OLD DOGS—-NEW TRICKS

October 15, 2011


OLD DOGS—NEW TRICKS

I think we all have an educational “half-life”.  Many, if not most, of the things we learn in college become obsolete within ten or fifteen years after graduation.   As you well know, the pace of technology is remarkably fast and continuous learning is the only means by which an engineer, scientist, medical practioner etc. remain relevant in his or her profession.  I look at all of the marvelous technology nonexistent two or three decades ago and wonder where we will be in twenty years.

Three weeks ago, I had the pleasure of attending a two day seminar conducted by Point Carbon, a division of Thomson Reuters.  Thomson Reuters Point Carbon is a world-leading provider of independent news, analysis and consulting services for global power, gas and carbon markets.  Energy and environmental markets are the focus of the Point Carbon business.  Thomson Reuters has a much much broader reach.  They have offices in Oslo (corporate headquarters), Washington D.C., London, Tokyo, Beijing, Kiev, Hamburg, Zurich and Malmo.  In other words, they are very well-connected and have a client base that literally spans the globe.  The individuals conducting the presentation were remarkably knowledgeable and demonstrated a depth of understanding that results only from “doing time” in the field.  “Green technology”, carbon credits, cap and trade, the Kyoto Protocol, Western Climate Initiative, carbon offsets, carbon footprint, etc are “new kids on the block” for me.  We all have read about various energy saving initiatives supported by governments and the private sector but this seminar provided new insights and a great in-depth look at where our country might be going relative to the technology that drives that sector of the economy.

There is the strong feeling that human activity drives greenhouse emissions.  Carbon dioxide (CO2) and methane ( CH4) are two primary constituents relative to GHGs.  The following areas account for the overwhelming percentage of GHGs on a global basis:

  • Transportation                  13%
  • Electricity & Heat             24.6%
  • Other fuel combustion   9.0%
  • Fugitive emissions          3.4%

(Pollutants released into the atmosphere from leaks in equipment, pipe lines, seals, valves, etc.)

  • Industry                           10.4%
  • Industrial processes     3.4%
  • Land use changes         18.2%
  • Agriculture                     13.5%

We were also introduced to the “Kyoto Six”.  These pollutants are as follows:

  • Carbon dioxide
  • Methane
  • Nitrous  oxide
  • Hydrofluorocarbons
  • Perfluorocarbons
  • Sulfur hexafluoride

These six components comprise the “hit list” for reduction in greenhouse emissions.

 Entities emitting GHGs must purchase carbon allowances to cover their emission under a cap-and-trade program.  This promotes trading of carbon credits and treats them as one would a commodity.  The value of one carbon allowance varies depending upon supply and demand considerations.   Price drivers such as weather, temperature and precipitation affect short-term demand while long-term demand is affected by:

  • Economic growth
  • Relative fuel and carbon price
  • Energy efficiency measures
  • Electric vehicles
  • Renewable governmental policies
  • Nuclear policies
  • Long-run marginal costs

OK, all well and good, but how does this technology affect products designed by engineers?  Standards and performance are mandated by the buying public.  Competition is based upon providing a better “mousetrap” and giving the customer MORE than what they expect—including an efficient product.  Already minimum energy standards exist for some appliances and with this being the case, engineers must be aware of energy consumption whenever designs are contemplated.  Where cap-and-trade programs are being created—like California—business consumers will need to know the emissions impact of products they are buying.    Engineers must be mindful of their consumers:  factoring in the cost of carbon will affect the purchasing choices of covered emitters.    This is something engineers should be aware of, particularly in the industry/power generation space.

 I feel it would be wise for every practicing engineer to gain knowledge about methods to reduce energy consumption and mitigate excessive greenhouse gas emissions.  It is also wise to understand the procedures needed to purchase and sell carbon allowances as well as any local, state or federal requirements for doing so.   Better to be ahead of the curve as opposed to behind it.

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