TECHNOLOGY - Continued
Online Regulation Ratchets Up, But Cookies Live On
Deloitte predicts that during the course of 2011 online privacy will provoke more irate headlines and exasperated calls for action than ever before. However, by year-end a torrent of criticism directed at online privacy is likely to result in only minor legislative and regulatory changes to the way websites gather, share, and otherwise exploit user information. Such changes are unlikely to challenge the fundamentals of the online business model.
Cookies, which are the small files of personal information that websites create on a visitor's computer, are very likely to remain core to the online user experience. Similarly, IP (Internet Protocol) addresses will likely still be shared among multiple online companies.
A flood of news stories about digital privacy invasion – combined with the launch of websites created to show exactly how compromising online information disclosure can be53 – are unlikely to dissuade Internet users from knowingly or unknowingly sharing their information, some of which may be personally identifiable54. A campaign in 2010 that encouraged users to quit a particular social network en masse in response to its revised privacy policies was taken up by only a tiny fraction of its members55.
But despite a lack of significantly harsher regulations, and the fact that just a small (but vocal) minority of the public is expected to clamor for more protection, the online industry will likely undertake increasingly robust measures to regulate itself, building on steps that have already been taken over the past few years56.
The underlying rationale for gathering personal information is that companies – be they traditional retailers, business to business specialists, or online pure plays – like to know about their customers. Knowledge is power, and understanding the customer is generally good for business. Sharing leads, reselling customer data, and analyzing consumer behavior are all ways to boost revenue and help make a sale. Passing along customer data is considered a fair practise if permission is given. So is aggregating customer data and reselling it – as long as permission is given and the user cannot be personally identified57.
Malpractise related to information sharing is common in all types of businesses. But in 2011, online privacy breaches – both real and perceived – are more likely to make the news than are offline breaches.
Some of the reasons for this are contextual. First, online companies are simply more effective than their offline counterparts at generating, accumulating, and exploiting vast quantities of data – and at using the data automatically in real time. Second, online privacy issues are currently more newsworthy, partly because the online environment is newer and less understood, and partly because of the number of people who are affected. Web-based businesses seem subject to heightened economies of scale. Market leaders tend to dominate on a global basis, and when problems arise they can affect hundreds of millions of users.
One privacy challenge unique to the online world is the use of personal information in the form of cookies and IP addresses. New legislation to be enacted in 2011 aims to clarify what, how, and with whom data can be shared. Some of this legislation, if enacted in its current draft form, could profoundly change the way that people use the Web58.
Many of today's websites share IP addresses with dozens of other sites. However, one draft law would require user approval every time an IP address is to be shared59. Similarly, a European Union (EU) directive60 passed in 2010 and due for implementation in 2011 will require websites to obtain consent from users whenever cookies are installed61. The EU has also proposed that Web users have the right to be forgotten: historically a user's Web trail has been nearly indelible62. The proposed changes would require websites to delete all personal data on request. In addition, there have been calls for "do not track" buttons to be made prominent on websites63.
These new principles, if applied to the letter, could have a major impact on online businesses. Consider, for example, what it would mean if websites could not use cookies. Recommendations would be impossible, and credit card information would need to be re-entered for every transaction, no matter how small.
However, there are two reasons why it is likely that only moderate online privacy legislation will be enacted in 2011. First, the legislation that currently exists to protect personal information – both online and offline – is considered generally robust64. Most discussions about new legislation focus only on the narrower category of personally identifiable information (PII) – and specifically whether a unique identifier to a computer, like an IP address or cookie should fall into this category. Second, the Internet has become a fundamental part of the economy. New legislation that might have a significant adverse impact on economic growth and tax revenues seems quite unlikely.65 Tens of billions of dollars could be put at risk66, and many governments are simply not in a position to threaten those revenues at this time.
For instance, the U.S. Commerce Department recently released a draft report providing recommendations for promoting online privacy. However, the recommended policies are likely to be enacted in a moderated form that also emphasizes information innovation, jobs, and economic growth.67 In the EU, probably most member states will determine that users should provide permission within browser settings and that the default position in the browser be set to "off" – as suggested by the directive68. Consent will not need to be given every time a cookie is used69.
In 2011, new online privacy legislation is expected to be modest and will likely draw upon fair information practices that are already generally accepted. At the same time, online companies are likely to become far more proactive when tackling privacy issues – expanding their efforts to influence legislation, and increasing their level of self-regulation with the goal of avoiding new legislation altogether.
|
Bottom Line Although changes related to online privacy may not markedly affect revenue in 2011, companies should consider increasing their investments in online privacy infrastructure, leveraging industry tools and initiatives to improve self-regulation, and getting in front of future legislation. Nearly all of the new and proposed privacy requirements are based on generally accepted fair information practices. However, businesses should stay abreast of changes in public opinion and regulatory policy, including the policies proposed by the Federal Trade Commission in its Staff Report on online consumer privacy released in December 201070. In particular, businesses that operate online might want to invest in programs and industry tools that:
These types of actions can help organizations stay ahead of the curve, create competitive advantage, and strike an appropriate balance between protecting consumer privacy and fostering performance, innovation and growth. |
Squeezing the Electrons in: Batteries don't Follow Moore's Law
Deloitte predicts that battery technology will make progress in 2011 and 2012. Energy density should rise and prices should fall. Plus, batteries should become more durable and charge faster. Unfortunately, even in a good year, advances in battery technology are slow compared with advances in the devices they power. Battery technology rarely attains anything resembling Moore's Law, which correctly predicted that computer processing power would double every 18 months. For batteries, a mere 5 percent performance improvement is a good year.
The one big exception is when the battery industry changes its underlying technology. For example, the leap from nickel-based technology to lithium ion technology nearly doubled battery energy density73. Annual improvements within the same battery technology are generally modest.
Nothing seems to beat lithium as a base material for batteries. Lithium is the third lightest element and is highly reactive, making it the best lightweight, high-density solution for the near term. Lithium is usually paired with cobaltate. Other possible partners, such as titanate and iron phosphate compounds, offer some advantages but deliver significantly lower voltages and energy yield. One scientist summed it up: "It will be refinement of existing chemistry from now on. There are no new compounds that will give higher energy density.74"
In future years, it is possible that a 1 percent annual improvement in lithium battery performance may become the norm. Some scientists believe that the lithium ion, which has been worked on for decades, may be close to peaking75. Changing the electrolyte, usually to a polymer, may offer some advantages but doesn't appear to provide a significant improvement in energy density or cycle issues, which are the key attributes.
There are other views. Some commentators trumpet 10-fold76, or even 100-fold, improvements to lithium technologies77. However, even if these claims prove true, there is a long way from the laboratory bench to the consumer. Because refinements in battery technology are based on applying new materials and chemistry, "overnight" technology breakthroughs usually take decades. Research initiatives that have identified potential improvements that could improve energy density and longevity of lithium batteries are based on laboratory findings. These new approaches would still need to be assembled into batteries and moved into commercial production, which could take years78.
Although there have been hopes of new electrical storage technologies, such as ultra-capacitors, their availability does not appear to be imminent according to the energy storage and venture capital communities79.
Even if some entirely new and cost-effective non-lithium electric storage technology was developed, the industries that use batteries typically require years to revamp their manufacturing processes, integrate at the system level, prove reliability and establish safety. For example, the adoption of lithium was delayed by years due to runaway heating problems, which forced extensive engineering and safety tests80.
Utility and transportation markets would take the longest to adopt breakthrough battery technologies, but even adoption by consumer product and computer markets would take years, not months. The biggest challenges for any energy storage solution are usually reliability and durability. The only way to determine ten-year reliability is to do a ten-year test; there are no short cuts (although some scientists are working on it)81.
The availability of lithium is another issue. Although it is the sixth most abundant element in the Earth's crust, concentrated deposits that can be extracted in an economical and environmentally clean way are rare and found in only a few locations. South American salt lakes are the primary source of lithium deposits. At one time there was some concern that a large increase in battery consumption would create a shortage, resulting in "peak lithium."82 However, further studies found that although the price might need to rise to make less-accessible deposits practical, the supply is more than adequate to support even very large growth83.
|
Bottom Line Although progress in battery technology may seem slow, even 5 percent annual improvement can lead to significant gains over time. The industry will need to keep innovating, both with lithium and non-lithium technologies. Maintaining realistic expectations and timelines will likely be key. For those who want and need better batteries, it may prove useful to focus on reducing power consumption rather than increasing energy storage. Making more efficient devices may be easier to achieve than trying to force battery technology to improve at greater than its historical rate of progress. Many of the technologies behind efficiency do improve in line with Moore's Law or offer the potential of rapid breakthroughs. Some older or alternative energy storage technologies (such as nickel and lead acid batteries, compressed gas or liquid, miniature fuel cells, and flywheels) may remain viable choices if lithium technology continues to progress slowly. For example, lead acid batteries can be combined with newer technology, such as super-capacitors, to produce surprisingly good results using core technology that is 150 years old84. |
Hydrogen Comes Out of Hiding: The Alternative Alternative Energy Source
Deloitte predicts that hydrogen will enjoy tremendous success in 2011. However, this success will not be seen in the automotive market as expected, but in other applications, such as clean standby power generation in the telecom industry85 and indoor forklifts86, where hydrogen's energy density and environmental benefits outweigh its current limitations of high cost and lack of fueling infrastructure.
A decade ago, hydrogen (H2) and hydrogen fuel cells (HFCs) were seen as the most likely technology to displace the internal combustion engine in vehicles. Hydrogen-powered cars were expected to be in showrooms by now, and some even said that millions would be on the road by 201087. Engineering difficulties, costly fuel cells (more than $1000/kw in 2002), and a drop in oil prices contributed to hydrogen disappearing from the front pages.
However, probably the biggest reason why thinking about HFCs changed in 2002 was due to the nature of hydrogen itself. At first glance, hydrogen looked like an ideal, safe fuel. Although it was not very dense, and so needed more compression than natural gas, this obstacle could have been dealt with.
The bigger problem was the lack of naturally occurring sources of H2. It can be extracted from water by electrolysis or processed from natural gas or ammonia, but free hydrogen does not exist in an economically useful resource. Unlike coal and petroleum, there are no hydrogen mines or wells. Instead, hydrogen is a substance that stores energy: the only energy you get out of it is what you put into it. This makes an HFC more like an H2-powered battery than a traditional fuel-burning engine.
There are many applications where hydrogen's battery-like power is preferable to a combustion engine. Two examples include forklifts used inside warehouses and remote generators that supply backup power for telecom equipment.
Forklifts are often used in large enclosed spaces like warehouses where combustion engines, which produce carbon monoxide, would be unsafe. Batteries have been the preferred solution for years, but have several drawbacks: batteries don't last an entire shift, their power output drops as they discharge, and stacks of charging batteries take up a lot of floor space. In this niche environment, an HFC can offer a full shift's worth of power, refuel in one to three minutes and pays for itself in two years88.
There are many places in the world where back up power (for infrequent emergency outages) or standby power (for more frequent outages related to a less reliable grid) is needed. Many of these locations are not amenable to traditional power sources, such as lead acid batteries or diesel generators. In particular, the telecom market requires power sources that can be located in harsh environments with extreme temperature fluctuations, which reduces the usefulness of lead acid batteries, or in urban areas where diesel exhaust is restricted. Hydrogen is a reliable and environmentally friendly substitute. As more countries mandate eight-hours of backup operating time to maintain wireless emergency communications service, this market is likely to grow89.
There are other near-term hydrogen applications, such as distributed energy generation for factories or residences90 and fleet fuel, including urban buses, where cost is less of a concern than air quality. Across all applications, 10,000 HFCs may be sold, representing revenues of $250 million, up 200% from 200991.
Some analysts are expecting H2 to make headlines again in the automotive space92. High oil prices, carbon-related environmental concerns, and the automotive industry's willingness to consider alternative fuels are driving the revived interest in H2 technology. Several large auto manufacturers continue to fund tens of millions of dollars in HFC R&D spending annually, although the amount is declining. Government support is also declining: North American HFC research for the transportation market was slashed (non-transportation HFC research was also reduced, but not as sharply)93.
Despite R&D investments, the H2-fueled vehicle has yet to be commercialized, and some pessimistic analysts say commercial adoption could be decades away94. The energy density is acceptable and the environmental benefits are obvious: you put hydrogen in, and water vapor is the only exhaust. But the cost of an HFC remains high compared to other power plants: current (nonproduction) vehicles are estimated to cost $300,000 each95. The cells are vulnerable to damage from fuel contaminants such as carbon monoxide, and they do not start well in cold temperatures. These problems are likely to be solved over time, but commercial availability appears to be at least several years away.
|
Bottom Line Although HFCs remain a niche, their near-term applications could easily create a billion-dollar market by 2015. The forklift and standby power markets alone are worth over $5 billion; hydrogen could likely capture at least 20 percent of these markets. Plus, there are many other possible applications for the technology, such as portable electronics. These energy-hungry devices are pushing the limits of lithium ion battery technology; a refuelable energy source might be a welcome alternative96. Military and space organizations are also likely to continue using HFCs for demanding and high-value applications, although generally in small numbers. The HFC sector seems worthy of ongoing R&D support. Current technologies can be made less expensive, more easily manufactured and more resistant to damage from environmental causes. Research will be needed in the areas of membranes and catalysts, with a special focus on reducing the amount of platinum needed: platinum costs are one reason HFCs are so expensive. Also, those involved in the production, transportation, and storage of hydrogen should consider improving their products and economics: as hydrogen demand increases, supply and distribution will need to become more widespread and economical. |
Footnotes continued
53. Please Rob Me: Site Tells The World When You're Not Home, The Huffington Post, 17 February 2010: http://www.huffingtonpost.com/2010/02/17/please-robme-site-tells_n_465966.html
54. For an in-depth explanation of personally identifiable information, see: Guide to Protecting the Confidentiality of Personally Identifiable Information (PII), National Institute of Standards and Technology, April 2010: http://csrc.nist.gov/publications/nistpubs/800-122/sp800-122.pdf
55. "Quit Facebook" protest day flops, Telegraph, 1 June 2010: http://www.telegraph.co.uk/technology/facebook/7792970/Quit-Facebook-protest-day-flops.html
56. For example in the US, the online industry has already aggressively made steps to enhance its self-regulatory efforts. These include consumer awareness campaigns and opt out tools, such as: NAI opt-out tool; the Interactive Advertising Bureau (IAB) "Privacy Matters" campaign, which consists of headlines; (e.g. "Advertising is creepy") and icons that direct users to the ''Privacy Matters" website; TRUSTe icon and its Behavioral Advertising Notice and Choice Program; NAI and IAB Control Links for Education and Advertising Responsibly (CLEAR) Ad Notice.
57. It is regarded as unethical and occasionally illegal to target individuals with evident or known weaknesses, even if these would be willing customers. For example, those who have drunk too much should be refused a last one for the road; those with gambling habits should not be offered a free bet; female adolescents profiled as health conscious, but in fact struggling with eating disorders, should not be offered weight loss products/services.
58. Do Not Track Proposal Unleashes Fresh Furor Over Online Privacy, E-Commerce Times, 12 February 2010: http://www.technewsworld.com/story/71360.html?wlc=1291337891
59. For more information, see: Boucher, Stearns Release Discussion Draft of Privacy Legislation, Congressman Rick Boucher website, 4 May 2010: http://www.boucher.house.gov/index.php?option=com_content&view=article&id=1957; Best Practices Act: http://www.house.gov/apps/list/press/il01_rush/h_r_5777_the_best_practices_act_2010.pdf
60. A directive requires member states to achieve a particular result without dictating the means of achieving that result. Directives leave member states with a certain amount of leeway as to the exact rules to be adopted. So indeed, the exact implementation can vary in every jurisdiction in the EU.
61. EU Chews on Web Cookies, Wall Street Journal, 22 November 2010: http://online.wsj.com/article/SB10001424052748704444304575628610624607130.html#ixzz170MrDxm7; The new EU cookie rule – so, we need to get consent then?, Computer Weekly, 23 November 2010: http://www.computerweekly.com/Articles/2010/11/23/244068/The-new-EU-cookie-rule-so-we-need-to-get-consent.htm
62. EU proposes online right 'to be forgotten', Telegraph, 5 November 2010: http://www.telegraph.co.uk/technology/internet/8112702/EU-proposes-online-right-tobe-forgotten.html
63. FTC wants voluntary 'Do Not Track' for the Web, CNET News, 1 December 2010: http://news.cnet.com/8301-13578_3-20024332-38.html
64. For example, the Office of the Privacy Commissioner of Canada held public consultations to examine the effectiveness of the Personal Information Protection and Electronic Documents Act (PIPEDA) in handling emerging privacy issues online, including online profiling, tracking and targeting. The report issued on October 25, 2010 confirmed that PIPEDA provides a sound framework; however, additional guidance is required to clarify how to apply the Act in new and emerging contexts. Source: Draft Report on the 2010 Office of the Privacy Commissioner of Canada's Consultations on Online Tracking, Profiling and Targeting and Cloud Computing, Office of the Privacy Commissioner of Canada website, 25 October 2010: http://www.priv.gc.ca/resource/consultations/report _2010_e.cfm
65. The new EU cookie rule – so, we need to get consent then?, Computer Weekly, 23 November 2010: http://www.computerweekly.com/Articles/2010/11/23/244068/The-new-EU-cookie-rule-so-we-need-to-get-consent.htm
66. Online Privacy Bills Would Hurt E-commerce, Trade Group Says ,PC World, 10 September 2010: http://www.pcworld.com/businesscenter/article/205157/online_privacy_bills_would_hurt_ecommerce_trade_group_says.html
67. Summary of Draft Department of Commerce Privacy Green Paper, HL Chronicle of Data Protection, 15 November 2010: http://www.hldataprotection.com/2010/11/articles/general/summary-of-draft-department-of-commerce-privacy-green-paper/
68. For example in the Netherlands, the original explanatory memorandum talked about "ondubbelzinnige toestemming" (unambiguous consent); the 'ondubbelzinning' (unambiguous) has since been dropped. The expected outcome in the Netherlands is probably also a browser based solution.
69. MRS warns strict EU cookie rules could 'severely disrupt' online MR, Research Magazine, 9 December 2010: http://www.research-live.com/news/government/mrs-warns-strict-eu-cookie-rules-could-severely-disrupt-online-mr/4004220.article
70. A Proposed Framework for Businesses and Policymakers, Federal Trade Commission, December 2010: http://www.ftc.gov/os/2010/12/101201privacyreport.pdf.
71. Privacy by Design is an approach developed and advocated by the Information and Privacy Commissioner of Ontario, Ann Cavoukian. See http://www.privacybydesign.ca
72. Expectations for Consumer Consent in Interest Based Advertising: Regulatory and Industry Positions in the United States, Europe, and Canada Jordan Prokopy and Megan Brister. BNA Privacy and Security Law Report. Vol. 9. No. 21. Pp. 775-779. 2010.
73. Is lithium-ion the ideal battery?, Battery University: http://batteryuniversity.com/index.php/learn/article/is_lithium_ion_the_ideal_battery
74. What does the future hold for battery technology?, ICIS, 9 July 2008: http://www.icis.com/Articles/2008/07/14/9139058/what-does-the-future-hold-for-batterytechnology.html
75. Building a better battery, Associated Press, 17 October 2005: http://www.msnbc.msn.com/id/9689826/ns/technology_and_science-innovation/
76. A tenfold improvement in battery life?, CNET News, 15 January 2008: http://news.cnet.com/A-tenfold-improvement-in-battery-life/2100-1041_3-6226196.html
77. A Better Battery? The Lithium Ion Cell Gets Supercharged, Scientific American, 11 March 2009: http://www.scientificamerican.com/article.cfm?id=better-battery-lithium-ion-cell-gets-supercharged and Toshiba – Rechargeable Battery: http://www.scib.jp/en/
78. The Innovation Process for Battery Technologies, ATP Working Paper Series, 21 July 2005: http://www.atp.nist.gov/eao/wp05-01/chapt3.htm
79. Deloitte Cleantech in Canada seminar, 4 November 2009: http://cleantechincanada.com/?p=183
80. Is Lithium-ion safe? Isidor Buchmann of Cadex Electronics, September 2006: http://www.buchmann.ca/article28-page1.asp
81. A Quicker Test for Hybrid Batteries, Technology Review, 4 August 2010: http://www.technologyreview.com/energy/25925/
82. Peak Lithium?, EV World, 28 January 2007: http://www.evworld.com/article.cfm?storyid=1180
83. An Abundance of Lithium, R. Keith Evans, March 2008: http://www.che.ncsu.edu/ILEET/phevs/lithium-availability/An_Abundance_of_Lithium.pdf
84. A Cheaper Battery for Hybrid Cars, Technology Review, 24 January 2008: http://www.technologyreview.com/energy/20105/
85. Transact Energy Secures Altergy Systems Fuel Cell Technology for India, TransAct Energy Corp., 2 November 2010: http://www.transactenergy.com/2010/11/transact-energy-secures-altergy-systems-fuel-cell-technology-for-india/
86. Plug Power Inc: Fuel Cells Power Walmart Lift Trucks, Business Review Canada, 23 June 2010, http://www.businessreviewcanada.ca/sectors/renewables/plugpower-inc-fuel-cells-power-walmart-lift-trucks
87. Hydrotopia, Salon.com, 24 September 2002: http://dir.salon.com/tech/feature/2002/09/24/hydrogen/print.html
88. Economics of Fuel Cell Solutions for Material Handling, Ballard, April 2009: http://www.ballard.com/files/pdf/Case_Studies/Material_Handling_Economic_Benefits_041510.pdf
89. FCC moves forward on backup power rules, ITExaminer.com, 14 September 2008: http://www.itexaminer.com/fcc-moves-forward-on-backup-power-rules.aspx
90. Ballard, Tokyo Gas to Develop Fuel Processor for Residential Fuel Cell Generator, HighBeam Research, 13 January 2000: http://www.highbeam.com/doc/1G1-58575057.html
91. Consensus analyst forecasts; Thomson FirstCall, October 2010.
92. Second Wind for Hydrogen In the Eco-car Race?, CBS News, 19 April 2010: http://www.cbsnews.com/stories/2010/04/17/tech/main6406094.shtml
93. Hard cell, Globe and Mail, 10 June 2009: http://www.theglobeandmail.com/globe-drive/green-driving/news-and-notes/hard-cell/article1176394/
94. Hydrogen/Fuel Cells, US News and World Report, 11 January 2008: http://money.usnews.com/money/personal-finance/articles/2008/01/11/hydrogenfuel-cells.html
95. The hydrogen car fights back, CNN Money, 14 October 2009: http://money.cnn.com/2009/10/13/technology/hydrogen_car.fortune/index.htm
96. Canadian Fuel Cell Commercialization Roadmap Update ,Ballard, December 2008: http://www.ballard.com/files/pdf/PWC_Report.pdf page 31
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
