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2021 Books

Posted: 4 April 2021

How to Avoid a Climate Disaster - Bill Gates

4th April 2021. First book of the year! I’ve been slowly working my way through the Japanese Economy textbook. I should be done with that by H2 2021. I’ve always been a fan of GatesNotes and of course Bill Gates himself, so it’s natural that when this book was released, I immediately ordered it and finished it quickly.

In this book, Gates broke down all global emissions into five major components. How we make things (31%), make electricity (27%), grow things (19%), get around (16%), keep cool and stay warm (7%). EVs aren’t the moonshot solution if the electron used to move that EV is a dirty electron. At the end of the day, we need to fix “making electricity”. That’s a really hard problem, as storage and distribution is even harder. The technology to make clean energy already exists.

Let’s use Singapore as an example. For Singapore to be 100% solar sufficient, we need to generate 200% worth of energy in a day. The first 100% assumes that energy is generated from 7am to 7pm when the Sun is up. The second 100% needs to be generated during the same period, stored, and then consumed at night. This of course simplifies the whole situation a lot, as there’s cloud cover, rain, the Sun moving throughout the day, etc. In 2019, Singapore consumed 51.7TWh (see EMA website). From NASA’s site, we can see that 1360W per square meter of energy reaches the top of atmosphere, if it’s directly facing the Sun. For ease of calculation, we will just assume that 1000W hits the Earth’s surface, a gross overestimation. If we assume 20% efficiency for solar panels (most commercial ones hit around 20%), and 12 hours of “full sunlight”, then a square meter in Singapore can generate 2.4KWh. 51.7 TWh translates to 141GWh in a day and 11.75GWh in an hour. This translates to 4.8 million square meters, An area about 2Km by 2Km. Hmmm… This is extremely back of the envelope and I hope I’m getting the interpretation of watts correctly. Let me know if I am not! I cross checked with this article and it seems to make sense. From this perspective, it does seem that Singapore can truly be 100% solar self sufficient…? If we could install battery technology in each HDB, and have central cooling systems, that might be very interesting. As stated above, the generation part is very feasible - the technology exists and it’s about scaling up. The storage part is really hard. Gates mentioned a hypothetical scenario about a three day power outage in Tokyo. If Tokyo was fully running on clean energy and has long term battery technology in place, then it would need more than 14 million batteries just for these three days - more storage capacity than the world produces in a decade. Averaged over the lifetime of the batteries, that’s an expense of 27 billion (data here cited from Gates’ book). I can’t say this enough because I keep coming back to this - storage and distribution is REALLY hard.

Gates talked about fertilizers as well, something of interest to me recently. Microorganisms in the soil that make nitrogen expend a lot of energy in the process of making nitrogen. They have evolved to only produce nitrogen when they absolutely need to, when there’s no nitrogen in the soil around them. This is why synthetic fertilizers disrupt the natural ecosystem in the soil. I’ve not used synthetic fertilizers in my garden and my plants are thriving. Gates also introduced CGIAR, the world’s largest agricultural research group, and the various alphabet soup organizations related to CGIAR. This is the first time I’ve heard of this. Last but not least, I learnt about Scuba Rice - that’s super cool.

Climate change involves more than just technology. Politics matter at the end of the day because the party that wants to increase prices of gasoline and food for the masses will not get voted in. However, the politicians can still play a part in crafting policy that encourages industry to go green. Everyone has to play a part in perhaps this greatest challenge of my generation (?).

The Ministry for the Future - Kim Stanley Robinson

13th May 2021. I can’t remember where I saw the recommendation for this book. It’s an interesting science fiction book that puts out some radical ideas. For example, using the expertise of oil and gas firms to drill holes on glaciers to pump out the meltwater under the glaciers to slow down the movement of glaciers. Or colouring the ocean yellow to reduce the heat absorption. There were quite a few radical geoengineering ideas. I think the most interesting of all was the carbon coin idea, where central banks get together to issue this new “global” currency. I wonder if it’s possible for our world today?

The Japanese Economy - Takatoshi Ito and Takeo Hoshi

15th May 2021. A heavy read that I read over 6 months. Takeaways below:

  1. Club of Rome’s 1972 report. Pollution in Japan was also reaching the point where many people thought something had to be done (p. 66). This seems to be the narrative that we see constantly in history. Is the same thing happening now for the pollution in China and the world in general? Is this time different?
  2. At the end of the 1980s, many economists as well as policymakers around the world were praising the Japanese economy for its excellent performance. Although a few economists raised concerns, many financial analysts and bankers were not alarmed at the apparent high value of stocks and land compared to their cash-flow earnings. In retrospect, it is obvious that the Japanese economy was experiencing a bubble (p. 166). Once again, is this time different? As of May 2021, stocks in general are at all time highs, land prices have also been increasing. The increase in price seems to be disjoint from reality, though anaylsts like to say markets are “forward looking”. Bridgewater also released an article in Feb 2021 here. “Bubble” stocks have taken a huge correction since then, but is it over? I think what’s interesting about financial markets is that you can draw a correlation between many pairs of events. For example, one can say that Bridgewater released this article and retail investors and analysts all took “some” of it as advice and started unwinding their positions, creating a self-fulfilling prophecy. This hypothesis is hard to prove and also hard to disprove.
  3. Now, many researchers conclude that the course of current Japanese fiscal policy is not sustainable, and that a serious crisis will occur in less than ten years unless fundamental changes in fiscal policy (such as increasing tax revenues) take place (p. 198). “Now” refers to 2020, the year of publication of the book, I think? Or at least 2015 onwards. I think it’d be interesting to talk to a Japanese debt expert on this.
  4. In Japan, all of a decedent’s property is subject to inheritance tax, which is imposed on the recipients (p. 214). Having more statutory heirs for a given decedent would lessen the total tax liability on the estate (p. 214). In Japan, land and structures account for more than 60 percent of bequeathed assets (p. 215). In 2009, a little more than 1 trillion yen was collected as inheritance tax (p. 216). Based on OECD’s records, (I didn’t fact check the website, URL checks out), estate tax was 1.35T in 2009 and was 2.23T in 2019 - it has more than doubled in ten years. Given Japan’s ageing population, could the estate tax end up paying for itself? See (3) as well.
  5. In sum, the researchers find that Japan’s fiscal policy is not sustainable at the current tax rates and expenditure pattern (p. 227). This statement appears once again. Is there truth to that?
  6. Big three trading companies are Mitsubishi, Mitsui and Sumitomo (p. 308).
  7. Life in a Large Company (p. 370). The preference to work in large companies among Japanese college graduates implies that it is competitive to get into a large company.
  8. The tradition of lifetime employment seems to be ending in Japan (p. 372).
  9. Indeed, most of the little economic growth that Japan experienced during the Lost Two Decades came from growth in external demand of automobiles and electronics (p. 390).
  10. Gravity equation in trade (p. 407). I thought this was cool.
  11. Although the US has been running current account deficits for a long time, it does not have to worry about a currency crisis because foreigners are content to hold US dollar-denominated securities, either as foreign reserves in the official sector or as investment portfolios in the private sector (p. 475).
  12. The magnitude of a bubble is difficult to know in real time. A sharp asset price increase usually can be recognized as a bubble only after it bursts.
  13. Run on toilet paper in the 1973 oil crisis (p. 557). Seems like humans just don’t change. This time it was not different.

I picked up this book as Japan has been in a low or zero interest rate policy era for the longest time. They have experience dealing with it. Now that almost all central banks around the world have low interest rates, they are probably looking to Japan as a model. What’s different now is that everyone is in ZIRP at the same time. What effects would this bring? If every country is increasing money supply, and increasing at the same ratio (bad assumption of course), would exchange rates change? Where is all the money supply going?