The $30 billion jobs opportunity

In an election year, you cannot swing a dead cat without hitting a political ad, photo op, or campaigning politician. In a country still reeling in many ways from the economic collapse of six years ago, the largest talking point still centers around job growth. Regardless of one's opinion on how many jobs we really need as we develop more and more efficient ways to maintain our quality of life, the current state of affairs in Illinois comes down to 433,000 people who want and need to work who cannot find a job. With approximately 150,000 to 200,000 job openings in Illinois going unfulfilled, we would need to create about 250,000 new jobs in order to obtain full employment. With manufacturing making a slow recovery, and nowhere near fast enough to create that kind of growth, where can we turn for good paying, productive jobs?

Clean energy and energy efficiency.

Currently, Illinois' residential and small business consumers spend over $30 billion a year for energy. Almost all of that capital leaves the state, with only a small portion getting recycled back into the Illinois economy. If we can find a way to tap into that capital already being spent, and turn that into job growth, we can both improve our employment situation and create a cleaner, healthier future. In addition, that $30 billion, at current rates of escalation, can be $35-40 billion within only a year or two, so economically, it behooves us to move quickly.

The key to the job growth comes from the need for almost all energy efficiency and clean energy work to use local labor. The fixing up of homes and small commercial buildings, installation of solar panels, and construction of wind turbines uses, almost exclusively, local labor. Dirty energy industries, including nuclear, employ somewhere between 5 and 8 people for every $1 million spent. Clean energy and energy efficiency employ about 16 to 17 in good, median income-scale jobs. That means that our $30 billion each year could fund as many as 495,000 jobs in Illinois. Even if we only took half of our current energy expenditures and switched them to clean energy or energy efficiency, we would more than eliminate our current unemployment. In addition, we would build a stronger, more resilient economy less susceptible to shocks from energy price increases.

It will take much work in our financial sector to develop the mechanisms to make this change happen, but it can happen within months, not years. We have the capacity to train workers through our robust community college network. We have the knowhow through years of programs managed by local consultants and non-profits. All it takes is for the financial system to let small building owners tap into the same tools to which institutions and large customers already have access. Tools like on-bill financing, property-assessed clean energy, and community energy cooperatives provide the mechanism that can turn $30 billion a year in energy expenditures into a $500 billion construction program.

It will also take political will...to bring big energy companies and utilities to the table when any program like this is in the interest of the consumer but not large energy companies. It will be interesting to see if either candidate for Governor has the insight or will to make something like this happen.

Flashes: July 16, 2014

Top 4 Most Energy Efficient Baseball Stadiums

1.  Marlins Park

"Its energy-efficient building envelope – and its mechanical, electrical, lighting, heating, and cooling systems – cost the ballpark 22% less on energy compared to similar structures."










2.  Target Field

"Upgrades to equipment, lighting, and HVAC in 2011 reduced electricity use by more than 12%, despite a new video board and added radiant heating units."








3. Nationals Park

"Energy-efficient lighting uses 20% less energy than typical field lighting."











4. AT&T Field

"Upgrading to a high-definition scoreboard that is 80% more efficient than its predecessor."








Enjoy the journey!

Source: Alliance to Save Energy/NRDC Sports Greening Project

The only story worth telling is the net-zero story

In taking my annual look at my home energy and water bills to see where we can improve, I turn my attention to my natural gas bills.  Natural gas bills comprise around 75-85% of our total annual utility expense, so of all, it poses the greatest opportunity for improvement in terms of finances.  Understanding that, last year we took part in the utility program managed by Energy Impact Illinois that allowed homeowners to receive home assessments that identify opportunities for energy improvement, then incentivize the resident to pursue as many of the recommended improvements as possible.  The hope was that we could lower our $2,000 per year natural gas bill by as much as $300-500.

Without going into too much detail about the assessment and the work, we chose to insulate our attic, seal around a whole-house exhaust fan, and fix seals around bathroom and kitchen exhaust fans.  Immediately after completing the projects, we noticed the reduced leakage (accompanied by a new odor from the spray insulation).  The new cap on the whole-house exhaust reduced its effectiveness , but did not eliminate its usefulness.  The hope was that the trade-off for our energy bills the next winter would make up for our discomfort.  Given the winter we had this past year, that should have been easy.

The results:  from April 2012 through March 2013, we spent $1,783 in natural gas bills, but from April 2013 through March 2014 we spent $2,712.

Yes, you read right.  After the work, we increased our bill by 52%.

And that provides an example of why the energy efficiency conversation proves so difficult to have.  After performing efficiency work, I should see an immediate lowering of my bill, but from 2012-2014 the cost per unit of natural gas (a therm, or 100,000 Btu in Northern Illinois) went up by around 30%.  The increase in price means that unless a homeowner sees a reduction in usage larger than the cost increase, they will see an increase in the bill which has to be explained.  Once you get into the conversation that starts, "But you would have spent more if you did not do the work...", we lose the audience.

If you are paying attention, you have noticed that our bill went up 52%, but the cost went up only 30%.  Now we have to explain that away.  From March 2012 through April 2013, Chicago experienced 5675 heating degree days (a measure of heating need calculated daily that assumes we need no heat at 65 degrees...on a day with the average temperature of 30 degrees, we would experience 35 heating degree days...65 - 30 = 35).  In that same time period in 2013 to 2014, we experienced 6916, or an increase of about 22% from year to year.  That means that from one year to the next, I should have expected a need for heating that was about 22% more than the previous year.

Now the real explaining begins.  If I had done nothing, I should have expected that my natural gas used in 2013 through 2014 would have been 22% higher than the year previous.  My usage from 2012-13 was 2,133 therms, which would have meant I should expect around 2,600 therms in 2013-14.  I also should have expected that instead of spending $0.84 per therm for that 2,600 therms, I would spend $1.08 per therm...meaning my total expected cost would be around $2,808.

After all that explanation, I saved around $100 for the year.  Given the $3,500 we spent on the work (even after a $1,750 rebate), that means that after 35 years, I will have recouped the investment.  Since I financed that work over a 30 year mortgage refinance, that means I spent about $216 last year in principal and interest payments for that work.  I have to save at least $216 to break even on the work (and remember that is even after the incentive).

Although a failed attempt, the only failure really comes in not learning from mistakes.  What could have caused this shortfall?  First, the quality of the work could have played a role.  Three years earlier when we replaced single-pane with double-pane windows, we saw a reduction.  This should have delivered one as well, so maybe the contractor who did the work bears some responsibility.  Another explanation comes from the potential that my house has so many issues that fixing only some of them did not fully address the issue.  If we leaked air into one part of the house, fixing that leak may have forced more air through another leak that was less active prior to the work.  In either case, more study and planning is needed.

The ultimate lesson to learn is that this kind of incremental work has significant drawback, especially with so many moving parts.  If the project had focused on eliminating the heating bill instead of lowering it, then regardless of the price fluctuations or the increase in heating degree days, the results would have been realized and we would have a more powerful story to tell - without all the explaining.  We need to refocus our efforts, and think bigger if we are going to succeed.

Where are the "creative financial instruments" to reduce resource consumption

The financial tools of our economy are supposed to find the most efficient way possible to deliver the priorities of our society.  In that sense, they can provide one of the most democratic tools to improving our quality of life.  All to often, however, the financial industry seeks only to creat wealth for the sake of increasing wealth and not to promote the furtherance of societal good.  As we saw in the financial collapse of 2008, the financial sector - free from the constraints of Glass-Stegall - found more and more complex ways to manipulate the economy in ways that increased risk instead of lessening it.  The time has come for us to put the creativity of the financial sector to use in promoting increased quality of life across all economic classes, while minimizing the need for commodity resources to attain that high quality of life.

For the past several years, Elevate Energy (formerly CNT Energy) has worked across disciplines to promote conversations that will lead to financial instruments readily available to all consumers that will allow them to reduce energy consumption cost effectively.  As summarized in a recent post, the challenges still remain, most notably in the areas of scale and delivery.  To address this we need creative risk-takers and willing communities to blaze the trail. Some opportunities include:

1.  Extending the utility energy efficiency portfolio requirements to include on-bill financing of any improvements that deliver a positive return on investment within five years.

2.  Utilizing property-assessed clean energy (PACE) financing whereby municipalities and other units of government can leverage future property taxes to make improvements to a property that deliver energy savings that provide a net positive ROI within ten years.

3.  Provide financial stability through loan guarantees to neighborhood building & loan-type entities that fund energy efficiency efforts.

4.  Utilize the existing network of home-improvement retail outlets and service professionals to aggregate a customer base, then fund the work through service contracts.

Any of these alone or in combination minimize risk and create opportunity.  As the Elevate Energy piece notes, demand has to lead supply, so options like the third and fourth allow for a gradual building of the marketplace to a point where the first and second can accelerate to scale.

This list only scratches the surface.  We need more people working on this effort, and finding opportunities to ease the lives of middle-class and lower-class renters and owners.  This will improve not only our national economy, but our quality of life.

Friday Five: March 14, 2014

All the arguments about climate change and carbon dioxide emissions ignores another great challenge of fossil fuel pollution, and one that industry has yet to find an adequate solution for: fine particulate matter.  The unburned, solid carbon creates a whole host of health issues, and left unaddressed, it will continue to plague us.
New research shows air pollution might make you bad at your job
"What they found was that every 10-microgram per cubic meter increase in PM2.5 levels decreased worker productivity by 0.6%, as measured by the number pear boxes packed by each worker. Since workers were paid piecemeal, this translated to a decrease of roughly 41 cents per hour, per 10 micrograms of PM2.5."

The urban pollution caused largely by automobile emissions, but also by industrial activity and building heating, leads to consequences that affect our nations poor and people of color at rates higher than that of other population groups.
Dyin' to live: Biggie Smalls and the silent killers in urban America
"Cancer and heart disease are still the top causes for premature deaths in Brooklyn today. Environmental factors have long been suspected as possible causes for both. The National Cancer Institute conducted a study in the 1990s in Long Island (just north of Brooklyn) to examine the role of environmental factors in the high breast cancer rates in that area. The researchers found a “modest increase” in cancer risk due to exposure to polycyclic aromatic hydrocarbons (PAHs), cancer-causing agents formed mostly from burning fossil fuels. A 2008 study found a link between PAH exposure and heart disease, and concluded that “chronic environmental stress is an important determinant” in cardiovascular disease risk."

Over the last several years, I have called for a planned, stable transition from utilities of infrastructure to utilities of service.  In order for utilities to survive, they have to make that transition, and it looks like in the nations on the forefront of renewable energy, that transition has started...to a point.
The future of large German utilities: It's already here
"If I would have written this paper two years ago and included the following, I would have called it utopia. Nobody would have believed it. But this unbelievable story actually happened. These four large German utilities decided to become 'green.' This can be seen from their recent advertisements, which show that all of the four major German utilities are 'solarized.'"

Making change that has lasting economic impact requires correctly identifying the value of the improvement and working that into the business plan of those developing, improving, or refurbishing.  Many homeowners and developers avoid improvements with long-term benefits because they cannot monetize those in the present.  A system that correctly values the improvements - and holds developers especially accountable for their performance - provides the proper incentive to make choices that improve quality of life. 
How to help appraisers fairly value home energy efficiency improvements
"Nothing works in the appraisal process unless high performance homes are consistently documented. Right now, the majority of home appraisers use Fannie Mae’s Uniform Residential Appraisal Report to provide opinions on the market value of a given property. But, this form lacks an adequate section in which to document energy efficiency features."

Economics can produce poor decisions.  The economics of developing, maintaining, and decommissioning nuclear energy do not really work, and the risk of catastrophe only exacerbates the point.  That said, in a nation whose economy depends on a fixed level of energy cost, it is tempting to go back to it...even when it has already damaged your country and its people.
Nuclear power in Japan: Start 'em up
"The sense of urgency is driven, first, by the mounting costs of doing without the nuclear plants. One by one, nearly all reactors were shut down in 2011-12. Utilities fired up conventional power stations to make up for lost electricity generation. But the cost of importing extra oil, coal and gas has been all the steeper with a weak yen. The trade deficit has climbed, along with electricity charges, particularly for businesses. Should nuclear plants be left idle, the programme of Shinzo Abe, the prime minister, to revive the economy could be in doubt."

Happy Friday!

You want jobs? Efficiency not mining

Over the next several weeks, the media will cover ad nauseum President Obama's decision on the Keystone XL pipeline that developers plan to run through the upper Midwest to connect the tar sands mining operations of Canada with the Gulf Coast export terminals of Texas.  Ignoring for now the potential cost in human life due to increased emissions of carbon soot and carbon dioxide, the increased risk to drinking water and arable land from pipeline breaks (which happen regularly), and the increased environmental damage to the Gulf Coast region where the tar sands refining operations will take place, the pipeline makes no sense from the point of view of a financial investment.  Depending on the source, the pipeline plans to create between 1,000 and 5,000 temporary jobs, 50 and 1,000 permanent jobs, and potentially influence the development of as many as 20,000 jobs.  It will cost at least $5.3 billion, and none of the fuel produced from the delivery and refining processes will go to support American machinery...it will all go to a burgeoning Latin American market.  This pipeline represents profits for the corporation that owns it, not energy independence for the US or Canada.  The jobs created by the investment - even if they happen at the highest level imagined - do not justify the expense, and we have much better ways to invest the capital.

For the sake of analysis, I consider a temporary job to have the value of one-tenth that of a permanent job; this assumes that a permanent job will last on the order of ten years, and the temporary job around a year.  This puts the range of direct, combined jobs at somewhere between 150 and 1,500.  At an investment of $5.3 billion, the investment-to-job ratio sits at around $35 million to $3.5 million per job.

The best alternative to the Keystone XL pipeline, energy efficiency investments, not only avoid all the human health problems KXL will cause, but it also creates more - and better - jobs.  Two recent energy efficiency programs serve as a basis for this argument.  The Energy Impact Illinois (EI2) program used ARRA money to match utility incentive program and private homeowner contributions to winterize homes and reduce the demand for heating energy.  In the US Southeast, ARRA funds also contributed to the Better Building Neighborhood Program (BBNP) which operated in the same fashion.  For each of these programs, the investment-to-jobs ratio looks like this:

Program                    Investment                      Jobs created                      Ratio         
EI2                               $24.0M                              140                          $171,428/job
BBMP                          $37.9M                              350                          $108,285/job

For an investment in energy efficiency on the scale of Keystone XL, the $5.3 billion investment would mean somewhere between 30,000 and 50,000 permanent jobs.  With a simple return on investment (ROI) somewhere in the 10-50% range for the direct savings (reduced utility costs), and a multiplier effect resulting in an ROI of up to 375% regionally from the boost to jobs and economic growth.

For decades, many have argued against investments in renewable energy and energy efficiency because they "cost too much".  This argument had merit on the renewable energy side when new technologies had no scale or access to market, and on the energy efficiency side when energy costs remained artificially low due to market manipulation and the absence of externalities (like the additional healthcare costs and property damage that results from burning fossil fuels).  The charge that clean energy costs too much no longer holds water.  Investments in energy efficiency bring greater ROI than investments in fossil fuels, and result in hundreds of times more jobs.  In a time when we see coal plants shuttered because owners cannot afford to pay for maintenance, and power producers investing in wind over natural gas, the time is right to stop investment in fossil fuel projects that will lead to forty more years of guaranteed, high volume use of fossil fuels.  The time is right to say, "No!" to Keystone XL, and instead put that money into energy efficiency (first) then renewable energy.

Because it will put Americans back to work and make our quality of life better.  Is that not what we should expect from our economy?

Friday Five(s): March 7, 2014...Cabin Fever Edition

Through a combination of cabin-fever-inspired restlessness, and a measurable uptick in environmental news this week, I cannot bring my brain to choose only five, so I am going with a double-dose...including shorter intros by me.


This should scare the livin' bejeezus out of everyone. (And note, 'bejeezus' is recognized as a word by my autocorrect.)
Chevron launches "news" site
"Ritchie said the site also offers a new model for the future of journalism — one that is funded directly by corporations. 'We believe the website has the potential to blaze the trail for a new model of corporate-sponsored, community-generated news,' the website reads."

The market has changed, and large energy companies - and especially investor-owned utilities - face extinction if they do not find new models.
Schadenfreude about RWE unwarranted
"What should RWE do? ... Maybe we need to be open to the idea that large power corporations were needed for central-station power plants, but that their role in a renewable future will be much smaller. At the moment, even the proposal to have them leverage their size to set up an enabling infrastructure – such as charging stations for electric cars – seems unlikely. The firms don't even have the liquidity anymore."

I forgive the inappropriate use of 'global warming' in the headline because the article discusses an industry I love. I am inspired to act.
Slope & change: The ski industry struggles to get its act together on global warming
"So what, you might ask, does the ski industry lobby for in Washington, if not for climate action? In the past, it has pushed for looser immigration rules (who’ll wash all those restaurant dishes and change the hotel sheets?) and to make sure that we can continue to import cheap shred threads from China (because, you know, we’ve gotta look good out there)."

In principle, I do not have an issue with natural gas as a bridging fuel if it is employed in retrofit of existing plants, and if carbon capture is required...but until the methane leakage issue is 100% solved, natural gas is as bad as coal...period.
How to make natural gas more climate-friendly
"It doesn’t have to be this way. The technology already exists to dramatically reduce methane leakage for a reasonable price. Environmental groups have put out reports outlining how. They could serve as a template for the oil and gas industry to follow voluntarily, or for the EPA to require under the Clean Air Act."

Good consequence, incentives for industry to capture, sequester, and even mine CO2...unintended consequence without regulation, continue depleting fossil fuels as source of "high quality CO2".
Don't waste CO2, turn it into bottles and glue
"If humanity is to avoid dangerous climate change, we need to capture hundreds of billions of tonnes of carbon dioxide. But what to do with it all? There is no shortage of places to bury it, but we can at least put some of it to good use. A few start-up companies view CO2 as a resource rather than a waste product. They are using CO2 as the raw material for making products including superglue and fertilizer."

It's said that collapsing societies burned their last tree to boil their last pot of water to eat their last meal...if we are to avoid that fate, we need to examine our priorities. Maybe cultural icons will help awaken minds.
Syndey Opera House and Statue of Liberty 'will be lost to sea level rise'
"Marzeion said that in Europe, particularly vulnerable sites included the leaning tower of Pisa, which is not directly on the coast but would be affected by sea level rises as a result of even a low temperature increase because it is very low-lying. He also cited Venice, which 'in a sense you can say is being impacted right now' and Hanseatic League cities including Hamburg, Lübeck and Bremen in Germany."

If the loss of Lady Liberty doesn't move us, how about the loss of large sections of a state?
Louisiana's coastline is disappearing too quickly for mappers to keep up
"Each year, this part of the coastline loses around 16 square miles of land, according to David Muth, the state director of the National Wildlife Federation’s Mississippi River Delta Restoration Project. And until quite recently, even the most advanced maps of the area did little to reflect the changing environmental reality. But in the last few years, renewed mapping efforts from the National Oceanic and Atmospheric Administration have begun to catalog these changes. These new maps show water where there was once marshy land, and bays where there were once small inlets."

Speaking of water, unless you live in CA or SD, you may not know how tentative our life is under "feast and famine" deluge-drought cycles.
Americans have no idea how much water we use - or how to conserve it
"Perhaps most troubling, Americans overwhelmingly believe that changing their habits, as opposed to improving the efficiency of their plumbing, is the most effective way to cut down on water consumption. Seventy-six percent of those surveyed said curtailment methods, such as flushing less frequently, are the best way to reduce water use. Only 10 percent chose more preventative measures, such as installing new toilets that use just 1.6 gallons per flush in lieu of old toilets that use five to six gallons."

Of course there is hope if we listen to free market economists and make rational decisions that are in our best economic self-interest. (Hint: That means divesting from fossil fuels and investing in clean energy & energy efficiency solutions.)
Energy efficiency creates 387% return on investment for US Southeast
"A wide range of economic benefits contributed to the overall $78.3 million in regional economic output created by SEEA’s energy efficiency upgrades. $55.7 million in economic output and 240 jobs were created through direct effects from program spending, while $22.2 million in economic output and 106 jobs were created via direct effects like efficiency goods and services. Induced effects from households or workers spending newfound money on consumer goods or services created an additional $366,471 in economic impacts."

And maybe there is something with tapping into the "keeping up with the Jones'" zeitgeist. Whatever it takes to give my grandkids a high quality of life.
With energy reports, it's game on
"But research has shown that neighbor comparisons are the most effective way to get people to conserve energy, he said. More people respond to hearing what their neighbors are doing than to the prospect of helping the environment or saving money. The comparisons work, he said; the first group of ComEd customers to get the reports, in 2009, reduced their electricity use by 2 percent."

Happy Friday!