SHOULD WE CHANGE THE WAY WE WORK

This post was published originally at Larvatus Prodeo. It discusses options for changing the way we work that could reduce emissions and share the work more fairly. See:  (http://larvatusprodeo.net/2009/08/24/guest-post-should-we-change-the-way-we-work/)

A recent Climate Progress post reported that “closing Utah state offices on Fridays has resulted in a 13 percent reduction in energy use as well as collectively saving employees between $5 million and $6 million annually in commuting costs.” (A 5×8 hr week was replaced by a 4×10 hr week) In addition, “employee surveys have shown that most state workers like the new schedule — absenteeism and overtime are down and customer complaints have steadily dropped. Even wait times at the Department of Motor Vehicles have decreased…”

The post goes on to mention Californian studies that have indicated potential health and traffic congestion benefits from making similar changes. More details for the Utah case and additional benefits can be found here. Note that the aim in Utah was to save heating etc. costs by actually shutting down the offices for an extra day/week.

So perhaps it is worth asking how changes in technology and the way we work might help the environment, quality of life and job security? By and large we are still using work patterns that were developed when observing the Sabbath was considered important and the telegraph was leading edge technology. Does it really still make sense for most people to work day shift, Monday to Friday and to do their work in workplaces that are more than a few kilometres from home?

Technology changes in the last 10 years have changed what is practical. Not so long ago I needed to work at my personal workplace with filing cabinets, reference books etc to work efficiently. Now all that information that used to be on paper will fit on a memory stick or be accessible via the internet. There is no longer a need to have a dedicated workplace to work efficiently. Modern technology is also allowing many other jobs that had to be done at a particular place to now be done anywhere with reasonable internet connections. For example, my understanding is that Hamersley now controls its crushing plants from Perth instead from control rooms at the crushers. Technology also means that many people should be able to reduce commute emissions by spending more time working at home or closer to home.

We have also reached a point where most people have no particular reason not to take time off during the week instead of weekends. For me the only time when being off at weekends was important was the 40% of my working life when our children were at school.

One possibility worth considering is a wider adoption of 7 day work rosters similar to those used by the mining industry. For example, many of the Thiess sites I worked with used a 4 day on 4 day off roster that averaged 42 hrs/week for 12 hr days. The roster was popular and turnover low. Seven day rosters can involve more than 2 crews, different roster arrangements etc. if required.

From an emissions point of view the big attraction of the above roster is that assets are used more efficiently. For example, it would allow office space requirements to be halved if individuals work more hours per day to maintain the same weekly hours. Halving office space requirements halves the emissions generated when an office is not being used. It would also allow most of the emissions associated with office buildings to be avoided for many years. Construction resources could be diverted to building more important things such as hospitals, clean power generation and the conversion of unused office space to accommodation etc. Widespread use of 7 day rosters would also reduce traffic congestion during peak hours as well as reducing weekend crowding at some recreation facilities.

It is worth discussing what changes to work arrangements may make sense in terms of society, the environment and the economy and the key reasons for this choice. It is also worth discussing what working arrangements we would choose as individuals if we had the choice.

USING OFFSET CREDIT TRADING TO DRIVE DOWN NEW CAR EMISSIONS

In a previous post it was argued that the most effective way of driving down the emissions per km of new cars would be to use an offset credit emissions trading system.  The aim of this post is to detail one version of this type of system.

WHAT ARE OFFSET CREDIT TRADING SCHEMES?

Versions of offset credit trading emission trading schemes are at the core of both the Australian MRET emissions trading scheme used to drive investment in renewables as well as the US system for reducing acid rain. Offset credit trading is particularly suited for situations where the aim is to control an average and where there is no shortage of better than target product. 

There is no transfer of funds to the government so offset credit trading schemes are not defacto tax schemes.  If all else is equal price increases will be lower because prices do not have to cover the cost of the defacto tax.

Under an offset credit trading system credits are awarded for better than target performance.  Any entity that wants to perform worse that target has to purchase these credits from entities awarded credits for performing better than target.

HOW MIGHT AN OFFSET CREDIT TRADING SYSTEM BE USED TO DRIVE DOWN THE AVERAGE EMISSION PER KM FOR NEW CARS?

A basic offset credit emission trading scheme for controlling average emissions per km might work as follows:

1.          Government sets target and specifies test procedures.

2.          If a new car with emissions per km below target is registered, free credits would be awarded by the government.  The number of credits awarded would depend on how far below target the emissions were.

3.          Before a new car with above target emissions could be registered enough of these credits generated by the registration of below target cars must be purchased and surrendered to the government. The number of credits needed will depend on how far above target.

In effect, all above target emissions have to be offset against below target emissions so that the average stays at or below target.

The advantages of offset credit trading schemes include:

1.          Do not depend on any change in the price of fuel to work.

2.          Will reduce the price paid for cars with below target fuel consumption.

3.          The target can be as challenging as the government is willing to make it.

4.          Unlike simple cap schemes, it does not completely block the sale of new cars with above target emissions.  (Reduces the impact of complaints from those who really do need cars with above target emissions.)

5.          At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill by $614/tonne CO2 abatement.

In practice there may be a number of modifications to the above system.  For example;

1.          Limiting actual trading to that required by manufacturers/importers whose averages haven’t quite matched the target.

2.          Providing some relief for genuine working vehicles and special cases such as large families.

3.          Extending the system to take account of significant conversions of existing cars.

4.          Controlling fuel consumption rather than emissions so that it is easier for people to understand targets.

5.           Excluding light commercial vehicles from the offset trading pool while giving/requiring similar payments to those in the offset credit trading scheme for below or above target emissions.  (Removes the incentive to argue about whether a vehicle is or isn’t commercial.)  There might be an upper limit on payments to avoid pushing the payments for large trucks up for no real reason.

6.          Have a separate system for commercial vehicles.

7.          Having different targets for vehicles that normally travel long distances or do not have access to clean electricity.  (Vehicles for which plug in hybrid will make little difference.)

At the start of the program there will be plenty of large, second hand vehicles available for those who really need this type of vehicle.  It would make sense to wait and see before introducing special arrangements.

CARBON TAX NOT THE BEST WAY TO DRIVE DOWN CAR EMISSIONS

SUMMARY:

This note argues that:

1.          A carbon tax is not an effective way of driving down car related emissions.  It was estimated that a $23/tonne carbon tax would reduce total car emissions by only 1.1% initially rising to 2.6% after a number of years.

2.          Driving down the average emissions per km of new cars should be a key part of any long term plan for reducing fleet emissions. 

3.          An offset credit emissions trading scheme would be the most effective way of reducing the average emissions per km of new cars.  The attractions of this approach include:

I.            Does not depend on any change in the price of fuel to work.

II.         Will reduce the price paid for cars with below target fuel consumption.

III.       The target can be as challenging as the government is willing to make it.

IV.      Unlike simple cap schemes, it allows some scope for people to purchase new cars with above target fuel consumption.

V.         At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill $614 per tonne CO2 abatement.

(*NOTE:  Offset credit trading is at the core of both the Australian MRET emissions trading scheme used to drive investment in renewables as well as the US system for reducing acid rain.) 

RECOMMENDATIONS:

1.          That an offset credit trading scheme be introduced before the next election.

2.          The initial tailpipe emission** target be set at 122 g CO2/km.  (5 litres/100 km for a petrol driven car.)

3.          The target be ramped down to 25 g/km by 2020.

(**NOTE: The target may be expressed in a form that takes account of total emissions from well to tailpipe, not just tailpipe emissions.)

DETAILS:

Reducing the fuel consumption of cars is important from the point of view of both emission reduction and reducing our exposure to oil supply problems.  ABS data indicates that passenger vehicles (excluding buses) consumed 18 billion litres of fuel at an average rate of 11.5 litres/100km during 2007. This fuel consumption would generate about 45 million tonnes of CO2.

Unfortunately, a carbon tax has been found to be ineffective at reducing total car fleet emissions.  The results of two large overseas studies in the UK and US both suggest that a $30/tonne CO2 tax on tailpipe emissions would reduce total car fleet fuel consumption by only 1.4% initially rising to 3.4% after a number of years.  (For a base fuel price $1.50/litre - These reductions correspond to price increases per tonne CO2 abatement of about $2100 and $900 respectively.)

Other strategies for achieving total fuel reduction include:

1.          Reducing total km traveled by using more public transport, car pools, reducing the distance/frequency of travel to work etc.

2.          Reducing emissions per km for the existing car fleet by retrofitting cars with plug in hybrid drives, improving driving practices, lowering speed limits, using lower roll resistance tires, fitting lower air resistance hub caps, etc.

3.          Reducing average fleet emissions per km over time by improving the average emissions per km of the new cars.  This strategy is important because it has the potential to yield the large reductions required to survive future oil shortages and because a typical car will have a life of 10 to 20 years.

The focus of this note is driving down the average fuel consumption of new cars.

Driving down the average fuel consumption of new cars:

There are many commercially available cars that are that have standard fuel consumptions well below the 11.5 litres/100km 2007 average.  For example, there are small, low cost cars with claimed highway fuel consumption below 5.0 litres/100 km as well as more expensive conventional drive cars that are claimed to consume as little as 3 litres/100 km.  ABS 2007 figures had passenger vehicles averaging 39 km traveled per day, light commercial 50 km/day.  This suggests that the plug in hybrids that are beginning to appear on world markets should deliver fuel consumptions below one litre/100 km without requiring large batteries.

Car related emissions are one area where quite dramatic reductions can be achieved over time even if we restrict ourselves to technologies that are currently commercially available. 

ABS reports that “Over recent years there has been a continuous reduction in average new vehicle emissions. From an estimated 252 grams of CO2 per kilometre in 2002, National Average Carbon Emissions (NACE) for all new light vehicles sold in Australia for 2008 was 222.4 grams of CO2 per kilometre. This decline in carbon emissions of new vehicles places the industry well on track to achieve the target of an average of 222 grams of CO2 per kilometre by 2010.” The target referred to was the Federal Chamber of Automotive Industries (FCAI) voluntary target.  (222 gms per km corresponds to the tailpipe emissions from a car consuming 9 litres petrol/100km.)

Three alternatives for driving down the average fuel consumption of new cars down further have been considered here:

1.          The carbon tax.

2.          The use of caps to put an upper limit on emissions per km.

3.          The use of an offset credit based emission trading scheme to control the average fuel consumption of new cars.

The carbon tax:

As mentioned above the carbon tax is not an effective way of driving down car related emissions because average fuel consumption has been found to be only weakly linked to fuel price.

A $30/tonne tax would add about 33¢/day to the cost of running the average 2007 car.  So it is hardly surprising that fuel consumption that such a tax would not be a great incentive to act.  Even worse, most of the changes that we are suggesting people take to reduce their fuel cost will reduce comfort, convenience and status.

The carbon tax is not an effective way of driving down the average fuel consumption of new cars.

The use of regulated emission caps:

Regulations that cap emissions per km for new cars could be used to block the sale of new cars that exceed the limit.  Advantages include:

1.          It does not depend on any change in the price of fuel to work.

2.          It could be very simple if no exceptions are allowed.

3.          The target can be as challenging as the government is willing to make it.

4.          At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill by $614/tonne CO2 abatement.

The disadvantage is that a simple cap may produce loud protests from individuals who have a particular desire for a vehicle that exceeds the cap as well as manufacturers whose product just exceeds the cap. There is a real risk is that the protests will result in higher caps.

A cap based system also provides no incentive for manufacturers to produce cars with emissions well below the cap.

The use of caps can be used to drive serious reductions in emissions.  However, there are some disadvantages.

Offset credit based emission trading schemes:

Offset credit trading emission trading schemes are at the core of both the Australian MRET emissions trading scheme used to drive investment in renewables as well as the US system for reducing acid rain. Offset credit trading is particularly suited for situations where the aim is to control an average and where there is no shortage of better than target product.

An offset credit emission trading scheme for controlling average emissions per km might work by:

1.          Government sets target and specifies test procedures.

2.          If a new car with emissions below target is registered, free credits would be awarded by the government.  The number of credits awarded will depend on how far below target.

3.          Before a car with above target emissions could be registered a number of these credits generated by the registration of a below target car must be purchased and surrendered to the government. The number of credits purchased will depend on how far above target.

In effect, above target emissions have to be offset against below target emissions so that the average stays at or below target.

The advantages of this approach compared with the others include:

1.          It does not depend on any change in the price of fuel to work.

2.          It will reduce the price paid for cars with below target fuel consumption.

3.          The target can be as challenging as the government is willing to make it.

4.          Unlike simple cap schemes, it does not completely block the sale of new cars with above target emissions.

5.          At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill by $614/tonne CO2 abatement.

In practice, it may be convenient to use the existing MRET administration system to manage the system for reducing car related emissions. 

Offset trading could be used to drive serious reductions in car related emissions while avoiding some of the disadvantages associated the use of regulated emission caps.  It is the best of the alternatives considered.

REFERENCES:

1. ABS

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/321136439E3661E8CA25773700169CE4

2. PHIL GOODWIN, JOYCE DARGAY and MARK HANLY ESRC Transport Studies Unit, University College London, London, UK: “Elasticities of Road Traffic and Fuel Consumption with Respect to Price and Income: A Review (UK)” Transport Reviews, Vol. 24, No. 3, 275–292, May 2004

3.  Espey, Molly (Energy Journal. Vol. 17, no. 3, pp. 49-60. 1996)

Explaining the variation in elasticity estimates of gasoline demand in the United States: A meta-analysis

NOTES:

It may make sense to keep light commercial vehicles out of the offset trading pool while giving/requiring similar payments to those in the offset credit trading scheme for below or above target emissions.  Removes the incentive to argue about whether a vehicle is or isn’t commercial.  (There might be an upper limit on payments to avoid pushing the payments for large trucks up for no real reason – or exclusion of vehicles above say 10 tonnes.)

SOLUTIONS TO THE AUG 11 WORLD ECONOMIC CRISIS

At the moment the Asian (and by extension, the Australian) economic strategy depends on the US growing its debt at an unsustainable rate so that it can continue to buy Asian goodies.  Goodies that the US could make for itself by using idle human and manufacturing resources. So far a key part of this arrangement has been that countries like China have simply accumulated surplus’s of $US or fed them into the questionable loans that fed the GFC.
The problem has been made worse by the crazies at the WTO who don’t seem to have come to grips with the idea that countries suffering from large trade deficits destabilize the world’s economic system as well as damaging themselves.  Under the current rules all that a country with a serious trade deficit seems to be allowed to do is to slow its economy to the point in an attempt to drive down the demand for imports.  Attempting to control imports by more direct means is considered unacceptable.
If China is seriously concerned about the loss of value of its $US holdings, the most logical thing for them to do would be to use their $US surplus to directly or indirectly buy US goods. This approach should be a win/win that  helps both the US and world economy, creates jobs in the US while improving the standard of living of the average Chinese. The long term problem with this approach is that other countries may take up the destabilizing role that China currently fills.
In the longer term we need to have a hard look at the way free trade globalization operates. If nothing else, the WTO rules should be changed to recognize that countries with large trade deficits should be able/required to take direct action to restrict imports to a level the country can afford.
The key question is: “how does the world get the benefits of free trade globalization while minimizing some of the potential problems?”
I guess the good news at the momnet is that a contracting world economy will reduce greenhouse emissions.