Happy birthday Ford Model A...celebrating the learning curve

Did you know, on this day in 1903 Ford Motor sold it's first automobile?  Thank you Garrison Keillor and 'The Writers Almanac' for this little gem of information.  If you don't get The Writers Almanac daily email, I highly recommend it and you can see it/sign up for it here.

The Model A sold for $850 in 1903.  It sold fewer than 2,000 cars but that was enough to make Ford profitable.  And, through continued innovation, engineering, scaling and process improvements, Ford was able to bring the price of the basic Model T down to under $350 by 1918. 

This is a simple real world illustration of what economists like to refer to as the 'experience curve' and the notion of cost reduction per unit of production based on learning functions, often classified as 'learning by doing' and 'learning by researching.'

The gist of the experience curve: as cumulative production of some good doubles, cost per unit of production decreases by some percentage.  This percentage is usually referred to as the learning rate or learning ratio.

I recently applied the experience curve to an exiting new technology with great potential as a future fuel for the auto way of life Mr. Ford and the Model T helped build.  I modeled an experience curve for algae biofuel production and scale up in order to quantify potential investments necessary for the technology to reach cost parity with fossil fuel sources of transportation fuel.  I'll share my work in some upcoming posts.  I thought Model A's birthday was a particularly symbolic way to kick things off.

I love Schoolhouse Rock!

Do you remember Schoolhouse Rock episodes?  One of my personal favorites was 'Conjunction Junction.'  My friend, Josh, just reminded me of the one below, 'The Energy Blues'. Ironic I remember one about sentence structure better than one about energy- I don't consider grammar, writing and spelling skills amongst my strong suits.

Amazing how something created in 1978 is still relevant today.  And, they produce a nice little summary of energy evolution over time in this cartoon (save starting at whale oil way back, that might have been a little traumatizing for the kiddos).  Discovering oil up to the gas crisis in the early 70's. 

My personal favorite line is around 2:15 'Nuclear, thermal, and solar. If we miss it'll get colder and colder.'  That's a fun little fact about 'global warming' you don't hear about as much.  The earth will warm, however, it is predicted warmer temperatures in the short term will create more precipitation and cloud cover.  Clouds, combined with more particles in the atmosphere, will act together to reflect solar energy coming to the earth.  The overall effect will ultimately cool the earth and will experience another ice age.
 
I hope you enjoy the throwback as much as I did.

Which Schoolhouse Rock is your favorite?

Rock On,
lisa

Why reinvent the wheel? A cap-and-trade versus a carbon tax.

I read this short piece from The Guardian this morning and think it gives a really nice overview of what a 'price on carbon emissions' is and why we need one.  I can write the same thing, but this article is concise and digestible, so, I figured I'd just share it.  Take a read here.

The article talks in general concepts but gives a nice overview of the two main policy mechanisms employed to place a price on carbon emissions: a carbon tax versus a cap-and-trade system.  

Cheers from the Pacific,

lisa

energy and water.. two peas in a pod

Summer is upon us and the US is feeling the heat!

In southern California we are very thankful at times like these- just another day at 75 degrees and sunny.  As we joke- the easiest market for a weatherman/woman in the country. 

Something we often take for granted here are the nice lush greenery of gardens and golf courses.  Technically, SoCal is pretty arid and we water the heck out of it.  It's beautiful, no doubt.  And, this brings me to my fun little fact for the day.

The California Energy Commission finds that water-related energy use (transporting water around the state, treating water and heating/cooling water) consumes about 19% of the state's electricity. (source: here)

Wowza.  Water and energy- hand in hand.  Water rights in the State of California is a whole other interesting issue.  That is for another post my friends.

Hope you're staying cool!

cheers,
lisa

Californ-i-a (/eh/)

Today I'm doing a little reading up on California's impending cap-and-trade program which is kicking off in the fall. 

Generally*, a cap-and-trade system is a preferable way to reducing emissions as, say, to a carbon tax. A cap-and-trade system sets a 'cap', an identified maximum level of greenhouse gas emissions (GHG), and allows emitters to trade permits/certificates to reach firm GHG emission maximums set by the government.  Certificates, the 'trade' part, create a market environment (the glories of capitalism- market competition ensures lowest cost to consumers) so firms under their allotted amount of emissions can 'sell' the unused emissions and firms over their allotted emissions can buy these credits to offset their pollution.  Overall, the cap is achieved at the lowest cost which is a good thing for society. 

There are really only a few other cap-and-trade programs in practice- the RGGI, Regional Greenhouse Gas Initiative, and the EU ETS, the European Union Emission Trading System.  So, what California is doing is pretty exciting from an environmental economists perspective and I look forward to seeing, and hopefully being a part of, how it all plays out.

what do you think?

cheers,
lisa

*please note this is a very surface overview of a cap-and-trade system.  I'll do a post that goes more in to depth soon.

$257 billion....

... reported invested globally in renewable power and fuels in 2011.  This is based on two reports produced by the United Nations Environment Programme (UNEP) and the Renewable Energy Policy Network for the 21st Century (REN12).  You can see the REN12 report here. 

For more information and details head to the Department of Energy (DOE)  energy efficiency & renewable energy (EERE) website here.  They also have a great eblast you can sign up for to keep current with goings on.

blonde energy economist....

... that's me!

I love blonde jokes and embrace the humor at my own expense for a good party trick.  My personal favorite is:

Joke: How do you keep a blonde busy?

Answer: Give her a pack of M&Ms and tell her to alphabetize them.

All in good fun, but, with that said, blondes get a bad rap.  Ok, we do have more fun.  But why must we all also be 'dumb'?  Can't fun come in the form of nerd-ing out and having some good ol' intellectual conversation?

So, I embrace my blondeness and my nerdness.  And, I hope to write on energy topics from an economics perspective here.  As energy sources, consumption, carbon emissions and security of supply continue to trend as 'hot topics' (no pun intended... global warming....ha), I hope to cover things here in an interesting and understandable manner.  Sometimes it is hard to know what matters and what's noise.  What are the influencing factors and dynamics at play within energy, technology, economics and policy.

I hope you enjoy and please feel free to ask questions.  And, all blonde jokes are welcomed.