Navigant Research Blog

Drought-Plagued California Looks to Smart Water System

— February 4, 2014

In drought-stricken California, an effective approach for helping people curb their energy consumption has shown similar results in helping them reduce their use of water.  It could also be a forerunner of similar programs in other regions that suffer from chronic water scarcity.

The 1-year pilot was conducted among residents living within East Bay Municipal Utility District’s (EBMUD’s) service territory, which includes Oakland and its surrounding suburbs.  Results from an independent study showed that when participants received information comparing their water consumption to neighborhood averages, usage decreased by 5% on average.

The pilot employed a “behavioral water efficiency” approach that has been used by numerous U.S. electric utilities to encourage customers to reduce consumption.  Opower, for example, uses this behavioral-based approach for energy utilities.  In EBMUD’s case, the technology provider was WaterSmart Software, which applies analytics and behavioral science tools to crunch data and provide consumers with feedback information and tips for cutting consumption.


The 10,000 EBMUD residential customers involved in the pilot received easy-to-comprehend water use reports for their home and compared consumption to similar-sized homes in the nearby area.  There was a control group set up to make sure other factors, like weather or other customer behavior, did not affect the estimated water savings.  It should be noted that the East Bay pilot was the first large-scale implementation of this type of technology by an urban water utility.

The pilot was partially funded by the California Water Foundation, which concluded that this type of behavior-based water use report, if implemented by other water utilities in California, could help meet state requirements to shrink per-capita water use by 20% by 2020.  And with Governor Jerry Brown’s recent declaration of a state of emergency due to drought, wider implementation of this reporting approach could spread rather quickly.

The East Bay study shows that saving water by providing more granular, timely, and actionable consumption data is an approach that can work.  This solution is bound to be used elsewhere in the United States, especially the Southwest and other regions where drought is an ongoing threat.  In a larger context, the pilot strengthens the case for using data analytics to help drive greater efficiency in water systems, as noted in a previous blog and in Navigant Research’s report, Smart Water Networks.  This is not to say upgraded hardware such as smart water meters and leak detecting sensor aren’t helpful, too.  The best practice will be to integrate both big data and smarter equipment to bring greater efficiencies to water systems.


Climate Change Discourse Ignores Immediate Impacts

— February 4, 2014

In President Obama’s State of the Union address, he delivered a passionate statement on climate change: “The debate is settled.  Climate change is a fact.  And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.”

Political discussions on the scientific legitimacy of climate change tend to ignore the enormous short-term consequences of relying on fossil fuels for the majority of our energy consumption.  According to a recent study by the Massachusetts Institute of Technology (MIT), air pollution causes 200,000 premature deaths each year in the United States.  Vehicle emissions were found to be the biggest contributor to these early deaths (53,000), with power generation following closely behind (52,000).  Surprisingly, statistics like these are largely absent in the public discourse on climate change.  Controversies, such as Obama’s ordering the EPA to curb coal power plant emissions, and outdated arguments over the scientific merits of climate change obscure the immediate public health and air pollution impacts of fossil fuels.

Clearing the Air

Perhaps the second most surprising element of the MIT study, behind the sheer amount of pollution-related deaths that occur every year, is that road transportation caused more emissions-related premature deaths than electricity generation.   The fact that cars and trucks tend to travel within more populated areas, thus releasing tailpipe emissions in and around densely populated areas, is a potential explanation.  This is another reason why electric vehicles (EVs) offer so much promise.  With no local vehicle emissions, the increased use of EVs can improve local air quality in urban areas.   An EV emits roughly half the amount of carbon pollution per mile as the average new internal combustion engine (ICE) vehicle, based on the United States’ 2012 electricity mix.  In states with higher percentages of renewable energy generation, such as California, EVs emit only one-quarter as much.  According to Navigant Research’s report Electric Vehicle Market Forecasts, the United States will remain the largest light duty plug-in electric vehicle (PEV) market in the world, with forecast sales of 467,000 vehicles in 2022 (compared to 129,098 for 2014).

This growth will help alleviate dangerous local emissions that contribute to the high level of premature deaths outlined in the MIT report.  Whether you question the science of climate change or not, 200,000 untimely deaths per year from air pollution should be enough to support action on emissions reductions and promote the adoption of clean energy and clean transportation technologies.


Ethanol Growth Lies in Optimization, Not Mandates

— January 31, 2014

The last 2 years have been punishing for the ethanol industry.  In August 2012, the Environmental Protection Agency (EPA) and National Highway Transportation Safety Administration (NHTSA) revised the treatment of flex-fuel vehicles (FFVs) under CAFE standards so that manufacturers will no longer receive credit for FFV sales beginning in 2017 if they cannot provide data proving E85 (gasoline with up to 85% ethanol) use by the FFV.  Then, in November 2013, the EPA proposed a reduction of an estimated 3 billion gallons of biofuels blending quotas for 2014 under the Renewable Fuel Standard (RFS).  Additionally, while the EPA has approved the use of E15 (gasoline with up to 15% ethanol) in model year (MY) 2001 vehicles and newer, major automakers have been hesitant on the fuel, in some cases approving its use only in MY 2012 vehicles and/or newer.  As a result, there are few stations that supply E15.

All of these setbacks mean that the market for ethanol in the United States has peaked at 10% of retail gasoline consumption and has flatlined in recent years.  Additionally, Navigant Research forecasts in a forthcoming report, Biofuels for Transportation Markets, that retail gasoline consumption will fall before 2022 thanks to increasing fuel economy standards and interest in alternative fuel and light duty diesel vehicles.

Despite ethanol’s recent tribulations, though, there are opportunities for sustainable growth.

E30 = $

A report developed by researchers at Oak Ridge National Laboratory (ORNL) finds that the use of E30 (gasoline with up to 30% ethanol) can significantly improve vehicle efficiency in optimized engines, compared to a conventional internal combustion engine fueled with regular gasoline.  Efficiency gains are achieved through the high-octane properties of ethanol, which improve combustion, thus mitigating engine knocking and allowing for greater downsizing of the vehicle engine.

The findings are important because they identify an opportunity for ethanol to become an economic product for end consumers.  To date, E85 has failed to catch on in the United States because the fuel shows no significant improvement in reducing fuel costs due to the lower energy density of ethanol compared to that of straight gasoline.  While there are currently many FFVs on U.S. roads, on average FFV drivers rarely fill up with E85.  Reasons include a lack of available infrastructure and low driver awareness.  However, those reasons would evaporate if the cost of driving on E85 were significantly less than driving on E10.  If the latter were the case, E85 compatibility would be a more valuable selling point for automakers than it is now, consumers would be well aware of the cost savings, and demand for E85 would be robust and drive infrastructure development.

If it’s true that an ethanol blend above 10% can improve fuel efficiency given the right engine, then the cost savings to the end consumer will spur growth in a market that has stagnated.  Realizing this opportunity, though, requires significant buy-in from automakers that would have to develop the optimized engines and the assurance that fuel retailers will have the optimized blends available.  Those factors will likely require government support.


Alarming Energy Headlines Mask Good News

— January 30, 2014

In Davos, Switzerland, the confabbing tycoons at the World Economic Forum spent their last day fretting over climate change.  The irony of the super wealthy flying in their private jets to hang out in a luxurious resort and talk about reducing carbon emissions was, apparently, lost on the attendees.  There’s no question, though, that we are at an apparent turning point in the struggle to limit global climate change over the next 40 years.

Recent headlines out of Brussels shouted that the European Union is essentially abandoning its ambitious clean energy targets.

“The EU’s reputation as a model of environmental responsibility may soon be history,” lamented the German newsweekly Der Spiegel.  “The European Commission wants to forgo ambitious climate protection goals and pave the way for fracking, jeopardizing Germany’s touted energy revolution in the process.”

“A deep and lasting economic slowdown, persistently high prices for renewable energy sources and years of inconclusive international negotiations are giving European officials second thoughts about how aggressively to remake the Continent’s energy-production industries,” reported The New York Times.

The European Commission, the EU’s executive branch, “has lost its moral courage,” Brook Riley, a campaigner at Friends of the Earth, told Reuters.

Not Quite So

Meanwhile, cleantech investment fell in 2013 for the second straight year.  Reports from Bloomberg New Energy Finance, Cleantech Group, and Clean Energy Pipeline all trace the decline, with Bloomberg saying that total investment in smart and renewable energy companies was $254 billion worldwide, down 12% from 2012.  If you were thinking of manning the lifeboats on the clean energy ship, now would seem like a good time.

Luckily, that’s not really the case.  In fact, the alarmist headlines are at odds with the underlying trends and may, in fact, wind up being good news.  The EU, for instance, has almost achieved its carbon emissions reduction goal, set in 2007 as part of the 20-20-20 mandates, of a 20% reduction from 1990 levels by 2020.  Emissions on the Continent today are 18% lower than in 1990 – remarkable achievement by any measure (though reached, in part, because of the continentwide economic slowdown).

What’s more, the current talks are not about scrapping the 20-20-20 targets (which call, in addition to the emissions reductions, for renewables’ share of EU energy consumption to rise to 20% and a 20% improvement in continentwide energy efficiency, both by 2020).  The argument is over what happens after 2020 – and the question is not whether to institute new targets through 2030, but how ambitious and how binding they should be.

In January, the European Parliament passed, with a strong majority, a measure to reduce carbon emissions EU-wide by 40% (per 1990) by 2030.  That figure might be reduced to, say, 35%.  And countries may be given more leeway as to how to get there, with France (which gets most of its power from nuclear plants) and Germany (which is still determined to achieve its ambitious Energiewende, or energy revolution) making deep cuts while, say, Poland and Bulgaria, which are still heavily dependent on coal, progress more slowly.

Hold My Jet

It’s important to remember that the tripod of 20-20-20 includes two legs – energy efficiency and renewables – that are really just avenues to the primary goal: reducing carbon emissions.  If that can be accomplished by moving more of Europe’s coal plants to natural gas, then absolute targets for renewables’ share of the energy mix, for instance, can be more fluid.

Even the cleantech investment slowdown has an upside.  The industry is maturing and major technology players such as Google, which just paid $3.2 billion for Nest, are placing large bets on established companies with existing markets for their products.  Corporate America is rapidly waking up to not only the economic and financial risks of climate change, but also the potential upsides of energy efficiency and cleantech businesses.

Fortune 500 CEOs increasingly “see global warming as a force that contributes to lower gross domestic products, higher food and commodity costs, broken supply chains and increased financial risk,” reports The New York Times – a position “at striking odds with the longstanding argument, advanced by the coal industry and others, that policies to curb carbon emissions are more economically harmful than the impact of climate change.”

At the widest view, the shift to a less carbon-based economy is happening more and more in boardrooms, in city council meetings, and on Main Street – and less in the gilded chambers of diplomats or the posh watering holes of the rich.  That’s a good thing.  And if the plutocrats in Davos can reach some consensus about how to simultaneously promote broad prosperity, advance technology, reduce global inequality, and limit climate change, good for them.  Maybe they could save all that jet fuel and hold next year’s WEF by teleconference.


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