out of factors such as future uncertainty and the “messiness” of social and environmental reality that no methodology can completely address. However, I suggest, in Section 5.8, a new ordinal approach with roots in multi- attribute practice that integrate narrative and keyword approaches, which can simplify and connect to the heart of valuation concerns. 5.6 TECHNOLOGY EVALUATION UNDER UNCERTAINTY In applying an evaluative framework to two technological paths in Chapter 7, I compare the lifecycle emissions of GHG and criteria air pollutants. The lifecycle concept is important when comparing technological pathways. The comparison of emissions is relatively straightforward based on standardized units of travel or energy required to perform an energy service. Comparison of efficiency is also reasonably uncomplicated. Energy output at the wheel can be expressed as a percentage of energy inputs at well or tank. Conversely, we can calculate the energy input required to provide a standard unit of service. Therefore, as noted in Chapter 3, efficiency and emissions can be compared in relatively simple terms to account for technological viability and sustainability. Risk, however, remains challenging. 231 Dodgson et al. 120 Certain types of risk can be calculated, including avoided risk, using financial tools such as CAPM and Portfolio Analysis232. However, future risk scenarios are unknown, and the risk of understating future costs can be disastrous. Pascal’s wager233, or its modern equivalent, the precautionary principle, applies in this case. The combined risk of ecological disaster, as it continues to unfold unremittingly, along with disruptions in generation, transmission and transportation of fuel, should be more than enough to motivate a serious mainstreaming of strategic sustainable choices that address these issues. However, this is not happening on a large enough scale. An analysis of the risk elements is made challenging by the uncertainty of future risk. Risk considerations can be expressed as a range, as a decision attribute or as the degree of mitigation offered by a diversified portfolio strategy. The assessment of submerged values also creates uncertainty for technology decisions, due to differences in perception of the intrinsic complexity of social and environmental systems. Varying assessments of worth are the result of misconstruing scale, differences in risk aversion levels, variations in cultural norms, and countless other specific idiosyncratic characteristics. Current non-monetary assessment methods rely on the accuracy of target group responses, the appropriate framing of questions, and complex allocations and weightings. These approaches, such as multi-attribute utility theory, assess characteristics using ordinal, heterarchical or simply descriptive methods to minimize uncertainty. Building on pain measurement literatures, in section 5.8 I suggest adapting descriptive methods that are narrative in structure234. This method could be used at a simple level to assess the influence of submerged values when comparing sustainable technologies. In time and with considerable effort, it could be developed into a more definitive and useful assessment procedure. 232 Awerbuch, 2000, pp 1023-1035. 233 The modern version of Pascal’s wager builds a 4 box matrix from two Y axis unknown realities: there is, or isn’t a significant environmental problem, and two X axis beliefs: that one believes or doesn’t believe there is a problem. The resulting 4 cells produce only one dangerous outcome—when one doesn’t believe there is a major problem and there is one. 234 R. Melzack, Pain Measurement and Assessment (New York: Raven Press, 1983). 121 5.7 COMMENSURABILITY, PLURALISM AND CONFLICT Valuation and market mechanisms are intrinsically linked, particularly in the neoclassical economic tradition. In the simplified view, the maximization of utility (value) and the transactional mechanisms involved produce a harmonious instrument for optimization. However, the nature of competition is not an isolated process, but one of mediated conflict. Market forces are not simply guided by a harmonious invisible hand, but are deeply conflicted with social and environmental processes, with possibly incompatible and incommensurate values at stake. They are in need of regulation and governance235. As Isaiah Berlin and others have understood in developing the original ideas of value pluralism and conflicting pluralism, there is no universal and correct answer and there is no universal metric236. There is potential for confusion between pluralism and relativism. A primary difference between these terms in this debate is that communication and some degree of common understanding are inherent in the idea of pluralism. Relativistic, and, for that matter, post- structuralist perspectives do not necessarily accept any universality of values—intrinsic value is not a necessary feature. The problem of range lies in the degree of incommensurability assumed. Weak incommensurability simply states that values can be ranked only qualitatively, not quantitatively. Moderate incommensurability argues for the relative incomparability of values, which does not preclude comparability, but dismisses hierarchical ranking. Radical or strong incommensurability is synonymous with relativism, which sees values as incomparable and comparison as a wasted exercise 237. From the surety of market rigour to strong relativism is a broad range of perspectives, in this case, on the social negotiation of technological value. In technology studies, this is 235 The issue is not regulation verses de-regulation as any de-regulator will admit when faced with the loss of IP, trademark and copyright regulations. It is whether social and environmental interests are protected. 236 I. Berlin, and H. Hardy, Against the Current: Essays in the History of Ideas (London: Hogarth Press, 1979). 237 Martinez-Alier et al, 277-286. 122 imperfectly reflected in a range of perspectives from technological determinism to new kinds of technological existentialism. When we approach the value debate from the grounded evolutionary perspective initiated by Darwin, all evolution is adaptation to niches. In evolutionary theory there is no absolute progressivity, no teleological goal of the sort envisioned by modern thinkers from Hegel to Teilhard de Chardin238. Some niches can be seen as large and long-term and some as narrow and specialized. They can be defined in many ways for different purposes, but the key understanding here is that of the growing maladaptation of humans and their socio-technical structures to the natural world. We do not know the complete nature, or the variety, of the upcoming niches we are forcing on our ecosystems across the globe, but we can ensure that our adaptation can be proactive as well as reactive. Such proactivity could include the selection of appropriate technologies to help us re-adapt to natural systems and mitigate our predicament. Proactivity can be used to minimize future impacts and re-invent the future global environment at local scales. In such a case, we cannot know the outcomes of our choices in any comprehensive manner at the outset. My preference here is to follow O’Neill’s arguments for weak incommensurability that initiates a possible solution239. Although he does not develop a solution, he suggests that we categorize and hierarchically rank values as done in other fields240, but so far not effectively in the environmental field. Therefore, the theoretical framework I use does not assume a model of linear progression241, but rather a Darwinian process of adaptation to changing environments with an overlay of Lamarckian cultural transmission. This process may be closer to how real processes of technological evolution and diffusion actually occur. The “random 238 P. Teilhard de Chardin, The Phenomenon of Man (New York: Harper and Row, 1965). 239 O'Neill, J., 1993. See also Martinez-Alier et al. 240 Melzack. 241 Linda L. Layne, “The Cultural Fix: An Anthropological Contribution to Science and Technology Studies,” Science, Technology, and Human Values, 25, no. 4. (Autumn, 2000), 492-519, describes the concept of the cultural fix as alternate story lines that include various “failures” as acceptable social narratives in the context of technological fixes and the culture of technological progressivity. 123 walk” of technological innovation is matched by arbitrary social processes that include the imperfectly understood needs and wants of individuals. Often this process means adapting more to the insulation of our own built environment, further removing ourselves from the unpredictability of the natural world. We know now that this disassociated cultural state, particularly in the developed world, has severely compromised the global commons. Technological progress is the result of social and political contexts, however disassociated it is from ecological systems. Such progress has historically been encumbered with failure, serendipity and dead-ends242, while occasioning successful technologies that aid our adaptation to the niche in which they are used. Forecasting and future scenario-building inevitably extrapolate from the past, and depending on the forecaster bias, promote either the negative or positive trends inherent in past performance. Unavoidably, forecasting cannot take into account future social and environmental discontinuities and disruptions, which can void the best and the most careful trend lines. No analytical process can be successfully predictive, as stock markets amply demonstrate. In the event that the future is simply like the past, analysis with a combination of knowledge and collective visionary thinking is the best we can expect243 to assess and craft strategy244. The pragmatic approach of formulating strategy distinct from either a free enterprise or socialist approach, often called “the third way”, relies on an attempt at vision, as well as a combination of theoretical and practical knowledge245. 242 Here Kuhn embraces the Darwinian model for scientific progress. Survival of the fittest, in some cases, relies on the competitive advantage that a winning technology supplies. In such a case technology resembles an adaptive trait, an extension of capability, whose success would depend on its “fit” within a specific environment. 243 Charles E. Lindblom, “The Science of ‘Muddling Through,’” Public Administration Review, 19, no. 2. (Spring, 1959), 79-88. 244 Henry Mintzberg, “Comments on ‘Forecasting: Its Role and Value for Planning And Strategy’ by Spyros Makridakis,” International Journal of Forecasting, 12, no. 4, 1996. 245 Henry Mintzberg, “The Economist Who Never Came Back,” Scandinavian Journal of Management, 18, no. 4 (December 2002): 616-618. 124 5.8 A DIFFERENTIATED PROPOSAL FOR ESTIMATING VALUE Earlier in this dissertation I have argued that monetary systems are inadequate to convey the deeper and more complex aspects of value, and require the move from hard science to the “harder” science of complex life and cultural systems. How do we deal with value when there are fundamental knowledge gaps and multiple levels of uncertainty? It may be an inappropriate use of scarce resources to attempt to optimize for multiple variables when there are significant knowledge gaps and great uncertainty. As well, it is impossible to produce optimal models, because some values operate outside monetization and other one-dimensional ideals, and the analysis will remain incomplete. Due to the multi- dimensionality of value, a logical response is to develop better heuristic models that convey the essential knowledge—the “good enough” value—required to function at the human scale. This may be a more effective method to take into account enveloping cultural cocoons and the even greater ecological environment. In evolutionary psychology and the understanding of pain, the Gate Control theory of Ron Melzack was a breakthrough in understanding the feedback nature of pain, its sole situation in the brain, and methods of pain control246. Melzack and his colleagues have hierarchically categorized types of pain and produced the McGill pain questionnaire, a defining approach to understanding and evaluating pain247. How he did this was both simple and tenacious. He interviewed patients and health professionals who work with the issues of pain both to express and to hierarchically evaluate key words that were connected to pain. Over a period of several decades, this resulted in the development of a consistent vocabulary that was able to accurately describe and evaluate the range and depth of pain by category and intensity. He noted that there were great similarities in both the type of words used and their ranking. Remarkably, this pattern of expression and 246 Melzack. 247 Ibid 125 placement crossed both language and culture. Similarly constructed terms for pain appear to be consistent by category and intensity in all cultures surveyed so far248. This pain research is a strong endorsement of weak commensurability, which, to reiterate, finds that values are incommensurable but can be ranked qualitatively. One explanation is that there are universal characteristics underlying the human condition that connect value in complex and unknown ways. It is not yet clear how cross-applicable this is, as pain is immediate, visceral and deeply connected with human survival. However, it may well be applicable and appropriate to calibrate this with environmental discomfort at some level. This type of approach may be applied creatively to submerged value by developing categories of value and by developing terminology to describe intensity of feeling. Aggregating multiple samples may show correlations for some terms and phrases. Borrowing from cognitive science, we can categorize attributes and use survey methods to develop keywords or short narrative structures to prioritize different levels of value. Using a similar approach, there may be useful ways to develop terms and narrative structures to express how types of value are grouped, and the potential range of perceived importance for these values. I suggest that many types of values can use such an ordinal keyword measurement system, and possibly larger narrative structures or phrases. This method can be applied to different categories of value: to general areas such as health and aesthetics, and more specifically to sensory stimuli or the visual appeal of natural beauty. Social concerns, such as the strength of communities, the perception of safety, and access and equity within communities, can also be assessed in this manner. Value categories can be determined by a combination of surveys, interviews, social investigation and questionnaires. These categories can be simple or complex, with numerous classes and multiple dimensions in time and space categorized for analysis. Terminology and a hierarchy for intensity could also be developed by survey and interviews. Essentially an 248 Ibid 126 interviewee is asked to identify a term or phrase that most closely fits their view or to provide one that can be fitted into a group of terms. Sustainability indicators are used to describe changes and trends in ecological, social and economic conditions249. Some individual or composite indices tend to measure quantitative data, which can be useful in understanding inferred social or environmental values. An example could be the relative cost of transit next to overall household transport costs. However, this is less direct than an ordinal narrative system. Multi- attribute and multi-criteria approaches have been modified to come close to this suggested approach. However, the simpler keyword or short narrative structure and the goal of extracting elements that are consistent descriptors differentiate this process. Evoking or eliciting values may also be used to develop a map of what is important, what is perceived to deliver value, and the nature and intensity of that value. Such information can be used in decision-making to indicate important issues and their relative weighting, and to situate and develop the parameters and language of public consultations, policy assemblies and meetings between experts in different disciplines. It may be useful to develop a system where values can be identified, grouped loosely and described for intensity. This process would help to bring what is valuable and important into the corporate and public discourse when choosing technological routes into the future. There is a great deal of potential research work in developing a system of evoked submerged value as a means for bringing important value structures into the public discourse. The ordinal keyword or narrative approach may be useful in a modified form for the social and environmental values that tend to be missed in the climate change, pollution and supply problem debate. Melzack’s work250 is a pertinent example of how seemingly indefinable and profound values can be expressed succinctly and scientifically to provide both a functional application and expression. These benefits can apply equally to social 249 The Centre for Sustainable Transportation, 2002. 250 Melzack. 127 and environmental values. First, such a system can effectively include these values in formal debate and decision structures. This is the expression and engagement of submerged values, the formalization of what we all know to be important, in ways that can be qualitatively ranked. As well, values so expressed have a potential role in shifting the discussion, such as the choice of technological pathway, from a largely monetary debate to one that becomes socio-centric rather than econo-centric. This method may be conceived as an advanced multi-attribute approach. Using a single word, short term or narrative structure may be an appropriate method of avoiding the pitfalls of monetization and can either complement monetary approaches, stand alone, or open the door to new and better ways of understanding and incorporating value into decision-making. The ordinal narrative measurement system, only suggested in this dissertation, is a nascent evaluation methodology that can advance the discourse, and could conceivably provide a relatively simple method for introducing submerged values into decision- making. As this method would require a great deal of development, it is only proposed and advanced here in the most tentative manner. 5.9 INTEGRATING APPROACHES TO VALUE The choice of evaluation process can have a large effect on outcomes. Value, value recognition, and subsequent policy choice mechanisms, are very large and important subject areas encompassing economics, economic sociology and an evaluation component in almost every academic discipline. As a result there are many approaches that seem incomparable and sometimes contradictory. Monetization, however inaccurate, appears to be one way to resolve these many methods. Although the economic understanding of exogenous social and environmental values is a completely different outlook than the approaches outlined here, there are common and complementary areas. The standard economic methods, WTP or WTA, do not adequately meet the needs of comprehensive inclusion and accuracy. Such methods, even under whole cost accounting procedures, essentially assign a placeholder or “fudge” factor for complex and often unknowable social and environmental relationships and structures. While this allows decision-making 128 to proceed, the choices may be severely skewed by the limited nature of the underlying evaluation process. Expressing capital and operating costs in monetary terms is relatively quick and easy and sets a baseline for comparison. Portfolio, Capital Asset Pricing Model and other approaches help us to price risk and risk abatement and to apply social discount rates. However, the nature of costs in the future is unknowable and enormously variable, due to the risk factors from any number of scenarios, which can range from peak oil disruptions to epidemics. It appears wise to utilize cost and risk data, where knowable, and consider risk factors and the additional benefits of risk abatement, employing a mix of quantitative and qualitative methods. This process leads us to social and narrative approaches to value, more akin generally to economic sociology approaches, but utilizing some of the specific strategies and techniques outlined above. Where we are unable to evaluate future risk well enough, we rely on ideas such as the precautionary principle to minimize future risk. There are many advantages to this inclusive approach. First, a sociological approach reflects the reality of the situation and accepts the relational aspect of valuation, values that are situated within social and environmental realms. Economic activity is clearly a subset of these realms. It exists within a wide societal context and is encapsulated and transformed by societal concerns251. Future impacts from renewable and conventional generation choices and strategies will initiate changes in social behaviour, energy use and concepts about energy. Time-of-day pricing, road pricing, land use and transportation planning, and the effects of distributed energy and CHP, are just some of the possible instigators and consequences of radical systemic change. Culture and technology are interactive and recursive in their effects on one another. Just as value can influence technology choice, these choices will reframe future choices, as technologies are taken over and integrated by cultural forces and used in unforeseeable ways within culture. 251 R. A. Cantor, S. Henry, and S. Rayner, Making Markets: An Interdisciplinary Perspective on Economic Exchange (Westport, CT: Greenwood Press, 1992). 129 Second, this approach is more flexible, in that it recognizes the imperfection of valuing human and environmental attributes. Technically isolated analyses, on their own, cannot cover all the important variables for decision-making, nor the dynamic developments and aspirations of culture. Finally, the social and narrative approach takes into account the dynamic, shifting and diverse nature of human goals and assumptions252. Realizing the relativity of social and environmental goals and value structures, one can examine the comparative benefits to be gained from one path over another. 5.10 FROM FULL VALUE TO SOCIAL UPTAKE A radical increase in our understanding of submerged values can help the shift to new ways of thinking about value that are less utilitarian and instrumental—and more comprehensive and responsive to important relationships and values—than current evaluation models. Cultivating full valuation is a part of the process for moving beyond the enframed techno-economic paradigm253 that is intrinsic to the mechanisms that now direct energy decisions and business and policy choices. Currently, mainstream economic thought will continue to prescribe policies and development primarily through cost- benefit analysis, but there are other values that are independent of this process. I suggest that there are historical environmental and social arguments for adapting existing processes to develop new comprehensive valuation approaches that are more realistic, comprehensive, and hence appropriate254. Comprehensive methods to situate and understand the full value of renewable energy sources and sustainable transportation options yield new outcomes that are more evolutionarily appropriate for well being and 252 Etzioni. 253 Heidegger, M. 254 M. Gladwell, The Tipping Point: How little things can make a big difference (Boston: Little Brown, 2000). Gladwell reviews the nature of social and technological change and the factors that allow change to occur. 130 survival. Such a process is more likely to result in technologies that can advance the energy system towards environmental, social and economic sustainability. The idea of value is intricately connected to the process of technology uptake and transformation, the topic of the next chapter. How value is recognized, counted and integrated into decision processes is a part of the selection of technologies. Market explanations assume preferential selection based on overall price and utility, but these are poorly considered in many cases—for example, automobile choice—next to social considerations. The requirements for the uptake of environmentally beneficial technologies by private and institutional decision-makers are directly connected to a comprehensive recognition of value. 131 CHAPTER 6 – TECHNOLOGY ADOPTION 6.1 INTRODUCTION The transition to a sustainable and integrated energy system will occur slowly by necessity because of the tremendous scale of the transformation required. Or it may not occur, and any number of threshold effects resulting from a combination of the driving forces outlined in this dissertation will increasingly break up human cultures and their supporting ecosystems. It is unlikely that we will be able to mitigate successfully an unknown and complex combination of climate, emission, energy supply and associated social crises that will stress increasingly fragile human and natural systems. Over the long term, whether or not we will have viable civilizations, and what shape these will take, may be in fact one of our more pressing questions. Current technological systems are inappropriate in that they damage the systems that underpin life. Our best hope may be a “soft landing”, made possible by the development of strategies that allow us to transform our inappropriate technologies, behaviours and infrastructure to be more appropriate. These are the realities that need to be communicated to and by leaders and publics alike. The paths and policy approaches we use to facilitate this social and technological transition will determine our societal success and well-being into the future. Technology is not an isolated subject when transcending our current unsustainable course, but overall it is a significant factor in re-shaping our current predicament. It is perhaps the easiest aspect to transform, and can lead to changes in behaviour and infrastructure. A critical issue is the adoption of appropriate vehicle technologies, as well as understanding social capacity and the methods and policies used to achieve uptake. Currently, the main policy alternatives are market-based, voluntary instruments, or mandatory strategies (such as regulations and emissions limits), or mixed strategies that incorporate elements of both. In transportation, more effective mandatory regulations are showing up as CAFÉ 132 standards255 for vehicle fleets or, in the EU, as specific GHG and criteria air emission limits per kilometre travelled256. The technology choices we are now making on the elongated cusp of a global crisis in energy supply, climate, and pollution impacts, will have direct and lasting effects for many years. As well, how we choose and integrate energy and vehicle technologies into our social and cultural frameworks in an IES will define the future nature of our societies and our well-being. The specific technologies that are ultimately adopted, such as the vehicle technologies examined in the next chapter, will play a role in determining the nature of infrastructure, but will also influence the types of management and social systems that subsequently develop around those technologies. Technologies interact with other social forces within cultures to transform and be transformed by them. Conversely, our cultural and social assumptions have a large effect on the technologies we choose. This recognition acknowledges authentic elements of both technological determinism and social theories, such as the social construction of technology. As an example, the need for a rapid shift to transit and active transport for personal transportation (cycling, walking), requires changes in culture, technologies and physical infrastructures. Significant changes in political and economic structures are also required, in conjunction with this shift, for change to actually occur. However, the means by which sustainable technologies are implemented can also be a force for social change when designed to generate collateral benefits, such as transportation equity and access. Important variables such as cost and efficiency will underlie and influence technology decisions. As well, policy approaches and specific strategies for technology adoption are necessary to enhance and increase market uptake of sustainable technologies. 255 CAFE standards, or Corporate Average Fuel Economy, mandate the fuel economy of US vehicle fleets. 256 EU mandates 140 gm/CO2e/km by 2012: Michael P. Walsh, Car Lines, Issue 2008 - 3 June 2008. http://www.walshcarlines.com/pdf/nsl20083.pdf 133 What approaches can provide incentives for private and institutional decision-makers to adopt technological solutions? What technologies are most likely to meet technology adoption or social uptake257 requirements, and be easily implementable? The issues are more complex than they appear, as they include the satisfaction of a range of factors which include informational, psychological and physical needs. Actual cost and risk factors have already been discussed, bu
UBC Theses and Dissertations
High potential : how a framework of criteria for an integrated energy system can initiate a sustainable… Elias, Arnold Lindsay 2010
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