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Cleveland’s Rid-All Urban Farm. (Photo by Brad Masi.)

This past weekend, I traveled to Cleveland to attend the eighth International Public Markets Conference, presented by the Project for Public Spaces. The three-day conference is geared primarily toward practitioners — farmers market managers, food hub facilitators, public policy figures, community advocates — designed as a group-think on how to catalyze urban growth and cohesion through vibrant marketplaces.

Cleveland was a natural choice for this gathering, as some of its most notable economic and cultural nodes revolve around food and agriculture. The city’s publicly owned West Side Market is probably the best known and most established node in the network, consuming several blocks in the up-and-coming Ohio City neighborhood. After 100 years of operation, people still pack into the massive hall each day to grab lunch from one of the prepared-food stalls, ingredients for dinner, baked goods, or fresh produce. It’s a great example of market-as-tourist attraction. Visitors come just to stand in the mezzanine and watch the buzz.

I had been to the West Side Market a couple of years ago, so I was excited to check out what else makes up Cleveland’s food economy. After an opening day of presentations and discussion sessions among the attendees, the second day’s program got us out of our seats and onto tour buses to explore the food hubs of the city and surrounding region.

My tour featured a few rural sites out in Wooster, Ohio, including a farmers market populated in part by the Amish community, and a relatively new member-run cooperative food store called Local Roots, which might be the most hyper-local grocery I’ve seen. The market operates on a “no minimum quantity” policy for sellers, meaning you could bake a batch of cookies and sell them through the store, provided you live nearby and your ingredients are local.

Intermittent rain kept us running back to the bus after each brief visit, but at the end of the day, we finally got a hearty dose of sun, just in time to stand outside and take in the awe-inspiring mountain range of compost piles that lines of edge of Rid-All Urban Farm. Someone in the group raised her hand: “Why is it called ‘Rid-All’?” she asked. “It sounds like a pesticide.”

The farm founders laughed and one, Damien Forshe, answered. She’s right, in a sense. Forshe founded Rid-All Corporation, an extermination company, 15 years ago. But the farm where we’re standing is called Rid-All Green Partnership, so named because Forshe’s company supplied the majority of the funds required to launch this enterprise early last year. “Now,” says Forshe, “Rid-All stands for ‘redeem integrity and determination for all mankind’.”

Forshe and two of his childhood friends, Randell McShepard and Keymah Durden, co-founded this farm in the Kinsman neighborhood, not far from where they grew up. When they came upon the site, they say, the garbage that had been dumped there towered so high it was impossible to see the train that passes every few minutes up the slope nearby.

The compost piles at Rid-All. (Photo by Sarah Rich.)

Now, instead of trash heaps, there are compost mounds the size of small buildings, maintained in such balance that all you can smell when the breeze picks up are wood chips. Following in the model of Will Allen’s Growing Power farm in Milwaukee, Wis., Rid-All uses red wiggler worms to break down the tens of thousands of pounds of municipal food waste and other organic matter that gets delivered here each week. The compost they produce is the farm’s dominant source of revenue.

But despite their astonishing size, the piles are not the main visual attraction here. Rid-All’s urban acre holds several enormous hoop houses and greenhouses, inside of which the farmers are experimenting with numerous agricultural innovations. We’re escorted into one structure filled with two-tier aquaponic tanks, which hold tilapia on the bottom, and sprout tomatoes on top. The closed-loop system uses the fish waste to fertilize the plants, and the plants to clean the water.

This is another process being employed at Will Allen’s farm, learned by the Cleveland team during a five-month training they underwent at Growing Power. Rid-All is now one of Allen’s official regional outreach training centers, and it is part of their duty as partners to continue pushing the envelope on what’s possible on a city lot.

The farmers open another hoophouse for us to check out, but the insulation is so effective that it’s too stifling hot to stand inside. We stand instead by a rain catchment pond covered with an electric-green layer of duckweed, the primary source of food for the tilapia inside.

Perhaps the most amazing thing about the Rid-All operation is that 14 months ago, none of this was here. The founders raised the funds, cleared the land, built the structures, and cultivated all of this food in just over a year. Now the site is the anchor for what will soon be a 26-acre Urban Agriculture Innovation Zone in this section of Cleveland known as the Forgotten Triangle.

The founders of Rid-All and the lead developer, Timothy Tramble, envision the Innovation Zone as an engine for job creation and youth education. One of their great tools for reaching the potential beneficiaries of those efforts is a 12-part series of comic books illustrated by a young Cleveland artist named Martinez Garcias, who was once an employee of Forshe’s extermination operation. Garcias created Brink City: Green in the Ghetto as a platform for addressing urban issues and youth struggles. In it, the dynamic leaders of Rid-All Green Partnerships become characters, delivering social and environmental justice to their community. It’s a fantastical depiction, but the narrative isn’t fictional at all.

Filed under: Article, Cities, Food

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By Rachel Cernansky

Does Grist food news knock off your socks?
Leave a tip in our farmbox.
(Why are we rhyming in phrases so terse?
Grist’s been cursed by verse!)

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When it comes to giving more people access to fresh, healthy food, the United States Department of Agriculture (USDA) has turned a great deal of its focus in recent years toward farmers markets. And, more specifically, opening farmers markets up to Electronic Benefit Transfer (EBT) or  “food stamp” users.

In fact, the agency reports, spending at farmers markets under the Supplemental Nutrition Assistance Program (SNAP) has already jumped by 400 percent since 2008 — and that’s with less than a quarter of the country’s 7,000 markets participating in the program.

“That’s a huge transformation in the farmers market world, in terms of people being able to feel like they’re invited to the party,” USDA deputy secretary Kathleen Merrigan said in a phone interview.

Expanding SNAP at farmers markets is part of the agency’s broader approach to increasing healthy food access for low-income communities that lack adequate grocery stores and public transportation — areas known (if sometimes controversially so) as food deserts. So when this year’s budget talks came around, the USDA requested $4 million to expand the effort. (Cost is a major reason why more farmers markets don’t already participate: SNAP benefits are redeemed through the EBT system, which relies on wireless technology, and that doesn’t come free.)

Today, the USDA announced it will begin to allocate funds to states with the greatest numbers of EBT-less farmers markets. The states will then decide how best to spend the money for each market: Some may purchase just the wireless equipment, others may buy the equipment and hire someone to manage it, or make other investments that will help manage the program effectively.

Because of that variation, it’s not clear how many more markets will now start redeeming SNAP benefits, but Merrigan estimates that the machines could reach an additional 4,000 farmers markets.

She hopes those markets will help break some of the stereotypes that have developed around eating and cooking with fresh, local fruits and vegetables.

“Twenty years ago or more, people thought this was something for the elite. Clearly that’s not the case, and the expansion of farmers markets with EBT has really proven that,” Merrigan added. And she’s optimistic that more time spent at these markets can lead to other healthy lifestyle shifts as well. “Hopefully some of those people are going to farmers markets on their bikes and walking,” she said.

That said, use of SNAP at farmers markets isn’t going to be the solution that solves all the country’s food problems, and Merrigan recognizes that.

“There’s no silver bullet,” she added.

And because someone will be able to buy local kale or fiddlehead ferns using EBT doesn’t mean they’re going to have the time or experience to cook them. For that reason, Merrigan emphasizes SNAP as a piece of a broader, multi-pronged approach, which includes: “getting access to the food, figuring out what to do with it, and then understanding why it’s important.”

But while this effort by the USDA won’t produce miracles, it will likely give more SNAP users — many of whom do cook at home — quicker, easier access to fresh produce. And that’s no small part of the battle. As Merrigan said, “Getting people to those markets is inviting them into really healthy eating.”

Filed under: Food, Locavore, Sustainable Food

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EnerNOC, Inc. /Boston, MA

EnerNOC, a leading provider of demand response (DR) and energy efficiency (EE) solutions, has an immediate need for an Energy Markets (EM) Team Lead to join our world-class Financial Operations organization. As an EM Team Lead, your primary mission will be to lead a small team managing DR portfolios and executing all activities related to EnerNOC’s participation in our ISO-NE economic and emergency DR programs.

The ideal candidate will have excellent knowledge of DR, portfolio management, capacity market strategies, and financial operations. Day-to-day responsibilities will require the EM Team Lead to successfully conduct market planning, drive program improvements, understand all program rules, participate in market development, define system enhancements, and train EM team members on tools and processes. Additionally, the EM Team Lead must possess excellent customer service skills, strong problem solving capabilities, solid analytical experience, as well as the ability to thrive in a flexible, fast-paced, team environment under time-critical, stressful situations.

Key Responsibilities:

– Oversee participation in ISO-NE Forward Capacity Market (FCM) and other New England based DR programs

– Manage FCM auction process; from developing strategy to gaining approval from senior management and executing on the plan

– Ensure EnerNOC is in compliance with all ISO-NE Market Rules

– Perform analysis to inform P&L and financial forecasts for ISO-NE DR programs

– Coordinate with Regulatory Affairs on all relevant regulatory issues that impact participation in ISO-NE

– Refine processes for asset registration, reporting, pre-dispatch readiness, and post-dispatch reconciliation

– Coordinate with ISO-NE and internal teams to ensure exceptional data quality for all ISO-NE assets

– Communicate regularly with New England Sales and Operations leadership on various issues

– Drive collaborative efforts with IT, Software Engineering, and Product Management to ensure existing/emerging technical requirements are always met for participating in market programs

– Develop DR provider targeting, outreach, and training strategies to increase/improve program participation

– Report monthly settlement data and coordinate with Finance to ensure timely customer payments and financial settlement

– Develop comprehensive reports and dashboards that track the status of assets in ISO-NE

– Collaborate with EM Market Team Leads and Specialists operating in other DR programs to ensure consistent and scalable EM operations across all DR programs

– Manage one to two Energy Markets Associates and/or Specialists to meet all key responsibilities (delegate tasks, manage day-to-day activities, conduct performance reviews, etc.)

Finally, the EM Team Lead will become an expert in EnerNOC’s core operational processes and will develop a deep understanding of the issues surrounding DR portfolio management, load curtailment, emergency backup generation, and DR programs across the world.

Required Qualifications:

– BA/BS with a problem solving, technical, and/or financial focus

– 3 – 7 years experience in the energy or electricity industry

– 1 – 2 years experience managing a small team

– Desire to learn new technologies

– High level of proficiency in Microsoft Excel

– Excellent oral and written communications skills

– Excellent problem-solving and organizational skills

– Excellent qualitative and quantitative problem solving capability

– Creative thinking skills and demonstrated ability to take the initiative

– Self-motivation and the ability to work in a fast paced, forward moving environment

Desired Qualifications:

– MBA or Masters degree with a financial focus

– Experience operating in ISO-NE DR programs

– Experience with Salesforce.com or other CRM system

– Experience with financial portfolio management

– Experience with data analytics/access tools such as Visual Basic, SQL, Microsoft Access, SPSS, and/or R

Please apply directly using the following link:
http://sj.tbe.taleo.net/…C&cws=1&rid=821

About EnerNOC:

EnerNOC unlocks the full value of energy management for our utility and commercial, institutional, and industrial (C&I) customers by reducing real-time demand for electricity, increasing energy efficiency, improving energy supply transparency in competitive markets, and mitigating emissions. We accomplish this by delivering world-class energy management applications including DemandSMARTâ„¢, comprehensive demand response; EfficiencySMARTâ„¢, data-driven energy efficiency; SupplySMARTâ„¢, energy price and risk management; and CarbonSMARTâ„¢, enterprise carbon management. Our Energy Network Operations Center (EnerNOC) supports these applications across thousands of C&I customer sites throughout the world. Using our C&I customers’ energy usage flexibility, we make capacity, energy, ancillary services, and carbon products available to grid operators and our more than 100 utility customers on demand as a cost-effective alternative to traditional power generation, transmission, and distribution. For more information, visit www.enernoc.com. EnerNOC is an Equal Opportunity Employer.

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By Gernot Wagner

Naomi Klein’s interview in Grist this week is smart, insightful, and half right. Her assessment of the obstacles to solving climate change — from ideology to misplaced faith in green consumerism — are exactly right.  And she’s right that fixing this problem means changing how the world does business.

But Klein is wrong in her more serious assertion, first articulated in her “Capitalism vs. the Climate” article in The Nation, that we can save the planet only if we abandon capitalism:

Responding to climate change requires that we break every rule in the free-market playbook and that we do so with great urgency.

The deeper problem is not that our markets are too free; it’s that they are woefully rigged in favor of pollution. Which is also the main reason the Earth finds itself in peril. (I’m pretty sure Klein would agree with that point.)

Think of it this way: As the system is set up now, my 1-year-old son has less right to grow up breathing clean air than to get his driver’s license and join the polluting masses 15 years hence. The reason is simply that markets are constructed so that few have to pay for the pollution they produce.

Every time I open my fridge, turn on the heat, hop in a car (or on a train), or do much of anything, someone else incurs the costs for the pollution my actions produce.

When I fly from New York to Austria to see my parents, my flight produces about one ton of carbon dioxide emissions. That ton causes at least $20 worth of damage to the atmosphere. But I don’t pay a penny of that. Every one of the planet’s 7 billion inhabitants pays a tiny fraction of a penny for my seeing my parents.

Klein offers two solutions. The first calls for a radical rethinking of how we lead our lives, opting for a more leisurely path. A lovely thought. I’d much rather spend weeks at a time visiting my parents in Vienna and in-laws in Bangkok (and take leisurely boat rides to get there) than embark on multiple, jetlag-producing “vacations.”

So yes, let’s create a culture where it’s OK for everyone to take off a couple months in the summer, and perhaps another one around the winter holidays. It works for the Swedes, why not the rest of us?

But Klein realizes this sort of cultural change won’t happen overnight and wouldn’t by itself stabilize the climate. Which leads her to call for “taxing the rich and filthy.”

Nice turn of phrase, but, unfortunately, it confuses the issue. It’s really about taxing the filthy. It’s not about taxing anyone for the sake of sticking it to the man. It’s about asking everyone to pay for their own pollution instead of shoving those costs onto society.

I’d gladly pay the $20 extra for my flight to see my parents. But Klein argues, correctly, that nothing will be accomplished if the only people paying are do-gooders who want to feel better about their carbon footprint. If we want to affect the planet, everyone has to pay the cost of their pollution. Only then will we truly level the playing field.

That all seems like wishful thinking, but it can be achieved. The European Union, starting Jan. 1 of this year, put a carbon price on every flight to and from the E.U.

The program is starting modestly; my flight to see my parents might cost around $2 extra, not the $20 or more that would make up for my pollution. Still, it’s a start. And keep in mind that the E.U.’s system covers a third of all miles flown globally. That’s no longer a bunch of greens spending extra on their organically sourced lettuce. That’s change on a scale the planet notices.

Europe, of course, is not alone. California will soon have the world’s most comprehensive cap-and-trade system limiting global-warming pollution. Australia just passed a carbon price. British Columbia has had one in place since 2008. India has a coal tax. China is pursuing carbon trading as part of its 12th five-year plan. It seems only Washington is falling further and further behind.

All of these are the kinds of changes that work with, not against, market forces and human desires — desires that capture the imagination of billions and make many of us want to buy the latest iAnything or fly on that Airbus 380.

My real argument with Klein is that in trying to escape capitalism, she is trying to evade human nature. We could and should work to make human desires less material. Some of the world’s rich may well be in a sufficiently comfortable position to be able to lead lives in sheltered solitude on their organic farms upstate, but I’m afraid that’s a losing proposition for the globe. (Just look at the density of iPads at any environmentalists’ gathering to know that limiting your own desires isn’t quite as easy as talking about others doing the same.)

It’s not about a full-scale assault on human desires, capitalism, and free markets. That’s another agenda and another debate. It’s about freeing markets, and in the process freeing all of us to do the right thing. It doesn’t get more ethical than that.

Filed under: Article, Business & Technology, Climate Change

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Rainforest Alliance/Lima, Lima, Peru

Title: Markets Specialist, Peru – TREES Program, Sustainable Forestry Division
Reports to: TREES Program Director, Sustainable Forestry Division
Location: Lima, Peru

The Rainforest Alliance (RA) is an international nonprofit organization that works to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behavior. Based in New York City, with offices throughout the United States and worldwide, the Rainforest Alliance works with people whose livelihoods depend on the land, helping them transform the way they grow food, harvest wood and host travelers.

The Rainforest Alliance’s TREES (TRaining, Extension, Enterprises and Sourcing) program promotes sustainable livelihoods and protects biodiversity in forest-dependent communities. We work to enhance the competitiveness of community and indigenous forestry enterprises by building business skills, increasing efficiencies, and facilitating investment in value-added processing, expanding income opportunities from wood and non-wood forest products and environmental services, and increasing access to local and global markets through Forest Stewardship Council (FSC) certification.

Position Summary:
The Markets Specialist will lead TREES program activities in Peru related to markets and marketing of products and services produced by small and medium enterprises (SME), communities and indigenous forest operations assisted by Rainforest Alliance. S/he will forge commercial alliances by employing a supply chain, market-demand approach to add value to forestry production, open access to finance for growing partner operations and create new linkages with buyers interested in sourcing products and services from sustainably managed forests. A particular focus will be on growing national, regional and international market demand for certified products produced by partner organizations.

Responsibilities:
• Prepare periodic work plans and budgets for marketing and business development activities for forest SME;
• Ensure achievement of project targets in the areas of sales, business skills development, product diversification, new market linkages and access to finance;
• Develop and implement marketing strategies for partner forest products (both timber and non timber) and environmental services;
• Provide support to forest partners in the areas of production efficiency, quality control, contracting, administration, business organization and planning, market strategy development and access to market information and buyers;
• Coordinate with Rainforest Alliance marketing counterparts in the region and at Rainforest Alliance headquarters to identify potential linkages with buyers and new marketing opportunities;
• Forge relations with national and international buyers and engage interested parties to develop commercial alliances with SMEs;
• Build market demand for certified forest products, especially in domestic markets for lower grade wood and non-traditional species (lesser known species);
• Assist buyers with supply chain analyses, procurement policy development, sourcing action planning, and creating and maintaining business relationships that favor partner producers;
• Create and develop alliances with other agencies and projects working in forest products and payment for environmental services (i.e. WWF Global Forest Trade Network, ADEX, etc.);
• Coordinate technical inputs to periodic reports on marketing activities and achievements in the field;
• Oversee planning, logistics and reporting on technical consultancies and other inputs related to marketing activities; and
• Other tasks as assigned.

Qualifications:
• Bachelors Degree in Forest Administration, Small Business Administration or related field required; Masters Degree in Business Administration, Marketing, Finance or related field preferred;
• Minimum 7 years of experience in the forest sector with at least 3 years experience in marketing in the private forest sector and preferably with at least one year experience in environmental services projects (i.e. forest carbon);
• Knowledge of non-timber forest products, environmental services and marketing of lesser-known species in the context of SMEs a major plus;
• Experience in development of forestry SMEs and community based enterprises; doing so in an international context is major plus;
• Excellent organizational skills, ability to work independently as well as in an interdisciplinary team environment;
• Experience in international and national markets and public sector procurement policies for sustainably produced forest products is highly desirable;
• Ability to prioritize and manage multiple tasks with a strong attention to detail, against targets and deadlines set in periodic operational plans;
• Ability to formulate and write technical inputs for projects (planning, funding, budgets, management, evaluation, and monitoring) and to negotiate commercial alliances with the community-based enterprises and national and international buyers;
• Strong computer skills (Excel, Word, Outlook, and PowerPoint);
• Excellent written and verbal communication skills in Spanish; proficiency in English preferred or required;
• Strong teamwork skills, ability to work in multi-cultural settings and capacity to engage effectively with a wide range of actors – from indigenous communities to high-level government partners to private sector players and technical specialists; and
• Willingness and ability to travel 40% of the time, nationally and internationally.

Only candidates authorized to work in Peru will be considered for this role.

Salary: Commensurate with experience.

To apply:
Send resume, cover letter and salary history to Human Resources, Rainforest Alliance, Lima, Peru; email: perupersonnel@ra.org

The Rainforest Alliance is an equal opportunity employer.

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by David Roberts.

Earlier this month, Nicholas Stern — respected U.K. economist and author of the famed Stern Review on the Economics of Climate Change — cast a spotlight on what he calls a “profound contradiction at the heart of climate change policy.”

On one side, the world’s governments have pledged to hold temperature rise to 2 degrees C (3.6 degrees F). To have even a 50/50 shot at meeting that target, humanity has a “carbon budget” of about 1,400 billion tonnes of carbon dioxide between now and 2050. The more we exceed that budget, the more the 2 degrees target slips out of reach. Here’s the thing, though: The world’s proven fossil fuel reserves, if burned, would create about 2.8 trillion tonnes of CO2, double that carbon budget. If countries are serious about 2 degrees, they must be planning to leave a lot of fossil fuels in the ground. Right?

On the other side, however, the world’s top fossil fuel companies are valued at some $7.42 trillion (including the top 100 listed coal companies and the top 100 listed oil and gas companies). They are valued at this level because of proven fossil fuel reserves to which they have access. In other words, their valuation carries the implicit assumption that they will burn the fossil fuels available to them.

Markets are assuming that fossil fuel companies will burn the fossil fuels that the world’s governments have, at least implicitly, said they cannot burn. That’s the “profound contradiction.” So what are markets thinking?

Well, either they think a full-fledged carbon capture and sequestration solution is going to spring into being overnight (spoiler: they don’t think that) or they just don’t think countries are serious about climate change. They think it’s going to be business as usual. “If this is the case,” says Stern …

… the resulting rise in atmospheric concentrations could eventually mean, with a substantial probability, global warming of 5 degrees or more, to temperatures not seen on Earth for more than 30m years. That would probably transform where and how people could live and lead to the migration of hundreds of millions, as well as to conflict and severe economic decline.

Yet markets don’t seem to be pricing those risks either! In fact, global markets don’t seem to be taking climate change or climate policy seriously. Even if you don’t care about that ecologically, it’s alarming economically. It’s a huge, unacknowledged, unhedged risk, and if we’ve learned anything in the past few years, it’s that having huge, unacknowledged risks at the core of your economy is ill-advised.

I was thinking about this “profound contradiction” as I looked over Black & Veatch’s latest “Energy Market Perspective” (they update it every six months), which contains a variety of predictions and projections about U.S. electricity markets. It’s a great example of what Stern is talking about, in microcosm. Here’s the core finding (keep in mind, this graph shows power produced — megwatt-hours — not capacity):

Renewables more than double their contribution over the next 25 years, mainly due to state renewable portfolio standards, but the big story is the shift from coal to gas, gas, gas. Coal declines from 41 to 16 percent; gas goes from 24 to 44 percent.

Here’s the impact on CO2 emissions (chart is a bit confusing: the green area is the CO2 eliminated by reductions; the other colors are regions of the electric grid):

Emissions decline, mainly due to a big wave of coal-plant retirements around 2020, but nothing like the amount that would be required under the carbon budget necessary to give the world a chance at 2 degrees. (After all, for large-scale reductions, electricity is central.)

To be sure, there are economic assumptions in B&V’s projections that could be disputed. They have natural gas prices staying low and stable all the way out to 2036, only reaching the highs of the early 2000s after 2030. But with demand rising through that whole period, there are reasons to expect far more volatility than that (see here and here). B&V also has wind deployment falling off after today’s state RPSs are satisfied, but I strongly suspect that underestimates both what states will do in the intervening years and wind’s increasing competitiveness.

But never mind all that. The core assumption, the one B&V shares with most analysts, is about policy. It is simply this: The U.S. is not going to do its part in a global effort to hit 2 degrees.

They don’t assume there will be no climate policy. They include state RPSs and even a carbon price starting in 2020. But as the results show, that level of policy is woefully inadequate.

It’s not that the U.S. electricity system can’t accommodate the level of changes necessary. Amory Lovins’ new book Reinventing Fire shows how to transform the U.S. electricity system at a profit. Or check out Michael Moynihan’s Electricity 2.0. Plenty of other analysts have charted out a course that U.S. policymakers could chart if they got serious. It’s just that mainstream analysts don’t expect them to.

And yet we do nothing to prepare for the future that inaction is going to bring us! It’s a widespread and increasingly glaring case of cognitive dissonance in the institutions and practices at the center of the modern global economy. One way or the other, it’s going to resolve itself, and I fear the results will not be pretty.

Related Links:

The U.S. electricity mix in 20 years: A prediction

Why electricity markets will never be (totally) free

The doctor and the life coach: A question for Andy Revkin

View full post on Grist.org – the latest from Grist

by Sean Casten.

Over the past few years, the U.S. electricity grid has begun a massive, underappreciated, and largely unintentional transition away from coal to natural gas. Because nobody decided on a shift to gas, or directed such a shift, many people have mistaken the transition for the outcome of a “free market.” It’s an easy mistake to make, since electricity markets do bear some superficial resemblance to competitive markets; we have spot prices, liquid markets, and no central planner telling us what to do.

However, the shifting power mix derives much more from regulatory choices than from markets. (For that reason,  future allocation decisions are much more predictable than we might care to admit.)  Moreover, we can reasonably assume that these extra-market forces will continue to play a critical role in asset deployment.

That stands in direct contrast to many of the claims of free-market advocates who assert that the current grid mix is a response to the deregulation of the 1990s.  I’ll address that in my next post, but first I want to address the core contradiction at the heart of “free electricity markets.”

First off, I should be clear: further deregulation of electricity markets is a good and necessary thing.  It remains far too difficult for electricity consumers and (unregulated) producers to independently enter into contracts with one another, and far too many of the services needed to ensure reliable, clean energy supplies are paid for via cross-subsidization rather than direct pricing.  It’s also worth noting that “deregulation” is not a synonym for “anarchy.”  Market oversight, contract law, and consumer protection agencies are all critical features of a competitive market.

However, full and total deregulation of electricity markets is probably impossible, and certainly amoral.

Consider, first, that the “last mile” of the distribution grid is never going to be subject to competition.  Someone needs to pay for the construction and maintenance of that grid in response to shifting patterns of generation and demand, but it can never be subject to competitive discipline.  Setting aside the question of whether we want to have a spiderweb of competing wires, an existing distribution infrastructure is a near-insurmountable barrier to market entry. As a practical matter, that means that a big chunk of the system must secure investment and be operated independently of market forces.

Beyond the practical problems, though, consider the moral choices implicit in a truly competitive market.  If supply and demand are the only determinants of price, then economic signals can curtail supply—Apple is under no obligation to sell you an iPod at a price you can afford. But few Americans would tolerate a world where hospitals could have their electricity curtailed when prices rise, nor one in which rural customers are forced to choose between relocation and electricity access.

As long as we find those possibilities morally objectionable, we have to accept that our electric system will include supply mandates, price caps, and centralized decisionmaking, which are inevitably in tension with perfectly efficient market operation.

That’s economically troubling, but it’s worth noting that the same challenges apply to lots of other public services.  Neither the police force nor the highway department would be more efficient if they were forced to fund their operations out of revenue from competitively provided services.  That’s not to say those agencies aren’t prone to waste and inefficiency—just that a market wouldn’t necessarily represent a better alternative.

The distinction is that the police and highway departments have never been run as for-profit enterprises, while the electric grid has.  So the problem is not that the electricity grid would be improved if fully deregulated, but rather that parts of the electric system warrant full deregulation, while other parts would be better suited to fully regulated economic models.

For example, I have never heard a good reason why profit-seeking behavior by regulated monopolies leads to anything other than economic rents, raising the total cost of power.  The ability to seek uncapped profits in fully competitive markets where failure leads to insolvency is a good thing—but only if failure is punished.

So we should continue our quest for market efficiency in electric markets.  But we should also accept that certain parts of the system are never going to be subject to market forces; a certain level of inefficiency is inevitable.  The mix of assets on the grid at any given time will always reflect a combination of market and regulatory forces, and some degree of dumb investment will always result.  When that happens, we should try to fix the underlying regulatory problem—and never tolerate the lazy economist who confuses the existence of markets with their perfection.

Related Links:

The US Generation Mix – a 20 Year Prediction

Here comes the sun – the chart Paul Krugman left out

Group purchase gets residential solar to grid parity in Los Angeles

View full post on Grist.org – the latest from Grist

by Tom Laskawy.

The USDA released its latest Farmers Market Survey last week, showing 7,175 farmers markets across the country, up 17 percent from last year. This news led USDA Deputy Secretary Kathleen Merrigan to declare:

The growth in farmers markets is a sign that the local and regional food system is robust and thriving. More farmers markets mean more opportunities for small and midsize farmers—especially beginning farmers—to diversify their farms, sell their products, and grow their businesses. More farmers markets mean more local economic stimulation to more communities which, in turn, mean more job opportunities. More farmers markets mean more access to fresh, healthy, and local food.

Providing support to that argument is a new report from the Union of Concerned Scientists called “Market Forces: Creating Jobs through Public Investment in Local and Regional Food Systems.” It argues that farmers markets and—more significantly—“the local and regional food systems behind them” can be a significant source of job growth with minimal investment.

The report is actually about far more than farmers markets. Report author Jeffrey O’Hara uses farmers markets as a proxy for the whole concept of local and regional distribution of food. And it turns out that, with proper support, growing and distributing fruit and vegetables either directly to consumers or through regional food hubs can represent a real job engine for both rural and urban areas.

The report suggests that government support for new and struggling farmers markets is particularly effective. It states that “modest public funding for 100 to 500 otherwise-unsuccessful farmers markets a year could create as many as 13,500 jobs over a five-year period.” But that’s a floor for job growth rather than a ceiling. Just as significant is support for other local-food institutions such as food hubs and farm-to-school programs—indeed, these kinds of initiatives are what will allow local food systems to scale. More ambitiously, the report also calls for an expansion of farm credit availability to small farmers and changes in the federal crop insurance program to include more “whole farm” coverage rather than the current system which is focused on commodity crops such as corn, wheat, soy, and cotton.

The report also highlights the effectiveness of the USDA’s Know Your Farmer, Know Your Food (KYF2) program, which is a clearinghouse for the USDA efforts on farmers markets, food hubs, and farm-to-school programs. While it’s nice to think that KYF2 could represent the vanguard in a new wave of agricultural job growth, note that the House GOP has already targeted KYF2 for elimination. And I somehow doubt that the Union of Concerned Scientists will do much to change their minds.

In fact, the best option for growing the local and regional food system may be through “locavesting,” or, as Fast Company describes it, “the movement to rebuild sustainable communities by investing in businesses within 50 miles of where you live.” Like farmers markets, locavesting is a back-to-the-future trend, as Amy Cortese, former BusinessWeek editor and author of a book on the subject, explains:

From the earliest days of the country, investments were local. There were informal networks of investors and merchants, and that’s how industries were built, how regions prospered, and local stock exchanges turbocharged that. But since the 1930s when our securities regulations were largely put into place, it’s gone in a different direction. After the Great Depression they created laws that governed how you could invest and trade. That had the unintended consequence of hampering a lot of local investment.

But now a new wave of investors are turning their attention back to Main Street. And appropriately enough, one of Cortese’s prime examples of successful locavesting is Hardwick, Vt., known as “the town that food saved”:

It started when the area’s new generation of farmers and entrepreneurs began getting together to help each other work through business issues. Many of them, such as Tom Stearns of High Mowing Seeds and Pete Johnson of Pete’s Greens, were experiencing rapid growth and would run into cash flow problems, so they began lending money to each other to get through lean times. Around 2005, Stearns raised $1.1 million from a group of (accredited) local investors, all within 50 miles. Other community investments followed. Claire’s Restaurant, which showcases food grown or raised by the area’s farmers, sold prepaid “food coupons” to 50 residents for $1,000 apiece, which entitled them to $25 off a meal once a month for four years. It’s sort of modern day barn raising. All of this mutual support and reinforcement has attracted more entrepreneurs to Hardwick, like the Vermont Food Venture Center, a shared use facility for food producers and startups, which has relocated to Hardwick from Burlington to be part of the action. In the last three years, while most of the country was struggling with unemployment, Hardwick created 100 food and agriculture-related jobs, increasing local jobs by 25 percent.

Now, Hardwick is going through growing pains, as this recent NPR report documented, but that’s a far cry from failing, and it’s still outgrowing many regions in the Northeast.

[UPDATED:] In all my excitement, I neglected to point out the main irony in all this: That the development of industrial agriculture has been as much about job destruction as it has been about increases in productivity. Most of the techniques of intensive, mechanized, chemical-based food production have ended up displacing workers. In some ways, this has been a positive change since much of farmwork is backbreaking stuff; it’s easy to sit at my keyboard and write a paean to “honest manual labor.” At the same time, much of this displacement has been to what might be considered management positions—owners and operators of farms. Advocates for local food systems (including the USDA folks behind KYF2) understand all this very well—but it’s nice to see a comprehensive look at the way these kinds of reforms can undo some of the job destruction damage.

In the end, one thing is clear with every passing day and every sign of further intransigence from a Republican Party dedicated to halting American progress on any and all fronts: It will be up to Main Street itself, not Wall Street or Capitol Hill, to figure out a way to make local markets grow. The good news is that the numbers—both people and profits—are turning out to be on our side.

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by Robert Stavins.

Cap-and-trade has been demonized by conservatives as part of an effective strategy to stop climate legislation from moving forward in the U.S. Congress. As I wrote in my previous blog post (“Beware of Scorched-Earth Strategies in Climate Debates,” July 27, 2010), this unfortunate tarnishing of market-based instruments for environmental protection will come back to haunt conservatives and liberals alike when it becomes politically difficult to use the power of the marketplace to reduce business costs in the pursuit of a wide variety of environmental objectives.

Cap-and-trade has been vilified as a national energy tax, an elaborate Ponzi scheme, and a giveaway to corporate polluters. The fact that none of these attacks are factually correct has not seemed to reduce their political effectiveness. This is one element of the poisonous atmosphere which has come to dominate so much of national political discourse, at least in this election year.

When Senate leaders decided they could not assemble the sixty votes necessary to cut-off debate on meaningful climate legislation, they pulled nationwide, economy-wide cap-and-trade off the table, quite possibly until after a new Congress is seated in January of 2013. But when serious attention is again given to meaningful national climate policy, as it surely will be, consideration will inevitably include carbon-pricing, whether in the form of carbon taxes or cap-and-trade, because these approaches have tremendous advantages over the alternatives (“The Real Options for U.S. Climate Policy,” June 23rd, 2010).

Therefore, it is important to set the record straight, and respond to at least some of the attacks that have been made on cap-and-trade specifically and carbon-pricing broadly. That is the fundamental purpose of an Issue Brief Dr. Janet Peace and I have written. Our report, “In Brief: Meaningful and Cost Effective Climate Policy: The Case for Cap and Trade,” was published by the Pew Center on Global Climate Change in June, 2010. In today’s blog post, I will highlight just a few of our findings.

Questions and concerns

While the justification for putting a price on carbon emissions seems straightforward to most policy analysts, some of the public and even some policy makers have questioned whether creating a market for greenhouse gas (GHG) reductions would be a cure worse than the disease itself:

Why employ market-based approaches to GHG emission reductions, when markets are subject to manipulation?
Would a market-based approach to reducing greenhouse gas emissions be a corporate handout?
Can markets be trusted to reduce emissions?
Will a market-based approach, such as cap-and-trade, be too costly?
Are other approaches likely to be more effective and less complicated?

In our Pew Center report, Janet Peace and I respond to all of these questions, but in today’s blog post I will highlight our response just to the first question. For the full and complete story, I urge readers to see the original report, which can be downloaded freely from the Pew Center’s web site.

Why create a market for GHG emissions, when markets – in general – are subject to manipulation and have failed terribly?

With the U.S. economy experiencing its worst recession since the Great Depression, amidst corporate scandals, pyramid schemes, and a series of government bailouts, some members of the public as well as elected officials have come to question the ability of markets to perform their basic functions. Despite the past successes of market mechanisms to address environmental problems such as acid rain, leaded gasoline, and stratospheric ozone depletion, this growing distrust of markets has led some to question whether market-based approaches are appropriate instruments to help tackle the exceptionally challenging problem of global climate change.

The storyline goes roughly like this: establishing a “carbon market” for greenhouse gas emissions opens the door for financial intermediaries – banks and brokers – to be involved. Since we know that they cannot be trusted, and only care about making profits (and not about reducing emissions), how could any approach that involves them be part of an effective solution?

In reality, of course, our recent economic turmoil does not mean that “markets” in any general sense do not work; only that markets require appropriate oversight. Our economy fundamentally is a market-based system, but oversight – including, where appropriate, effective rules and regulations – can be essential to ensure transparency and prevent manipulation.

With appropriate rules and oversight, markets have been shown to work exceptionally well to address environmental problems. They provide key flexibility to regulated entities to adopt least-cost approaches to emission reductions, while providing powerful incentives for technological innovation and diffusion, which serve to reduce costs over time. Real world experiences with using market-based instruments for environmental protection include CFC trading under the Montreal Protocol (to protect the ozone layer); SO2 allowance trading under the U.S. Clean Air Act Amendments of 1990 (to curb acid rain); NOx trading (to control regional smog in the eastern U.S.); and eliminating lead from gasoline in the 1980s.

Studies that have evaluated the performance of these market-based approaches to environmental protection have found that they have achieved their environmental objectives and have done so at lower cost than conventional, command-and-control approaches. Estimates of cost savings range from 7 percent to 96 percent, with more than half of studies showing that market-based programs cut the cost of regulation by well over 50% compared with command-and-control options. For example, the SO2 allowance trading program resulted in 33 percent cost savings — on the order of $1 billion annually, while reducing power-sector emissions from 15.7 million tons in 1990 to 7.6 million tons million tons in 2008. The phase-down of leaded gasoline in the 1980s, which employed trading of environmental credits, was also successful in meeting its environmental targets, while yielding cost savings of about $250 million per year.

The evidence is incontrovertible – market-based approach to environmental protection can work, effectively achieving environmental targets and keeping costs to a minimum. These approaches are not deregulation, but reformed and improved regulation. And like all markets, these environmental markets need rules and oversight.

A real and pressing problem

The fundamental reason why we face the threat of global climate change is that there is no price or cost for emitting greenhouse gases. In the absence of a price, the damages associated with a changing climate are not considered by companies or individuals when they make their energy choices. A cap-and-trade policy creates this price by establishing a limit on the amount of greenhouse gas emissions and allowing firms covered by the program the flexibility to trade allowances. The environmental integrity of the program is ensured by the “cap” on emissions, and the costs of the program are kept as low as possible through the creation of a market (where firms can buy and sell allowances).

Concern about financial markets and fraudulent investment scams has created an atmosphere of distrust regarding the functioning and effectiveness of markets. By extension, questions have been raised about the wisdom of creating a market with a cap-and-trade program for controlling greenhouse gases. In truth, appropriate oversight and regulation of carbon markets will be required. The problem has been the abuse of markets, not something fundamental about markets themselves.

Climate change is a real and pressing problem. Strong government actions are required, as well as enlightened political leadership at the national and international levels. Creation of a market for greenhouse gas emissions can work, but is contingent on government action to establish this policy. When the Congress decides to return to this issue ­– as it inevitably will – cap-and-trade policy specifically and carbon-pricing generally must be considered seriously and debated honestly, otherwise it will be fundamentally impossible to provide the right incentives to put the United States on a climate-friendly path of robust and sustainable economic growth.

———

P.S. For those of you interested in the important climate policy developments that are taking place in California, you may find of interest a conference organized by the University of California, taking place in Sacramento on October 4th, “California’s Climate Change Policy: The Economic and Environmental Impacts of AB 32.” You can learn more about by clicking on this link.

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by Sean Casten.

If power companies have to pay for their CO2 emissions, what will happen to the price of electricity? The answer isn’t as obvious as you think.

The linkage between costs and prices—increase the first and you raise in the second—is predicated on the notion of efficient markets. Yet it would be hard to find a market less efficient and more distorted than the U.S. electric sector, which is responsible for over 40 percent of America’s CO2 emissions. If we want to use a price on CO2 to drive changes in energy use, we better start with an understanding of how the electric industry actually works.

Electricity markets are not Pareto efficient

Pareto efficiency is one of those things that we all learned in freshman economics and subsequently forgot. A refresher course: markets are said to be Pareto-efficient when no party can be made better off without making another party worse off. When they’re not Pareto efficient, changes in price may not lead to changes in supply/demand. Northwestern economist Lynne Kiesling points out that this issue is particularly important for new markets seeking to monetize environmental externalities. She uses a flower garden as an example and asks how much you’d be willing to pay your neighbor for the vicarious pleasure (aka, market externality) you realize from their flowers:

… it’s a safe generalization that your neighbor-gardeners have more intense preferences over their gardening decisions than you do over their decisions… [this] implies that even if you did pay them as compensation to internalize your benefit, if your marginal benefit is small relative to theirs, your payment is unlikely to change their decision at the margin of how much gardening to do.

In other words, a market that seeks to internalize the positive externality of nearby flowers is unlikely to arrive at a price that leads to more daisies, because Pareto-inefficiencies cause prices to clear at levels too low to affect the gardeners’ behavior. This is a huge problem in electric industry.

Capital cost-domination

In any capital-intensive business, there is a huge barrier to entry established just by existing. An existing generator that sells power for $0.01 more than its marginal costs will earn a profit, but a new power plant won’t get built unless it can secure a contract high enough to recover marginal costs and provide an attractive return on capital. That tends to cause prices to fall to levels that keep competition out, even while preserving (admittedly, depressed) profits for established players.

We’ve all got direct experience with this. Do you want to save money on gasoline but can’t afford a more fuel-efficient car? Do you wish you had a shorter commute but can’t afford to move? In both cases, the high up-front (capital) cost blocks investment in lower long-term (marginal) cost activities. Note the Pareto inefficiency: gasoline prices could conceivably rise to a level that caused you to stop driving your Escalade, but not high enough for you to buy a Prius.

Good CO2 policy should bring about both a reduction in energy consumption and investment in lower-carbon energy supplies. Unfortunately, the capital-intensivity of this sector means that new investment requires a higher CO2 price than reduction in consumption. This raises equity issues, since the poor will be the first to curtail demand in response to higher energy prices. A good policy therefore needs to ensure that new low-CO2 (typically also lower-cost) generation comes forward. Of late, we seem to dedicate much more time trying to ameliorate the regressive outcomes innate to bad policies.

U.S. environmental policy gives economic advantage to dirty power

The U.S. regulates pollution by forcing the next pollution source to come up to modern standards but allowing existing pollution sources to operate in perpetuity at yesterday’s standards. David Roberts gave a nice summary of those problems here. It’s virtually impossible to get a new coal plant permitted today (thank goodness), which has led to a dramatic shift towards gas-fired generation. But why do we then allow old coal plants to sell their dirty product at a price set by new (more expensive) gas-fired facilities? We might as well impose life-sentences on tomorrow’s petty crooks and give their contraband to yesterday’s (free) serial-killer.

So now let’s assume that a CO2 price is applied uniformly to all emitters. Even in that idealized case, utilities will only shift their operations towards lower-CO2 sources to the degree that the economic advantage gained exceeds the economic disadvantage forced on the cleaner sources by environmental policy. Another Pareto inefficiency.

A regulated monopoly isn’t a market

By definition and design, a sector dominated by regulated monopolies isn’t a competitive market. So why do we assume a linkage between costs and prices?

Even in “deregulated” states, the distribution utility isn’t. A PV array on your house interfaces not with a market but with a for-profit monopoly who (with their regulator) dictates all aspects of your economic interaction. If you planted a vegetable garden in your yard and required Cargill’s approval to harvest, eat, transport, set prices for, and/or sell your crop, you wouldn’t call it a functioning market—but that’s life for a rooftop PV investment in a “deregulated” electric market.

And that’s the best case! Now consider the 27 states that remain fully regulated. Electric utilities in those states are to normal businesses what a flying fish is to a blue jay. Normal businesses allocate resources in an effort to balance investors’ desire for dividends with customers’ desire for savings and competitors’ desire to steal market share. In a regulated utility, the regulator is responsible for that balance. To understand the impossibility of that job, pretend you are a regulator and answer the following questions:

What level/structure of executive compensation is sufficient to attract talent without over-charging consumers?
If maintenance is deferred to keep costs (and prices) low, should customers or shareholders bear the liability for subsequent problems? What if maintenance is too high? Should rate-payers bear the cost of gold-plated operations? How do you identify the appropriate level?
If you make a regulatory mistake that compromises grid reliability, who should pay for the clean up costs?

These are hard issues, unique to the regulated enterprise, and they create an inherent disconnect between cause and effect, cost and price. Now imagine we place a cost on CO2 emissions. Should those costs be recovered through higher electricity prices or through a reduction in shareholder dividends? At one extreme, the utility has no incentive to change their behavior. At the other, the customer has no incentive to change theirs. And in all cases, there is no competitive pressure to draw customers (or investors) away. Which do you choose?

Deregulated markets lack cost/price causality

So what about the deregulated markets? Surely the power plants selling into those markets will rationally allocate their capital in response to changing costs, right? Not really.

For starters, those markets are dominated by “spot” rather than long-term contracts. Big capital investments require some degree of certainty about long-term revenue, but you’re hard pressed to get a contract on wholesale power markets for more than 5 years. So unless you have a very high risk tolerance, wholesale markets are effectively useless when it comes to encouraging investment in new generation.

Indeed, the generation investments that have been made since deregulation have predominantly secured revenue streams external to wholesale markets: regulated utilities have built generation underwritten by the state/ratepayer, renewables have been built on the back of bilateral power purchase agreements with utilities, and some consumers have built on-site generation that could to displace their retail purchase. Unfortunately, while none of those investments have participated in wholesale markets, they still affect them. A utility that enters into a long-term RPS contract for biomass power no longer has to procure that power on the spot market. The wholesale market—where price is set by the balance of supply and demand—is thus short on demand and prices have been depressed accordingly, well below the level required to build new generation.

These are structural problems that CO2 pricing won’t fix. Absent that reform, wholesale markets will remain unable to provide a meaningful price signal to encourage new investment (clean or otherwise). As a result, the economic signal sent by CO2 pricing will be received primarily to the least economically-efficient parts of the electric sector.

So what should we do?

Who pays? Who do they pay? How does CO2 policy interface with other elements of state and federal regulation? Consider all those issues carefully and it is entirely possible to craft CO2 regulation in the electric sector that works in spite of these challenges. Effective CO2 policy ought to include the following:

Clean Air Act reform
So long as old dirty plants retain an economic advantage against new clean ones, efforts to bring low-CO2 generation face unnecessary regulatory headwinds.
Output-based emissions standards
Current emissions rules discourage investments in efficiency, inadvertently mandating greater CO2 release. This can be fixed in the law or in the courts, but we cannot sustain a conflict between two elements of our environmental policy.
Explicit incentives to balance penalties
The carbon price required to shut down dirty generation is not sufficient to bring clean generation on line. A system that provides direct economic links between CO2 sources and sinks without regulatory intermediation will be critical. A stick is not a negative carrot.
Capital cost incentives
CO2 pricing can only affect the variable cost of operation. Given the capital-intensivity of electricity generation, regulation may need to include some type of additional inducement to deploy capital.
Technology neutrality
The goal of CO2 regulation is to reduce emissions of CO2, not to deploy technology X or bankrupt company Y. Any policy that confuses paths and goals introduces new Pareto inefficiencies into a market that already has plenty.

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