The Economist ran a story this morning about how increases in lighting efficiency have actually led to increased energy usage over time as people have been more willing to overutilize these technologies.
While this is perfectly rational and somewhat to be expected, it is nevertheless a profound facepalm moment for me, and speaks to the entire notion of energy efficiency and renewable energy by extension; while my aim is to reduce the amount of fossil fuel energy used and its corresponding environmental and social impacts, the realities of the situation is that these advances in many cases simply provide an opportunity for people to just consume more.
(This is an uncomfortable parallel with the Marxist ideal of machines as multipliers of labor that would simply lead to more leisure and self-actualization time for the workers; in reality, the economy just sped up to expect more productivity from workers armed with such technology and no attendant reduction in demands placed upon labor was observed.)
Monday, August 30, 2010
Friday, August 27, 2010
Renewable energy market analysis - Oregon
Given that the state of the renewable energy market has finally caught up with me on a personal and professional level, I figured that this was a good time to talk about it here.
Typically, renewable energy systems do not provide a net financial benefit to hosts / owners in and of themselves; given how cheap electricity is (for the moment), the up-front costs of installing a system still outweigh its lifetime benefits from a NPV perspective. To make up that gap, state and federal incentives are available; the feds offer 30% of the eligible system costs as a tax credit in the first year after the system is completed, while state incentives fall largely into two categories- tax credits and Feed-in Tariffs.
Oregon has historically had a tax credit, the Business Energy Tax Credit, or BETC (pronounced Betsy) that offered a very attractive payback period for businesses that had the tax liability to offset. However, this program has run afoul of some political turbulence over the last few years and appears to be on its way out.
To replace it, the new incentive program is a Feed-in Tarriff (FiT). This essentially consists of a fixed duration net metering agreement with a particular power provider to sell the energy from a renewable energy system to them at a substantial markup, which assists utilities in meeting their renewable portfolio standard goals; the utility is, in turn, subsidized by the state. Oregon's model is somewhat more complicated, but that's the gist.
The problem is that, from an accounting perspective, the FiT is not nearly as attractive an option as the BETC. For one, it stretches out the payback period immensely- while a BETC-funded project will break even after ~7 years in many cases, FiT projects can take twice as long to turn around. In addition, it exposes the investor to the risk that the system will underproduce and thereby yield less, leading to an even more protracted payback period. So while it helps to open the field to businesses with lower tax appetites, it makes third party funding- a requirement for most of the large commercial installations that take place- for these projects considerably more difficult to orchestrate.
Regardless of the incentive program, however, these systems require two things in order to function: A state government with the money and will to fund them, and businesses in the state making enough money to be attracted to the tax breaks offered by these investment. Unfortunately, at present Oregon has neither of these, and if economic projections are to be believed any further than augury by the reading of entrails or bird migrations, that looks to be the case for the foreseeable future.
So, what would need to happen for the renewable energy industry to be resuscitated?
1) A stable economy. Like it or not, alternative energy is still viewed as a luxury, not a necessity, and luxury goods by and large gather dust during economic hardship.
2) Political will. It's very tempting when your state is running a $350M budget deficit to avoid looking with hungry eyes at taxes that could be realized by cutting these incentive programs, and doing so will provoke considerably less widespread furor than many other potential cuts (health, education, infrastructure, and the like). Oregon has a lot of representatives who are passionate supporters of renewables, and a lot of increasingly hungry people who will happily see them eviscerated for it.
3) Perhaps most importantly... Energy just needs to cost more. Oregon has incredibly low rates for electricity, and while it is politically unpopular on both sides of the aisle to suggest boosting them substantially, it is going to need to happen for renewable energy to stand a ghost of a chance of remaining viable in this state.
Typically, renewable energy systems do not provide a net financial benefit to hosts / owners in and of themselves; given how cheap electricity is (for the moment), the up-front costs of installing a system still outweigh its lifetime benefits from a NPV perspective. To make up that gap, state and federal incentives are available; the feds offer 30% of the eligible system costs as a tax credit in the first year after the system is completed, while state incentives fall largely into two categories- tax credits and Feed-in Tariffs.
Oregon has historically had a tax credit, the Business Energy Tax Credit, or BETC (pronounced Betsy) that offered a very attractive payback period for businesses that had the tax liability to offset. However, this program has run afoul of some political turbulence over the last few years and appears to be on its way out.
To replace it, the new incentive program is a Feed-in Tarriff (FiT). This essentially consists of a fixed duration net metering agreement with a particular power provider to sell the energy from a renewable energy system to them at a substantial markup, which assists utilities in meeting their renewable portfolio standard goals; the utility is, in turn, subsidized by the state. Oregon's model is somewhat more complicated, but that's the gist.
The problem is that, from an accounting perspective, the FiT is not nearly as attractive an option as the BETC. For one, it stretches out the payback period immensely- while a BETC-funded project will break even after ~7 years in many cases, FiT projects can take twice as long to turn around. In addition, it exposes the investor to the risk that the system will underproduce and thereby yield less, leading to an even more protracted payback period. So while it helps to open the field to businesses with lower tax appetites, it makes third party funding- a requirement for most of the large commercial installations that take place- for these projects considerably more difficult to orchestrate.
Regardless of the incentive program, however, these systems require two things in order to function: A state government with the money and will to fund them, and businesses in the state making enough money to be attracted to the tax breaks offered by these investment. Unfortunately, at present Oregon has neither of these, and if economic projections are to be believed any further than augury by the reading of entrails or bird migrations, that looks to be the case for the foreseeable future.
So, what would need to happen for the renewable energy industry to be resuscitated?
1) A stable economy. Like it or not, alternative energy is still viewed as a luxury, not a necessity, and luxury goods by and large gather dust during economic hardship.
2) Political will. It's very tempting when your state is running a $350M budget deficit to avoid looking with hungry eyes at taxes that could be realized by cutting these incentive programs, and doing so will provoke considerably less widespread furor than many other potential cuts (health, education, infrastructure, and the like). Oregon has a lot of representatives who are passionate supporters of renewables, and a lot of increasingly hungry people who will happily see them eviscerated for it.
3) Perhaps most importantly... Energy just needs to cost more. Oregon has incredibly low rates for electricity, and while it is politically unpopular on both sides of the aisle to suggest boosting them substantially, it is going to need to happen for renewable energy to stand a ghost of a chance of remaining viable in this state.
Monday, June 28, 2010
Look first to the log in your own...
So, as a part of my new job (employed again in the renewable energy industry at last!) I went to a conference on Friday focused on energy efficiency and sustainability more generally. While it was more or less a bust on a professional level, I did emerge from it with one anecdote to share.
A full 2/3 of the audience at this conference was composed of independent "sustainability consultants," a job description and market that I think is so thoroughly over-saturated at this point that it is of extremely limited usefulness. (No offense to those of you pursuing that path, and best of luck.) It was no real surprise, then, that when we broke for lunch I was seated in a group of four people, two of which were consultants of this type.
One of them, a somewhat conservative, middle aged man, announced that his particular area of focus was on paperless offices and reducing paper use. He had all manner of statistics, facts, and figures on the topic- Iron Mountain alone has X million cubic feet of paper in storage, the US uses Y million c.f. of paper per year, which is the equivalent of completely filling Z Nimitz class aircraft carriers and stacking them end-to-end. Paper milling is the third most polluting industry in the U.S., etc.
Now, by and large I agree with these points, don't get me wrong- as much as I appreciate the sensual experience of picking up a book, I've moved my own library as much as possible to an electronic format, and think that transmission of electrons makes a lot more sense than cutting down and flattening trees. (Though there are definitely arguments to be made about the embodied energy and pollution cost associated with microprocessors as well...) So I am totally onboard with his core message.
What had me shaking my head in disbelief, though was watching after we'd completed our meals as this evangelist of paperless offices, this man with such an incredible battery of criticism against paper use, proceeded to carefully put the corn-based plastic fork from his lunch, the unused napkins, the plastic wrap, the cardboard box, the brown paper bag, and, yes, even the aluminum can from the soda he had with it all, directly into the trashcan. This, despite the fact that there was a) a compost bin directly adjacent to the trash cans and b) a recycle bin about 30' away on the opposite wall. And he looked at me as he did it, announcing bitterly that "*this* is the problem with paper!"
Now, it took me all of about 30 seconds while sitting and chatting with these folks to separate out the detritus from lunch, which wound up being entirely compostable but for the bit of plastic wrap my sandwich came in and the aluminum can from my own soda.
This sort of thing gives sustainability a bad name, people. If you aren't willing to spend half a minute out of your day taking care of the inefficiencies and waste involved in your *own* life, please get off the stump. To invoke a proverb, before commenting on the twig in your neighbor's eye, look first to the log in your own.
Saturday, December 26, 2009
A skeptic waxing poetic
I have been exchanging some rather interesting emails with a new friend of late and, in the course of them, wrote the following. It is really my answer to the common charge that atheists and rational skeptics lack any sort of awe or wonder in their relationship to the world; far, far from it.
But that, in a lot of ways, is exactly the problem- if I just accept that because it fits well, because it harmonizes with my feelings and how I view the world, I am in no more tenable a position than someone who does the same thing with their deity of choice. Being rational about it, I can only accept such things as I have seen sufficient evidence to support, and I have seen no evidence to support the idea that there is that spiritual, transcendent level to reality that would tie things up so neatly. I haven't ruled out the fact that someday, I might have that sort of revelatory experience and all of the sudden realize that, holy shit, I am connected to everything in the world not only in terms of energy and matter moving through states in this partial closed-loop system but something utterly transcendent, but until I see evidence of that for myself, I can't make that assumption.
In the meantime, though, my biggest point is that while that additional connection to the world would be nice, it isn't necessary to provoke the sort of awe that most religious types think rational reductionists lack. Even without the assumption of another layer of reality, I am connected to All That Is. We are both in the stream and of it, and what we do to the whole we do eventually to ourselves. It sounds incredibly new-age and hippy dippy, but strictly in terms of
physics, chemistry, and biology, it is all absolutely true.
Look at water as a simple example... We drink it in. We breathe, sweat, piss, and otherwise excrete it out for every moment we are alive on this planet. It doesn't disappear. It is taken back up into the stream, absorbed and used by myriad forms life, from trees to bacteria, swept up into clouds and rained back down to begin anew. Molecules of water that were once a part of me have passed through and been a part of billions of other organisms- maybe even you. The same is true of carbon, oxygen, nitrogen, all manner of other things; energy to fuel all of this comes from the sun and powers this organization until it is lost to entropy, but perpetually replaced.
With that sort of connection just in what we can see, touch, measure, and truly understand, what need is there truly for another ineffable layer to reality?
Sunday, October 4, 2009
Sustainability defined
A high school buddy of mine asked this morning that I write a little bit about sustainability as a concept- apparently I am more credible than the average raving tree huggers he has encountered, so he hoped I'd give a more balanced view.
At its most basic, sustainability as a concept really boils down to two things:
- Understanding and acknowledgement of the fact that both renewable and nonrenewable resources on this planet are not inexhaustible, and
- A desire to make the most efficient use possible of those resources, and in such a way as they will always be accessible for continued use
From that perspective, it really has a lot in common with the output maximization equations you might see in an industrial plant, figuring out the most efficient way to use limited or costly resources to extract the maximum possible benefit from those resources, doing as much as possible to cut down on waste and redundancy and to use less costly and / or more durable materials to the greatest degree possible.
Where they diverge is in the intent. In the industrial example, the goal is to extract the maximum value from the material inputs to deliver the greatest possible profit to the company. Sustainability from an environmentalist perspective, though, is all about reducing the amount of impact our economic activities have, most notably through reducing the amount of consumption (be it materials or energy) required to operate in a given industry. (Carbon and other emissions, while often set up as or misunderstood to be the goal of sustainability, are in many ways just a stand-in for this idea of reducing consumption.)
The part that is most interesting and exciting for me in all of this, though, is the fact that both the industrial and the environmentalist goals in this equation are the same- it's the same maximization equation either way, maximizing output while minimizing inputs.
A classic example of this in sustainability-oriented academia is Ikea; while I have my own issues with them (I don't believe that it is sustainable to manufacture a cheaply-made durable good designed to be commoditized and perpetually replaced, regardless of the recycling and sourcing policies associated with its manufacture), they were a relatively early adopter (due, notably, to a PR nightmare associated with their early policies relating to pollution and toxins) of recycling and waste reduction; by systematically analyzing their operations they were able to positively impact both their financial and environmental bottom line through a few different means:
- Reducing the amount of waste generated in the course of production
- Increasing the amount of material reclaimed as recyclables and reused within products
- Consequently reducing the amount of material consigned to landfills, thereby reducing that substantial cost
Now, obviously, the interests of industry and those of environmentalists aren't always going to be aligned, especially while the costs of polluting continue to be so easily externalized (to say nothing of the artificially deflated cost of energy as we burn through eons upon eons of stored energy in the form of fossil fuels in the course of a scant few centuries). But, to me, the idea that they can be aligned is very exciting- it is a win-win solution in an arena that has been characterized for decades by confrontational, unproductive bickering.
I genuinely believe that, as the costs of unsustainable practices mount over time and as industry is held more and more accountable for the total costs of their operations, these two divergent interests will find themselves more and more in line with one another. It may not- truth be told, probably will not- happen in my lifetime, but I believe that we are laying some very important groundwork now. This is not greenwashing, this has nothing to do with PR, but everything to do with the linked environmental and economic bottom line for a company.
(The idea of the linked environmental and economic bottom lines is not mine, I should note, but is a part of the larger concept of the triple bottom line; for a process to be sustainable, it must not only be environmentally sustainable, but economically and socially as well. In short, it is no more sustainable to operate in such a way as you are going out of business (in which case someone else will step in and do it however they see fit) or degrading your workforce (in which case you will chew through them eventually and be unable to continue operating) than if you were tearing through all available resources at an unsustainable rate.)
In any case, to return to the basic premise and reword it slightly, the idea of sustainability is to live within our means, whether we accomplish that by way of reducing our consumption or making smarter decisions on what and how to consume, such that we will continue to be able to live into the future and won't have to deal with any of the ugly consequences of running out. It's a concept that any business owner, manager, or person with a checkbook should be able to grasp very readily.
At its most basic, sustainability as a concept really boils down to two things:
- Understanding and acknowledgement of the fact that both renewable and nonrenewable resources on this planet are not inexhaustible, and
- A desire to make the most efficient use possible of those resources, and in such a way as they will always be accessible for continued use
From that perspective, it really has a lot in common with the output maximization equations you might see in an industrial plant, figuring out the most efficient way to use limited or costly resources to extract the maximum possible benefit from those resources, doing as much as possible to cut down on waste and redundancy and to use less costly and / or more durable materials to the greatest degree possible.
Where they diverge is in the intent. In the industrial example, the goal is to extract the maximum value from the material inputs to deliver the greatest possible profit to the company. Sustainability from an environmentalist perspective, though, is all about reducing the amount of impact our economic activities have, most notably through reducing the amount of consumption (be it materials or energy) required to operate in a given industry. (Carbon and other emissions, while often set up as or misunderstood to be the goal of sustainability, are in many ways just a stand-in for this idea of reducing consumption.)
The part that is most interesting and exciting for me in all of this, though, is the fact that both the industrial and the environmentalist goals in this equation are the same- it's the same maximization equation either way, maximizing output while minimizing inputs.
A classic example of this in sustainability-oriented academia is Ikea; while I have my own issues with them (I don't believe that it is sustainable to manufacture a cheaply-made durable good designed to be commoditized and perpetually replaced, regardless of the recycling and sourcing policies associated with its manufacture), they were a relatively early adopter (due, notably, to a PR nightmare associated with their early policies relating to pollution and toxins) of recycling and waste reduction; by systematically analyzing their operations they were able to positively impact both their financial and environmental bottom line through a few different means:
- Reducing the amount of waste generated in the course of production
- Increasing the amount of material reclaimed as recyclables and reused within products
- Consequently reducing the amount of material consigned to landfills, thereby reducing that substantial cost
Now, obviously, the interests of industry and those of environmentalists aren't always going to be aligned, especially while the costs of polluting continue to be so easily externalized (to say nothing of the artificially deflated cost of energy as we burn through eons upon eons of stored energy in the form of fossil fuels in the course of a scant few centuries). But, to me, the idea that they can be aligned is very exciting- it is a win-win solution in an arena that has been characterized for decades by confrontational, unproductive bickering.
I genuinely believe that, as the costs of unsustainable practices mount over time and as industry is held more and more accountable for the total costs of their operations, these two divergent interests will find themselves more and more in line with one another. It may not- truth be told, probably will not- happen in my lifetime, but I believe that we are laying some very important groundwork now. This is not greenwashing, this has nothing to do with PR, but everything to do with the linked environmental and economic bottom line for a company.
(The idea of the linked environmental and economic bottom lines is not mine, I should note, but is a part of the larger concept of the triple bottom line; for a process to be sustainable, it must not only be environmentally sustainable, but economically and socially as well. In short, it is no more sustainable to operate in such a way as you are going out of business (in which case someone else will step in and do it however they see fit) or degrading your workforce (in which case you will chew through them eventually and be unable to continue operating) than if you were tearing through all available resources at an unsustainable rate.)
In any case, to return to the basic premise and reword it slightly, the idea of sustainability is to live within our means, whether we accomplish that by way of reducing our consumption or making smarter decisions on what and how to consume, such that we will continue to be able to live into the future and won't have to deal with any of the ugly consequences of running out. It's a concept that any business owner, manager, or person with a checkbook should be able to grasp very readily.
Wednesday, October 15, 2008
R/E in the 2008 US Elections
Well, we finally saw the last debate of this presidential race tonight. To be perfectly frank, I wasn't all that impressed with the performance of either candidate; McCain came off as shrill, trying desperately to throw some FUD into peoples' perceptions of Obama, while Obama was almost entirely reactive through the course of the debate, spending most of his breath responding to McCain's attacks rather than speaking about his own policies. CNN's results suggest that Obama polled substantially better among their focus group, but that doesn't necessarily matter a hill of beans.
To talk about the main issue of this blog, though, I think it's very interesting this time around to hear both candidates trotting out their support for renewable energy; after the antipathy toward R/E shown by the Bush administration, it's a bit startling and a phenomenal change of pace to hear any discussion of renewable energy from the GOP candidate.
Of course, talking about renewable energy and following through on that talk are two very different things. Given McCain's history with renewable energy to this point- 24% lifetime and 0% 2007 score according to the League of Conservation Voters- my faith in his newfound enthusiasm for renewable energy fails to abound. Obama's record- 86% lifetime, 67% 2007- is substantially more heartening.
Why does any of this matter? Well, beyond the obvious subjective importance of the topic to a professional in the R/E industry, I genuinely believe that the development of renewable energy and other sustainable technologies presents an incredible opportunity for the US in the coming decades. Not only can this sort of development serve to alleviate the coming growing pains associated with moving from an unsustainable, unstable energy-dependent condition to a lifestyle that is within our means, but it provides an incredibly promising opportunity for the export of new sustainable energy technologies to the developing world. It's no secret that the US could badly use a new export commodity, and, from an ethical and environmental standpoint, this allows other countries to avoid the growth pains associated with the transition we are facing now.
Whether or not that happens, however- whether the US will actually sieze this opportunity and becomes a global leader in sustainable technology- is anyone's guess. As a nation we haven't been particular exemplars of forward thinking in the last four decades, but the opportunity is there.
There are worse things to predicate a future on than a set of technologies that is, by its very nature, sustainable...
To talk about the main issue of this blog, though, I think it's very interesting this time around to hear both candidates trotting out their support for renewable energy; after the antipathy toward R/E shown by the Bush administration, it's a bit startling and a phenomenal change of pace to hear any discussion of renewable energy from the GOP candidate.
Of course, talking about renewable energy and following through on that talk are two very different things. Given McCain's history with renewable energy to this point- 24% lifetime and 0% 2007 score according to the League of Conservation Voters- my faith in his newfound enthusiasm for renewable energy fails to abound. Obama's record- 86% lifetime, 67% 2007- is substantially more heartening.
Why does any of this matter? Well, beyond the obvious subjective importance of the topic to a professional in the R/E industry, I genuinely believe that the development of renewable energy and other sustainable technologies presents an incredible opportunity for the US in the coming decades. Not only can this sort of development serve to alleviate the coming growing pains associated with moving from an unsustainable, unstable energy-dependent condition to a lifestyle that is within our means, but it provides an incredibly promising opportunity for the export of new sustainable energy technologies to the developing world. It's no secret that the US could badly use a new export commodity, and, from an ethical and environmental standpoint, this allows other countries to avoid the growth pains associated with the transition we are facing now.
Whether or not that happens, however- whether the US will actually sieze this opportunity and becomes a global leader in sustainable technology- is anyone's guess. As a nation we haven't been particular exemplars of forward thinking in the last four decades, but the opportunity is there.
There are worse things to predicate a future on than a set of technologies that is, by its very nature, sustainable...
Thursday, October 9, 2008
Turning point
This may be a bit of a sticky topic for many; I know that going into it. I'll say up front that I have some very grave concerns relating to how this economic crisis will impact people in this country and around the world. I worry in particular about my parents, who have / had most of their retirement savings invested in AIG and the rest in a 401k, both of which stand to get battered rather badly in the course of this downturn.
That said, though, the instability of the global economy does provide some opportunities for other systems and options that have, to this point, been marginalized and rolled over by that international economy. Specifically, I am thinking about local finance, local economy, and local energy.
The first and most obvious is the potential shot in the arm that may be enjoyed by local financiers- credit unions. Many people far smarter and far better informed than I am have commented on the advantages, both personal and in terms of community, offered by a credit union as compared to a larger bank. These institutions may, functionally, be no safer than a bank, especially for those of us with less than 100k to put into them, but I know for my part that I relish the thought of actually being a voting member of my financial institution and being able to exercise some small modicum of control over the decisions it makes.
One step grander than that is the idea of local economy. Admittedly, living in the Pacific Northwest makes this a rather easier proposition than it would be in, say, SoCal. By and large, however, I can obtain just about everything I need in the course of my day-to-day life from a local producer. Food is an obvious one, but it extends also to most any craft good- furniture, clothing, home and body care products, and the like. This isn't universal- as I'm sure some clever person thought upon reading this, the computer on which I am typing these thoughts is anything but local- but watching the international economy falter provides an opportunity to look at localizing production and consumption.
Finally, there is the idea of local energy. Again, being in the NW I am situated rather conveniently to discuss this concept- Oregon and Washington have some very nice incentive programs in place for the installation and use of renewable energy. Small-scale, distributed power generation- be it in the form of micro hydro, small scale solar, or small turbines- provides ample opportunity to move away from the global energy trade and instead keep that money in our communities.
I genuinely don't know if people will pick up the ball and run with it, to use a cliche- whether our communities and our nation will be able to see the opportunity inherent to this crisis and move toward a system less prone to abuse and failure. But I hope I have the opportunity to help move in that direction.
That said, though, the instability of the global economy does provide some opportunities for other systems and options that have, to this point, been marginalized and rolled over by that international economy. Specifically, I am thinking about local finance, local economy, and local energy.
The first and most obvious is the potential shot in the arm that may be enjoyed by local financiers- credit unions. Many people far smarter and far better informed than I am have commented on the advantages, both personal and in terms of community, offered by a credit union as compared to a larger bank. These institutions may, functionally, be no safer than a bank, especially for those of us with less than 100k to put into them, but I know for my part that I relish the thought of actually being a voting member of my financial institution and being able to exercise some small modicum of control over the decisions it makes.
One step grander than that is the idea of local economy. Admittedly, living in the Pacific Northwest makes this a rather easier proposition than it would be in, say, SoCal. By and large, however, I can obtain just about everything I need in the course of my day-to-day life from a local producer. Food is an obvious one, but it extends also to most any craft good- furniture, clothing, home and body care products, and the like. This isn't universal- as I'm sure some clever person thought upon reading this, the computer on which I am typing these thoughts is anything but local- but watching the international economy falter provides an opportunity to look at localizing production and consumption.
Finally, there is the idea of local energy. Again, being in the NW I am situated rather conveniently to discuss this concept- Oregon and Washington have some very nice incentive programs in place for the installation and use of renewable energy. Small-scale, distributed power generation- be it in the form of micro hydro, small scale solar, or small turbines- provides ample opportunity to move away from the global energy trade and instead keep that money in our communities.
I genuinely don't know if people will pick up the ball and run with it, to use a cliche- whether our communities and our nation will be able to see the opportunity inherent to this crisis and move toward a system less prone to abuse and failure. But I hope I have the opportunity to help move in that direction.
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