Navigant Research Blog

Takeaways from Reversapalooza: One Analyst’s Perspective on Blockchain

— May 15, 2018

I recently returned from Reversapalooza, a 2-day event hosted by Nori and designed to explore the role of blockchain technology in reversing climate change. There were farmers, economists, policymakers, academics, and representatives from many other professions in attendance. In the conversations that ensued, blockchain took a backseat to Nori’s larger mission.

Blockchain is a hot topic at conferences globally and in many sectors, but this event was one of the few large-scale conversations I have participated in where the “hash everything and put it on the blockchain” crowd were a minority. The event gave me the opportunity to reflect on how blockchain is perceived by stakeholders with a wide range of familiarity with the technology. The majority of customers who will be the end users of blockchain-based solutions probably won’t understand the underlying systems, but they still need to be able to engage with the system.

Blockchain Attracts People, but It Can Also Alienate Them

Blockchain generates a huge amount of interest even outside of tech-savvy circles. I have yet to speak with someone who has heard about blockchain and doesn’t care to learn more about it. It is very tempting for early innovators to put blockchain front and center to capitalize on that interest.

However, once you get people in the door, you need to be prepared to explain in simple terms what blockchain brings to the table and why you’re talking about it in the first place. The technology is complex and difficult to visualize. Without proper care, it can begin to sound suspiciously like wizardry.

Demonstrations Help Clarify Blockchain

Nori worked hard at Reversapalooza to create interactive exercises that demystified some aspects of the customer experience with blockchain-based systems. One gave folks in the room hands-on experience with trading mock carbon removal credits (CRCs), and a second used 10 copies of the Seattle Times, some simple addition, and a 5-dollar bill to illustrate the fundamental steps involved in building a blockchain.

Results were mixed, but any explanation of blockchain must strike a difficult balance between oversimplification and a black hole of technical details. Overall, attendees left the conference knowing more about blockchain than they did when they came into the room.

Blockchain Should Never Be in the Driver’s Seat

I dream of the day when blockchain becomes a means to an end for companies like Nori, and panels devoted to its specifics are no longer necessary. When was the last time you attended a conference with a panel on database mechanics?

Today, companies that use blockchain but neglect to explain it risk appearing like they don’t know what they’re doing. They can’t afford to push it completely into the background. But startups and established players alike must recognize that blockchain, by itself, is not a value proposition. Succeeding in this space requires a clear mission and purpose—a goal where blockchain makes sense as the means to an end.

What Did Reversapalooza Do Right?

Reversapalooza succeeded because Nori kept blockchain in the backseat (or at least in the passenger seat). The event was about reversing climate change and the many processes—behavioral, economic, geological, and scientific—that are necessary to achieve that goal. Within that context, attendees could see the value of a trusted, decentralized ledger that could track CRCs and compare it against the carbon offset markets and other mechanisms that currently exist.

 

A Disruptive Approach to 100% Decarbonisation of the Global Energy System by 2050

— May 8, 2018

Decarbonisation of the global energy system is one of the big challenges society faces today. The Paris Agreement, adopted in 2015, states that efforts should be pursued to limit the temperature increase to 1.5°C above pre-industrial levels. This is a tightening of earlier agreements that put the limit at 2°C.

What Does Such Increased Ambition Mean for the Global Energy System?

The temperature effect of CO2 emissions is not primarily determined by the level of emissions in a future year; rather, it is by the cumulative amount of emissions, or the carbon budget. To stay within the carbon budget, emissions need to be reduced—and fast. If we keep on emitting CO2 at the current pace, the carbon budget to limit the temperature increase to 1.5°C will be exceeded in one or two decades.

What Could a Fast Energy Transformation Look Like?

Population and GDP growth results in an increasing demand for energy services like space heating and cooling, transportation, and materials production. There are several critical levers to constrain emissions against the background of these developments:

  • Ongoing efforts to deliver all energy services in an efficient way
  • Electrifying energy consumption, especially for buildings and transportation
  • Fast penetration of wind and solar in the electricity sector
  • Adopting a range of other renewable energy technologies, from solar heat to electricity-based hydrogen
  • Bioenergy as a fuel source for the manufacturing industry and specific transportation needs and a role for carbon capture and storage (CCS) in specific sectors

By giving preference to options that have high social and political acceptability, Ecofys, a Navigant company, developed a decarbonisation scenario where maximum feasibility is achieved. With strong energy efficiency improvement, this decarbonisation scenario shows it is possible to bring global energy use below current levels to 435 EJ, which is a strong contrast to business as usual growth to about 800 EJ. However, while the total primary energy supply in the scenario is reducing slightly, electricity demand is expected to almost triple. We estimate that all this energy can be supplied from zero-carbon or low carbon energy sources because of the unprecedented scale up of technologies such as solar PV, wind turbines, EVs, and heat pumps.

(Source: Ecofys, a Navigant company)

Despite the global energy system’s rapid reduction of CO2 emissions in our disruptive decarbonisation scenario, cumulative CO2 emissions beyond 2014 are calculated to be 680 billion tonnes, likely exceeding the carbon budget. However, combined with options such as afforestation and agricultural carbon sequestration, it seems possible to stay within a carbon budget compatible with a maximum temperature increase of 1.5°C.

Fast Global Action Is Needed

Fast global action is needed, and the way we live, produce, consume, and dispose of products and services needs to be redesigned to reduce dependence on future negative emissions. An energy system transformation as set out in a recent report by Ecofys, a Navigant company, Energy transition within 1.5°C, is feasible but highly disruptive because it is based on technologies that are already available. Nevertheless, it will influence all players in the energy system due to strong electrification and the increased use of bioenergy. Existing businesses will need to be completely reoriented and new business lines developed to cope with the energy technology requirements of the future.

 

The Need to Balance Ride-Hailing Costs and Benefits

— April 26, 2018

People who frequently use ride-hailing and carsharing services enjoy the flexibility and freedom that comes from operating or owning a car. Others complain about the perceived shift back to personal car use from public transit and increases in traffic congestion.

Perspectives from Texas

Case in point is the city of Austin, Texas, where Uber and Lyft have returned after a 2-year hiatus. According to Automotive News, not everyone in the city was happy to see the services return, with some residents miffed about the increasing congestion. Adding to the fray in Austin is General Motors, which recently brought in a fleet of all-electric Chevrolet Bolts via its Maven Gig rental program. The Bolts are offered to people without a car who want to work for the ride-hailing and delivery services, with drivers paying weekly rental fees. The Bolts provide the benefits of zero-emissions driving, but still add to the number of vehicles on city streets.

Austin was rated as one of the 26 best US cities to be an Uber driver based on analysis of earnings per trip. All of these cities will likely see more ride-hailing traffic in the coming years. According to Navigant Research’s Mobility as a Service report, the number of drivers working for ride-hailing services in North America will grow by 20% annually and surpass 5 million in 2026. The benefits and costs of these services to the cities where they operate will continue to generate debate.

Are Millennials Killing the Personal Vehicle, Too?

There have been several studies on the impact of ride-hailing, including analysis by the Institute of Transportation Studies at the University of California, Davis. According to a recent report, ride-hailing customers report using public buses, light rail, and bicycles less, but actually walked and took trains more. While traffic may be increasing, parking is getting easier as people are parking at destinations less, and many cities are seeing declining rates in car ownership. According to UC Davis data, 9% of millennials who use ride-hailing services disposed of one vehicle in their household, and others have delayed car ownership. As the frequency of using ride-hailing services increases, the likelihood of giving up a car rises, while vehicle miles traveled in personally owned vehicles declines.

Sharing Services Continue to Gain Popularity

Between 2010 and 2015, several of the largest US cities saw declines in vehicle ownership among millennials, including Seattle, Detroit, Washington, DC, New York, and San Francisco. The decreases in vehicle ownership are likely to continue as ride-hailing and carsharing services rise in the coming years.

There are positive repercussions for urban land use with the reduction of vehicle ownership and personally owned vehicle trips. Eliminating parking spots in the urban core frees up spaces for greening cities and other uses that are more aesthetically pleasing than parking. Reduced vehicle ownership will make more spots available in residential areas for those drivers who retain their cars.

Economic Benefits

Ride-hailing services also are good for the economy as customers can freely travel to areas with limited parking, stay out later, and indulge in drinking alcohol knowing that a safe, reliable ride is available in minutes. A recent study from the University of Pennsylvania found a correlation between the presence of Uber and reductions in drunk driving, a safety benefit for all. Another benefit is less costly transportation access for an aging population and people with disabilities. Uber recently announced the UberHealth service, which enables caregivers to book appointments for patients.

Ride-hailing should not be left unchecked to create more traffic problems and reduce use of public transit. That said, the benefits of ride-hailing services for customers and local economies are real.

 

Google Has Reached 100% Renewable Energy, so I’m Issuing a New Challenge

— April 19, 2018

As consumers press companies to be more conscious of their environmental impact and sustainability, corporate procurement of renewable energy has gained momentum around the world. Some 130 companies have signed the RE100 pledge to make their operations run on 100% renewable energy. One of the companies that started this trend was Google.

Google’s First Renewable Steps

In 2010, Google started a journey to replace the electricity it uses with renewable sources by signing its first power purchase agreement (PPA) with a 114 MW wind farm in Iowa.

To ensure that its purchases have a meaningful impact on the environment, Google has followed the concept of additionality, which means that all the electricity it buys is funding new renewable energy projects.

In 2017—2.6 GW over 20 projects and 7 years later—Google announced that it reached its 100% renewables target. This is a massive achievement, especially considering that Google began these plans when grid parity was little more than a dream for wind, and solar energy was a technology that only rich Californians and Germans put on their roofs.

My Challenge to Google

While Google’s achievement should be applauded, I believe it is possible to move that target further afield. It is true that Google is buying all its electricity from renewable sources, but it is unlikely that all the electricity it is using comes from renewable sources. This is because solar and wind, Google’s choices for renewable sources, are both variable, while Google’s electricity demand is not. In other words, there are times and locations when Google must use electricity that comes from traditional sources, while simultaneously the electricity generated from the renewable projects funded via Google’s PPAs is curtailed and lost.

So, here is my challenge to Google (or any company willing to accept it—looking at Apple, Amazon, Microsoft) to move its energy program forward:

  • Work with the 20 projects it has funded to ensure they have onsite storage, which reduces the chance of curtailments and increases impact on the grid. This also means the balancing cost is not passed to other ratepayers.
  • Ensure all energy assets (distributed generation and loads) are part of demand response programs or virtual power plants, which makes the flexibility of these resources open to grid operators.
  • Make sure any new electricity procured is locally generated, and has no impact on the grid (or that the sites at least fulfill bullets 1 and 2 above).
  • Encourage employees to take their own energy consumption choices along the same journey!

Major Companies Should Continue to Set a High Bar

This is not an easy challenge, but it’s also not impossible. It’s probably as difficult as the goal to achieve 100% procurement of renewables seemed in 2010, when Google embarked on this mission. Google addressed these concepts in a white paper released in 2016, but mostly in a future tense. In my opinion, the technologies and regulations to make this possible are already here and are starting to reach scale. Now it is up to Google and other visionary organizations and individuals to make this happen.

 

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