At YearlyKos, in 2006, Jerome a Paris, Jerome a Paris, DevilsTower, George Karayannis, and A Siegel presented Energize America 2020 on a panel with Governor Bill Richardson (D-NM) (former Secretary of Energy) participating as a commentator.

In the year since, the situation has grown more dire (with ever more serious news on the Global Warming front) and improved (with a Congress seeking to act and a nation ever more aware of the serious challenges ahead).

This diary returns to one part of the YK2006 presentation, Core Principles, with more extensive discussion than what was diaried along with reflections a year after YK2006.

This presentation was provided in a five-part series,

* Part 1: The energy situation
* Pt 2: How Kossacks built EA
* Pt 3: Main Goals
* Pt 4: Principles and Exemplary Acts
* Pt 5: How You Can Help

*Introduction*

My (user) name is A Siegel. I am a petroholic. My last full tank was 27 hours ago and I am beginning to feel withdrawal.

Richard Smalley ("Terrawatt Challenge (pdf)) was right.

Take a moment to put together a list of the top ten challenges for humanity for the 21st century. Your list might include global economic growth, health issues, hunger, environmental destruction, climate change, water, terrorism and others. When considering such a list, there is at least one common thread. All are worsened by a future dominated by an expensive, uncertain, unevenly available, polluting energy system. And, all will face eased solution with a future dominated by a clean, sustainable, readily accessible, fairly distributed, and reasonably priced (if not inexpensive) power solutions.

At this time, the United States is hurtling toward the cliff like Thelma & Louise, but we’re in our Hummers rather than a convertible. And, we are dragging the world ... and future generations ... behind us, bound hand and foot by our dangerous habits and shaky energy structure.

*ENERGIZE AMERICA: Core Principles*

This group, the Energize America team, is drawn together by the necessity to – and belief that we can – divert this reckless path before it will be too late. We seek to leap from our Hummers, hurtling into a dismal future, into 100+ mile per gallon (mpg), composite, flex-fuel, plug-in hybrid cars and SUVs that will allow us to turn aside from the cliff into a brighter and sustainable future.

With this vision in mind – that we both must and can pursue a better energy future – we turn to a discussion of the principles. The slide above provides a list of key principles but, at the core of almost all our work is a rather simple – even if extremely difficult to achieve – principle:

We seek to make the right choice the easy choice for:

* Government, at all levels;
* Corporations, businesses, and other organizations;
* Communities and associations; and,
* Individuals.

Right now, for multiple reasons, there are too many misaligned incentives that favor the ‘wrong’ energy choice over the right one. For example,

* Businesses face accounting rules, regulations, and laws that create obstacles to building a more energy efficient facility and investing in renewable energy for an installation. While the utilities can be deducted each year by a business, investments in making a more energy efficient building might be restricted to a 39.5 year depreciation schedule. In fiscal accounting terms, the Net Present Value (NPV) of that renewable energy and energy efficiency is devalued against the ability to deduct utility costs annually. In other words, a Chief Financial Officer (CFO) for a business faces disincentives to making the right, long-term choice re energy usage due to accounting rules.

* Government (and business – and individual) budgeting can hamper making the better long-term choice. “Capital” funds – buildings – are highly visible and divorced from operating budgets. Within ‘constrained’ current budgets, buildings might be built less efficiently in what is – often incorrectly – perceived as a ‘cheaper’ upfront cost while accepting (often not explicitly) higher future energy costs due to constrained current capital budgets. Thus, capital budgets are ‘stretched’ to do more through creating higher future operating costs due to not incorporating high energy efficiency and, even, renewable energy as an upfront part of the construction. An excellent example of this would be geothermal heating/cooling (HVAC) systems which will cost more to install than ‘standard’ HVAC systems, but which will use substantially less energy than any alternative across large parts of the United States. The “builder”, all too often, isn’t the one who pays for those higher future costs.

* And, there is of course the hidden bias at all levels. Polling and analysis show that Americans are prepared to make efficiency investments if the money will be paid back in a 30 month period, 2.5 years. Translate this into a “return on investment” (ROI) and this is 33 percent annual ROI. For the individual homeowner, that 33% investment in – for example – new insulation would be 100 percent after tax. What stockholder would not love to have a guaranteed, 33% ROI after tax – inflation adjusted – indefinitely? Actually, who would not be ecstatic with a 10% guaranteed ROI when money in a certificate of deposit might be just 5 percent? If we could change the ‘inherent’ ROI calculation to 10% -- or seven years – it opens the door to huge opportunities for a more energy efficient life-style for all Americans.

And then, of course, is the not insignificant issue that externalities are simply not calculated in energy decisions – the implications of pollution being the most serious (for the environment, human health, etc) but also not insignificantly security and other subsidized system costs.

Now, if this sounds too ‘fiscal’ oriented and not principled enough, remember that a core principle is to make the right decision the easy decision. While every EA2020 team member believes in the importance of conservation, EA2020 seeks to enable change through efficiency and a move toward more sustainable energy future. Tremendous gains can be made via efficiency – tremendous gains.

Making efficiency – and renewable energy choices – more straightforwardly the ‘right’ choice from a financial accounting perspective will help propel the nation toward the situation where the right choice is the easy choice, rather than the difficult option to be adopted only by ‘zealots’, the ‘converted’, or reluctantly by the ‘unconvinced’.

*Exemplary Acts 1: Sustainable Development Agency*

So, what are potential mechanisms for maximizing the chance that the rules will be structured and decisions made with 'make the right choice, the easy choice' a guiding principle. As with the Energy Smart Communities Act, EA2020 was not hesistant to learn from other's ideas and experiences. In this case, we drew from the United Kingdom.

Perhaps the most fearful thing to do is suggest a new governmental organization and we came to this Act reluctantly but out of a true sense of necessity. Discussed earlier is how incentive structures are, too frequently, misaligned against the right choices for energy efficiency and renewable energy. In leading to this proposal to form a Sustainable Development Agency, we faced the reality that policies, regulations, and laws can be skewed against the right choice.

One way to express this is that Americans live in a $9.99 culture, with a focus on how much something costs to buy rather than how much it will cost to actually own (and operate). Let us provide a tangible example. Following the most recent Base Realignment and Closure (BRAC) deliberations, the Department of Defense is moving forward with roughly 250,000 homes on its bases. These homes will be built to code ... to code. Remember, that code is the minimum standard when it comes to insulation and energy efficiency. In seeking a more sustainable and secure (in the face of rising prices, natural power disruption, or some form of man-made disaster) military infrastructure – which includes housing on bases – building to Leadership in Energy and Environmental Design (LEED) standards would lead to a housing stock that would be far less expensive to operate – to own – and not even necessarily more expensive to build. Building to LEED standards could reduce the energy operating costs easily by 50% and potentially by even more but getting to that choice is difficult within the funding structure for building this homes. This reality is driven, in part, due to the fact that the “builder” is not the “owner” and the “owner” won’t be the “tenant” who will actually pay the utility bills. At the end of the day, the American taxpayer will – over the long term – pay for all of this, but the various funding streams are totally separate from each other.

The Sustainable Development Agency (SDA), reporting into the highest level of government – potentially even as a cabinet position, will be focused on seeking out perverse incentive structures in regulations and laws ... and propose paths and options to redress these perverse incentives. It will be a center to expertise for government, American business, Americans, and even the larger world community as to how to create paths toward a economically prosperous sustainable energy future.

As noted above, the SDA will focus on “America” but will engage with the world. One arena where this will interconnect is that the SDA will help foster a more sustainable energy focus for the US government’s interactions with the world and various aid programs. For example, in the Iraq energy sector reconstruction projects, renewable energy programs are so miniscule that one can reasonably call this non-existent. Amid all the other problems in Iraq, how much better off would Iraqis be if ten percent of energy reconstruction funds had gone to distributed renewable energy projects not susceptible to disruption and attack by insurgent forces? And, how might this have created a path in Iraq for a domestic renewable energy industry (small windmills, solar hot water heating, installation and maintenance people) that would foster an ever increasing renewable energy future in this oil-rich nation. This is counter-productive for Iraqi, US, and global interests.

*Exemplary Acts 2: Energy Smart Communities Act*

This is a good place to note that Energize America is working, today, with the Hill to develop new concepts for legislation -- and that this Act, we hope, will be introduced in legislative form. This is now the Energy Smart Communities Act (ESCA), renamed from the Neighborhood Power Act, renamed from -- clearly -- the Community-Based Energy Investment Act. (For the most recent discussion of it, see Energize America and Good Governance.) But, the principles and core objectives remain the same.

There is a simple reality in today’s world – the best energy investment is, simply, negawatts – achieving power savings through efficiency. Each watt saved through efficiency is the equivalent of creating a new watt of generating power. Tremendous gains have occurred over recent decades – the National Resource Defense Council estimates that existing energy efficiency standards have “cut electricity use 5 percent and reduced levels of pollution that come from the power plants that produce the electricity by over 2 percent.” New refrigerators use 75% less than those from the 1970s. Even with these tremendous advances, however, there is not hard to find tremendous opportunities for fiscally sensible energy efficiency investments.

San Francisco had a bond program, nicknamed Vote Solar, which recognized and exploited the reality that government facilities have tremendous opportunities for huge gains through energy efficiency. With a $100 million bond, San Francisco put together a package of efficiency investments combined with some investment in renewable energy (wind power and solar photovoltaiics) such that the total energy savings and renewable power generation have a higher value than the cost of paying back the bond. Thus, San Francisco traded capital investment – via a bond – for lower operating costs which pay for the loan and save the city some money. There is virtually no community in this nation that could not pursue such a program profitably – schools, police stations, community recreational facilities throughout America can be made more energy efficient. As a specific example, community pools are prime candidates for solar hot water pool heating (a roughly 18 month payback period, in general, if the pool would have been heated otherwise). And so on ...

But, this can be difficult for an individual community to develop. It costs money to structure bonds. Not every community has renewable energy or energy efficiency expertise nor the resources to study how best to allocate resources from a bond so that savings would pay for it (actually, where the savings would exceed the costs – creating a lower-cost environment lowering future taxpayer burdens for operating public facilities).

The Energy Smart Communities Act seeks to enable local communities to be able to make the right choice – while saving money for the tax payer – again truly seeking to empower the right choice as the right choice. How? Through developing a core Federal financial expertise for bond structuring combined with energy expertise (efficiency and renewables) to assist state and local governments for structuring bond programs. In addition, the Federal government would provide a small matching grant against these bond programs to provide greater incentive for moving forward.

This act would not just save taxpayers money through reducing public energy costs and lower governmental contribution to pollution through energy use, but would have a not insignificant corollary benefit of helping strengthen energy efficiency and renewable energy capacity throughout the United States. This newly created and enhanced capacity would be available to work for local businesses and local homeowners. This capacity ranges from building inspectors more knowledgeable about renewable programs, less likely to create inspection uncertainty for builders (uncertainty, for a businessman, is a risk and risk translates into cost) to trained workers for installing systems to building code writers learning enough for instituting greater energy efficiency requirements as they have seen the positive impacts within public buildings. Thus, the bonds will provide a public-private partnership that will have a multiplicative impact beyond ‘simply’ the positive results in the public infrastructure.

As vision, this act offers the potential for tremendous educational opportunities to foster the next generation’s ability to accelerate the progress toward a prosperous sustainable energy future. Throughout the United States, school systems have faced energy shocks in recent years (just as have individual Americans). Schools, in many cases, represent prime opportunities for significant cost savings through energy efficiency investments. Through the Energy Smart Communities Act’s bonds, funding could be made available for school systems to have students monitor and study the impacts of the energy efficiency and renewable energy programs at the schools (or throughout the local community). Scholarships and other awards could be associated with these efforts. Linking the program to real and practical educational opportunities could help develop tomorrow’s engineers and scientists for the next generation of renewable technologies. It can foster a more energy literate populace, with greater understanding of how energy efficiency and renewable energy offers the very real option of a better standard of living while using less energy.

This act provides a Federal enabling and sparking role for local action; this is using the Federal government to enable local initiative that will be in the common interest of all citizens. The Energy Smart Communities Act seeks to make the right choice for a more energy efficient and renewable energy infrastructure the easy choice for communities across throughout America.
*EA2020 in 2007*
If you are not aware, members of Congress have approached the ENERGIZE AMERICA team and asked for concept imputs for energy legislation. We are working to bring some of these to fruition and to help turn the nation toward a sustainable and prosperous energy future.

We are working with several members of Congress, with several EA2020 concepts being worked on by legislative counsel to turn them into actual legislation. We hope that, in the not too distant future, the members will begin seeking co-sponsors for the legislation.

At that point, every one can help. At the moment, you can help by giving thoughts and reactions to the material here ...
*PHOTO* Mark Sumner, Jerome a Paris, Governor Bill Richardson, George Karayannis, A Siegel, Yearly Kos Panel, Las Vegas, 2006

Ask yourself: Are you doing your part?
*NOTES*

* Are you coming to Yearly Kos? There will be an EA2020 panel along with a session on using the blogsphere for policy development.
* This discussion is mainly the extended version of the annotation from the 2006 YK presentation. Would be interested in thoughts/comments as to where this can be improved.
* And ... of course, ENERGIZE AMERICA