Monday, December 12, 2016

Ahh... driving

What could be more normal than getting in the car and driving somewhere?

Driving is such a normalised activity. Almost everyone I know does it -- people that don't drive are a bit strange, and their options are greatly constrained.

I love a road trip. When we moved from Brisbane back (home) to Adelaide, we took 5 weeks to drive home along the coast, which we followed from Brisbane to Melbourne. It was a fantastic trip.

It's so easy to get in the car and watch the world rush by. It's also easy to forget just how much energy is being used in that process. Here's an example:
We recently went to visit Monarto Zoo which is (the only?) open range zoo in Australia and is about 65 km from my house. It's an easy drive, about 40 minutes up the freeway. Google Maps estimates it as a 4 hour bicycle trip (I'm presuming that is without kids)
So the round trip is about 130 km. Our car uses about 8 L per 100km on the open road, so that works out to about 10.4 L of petrol, which is about 100 kWh (each liter of petrol has about 10 kWh of energy). For us, that is a month's worth of energy (as consumed by our house of four people) used in 1h:20m of travel.

Faced with these numbers, it is clear just how much of a problem driving is for our carbon emissions, and how easy we make our lives elsewhere if we can just drive less. If we want to avoid damaging climate change, we simply need to drive less, and this will make our other goals (eg. renewable electricity, reduced consumption, more sustainable agriculture, etc) that much more achievable.

Wednesday, October 12, 2016

End of winter recap

Now that winter is over, how have we done?


My last post about my solar systems' performance has made me think a bit more about their performance, so I've done some analysis.

I have taken some meter readings over winter, which gives me
  • solar PV production over winter
  • grid draw over the same period
  • grid export over the same period
This gives these data (for the period June 1st to October 6th):
average total daily consumption (PV self consumption and grid-draw): 6.26 kWh
average Daily PV production: 6.13 kWh
average daily grid draw over winter: 3.9 kWh
average daily grid export over winter:  3.7 kWh

The same calculations for the period June 1st to August 2nd look like this:
average total daily consumption (PV self consumption and grid-draw): 6.29 kWh
average Daily PV production: 4.67 kWh
average daily grid draw over winter: 3.91 kWh
average daily grid export over winter:  2.66 kWh
 We tend to cook more with the electric oven in winter, which I think largely explains the higher daily consumption. Also, we use lights more, etc. We needed to boost the solar hot water system once, for about an hour, which used about 2.4 kWh.
Overall, I am fairly happy with these numbers. I think we're losing at least 0.5 kWh/day to phantom loads, but there's only so much energy I have for turning things off at the power point. Clearly, for our PV to cover our consumption in winter, we need ~50% more panels.

Propagation area

I've been busy building a spot for seed propagation. Seeds need constant moisture, and the requirement that we keep them moist for several weeks was just too much for us (forget to water them for a day and they're dead). I built this bench using almost 100% found or scrounged materials. Even the nails and bolts were mostly reused. It's also amazing what you can build with poly pipe and clothesline! It has a watering system that waters it for 1 minute every 6 hours. Bonza!

tomatoes and beetroot and basil, oh my!

does your propagation table have turned legs? ;-)

Composting loo

Now that we've had the last rain until about March (well, we can't expect much!) I'm again feeling unhappy about putting potable water down the toilet. I've started building a box composting toilet. It's designed to hold a 20 L plastic bucket and a urine diverter. It's made from pallet wood (and pallet nails), with a few bits of nice timber I found on an old air-conditioner facade that I found on the side of the road (they made them attractive in the old days!). Not quite finished, but getting there. As I said in a previous post, I'm using this device as a urine diverter, and they have some plans online for how to make the toilet. I am vaguely following those.

It is spring, and the garden is blooming. Here are some photos from the garden:
New citrus grove (sorry for the dark photo)

Broad beans

Monday, October 10, 2016

2 years on: System performance

We've now had our solar hot water and solar PV system for 2 years. I thought it was worth commenting on them.

Solar Hot water (main)

This system is detailed here and here. Based on my meter readings, I estimate it has saved us 4500 kWh (just over 6 kWh/day), which is worth $1350 on the standard tariff (we avoid the off-peak tariff because it supports fossil fuel power, even when buying Greenpower) At this rate, the system will pay for itself in about another 18-24 months (4 years total from new).

The tank looks a little weathered, but still in very good shape. Beacuse  it is low pressured, I am confident it will last many years. I partially shade the panels (with an old cotton blind) in summer, to stop it boiling, and we lose very little water from it.

Kitchen Hot water

This system performs poorly in winter. It's nice to have instant hot water, and it was a good learning project, but I wouldn't recommend people do this if they have other solar hot water. At some point I might re-purpose this system into a backyard shower.

Solar PV

Our system has produced almost 10 MWh. Since we got the new input/output meter we've exported about 7 MWh to the grid (which means we've self-consumed 3 MWh of our solar PV). We get paid $0.24 / kWh for exported power and pay $0.32 / kWh (including the GreenPower premium) for imported power. So, the return on our solar PV has been $2600, or about 1/2 the cost of the system.
As of the end of September, we lose the $0.24 feed-in-tariff, and will be paid about $0.08 / kWh. That will reduce the return on the system cost. In another 2 years, we'll have got back an additional $1500 at these tariffs. I think we'll pay back the cost of the system in about 3 years (5 years total from new).


Our 2 kW solar PV system has produced more electricity than we use almost every day (about 50 exceptions in two years) since it was installed. I've shown the economics here, because that's of interest to some people, but it's a great feeling to look at the roof and see the power we harvest. It's strange how people carefully consider at the economics of solar PV, but not of cars.
At some point, I think we'll install a hybrid battery system. I like the idea of self-consuming more of our power. But I don't think we'll try to go fully off-grid. I think that doesn't make sense in the city (firstly, we'd need a much larger battery to provide for the small number of days when we lack solar PV and secondly it has a bit of a gated-community feel to it). I might also install a second solar PV system. That will have much worse payback than the first, but that's ok.

Wednesday, September 21, 2016

A heater battery

I've been thinking about home temperature management, and the problem as I see it is:
  • We have a huge supply of existing housing stock, with limited options and money for retrofitting improvements
  • People are unlikely to be satisfied with a 13°C house in winter and a 33°C house in summer
  • As we move to a more renewables-based energy grid, the importance of storing energy increases
  • heating/cooling is, for most people, the largest energy user
  • I believe that the burning of firewood in the city should be minimised
  • If we want to use batteries to supply electricity for heating/cooling, we will need an enormous supply, which will be very expensive (in terms of money and energy) putting it out of reach for most people.
So, we need a heating solution that is
  • Relatively cheap
  • Able to store a large amount of energy during times of plenty – I think in winter it needs to store 4 days' heat (during summer, it really only needs 1 or 2 days as solar PV is very productive)
  • Suitable for retrofitting
 I think I have come up with a possible solution.

Heater-cooler design

In Europe, it is possible to buy a storage heater. It is designed to run on off-peak electricity, which it uses to resistively heat a “bank” of iron “bricks” to about 700°C. Then, during the day when heat is wanted, it blows air over the bricks to warm the room.
My idea is a variant of this, except it uses phase change materials to store heat and “coolth” (the ability to cool air).

Phase change materials (PCMs)

You are familiar with phase change materials if you have ever put ice in a cool box. Ice keeps your food cold not (just) because it is cold, but because ice absorbs a lot of heat as it melts. To put it another way, to it takes a lot of heat to turn ice at 0°C to water at 0°C. If you add the same amount of heat again to the 0°C water, you will raise its temperature to 80°C.

My design uses this principle to store large amounts of heat and coolth.

It uses a PCM that melts at about 30°C. This is encased in small containers (eg. 1L soft-drink bottles) with a large surface area, within a tank of water surrounded by insulation.


In winter, heat is put into the tank, which melts the PCM. Because the maximum temperature of the tank only reaches about 50 – 80°C, there are more options for heating it. Instead of using a resistive heater (such as used in the European storage heater) we can use a bank of evacuated tubes or heat pump and get either free heat, or 4 kWh of heat for every 1 kWh of electricity (it might even be possible to use a roof-top solar pool heater). This melts the PCM and stores the heat. Later, when the building occupants want to warm the room, a small fan blows room air over the heated tank and warms the room air.


In summer, a heat pump can be used to pump heat out of the tank. This can freeze the PCM first (at 30°C), and then the water surrounding it (at 0°C). This stores “coolth” and in the evening when people come home from work, they can use the tank to cool the air in the room.


I have done some analysis and modelling in a spreadsheet that can be found here.
I have modelled the heater’s performance under various design considerations. At the moment, here is what I have settled on:
  • Heat/coolth storage volume: 350 L (total size: 1.2 x 0.9 x 0.5 m, allowing for 50mm of insulation all the way around)
  • Volume of hot-melt PCM: 250 L
  • Volume of water: 100 L
This design gives the following (theoretical) performance:
Heat storage (for use in winter): 31.8 kWh equivalent
Coolth storage (for use in summer): 12.5 kWh equivalent (I’ve deliberately designed it with less coolth storage, because solar PV is abundant most days in summer, but it could be adjusted. This also assumes that the heat pump can efficiently freeze the water.)


If the home occupant has solar PV and a reverse cycle system anyway, and if the marginal extra cost of my system is $1500 (my unit would replace the internal component of the split system), then even if the installation cost of an equivalent-performance battery system reduces to about $5000 (about ½ current prices) then my system is about 25% cheaper (this calculation is on the basis of heat/coolth delivered, and considers that it won’t be used in spring/autumn. It allocates batteries as having more value, but only at the same rate as heat/coolth – ie. when my heater is unused). In other words: if the price of batteries halves, my heater is still 25% cheaper.
Despite this, I doubt that this can be successfully produced as a commercial product, for the following reasons:
  • It’s a one trick pony – it can’t store energy for general use, only for heating cooling. Batteries store electricity, which is more generally useful. Batteries also have a lot of “public mindshare” and will be hard to compete against
  • The cost of the PCM is significant. To be sold for $1500, it would need to be made for 1/2 that, which I don’t think is possible. I think a bespoke heater could be made for $1500, but that would be using “scrounged” parts wherever possible, since the retail cost of PCM would be about $1500.
Despite this, I think my system has some real advantages over using batteries to power heating/cooling:
  • Its embodied-energy is very low in comparison with batteries
  • It can be expected to have a very long useful life and is repairable (the only moving part is a fan which is replaceable). I could imagine a unit lasting for decades if well-made.
  • It is (relatively) easy to integrate with evacuated tubes to collect extra heat in winter


Most Australian houses have poor thermal performance. This device allows one to store heat/coolth that can be released when it is wanted. Because there are low temperature gradients (the internal temperature range in the device might not go outside -4 to 40°C) it should be easy to insulate. It is a cheap and easy retrofit (compared with improving the building envelope) that allows people to store large amount of heat/coolth to use as they please and is inherently compatible with renewable energy systems.

Sunday, September 4, 2016

Don't abandon the plebiscite

I am not LGBTI, but I am an ally. I strongly believe that all Australians are better-off with marriage equality, and I hope for a future that is more inclusive and less judgemental. I realise that I can’t understand the discrimination that LGBTI people suffer, but have had a few thoughts about the “debate” and how LGBTI people might strategise to get the outcomes they want.
I’m certainly not arguing that a plebiscite is a good outcome (John Howard's government changed the Marriage Act without a plebiscite -- there's no reason this government can't change it too), but it might be the only way of getting marriage equality during this term of parliament. If that’s the case, I think it should be pursued.
Note that I’m only thinking about the politics here, not whether a plebiscite on marriage equality would actually succeed, or any nastiness it might raise – I’m not very knowledgable on either of those things (and it's not for me to glibly talk about LGBTI people tolerating extra abuse for the greater good).

Thoughts in brief:

Marriage equality is a wedge-issue for the Coalition. The (small-l) liberal (progressives) like Turnbull support marriage equality, while the conservatives oppose it. Therefore, there are internal politics at play within the Coalition, with both the (small-l) liberals and conservatives hoping to use the issue to strengthen their power within the party. Turnbull wants to strengthen his prime-ministership, the conservatives want to replace him with someone like Abbott.

Labor is happy that they have found an issue on which to wedge the Coalition. The Coalition successfully wedged Labor on asylum seekers for two decades, and Labor are happy to pay them back. Because of this, politically, Labor are not in a hurry to resolve this. The longer they can prolong this issue, the more political mileage they get from it. The ideal outcome for Labor would be for this to drag on over several electoral cycles. Labor can keep ineffectively “trying” to get marriage equality to happen, and paint the Coalition as the breakers. If this continued, people for whom this is a big issue (ie. The LGBTI community) could become a captive constituency – they are forced to support Labor as the lesser-evil: they know the Coalition will never do it, so they can’t vote for them, but Labor is therefore not in a rush to do anything either. This would be a disaster for the LGBTI community.

For this reason, I think Labor are only too happy to vote against the plebiscite, especially if they can blame the Coalition and not expend political capital. Given the internal politics of the Coalition, the plebiscite might be the only realistic mechanism to get marriage equality – perhaps Labor don’t really want that, and would rather keep this as a hot-button issue that keeps votes coming to them.

There are people in the Coalition who support marriage equality. Since it is not coalition policy, they can’t vote for it (it would require that they cross the floor, and they would be kicked out of the party). But if there was a plebiscite and voting afterwards, perhaps they could. Labor and Greens defeating the plebiscite will weaken Turnbull’s leadership, and make it likely that he will be replaced by a more conservative leader. Is that what progressives really want?

Imagine that a plebiscite is the only option. It might pass or it might fail. If it fails, little is lost and another attempt can be made in a few years. If it passes and goes to parliamentary vote, a few conservatives in the Coalition might oppose it, but most of Labor will support it, as will many other Coalition politicians. It would easily pass. For this reason, if the lower-house fails to do its job and pass legislation on its own, the plebiscite should stay on the table as a fall-back option.

If it comes to a plebiscite, I think the question could be:
Should the government be able to prevent two adults from marrying?

Monday, August 8, 2016

turning our rose-coloured glasses towards the future

Everyone has a different idea about what the future holds, and our beliefs about likely future scenarios are largely defined by our beliefs about the present. This post aims to consider the way our beliefs shape our thinking about the future, without trying to ascertain which beliefs are probably correct.

The Christian Worldview

In the West, our thinking is hugely shaped by the Church. As a group, Westerners are romantic, idealistic and individualistic. We have a long history (which even predates the church) of skepticism about humanity's ability to be in control in a sensible way. A great example is the Greek fable of Icarus, or the story of Adam and Eve, but there are others, including more modern examples such as Frankenstein, Jurassic Park, etc. The issue is also deeper, and plays into the idea that the natural world is inherently beyond our comprehension or ability to control.
The Christian worldview also views humans as a mar on an otherwise-perfect landscape. A consideration of our flaws is fundamental here.

The Enlightenment worldview

In opposition to this is the Enlightenment worldview, which posits that rationalism and systematic research can reveal the workings of the world to us. It also views human potential as infinite and humans themselves as the apex of creation, with our intellect and reason elevated to near divine status. This view really began in the Renaissance, and gained traction with thinkers like Voltaire, Newton, Bacon, etc.
Since the Enlightenment, this view has been tempered somewhat by thinkers such as Godel and Schrodinger who have shown some of the limits to human knowledge. However, the enlightenment view persists, that people can continue to better themselves indefinitely through the application of knowledge about the universe.

The future

Many, perhaps most, people agree that humanity is at a crisis point when it comes to climate change. There is a smaller group who are aware of the dangers of resource depletion. We know that we cannot continue adding CO2 to the atmosphere without significant consequences for ourselves and Earth's ecosystems. There is disagreement, though, about what this forced change means for us and how we should achieve it.

The techno-utopians

The techno-utopians believe that technology will solve this problem for us without major changes to our society. Some even argue that market mechanisms, as they currently exist, will seamlessly transition us from fossil fuels in a timely manner. Others argue that government intervention (at least to remove market distortions) may be required.
The basic consensus in this group is that solar PV and wind turbine technology is currently the cheapest new form of power and that it will quickly displace all fossil fuel generation. To my mind, techno-utopians share the enlightenment worldview.


Doomers believe that we are on the way to collapse. They envisage that the disintegration of the West, industrial society, human civilisation, or even human extinction are the likely outcomes. They believe that humans have risen above their station by the exploitation of fossil fuels, that it won't be sustained, that there is no other alternative and we will revert back to some former, simpler, state. They believe that a sustainable society looks very different from our current society.
I believe that this way of thinking is close to the Christian worldview. Our punishment awaits us due to the pursuit of knowledge (that we shouldn't have) -- like the fable of Adam and Eve.


I'm not saying that one of these opinions is right and one is wrong (to my mind, it is not yet clear how this will play out). However, I think it is useful to be aware of the background and presuppositions to our thinking.
Also, the sketches of the two groups are very broad -- I realise that both groups are highly heterogeneous and have many distinct and conflicting opinions.


To my mind, a big question is: can humans discover/invent things that nature cannot?
A good example of this is solar power. Is it possible for humans to build solar PV systems that have a full-circle efficiency (ie. including materials provision, manufacture, maintenance and decomissioning) better than photosynthesis? I think that doomers would say we can't, and that techno-utopians would say we can.

Here is a restating of the question:

Evolution is our name for the process that leads organisms to possess traints that are well-fit to their environment. Because unfit organisms tend to produce fewer successful offspring, the tendency over time is for a trait to become optimal for its environment [1]. One thing to bear in mind is that evolution is incremental, and every tiny step in the development of a trait needs to be not only viable (ie. able to survive), but optimal (the currently most competitive solution) otherwise the progeny of that evolutionary step will be disadvantaged and the trait will tend not to persist.
This is not true for humans developing a new invention. Humans can mentally explore options, and use creativity and leaps of inspiration to create something fundamentally new. We don't need to arrive at a new idea, in tiny incremental stages, where each stage will be optimal -- we can "build" the invention, in our mind, all at once: exploring different designs and their strengths and weaknesses.
Clearly, humans' ability to make mental models of the world is constrained by our own evolution (eg. we retain a primate nervous system), but it seems possible to me that humans can still create inventions that are impossible for evolution to create. [2]

This doesn't answer the question of whether solar PV has a full-circle efficiency better than photosynthesis, but it indicates that it is possible it is true, while providing no evidence one way or the other. For this reason, I believe it shows that saying "if there was a better way to convert sunlight into chemical energy, evolution would have found it" is fallacious reasoning.

[1] This is clearly a gross simplification, but for the purpose of this sketch, it will do.
[2] There is a danger in this thinking though -- biological evolution has been occurring for such a long time that it could find circuitous routes around what appear to us as impossible chasms -- for this reason we should be careful before pronouncing that we have found an invention that evolution could not find.

Monday, July 18, 2016

Holistic home temperature management

This is a draft of an article to be published in the SA permaculture magazine. Your thoughts and comments would be very helpful in making it better.

I have deliberately chosen the term management instead of control. This relates to the idea that, in a retrofit situation, there is no way to control the internal climate of your home without using many resources (expensive, unsustainable). This article will give a quick overview of how to maintain a comfortable home economically and sustainably.
Note that this is in the context of a retrofit -- for new builds and renovations, there are other opportunities that are not covered in detail here.

Quick thermodynamics primer

Heat flows from warmer places to cooler places. A hot cup of tea left on the bench cools down to room temperature, while a block of ice left on the same bench will melt. In both cases there is a temperature gradient, heat moves from a warmer place to a cooler place and eliminates the gradient. The greater the temperature difference, the steeper the gradient, the faster the heat moves. You can slow this movement of heat by adding insulation -- a tea towel wrapped around a mug of tea will keep it warm for longer.
It is exactly the same with your house. If you want to maintain a house that is a different temperature from the environment (eg. cooler in summer or warmer in winter) then the natural movement of heat will be slowly removing that temperature difference. You must work with this process.

A way to think about heat and your house, in an ideal situation

These examples aim to work only with the resources at hand -- they try to avoid using lots of energy from the grid or other stores.


It’s morning, outside it’s very cold. Inside, your house is at its coolest. When the outside temperature is greater than the inside temperature, you want to bring that heat inside as much as possible. When the sun rises, you allow it to shine through the windows into the house. When your solar PV is producing significantly, you switch on your reverse-cycle or heat-pump hydronic system to start pumping heat into your house. When the sun hits your solar heat collector or greenhouse, you pump the warmed air into the house (this can be thermostat-controlled). At the end of the day, as the sun sinks and the outside temperature drops below the inside temperature, you close up the house to slow the escape of inside heat into the cooler environment. You avoid space-heating inside the house now (because your solarPV is no longer producing), and use heating direct to occupants as they need it (see below).


It’s morning, and the coolest it will be all day. Your house should already be open to allow warm air to escape. If you have a solar heat collector and pump, you can pump warm air out of the house. If you have East-facing solar PV, you might consider switching on your reverse cycle to cool the house further (taking advantage of the cool outside temperature to improve the efficiency of the heat-pump), otherwise you might want to wait until a little later. Now might also be a good time (depending on the humidity) to use an evaporative air conditioner if you have one.
All outside blinds should be down before the sun hits any windows, and as the outside temperature increases above the inside temperature you should close up the house to exclude as much heat as possible. Every curtain, door and blind should be closed.
At the end of the day, as the sun sets, the outside temperature is at its highest. You should not open up the house until the outside temperature drops below the inside temperature, but at that point, you should open all doors and windows to let the warm air out of the house.


I will now talk about some ways of being more comfortable, in order from cheapest and most sustainable to most expensive and least sustainable.

1. Rug up

It’s a lot harder to change the temperature of an entire house than it is to change the temperature of one room. It’s also a lot harder to change the temperature of a room than of a single person. Try temperature changes that target the human body directly:


  • put on a jumper, hat, thick socks 
  • put a throw (electrified throws are also available which are extremely effective)
  • have a hot drink
  • do a small amount of exercise
  • sit in a snug chair (one that surrounds you and stops heat loss)
  • use a heated chair


  • use a fan to move air over your skin
  • wear fewer clothes
  • have a cool drink
  • Avoid unnecessary movement
  • Put your feet in cool water
Doing these simple things allows you to be comfortable in a much greater range of inside temperatures.

2. Target heating to the person

Heat that targets a body is much more direct than heating a whole room. More of the heat is warming the person so it is more efficient. [0]
I’ve already mentioned some direct active heating methods that can be used. An electric throw (eg [1]) is an electric blanket that is designed to be worn when using a computer, reading or watching TV. They use little power but are very effective. Similarly, a heated foot pad (eg [2]) will help keep your feet warm when it is cold.
Conversely, a cool foot bath is very cooling on a hot day.
A cold bedroom doesn’t matter if there is warm bedding and an electric blanket. You can even buy a refrigerated bed (eg [3]) cover to keep the bed cooler in summer.

3. Stop heat movement through the building exterior

When I say “stop” I really mean “regulate” (it is not possible to stop the movement of heat, you can only slow it down). You want to control when your house lets heat in and out. If there’s a warm sunny winter’s day, you want to get lots of heat into your house (ie. open the doors and windows, allow winter sun to shine into Equator-facing windows).

This means you must insulate your house. I approached it in this order (based on bang-for-buck and easiest-first):
  • stopping drafts (caulking around doors, skirting boards, windows)-- reduces convective heat transfer
  • roof cavity (loft) insulation (batts) -- reduces conductive heat transfer
  • window coverings (curtains, bubble glazing, external blinds, secondary glazing, double glazing) -- reduces conductive and radiant heat transfer
You definitely want to keep the sun off all windows in summer. That makes external blinds a very good investment. Judicious use of deciduous trees/vines can be helpful, though their leaf-free time may not perfectly align with your desire for winter sun.

4. Use passive solar gain to warm your house in winter

Adelaide has very hot summers, but still has a “heating” climate for most of the year (April - October). Hence, thinking about winter warmth is very important. You want to get winter sun shining into your home, preferably onto something dark and heavy, such as a stone wall or floor inside the house. Dark things absorb energy (heat) from sunlight more effectively, and heavy things can hold more heat (thermal mass). This is like charging up a heat battery in your house.
If you don’t have good Equator-facing glazing that will let lots of winter light into your house, it can be expensive to retrofit. Some other options are to build a greenhouse on the Equator-side of your house, then let the warm air into your house. Another option is to build a solar heat collector and pump in hot air [4]. These are less effective than true passive solar, but are a cheaper retrofit.

Note that thermal mass in the floor can be problematic if it is inadequately insulated from the ground. It can be very difficult/expensive to maintain a desirable floor temperature in that situation. It may be better to "insulate the floor out of the space" instead of heating it.

5. Active heating

There will be times when you want to employ active heating in your house.
If so, remember that it is much cheaper and more sustainable to only heat (a small) part of your house.


I don’t recommend gas heating. Gas is expensive to connect initially, the ongoing supply cost is expensive and the gas itself is expensive and becoming more so. Also, gas is a fossil fuel and thus contributes to climate change.

If you live in the city, think carefully before installing a wood combustion heater. I have been using one sparingly this winter, but they produce so much smoke and soot (if you want efficient, low-smoke combustion, you will quickly burn your wood and lose lots of heat up the chimney. If you throttle the fire to reduce chimney heat loss and conserve wood, your fire will produce a lot of smoke and soot). [5]
Rocket-mass-heaters or masonry-heaters [6, 7] are a possible exception to this, but I suspect most people wouldn’t install one of these as they are too expensive and/or too labour-intensive.
Separate to the question of smoke/soot, where will you get your firewood from if you live in the city? Is the wood sustainably grown/harvested/cured/transported? (I’m betting not)

We don't rely our wood heater a lot, and I don't really want to change that approach.

What does this leave? There are three main options, as I see it:

1. Hydronic heating

Has the advantage of allowing various sources of heat (eg. evacuated tubes, heat-pump) and can store heat from times of abundance (eg. sunny day, solar PV) to release later. It is fairly expensive to install.

2. Reverse cycle space heating

Cheaper to install, but less effective. There is no heat storage, except in the thermal mass of the house itself.

3. Electric radiant heating.

This is nowhere near as good as an electric throw, but is still more efficient than space heating of any kind, because it can be targeted more to the building occupants. [8, 9, 10]

A few thoughts

This article is not exhaustive, by any means. I don't think that sustainable home heat management is a "solved problem". There are some other, more explorative, options that I've considered but not researched in more detail.
  • Home fuel-alcohol distillation and its use for heating/cooking. This would provide only very meagre heating, but could provide cooking on the few days that solar PV is inadequate. Finding a sustainable source of sugar for fermentation could be tricky in the city.
  • Home ethanol synthesis using surplus summer PV electricity. This could be a good way of storing surplus solar PV energy in summer for use in winter. A catalyst is in the early stages of development, and no commercial product is available
Really, we just need to learn to live with cooler houses in winter, and warmer houses in summer.


Wednesday, May 4, 2016

Review: New jobs in a transforming economy – a low carbon future

This forum took place on May 2nd, details here

There were four speakers:
Martin Haese (Adelaide Lord Mayor), Giles Parkinson (journalist, editor at, Heather Smith (energy and climate change specialist and blogger)  and Catherine Way (industry development manager)

Brief summary

Martin Haese spoke first, and focused on South Australia’s leadership in the area of renewables, and Adelaide City Council’s support of the carbon neutral Adelaide project.
Giles Parkinson spoke next, and focused on the technological aspects and the way that renewable electricity is now the cheapest new electricity generation.
Heather Smith spoke next and focused on industry and employment as we transition to a renewable economy.
Finally, Catherine Way spoke about the fact that there are likely to be fewer jobs in a society based on renewables, but that the web and disintermediation could make up for it.


It was interesting that the first two speakers didn’t mention jobs at all. Though the second pair of speakers did, I felt that overall the forum didn't underline the depth of the problem. Based on my reading at her blog, it is clear that Heather Smith understands the issues, and she mentioned it on Monday. Smith also collated community input on her website, which shows a lot of thought about jobs in new industries. Similarly, Catherine Way also articulated the problem of future jobs and clearly sees problems. Despite this, I still think it didn't get the attention it needs.

The problem (or part thereof) as I see it is this: for renewable energy to be economic, a high-tech manufacturing sector is required. Most of the cost reduction in renewables has come not from fundamental improvements to the technology but from efficiency gains. In this context, efficiency means more automated manufacturing with fewer workers, and more streamlined installation with less labour and a preference for lower-skilled (cheaper) labour.

If we extrapolate what is already happening, we will have an ever-larger unemployed or underemployed underclass, and a wealthy minority whose material needs are attended to by machines.

Simply put, automated manufacturing means that we need a lot fewer workers to deliver the goods and services we want and this can’t be disentangled from the renewables revolution.

I think this is underappreciated by most people who are thinking about renewables and labour in the 21st century. The reason I think it is underappreciated is that most of the “thinkers” are middle-class people for whom the kinds of people who make things are largely invisible. They have an attitude based on consumption of goods, and it doesn’t matter where those things are made or whether it’s by humans or robots. This is why we’re so comfortable using terms like “efficiency” to mean staff redundancies as the labour pool grows ever smaller.

A second industrial revolution? No thanks!

The other problem I had with the presentations is that some of them glibly refer to a second industrial revolution – as though that’s a desirable thing to have. We have forgotten how convulsive and devastating the industrial revolution was to the people living through it. While it was great for the emerging middle class, for most people the industrial revolution brought poverty, immiseration, disease and death. If you want a picture of this, read some Charles Dickens. People didn’t want to be forced from their villages to work long days in dark, dangerous and crowded factories for poor pay. To make them do so, the land they lived on was privatised (it had previously been the commons) and they were kicked off their subsistence farms where they had lived for generations leaving them the choice of moving to the city to earn a living or staying in the country to starve. This was, of course, very profitable to the factory owners (who now had a huge pool of desperate, cheap labour), and is known today as the enclosures.

I think the blithe attitude to a “second industrial revolution” speaks to the sense of entitlement that so many people have today – as though we can realise all the benefits of cheap goods manufactured by robotic labour, but none of the costs of unemployment or social instability.

An answer

For centuries, resources have been plentiful and humans’ ability to harvest them limited. Because of this, a strong work ethic has developed, which views hard work and the accumulation of resulting riches as an expression of virtue. This work ethic and “virtuous consumption” can be seen across our society.

Today though, we have the opposite problem: resources are scarce and humanity’s ability to harvest them far exceeds what the planet can sustainably yield. In this environment, there is less work needed (or desired) than what people want to do and work stops being a virtuous contribution to society but instead a competitive scrabble (also known as a zero sum game) for what is available so that people can gain status.

We need to change our attitude to work and recognise that workaholics are really depriving someone else of their time at work. This attitude-shift will need to have implications right across the labour market – from industrial relations (the length of the working week), to welfare (perhaps a regulated minimum income) to taxation (a stronger progressive tax system with higher marginal tax rates for high income earners to acknowledge the costs to society of them monopolising employment)


I probably sound quite critical of the forum. Overall (despite my criticisms) I thought it was excellent and thought-provoking and I support all the speakers in what they said and their endeavours. However, I think it's easy to fall into the trap of techno-utopianism, and I think that Martin Haese, Giles Parkinson and a significant proportion of the audience[1] did so on Monday.

[1] I have no evidence to support the claim that "a significant proportion of the audience" fell "into the trap of techno-utopianism" -- is was a feeling based on the questions that were asked and the conversations I heard afterwards.

Wednesday, April 13, 2016

Cheap wicking beds


This article shows you how to build (almost) free wicking beds out of scrap materials -- the sort that you might have lying around your backyard, or might find on the side of the road. Some of this post is repeated form previous posts, but it's designed to be a reference that contains everything about the building of the beds.
Wicking beds need a water reservoir and a soil-water barrier. We've used builders' plastic and geotextile, which are the only things we've bought for the beds. This has saved us about $1000 in timber or corrogated iron raised beds.


If you live in an arid climate, and want to grow (annual) vegetables, wicking beds are a great way to save water. The water "wicks" up, from below, through the soil -- the driest soil is right at the surface -- which minimises evaporative losses. It also encourages deep root growth which makes for stronger better plants.

Gardening Australia has a great introduction to wicking beds, I won't duplicate its content.

As much as we love gardening, part of the reason we do it is to save money. When we harvest vegatables, it is great to think that they're "free". Of course, it is really easy to get carried away spending money in the garden -- so that home-grown vegetables become an expensive luxury instead of an economy. A big part of this is that we are so conditioned to view spending money as a way to solve problems. If you want to sort something out, just buy xyz which will do it. It is really hard to get away from that mindset to a mindset of trying to solve a problem with whatever is on hand, and make the best of things.

For this reason, the "normal" way to build raised garden beds these days is to build them with sleepers, with hardwood timber, using corrogated iron circles etc. We wanted to have a large area of raised (wicking) beds, and I worked out that if we followed this route it would have cost us about $1000 in materials. I wanted to explore whether it could be done more cheaply.

Partly, this is an exercise in simply saving money. Partly, it is trying to find ways to garden and live that are accessible to more people than slapping down large amounts of cold cash.


I'll show you two different beds that I built. They are built differently, but share some principles.
  1. If you want the sides of your bed to be less strong, don't build them so tall. Soil, like water, is heavy and the pressure it exerts on the walls of its container is directly related to its height. 
  2. Some materials are strong in compression but not tension (eg. concrete, which is hard to crush but easy to snap) and some are hard in tension but not compression (eg. corrogated iron which is hard to pull but easy to bend). Base your design on the materials you have.
  3. Don't try and make the bed too strong. Think about a kid's inflatable paddle pool -- that is the sort of pressure we're trying to contain. If a plastic inflatable pool can do it, why should we need railway sleepers?

Wicking bed 1

This is the simplest bed I built. Its structure is made solely of old corrugated iron. The bed is circular. Usually, a corrugated iron raised bed would look like this or this.

Note that the corrugations are usually horizontal, and there's a single piece of iron going the whole way around. This is great, but it needs to be especially rolled like this at the factory and is hard to transport. This makes it fairly expensive. Is there a cheaper way?
Yes! Get some scrap corrugated iron (free) cut it into lengths so that the length is the height of the wall you want (this can be done with tin snips), then rivet the pieces together in a circle. The circle is not rigid (like the above example) but flimsy -- but it doesn't matter. Get it into a circle shape, and fill it so that the whole thing is in tension, and it is not flimsy any more. This is what I mean when I talk about working with materials -- the bed doesn't have to be rigid (strong in compression) it just needs to be strong in tension (hold in the soil).
The bed is then lined, in typical wicking bed fashion, and filled, etc.

The top edge of this will be sharp (it's the end of the iron, and may have been cut with snips) -- get a piece of old hose and slice it longways, then put it over the edge. To help it stay on, drill holes every 3rd corrugation, and put a cable-tie through the hold and around the hose.

This bed works well, and is suitable if you want a round bed.
The completed bed. Extremely productive!

Wicking bed two

I wanted a larger bed, but didn't want just a larger diameter circle (2m diameter is about the maximum a person can reach into). A larger bed needs to be oblong, which requires a different design. I basically got the round bed (above), cut it in two, and put a square box in the middle. The ends of the bed work exactly as above, but the middle needs to be stronger. Having soil pressing against straight sides mean they need to be strong in compression as well as tension -- how to do this cheaply?
I had some light meranti timber that my dad and I had salvaged. Its cross-section is only 35 * 50 mm (1.4 x 2") so it isn't very strong. I decided that if I can fix the ends of the "box" in place, then the box needs to bear smaller compressive forces. I did this by running timber across the top of the bed to stop the soil from pushing the sides of the bed out (you could also use rope or wire).
This bed is about 2 m wide by 4.5 m long

Clearly, this only works at the top of the bed -- we still need to hold the lower corners of the box in place (where the pressure is higher, because there's more water/soil pushing down). This was done with a star-picket in each corner. I also sunk posts in the centre of each side into a hole in the ground with broken concrete rammed around. This all makes the box fairly rigid. Here are some under-construction photos:
One side of the half-built bed. The vertical post is shown and part of the "box". Notice how light the timber is. Also, you can see the join in the horizontal iron -- it's only about 1.5m long, whereas the box side is about 2m long.

The round end of the new bed. This will become more circular when it's under tension from the soil. Notice how simply it's joined onto the box, and the hose on top for safety.
The inside of the partly built bed. The plastic here is to keep the meranti from the soil, which would cause it to rot.
Because this will be a wicking bed, it's important to make the insides as smooth as possible -- sharp points will puncture the plastic and ruin the bed. (I have learnt this the hard way on previous beds -- don't skimp this step...)
The structurally-complete bed. Ready to be lined and filled. We picked up many stones, etc, from the ground to try and make it as smooth as possible. We then lined the ground with some old synthetic carpet and covered all the sharp bits of iron with some offcuts of plastic and geotextile (weed mat) that we had.
the same bed being lined with builders plastic. It needs to be water-tight so this step is important. Don't puncture the plastic! The white behind the plastic shows the geotextile covering the sharp bits. We bought brand-new good quality builders' plastic -- you need to spend money here -- don't skimp on this step. Make sure it doesn't have any holes in it! We used two layers.
These are upside-down polystyrene boxes we got free from a building side. Broccoli boxes (from a vegetable store) also work well (and can also be had for free) These bear the weight of the soil and create the void for the water reservoir. Note the PVC pipes that run down the sides of the bed -- this allows water to flow easily through the reservoir (instead of being occluded by soil). It also means less soil sits in the water.  Note that I drilled lots of holes through the polystyrene boxes so that water and air could easily move around and through them. I also cut notches out of their tops (in the photo they're upside-down) to let water move underneath them.  

Then, cover the boxes with geotextile (weedmat). You want to stop the soil mixing with the water, but you want some of the soil to be in the water so that the water can wick upwards.
Then carefully fill with soil, starting with the pockets, and then the whole bed. be careful not to get soil down the sides. Also, note the PVC pipe that is used to let mosquitoes breed in fill the reservoir. I suggest putting a cap on the PVC to stop mozzies.
The completed large bed -- planted out, seeds just germinating
The completed large bed -- planted out, seeds just germinating


We've now built three raised (wicking) beds: 7 square m, 3.2 square m and 9 square m. All we have bought is the builders plastic and geotextile. I think we've saved at least $1000.

If anything in this post is unclear, or you feel that detail is lacking please let me know. I think these beds work really well, with the only cost being builders' plastic and some geotextile -- they really demonstrate that the raised-bed part of a wicking bed can be made for free.

Wednesday, March 9, 2016

Rethinking transport

What got me thinking about transport (yet again) was an Australian-sold electric scooter, the Fonzarelli. They look very cool, cost AU$5000 and don't require a motorbike license. Because they're small, registration is much cheaper, and the electricity-use would be small. It looks very attractive, and I'd quite like to ride one -- compared with a car, it is an extremely economical way to get around.

Then I started comparing the electric scooter to a bike or ebike, and there are several disadvantages:
  • It's relatively expensive
  • it needs to be registered (annual fee)
  • it's not modular (I'll come to this)
  • It can't be ridden on bicycle paths (it's confined to roads)
  • It can carry one pillion passenger only (in addition to the driver)
One advantage is a top speed of 75 km/h means it can be ridden comfortably on major roads (if the user has a license that allows this -- otherwise it can be programmed to limit the speed to 50 km/h). Let's quickly go through these dot points:


A new ebike can be bought from $1500, although good ones are more like $2500. A retrofit kit can be bought from about $800 to fit to an existing bike.


Modularity means that a bicycle can be built from easy-to-assemble off-the-shelf components that can be chosen depending on your requirements.
If the DIY path is chosen, you can build a customised bicycle that is specific to your requirements, and can build it from off-the-shelf parts. Want to carry three children? A surfboard? Tradie's tools? A piano? All these things can be carried on a bicycle (and possibly all at once, if you're keen). The other benefit of modularity is that if any component fails, it is easily replaced by the user (instead of needing to send the whole vehicle in for repair) -- this is both cheaper and more convenient. If you are a bit handy, I recommend the modular, DIY approach.

Bicycle-path access

Australian cities have shared-off-road paths that are for use by pedestrians and cyclists only. To cycle on these paths legally, you must ride a "bicycle" -- there is a definition for this. An electric scooter does not count -- scooters must remain on the road. To my mind, one of the great benefits of cycling is the flexibility to leave the road and ride on off-road tracks and (in some states) the footpath [1]. Even in the centre of the city, these are often through paths which take you away from traffic congestion and red-lights.

What is a "bicycle"?

In Australia, there are laws about adding electric motors to bikes. Essentially, there are two options:
  1. you are limited to a 200 W motor, and it can be operated by a throttle (like a motorbike) if you want (I have a throttle on my bike -- it's easier to install than a pedal sensor)
  2. 250 W motor, but pedal assist only, and the motor cuts out at 25 km/h


In the days when motor vehicle (even motor bike) engines routinely output 15 - 100 kW, you may think why bother with 250W?? It is such a comparatively-small amount of power -- what does it do? Does it do anything?

An average fit adult can sustain an output cycling power of about 200 W. The motor will double that. This makes cycling up big hills, or with lots of luggage, feasible for only moderately-fit cyclists. My ebike motor can accelerate me to its maximum speed (25km/h) on the flat without pedaling. Generally, it makes hills feel flat, and the flat feel like a strong tail-wind.
25 km/h doesn't sound fast, but it is (qualitatively) above the average speed of cars in the city (in terms of getting from source to destination), it is also faster than the tram, though not as fast as the train though.

An example of an ebike trip

I took the kids bushwalking in the Adelaide hills. We caught the train to Blackwood, then cycled up the hill through the Belair National Park, out the back of the park, and on to the Mark Oliphant Conservation Park. Although I do have the fitness to pull the kids up there without motor assistance, it would not have been feasible that day (also it would be much slower, which would try their patience).

This is the route we took. I should add that, although google estimates this route to take 2h:40m to ride, it took us under 2 h (to drive would have taken about 35 mins each way, assuming no traffic congestion). Typically, our car uses about 25 L/100km when going up a hill. I think we would have used at least 10L of petrol had we driven there and back -- 10L of petrol contains energy equivalent to about 100 kWh, and would cost about $10 (at current low oil prices). Conversely, the electricity to charge the ebike is worth about $0.24, and the battery depreciation through use was about $2 (battery cost $500, about 500 cycles before replacement)

Monetary Savings

I think it's interesting that even with
  1. the sunk cost of car registration and insurance
  2. the very low price of petrol
there is still a considerable saving of cycling the ebike versus driving the car. It was nicer too -- we got to cycle through the national park, which we couldn't have done in the car.

Energy Savings

To manufacture a 1 kWh lithium ion battery uses about 500 kWh of energy. Assuming a lifetime of 500 discharges, this implies a manufacturing cost, per battery charge cycle, of 1 kWh. If I fully drained the battery on our cycle to the park, then there would be an additional charging "cost" of 1 kWh. That means the trip with my kids "cost" 2 kWh on the ebike.
Compare that to the fuel cost estimate in the car of 100 kWh (which does not include manufacturing or maintenance of the car or road), and we can conclude that the ebike uses less than 1/50th the energy of the car. This is such a big saving that I conclude, unequivocally, that ebikes are a Good Thing if their use displaces car use.

[1] I regularly cycle on the footpath, and it is legal to do so in South Australia. I think it is very important that cyclists are careful and courteous on the footpath. Please remember that there will be very young, very old, mobility-impaired and sensory-impaired people on the footpath and cycle accordingly. Remember, too, that sightlines on the footpath are not as good as on the road -- you will regularly find blind corners. I would never cycle above about 10 km/h on the footpath, and would go past a pedestrian at walking pace.

Friday, February 26, 2016

wicking bed, take 3


This post describes a method of building a wicking bed using salvaged materials (except the liner). Total cost was about $40 (part roll of geotextile and builders plastic, few nails and screws).


The Summer that is now finishing was not particularly hot by Adelaide standards, though the Spring was very hot and dry. We found that our tomatoes really struggled due to lack of water in their early growth, and our tomato harvest is very small compared to last year. Our most successful tomatoes were volunteers (self-seeded) that grew in one of our wicking beds.
Also, I've already planted out some brassicas (broccoli) in preparation for autumn in one of the existing wicking beds -- despite no rain and some very hot (~40 C) days, they're doing very well with only a few bits of extra hand watering.

So, I am building another wicking bed. 


Recycled or found:
  • Lengths of meranti timber, 50 x 35 mm that I salvaged from a 1970s pergola that I rebuilt. Some of them are a bit rotten, so I've chosen good bits. 
  • Sheet iron from a fence with a neighbour that was replaced (I kept all the iron and jarrah posts, though the posts were rotted away at the ground)
  • Two 50 mm square tube posts from the garden
  • Length of old garden hose from the side of the road
  • Builders' plastic (to create the reservoir)
  • Geotextile (to stop all the soil mixing into the reservoir)
  • Rivets and 40 mm screws


I considered buying some railway sleepers or circular corrugated iron beds, but for a similar sized bed it would have cost $500 - $700. Possibly that would result in a longer-lasting bed, but I'm hopeful that this should still work fairly well, and cost much less.
The basic idea is that, because the timber is not strong enough to actually retain the soil and water, it needs to work under tension (as opposed to simply bearing a load). I think many garden beds are really over-engineered -- I'm not building a bunker -- just something that can hold in the soil. Note that it doesn't need to be strong like a retaining wall -- circles in tension are much stronger than a straight edge -- having the rounded ends makes it easier to build.
The design was inspired by a circular wicking bed I build before, simply by joining sheets of iron together with rivets. That design works well, and is very cheap and simple. Now imagine getting that circle, cutting it in two, and putting some square sides in between and that is what I'm doing. This is more complicated, but it gives a larger bed.
Basic design of the bed. There are straight side walls, reinforced with the meranti timber and vertical posts. I will add star pickets to the "corners" if needed for support at the base. The three timbers across the top are to hold the top together in tension so that the sides don't splay out.
 One problem with using meranti is that it will rot quickly if it has wet soil against it. At the bottom of each side, there is a piece that rests against the ground -- I've wrapped this in plastic to protect the timber.
The partially built bed. Note the plastic to protect the meranti that is in contact with the soil. At each end of this "box" I've now put a star picket, to give the bed extra rigidity. I'll do the same on the other side.

The 1/2 cicle at the end. It's not quite circular yet -- I need to move a bit more mulch away and push it out. Note the hose on top to protect people from sharp edges. I drilled holes through the iron and used cable ties to keep the hose in place.

An inside view of the bed. Before any plastic lining is installed, I will carefully go over all the internal surfaces and cover any sharp bits. I'm not quite sure how I'll do this yet -- maybe silicon, maybe tape
 The  reason I chose to fiddle about with reused materials instead of buying new, is just part of the thinking about consumerism. We're really conditioned to see buying things as the solution to a problem, and I'm trying to move away from that kind of thinking. Hence, I wanted to build it, as much as possible, with things I already had.

The plan is to try and find some old carpet, or underliner (synthetic, preferably) on the side of the road and use that to line the bed and protect the plastic sheeting.

The eventual plan is to give it a nautical theme, including a sail and some portholes on the sides -- maybe even an anchor :-)

I will post an update about this bed when it is finished, but in the meantime would appreciate any comments regarding potential problems people can see with the design.

Rest of the garden

We're getting a fair bit from the garden at the moment -- lots of curcurbits, capsicum, loads of basil, silverbeet and other leafy greens, some tomatoes.

This is a volunteer pumpkin that we've just let do its thing. It's now about 8 sq meters in size!
It has about 6 or 7 pumpkins like this growing on it. I hope they're tasty!

Here's one of our capsicums

 In other news, some friends picked up this little toaster oven second hand ($10) and kindly passed it on to us. It's lovely, old, made in Japan (I'm guessing it's at least 40 years old) and has no electronics at all. It has a timer that uses a spring and rings a bell when its finished. Charming! It only uses a max of 750 W too, which is great. If I cover it with a couple of tea towels (and keep an eye on it, of course!), I can cook on quite a low setting. I've cooked lots of roast potatoes in it, and have also baked bread -- I want to try and pick up a small bread tin that will fit inside it. I cooked a loaf of bread using 0.2 kWh -- I'm pretty happy with that!

Monday, February 22, 2016

Boom and bust

I have just finished reading the excellent book "The great crash, 1929" by Galbraith. It (entertainingly) describes the events that led to the crash of 1929, as well as the responses and effects it had. It's a great book, is very readable and informative and I highly recommend reading it.

This is not a review of the book, but a few musings on related themes.

I remember reading a question, a few years ago, which went like this:
"Why is it not possible to end a bubble without a crash? Why can't we have a soft landing?"

The answer is that, during the bubble, wealth is being destroyed but the market only realises this at the time of the crash, and adjusts the prices accordingly. Let's think about this in more detail.

Human's have various tools for understanding and describing the world around us. A big one is language. I can tell you about something that I saw -- I could for example describe a tree with large pink blossoms on it that I saw recently. I can never perfectly describe it to you though -- there are limitations at every stage, from the way my eyes see it, to the way my brain understands what my eyes are seeing, to the way I describe it to you, to the way you understand the words I say and align them with your prior knowledge to visualise the tree I'm describing. Although you might be able to imagine a tree that I'm describing, it will never be the same as what I'm trying to describe, which in turn will never be the same as the actual tree that I saw.

Thus, my ability to perceive something and communicate it to you is limited.

The Market is similar. It is a human tool for understanding and describing an aspect of the world in which we live. We use that tool to allocate resources: high prices indicate demand for a good or service and communicate to people that more of that needs to be provided. Low prices indicate an oversupply and that they should focus their energy elsewhere. It is important to remember, though, that the market is merely a human method of communication, and problems arise when the market does not accurately reflect what is actually going on in the real world (of course, it never describes perfectly what is happening, but the hope is that generally it is close enough).

Where the market diverges from reality, it misinforms people about the demand for various goods and services and results in a misallocation of capital (because all goods and services require some investment of time and/or resources, which is basically what capital is).

When there is a bubble, the market ceases to reflect the underlying reality, usually (as in the years leading up to 1929) because of speculation. Speculation occurs when people buy something, expecting it to increase in value so that they can sell it for a higher price later on. This is different from investment -- let's quickly see how.

If I invest money, say in a business, I am basically loaning them some money to get established and then owning a share of the resulting value that is created. Imagine a factory being built -- there are a lot of up-front expenses that occur before the factory makes any money. These are paid by investors, who then own a share in the completed factory and any profits it creates (the profits are returned to the shareholders as dividends).
In contrast to this, a speculator buys a share in the factory on the assumption that it will increase in value -- not necessarily because anything underlying has changed, but just because the speculator expects that other speculators will also want to buy that factory (this increase in price [though not necessarily the underlying value] is reflected as an increase in the share price).
The best example of a speculative bubble, was the Tulip Bubble that occurred in The Netherlands in the 1600s. The prices of tulip bulbs reached astronomical heights -- a pair of bulbs were reportedly traded for 12 acres of land. Needless to say, nothing had fundamentally changed about the value of tulips -- all buyers of tulips assumed that a "bigger fool" would come along later and pay more.

That is the nature of speculative bubbles. Eventually, the supply of "bigger fools" (with ready cash) ends and the whole thing comes crashing down. But this brings us back to the original question -- can we come down slowly, without the crash?

To answer this we need to think about what is occurring during the bubble: because of the excitement, and the high prices, capital is diverted towards the bubble. People remove capital from productive enterprises, and direct it towards speculative investments in the bubble. People take loans on their houses and direct it towards the bubble. In many cases, people cease their previous employment to work full-time as a speculator. This can drive consumption, because people feel wealthy, but it is important to understand that owning a share of a bubble is not actually valuable until the share is sold and the wealth is realised -- this is something that few people generally do. When the prices start to fall, people realise that they are not as wealthy as they thought, and they try to sell to realise their gains. Unfortunately, the supply of "bigger fools" quickly ceases and the prices plummet. Now we are left in a situation where people are heavily in debt (because they have taken loans to speculate in the bubble) businesses have had money removed from them and directed to the bubble, etc. In other words, the bubble has sucked a whole lot of value out of the economy and destroyed it.

This is why the crash cannot be avoided -- by the time the market crash occurs, the economy has already crashed and the market is playing catch-up.

Lessons (from the great crash):

  1. Very few people are aware of the bubble before it crashes. Those that are, and speak out about it, are heavily criticised. In the USA, people were describing the market as "fundamentally sound" right up to (and even during) the crash.
  2. The misallocation of resources that occur during the bubble cause the crash, and have effects that percolate right through the economy in non-obvious ways
  3. The crash affects people who were themselves not involved in speculation. This happens because after the crash there is no capital to get things done, consumer spending plummets, credit becomes expensive
  4. There will be appeals to authority to proclaim that the market is fine and prices will keep increasing. This can come from the highest political, industrial and academic leaders and should not be trusted.

Is this relevant in Australia?

I think it is. I think that we have a housing bubble, right now, that is causing the mis-allocation of resources (ie. the destruction of wealth) in our society. I don't think it is as bad as in 1928, but I think it is unsustainable. To see why, we need to compare the price of houses to income. Relative to income, houses have doubled in price over the last 60 years, and has gone up 50% since 1980. This has caused a lot of capital to be directed towards renovations, extensions, etc. A lot of money is spent on making houses "fancy", and this money is non-productive (ie. if we invested it in manufacturing or businesses it would be more useful). It's fine to spend some money on one's house to make it nicer to live in, but I think the current problem is that people are doing it now on the expectation that it will increase resale value of the house and hence they are spending much more (than what they would if the money was "just" being spent to make the house pretty, without hope of recouping it when the house was sold). That is the mis-allocation of resources, and that is the value that is being destroyed in Australia right now -- and will only become apparent once house prices start to fall to the long-term average of about 1/2 what they are now.

What can't be concluded from a crash?

The bubble occurs when the market diverges sufficiently from reality that resources are misallocated. This misallocation causes the destruction of wealth and a subsequent crash. However, because the market has drifted from reality, you cannot necessarily make conclusions about reality (just that the market no longer reflected reality). For example, it seems possible that we're near the end of a North-American fracking bubble and that a crash looms. In that case, the market has misallocated resources to fracking companies that would have been better used elsewhere in the economy. This does not necessarily mean that fracking is inherently economically unsound, just that the speculative resources that have been put into it (right now) were economically unsound, and that the expectations of speculators (sometimes misnamed "investors") were unrealistic.

However, it might be reasonable to conclude that tight oil is not a good investment when the price of oil is $30 / barrel. This is interesting, because perhaps if the price of oil had remained high, those companies might have remained solvent -- whether they could continue to operate when oil was $100 / barrel is now an open question. I suppose it goes to show that reality is complex, and even processes that might seem out-of-scope (eg. geopolitical changes affecting commodity prices) can show apparently-sound market responses to be unsound.
Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.