Tag Archives: markets

Going in circles

Our spray bottles for cleaning the kitchen counter, pump bottles that come with our body foam, as well as that shampoo bottle are all going to outlast our use of the fluids stored within them. They can be reused – and in reusing them for the same applications, we are reducing their usage. Good for the overall economy in terms of saving resources, for our pockets and also the environment. Except that it is in the interest of the fossil fuel companies to churn out more plastics, for the consumer goods company to create more new packaging and mark up the price of these products, for logistics companies to handle a consistent set of quality, new containers rather than re-used, non-standardized ones.

We’ve created incentives, built our economies around sheer wastage and environmental destruction. Can new business models be created, alongside the harnessing of forces to drive change in consumer culture and consumption practices? Grist reports on some interesting examples recently.

Indeed, we already have vending machines and public water fountains. Why not make soda fountains where people pay for soda that goes into their water bottles? Scoop Wholefoods already tries to retail all kinds of products by having customers bring containers into store where they are filled up.

Laundry detergent, hand soap and all can definitely be sold in bulk dispensed from big containers into the containers brought by the consumers. During the Covid pandemic, Singapore had deployed vending machines and various physical outposts around community centers where Singaporeans could bring their containers to refill and get alcohol-free hand sanitisers. Why not make that the norm?

It will be difficult for the market capitalism as we have evolved it to stomach and put up with all these changes. People want to carry on with proliferation of brands and ‘choices’ – they want to make different containers and so many different kinds of detergent, soaps and handwash that makes it hard to retail all of these in bulk.

Would you rather have more options of soap and less possibilities of a future we would want to be part of? Or less option of soaps so we can choose better futures to exist in?

Who is the enemy?

Is it fossil fuels or the fossil fuel companies?

Biomethane (or upgraded biogas) has a challenging reputation in some markets. It is chemically indistinguishable from natural gas which is a fossil fuel. It burns identically and emits carbon dioxide when combusted. However, it is considered a low-carbon fuel because the carbon content from biomethane is actually the short-cycle carbon dioxide. It is great because you can combust and generate power or heat using a conventional gas turbine or other gas appliances with it without having to retool or change the equipment.

Biomethane is a clear pathway to support decarbonisation of gas and yet it is being shunned by critics. Part of the reason is that the fossil fuel companies are getting involved and could extend the lifespan of their fossil fuel assets and infrastructure using it. And some people are unhappy that they even receive low-carbon funding for the gas infrastructure.

When we see fossil fuel companies as enemies, then anything they do will be wrong and things that continues driving their asset base even tangentially related to fossil gas seem like a problem.

But if the enemy is carbon emissions, then those companies need to be given a chance. We need to demarcate some boundaries: for example, they could set a profit margin cap on themselves and commit all the funds above that towards clean energy investments. Or even better, they could funnel those funds into a ring-fenced facility which then dole out the resources towards anything proven to be low-carbon.

Story of methane

I thought of writing about methane. It is a curious molecule consisting of a single carbon atom surrounded by four hydrogen atoms around it which pretty strong bonds with the carbon atom. The entire molecule is relatively small and exists in gaseous form at room temperatures. It is naturally occurring and comes out of natural processes that involves anaerobic bacteria actions. It is a fuel that can be combusted to produce carbon dioxide and water vapour.

It also happens to be a greenhouse gas. Each methane molecule is thought to have 25 times more global warming potential than carbon dioxide. Natural gas is largely made up of it; hence it is a greenhouse gas by itself though combusting it will also produce carbon dioxide which itself is a greenhouse gas though with lower potential.

The focus on carbon emissions is a result of the recognition that we have spewed so much of this particular greenhouse into the atmosphere that it is having extreme effects on the global climate due to the warming potential. The world needs to move towards low-carbon and that means having activities that are emitting less carbon dioxide into the atmosphere. In general, fossil fuel based carbon holds the largest responsibility in anthropogenic carbon emissions.

Interestingly, you could produce methane through anaerobic biological process. And cows are known to release methane into the air because of the bacteria actions in their stomach. The dairy industry therefore becomes a rather larger emitter of greenhouse gas for this reason. That is where stuff gets a bit fuzzy when you’re counting global warming potential, anthropogenic emissions and so on.

So biomethane is the methane produced through anaerobic digestion of organic matter can be captured and used as a fuel. When combusted it likewise produces carbon dioxide and water. But this carbon dioxide belongs to the short carbon cycle due to its organic/plant heritage and hence is excused from what typical constitutes carbon emissions. Yet when biomethane leaks or is released into the air, the methane’s global warming potential is counted and the carbon-equivalent emissions actually forms part of the emissions from processes whenever biomethane is used. This ‘short cycle’ argument doesn’t seem to apply.

This may not seem very consistent and can potentially create a lot of confusion around the truly ‘green’ identity of biomethane. One could see how biomethane, or renewable natural gas as it is known in the US, is going to suffer from being conflated with fossil fuel natural gas.

Cheap renewables and surging bills

Even as we see the levellised cost of solar coming down, and increasing penetration of renewable energy, the electricity coming to us in our grids are increasing in prices. At least it seems to be so in Australia. There’s a lot of cost associated with the transmission and distribution infrastructure that needs to be recovered – partly because the growth of intermittent renewables mean that the grid infrastructure will have to be expanded.

But it is not just that; there’s also more padding required in the margins of electricity retailers because the intermittency results in even more volatile electricity prices in the wholesale market. That means that if the retailers are still providing fixed price tariffs and long contracts to customers, they will have to manage their risks by putting higher profit margins into the retail packages.

There is a huge price to pay by the society to eventually enjoy more renewable energy. If we don’t adapt to the intermittency through more adding more flexible generation leveraging on demand response and integrating EV recharging networks into the network operation optimisation (ie. Vehicle-to-Grid systems), we can only expect higher bills. We had better accelerate the transition or we’re soon losing the patience of energy consumers.

Labels and bullshit

I think that schools and parents should spend a lot more time teaching kids to read labels and discern marketing from science and verified statements. One of the problematic trends that emerged from our market economy or highly marketised, monetised society is the rise of wildfire marketing. You’d think that lies or wrong claims would be quickly discovered but often, verification takes time and money and has the nature of a public good so no one invest in them.

Yet the interest of the marketing departments and companies to make claims that can get them customers is so much more. So there is no prize for guessing who would put more resources into the activity and who emerges as winner, at least in the short term.

Question is why has our market economy created such short-termism? The people at marketing departments are measured perhaps by the short term sales figures. The management is assessed based on short term profit and loss or worse, share prices. No one within the transactions have any long term stake other than the consumers.

Besides strengthening consumer bureaus, you will have to strengthen the consumers through education. And that has to start whilst young; and these are extremely long term investments that will pay off for the broad society.

What is value?

One of the key fundamental steps to take in order to move towards a low-carbon future is to re-assess our notion of value, economic value. Over the past decades, economic value had been increasingly important as more and more things in the world could be bought with money. This is what Michael Sandel calls the making of a market society.

This is worrying because the value of anything and everything used to be so much more. There’s richness in being able to evaluate and appraise value of various things in different ways. And this is why dollar values can never encapsulate all of that. In fact, there is no such thing as a market for single goods and services. The notion of a market price is just about as real as the notion of an average. The same good can be simultaneously sold at low and high prices depending on where, when, and to whom it was sold.

By defining this abstract concept of market values, we are trying to make a subjective valuation something objective. We are trying to abstract from specific context and circumstances and forcefully say that surely there is something about the good or service itself that has nothing to do with all that. And if we can gather the averages or have a large number of observations, we can use that statistic as something objective. In reality, the statistic is just a statistic – is it a market value? That’s up to whoever is reading the statement.

Beyond the market, the real way to appraise value continues to be subjective and that is okay because we all should be selecting the dimensions we all care about and build our decisions based on that.

Ready-made solutions

Just add hot water to instant coffee and you get your morning cup of coffee. Boil some water and pop the noodles and powder in, or even better, just rip the packaging and put it into the microwave, pressing just a few buttons then wait – and you get your meal. Bring a packet of ready-mix cement and mix in water, and you can have some of the bonding materials for your brick building. Or you can start paving the road.

So why can’t you just order a report and instantly know everything there is to know about a market? Or to pay someone to give you all the answers to entering a market for your business? Even better, pay someone to enter the market, run the business for you and then you just reap the business success benefits? The challenge of having instant, ready-made solutions in some parts of life is that we start expecting all parts of life to be like that.

And worse still, we allow the market to grow into crevices of our lives expecting it to deliver but it never does. Professional service can deliver a report but won’t be able to ensure you learn all about a market. You could get someone to develop a strategy to enter a market for your business but you’re the one who would eventually have to follow through with it. And moreover, the less you’re involved in co-developing the plan, the less you’ll be able to actually execute it.

There are just so much work that is better, more beautiful and meaningful because they involve co-creation and where you’re paying for someone to partner with you to make a new thing happen. The reason you’d pay them for it is because you will eventually reap the full benefits of the result while they wouldn’t have been working to partner with you otherwise. And in this domain, there are no ready-made solutions for you to purchase; you will have to do the work if you want the success. And it won’t be guaranteed.

Bridge to the future

Having been based in Australia for two months now and getting a better view of the overall energy landscape, I’d say that the greatest hurdle we need to overcome is developing an alignment in commitment, plans and action to bring bioenergy especially biomethane into the system energy mix in order to decarbonise.

We are trying to build a bridge to the low-carbon energy future. And there has been many announcement, efforts and plans around hydrogen hubs, hydrogen parks. In the year 2023, the prices of electrolysers didn’t seem to come down all that much as expected, renewable electricity in the form of wind and solar, while being cheap, is bringing about a degree of intermittency that challenges grid operations to the extent that overall cost of electricity or at least access to electricity remains high. As it turns out, we were building the bridge from the destination towards us when we were working on the hydrogen projects. They were good, at some point in the future but it seems that they are not being built fast enough to reach us today. We are still unable to adopt those solutions.

This means that as the decarbonisation targets and emission reduction dreams comes back to bite us, we need to start building the bridge from our side. And biomethane is a great solution that allows us to do that. It displaces natural gas on a one-to-one basis and does not require end-users of natural gas to change their appliances. Biomethane can be spec-ed properly in the biogas upgrading process in order to achieve the quality required for gas grid injection. Moreover, the production of biogas (precursor to biomethane) can be done in conjunction with managing our organic and agricultural wastes which were either being burnt, composted openly or sent to the landfill – all of which involves some kind of carbon emission (albeit short-cycle to a certain extent) that does not achieve extra work done. And don’t get me started on the potential of biogenic carbon dioxide as a future market to build.

Lots of clear work and action. Once we get the perception right and eliminate the misinformation around bioenergy in Australia.

Government bashing

The government tends to be an easy target for most of the problems, or the lack of solution towards them. In most cases, the lack of technical solutions tend not to be the barrier towards solving the problems. It is a matter of adoption. And people look towards the government to drive the uptake of solutions. The struggle today, in the market economy where there’s a multitude of technical solutions backed by various different economic interest, there’s some kind of gridlock towards having governments select solutions.

Historically, the popular beliefs, ideas and thoughts drive the directions of democratically elected government. Influence from businesses probably will contribute to some of that. But the options are limited (automobiles or horse carriages, internal combustion engines or electric engines, AC or DC transmission, etc.) and there are certain dimensions by which governments can justify their choices and move forward.

Today, it is less clear. Should we electrify homes completely or allow them to continue using gas, albeit having to encourage the development of renewable gases? Should the government be driving the choice of technologies used in homes or industries by enabling or making difficult the development of more biomethane for grid-injection? Or should they be encouraging full electrification not just of homes but also industries, and even heavy transport, redeveloping infrastructure to be able to deliver lots of electricity, enabling battery swapping or ultra-fast charging along highways?

What are the dimensions that the government should be optimising along, should they be taking positions to propagate certain solutions or standards? Are they in the position to make those choices? Yet some of these innovations and technological adoption can only move forward with enabling policies. The issue is that being in a standstill and not enacting any policy is in itself a choice for status quo, for the carbon-intense way of life, and dooming our system. Yet making a choice can mean excluding certain options or causing certain options to be more or less expensive than they otherwise would be, hence favouring one over another.

Taking policy positions and ultimately making some kind of technological choice implicitly is inevitable. So it is just a matter of what are the priorities.

Market society

From the last couple of blog posts, I’m clearly revisiting the pondering of my youth in college about the role that market ideas should take. As I learn to live in a different society – this time as a working adult – from where I grew up, I begin to become more conscious of the way we structure our societies and how that reflects our values.

This talk by Michael Sandels is still relevant today if not more so. And especially for Singapore during this time with the recent saga from a certain social media post.