Virtual People; Real Energy

Internet_broadbandWi-fi everywhere. Broadband Internet. On-demand video.

These are the technological features of modern life for many of us, and it gets harder and harder to imagine how we'd get along without them. Behind the scenes, though, an enormous amount of electricity is being used to provide these services to us. A recent report by Jon Koomey, an independent researcher associated with Lawrence Berkeley National Labs and Stanford University, estimates that it takes about 14 large power plants to power the world's servers. In the US, servers consume about 1.2% of all electricity generated, and that is expected to rise to 2% by 2010. (Geeks may read the actual report here.)

Secondlife_main_485Amazingly, an online, Second Life avatar (a virtual person used in on-line gaming, for those of you unfamiliar) requires more energy (1700 kWh per year) than the average real-life Brazilian (1000kWh/yr.)!!

What can you do? For one, always turn off and power down your equipment when not using it. If you have a wireless router and/or high-speed modem at home, unplug it while you are away (most households leave these on 24/7. Why?). Both at work and at home, push the button on your monitor to turn it off, even if you are leaving your computer running for whatever reason (even though it uses only a little energy in standby mode, why not turn it all the way off? Your monitor isn't doing anything at all when you are not looking at it.)

You can also choose a green Internet Service Provider (ISP). E Magazine published an article in 2006 about green ISPs, and you can find others by searching the web.

Time to Ground the Washington Flyer

Travelers to and from Dulles airport probably wonder why there is a monopoly taxi service, the Washington Flyer, serving the airport. I am aware of only one other major US airport that has a monopoly taxi service. With rising concerns about climate change and the DC area's status as a non-attainment area for air pollution, the millions of empty miles taxis drive due to this anachronistic service need to be eliminated.

In 1962, when Dulles International Airport opened, it was located out in the middle of nowhere. There were legitimate concerns that passengers would not be sufficiently served by existing taxi services, so the airport created its own, which currently operates as the Washington Flyer Taxi (a monopoly service under contract to three different companies). Dulles is no longer in the middle of nowhere, and the original reason for the existence of the Washington Flyer no longer applies. Dulles is now surrounded by businesses and residential areas, and thousands of people arrive every day in taxis from all around the region—taxis which then leave the airport empty to return to Alexandria, DC, Montgomery County or wherever else they started from.

According to the Metropolitan Washington Airports Authority, Washington Flyer taxis provide 2,500 to 3,000 rides per day from the airport, but only provide 300 to 350 rides to the airport—that means more than 85% of return trips are made empty. It's probably a fair assumption that a similar number of people arrive at the airport by taxi as leave, so that means that more than 2,000 local cabs drop passengers at Dulles and then drive back empty. Let's do the numbers.

Assuming a 25-mile, 1-way trip on average, taxis to and from Dulles drive more than 100,000 miles per day empty. Per day! 38,000,000 miles per year. At 20 mpg and $2.25 per gallon, that's 2,000,000 wasted gallons of gasoline, costing taxi drivers more than $4 million per year for gas when no passenger is in their cab. Last summer, when gas prices were higher, drivers were paying more than $20,000 per day for gas to drive back empty to the airport or their home jurisdiction. Those wasted miles also contribute to our poor regional air quality and add 17,000 tons of carbon dioxide, the primary climate change pollutant, annually to our atmosphere.

The current situation benefits virtually no one, with the possible exception of the cab company owners, since monopolies are always a good deal for the businesses that have them. Eliminating the Washington Flyer taxi service will not change the fares paid by airport patrons: the same number of people will still be flying in and out of Dulles. Drivers, though, will save millions of dollars and thousands of hours of wasted time. It's likely this will reduce the need for as many drivers and taxis, but taxicab drivers as a whole will collect just as much in fares while saving millions of dollars on operating costs. Reducing this waste will also reduce the pressure to raise fares on customers while introducing competition may result in better service, too.

The Metropolitan Washington Airports Authority (MWAA) does not need to be in the taxi business. At DCA they manage the dispatching of the taxis without providing service themselves, so they already know how to do it.

I don't suggest canceling the current contract, but MWAA should start planning now for the transition out of the taxi business at the end of this contract. Eliminating the Washington Flyer will improve service, reduce waste and significantly reduce unnecessary air pollution.

Book on Cap and Trade

I have recently been contacted by a business publisher to write a book on Cap and Trade. This is an exciting opportunity, and I am both excited and humbled to take on this task.

UPDATE - As of late January, 2010, Bloomberg has gotten out of the publishing business, so this project has ended. I may be taking on another book project, so keep on eye on my blog.

I would like the help of my readers and followers. In order to make the book as useful as possible I need to know what the issues are that readers would like to have addressed. The book will not be a policy book; it will be a business book. With that in mind I would sincerely appreciate business people letting me know what they would like to see in the book.
- What are your questions about Cap and Trade?
- What are issues related to your business or industry that if you understood better would help you make better decisions?
- What other issues or questions do you feel are important to cover in a book on Cap and Trade?

Please provide me with your thoughts and ideas so that I can make this book as useful as possible. You may comment below or send an email to me directly at

Thanks a lot for your help.

More Urban Canopy Using Market Mechanisms

I have been asked to present this idea at the 2009 Policy Greenhouse being sponsored by DC Councilmember Mary Cheh and hosted at George Washington University on Friday, July 10. I am pleased that my idea was accepted as one of eleven innovative ideas for achieving high impact environmental solutions.

The premise is simple: apply the concept of a Portfolio Standard (a kind of Cap and Trade) with market-price trading to the issue of urban canopy.

A couple of definitions:
- Urban canopy is the layer of trees, branches, leaves, etc. that cover the ground when viewed from above.
- Urban forest is the total system of trees and other plants that exist in an urban area.
- Cap and Trade is a system to limit something, such as a pollutant, by designating an overall cap and allowing all the parties under the cap to buy and sell. It's analogous to secondary market ticket sales for concerts or sporting events. The "cap" is the total number of seats available for the event. Generally once all those tickets are sold, then a secondary market is born on sites like StubHub to allow people with tickets to sell to those without. The total number of tickets does not change, but ownership of those tickets can.
- Portfolio Standard is the other side of the same coin as Cap and Trade, except instead of trying to reduce or limit something, we are trying to increase it. A minimum requirement is set and each entity has to meet or exceed that requirement--either directly or by purchasing enough "credits." A common use of this concept is a Renewable Portfolio Standard, in which a state or other entity requires that x% of the electricity generated will come from renewable sources.

What makes this concept attractive is that it creates an economic incentive to go above and beyond, because when one does, the extra environmental benefits can be sold to someone else in the market.

So let's apply this idea to urban canopy. Since my presentation is to the District of Columbia, I'll use data specific to DC.
According to American Forests, tree canopy in DC declined from 37% to 21% of the District's area between 1973 and 1997. Acres with 50% or more tree coverage declined from 37% to just 13% of the acres in the District. Most of those are probably in parks.(photos taken from the American Forests report cited above)
In contradiction to the American Forests report, Casey Trees estimates tree coverage as 36%, so a consistent methodology will need to be established.

Urban tree canopy provides numerous benefits, including:
- Reduction in the urban heat island effect--the effect that makes cities hotter than the surrounding areas. Buildings in urban heat islands require more energy to cool. Hotter temperatures also lend to greater production of ground-level ozone, also known as smog. Trees reduce temperatures two ways: through shading and through transpiration (the emission of water vapor from the leaves).
- Reduced stormwater runoff. Trees capture rainwater as it falls and absorb it through their roots. Reduced stormwater runoff reduces pressure on wastewater treatment facilities, reduces the risk of localized flooding, reduces toxins and particulates from flowing into streams and eventually into the Chesapeake Bay in the case of DC.
- Improved air quality. In addition to the air quality benefits of reduced urban temperatures, trees themselves can filter toxins from the air. They also sequester carbon, helping to reduce the risks of climate change.
- Wildlife habitat. Trees and other urban plants provide shelter and food for wildlife, including migratory birds and butterflies.
- Increased property values.
- Improved aesthetics. Trees look nice.

The simplest way to apply the portfolio standard to the DC urban tree canopy is to require each property to meet the same minimum requirement and ratchet it up slowly over time. Let's assume that the current canopy is still 21% as it was in 1997. The portfolio requirement could be set at 20% to start (it's a good idea to make the initial standard relatively easy to accomplish in order to get the system operating and keep prices low so there is less likelihood of backlash). If my property is 6000 square feet, then I would be required to have 1200 square feet of tree canopy--either actual canopy or "credits" from someone else. Suppose my lot is 50% covered with trees--3000 square feet. This is good, because I have an extra 1800 square feet of canopy that I can sell.

Now suppose the apartment complex down the street is on a 30,000 square foot lot, so their 20% requirement dictates 6000 square feet of tree canopy. However, they only have 4200 feet of tree cover. That means they need to purchase 1800 square feet of additional tree canopy from someone to meet their requirement. Voila! I can sell my 1800 square feet of extra credits to them, and we both now meet the standard.

Because I have gone above and beyond the minimum, I have been able to make money from the sale of my canopy credits. The apartment complex has had to pay for their lack of tree canopy. This is how it should be: our incentives are perfectly aligned with our environmental goals. If the price is high enough, the apartment owner will look for ways to plant more trees instead of buying credits.

In fact, that is the next step. After the initial couple of years, the requirement should start increasing. If the District's goal is to return to 37% tree canopy as it was in 1973 (or 40%, which is what American Forests recommends for urban areas; or 50, which is what Casey Trees suggests is feasible), then it can slowly increase the requirement over a couple of decades. Each year the value of tree canopy will rise so that the incentive to plant trees (or not cut them down) gets greater and greater.

Since a lot of the urban tree canopy is on public land, parks specifically, the city itself can earn money from selling its credits. This is politically tricky ground, though. In theory I like the idea of the city being driven by the same financial incentives as the rest of the market. However, it may want to create a mechanism in which the revenues received through the sale of canopy credits go to enhancing parks or improving environmental performance or other programs that residents will support. In addition, it's important that the system be designed so that it does not create the appearance that the city can manipulate the market to its advantage.

One other appealing feature of this concept is that it is completely scalable. A pilot program could be designed for a single neighborhood, district or ward. Everything works exactly the same, just on a smaller scale.

There are additional details that I won't go into here. Perhaps in a subsequent post.