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Sunday, 31 January 2010
Cap and Trade Links
Topic: Cap and Trade

Some links for the Cap and Trade Markets-

Evolution Markets


NPR On Cap and Trade

American Tree Farm System

Carbon Calculator

Posted by praneymittal at 4:41 PM PST
Updated: Sunday, 31 January 2010 11:07 PM PST
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Thursday, 28 January 2010
Cap and Trade, the Airline and the utility company
Topic: Cap and Trade

Today, listening to NPR was really enlightening. Terry Gross was talking to Mark Schapiro about Cap and Trade and the Carbon economy. The work done by Mark is incredible. Basically, Cap and Trade is a program that has two parts - set the emission caps and trade the over the cap emissions. The system is amazingly speculative and according to this documentary, $150 billion is involved per year. So, here is the run down.

First the demand side:

Lets imagine a utility company being regulated in Europe has a carbon emission limit of 100 million tonnes. However, with the technology investments in place, they can only come to 120 million tonnes. So, the company will need to buy 20 million tonnes to satisfy the 100 million tonnes cap. The deal is that if you create it, someone else offsets it. For an airline, a DC-10 may be highly inefficient but they want to use it as it is paid for. The emissions for this plane may be twice that of a Boeing and when, in total, they exceed for a certain year, then the company has to go to commodities market to buy it.

Then the Supply side:

There are three ways for the company to offset the extra pollution -

  1. Go green - Adopt more green technologies. This option is the simplest and companies can take either the efficiency route or the conservation route. Many companies are giving incentives for conservation to their customers. The interesting fact is that the customer's love for environment is exploited and used to cover up for Vendor's inefficiencies. The second way is to reduce the energy usage by adopting more environment friendly technologies like Solar, wind or in some cases, planting trees.
  2. Partner with an offset creating firm and trade the credits. When a large utility company parterns with a tree plantation firm, they buy carbon credits from that firm to offset emissions. Do you remember the optional line item on your bill to offset carbon emissions. This is likely the guy who gets it. But remember, the customer still paid indirectly for the utility company's inefficiency.
  3. Go to public commodities market and buy the carbon credits. The utility company or airline can buy carbon credits from a developing country company or other company which is planting trees in Amazon forest or simply has extra credits because it is operating under capacity or not emitting enough.

The Middlemen:

This is the most interesting part of the trade. US is a non-signatory to the Cap and Trade agreement. About 37 countries included in the Kyoto protocol signed it. So, guess where the business of carbon credits is centered - London. Most big investment banks (the remaining ones!) have set up a shop there. They deal in carbon credits. They buy the carbon credits from across the globe and create bundles and sell them to the companies which exceeded their cap. They take deep cuts in the money and it keeps their fat wallets growing.

The Moral Dilemma:

There are several very disturbing things in this system:

  • Carbon credit certificates are speculative in nature. They are regulated but by different bodies. They are based on future expectations not as of today. How do you measure the green house impact of a tree that has not been planted yet.
  • Why the middlemen? Investment bankers have no business being paid for auctioning environment.
  • It pays some companies for sitting idle. An undercapacity plant may trade off its carbon credits to an inefficient plant, thereby, having a Zero sum effect on the environment.

It almost seems like a fictitious market in existence. A bubble waiting to burst! Mr. Bernake, will u be there?


Posted by praneymittal at 9:17 PM PST
Updated: Thursday, 28 January 2010 10:07 PM PST
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Tuesday, 12 January 2010
Things we ignore...
Topic: Conservation etc ...

This year brings in new perspectives for all of us. I went to office one Sunday night to pick up an item on my way to airport. Our office is very conscious on resource wastage, so, I always thought there was nothing to worry about from the conservation perspective. However, that evening opened my eyes. There was not a single person in the office and lights and most airconditioning was off. It was evening time but the entire floor was lit up with the light from the monitors. Being an IT office, everyone gets two monitors.  We use these only 40 -50 hours a week and they are switched on most of the time - about 168 hours in a week. It seems that we use only 25% of their uptime and waste the rest of it.

I would think that this happens in IT offices of most companies. It does not just put extra pressure on the power supply, it also takes the airconditioning to keep these devices cool. I think we all owe a moral responsibility to shutdown the computers and monitors that we dont use at work.

I know I am not saying something new but it is so old that it gets ignored. Sometimes we just need to go back to basics ...


Posted by praneymittal at 10:31 PM PST
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Thursday, 22 October 2009
Berkeley Plan for the entire nation - Great Start but be cautious
Topic: Green Business

I recently read in the news that Berkeley's plan for financing the Solar panels is being adopted at a national level. Overall, it is a great start for a nation with the rising energy prices and towering unemployment. But this has the drawback that was typically seen in the nation's telecom infrastructure. Consumers have little incentive to go solar since the prices of the solar or Wind tech still remains very high compared to a montly bill. The administration should make an effort to make it a phased adoption because the early adoptors of this plan will likely see their investment wash out in 5-7 years since the mass production will bring the solar panel prices down drastically. Secondly, the solar panels should be produced indigenously in order to make a real impact on the economy. The solar panels being associated with a home value also makes it difficult to sell the home and reduce options for the purchaser who may want to try newer panels for the new home. Anyway, as the details of the plan become clear, it will be interesting to see how administration makes the policies.


Posted by praneymittal at 10:06 PM PDT
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Sunday, 28 September 2008
Economics of a solar powered rickshaw
Topic: Green Business

There has been some recent buzz around the development of solar powered rickshaws. They will particularly help the rickshaw pullers in the south asian nations where they barely make a living after putting in entire day of hard physical labour. The biggest challenge with the adoption of solar technology for low end applications is the high entry level price. Most examples on the internet regarding the economics of such applications start with a solution and then try to make sense of the cost. My belief is that such a solution has to start with the economics of the problem first.

In India, there are at least a million rickshaw pullers. A typical rickshaw costs about $100 and a typical rickshaw puller makes $6 - $8 on a good day. Most of these are male adults between 18 - 60 years of age and there are some older ones too, but they dont make as much money. They are day workers and work all days. So, basically, in a typical month they make $ 150 - $200. This number is much lower in many impoverished areas.

For a technology that can benefit them, it has to bring a productivity increase at least equivalent to the cost of the technology. If we thought of upgrading the vehicle to a new one, it will be out of reach of most, since the vehicle will cost over USD 1500. It will give them more leverage to charge higher prices, but it will be hard to justify the cost.

I believe that they would be more willing to buy a kit instead that puts up a solar panel on the passenger roof and fits an electric motor in the rear panel to provide the assistance while pulling. Any battery would add to the cost and weight and should be considered optional.

A very basic Solar Panel BSP10 comes for 140 USD and I believe it can be further brought down to USD 100 for mass production. It is not the best in energy capabilities and can add 25% to the productivity of the puller when coupled with a small electric motor which will cost about 50 USD. An installation cost of USD 10 - 20 is reasonable if the installation is simple enough. After adding other overheads, a solution can be devised for USD 200 including installation.

Such an amount can be microfinanced from the several microfinance websites in play on easy terms. Lets say that this has a potential to increase the earnings of this person by 20%, so, he makes an additional USD 40 per month. Then he should be able to pay the loan within six months including interest from additional income. This is of course assuming that he will be taking the market away a little bit from competition.

I am willing to invest some time in thinking through and investing my time in this, if it turns out to help the mankind.

Posted by praneymittal at 12:25 PM PDT
Updated: Sunday, 28 September 2008 3:36 PM PDT
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Saturday, 13 September 2008
Rich and Alone: America's Oil Industry
Topic: Conservation etc ...

America's Oil industry well realizes that its best days are gone. Soon the oil friendly administration will go. America's oil industry is like the CEO of a big company seeing retirement. This industry has milked every single person alike and at the same time, has reaped windfall profits. Hats off to their strategists for that. However, in the process they have made less friends - more enemies than friends. Biggest of all, they have made their consumers enemies of themselves. This is not a happy situation for any company.

These companies have the best cash positions in the entire industry and so, they will probably never feel any major problems related to sustainability. Their major issue will come from people's love of environment. The engine efficiency initiatives, which are emerging from Automakers desperation to get customers will keep driving the fuel demand lower for upcoming years, will keep the oil company profits linear. Ultimately, oil companies will need to make friends and the consumers will win!

Posted by praneymittal at 11:12 AM PDT
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Tuesday, 9 September 2008
Oil Prices: Do you see a pattern?
Topic: Green Business

There is a predictable pattern happening in oil prices. Some four years back, around the election time, the oil prices bucked the trend and went significantly down. I am not a big believer in the conspiracy theories but I am seeing the same pattern this year. The oil prices went to historical highs and now are coming back on track. The oil industry is saying that the forces of American demand are bringing the price low. Ok, that's not how I understand the industry. The last time I checked, this industry does not care for demand growth as the supply is controllable at a short notice. OPEC can shut off a few oil wells and the supply and demand will be in an upside down situation again.

I believe that the gas prices going down has more political reasons that any mathematical reasons provided by industry analysts. Did someone go tell the OPEC that this is an election year, so, don't mess with the prices? Do you smell a smoking gun?

On the other side, I am happy about the demand going lower. This will improve US lead on the alternative technology landscape. I have also read the reports from AAA saying that we have driven zillions of less miles for our vacations. But I can't help noticing that many people are driving high mileage cars. Overall, this trend will help reduce the demand of gas. But there is still a lot of ground to cover when it comes to the alternative fuel technologies.They are still not making the solar charged air planes as yet:-)


Posted by praneymittal at 8:11 PM PDT
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Evolve a standard for eco-friendliness

I am in Red Sox land (Boston) today. While turning the pages of skymall catalog on my long coast to coast flight, I found that the green products are slowing penetrating the product catalogs. But here is the reality, every single product charges a much higher premium for using alternative energy. Many products are over half more expensive than their traditional energy counterparts. Moreover, the energy savings from these products is a hogwash. Most replacement products use such a low amount of energy that the effective savings are perhaps negative. Many of these products last less than 2 years  increasing the cost of overall ownership for the buyers. A typical solar powered device has a battery in it making it very hard to decompose. The manufacturers are cashing in the mad rush for green at the expense of your want for eco-friendly products.

In my opinion, a three point standard should evolve for measuring the eco-friendliness of a product and the entire company. The standard should define the three key measurements -
1. Power used to manufacture the device
2. Power consumed by the device operationally if it was not powered by Alternative technology
3. Eco-friendliness of the device's by-products when sent for disposal

This will help consumers to decide the merit of the green products and services.This will also raise the stakes for manufacturers so they would not just rush for manufacturing products which are not actually eco-friendly.


Posted by praneymittal at 8:10 PM PDT
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Thursday, 4 September 2008
Good news for the hybrid lovers!
Topic: Green Business

Honda is doing some wonders. They announced today a long anticipated news. They are launching a competition to Prius and it has the name of their famous hybrid Insight. It will likely be priced at $19K, a notch below prius but will defintely command a premium. The expected fuel efficiency is unknown but my best guess is that it will be 60 something. They have experimented with the same chassis for FCX Clarity concept car and now, launching it as competition to Prius. Honestly, it looks cooler than Prius. This will be first of the several under $20K hybrids Honda is launching this year.

It is actually nice to see the Hybrid market getting hotter. It will drive the price premiums down and make the cars more affordable to normal people, not just early adopters. The HOV lane stickers are all exhausted, so, they dont save the commute time anymore. But with gas prices nearly doubling in past three years, buying a hybrid still helps the wallet.

Posted by praneymittal at 9:36 PM PDT
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Friday, 11 July 2008
Travel Experiences - Hong kong and Hyderabad, India
Topic: Travel

I have not been able to write for a few days. The reason is that I have been traveling and I have a lot to share. Actually, I could spend pages and pages writing about the good travel experiences but this blog is rightfully so, a green blog. So, I will preserve sanctity of it. I am starting a series on some of my travel experiences from the recent travel.

I work with an offshore team and so, travel to these destinations is very much a part of the job. This time it was a travel to Hyderabad. The flying time is close to 24 hours, so, I decided to take a break in Hong kong for a couple days. The richness of the city was marvelous.  The city is very well developed in general but has sharp contrasts. We (me and my wife) decided to visit a part of original Hongkong, the Aberdeen village. As our tour guide narrated, it is the only surviving fishing village in Hongkong and people live on boats there. It was amazing to see such a natural setting, however, Victoria harbour happens to be one of the world's busiest shipping channels and the pollution was striking. The color of water has changed and I dont think any fish would ever survive in that water. No wonder, Aberdeen fishing village has been shrinking. The worst part was a visit to the village, a heritage site, where ocean was lined up with plastic bags and bottles. Sad!

Fast forward a week, I am in Hyderabad, India. It is a great city with a lot of historical heritage. I would like to write about the heritage of the city in a different article but would like to focus on the subject of this blog. Hyderabad is situated in a very rocky area and one of its heritage sites include Golconda fort, a fort made of rocks standing proudly on a hill. The fort dates back 500 years and when compared to any American heritage site, it is much older. From my perspective, it is a national treasure for India and a site with amazing past. This fort has seen several kingdoms come and go, it has been home to the famous Kohinoor diamond. Everything about it is great. A striking thing about this was the amount of plastic trash that lined up the fort. Nothing had been spared, the water bottles had been hidden in the most protected secrets of the fort.  Ten years back, when I used to live in India, water bottles were a luxury and were barely available. Today, they rule the roads and any heritage sites. They are entrenched in every single restaurant, home and elsewhere. The municipal water quality is very bad and not palatable, so, from people's perspective, only viable solution for safe drinking water is bottles. While US has been fostering its new found dislike for the water bottles, this part of the world is fast catching this fever. A trash crisis is impending! The Arabian sea, Bay of Bengal and Indian ocean are bearing the consequences.

Ok, enough about trash! There were good experiences, Hongkong and San Francisco share character. After all they are both located on the perimeter of Pacific ocean. Hongkong has the similar heights and outlying islands as San Francisco's Alcatraz, treasure island and other smaller islands. It boasts of a big mall made at the top of a mountain popularly known as Victoria Peak. Watching the city from the heights of Victoria peak brought me some good memories of my last trip to Honolulu, Hawaii. The waikiki beach area looks very similar and Hong Kong by all means outclasses it when the urban beauty is compared.

Then there was Hyderabad, I liked the city primarily because of a great visit last year and went on this year primarily expecting that things will be even better this year. I dont know if things were better but I came to know of many more dimensions of this city. A drive to the Hitec city in Hyderabad was an eye opener. Having grown up seeing Delhi as an example of a big city, I really discounted Hyderabad. But to my surprise, the Hitec city was a new generation of Hyderabad - spanking new buildings, grand offices that would put silicon valley headquarters of many companies to shame, A great work culture and an active nightlife. The city is full of jobs. People say something very real about this city - a person born here either lives his entire life here or goes to live abroad.  I would love to live here.


I stayed at a hotel with a brand that I had fancied always. I had worked in the early stages of my career with this group. And my expectations were really high when I went there. The services and staff were very polite and helpful true to the image of the hotel which by the way, was more expensive to stay than a hotel in Manhattan. I later came to know that rooms in these hotels are a rare commodity and are marked up heavily. To my surprise, every single meal was more expensive than I would have in Boston or in San Francisco, both known for their culinary heritage. It was hard to believe that it is same country where I have lived a larger part of my life. The cost of a dinner in a good restaurant seems to have increased 8-10 times in a span of 6 years. The inflation rate is touching 12%.


Its the people of a city that define the character of a city. I was pleasantly surprised with the kind of reception I received. It really made my trip to the city worthwhile. A colleague of mine brought the speciality mangoes for me. It was a delight to enjoy not just the mangoes but the special feeling of feeling cozy in an unknown city. The hotel's gymn was really special, I tried to converse in English with the fitness advisor earlier and later found comfort in talking to him in Hindi, my very own native language. And then there was cricket, a great cricket match does a spell on masses there, life just pauses until the match is won. One interesting dimension of work ethic in sharp contrast with the west is that for every single job in the west, I found many more people there. The work is not too much more, so, I noticed that they spent a good time socializing and talking to each other.

Will write more experiences in my upcoming articles.

Posted by praneymittal at 8:24 PM PDT
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