Tuesday, May 28, 2019

... about that 2018 UN Climate Change report

All bad news, from just the last 2 years

All of the above headlines share one common thread: they are conditions directly caused by, or exacerbated by, climate change.  Perhaps you think it's just a "global" problem that doesn't  affect you, maybe only those living in Middle Eastern deserts or around the Arctic Circle.  But Jakarta also?  See, not even my kampung is spared.

... So this lead me to spend the weekend going through the 2018 IPCC report, which made a splash last October.  The full report is 400+ pages long and written in an esoteric format (because it is not original research; it's basically a summary of other people's existing primary research).  I skipped the lengthy PDF download (it's even longer than the Mueller report) and went straight to the "Summary for Policymakers", which is still 32 pages long, and read the charts first.  Still, it's amazing what we can learn by browsing a handful of diagrams -- especially for a layman with zero knowledge of environmental science.

So the "Global Warming of 1.5⁰C" by the Intergovernmental Panel on Climate Change is really a misnomer.  We are really on pace for something like 3-4⁰C of warming (against a baseline of year 1850 -- approx. the start of the industrial revolution, when we started using fossil fuels en masse).  The paper talks about 1.5 degrees, but it's an extremely optimistic scenario based on aggressive transformation of the global economy.  Nevertheless, the research is unequivocal that the warming is anthropogenic -- caused by human activity -- which is good because it means we can actually do something about it.

The direct impact of climate change is devastating:
  • Sea-level rise at least 10cm for every 0.5C rise of global temperatures, and ice sheet loss is irreversible over >100,000 years
  • Biodiversity and ecosystem loss on land and sea
  • Climate-related risks to health, food security, and water supply
Damages are estimated at US$54 trillion worldwide.

Avoiding the most serious damage requires massively transforming the world economy and energy usage within just a few years.  If you thought the Green New Deal was batshit crazy, then brace yourself:
  • Damages will be spread worldwide but unevenly. >50mn people in the US, Bangladesh, China, Egypt, India, Indonesia, Japan, Philippines and Vietnam will be exposed to coastal flooding
  • To prevent >1.5C of warming, the report said, greenhouse pollution must be reduced by 45% from 2010 levels by 2030, and 100% by 2050.
  • By 2050, use of coal as an electricity source would have to drop from nearly 40% today to between 1-7%.   Renewable energy such as wind and solar, which make up about 20% of the electricity mix today, would have to increase to as much as 67%.

Now let's go to the charts:


Since the industrial revolution, it took us some 140 years to pollute the earth and raise global temperatures by 0.5C; the next 0.5C took us just 30 years; and the next 0.5C is expected to take us <20 years, if not sooner.  It's clear that we've taken earthly resources for granted without much care of what's left behind.



The above shows that our civilization produces 40 Gigatons of carbon emissions every year, and that we need to reduce it *down to zero* in just 30 years to achieve our targets.  Can we just blame China and press them to, like, do something?  Let's turn to MIT Technology Review.


So, the answer is a resounding "No".  China's is the highest in the world, but even combined with USA, EU, and India, they amount to just 15% of annual greenhouse emissions.  This is a global problem in desperate need for a worldwide, coordinated solution.


The above shows the uneven distribution of temperature change: the poles bear the brunt.  For its part, Russia is fully embracing the problem by accelerating the creation of a new shipping route, while the US only wishes it could do the same //sad but true.   


So we need to fundamentally change how we generate energy.  Nuclear is a good source: very low carbon footprint, we just need to solve the cost issue and that pesky problem of long-term radioactive waste storage -- difficult yet shouldn't be intractable challenges.  Solar, wind and hydro are also possible, but they tend to be unreliable, depreciates rapidly within <20 years, and surprisingly, have (potentially large) carbon footprint and ecological impact.  The solution is likely a combination of several approaches, implemented in managed moderation.  Or maybe there's some new idea in the horizon, some technological innovation, but it's no excuse to postpone making good on environmental policy.  We can already see new developments that can help us better adapt to the changing world, like more resilient crop breeds, and satellite imaging to better prepare for wildfires..

---

Humanity has shown great ingenuity and staying power in resolving seemingly existential threats.  Remember the hole in the ozone layer caused by aerosols and CFC?  It's healing, and should be completely "cured" by 2030.

But if we've learned anything about American leadership on this greatest challenge of our lifetime, it has failed us.

Thursday, May 23, 2019

Netflix, Uber, WeWork, and CHINA!


Whew it's been a big week in the tech/startup world.

1. Uber IPO went sour

The ride-hailing giant capped off its tumultuous journey with a NASDAQ listing Friday.  Shares disappointed, falling well below IPO price, but the company still commands a whopping $69bn market cap.... which is still lower than the pre-IPO valuations at which investors in the past 3 years entered.  Maybe it's because Silicon Valley loves Uber -- its constant fights, breaking of laws, habit of pouring VC money (=lobbyists) onto problems -- more than the wider public does?

Investors are basically betting that the juggernaut will continue to dominate the market, until such time that autonomous vehicles can replace those pesky (costly) drivers.  By that [undetermined time in the future, can be up to 30 years??], Uber's bottom line will turn green -- otherwise the company has shown no visible path to profitability (it burned $2bn of cash in 2018 alone).  But in the meantime, Softbank to the rescue (again) ?


2. China's Luckin Coffee also failed to excite


An outlet in Beijing

China's Starbucks/convenience-store-coffee competitor Luckin Coffee listed on NASDAQ Wednesday.  Shares fell below IPO price -- not unlike Uber and Lyft -- but the barely-two-year old 2,100-strong coffee chain still raised $560m, putting its market cap at $4.0bn.  Luckin has achieved "hyperscale", but let's hear it from Peking University professor Jeff Towson on the bottom line: the Chinese "don't seem to really like coffee" that much, so do any of those metrics even matter?  

Maybe it's just another case of China imitating a Western invention, and replicating it to scale [usually with the help of friendly government regulations/direct support].  -->See: Weibo.

Outlet at Jakarta's Grand Indonesia mall

If that seems rough, here in Indonesia a number of similar startups (Kopi Kenangan, Fore, Tuku, etc) looks to be modeled closely after Luckin.  Expect scenes like this in other markets.

3. WeWork also plans for IPO, skepticism abound

Co-working behemoth WeWork is a really strange animal.  Just like Uber, it's backed by Softbank, so operating losses never seem to faze them.  It's already the biggest tenant in Manhattan, and it's moved into co-living and other co-activities that generate no profits whatsoever -- I guess even the company doesn't believe its own core business could be viable.  It blindly focuses on the high-end segment, seemingly disregarding local market nuances. Now founder Adam Neumann wants to set up a real estate investment fund (named "ARK", after Noah, naturally) to buy up office properties to lease to WeWork.  Unsurprisingly everybody's screaming bloody murder conflict of interest.

Articles about WeWork are eerily reminiscent of how people described the past decade's housing crisis.  Just like the mid-2000s, "property values always rise... ", but now it's "... thanks to WeWork's presence".  Sure its sites are hip and wildly popular with clients, but that itself doesn't necessarily make the business model sustainable.  [I too can pitch an idea: why don't we sell $100 bills for $10?]  Ellen Huet from Bloomberg notes:

'...even by the standards of its cash-incinerating startup cousins, the company’s business model—taking out long-term leases and renting out short-term parcels—doesn’t deserve the favorable treatment of a tech company and looks glaringly vulnerable to an economic downturn as the global bull market in equities stuttersteps toward Year 12. “They don’t make money even with the economy roaring,” says Scott Crowe, the chief investment officer at CenterSquare Investment Management, which focuses on real estate. “If the economy softens, [it's all over].”'

4. Netflix faces impending doom

The video streaming/cord-cutting pioneer has less than 180 days to answer to a new competitor.  Disney is launching its video streaming platform, Disney+, and it will undercut Netflix's subscription pricing *and* pull all of its content out of Netflix.  We are talking all of Marvel, Pixar Animations, Star Wars, ESPN, NatGeo, Modern Family, The Simpsons, and all the classic characters like Mickey Mouse and Donald Duck.

Content is king, and Disney is still the king of content, for better or worse.


5. Tight driver market can bring autonomous trucks sooner

There's actual interesting development within autonomous vehicles, and it has nothing to do with Uber.  The US Postal Service, working with startup TuSimple, is testing self-driving trucks to deliver mail across Arizona, New Mexico and Texas.  USPS expects the technology to improve delivery times and costs, noting severe driver shortages and regulatory constraints among interstate freight haulers.

Amazon faces a similar issue, but is proposing a totally different solution: offering its own employees $10,000 to quit and become its delivery drivers.  

If anything, this suggests that maybe the coming robot apocalypse is just a tad overhyped.  In the future, *we* will be the robots.