The Bias Within: How Confirmation Bias Affects WTE

Earlier this month, The Wall Street Journal ran a three-part series on confirmation bias by Matt Ridley. The final installment, entitled “How Bias Heats Up the Warming Debate” discusses announcements of two preliminary new papers on climate by opposing schools of thought and how each uses confirmation bias to support its findings.

Courtesy: The Wall Street Journal. 

Confirmation bias is the art of “if-then modeling”- using data and models to prove what you already believe to be true. This is used in every facet of life, sometimes unknowingly. Not only does this affect our ability to accurately predict the future of global warming, but it colors our view of the present facts as well. Ridley points out that oftentimes unusually warm and wet summers in the U.S. and U.K. are interpreted as proof of a rise in global warming while overly cold winters are written off as “weather.”

Protesting a proposed wood-burning plant in Michigan.
Photo by Earth Melzer. 

Just as biases exist on both sides of the climate change issue, they are also present in arguments for and against waste-to-energy technology. The tendency among certain environmental organizations to use vocal and aggressive campaigns against prospective WTE projects is common and sometimes the speed at which these are put together begs the question of whether time has been given to adequately research the new technology and consider it with an open mind.

Representatives from the other side can be just as guilty of confirmation bias in their efforts to promote the benefits of WTE technology. While radical environmentalists like to zero in on the failures of past attempts by different technologies, proponents of WTE prefer to sweep them under the rug, assuring residents that something like that could never happen with newer technologies. While these proponents may be correct and have ample information to back their claims, it is still a form of confirmation bias.

Supporters of Biomass Projects. Courtesy: MassLive.com

Forbes contributor Larry Bell acknowledges his bias as an opinion writer and notes that these biases have a place in pushing discourse of controversial topics forward. He also remarks that while opinion pieces aren’t subject to the same peer review processes as research papers, “accountability for factual accuracy is a paramount priority.” In today’s world where readers are invited to share opinions through comment sections online and in print, reporting inaccuracies will be quickly and – as he notes, frequently impolitely – pointed out.

While we at the Better BTU strive to be as objective as possible when presenting arguments, we can’t ignore that we too are guilty of a confirmation bias. As steadfast believers in the biomass WTE movement, articles we pick and topics we present are often designed to illustrate our thoughts on the benefits of WTE technology as well as to create debate on highly controversial topics. We try to account for bias by also reporting on projects that don’t always have happy endings, such as the cancelled plans for a plant in Missoula, Mont. or the chaos that has ensued in Ada County as Dynamis tries to install its first commercial plant stateside.

Bias is inherent in all of us, but recognizing the bias and having multiple centers for scientific research to avoid a monopoly are the best ways to deal with it.

Further Reading:

How Bias Heats Up the Warming Debate – By Matt Ridley, The Wall Street Journal (Aug. 3, 2012).

Confirmation Bias: Why Both Sides of the Global Warming Debate are Nearly Always Right – By Larry Bell, Forbes (Aug. 14, 2012).

State Sovereignty: Mass. Banks on Sun and Wind over Biomass

Last month we discussed New Hampshire’s bold move to grant biomass projects the same incentives as other sources of renewable energy. This month we look at a neighboring state moving in the opposite direction.

Governor Patrick signs Senate Bill 2395. Courtesy: Eric
Haynes/Governor's Office. 

On Aug. 3^rd, Massachusetts Governor Deval Patrick signed Senate Bill 2395, enacting new energy legislation that has been in the works for nine months. The new law increases incentives for developing wind, solar and hydro projects and “includes provisions that aim to manage some of the drivers of energy cost increases.” (Mintz)

Utility companies will now be required to purchase seven percent of its power supply from renewable sources, up from three percent previously. Additionally, the law mandates long-term contracts of at least 10 years, which will help with project financing for renewable technologies. 

The move comes after the Bay State suspended consideration of all biomass energy applications on Dec. 3, 2011. Biomass had been a sizeable portion of the state’s renewable energy supply, reaching 49% in 2007. Massachusetts announced plans to begin its “RPS solar carve-out on Jan. 1” and many felt the Aug. 3^rd signing into law was long overdue. The new legislation also establishes a clearinghouse auction for surplus SRECs until the state meets its 400 MW solar target. Massachussetts’ goal is to have 15% of its energy supply come from renewable sources by 2015, with two GW of it coming from wind.

Biomass escaped having some limiting regulations that were proposed by the Massachusetts Department of Energy Resources (DOER) included in the final text, but the message is clear: biomass project developers should move over state lines to New Hampshire.

We can certainly understand Massachusetts legislators’ thought process: solar and wind produces zero emissions; it’s clearly the greenest way to go. So why not spend our money on the cleanest technology out there?

Courtesy: The Wall Street Journal, Associated Press. 

We support wind and solar as viable alternatives to landfilling but believe it is only part of the solution. Both solar and wind are intermittent power sources while biomass is a baseload power source. Additionally, wind and solar are still more expensive than biomass (excluding subsidies) and the cost of transmission lines from the oftentimes remote locations to more urban areas is not usually factored in. The proposed Cape Cod wind farm, which would consist of a series of turbines in a 25-square mile area in the shallow part of the sound, comes with a $2 billion price tag. While producing 468 MW of energy would be an impressive feat for the country’s first wind farm, it would only provide approximately 3.5% of the 13,300 MW used in Massachusetts.

We support the growth of other renewable source industries but hate to see it come at the price of excluding biomass projects. As the world continues to work to find the right combination of renewable sources to keep the light on, we think any legislation that excludes an entire section of industry does a great disservice.

The good news for Bay State biomass developers? New Hampshire is right next door.

Further Reading:

United States: New Massachusetts Law Boosts Wind and Solar Energy – By David L. O’Connor, Jeffrey J. McCourt, Amarynth Sichel and James Sasso, Power Engineering (Aug. 6, 2012).

Renewable Power & Energy Efficiency Market: Renewable Portfolio Standards – By Federal Energy Regulatory Commission (May 3, 2011).

Cape Cod Wind Farm Tiptoes Ahead – By Jennifer Levitz, The Wall Street Journal (Aug. 11, 2012). 

Industry Spotlight: John May

When we think of leaders of the renewable energy field we frequently picture engineers and scientists tinkering with machines or lobbyists fighting for emissions controls and government programs that foster green energy development. But there is another element, behind the scenes, that must develop in order to make the rest possible: the financial element.

John M. May, Managing Director
Courtesy: Stern Brothers & Co. 

It is for that reason that Managing Director of Stern Brothers & Co. John May is considered a pioneer in the movement, a leader in the financial frontier. May heads up the firm’s renewable energy practice and has built a reputation as one of the top environmental bankers, focusing primarily on biofuels and biomass.

May’s most significant contribution has been navigating the use of bonds as a form of financing for alternative energy projects. With the economy in a fragile state, banks and other traditional sources of capital have become even more hesitant to take risks - a bad sign for the entire renewable energy market. May points out that even experienced European banks, which have financed alternative energy projects in the past, are shrinking its involvement in the arena.

“A key advantage the bond market provides developers is a broader and deeper pool of available capital,” said May in an article he co-authored for the April issue of Renewable Energy from Waste. “Bond buyers include insurance companies, pension funds, mutual funds, hedge funds, private equity funds, and other strategic investors. Bonds can be the sole source of debt for projects or can provide a complement to bank debt.”

May underwrote the country’s first tax-exempt bond issue to fund a landfill gas-to-electricity project in 2003. Since that time he has developed one of the first tax-exempt bond structures sold to major U.S. institutional investors to fund ethanol projects. He secured a $15 million full faith and credit guarantee from the state of Illinois for a biodiesel project in 2006. He also created the bond finance structure adopted by the USDA in its Bio-Refinery Loan Guarantee Program, resulting in the agency’s adoption of a new Interim Final Rule for the program in 2011.

Developing an industry takes contributions from competent professionals in a variety of capacities. In addition to entrepreneurs, the field needs project developers, attorneys specializing in utility and environmental law as well as savvy investment bankers and financial analysts.

May’s specialties have helped finance large-scale projects and Stern Brothers & Co. is one of the most recognized firms in the financing of biofuels of U.S. The firm represents companies we’ve written about in our technology blog, including ICM and Rentech.

Financing continues to be a hurdle for smaller-scale biomass projects. We can only hope for a “John May” to come along with similarly innovative approaches to help get projects financed and push the industry forward.

For More on John May:

John May, Managing Director - Stern Brothers & Co.

Healthy Support - An Investment Outlook by John May, James Dack and Adam Pierce, Renewable Energy from Waste (Apr. 23, 2012)

Alternative Energy Financing  - Brochure by Stern Brothers & Co.