Resurrection Story
After forty years of underinvestment in public infrastructure and services, the US is lumbering back to life. But the pull of the past, and layers of dysfunction built up over time, will create extra hurdles for the country as it resolves to modernize. These sedimentary barriers appear almost instantly, whenever policy makers or urban designers or infrastructure experts contemplate making change. A poignant example of the moment are the mounting concerns which surround the ambitious and quite necessary Los Angeles River revitalization project. Briefly, Los Angeles in the past decade rediscovered its own downtown, and began to confront more soberly its enormous emissions output. The river project is an attempt to restore nature, further promote walking and biking (in a city that’s never supported either), while creating a long needed public spine. Los Angeles is of course famous for being a city without a center. The project would create a common focal point, touching every community on its path from the San Fernando Valley down to Long Beach. | see: before and after renderings from the original master plan presentation below.
But the restoration would also disrupt homeless encampments, and very likely raise adjacent property values, especially in long depressed (and really, quite industrial) districts south of downtown. This 2016 story from The Nation, Will the Los Angeles River Become the Playground for The Rich, presciently signaled the set of arguments to come. More recently, High Country News reported that approximately 66,000 unhoused people live near the river and use it as a resource. Now, in other developed countries, the rather complex problem of homelessness has been countered with a range of more rational, competent policies that better address land use and health care issues. Not so in the US. As a result, the failure to address one serious social problem has spilled over to another, making solutions all more difficult. Worse, perceptions have fused these problems together, when of course the need to invest in our public landscapes is entirely separable from the problem of homelessness. Thus, when the US sets about to engage one longstanding need, it finds that it must address others too. But the conversation which tends to occur politically, as a result, often resolves into the worst possible outcome: doing nothing at all.
You can find this tragic dynamic in many areas of the country’s political economy, because the US is now so far behind the rest of the developed world in transport, health care, schooling, public safety, incarceration, and in urban design. A classic example is the barrier to higher petrol taxes and road use charges because so many Americans, especially lower income Americans, rely on their cars to get to work. Accordingly, mayors and governors do not dare take the inevitable steps needed now to decrease emissions from the existing vehicle fleet.
But ironies abound in this area. Because it’s also universally the case in American cities that the poor disproportionately suffer the bulk of emissions directly from federal highways, which greatly impacts the health of children. One only needs to inspect any urban map to know where the poor live: near the highways. You can find this in large conurbations like Los Angeles and the SF Bay (Oakland in particular) and also in cities large and small on the East Coast. Here is Providence, for example, in which I-95 and I-195 hit East Providence, South Providence, and Pawtucket—leaving the verdant and stately East Side of the city, composed of Brown and RISD, nearly untouched.
To put a finer point on the intractability of these long-neglected problems, let’s imagine a punk syllogism that might describe American inertia.
Federal highways in cities are carbon monoxide factories.
But they also lower real estate values, and create housing affordability.
Therefore we should not remove them, and perhaps even build more of them.
You can also find this same failure of logic in the recent outcry over the closure of aging nuclear power plants. The closure this month of Indian Point has generated the predictable lament from some quarters, whose arguments never seem to include the fact that we should not be opposing the closure of old infrastructure, of any kind. Instead, we should be building so much new infrastructure that it wipes out the need to have such conversations in the first place.
Yes, it’s true, that closing such plants past their design-life wrecks clean electricity accounting and typically shifts demand onto natural gas fired power generation. Yes, that’s bad. But in a more rational and non dysfunctional system, the creation of these Hobbesian choices would be far more infrequent. We should close, shut-down, and replace all aging infrastructure of any type. Full stop. Instead, many observers greet the closing of a 59 year old nuclear plant as a tragedy. Well actually, the real tragedy is the chronic failure of governance, and the conversion of these aging plants into spent fuel storage facilities—something never originally contemplated by the industry. America can neither mount a conversation about the fate of 60 year old power plants at the appropriate juncture —when they are 30 years old—nor can it even agree on how to handle the industries spent fuel. Worst of all, we don’t build anew. This quagmire then ropes otherwise smart people into a conversation that sits on top of sedimentary mess of long neglected problems.
Addressing problems when they arise is hard, and procrastination is nearly always the easier route. The US has been deferring maintenance and hard choices for decades. The country will find it far easier, therefore, to build out a network of EV charging stations or utility-scale wind and solar in remote regions than confront all the barriers to establishing high-speed rail through 20 urban areas along the eastern seaboard.
If you are watching the US from outside the country, therefore, it may prove useful to keep something in mind: flooding the economy with stimulus largely maintains the system in its current form. Stimulus may act to loosen up some of these legacy problems but difficult political choices will still have to be made. And in the last 40 years, the US has repeatedly shown that it knows how to avoid, not confront, those choices.
Coda: New York City’s High Line project (photo above, and inspired in part by the Promenade Plantee in Paris) also took an inordinately long time to complete and faced the usual opposition and lack of imagination. You can read its timeline here.
The IEA released its global EV outlook report which correctly identifies model choice and availability as a key factor now in EV adoption. Indeed, 2020 was a kind of leap year, in which model choice advanced from just above 250 to over 350 varieties. As readers know, one of the reasons the US lags both China and Europe is that its EV market has been overly dominated by Tesla, and the sedans produced by Tesla. But Americans don’t want sedans—haven’t wanted them for 20 years—as sedan sales have undergone a long and steady decline. Ford’s e-Mustang, and the truck offerings on the way, should remedy this problem starting this year. | see: Global EV Outlook 2021.
The price of carbon in the EU’s ETS market has risen to yet another high. Last week, traded EUA Futures closed the week above €48.00 per tonne. Apart from the newly active presence of speculators in this market—something which I have written about at Petroleum Economist (Speculators discover EU-ETS, and like what they see)—there is a helpful framing that’s been offered by BNP Paribas’ Mark Lewis, to better understand the future pricing path of these allowances. In short, Lewis observes that green hydrogen is fated to play a key role in EU decarbonizaton of the industrial sector. Therefore, the EUA futures price is likely to rise to a level that makes green hydrogen economic to integrate into EU area industry. To see the price range Lewis foresees for this market, read his latest thread starting here:
The state of Texas, a leader in global wind power, is set to bust out with a solar building spree. According to the EIA, Texas will add an astonishing 10 GW of new solar capacity through the end of next year. This great leap forward is so substantial that Texas will account for a full 1/3 of all the new solar to be deployed in the US, by the end of 2022. For years now, Texas and California have led the nation in wind and solar respectively. Both states are pushing/near 25% market share for these clean technologies in their power sector. But the Texas solar plan is not matched by any such wind plan in California. Accordingly, the Lone Star State is poised to move ahead of California now in total output of wind+solar generation.
EIA released annual energy flow charts for the US power system, a reminder of how profoundly inefficient are fossil fuels. Using btu as the unit of account, the US consumed 35.47 quadrillion btu to produce electricity, but 22.11 quadrillion btu were lost in conversion, and another 0.87 quadrillion but were consumed by transmission losses. While the migration to wind and solar will not avoid transmission loss, doing so will greatly claw back the heat losses associated with coal, and now with natural gas. The salient point is that no matter how efficient natural gas turbines become, the heat loss in fossil fuel combustion is huge.
The Gregor Letter observes that even today, many economists, politicians, and other professionals continue to operate in total ignorance of these losses. Accordingly, they are sincere in their lack of awareness that energy transition represents a massive neutralization of those losses, and thus greatly defrays the lifetime costs of new energy infrastructure. For the US in particular, this ignorance is strange to say the least, given that Accounting and Business remain universally popular concentrations on both the undergraduate and graduate level.
The US Department of Energy is leading a round of seed funding to encourage the discovery and production of rare earths and other critical minerals. Yet another variation on an emerging theme: energy transition leans heavily on manufacturing, high-technology, and material science. Notable is the attention paid to the Appalachian Basin in the DOE directive, which could prove valuable in both material and political terms. Relatedly, see this piece from Jordy Lee and Morgan Bazillian at the Colorado School of Mines, The US is Worried About its Critical Minerals Supply Chains.
Parting Shot: spotted on Google Street view, across from the Goldhawk Road underground station (Hammersmith & City, Circle lines), October, 2020.
—Gregor Macdonald, editor of The Gregor Letter, and Gregor.us
The Gregor Letter is a companion to TerraJoule Publishing, whose current release is Oil Fall. If you've not had a chance to read the Oil Fall series, the single title just published in December and you are strongly encouraged to read it. Just hit the picture below.
