One book digs into a scandal, another refuses to discuss one.
Back in October, I was worried that I wouldn’t have many energy books to review this year. But thanks to a flurry of late-year discoveries, that’s not a problem. I came across some of the books so late that I haven’t had a chance to read them myself. I list them here to stimulate a discussion in the comments section, in case anyone else has opinions.
- Faster, Higher, Farther: The Volkswagen Scandal, by Jack Ewing. This is a fantastic book about the VW emissions scandal. In case you were living under a rock in September 2015, here’s the story in a nutshell: Since at least 2006, VW was “meeting” tailpipe emissions regulations by programming its vehicles’ computers to recognize when they were in the regulators’ test labs. A small group of under-funded academics emerged as heroes (yay!) when they administered road tests and discovered emissions that were many, many times higher than the legal limit. Like forty times higher, for some of the vehicles. Max’s earlier blog describes more of the details.
The scandal didn’t fully surface until over a year after the academics publicly presented their results, and it caused major disruptions. People who believed VW’s “Clean Diesel” ad campaign and bought the polluting cars were understandably upset. Robert Mueller (yes, of Russiagate fame) oversaw a U.S.-based settlement process that got the polluting cars off the road quickly, penalized VW to the tune of about $20,000 per vehicle, compensated owners, and gave them the option to sell back their vehicles or have them fixed.
To Ewing’s telling, several factors laid the groundwork for VW’s misdeeds. For one, he describes the fundamental tradeoff embodied in diesel fuel: on the one hand, it burns hotter, so this makes diesel engines more fuel efficient. But, because it burns hotter, the engines release more emissions – NOx in particular.
Ewing has a great treatment of VW’s history, the heavy involvement of the founding Porsche/Piech families and the corporate culture that emerged – authoritarian, in a word. The grandson of the founder took over as CEO in the mid-1990s and pushed unrealistically ambitious sales targets for the company in the early 2000s, which, Ewing hypothesizes, put pressure on managers to bend the rules. Ewing also emphasizes how European emissions regulations were ostensibly similar to those in the US except that there were much lighter punishments associated with violating the EU regulations.
It’s straightforward to see how execs could convince themselves that (a) they needed to meet ambitious sales goals, (b) they were helping address global warming by promoting diesel cars, and (c) there would be limited repercussions if their excess emissions were uncovered. As Ewing describes, “[i]t’s hard to know whether company executives were ignorant of American laws, or so arrogant that they did not feel bound by them.”
Ultimately, Ewing is upfront about his strong suspicion that VW engaged in a massive cover-up that most likely involved high-level executives. I’m convinced, and the recent events that he describes in the book’s epilogue suggest he’s right.
Back in 2007, Audi decided to treat emissions in the Q7 SUVs using urea. But, they didn’t want a big urea tank as it would reduce the vehicle’s cargo space. They also didn’t want to tell potential customers that they would need to bring the vehicle in every 5,000 miles to refill the small tank, so they decided to program the urea sprayer to work really well during emissions tests, but then spray much less urea during regular driving. It seems only logical that a very high-level manager would be involved in a decision about how to trade off all these competing issues. At the time, Winterkorn, who would soon become the CEO of the whole VW Group, was the head of Audi.
Also, VW’s response to the academics’ results smacks of cover-up. They administered a limited recall, but it didn’t actually fix anything. Finally, their response to the scandal doesn’t leave me feeling sorry for execs who had the bad luck of hiring some rogue computer programmers, but I’ll let you read the book for the details.
I don’t think we’ve discussed on this blog just how world-altering the VW scandal was to energy economists. We’ve built our lives on data and spend lots of time trying to draw lessons out of facts and figures. But, what if the data are simply made up? It’s instructive to recognize just how much companies will do in pursuit of profits.
The book also left me sad that my husband recently bought a VW (GTI, gasoline). Yes, it’s peppy, and it was probably a decent deal since we got it post-scandal, but it’s not a company I’m happy to be supporting.
- California Goes Green: A Roadmap to Climate Leadership, by Michael R. Peevey and Diane O. Wittenberg. One of the authors, Michael Peevey, is a former czar of the California energy sector, having served as a top executive at Southern California Edison, the founder of a major competitive retailer as well as the President of the California Public Utilities Commission (CPUC) from 2002 to 2014. Certainly, California made great strides in confronting climate change during Peevey’s tenure at the CPUC. Unfortunately, he departed amidst criminal investigations of his relationships with the utilities he regulated.
Given the fact that Peevey lived through the restructuring of the California power sector in the early 2000s and then was a long-time regulator, I hoped for some insights into the appropriate balance of competition and regulation. Instead, the policy lessons that the book seems to emphasize are relying on ostensibly environmentally friendly policies (regardless of cost), the unique politics of California that make its environmental policies possible, and the important role of California universities in supporting the state’s environmental policies (here, here!).
The book is not very introspective or reflective. It reports that every policy Peevey enacted was hugely successful. The authors conclude that the California Solar Initiative, a program that subsidized rooftop solar installations, is a, “program, [that] by most all judgments, has been an unqualified success.” And, the authors claim energy efficiency policies were also highly effective, citing the fact that a recent legislative act doubles down on energy efficiency to meet climate goals as an important metric of success. (I’ve expressed my doubts on measured energy efficiency savings here.)
The book does include lots of interesting vignettes about California history and the energy industry, including, for example, the fact that Fran Pavley, a climate leader in the California legislature, is the great-granddaughter of William Jennings Bryan. I also enjoyed the description of Peevey’s first conversation with then-Governor Schwarzenegger about rooftop solar in which the Governator was mostly interested in helping his friend and former Terminator director, James Cameron, install them on his roof. The rooftop solar market might look very different if Schwarzenegger had actually turned down the lead role and that friendship hadn’t developed.
- Modernizing America’s Electricity Infrastructure, by Mason Wilrich. Among other roles, Mason Wilrich was a senior executive at PG&E and a California ISO board member. I’ve known about this book for some time, but because of a series of snafus with MIT Press, it didn’t show up until too late for me to read before this blog. My husband (who read it on his Kindle) says it provides a very sensible overview of the industry, especially the history of the restructuring of the 1990s and 2000s, as well as some of the bigger current issues.
- Energy and Civilization: A History, by Vaclav Smil. Bill Gates lists this book as one of his top-5 picks for 2017 across all topics. Gates has a longer review of the book here. I might give this book a try, although, last year, I was pretty disappointed in The Grid by Gretchen Bakke and Gates gave it honorable mention on his annual review, so I’m worried that my tastes don’t align well with Gates’.
- The Fracking Debate: The Risks, Benefits and Uncertainties of the Shale Revolution, by Daniel Raimi. This isn’t even out yet (coming December 20), but Science has a favorable review of it. The reviewer describes it as, “easy-to-read” and “conversational,” which is perhaps surprising given that it’s from an academic publisher (Columbia University Press).
Any comments on the last 3 books? Other energy books I’ve missed?
Catherine Wolfram is the Cora Jane Flood Professor of Business Administration at the Haas School of Business, University of California, Berkeley. During Academic year 2018-19, she will serve as the Acting Associate Dean for Academic Affairs at Berkeley Haas. She is the Program Director of the National Bureau of Economic Research's Environment and Energy Economics Program, Faculty Director of The E2e Project, a research organization focused on energy efficiency and a research affiliate at the Energy Institute at Haas. She is also an affiliated faculty member of in the Agriculture and Resource Economics department and the Energy and Resources Group at Berkeley.
Wolfram has published extensively on the economics of energy markets. Her work has analyzed rural electrification programs in the developing world, energy efficiency programs in the US, the effects of environmental regulation on energy markets and the impact of privatization and restructuring in the US and UK. She is currently implementing several randomized controlled trials to evaluate energy programs in the U.S., Ghana, and Kenya.
She received a PhD in Economics from MIT in 1996 and an AB from Harvard in 1989. Before joining the faculty at UC Berkeley, she was an Assistant Professor of Economics at Harvard.