Tuesday, July 19, 2005

Energy Policy Roundtable

I attended the New England Roundtable on Federal Energy Policy at Worcester Polytechnic Institute today. I must admit that my business background gets me antsy at policy meetings. I feel like we are not accomplishing anything, that we would be better off out "doing something". The error in this assumption is that regulators and legislators need feedback of all types to understand the market barriers and opportunities that policy could help overcome and develop. The challenges to policy-makers are great, making long term decisions with incomplete data, partisan and self-serving polls and statistics, and lobbyists from left, right and center.

The meeting location, at WPI gave me an excuse to visit my alma mater; I graduated with a Mechanical Engineering degree in 1994. Despite my feeling that my purely technical education failed to provide me with a healthy grasp of the social impacts of design decisions, I still enjoy wandering the alleys and lawns (some of them new) of the campus. There is something about college campuses that I enjoy; a feeling of safety, of quiet potential and of nurturing one's thoughts. It is hard to describe. But I digress.

I am now involved in the working group, "Bringing New RE Technologies to Market". The conversation was interesting as we rambled round the edges of the issue early in the session, feeling around for what we were really doing, and what we could possibly recommend for federal action to spur market acceptance of "new" renewable energy technologies. We discussed briefly what "new" technologies were, though there was nothing drastic about our conclusions. Photovoltaics, wind, biomass, geothermal, waste-to-energy, alternative fuels, hydro, wave power, etc.; the usual players. Where was hydrogen? It's in there somewhere.

The concept suggested by one of the panel participants that interested me the most was tying federal dollars to a renewable energy goals at the state level through block grants. It brings the power of federal money while leaving the decision for action in the hands of the states. This removes the potential resistance from states to federal mandates; preserving states' desire to take care of things (like energy) in a way that fits their regional needs. There would be a check list of sorts, items that the states would be judged upon that would serve to determine how much money a state received from the federal trough. If I am not mistaken, transportation funding is divvied up in a similar way, though in some cases the optional items are more like requirements since the dollar value tied to the desired state policy makes it politically impossible not to implement. We talked about the national security benefits, increase in entrepreneurial activity, economic and job growth, and reduction in the impact of volatile fossil fuel prices promotion of renewable energy technologies could make.

Some of the check boxes we thought about were:

A national security credit for procuring energy domestically, this would have to be tied to efficiency
A state has a RPS
A state has an energy agency
The state has a commercialization incubator for entrepreneurs
Commercial incentives for energy efficiency
Residential program to encourage smaller and more efficient homes.

The last check box came from a challenge to the current energy efficient mortgage programs; people save money on energy, get a lower rate, qualify for a larger mortgage, and buy a bigger house, therefore negating the potential energy saving on a smaller house. It's a perverse subsidy. People buy homes based on square footage, kitchens, bathrooms, schools, etc. There must be another way to encourage energy efficient technology adoption for builders and consumers.

The comparison we made between transportation and energy infrastructure (and funding) is a good one; both have inefficient delivery systems, with energy losses along the way. One delivers electrons over wires and one delivers goods and people over roads and rails. Distributed resources, whether it's energy generation, food production, or manufacturing would increase national security, reduce energy use, and spur the development of robust local living economies. Transmission losses in the utility grid run at about 6% (add generation losses of approximately 65% and the system efficiency is much lower, about 45%), the drive wheels of a car receive about 25% of the energy produced by burning gasoline (approximately 80% drivetrain efficiency and 30% thermal efficiency in the combustion process). Overall industrial efficiency is much less efficient, something like 1-2% from beginning to end. For a striking example, read this excerpt from Natural Capitalism.

The kicker today; I came home and opened the latest issue of Mass High Tech. What greeted me on page 19 but an article entitled Competitive Energy Strategies can Provide Economic Edge, dated July 18-24 by Bob Kinscherf. The highlight of the article is energy providers helping industry leaders remove the volatility in energy prices to increase the state's competitive edge. The author has a vested interest, as he is part of one of the companies that provide these services, but that does not invalidate the point.

What was I most interested to hear? That ACORE has an intern investigating sports marketing opportunities for renewable energy. Sustainable Cycling Team anyone?

It will be interesting to see what we come up with.

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