Can you answer these four easy questions?

factorySuppose that for an extra $5,000 on your home loan you could have unlimited electricity for all the household appliances and your electric car for the lifetime of your loan. Over the 25 years that must pass as you steadily pay the bank more than double the amount you borrowed [yes folks, it’s true] you would not have any energy bills.

Would you take the offer?

Now suppose you also own a factory that makes Halloween costumes for kids, the only one of its kind outside of China, and I said that for $20,000 you could have unlimited power day and night to run the machinery for as long as there are kids wanting lollies and parents willing to buy them scary outfits.

Would you find the money?

And now for your next car, whether you are in the market for an SUV or a hot hatch, what if you could purchase an electric version of you model of choice that had the acceleration of a Porsche, a 500km range, and cost 20% less than the petrol version?

What would you say?

It seems that Elon Musk the co-founder of the Tesla car company [among other things] knows your answers. He is building a solar-powered Gigafactory to make batteries. The plant will cover 93 ha of the Nevada desert and produce 50 GWh in annual production by 2020.

Because all it takes to realise these fantasies is the ability to capture and store sun or wind energy at a reasonable price. Reliable cheap batteries would make it happen

Here is the fourth and final question.

What would you do if you were on the board of a company and responsible for maintaining profits from a coal mine or coal-fired power station and you had the ear of the Australian prime minister?

Answers on a postcard.

Time for scepticism

coal mineAt what point did scepticism become a dirty word?

Perhaps it was when political correctness overtook us and we were forced to accept convention or risk ridicule from everyone, including the kids. Maybe it was when we disappeared into the virtual world where the only thing reminding us of reality was stiffness from ‘smartphone neck’. Or maybe it was when the media purposely made sceptic and denial mean the same thing.

Here is quick reminder of the real definition of sceptical… not easily convinced; having doubts or reservations.

What this means is that a sceptic is not convinced by the first thing she hears. She thinks about new information, turning it around to see it from all sides. She seeks other opinion, even counsel. She thinks some more and then makes a decision to believe or not.

The sceptic is not a denier even though she may choose to reject what she is told. She is much smarter than that — she starts with the idea that whatever new information is heard may not be all that it seems.

Recall any scene from your favourite reality TV show. The editors pull together snippets of action to present the most drama and then milk it with liberal use of mood music enhancement. This can make the little craziness in the scene much wilder and entertaining; but if we believed all these capers as the truth we would be foolish indeed.

Now let’s consider how the sceptic would deal with a more difficult example.

Should we believe the Australian government when it says that giving mining companies taxpayer funded offset credits to capture methane at new coal mines is a good tactic to achieve policy targets for emission reduction?

Under any carbon price mechanism the idea is to reduce the carbon intensity of human activities. This means that energy generation, manufacturing, transport and agriculture [the sectors that make up almost all the greenhouse gas emissions] should release less carbon to the atmosphere than in the past. Where the activity can’t be made less intensive, such as a coal-fired power station, emitters can buy credits [or are given allowances] that, in time, make them commercially inefficient and so they are replaced by cleaner technologies.

Methane gas is often associated with coal seams. The whole coal seam gas debate is about extracting this methane as a fuel source. But when the resource in demand is the coal, the methane is either incidental or too expensive to capture. Usually it is released to the atmosphere where it contributes to climate change effects because methane has 23 times the global warming potential of carbon dioxide. Capturing and burning the methane from coal mines would reduce this emission source because methane converts to carbon dioxide when burnt. And carbon dioxide has a net global warming potential of 1.

Burning methane would reduce net emissions from the activity of mining coal.

Except how does this contribute to emission reduction when new coal mines will extract millions of tons of the very stuff that generates greenhouse gases in the first place. No matter that most of the coal is exported and ends on the emissions accounts of another country.

Whatever the rhetoric the taxpayer is actually paying for more emissions not less. In effect it subsidises the development of new coal extraction capacity. This cannot be “a good tactic to achieve policy targets”.

So what should the sceptic do with all this? Be themselves and be sceptical, very sceptical.

This is a ruse by the mining sector to get paid for emitting, the exact opposite of the original policy objectives.

Civil service overhaul

officesHere’s a line from a recent article by Harold Mitchell writing in the Sydney Morning Herald on club mentality in the civil serviceIf we just keep swapping jobs around among the boys, before we know where we are, the world will have gone past us and the boys won’t care. 

The lament is not a new one. Many know that the civil service system inherited from the British is a cunning mixture of yes minister patronising and self-preservation. Don’t appear to rock the boat as you climb the bureaucrat ladder to success. Adhere to these two metaphors and you should rise in the system cleverly skipping from department to department. It is smart to hone skills in boating and rung adherence because they are far more important than any topic expertise.

Arguably it is no better in business. Only there it is ok to rock the boat near to capsize as you climb the ladder. But in business it is unlikely that you can readily switch from let’s say the insurance ladder to one in pharmaceuticals. In business topic expertise also has some value.

Harold Mitchell was calling for a change to the club mentality that sees senior public servants shuffle around with abandon among the portfolios. He might have added that the same happens in the lower ranks too. Especially at Federal level, junior staff also shuffle between positions and from ladder to ladder all too frequently. They learn the fine art of survival in a system they see as being inherently unstable and insecure.

Risk is the given justification for feeling antsy. Certainly if I had a dollar for every departmental name change over the last 15 years or 10c for every time I heard a staffer say ‘there are not enough resources to do that’ then I could retire from my own ladder today. But this is a ruse. In fact the tasks are the same whatever the moniker and the resources are still there. Almost all of those who claimed to be in fear of their jobs are still in one.

I think that what happens is that club mentality in the high ranks seeps down the ladders too. It creates an atmosphere of fear and even loathing that cramps the creativity and drains the capacity of the whole system.

My experience with the Feds has mainly been with the wonders of the Carbon Farming Initiative. Here in the land of carbon offsets and emission abatement — that without irony has nothing to do with farming as you and I understand the term — you can see the system visibly strangling the staff and shunting them around. Staffers seem to move just when they are about to understand the details of their job and those that stay pretend that they have no idea. Now I can’t pass without saying that some of these people were complicit. They were boating and laddering with the best of them. Most though were prevented from being good at their jobs by the system.

This inefficiency was not the only reason that the CFI was a wasted opportunity to make a real difference to the climate change conundrum but it certainly didn’t help. Now that the CFI has become ‘Direct Action’ a new round of staff has set about reinventing offset payments yet again. Only this time coal mines can get offsets for mining coal — go figure.

Meantime the world has indeed gone past us.

What it takes to be a profitable farmer

Australian farmerA friend of mine grew up on a farm. After a career in the corporate world he is thinking of returning to the land by buying a property and running some cattle. Being very aware of the necessity for commercial viability he asked what I thought made a profitable farmer.

There is much irony in this question. I was not brought up on a farm, nor do I have any farming experience. I even fail at growing veggies in the garden as the possums eat any green things the wallabies leave behind.

But I do think about farming a lot. Not about the skills in fixing the tractor or knowing when to plough but with a bias for the big picture that determines a doubling of production from a dwindling stock of viable farmland.

Answering the question of how to be profitable, here are the first six things that came into my head…

  1. You really have to know what you are doing as the Pareto principle applies — 20% of farms deliver 80% of production
  2. Choose your property wisely — it needs to be either productive or restorable
  3. Decide if you will broker your own deals with retailers or go with aggregators
  4. Don’t always listen to your neighbours because what great-granddad did might not work today [arguably it didn’t back then] but at the same time you will need their help
  5. Climate change effects will be real but manageable given that the Australian climate is already makes agriculture a challenge
  6. Diversify, diversify, diversify

In other words, farming is a business just like any other. You need to know how to do it well to be profitable and that means efficiently matching skills to the available resources.

And it takes guts to farm. Thankfully there are many brave souls with such courage, otherwise most of us would starve or work in vain to feed the possums.

Post comments to suggest things to add [or remove] from the list.

Happy thinking.

Sounds Crazy #12 | Fossil fuel subsidies

Here’s a thing. Why would you have any international agreement to reduce carbon emissions when governments across the globe are spending 8.5% of tax revenue on fossil fuel subsidies?

Allow yourself to imagine that you come from a nation where the per capita emissions was less than the global average of around 4.5 tCO2e — you could choose any from around 120 different ones.

You would not be too chuffed at any international agreement on emission reduction when you find out that a big chunk of taxpayers money goes to propping up the problem. You could ask this perfectly sensible question: Why not reduce the subsidies? Wouldn’t that make emitting more expensive and be the very market force that complex trading schemes were designed to achieve?

Now you would be told, well yes, but it’s not as simple as that.

Except that it is.