Green Jacket, Cigar, Gold Rings, and Disneyland

18 01 2011

I attended the Midwest Energy Efficiency Alliance last week and it was an interesting environment, to say the least.  This was the 4th or 5th MEEA conference I have attended. 

Behavioral stuff is an up and coming topic/issue in the EE industry.  I am planning to do a rant that to save energy, people have to give a crap.  I just need something to push me over the edge.  After all, just about all lasting energy efficiency requires behavioral changes.  Only inanimate, stationary, non-energy consuming stuff, e.g., insulation, doesn’t require behavior change.  Everything else has a behavioral component for maintenance, avoiding rebound and things like that.

What was probably most interesting to me was the political environment addressed by speakers at the conference.  For whatever reason, MEEA likes to attract people from Washington DC to discuss current events.  Essentially, people from the Department of Energy, Alliance to Save Energy, and Center for American Progress, to name a few, are on the defensive with the congressional wipeout last fall.  The theme I absorbed was one of playing defense and riding out this storm.  The mood for some was as though their dog had just left them and passed on to k9 heaven. 

One speaker was afraid of the jobs that were going to be lost but also threw wild numbers around – like the energy efficiency portion of the stimulus produced $50 billion in economic activity and that the regulation put in place and on auto pilot will produce billions of baskets of bread from the heavens in the next couple years. 

Energy efficiency is not like giving a child an immunization.  I’m a member of Rotary International and one of Rotary’s missions is to end polio worldwide.  We were down to just a few very poor and politically repressed countries like Afghanistan and Sudan, but like anything, completely eliminating something is very difficult.  Anyway, I’ve seen many photos of children bawling their eyes out as volunteers dripped immunization in their mouth.  This may seem unpleasant to the tikes but it is obviously in their favor and has a practically infinite benefit/cost ratio. 

Conversely, we can’t ram energy efficiency down peoples’ throats.  How many times do I have to say it?  The price of ramming things down American’s throats: 63 house seats, 6 senate seats, 5 net governorships with a near sweep in the Midwest, and a tidal wave of state house flips.  Here’s how regulations work: increase the cost of doing business and businesses move out of the state or overseas and then they get blasted for being Benedict Arnolds by the very folks who impose the regulations. 

Like light bulbs I discussed last week, energy efficiency is gathering really positive momentum, not because of top down regulation, but because it’s good for business.  See Save Energy – Get Out of Jail where Wal-Mart used “green” to get thousands of critics off its back.  They in turn are requiring energy efficiency standards for their suppliers.  I just red about Holcim cement getting ENERGY STAR® ratings on five of their plants.  I can’t speak with certainty but I don’t think they are taking the time and expense to get ENERGY STAR to pump up their four-wheel-driven employees.  They are obviously doing it for marketing.

And the DOE person was concerned about the jobs that will be lost once the stimulus is gone.  What jobs?  I’ve never lived through such a bizarre two years in my life and I’ve been in business for 20 years – eewe, old codger, I am.  It’s been crazy.  Talk about modifying behavior.  Millions of people purchasing vehicles a few months before they otherwise would, leaving in its wake a predictable buying vacuum – how many jobs did that create?  I don’t know, but I just read that Ford is planning to bring on 7,000 workers about 17 months after the cash for clunkers fiasco.  The $8,000 first-time home buyer credit – same thing.  The housing market is still searching for a bottom.  Just let it bomb and let’s get on with the recovery.  With regard to EE, probably hundreds of millions of dollars have been spent pursuing federal grants.  Enormous efforts have been expended trying to get free money.  This, my friends, is not stimulative.  It’s fighting over other people’s money to be repaid sometime in the future by said people.  This too as with my rant last week was a bipartisan bad idea started by Bush. 

Meanwhile, our industry is booming but the DOE speaker doesn’t know this because she lives in the beltway bubble.  The downturn only hit our new construction and LEED services.  Our other EE services have more than made up for it and we have four engineering spots to fill but we can’t find qualified people.  How bizarre is this?!  I think I mentioned we had an outstanding candidate we spent no time giving an offer to but she already had two other offers and took one closer to the spouse’s job.  Our usual evaluation teams have had to sit out requests for proposals because some couldn’t handle the work they already had in the tank.  We’re passing on RFPs as well.  So jeezo woman, when the stimulus goes away we’ll still be working hard to find people – as will be many others in this industry.

Back to the MEEA conference:  After a series of “Oh woe is me” talks, one guy in the crowd walked up to the mic to make a suggestion.  Rather than duking it out over regulation and climate change policy, why don’t we focus on the irrefutable common benefits that everyone can buy into – that EE is cost effective and is good for business.  Give that man a standing O, a green jacket, cigar, bottle of milk, gold rings, a trophy and a trip to Disneyland.  THIS is what we ought to be doing, not battling it out over something people rank 19th out of the most critical issues of the day and something half the population opposes. 

Tidbits

Speaking of jobs… Note to wonks trying to “create” or “focus on” jobs:  People invest and are in business to make money; period.  They are not in business to hire people.  People are hired as necessary to make more money.  Think about that.  If the bureaucrats want more jobs, let people and companies make more money. 

And speaking of sole purpose of business is making money…  In New Years Collage I chronicled a three way fight The Wall Street Journal, several utility CEOs and the EPA were having.  Among the CEOs cheering the EPA’s increase in emissions regulation was Exelon Corporation’s John Rowe.  I was eating lunch at MEEA next to a long-time Chicagoan familiar with Mr. Rowe’s strategy for Exelon (parent of ComEd, which serves Chicago).  The gentleman said Mr. Rowe sold off all of Exelon’s coal generation, leaving it with only nuclear plants.  He said the nuclear plants had among the highest operating costs in the country, which left Exelon with a high operating cost, which had to be made up by higher rates.  The gentleman explained how Mr. Rowe brought on a former Naval Nuclear engineer (Yeah!  Go Navy!) to improve the “efficiency” of the nuclear fleet.  And so he turned them around overnight.  As a result Exelon has virtually no coal generation, very efficient nuclear plants, and the highest return on capital of any utility in the business.  As I mentioned above and in several other rants, CEOs report to shareholders.  Shareholders rule.  Profit is king.  I have no problem with any of this except, I think lobbying for government to regulate a competitive advantage for yourself is not something I would do.  Preparing for and reacting to policy, good or bad policy, is fine, and indeed smart business to me.  Otherwise you might find yourself on a street corner with a tin cup. 

BTW, this was not a wild eyed ideologue I was enjoying lunch with, but I did check the facts and what he told me was pretty well right in line with an article by Forbes magazine

written by Jeffrey L. Ihnen, P.E., LEED AP

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New Years Collage

28 12 2010

I’ve corralled a mishmash of rather preposterous short stories for the year end rant.  This will be historic so be sure to pass it on to your enemies.

Case 1 comes from Engineered Systems Magazine or ES Magazine.  I was catching up on my stack of trade magazines over Christmas weekend (is this sick or what? – but it can be about as entertaining as National Lampoon’s Christmas Vacation).  September’s “Case in Point”  features an energy-saving project for Bangor Maine’s Discovery Museum, delivered by Honeywell.  An audit was followed by implementation of cost-effective measures.  The audit was completed in 2008 using the “Field Automation Service Technology” tool (FAST – I love acronyms – this is for real, theirs).  Findings included the not-so-unusual deferred maintenance like plugged air filters and heating/cooling coils among some more capital-intensive measures apparently.

One of the measures was to install a dual fuel boiler burner to take advantage of cheap natural gas as opposed to $3 fuel oil.  The results “dramatically impacted the museum’s bottom line”.  The museum paid $2,732 for fuel oil in March 2007 and only $39 in March 2008.  Well gaaaauuuullly!  (1) fuel oil is stored in tanks on site so you can spend money on fuel when and how you want and (2) they switched from using fuel oil to natural gas.  To ensure the savings persist, Honeywell was generous enough to throw in three years of service contract to maintain fresh filters.  So what were the real savings??

Case 2 begins with the opinion guys from The Wall Street Journal noting that the EPA is regulating the bejesus out of heavy industry, and in particular the utility industry.  This is to start in earnest after the first of the year, with EPA chief Lisa Jackson leading the way.

Starting in the midst of several salvos, the WSJ says utilities are being “forced to choose between continuing to operate and facing major capital expenditures to meet the increasingly strict burden[s], or else shutting down and building replacements [power plants] that use more expensive sources like natural gas. Either way, the costs will be passed through to business and consumers as higher rates, which is the same as a tax increase.”   My major problem with this is the usual case of government making things more expensive for the private sector, and guess who takes the beating?  It won’t be the government.

But even more bizarre and fishy smelling is a bunch of utility CEOs cheering on the EPA in a letter published in response to the Journal’s rant – like this will be good for their business.   They say that “Contrary to the claims that the EPA’s agenda will have negative economic consequences, our companies’ experience complying with air quality regulations demonstrates that regulations can yield important economic benefits, including job creation, while maintaining reliability.”  And throwing rocks through windows stimulates the economy and makes for carpenter and window factory jobs too.  This doesn’t pass the laugh test.

In the latest shot, the Journal points out the agenda driving the do-gooders – higher prices driven by other utilities as noted above, but the higher expenses don’t apply to certain utilities that are heavy in nukes.  This makes perfect sense.

A strong word of advice for these CEOs: play with the devil (U.S. Government) and you WILL get burned by command and control coming from Washington.  It’s only a matter of time before you will be looking down the long barrel yourselves.

Case 3, just in time for the warmer weather, airport snow removal by heated pavement!  OMG!  Of all the insane ideas, including air conditioning in 19 soccer stadiums in Qatar, manmade islands in Abu Dhabi and indoor ski slopes and ice rinks in the Marina Mall, this one tops them all.  Calculating the heat loss would melt a mortal Hewlet Packard RPN calculator.  Larger airports in cold climates, like MSP and ORD would require a small star (like our sun) to keep the concrete above freezing in worst-case weather.  And per my crude calculations, ORD has roughly 14 miles of runway that would take roughly a half million cubic yards of concrete alone (this is from me, a civil engineering / aviation zero).  This doesn’t include tarmacs or the infrastructure like underground rivers of antifreeze required for heating.  And just think of the disruption.

This is a really bad joke for an idea.  Intervention by someone with a brain may be required.  This comes from people who throw the number “trillion” around like it equals 10 million.  I forget where/who I was listening to but they didn’t use the word “trillion”.  They used “thousand billion” in it’s place – much more effective.

written by Jeffrey L. Ihnen, P.E., LEED AP