Is it chaos? Is it disorder? Nope, it's just what makes Marty McFly a fictional character.

When giving speeches or workshops about energy, I use a graphic that shows the primary forms of energy and their relationship to each other.

It highlights that almost all of what we know as "energy" starts as nuclear energy, and eventually becomes heat.  In between, we have become expert at manipulating the various forms of energy in ways that help to improve our quality of life.  The faster we move from the upper left corner to the lower right corner, or the more twists and turns we take in moving along that path, the more we waste the initial nuclear "fuel" in delivering a unit of quality of life (whether it be food, light, heat, or motion). Until Ephraim Cochrane perfects the warp coil, this is our relationship with energy.  (I have a small following at present, and enough of them are Star Trek geeks that it's worth planting that reference there for them.)   Our present understanding also impacts another of my favorite fictional characters: Marty McFly.

This property of near-uni-directional, near-linear, always-imperfect energy flow also means that time travel to the past is impossible.

Life always moves forward.  Heat always moves from hot areas to cold ones.  Fluids - air and water - always flow from areas of high pressure to areas of low pressure.  We grow from children into adults.  Life always moves in one direction.

For those who remember their high-school science, you have already learned the property of energy (life) that governs this...we call it entropy.  We have commonly thought of entropy as a measure of chaos or disorder, but in a way, this oversimplifies it.  Entropy does describe relative positions of "order" but more in a sense of probability than a sense of discipline.  If we think of combinations of atoms as a deck of cards, there are thousands of possibilities for how a deck can be shuffled into an "out of order" state, but only one way that it can be arranged from the 2 of clubs to the ace of spades.  If I go into any home in the country and open a used deck of cards, I am much more likely to find a shuffled deck than an ordered one.  Even more precisely, when I drop a deck of cards and randomly recombine the deck, the chance that I have created a deck with all cards in order is slim to nonexistent.  Whenever I move from a low probability state of energy to a highly probable one, I create entropy in the process.  Moving back to the low probability state requires me to expend significant energy (much akin to the process of manually rearranging the deck).

Going back to the concept of nuclear energy and our various ways of manipulating it, our sun fuses simple hydrogen atoms into slightly less simple helium atoms, releasing significant amounts of radiation and heat energy.  When we put this to direct use, for example heating or lighting our buildings, we create no additional entropy than the original process.  The heat finds its way in and through our world. When we grow plants, we reverse the entropy generation process because we take the radiative form of energy and use it to synthesize organized matter (this is not a closed system, so it does not violate the second law).  When we eat those plants, we break down the bonds into the constituent components, release heat energy, and build our bodies.  All these forms of transfer and energy use must happen to sustain our life, therefore a balance of entropy production defines the forward path of animal and plant life here on earth.

Where we have changed things drastically is with our use of "stored" energy, namely in the decayed and compressed plant and animal life that forms our "fossil fuels".  The process of growth, decay, and compression has created highly arranged substances that contain significant nuclear bonds.  When we break these bonds - as we do in both fossil fuel and what we classically term nuclear energy, we release heat in amounts significant enough to drive motion, create electricity, or heat our homes.  In a sense, we take hundreds of millions of years of "ordering" and release it in less than a decade.  The drastic inefficiencies within this process of breaking down highly arranged materials exemplifies one of the benefits of understanding entropy.  As a known, predictable quantity, it stands as a measure of how inefficiently we do the work that maintains our quality of life.  Both in the amount and rate of entropy production, we have measures and predictors of how close to natural our actions can are, have been, and can be.

We see opportunities all around us for how to maintain life in "low entropy" ways.  Plants take the radiation from the sun and create matter.  Spiders use food at relatively low temperatures to create a material stronger than any steel cable (ounce for ounce) that we can produce with much heat and wasted energy.  Our bodies create bone, and recreate it when necessary, without the aid of high pressure, temperature, or additional energy sources.  As we learn more about those actions that truly sustain us, and understand the fundamental processes behind the actions, we arrive at a couple of basic conclusions:

1.  The more we accomplish without any form of energy transfer, the lower the resource use and the lower the entropy generation.  This means maximizing direct use of the heat, light, and radiation from the sun.
2.  When we have maximized the input from these naturally occurring sources, the fewer steps we take in converting the fundamental results of the natural nuclear reactions into useful forms of energy, the more we can accomplish and the less we disrupt our surroundings.  From growing food to generating electricity to developing highly efficient thermal batteries, when we maximize the amount of energy we harness and store without transfer, we create an easily sustainable future.
3.  Once we have accomplished all we can through these two methods, then - and only then - we can supplement these resources to meet our needs.  Until we make significant improvements in thermal and electrical battery storage, we will have trouble navigating the variability in natural energy exposure.  Transitioning from our present day to a low entropy future will require a smart transition based upon low-temperature energy conversion.  This will both extend the life of resources and reduce the environmental impact of the shocks associated with high-temperature, material destruction.

I will review entropy in more depth, and with some more specific applications, over the coming months.  The long and the short of it is that entropy acts like nature's clock.  The natural cycle of energy moving through our life occurs at a pace to which nature has adapted, and one that it expects.  When we accelerate the processes of life, we introduce an element of disruption - measured by the production of entropy - that forces our surroundings to adapt to a new way of life.  As we have seen over the past decades, this level of disruption negatively affects our quality of life, and we must find a way around it. We are quickly developing and deploying technologies - and more importantly learning strategies to maintain quality of life without large, destructive energy inputs - that avoid or even reverse this disruption.  If we look toward entropy as our predictor of which actions will best minimize disruption and maximize productivity, we can quickly and effectively move to a largely sustainable future.

The only ones who can do this is we...because thanks to entropy, there are no Martys or Doc Browns from the future coming to tell us what to do.

Friday Five: September 27, 2013

Read it for yourself

Working Group 1 contribution to IPCC Fifth Assessment Report Summary for Policymakers

We have to end the mantra that "gas is better" and understand that like everything else, natural gas is only better than coal if done and managed properly.  There is not enough monitoring and reporting to suggest it is, and enough anecdotal evidence that much more is needed.

Is natural gas "clean"?

"Then there’s this: Natural gas is made up mostly of methane, and methane, unburned, is around 70 times as potent a greenhouse gas as carbon dioxide. There isn’t nearly as much of it, and it’s shorter lived, but it’s not so short-lived that we can allow a great deal to escape into the atmosphere, which it does when anything in the production, transmission or distribution processes leaks. It’s a scarily powerful greenhouse gas for over 20 years, and merely powerful (25 times stronger than carbon dioxide) over a span of 100 years. By which time much of the world’s coastline will be what we now call 'inland.'"

Two things about the measures that mitigate climate impacts: we know enough of them to have an immediate and significant impact, and almost every one of them will have a net positive impact on our economy - both near and long-term.

How the Obama administration could hit its climate targets in one chart

"This chart shows how recent policies such as the administration’s support for solar and wind power and stricter fuel efficiency standards for automobiles, along with market forces like utilities’ switching from coal to natural gas, have cut the nation’s emissions in recent years. But unless Obama pursues other federal curbs on greenhouse emissions, they will begin rising again."

One of the newest and most ambitious projects is how online, however questionsrain as to how the technology will balance energy and water needs in practice....especially if deployed on a more significant scale. 

World's largest solar thermal power plant delivers power for the first time

"Today, Brightsource Energy announced that its huge, DOE-funded solar thermal power plant at Ivanpah, California, delivered power to the grid for the first time. It was part of a test to demonstrate the system, which uses mirrors to focus sunlight on towers to generate steam. The steam is then used to spin turbines and generate electricity. The plant isn’t quite finished yet, but is expected to be done by the end of the year."

With all the industry attacks against GMO labeling, I thought that they were a financial boon for farmers.  It is interesting to learn that is not the case, and that it is only a matter of insurance reform to make organic farms financially more viable.

Are GMO crops worth their weight in gold? To farmers, not exactly

"The organic land makes less money in the off years of the typical one-year-on, one-year-off rotation, when the farmers grow alfalfa and oats, instead of the soy they grow on the GM farms. Soy is clearly more profitable, but not so profitable as to erase the lead from organic corn, Soper said, 'On a two-year average, organic is still way ahead. The bottom line was that our organic farms have 30 percent higher profits.'"

Happy Friday!

Mayor Emanuel can have his cake and eat it too

The Chicago Public Schools closed 50 school buildings this last summer amid valid concerns about the cost of maintaining older buildings and allocating resources to schools that no longer have the neighborhood population to support them.  In a publicly embarrassing week of announcements, the Mayor noted that four new schools, renovations or additions will be performed using TIF dollars, and the more cynical among us noted that at least three of them will be executed  in time for the Mayor to do a ribbon-cutting while he seeks re-election.  Those with experience in facilities management know that the borrowing done through TIF allocation does not overlap with operation funds (although the two have an inextricable link as they both get their value from the property taxes we pay), but watching politicians try to explain to all of us how they can claim they do not have enough money to keep 50 schools open but they have the money to open or renovate four new schools provides theater-of-the-absurd-level entertainment value.  That said, in every failure comes an opportunity.

The Mayor can turn this into a revolution in public funding of buildings and their operation that can have a impact long beyond his tenure.

Universities and long-term owners of facilities have begun to approach the funding of new buildings not just focusing on the first-cost of design, development, and construction, but also incorporating long-term facility maintenance.  Traditionally, an owning business or entity commissions a new building, raises the money they need to design, develop, and build, then turn the facility over to operations and maintenance with a budget coming from annual revenues.  This places the performance of the building at the mercy of annual appropriations, and in the case of municipal buildings, at the whim of politically motivated boards and managers.  The new approach raises both the funding for construction and an escrow/endowment to fund long-term maintenance and operation.

This innovative, and more responsible, approach greatly improves the value of the building in several ways.  First, with all of this funding raised at the start of the project, the owner immediately has the opportunity to fund project scope that will improve maintenance or create energy efficiency.  Think of it this way, if you were able to raise $100,000 to build an addition on your house and set aside money to pay for a child's college education, then realized your child was going to get a scholarship to reduce the cost of college in half, you could increase how much you allocate to build that addition.  Second, it draws the attention of everyone to designing, developing, and building a structure that provides maintainable service.  This focus alone usually delivers results.  Lastly, by putting an immediate monetary focus on the lifetime services the building will provide, the owning entity will not have to worry about politically-motivated annual appropriations to keep the occupants in a comfortable, productive, and high-performing building.

Because the Chicago Public Schools funds future operations out of the future property taxes paid by citizens, and TIF allocations come from a portion of those same property taxes, the opportunity exists to fund both the development of these projects as well as their life-cycle operations.  If the Mayor has the courage to propose this action, he can push back against those who have called out the hypocrisy of the closings and new buildings.  By noting that through building these new projects, the Mayor sets a standard that he will add no new annual budget needs for facilities operations, and he can present a fiscally responsible plan that completely supports the foundation of the facility closures.

School buildings have stood for 50, 75, up to over 100 years in the Chicago Public Schools.  They outlive politicians and provide a foundation to their communities.  It is time that our politicians recognized this and approached the long-term funding of operations and maintenance as more important than the first cost.

If he takes this approach, the Mayor just might turn a stumble into big step forward.

Flashes: September 25, 2013

• To date, the United States has invested between $8 billion and $20 billion on upgrades to the electric grid to create what we hope will be a smarter and more resilient grid.  To put this in perspective, to update the remainder of our grid will take an additional $350-800 billion.

• Industry analysts predict that by 2050, electric vehicles will make up around 60% of the United States passenger vehicle fleet.  If all those vehicles charged at one time, it would require a system capacity of 250 GW (gigawatts, or one-billion watts).  Comparatively, the existing United States total electricity capacity sits at around 1,000 GW.

• As we expand smartgrid throughout the country, we will introduce significant amount of data into the utility and grid management industry.  We will create a new "big data" in the utility sphere, which will require a new approach to the building of IT infrastructure.  Currently, we use a centralized query model that requires significant computational capacity and network traffic.  Moving to a Hadoop model, we can use smaller and smarter query algorithms across multiple nodes to reduce needed infrastructure and lower costs with faster performance.

• For the past couple of years, electricity smart grid cyber security has focused on "wall building".  This is akin to the way the automobile industry used to build safety into vehicles through the "tonnage rule": build cars that are so massive that they can withstand collisions.  The grid protection industry has begun to move toward a more nimble security approach, one focused on reliability and restoration.  In much the same way that modern cars avoid collisions and protect the driver through tactically-placed structure, grid security now mixes cyber and physical infrastructure in ways that maintain electrical power service.

Enjoy the journey!

If being patient and frugal would make us happier and healthier, would we choose to do it?

An article summarizing a presentation by Tom Vanderbilt, author of Traffic, provides some key insights into the why and how of vehicular traffic.  I am teaching my third child to drive, and I am proud to say that I have tried to pass along to them the common-sense advice my father passed onto me...almost all of which hits on the two major issues noted within the presentation: maintain constant speed whenever possible, and when necessary to merge, "zipper merge" instead of "branch merge"*.  If we were to add in staying at or below the speed limit during rush hour, and we could significantly reduce the time we spend idling in traffic.

According to the annual Texas A&M study on urban mobility, Chicagoans pump 2.3 billion pounds of carbon annually into the atmosphere.  In addition, Chicagoland driving commuters lose 271,000,000 hours a year at a total cost of over $6 billion.  That type of inefficiency creates an opportunity, but it will take a culture change and policy developments to help us monetize the benefits of correcting that inefficiency.

The presentation, study, and my own observation point to three main opportunities:

1.  Changing driving habits.  Using traffic cameras (a highly controversial tool, I will admit) predominantly during rush hour, we can provide a "stick" to drivers who create or exacerbate congestion through their speed.  Additionally, the expansion of travel monitoring devices from auto insurance companies creates a carrot for those who either avoid using their cars during high-traffic hours, or maintain appropriate driving habits.

2.  Downsizing our personal fleets.  The era of two-car (and even three-car and four-car, etc.) families rose because American infrastructure grew during an era of cheap energy.  Both the financial and social cost of energy have pushed us to a point where we need to rethink how much we really need to drive to maintain quality of life.  The existing capacity in most urban public transportation makes this a cost-effective option.

3.  Rethinking community development.  This flows from the previous item.  In order to help communities (especially suburban communities) rethink their approach, we need to adapt our community planning to avoid single-use zoning in favor of more complementary activities occurring in the same area.

No matter which way we get there, it is to our benefit - financial and physical - to rethink our relationship with the car.

Revisiting the concept of "not for profit"

In what is, to date, my most viewed article, I discussed how I would never recommend to a student graduating college to enter the not-for-profit world to make a difference.  Rather, they should focus on an idea that will change the world and seek to make that venture work in a traditional for-profit enterprise.  I still stick by that thinking, but I open the door with a huge caveat...

If someone changes the model of not-for-profit industry, then Katy bar the door.

A friend recently turned me onto a TED talk given by Dan Pallotta about the nature of social innovation and social enterprise in the modern era.  Outside of the historical context for the development of charities (the predominant view of NFP enterprise) as penance for the Puritan pursuit of capitalistic profit, there was a clear summary of my thoughts on the scale of impact an individual can attain through charitable or not-for-profit work:

It's cheaper for that person [a Stanford MBA making an average of $400,000 per year at the age of 39] to donate $100,000 every year to the hunger charity [where the CEO makes on average $86,000], save $50,000 on their taxes...so still be roughtly $270,000 a year ahead of the game.  Now be called a "philanthropist" because they donated $100,000 to charity.  Probably sit on the board of the hunger charity, indeed probably supervise the poor SOB who decided to become the CEO of the hunger charity and have a lifetime of this kind of power, and influence, and popular praise still ahead of them.

Even critics of Pallotta's talk and ideas (of which there is much, for example here and here) agree with the basic premise that non-competitive compensation and current fiscal measures of organization effectiveness completely miss the point of any corporate activity, even more so when evaluating not-for-profit activity.  Non-profits and charities are expected to "keep expenses down", minimize their overhead, and raise money for their cause either through for-profit-like models or through philanthropy.  Foundation and corporate grants that provide a significant portion of the funding for charitable organizations specifically exclude the organization receiving funds from using the grant to pay for fundraising or operations.  This is, to a point, understandable because the foundations or corporations want to be able to report to their stakeholders that any contributions when specifically to a project, program or activity that they can easily identify.  This significantly limits what a not-for-profit organization can do.  If everyone who gave money to a charity or NFP corporation had that same restriction, the organization would have no structure or backbone on which to build.

The solution to this problem comes not in eliminating not-for-profit enterprise, as many have suggested...either replacing it with for-profit enterprise or government.  Rather, it comes in changing the cultural norm we have relative to organizations that do not center their enterprise on increasing the monetary value to shareholders, but rather measure solely on the accomplishment of a mission.  It starts with terminology, and instead of focusing on the terms for-profit and not-for-profit, we should more accurately refer to them as investor-based and mission-based corporations.  Then, we can accept mission-based corporations not as "not for profit", but rather for what they are, companies that strive to create profits, but instead of returning the profit to investors, they use the profit to further their mission.

In the traditional for-profit, what I am calling investor-based, model, a group of individuals provide capital to an enterprise with the expressed goal of receiving that capital plus an additional return over some pre-planned time period.  The success of the enterprise comes from those investors meeting or exceeding that monetary gain.  The enterprise may serve a social mission - for example, a grocery store that provides easy access to food, but the driving force is the expectation of fiscal return for the capital invested.  No matter how successfully the business meets a social goal, if the capital is not returned, then the business closes down and the investor cuts their losses.

In the mission-based model, the organization targets a social benefit to provide to a community, region, country, or even larger population.  The investors who provide the capital to the organization do so expecting a certain outcome from the organization.  In Pallotta's hunger charity example, it might be as simple as meals provided to an underserved population, or it may be a more ambitious goal of moving a number of people from an impoverished or "hungry" state to one where they have regular access to sufficient nutrition.  Although many mission-based organizations use internal metrics of lives impacted to report to stakeholders, the outward financial reporting focuses on salaries, compensation to board members, and overhead - strict fiscal measures of organizational frugality.

If, instead of focusing on fiscal reporting similar to investor-based organizations, we reported and measured mission impact, then investors would have a similar ability to determine how to invest their capital as with investor-based organizations.  A potential investor could look at metrics like: number of high school dropouts, amount of food waste averted, or progress toward cure for a disease.  That investor could then compare the investment in one organization against others (both investor-based and mission-based) and determine where their capital will have the most impact.  If an organization has a higher overhead than its competitors, that organization will have to adjust or lose market share.  If another group needs five years of growth and network building to make an impact, a good CEO will communicate that effectively with those who have invested, and if the organization has a clear path, their patience will be rewarded.  If not, then the investors will pull their support, "cut their losses" and find another avenue for their capital.

Evaluating mission-based organizations by their potential or realized performance means that if an organization wants - or needs - to pay a competitive salary, or invest in marketing/advertising, or put resources toward fundraising, the organization will evaluate it based upon the potential for impact instead of how much grant funding they will lose because their balance sheet "looks bad".  As Pallotta suggests, if an organization with 5% overhead can better the lives of 100 people, it should not be praised as better than an organization with 35% overhead that betters the lives of 1,000,000 people.  If there is an organization that can help 1,000,000 to the same quality of life at lower than 35% overhead, that organization will compete and take the place of another, but using arbitrary measures of performance limits the opportunity in those industries where mission-based organizations have a better chance of success.

This approach to evaluating investor- and mission-based organizations also allows for better transition from one to the other.  Much work is happening around food deserts in our nation's cities.  Mission-based organizations have stepped in to provide both consumer education as well as low-priced, healthy food options to create a marketplace for food that retailers need to sell to turn a profit in a traditionally low-profit-margin industry.  Once mission-based organizations have built the marketplace to a critical point, investor-based organizations (in my personal view, IBO that include local community investors) can step in and maximize the efficiency with which the community receives its nutritional staples.  The MBO then moves onto another community to continue the process.  This flow of MBO-to-IBO provides a stable and sustainable process by which philanthropists and government can provide seed money to solve a community issue, work through several competing MBO to find the right approach to solving the problem, then create a maintainable IBO marketplace.

Several people contacted me about my article, noting that the central point was sound, but that there will always be a need for not-for-profit enterprise, so we should not discount it.  I could not agree more, but we have to move away from the concept that good business management is less valuable in mission-based organizations than in investor-based organizations.  We have to stop thinking that an engineer working on energy improvements in mission-based organizations provides less value than an engineer working in the investor-based energy services industry.  And we have to stop assessing mission-based organizations on simply their ability to do a little with nothing at all.  An engineer managing disaster relief for Engineers Without Borders and an engineer managing infrastructure projects for Halliburton should be compensated equally for equal work.  If a community-based energy coop needs to lose money for three years in order to build the market and infrastructure for a twenty-year benefit of low-cost, stable energy resources, it should have the same flexibility as an investor-based energy company.

When that day comes, I look forward to being able to officially recant my article.  I cannot today, but I hope that day comes soon.

Author's note:  My current research focuses on evaluating the MBO-to-IBO model against traditional for-profit and not-for-profit enterprises to maximize community resiliency.  Resiliency measures the ability of a community to withstand shocks to material and energy flows in maintaining quality of life.  The hypothesis is that a class of MBO investors can provide the capital necessary to evaluate the marketplace and identify opportunity for improving community stability, the MBO can then test various business models across MBO, IBO and government that address resource consumption and the loss of community capital, and then the MBO can manage a transition to the most effective model.  The community then has the tools to reevaluate performance regularly and make adjustments as needed.  The Center for Ecology in Economic Development will continue this research and provide regular updates on the viability of certain business models in various types of community structures.

Friday Five: September 20, 2013

The evidence continues to mount that continued investment in fossil fuels makes no financial sense.
New study: Clean energy least costly to power America's electricity needs
"Using widely available models of climate change pollution costs and other health damages from burning fossil fuels (i.e. from sulfur dioxide pollution), the study calculates the real cost we bear for electricity—not just what it costs to generate, but also the climate and health costs caused by power plant pollution. Our results support the need for strong and protective pollution standards for new and existing plants."

In related news, evidence continues to mount that continued burning of carbon-based fuel sources leads to early death.  (Sadly, my hometown sits is a brown zone.)
Here's where you're most likely to die from air pollution
"Heavily urbanized places in eastern China, India, Indonesia, and Europe are stippled by the darkest colors of snuff, meaning they experience rates of ruination as high as 1,000 deaths per 1,000 square kilometers* each year."

We waste food, and money, and then to boot, we create a larger issue for the environment through the rotting of the wasted food. We could feed 2 billion more people for the same cost we feed 7 billion today...if we just stopped wasting food.
Wasted food is a huge climate problem
"In the West, most of our food waste occurs because we toss out leftovers and unused ingredients — and because stores won’t sell ugly produce. The FAO found that some farmers dump 20 to 40 percent of their harvest because it “doesn’t meet retailer’s cosmetic specifications.” In developing countries, by contrast, most of the wasted food rots somewhere between the field and the market because of insufficient refrigeration and inefficient supply chains."

This is a story more about the possible than the red tape. Most regulations exist to protect public health. It makes sense to have some monitoring of garbage and material flows since if they are left unregulated, they can lead to the spread of disease. That said, it also makes sense that if a community wants to collect its food and garden waste and use it for a local business or a community garden, it should have a mechanism that does not cost a fortune. I am confident one will be found.
Gardner wants more garbage for compost, but red tape is trashing his plan
"Dunn said the permit for the compost-processing center he ran in 2005 cost about $30,000. He now trucks the food waste he picks up from restaurants to Waste Management to be turned into compost and then buys the finished compost back to use at Perry Street Farm at 5700 S. Perry Ave. in Washington Park.
'That is partially citizen protection and partially to keep the number of players low,' Dunn said.
Dunn said the state is attentive to the city’s desires, and if the city wants to loosen the rules on composting, he said he thinks the state would listen."

When something makes sense, and people see the value, even those most interested in making a living will do the right thing...and make sure that their competitors do as well.
Air board has allies in diesel pollution crackdown: Truckers
"By Jan. 1, about 50,000 more heavy diesel trucks — including those of the smallest fleets, owner-operators and independent drivers that make up the bulk of the industry — will have to install diesel particulate filters or upgrade to newer, cleaner engines."

Happy Friday!

Is it important that more green energy means more jobs?

I was struck today by a Tweet from Energy Fact Check linking to a story from GreenTechMedia about how Massachusetts has maintained steady job increases in the "green" sectors of its economy over the past five years...outpacing the average of all other sectors.  While misstating the relative position of green jobs in Massachusetts to natural gas and oil jobs in Pennsylvania, the article does point out accurately that the number of "green" jobs in Massachusetts does outnumber the number of gas and oil jobs in North Dakota, a state that has drawn national attention for the boon in good paying jobs over the past decade.  This raised a question in my head:

Should we care about how many jobs a given energy technology creates or maintains?

As with most questions, the answer depends on your point of view, but some basic evidence points to significant benefits to the economy from switching fuel sources, or even better, eliminating some amount of energy use.

First some basic facts about our economy and its reliance on energy.  For 2011:

Total gross domestic product (GDP) = 14.419 trillion
Total cost of energy inputs =                  0.571334 trillion (4%)
Total electricity sales =                           0.371 trillion (2.6% of GDP or 65% of energy)

Although energy costs weigh heavily on a micro scale, whereby everyone living a middle-class lifestyle or less would have difficulty with even a 2 or 3% increase in our household expenses, to the economy as a whole, they represent a relatively small portion of the total cost of maintaining our standard of living.  Within the cost of electricity is an amalgam of options for generating that electricity.  Currently, that breaks down as follows:

In the chart above, "Renewables" includes everything we traditionally consider renewable energy (wind, solar, biomass, hydro) except hydroelectric power.  Detractors against developing renewable energy sources historically have focused on the relative cost of the generation and the drag on the economy that increased prices would have.  Looking at the relative cost of generation by fuel type, we notice two trends:

First, non-renewable forms of electricity generation live up to their name and rely heavily on a fuel input that has a cost in the economy (thereby highlighting its scarcity).  This reliance inserts an element of risk into the cost of the resource.  With energy markets more dependent on global trends in development and stability than ever before, energy sources that rely on a scarce fuel stock will experience volatility based on the availability of the source.  Although we can tout more domestic sources of energy - and therefore claim more insulation from these shocks - the truth of the matter is that energy companies will not provide US customers a "hometown discount" on price if they can sell the resource for higher profit overseas.  An increase in the world price for any resource will be felt here as well.  Because they are not dependent on a scarce fuel source, renewable forms of electricity generation do not carry this risk.

Second, the cost per unit of energy generated for wind and hydro compete with natural gas and beat coal or nuclear.  (As of the time of the creation of the chart, wind cost just a small percentage more than natural gas...there is recent evidence that for new development, companies are seeing wind development as less expensive than natural gas.)  Ignoring hydro because of the other environmental implications of new development (although significant consideration has been, and should be, given to retrofitting existing, non-generating dams with hydro-electric generators), investing in wind to reduce coal generation makes perfect sense economically.  If we were to wave a magic wand and do that, what impact would that have on the economy and the job market?  To understand that impact, we look to a study done by a team at UC-Berkeley mapping out the total number of jobs per megawatt-hour (MWh) for various types of generation.

At nearly 4 billion MWh per year of electricity generation, replacing the 340,000 MW of coal generating capacity in the country with wind would not only reduce the net cost of energy to the country by about $11 billion, but it would also create a net 618,000 jobs*.  If we perform a comparable replacement of coal with natural gas, as many well-intended environmentalists have advocated, we similarly save - this time about $17 billion, but lose a total of over 2.5 million jobs.  In an economy where labor opportunities are scarce, circulating more of our GDP through employed citizens as opposed to fewer provides a better foundation for improved quality of life throughout the country.

Looking at the current state of energy dependency in the United States, we see that compared to the rest of most of our peer countries, we use twice as much energy per capita to maintain our standard of living.

If we were to invest in changing that through improved buildings and infrastructure, and assuming that we would implement solutions that pay for themselves in five years or fewer, we could drop the cost of energy to the economy by at least half (or about $280 billion per year).  That nearly $1.5 trillion investment (5 years of savings at $280 billion per year) would produce as many as 25,000,000 jobs over the time period of the investment, and return the the economy a minimum 200% return on investment over 10 years.  Although a bit simplistic, if we assume that all that energy reduction came in the coal, petroleum and natural gas sectors, we would net lose about 2,500,000 jobs in those energy sectors, but as most of those jobs come from engineers and technicians that have the background in applied sciences, there is ample opportunity to provide retraining to include them in the 25,000,000 job pool.  

All of what I have discussed so far provides, at minimum, a net break even to the economy.  If we were to suggest that coal generation be replaced by solar generation, we would have the net effect of adding 4,500,000 jobs to the economy (assuming equal development of concentrated solar and solar photovoltaic).  This would, however, come at an additional cost to the economy of approximately $163 billion (or about 1% of our GDP).  In terms of risk management, however, given that over half the country will achieve solar grid parity in the next ten years, a present-day investment of solar promises better long-term economics than a comparable investment in any fossil-fuel based generation.  Even if we ignore the future potential parity and look at solar as it stands today in the marketplace, if we combined the investment in energy reduction with the investment in solar technology, we would still reduce overall costs, but would have the added benefit of replacing natural gas generation with solar.  This yields an even higher level of job creation, and still maintains a net reduction in cost to the economy of over $200 billion a year. 

In summary, the macroeconomic importance of employment is the circulation of capital in the economy through as many participants as possible.  Rewarding hard work with the access to food, healthcare, and lodging that comes with income has always been the promise of our country.  If we looked at setting policies not based just on the value in capital, but in the combined value of economic and human capital, there would be an immediate call to end fossil fuel use and switch to measures of efficiency and renewable energy generation.  This would shift more of our current expenditures from commodity purchase to human employment, and have a strong ripple effect across the economy.  The greater truth is, even without taking into account the impact on human capital, the economics already favor a switch to efficiency and some forms of renewables.  The future economics suggest that all forms of electricity generation from renewables will meet the projected cost of current forms of generation, thus suggesting that from a risk-avoidance perspective, increased and immediate investment in renewable energy provides greater resilience to the economy.

And in a 1500 word article on the merits of investing in energy efficiency and renewable energy, I did not once bring up the cost of carbon, the decreased cost of healthcare related to ending fossil fuel use, or the increased productivity of the economy without the drags that both impose...until now.  We do not have to argue about climate, scientific method, or politics to see that our way of life gets better in an economy based on renewable energy.

*  Although some highlight intermittency as a reason to avoid renewable energy sources in favor of "reliable" non-renewable sources, operationally, plants that rely on non-renewable sources have significant variability based upon fuel quality and upkeep of the facility.  Further study is needed before we can verify the presumption that renewable intermittency would have greater net impact than current plant intermittency.

A band-aid is better than nothing...for now

This summer, the Illinois General Assembly did not take up a full fix to the Illinois renewable portfolio standard (RPS) as had been proposed in the spring.  Instead, it did provide a temporary fix to the current situation by allocating the funding collected from ARES to be used by the Illinois Power Agency.  As the Sierra Club Illinois Chapter announced in its recent newsletter:

The $51 million will help to make payments on existing contracts, but will do little to inspire new development until a permanent fix takes place.  The General Assembly can choose to shift all funds to a single fund controlled only by IPA, or allow utilities to collect all payments for renewable resources.  Either will result in removing the current Renewable Energy Resources Fund over which IPA does not have direct control.  I point out several other fixes in a previous post, but in addition to the RERF fix, the General Assembly should look long and hard at devaluing renewable energy certificates (REC) relative to power purchase from Illinois renewable energy development.

This fall or next spring, the legislature is likely to take up the full fix.  Negotiations are currently underway with Exelon as they are presenting the largest obstacle.  Dropping electricity rates overall, and especially for wind, have put pressure on Exelon nuclear and coal plants.  With the market prices not favorable to the renovations necessary at both anyway, anything that gives greater market share to competing technology is not in Exelon's best interest.  Signs are positive, however, that a solution will present itself soon.  When the time comes, we all need to let our representatives know how much we want them to make sure that cost-effective renewable energy remains a priority for the state.

The opportunity & the challenge

I wrote last week about the economic analysis an individual owner performed to evaluate options for reducing energy consumption in a new building, and pointed out that the analysis skewed escalation and discount rates in such a way as to justify inaction.  Over the weekend, it occurred to me to look at how a realistic analysis might play out over the entire US economy.  That is to say, if we look at the range of possible monetary discount rates, the range of possible energy escalation rates, and predict the most likely range or resultant outcomes, what sort of opportunity would we have today to boost the economy through immediate investment in making all of our commercial and residential buildings net-zero relative to heating and cooling (not to lighting, equipment or personal hot water, just space temperature regulation).

To perform this macro-scale analysis, I used the most recent information from the Energy Information Administration (eia.gov) on current usage for space heating and air-conditioning, both in total energy used and total cost.  According to the most recent data, the entire US uses:

4.226 quadrillion Btu per year for residential space heating at an annual cost of $64.65 billion
0.635 quadrillion Btu per year for residential air conditioning at an annual cost of $22.27 billion
2.365 quadrillion Btu per year for commercial space heating at an annual cost of $20.32 billion
0.516 quadrillion Btu per year for commercial air conditioning at an annual cost of $12.10 billion

For a total of 7.742 quadrillion Btu per year and an annual cost of about $120 billion.  Note that this does not reflect our entire energy consumption across the economy, but only a portion of each of the residential and commercial sectors.  This represents the savings opportunity to our country if we can use existing and proven technologies to eliminate energy use for space heating and air-conditioning.*

As pointed out in last week's article, the determination of the rates associated with the time-value of money and energy cost escalation have a significant impact on the overall assessment.  In addition, the length of time over which an investment is evaluated will determine the scale of opportunity.  Long-term owners like universities, school districts, and government can look at a fifty year or longer time horizon for their investment, while short-term developers might only look at a three-to-five year horizon.  In the case of the country as a whole, since our borrowing corresponds to a thirty-year horizon (the timeframe for a treasury note), we can look at that timeframe to make our determination.

Instead of determining a single rate for each of the discount rate, heating energy escalation (natural gas and fuel oil), and air-conditioning energy escalation (primarily electricity), I looked at a range of rates and combinations, then assigned some probabilities for each of these combinations based upon historical trends.  For each of the primary rates, the following methodology was used.

The discount rate
Setting the discount rate for this exercise could take up a research paper in and of itself.  We can factor in the inflation rate, the yield to be paid on the 30-year treasury, as well as other factors associated with an individual building, state or region.  If we look at the trend in the 30-year average annual inflation rate (that is, average inflation rate over the previous thirty years computed each year), we have seen it drop from an average of around 5% for the period of 1960-1990, to a current average of just under 3% for the period 1983-2013.  The current yield on a 30-year treasury sits just under 4%, and the institution in last week's analysis uses a discount rate of 4.5%.  Given this range, I performed the analysis at each of 0.0%, 1.5%, 3.0%, and 5.0%.

The heating fuel escalation rate
When looking at energy cost trends, the volatility from year to year appears to make it difficult to know what will happen next.  This often pushes decision-makers to assume no change in energy prices as a compromise between seemingly equally likely options of increase or decrease.  A look at the year-to-year escalation or deflation of natural gas prices would seem to justify this caution.

With prices varying so sharply from year to year, the safe bet would appear to be to assume a constant cost of energy and then absorb any annual shocks.  If, however, we are looking out past a two-to-three year horizon toward a twenty or thirty year horizon, these annual shocks smooth out.  Looking at the 30-year average escalation rates over the past several decades, we garner more information.

First, note that as we leave the era that includes the Great Depression (30-year averages up until 1970 will include years from the time period traditionally referred to as the Great Depression), the average annual escalation in natural gas prices remains above 4% until we experienced the Great Recession in 2008-2009 where the one-year drop in prices caused a sharp decline in the 30-year average.  There remains great debate about what the future holds for natural gas prices (the primary source for home heating in the US).  Average escalation rates did start to decline in the early 2000s from highs of 10-12% in the 1980s and 90s.  This can be explained by the increase in US production through hydraulic fracturing which had an increasing effect on supply.  Until the world fully recovers from the current economic downturn, we will not have enough information to know if the new resources will create a prolonged era of low (2-3%) annual escalation, or if we will return to the era of 10-12%.  In order to provide enough information to evaluate the likely range of impact, the analysis looks at 0% escalation, 10% escalation, and the above graph's average value of about 6.4%.

The electricity (air-conditioning source) escalation rate
Thankfully, our analysis has one parameter with some relative certainty to it.  Unlike the volatility (especially recently) in natural gas escalation rate, or the variability associated with discount rates, electricity prices have had a steady and relatively predictable climb over the past five decades.  Reliable information only extends back to 1960, but over the timeperiod since, we have seen the following year-to-year escalation rates.

We, again, see shocks in the 1980s and 2000s as with natural gas, but relatively frequent rates hovering in the 0-5% range.  This bears out in the 30-year average escalation rates starting in 1990.  (With data prior to 1960 unavailable or unreliable, the first 30-year average cannot be computed until 1990.)

We note the slow increase to the peak in 2000, then incremental decreases over the past decade with a similar drop noted in the 2008-2009 timeframe.  However, even with that drop, over the past nearly 25 years, the average escalation has remained largely in the 3.0-4.5% range.  In order to complete the picture on future rates, the analysis looks at rates of 0%, 1.75%, and 3.7%, the maximum of which represents the average over the time period represented by the graph above.

With those parameters determined, the analysis computed the net present value of the annual projected energy expenditures over the thirty-one years from 2013 to 2043.  For each discount rate, a run was performed for each combination of the three possible natural gas and electricity escalation rates (a total of nine possibilities).  The spreadsheet then weighted the results of each combination based upon a crude estimate of probability that the escalation rate would fall around that value.  (Please feel free to contact me for a copy of the spreadsheet with all the probabilities and calculations if you would like to recreate the values.)  The analysis assumes a likelihood that natural gas will escalate between 6-10% over a likelihood it will not escalate at all, and assumes that a 3-4% escalation of electricity costs is the most likely scenario.  With these included, the present value of the energy expenditures for residential and commercial thermal comfort over the next thirty years (space heating and air-conditioning) is as follows:

Discount rate:          Net present value of expenditures:
    0.0%                               $12.4 trillion
    1.5%                               $  9.0 trillion
    3.0%                               $  6.8 trillion
    5.0%                               $  4.7 trillion

This means that if we could dedicate between $4.7 trillion and $12.4 trillion to investment in strategies associated with eliminating the need for space heating and air conditioning (e.g. insulation, geo-exchange systems, on-site renewable energy, battery storage**), over the course of thirty years, the economic value would be equal.  In terms of immediate quality of life, however, setting about to put a workforce together to complete this work (even over the next three-to-five years) would provide an immediate and significant jolt to the economy.

Note that this analysis does not count the reduction in direct health costs due to the use of fossil fuels to power our economy (estimated at almost $120 billion), nor does it include the additional annual costs of mitigating and dealing with climate change (average of $200-300 billion per year through 2040).  Based on the relative value of these costs to the economy to the direct expenses for energy (and taking into account the fact that the energy costs looked at in the analysis form only a percentage of the total energy usage), we could expect another $4.7 - $8.5 trillion at the 5% discount rate up to $12.4 - $18.6 trillion at the 0% discount rate.

The challenge then, comes in determining first how we can accomplish this technically, then second, finding the financial mechanisms (and political will) that will account for all the benefits.  Over the latter part of the last decade, we have seen growth in energy efficiency programs targeted at measurable improvement in existing building performance.  Even with these, energy use per capita is back on the rise.  We would need both a larger workforce trained and ready to deliver the necessary improvements, and a more rugged infrastructure of financial management to make it happen.  The opportunity exists now to put so many Americans back to work, create a more resilient future for our country, and shift the focus of our economy from extractive and damaging sectors (energy generation and mining) toward high-quality of life sectors (construction, maintenance, and energy services).

The question is whether we will continue to make baseless excuses for why we cannot afford to act, or whether we will rise to the challenge as our nation has done so many times before and recognize that the only thing we can afford is to make improvements now.

Friday Five: September 13, 2013

We are wasting food.
One-third of food wasted worldwide, U.N. says
"The world throws away one-third of food produced yearly, making food waste the third-largest source of greenhouse gas emissions behind those produced by the U.S. and China, according to a U.N. report released Wednesday.
The U.N. Food and Agriculture Organization study found 1.3 billion tons of food is wasted every year, contributing to economic losses that total $750 billion yearly."

We are wasting energy.
Energy Fact Check: Energy efficiency
"In the U.S., over 50% of all energy produced is wasted due to inefficiency. In 2012, the U.S. used approximately 95.1 quadrillion BTUs (“quads”) of energy, including electricity generation and transportation fuels. 58.1 quads of energy were “rejected” or not used due to ineffective production and consumption methods."

We are wasting farmland.
Dust bowl worries swirl up as Shelterbelt buckles
"Many of the farmers who saw the benefits of those shelterbelts are gone. Piercey says the trees used to be essential, but they were also burdensome. He also says agriculture has improved and modern soil conservation is much better now.
Still, if cycles of drought continue in the Great Plains, Murray worries about what the loss of those trees will mean. 'Sure, we got some new farming practice out there ... but this ground will still move,' he says."

We are wasting space, resources, and money.
Parking rules raise your rent
"Los Angeles’s ARO experience illustrates another important lesson: deregulating parking eliminates neither on-site parking nor its construction. It simply allows developers and residents to come up with innovative solutions to the age-old question of where to park. It lets millions of individual actors making daily decisions about alternatives and costs determine how much parking gets built, rather than expecting city councils and a few officials in planning departments to decide how much parking to build based on nonexistent theory or divine revelation. Parking deregulation lets residents decide how much they’re willing to pay to park, how far they’re willing to walk to park, and ultimately how much it’s worth to them to own a car that needs parking."

And we are wasting time.
GOP energy bill amendment would block EPA carbon regulations
"And Sen. David Vitter (R-La.) is demanding a vote on his plan that would require the president, the vice president and political appointees, along with members of Congress and their staff, to use the ObamaCare health exchanges, among other provisions.
Vitter is blocking lawmakers from securing votes on amendments unless he gets a vote on his plan, either as an amendment to the energy bill or separately."

Happy Friday!

Beauty is in the eye of the rate holder

I attended an interesting presentation recently about the use of energy modeling to help decision making on building construction and renovation at a local university. The presentation centered around the case study of a large research building that will begin construction next year, and the pre-planning that went into selecting some of the innovations that will reduce the energy consumption of the building without sacrificing the research function. A slide caught my eye. It showed the cost, savings and present value of several options considered for the project. It grabbed my attention because it showed the following:



First, I wondered why, on a facility that was projected to cost $2.5 million dollars a year for utilities, the savings from a high-performance envelope would only result in savings of 2% of the expected utility cost. More importantly, however, I wondered why an owner that would perform a fifty-year financial analysis (as the speaker stated the university had), would have a negative present value for this analysis.

Turns out it has to do with rates.

The university uses a discount rate of 4.5% when performing financial analysis.  This generally reflects that a dollar spent today is worth more than a dollar spent at some time in the future, and can provide some measure of how much value the capital spent by the university today means for the future growth of the institution.  However, since our economy uses currency as a measure of many different aspects of civilization, it could also suggest that a service today is worth more than a service in the future, that a comfort today is of greater value than a comfort in the future, or that a life today is worth more than a life in the future.  A 4.5% discount rate suggest that the present has ten times as much value as the future (for a handy chart, see page 8 of Caring about the Distant Future in the University of Chicago Law Review).  On the surface, it means that savings of a one dollar in the future has equal value to saving a dime today, so expenses with significant future value will have to have benefits that far exceed the current established market cost.  Looking deeper though, and realizing that the issue really under scrutiny deals with the quality of human life through the impact of environmental degradation due to energy use, through a discount rate of 4.5% we are saying that improving the quality of life of one person today counteracts the negative value of decreasing the quality of life of ten people fifty years into the future.  The moral underpinning of the superficial financial analysis can create a challenge for those justifying positive discount rates on the grounds of economic growth, especially when life-damaging consequences and not just economic consequences await the future.

The discount rate has a significant impact on the understanding of whether or not improving the envelope adds value.  Decreasing the rate to 3% from 4.5% suggests that only five lives in the future equal one life in the present (as opposed to ten), and in that circumstance, the result shifts from (232,000) to positive 75,000.  If we were to assume that a life in the future has equal value to a life in the present, or a discount rate of 0%, then the net present value of the high-performance envelope would carry a positive NPV of over $1.3 million...almost a no-brainer investment.

Even allowing that any institution has the right to set its own discount rate based upon the values of the school (e.g. that the work done with the investment will improve the lives of ten times as many people in the future than are harmed), the other curious rate-setting choice relates to the value of the savings.  The analysis assumes that the cost of energy - the basis for the value of the savings - remains constant over a fifty year horizon.  That same assumption in 1960 would have been off by a factor of 5 for electricity and a factor of 10 for natural gas (the primary energy sources for buildings in our area).  Using the standard balance of natural gas and electricity in buildings in this climate zone, the actual value of the savings in the fiftieth year would be over $363,000.  Based on current trends in usage, and current depletion patterns of assumed and known reserves, the assumption that scarcity over the next fifty years will remain the same over the next fifty represents, at best, a conservative estimate.  Instead of assuming no escalation in energy costs as the original assessment did, if we conservatively assume escalation at the same rate as the past fifty years, the NPV of pursuing a high-performance envelope changes from (232,000) to positive 980,000.  Accounting for escalation and lowering the discount rate to 3% would result in an NPV of just over 2,000,000.  Either of these should justify the investment.

The process of assessing future risk based upon present action inherently carries uncertainty.  We deal with this uncertainty by making as accurate assumptions as possible, and by building a model that minimizes uncertainty with accepted science.  I have ignored the fact that the energy model suggesting that a high-performance envelope upgrade would result in only 2% energy savings underestimates the value of such work.  (Energy models, much like financial models, depend on the assumptions and inputs into the model...an inexact science influenced heavily by the desired output of the modeler.)  Even without this improvement*, the selection of discount rate and decision to ignore escalation in costs prove to be flawed choices that reinforce the owner's desire to ignore energy efficiency in the name of economic practicality. The discount rate because the environmental impact of the decision means that human life and not human wealth ultimately hangs in the balance, and the escalation rate because nothing about energy scarcity suggests that fossil fuels will become more ubiquitous.  If even reasonable assumptions on discount and escalation rates were made, the decision to include a high-performance envelope would have moved forward.

Unfortunately for us, the continued reliance on a man-made system, rife with imperfections, as opposed to the natural and moral systems associated with our existence, which exist regardless of our desire for them not to, places us in peril.  We can change our economy to suit our needs and desires; we cannot change the laws of nature to accomplish the same.

Flashes: September 11, 2013

• By a vote of 32-17, the Chicago City Council approved an ordinance requiring owners of certain large buildings to measure, benchmark, and certify their energy use.  It's a good step forward.
• I saw one of the coolest technologies today....Whole Trees architectural/structural products.  Odysseus would be proud.
• The Energy Center of Wisconsin is doing some amazing work in education, training, and assistance to owners, designers and policy makers.  Their work is worth checking out.
• We can, and will, rebuild main streets across our country, and we have the opportunity to use energy efficiency and renewable energy to do it.  Kudos to the National Historic Trust on their partnerships to help deliver on this goal.

Enjoy the journey!

Turning photons into pensions

State of Illinois budget shortfall at $6.1 billion
City of Chicago budget shortfall projected to be $1 billion
Cook County budget shortfall at $152 million
Chicago Public Schools budget shortfall at $643 million

We live in a state where politicians for years exercised horrible judgement by looking at the contractual obligation to fund pensions as a "soft promise".  We now bear the consequence of that poor judgement up and down our state and local government.  Regardless of how much of the budget shortfall actually comes to fruition in actual operating losses, or more generally how much one believes about political rhetoric, our state currently mismanages its finances and we need to demand a fix.

Currently, the most commonly proposed solutions involve a combination of tax hikes and cuts in pensions.  At worst, these solutions seek to punish those who worked for their careers at lower pay with the promise of future security, breaking the contractual obligation when the pensioner did no wrong.  At best, they punish the taxpayer for sending people to represent them who make short-sighted decisions.  Through our elected officials, we need to demand a better solution....and one exists.

Our governmental entities need to take advantage of their current land and building assets to turn government property into a field of renewable energy generation.

The cost of solar has dropped significantly over the past five years, and could soon reach $3 per watt of installed generation.  As the state and local governments look to close as much as $8 billion in budget deficits, the opportunity afforded by the market potential of solar photovoltaic electricity generation should get detailed consideration.

In a state that annually uses 143 billion kWh of electricity, using government buildings (including schools) to generate as much as 30 billion of that annual usage would provide a revenue stream that the state could monetize for both an immediate fix, and a long-term solution.  Spreading that out over as many at 20,000 properties across the state would require each site to generate 1.5 million kWh.  This, in turn, would require about 10,000 square feet of solar panel installation at a first cost of about $300,000 each.  An individual site would generate $3,750,000 worth of electricity over 25 years (assuming the cost of energy rises at the same rate of inflation, which was not the case in the first six years of this century) leading to an estimated $75 billion value over the 25 years.

A business model can be developed to specifically meet the short-term need for budget security to raise the state's bond rating and fiscal health, as well as the fiscal health of all government entities within the state.  In addition, the opportunity presented by solar development can provide ongoing revenue to the state to provide better budget certainty going forward.  As a side benefit, we can put thousands of Illinoisans back to work designing, installing, and maintaining these systems, which will create a vital, long-term industry providing even more certainty to the state's finances.

We owe it to those who have fulfilled their obligation to the citizens of our state to live up to our commitment to them.  We also owe it to ourselves to develop industries that provide good-paying jobs to those who will work.  We owe it to our children to reduce damage to the environment from fossil-fuel-based and nuclear-based electricity generation.

We have the opportunity to solve all three, if our current lawmakers can exercise better judgement than their predecessors.

Time for the Heartland to beat strongly again

Heartland
a : a central land area having strategic advantages

b : the central geographical region of the United States in which mainstream or traditional values predominate

c : a region where something most strongly thrives

As a nation that values hard work, individual spirit, practicality, and ingenuity, the Heartland of our country stands as one of the greatest examples of these values in action.  The national green building community identifies the Heartland as a series of states running from North Dakota on the northwest to Kansas and over to Ohio.  These twelve states make up:

Over 40% of the agricultural output of the country.
Just under 25% of the population
Around 22% of the land area
Around 28% of the surface water area


We pride ourselves on doing more with less, and value efficiency above style.  When urban populations began to pressure development, we built the first skyscrapers.  When the country and the world wanted to move on land faster than a horse, we made the car...and made it so almost anyone could afford it.

And now that we have reached the point where we must rethink how we develop communities, the Heartland is standing up to the challenge.  From job training and deconstruction (not demolition!) programs that take advantage of material value in depressed real estate markets to rebuild property values to mainstreet programs to inspire a local individual to help use energy efficiency development to bring back business districts, the upper Midwest shows that we can stay within the existing economic framework and put our capital to use - both financial and social.

The Greening the Heartland conference is in Chicago this week.  Over 500 designers, policy-makers, and building industry professionals from across the twelve Heartland states have come together to share the stories - both successful and unsuccessful - about how to maintain our quality of life with fewer resources.  We are hearing much about resilient communities, local job growth, on-bill financing, and passive building technologies.  Interesting issues around new building versus existing redevelopment remain unsettled, but the most common theme is hope.  No matter how pushed around the country or region has been, we have hope.  We know what to do, we know what can be done, and we are at a unique point to make it happen.

I encourage you to visit www.greeningtheheartland.org, and look at the presenters, the topics, and the discussions.  Visit web pages, ask questions, and learn about what new and exciting opportunities exist.

We have time to succeed, but not much more time to act.

Friday Five: September 6, 2013

This week we saw some interesting science about climate change, the reality of it, and the conclusion that as much as we know, there is still so much more that science needs to understand. This is not the same as science being wrong, but rather an admission that the understanding of the scientific community moves toward truth, but takes a long time to get there. Unfortunately for us, we do not know how long we have to act, so waiting for science to have a perfect understanding may be too long.
Is global warming really slowing down?
"It’s true that they also acknowledge the slowdown: A new paper just out in the prestigious journal Nature, for instance, cites the 'hiatus in global warming' and seeks to explain it with reference to changes in the tropical Pacific. The recently leaked Intergovernmental Panel on Climate Change (IPCC) report, too, cites an 'observed reduction in surface warming.' But scientists say the slowdown is only temporary — a result of naturally induced climate variability that will soon tip back in the other direction — and that more human-caused global warming is on the way."

Our capacity for computing increases exponentially, and our population increases geometrically, meaning our ability to model, observe, predict, and verify expands constantly. As we investigate more, we will learn more, and improve our imperfect understanding of the world. The growing understanding of how the oceans work to regulate the livability of our planet has a profound impact on the study of the consequences of the chemical imbalance we willfully create.
How one little molecule influences earth's climate
"Dimethylsulfide is the largest natural source of sulfur gas into the atmosphere—larger than either volcanoes or vegetation—and 95% of it originates in the ocean. It is made within the cells of some species of phytoplankton, and is freed when their cell walls are broken, most often when algae-eaters take a bite. All of this leaking DMS makes the ocean smell like, well, the ocean—a soft whiff of sulfur in the air."

With this humility about the workings of our world, it would seem obvious that when we educate our population, the focus should be on science, the process of science, and the interpretation of scientific results. Turns out that in my home state, the focus has been on a Prabda-like indoctrination into a blind acceptance of the need for an industry that causes as much harm as good. Knowing that we can (and have!) transition miners from the hazards of the mine into equally fulfilling jobs in the renewable energy workplace, there is no need for us to continue to use misinformation for the sake of economic gain. I would love to say this pro-coal curriculum was developed in the 70s, but it was fewer than 10 years ago!
Pro-coal curriculum on the rocks in Illinois
"On July 30 the Illinois Department of Commerce and Economic Opportunity (DCEO) released a 400-page evaluation of the coal education program. It calls for retiring the current curriculum and revamping it to 'provide high-quality scientific content, a balance of perspectives, and present coal as part of an energy portfolio in national and global contexts.'
Some environmental advocates see the coal education program evaluation as significant progress; others decry a lack of urgency in replacing the pro-coal curriculum with a robust curriculum reflecting current energy realities and real science."

Our approach to economic development through the creation of infrastructure ushered in the largest prosperity the world had ever seen, and created a middle class that provided the backbone of a strong nation. Over the past thirty years, instead of innovating and finding a new way to provide economic prosperity to all, we still rely on the development of new infrastructure or the demolition and replacement of old. We can, and need to, transition to an economy based on maintaining what we have, adapting to new needs, and expanding only where we cannot make better use of existing. We have the intelligence and creativity to find better solutions, and know better than to let our existing investments crumble.
Across U.S., bridges crumble as repair funds fall short
"Every day, U.S. commuters are taking more than 200 million trips across deficient bridges, according to a variety of analyses, and at least 8,000 bridges across the country are both "structurally deficient" and 'fracture critical' — engineering terms for bridges that could fail if even a single component breaks.
'These bridges will all eventually fall down,' said Barry LePatner, a construction attorney who has documented bridge deficiencies in all 50 states."

One of the smarter ways we have to develop the systems that support life comes from the idea of distributed/networked infrastructure. The concept of using information and communication instead of material to link community-based energy technology with customers provides hope that we can develop more resilient, more maintainable, and more flexible systems that require less capital. That way we can improve our quality of life without saddling future generations with debt that they cannot afford.
PG&E signs PPA with Mosaic offering solar investors a 5.5% annual return
"The return on investment is double the current return on investment rate for a 10-year U.S. Treasury Bill, according to Mosaic. The return is guaranteed by Panasonic, the module supplier, as well. It provided the Gerber project with a 12-year production guarantee. Under the guarantee, if the farm fails to generate an expected minimum, Panasonic will make up for the revenue shortfall, assuring the anticipated return on investment.
'Small utility-scale solar projects like this — complete with a low-risk purchase contract with PG&E and top quality components by Panasonic — are the future of utility-scale solar in America,' said Troy Helming, Pristine Sun CEO. 'As a Mosaic investor, I'm excited to be making our projects available through their innovative and successful platform.'"

Happy Friday!