Recently, I’ve been having a debate with one of my partners, who bikes to work, and who is incensed that a key current transportation funding bill in the Legislature would impose a $25 excise tax on the purchase of a bicycle costing $500 or more. My response is that we need to tax all bikes and we need to increase the tax on electric vehicles and hybrids. She says I get credit for consistency, but she’s not buying it. She makes some valid points about the tax falling mostly on independent bike shops, while the major discount stores can sell bikes for less than $500. She also makes a valid point that far more bicycle infrastructure is needed than a $25 tax on new bikes will pay for, although I’m not quite sure why the fact that the tax won’t raise enough money to do what is needed is a reason not to have the tax.

Really, the bottom line is that we need to be taxing all bikes, electric vehicles and hybrids. We have a huge transportation funding deficit and all users who need facilities built for them need to be prepared to pay their fair share of the transportation budget. That is true because the deficit in our transportation funding is so huge that there simply is no free lunch. And it’s true because in our polarized, tax-averse political world, the ability to get anything paid for depends on everyone feeling that the system is fundamentally fair, most especially the people being taxed.

Washington’s primary source of road funding is the gas tax. The State Supreme Court has held that gas taxes cannot be used for transit facilities under the state constitution. So, transit is paid for by sales tax and recently by a motor vehicle excise tax, as well as federal funding. But gas taxes are a declining resource. If the number of vehicle miles driven stayed unchanged, the shift to more fuel efficient vehicles would automatically reduce gas tax revenues. The recession compounded that effect by causing people to drive fewer miles. As recently as 2010, the State’s Office of Financial Management forecast that gasoline use would increase at around 1.2% per year over time. Today it estimates that gasoline consumption will fall on average about 0.43% per year. We have not kept up with basic maintenance of our state or local transportation infrastructure. A commission appointed by former Governor Chris Gregoire estimated that the state has at least a $50 billion backlog of maintenance and basic infrastructure preservation tasks. That was before a federal judge ordered the State to accelerate repair of culverts that block 1,000 miles of salmon migration – at the cost of more than $1 billion.

The bottom line is that my plug-in hybrid puts exactly the same demands on our state and city roads as my old VW Beetle did. But it not only doesn’t make me pay for gasoline, it also exempts me from gasoline taxes.

My partner wants – correctly, in my view – the City to spend a lot of money to build bicycle lanes, to separate bicyclists from automobiles. We need to do that. Bicycling is great exercise for our increasingly sedentary society and we should encourage it. It is carbon neutral. Most importantly, bicycles and automobiles in the same space are a disaster on two fronts: the bicycles slow down the cars and thereby increase congestion on already congested streets, and while a fender bender between two cars makes for repair bills, the same accident between a car and a bicyclist kills or maims the bicyclist. We simply must separate the two.

But the cost of all of this will necessarily fall most heavily on the people driving cars. In a world with Tim Eyman, it may need a vote of the people. Even if a vote is not required, politicians who vote for new taxes are going to have to explain and defend that decision at the next election, and if people don’t feel the decision was warranted, politicians will be replaced. Taxes must be fair, and they must be perceived as being fair. If they are not, they will not last long in a democracy.

There has been an argument among bike and electric vehicle enthusiasts that they are “so good” for the environment, it is important to encourage them, and that they should somehow be exempt from taxes. It is as if taxes, being nasty, should fall on the folks who want to do “nasty” things, not on people who are “virtuous.”

Don’t get me wrong. I will happily take my tax credit if the federal government wants to make up for the fact that the plug-in part of my car added several thousand dollars to its cost. Subsidizing early technology is one of the key ways that government has brought many technologies to commercial viability. But the federal tax credit is the government’s effort to get the plug-in hybrid market past its initial start-up costs. I don’t expect that in addition to federal tax incentives, the fact that I bought a green car should keep me from paying my fair share of the cost of the roads I drive it on. I think all people who believe that it is important to make basic infrastructure investments in our transportation system should be prepared to step up to their share of that cost. That includes me, and the folks about to spend $500 on a new bike.

Kathleen Petrich reported on January 9 that I had bought a new car.  I had been nursing my 13-year old VW Beetle, hoping that before it died someone would make a car that I could drive back and forth to work without using any gasoline, but still could drive to Olympia or Tacoma or Edmonds whenever I wanted without worrying about whether I had enough battery to get home.  And Ford did it!  Just in time.  The Ford C-Max Energi is a plug-in hybrid, which gets somewhere between 12 and 21 miles based on a full charge of its plug-in battery, then switches to a hybrid motor, using what we have all come to think of as “Prius technology.”  [Ford would be offended by that statement.  It turns out that Ford and Toyota were independently developing the technology at the same time.  After some suits and countersuits, they settled by giving each other a cross-license.  So they both have essentially the same hybrid technology, and each claim bragging rights to it.]

My new car is an amazing piece of engineering.  It is a joy to drive, with lots of pickup, great handling, an array of gadgets, and far more space than I was used to.  Ford claims I can expect better as the car gets broken in, but on that first tank of gas I went 642 miles on 10.9 gallons of gasoline, for an average gasoline use of 58.8 miles per gallon.  Yes, there were trips to Olympia, Edmonds, Kirkland and Tacoma, but mostly commuting to work has been gasoline-free.  Living in Seattle, where our electricity comes from water falling over dams, not coal- or gas-fired generators, that makes my commute about as climate neutral as it gets.  And when I get home at night, I plug it into a normal 110-volt plug in our garage – no fancy charging station for this car.  I love it!

But the experience has also focused my attention on the issue of “what happens if this move to plug-in hybrid cars succeeds like I think it will?”  Because it is hard to miss the fact that it takes energy to move this car, all 3,400 pounds of it, up and down the hills of Seattle.  Just because it is gasoline-free doesn’t mean it is energy free.  It can’t be.

Right now Seattle City Light gets about 13% of its revenues from selling surplus power on the wholesale market.  In the middle of the night, it can produce way more energy than it can sell, and mostly spills water over the dams rather than running it through the generators.  Charging a car at night has essentially no environmental consequences.  But what if 5 years from now 50% of the new cars in Seattle are plug in cars.  What then?

About 28% of all energy used in the United States is used by transportation.  That includes planes, trains, trucks boats and cars, not just the personal automobile.  But the personal automobile and fleets of vehicles that could be electric-powered are a significant share of the total.

Electric companies are required to build generation, transmission and distribution capacity to meet their peak demands.  That is typically the middle of the hottest day, when the most people are running their air conditioning systems at full bore.  Different electrical utilities have somewhat different peaking periods, but for all of them, by 10 or 11 o’clock at night, they don’t begin to need all the generation capacity they have.  Across the United States, during the off-peak periods there is enough unused electrical capacity to take maybe half the power demands of our automobiles if they were electric.  But, if all those cars were being charged during the middle of a hot summer day – the nation would need to build a lot more generation plants and distribution facilities and would need to upgrade its distribution systems downstream of thousands of substations.

And what would that mean?  Power companies are entitled to earn a return on the capital investments they are required to make in order to supply the power we need.  Those investments get repaid, and a return on the investment gets earned, through the electrical rates we pay.  That is a fundamental rule of utility rates.  So if power companies have to build new generation capacity, or new transmission lines or upgrade their substations, they are entitled to increase their rates to pay for that and earn a return on the investment.  The bottom line is that if some years from now, the conversion to electric cars forces construction of new generation, transmission or distribution capacity, the rates for electricity must rise.

What does that mean for today?  The power companies are saying, “don’t worry about it.  We’ve got plenty of power.”  And indeed many electric power companies have seen their loads fall as consumers have invested in energy saving devices and strategies.  When their load falls, the power companies need to cover their return on investment from the sale of fewer kilowatt hours of electricity.  Power companies don’t necessarily like too much conservation.  And they would not necessarily mind having a new source of load on their system – that is more kilowatt hours to sell.

But the rest of us, and particularly the automobile companies that have invested in developing this amazing new technology, need to worry now.  People who would love to see a major switch to electric cars should be insisting that electric rates get set now to encourage electric cars to be charged at night.  Some Northwest utilities already have time-of-use pricing.  Smart metering makes that possible.  On the other hand, when time-of-use pricing just moves the existing load around, there can be real disadvantages as well, because while some customers’ rates go down, customers who use electricity during peak periods see their rates go up.

But electric cars are not existing load – they are potentially a huge new load.  That load needs to be met, to the greatest degree possible, by the unused capacity of the off-peak hours.  And now is the time to develop the rate structures and the technologies to encourage electric car owners to charge during off-peak periods.

That can still make electric cars a new source of revenue for power companies.  They need not worry about too much efficiency with electric cars – every kilowatt sold to power a car is a new kilowatt.  But if we just assume that electric cars can be charged “whenever” – if we wait until the power companies have to build more capacity or we start to experience brown outs as a result of that new load – the odds that we can get this right go down.  At that point electric cars will be demonized, and we will have one more example of the law of unintended consequences.  What could and should have been a major tool in reducing carbon emissions and our dependence on foreign oil will instead sour, as all electric consumers pay the price.  There is no excuse for that to happen.  We should be smart enough, and able to see over the horizon well enough, to address the problem now.

In an earlier post (Part One) I described the broad outlines of the new City of Seattle Energy Code that is under development.  The new Seattle Energy Code seeks to go significantly beyond the newly approved 2012 Washington State Energy Code  – which itself is light years beyond the energy codes of a decade ago.  Seattle has set the goal of zero net carbon use by 2050, and aggressive implementation of the range of new building technologies that reduce energy usage is an essential piece of meeting that objective.

The entire code reflects the fact that there is no progress without some hard choices.  It will increase the initial cost of buildings in Seattle.  That means that certain kinds of buildings will be built elsewhere in the region.  But that’s ok.  It will dictate how comfortable buildings are.  But that too is ok.  You shouldn’t need to wear a sweater in the summer when you go into an office building, and it’s ok if you need to wear a sweater in the winter.  Although real estate markets don’t yet pay as much attention to on-going utility costs as they pay to initial costs, eventually the added initial cost will be repaid with lower operating costs.  And we will be just fine with summers seeming warmer than winters where we work.

The one area where I believe the Seattle code is a mistake, however, is with its provision that when a building undergoes a major renovation, or when it is reoccupied after it has been vacant, it has to be brought up to within 20% of the energy efficiency of a new building of the same size.  (The current proposal applies only to buildings of 10,000 square feet or more.  But once the concept is embedded in the code, it is hard to imagine that the 10,000 square foot limitation won’t fall in the next energy code revision.)  I believe it is a mistake based on a couple of experiences in my career in getting an older building re-occupied with a new use.  The reality is that the easiest thing to do with an old building is to wait until someone wants to tear it down and build two or three times as much on the lot.  That is what “pencils.”  Reusing an old building is much harder, and much harder to make pencil.  And still, in the situations I have been involved in, reusing an old building can have enormous benefits for the community.  Indeed, reusing existing building stock has energy savings over hauling all the materials in the existing building off, some to be recycled  and the rest to a landfill.

I expressed my concerns in an email to Duane Jonlin, the Department of Planning and Development staff person responsible for the new energy code, and he responded to my concerns in a detailed email.  If you are wonky enough to have read this far, then you may want to read what I said, and what he said – and then I get the last word.  Because this is my blog.

I wrote:

I applaud the City’s effort to adopt an energy code that will make a significant contribution to achieving the City’s goals of zero net carbon use by 2050.  Some of the code provisions are arguably onerous – but the goal of zero net carbon is not easy, and will require some cost.

That said, I think the City – both DPD and the Council – in adopting the new energy code needs to recognize that minimizing energy use in buildings is not the only important thing to be considered.  With respect to the retrofit provisions, I believe the City is applying a tunnel vision approach that will potentially result in some energy savings, but at a disproportionate cost to other important values.

In my experience, low-scale, outmoded buildings follow one of three paths.

• They receive less and less investment, until the business occupying them folds and they become vacant.  At that point they may remain vacant for many years.  Vacant buildings are almost uniformly a blight on their neighborhood, as well as providing minimal tax revenue and no jobs.
• They are converted to a new use.  I have been involved in several such conversions over the years, where non-profits have managed to put a building that was otherwise vacant to a completely different use.  Sometimes those included minor expansions of the building.  I am also aware of several conversions to retail uses.  This Sunday’s Pacific supplement in the Seattle Times had an article about several.  Those conversions were virtually always only possible because the space, after the conversion, is still cheap.  Whether it is a retail use or some little non-profit arts group or a housing group that manages to convert a vacant building into something entirely different, they can achieve a use that would never go into a new building for the simple reason that the price can be made right.  Those conversions offer many benefits to the community, including maintaining a sense of scale in the neighborhood,  creating spaces for important businesses and organizations that create the “fabric” of the community, and adding life to a neighborhood instead of blight.
• The building is bought by a developer to tear it down and build to the zoning maximum  – either for condo or office development.

The first and third paths are by far the most common, and the easiest to make happen.  The third would, of course, also bring the property up to current energy code standards. 

The second path is hard.  The second path is also often extraordinarily valuable to the neighborhood and to a range of things we value.  I do not believe the City should prejudice the ability for properties to take the second path except for compelling reasons.

Over the last 15 years the City has adopted a number of codes that increase the cost of retro-fitting old buildings, and thus make it increasingly difficult to take the second path. These include the City’s seismic retrofit rules, and its handicapped accessibility rules, in particular.   I represented the owner of a one-time automobile garage when she converted it to a dance studio on Capital Hill.  Had she fully understood the costs of the seismic retrofitting she would be required to do, that project would never have happened.  On the other hand, that dance studio maintains the scale of the neighborhood, while it is surrounded by condos built to the maximum allowed by code, and it adds to the fabric and urban vitality of the neighborhood.  The City would be poorer if the owner had waited an extra 2 years, and sold the property to one of the current round of condo developers. 

We can probably all agree that the trade-off between losing a potentially nice project versus having increased occupancy of a seismically risky building probably weighs in favor of the seismic upgrading.  The same is true of handicapped accessibility.  As a society we can make a decision that we will risk losing a project rather than have it inaccessible.  But I am not convinced that the energy code is in the same category.  At the very least, the City needs to recognize that it is making a choice – that requiring major energy efficiency upgrades if an older building is significantly upgraded will result in more buildings not receiving new investment, and more buildings becoming vacant and staying vacant longer, and will lead to the ultimate outcome of those buildings being razed and turned into the current generic condos and offices more often. 

Again, I applaud the City’s motives.  But there are other potential avenues to achieve the objective – at least sometimes – of improving the energy efficiency of older buildings.  The City has received federal grants to upgrade its housing stock in older neighborhoods.  It could potentially seek grants to allow the City to finance energy upgrades when older buildings are being converted to a new use.  It might be able to do that with loans paid off over time that the new user could afford, and might well be delighted to take out.  But I don’t believe the requirements of the current draft are appropriate.  Energy efficiency is important; it is not the only civic value that is important.

The following week, Duane wrote back:

I certainly don’t maintain that energy use is our only value.  Maintaining our current building stock and neighborhood character is a significant policy for my department and for the City in general.  I have been working extensively with the Preservation Green Lab staff to develop rules that encourage long-term retention of our historic fabric, and our mutual belief is that old buildings will have improved resilience and long-term survival prospects if they are high performers.

Please note that during the state rulemaking process and in my proposed Seattle amendments I have softened the impact of energy code rules for non-residential to residential conversions, for unheated to conditioned space conversions, and for conversions of lower to higher energy use occupancies.  Those are now required to bring buildings most of the way to compliance with current code, rather than all of the way to code as has been the case with current codes.

Note that the draft proposal has a threshold of 10,000 SF, so that most of the building reuse projects featured in the Sunday Times article would have been exempt from these rules.

Note that the proposed rules, unlike almost all other regulations, do pay for themselves over time with reduced energy costs, and are certainly more comfortable for occupants.  The dance studio you mention, which must be kept comfortable and warm for the students but is built in an old uninsulated building, is a great example of an appropriate application of this rule.

Note also that all of the new systems (HVAC, lighting, water heating, windows, etc) in a renovated building must already meet current code.  Uninsulated roofs are required to be insulated during re-roofing projects. This leaves the remaining building envelope components to be upgraded under my proposed substantial alterations rule, and only to the extent that the whole building achieves about 80% of the performance level required of new buildings.  This would typically mean that some windows would need to be replaced, or walls insulated, or floors over unheated spaces insulated.

Over the long haul, we must make substantial energy use improvements to our existing building stock.  Mandating upgrades to occupied buildings would be expensive and disruptive, so I have instead selected the point of substantial alterations to be the least disruptive and most cost-effective time for these improvements.  However, I would certainly welcome any ideas you may have that would accomplish these goals more effectively.

I’m sorry to say that while I appreciate his response, it seems to me to typify how Seattle, with its liberal and well-intentioned goals, can be completely tone deaf to anything other than the objective of the moment.  I really do not believe Mr. Jonlin has ever tried to make a pro forma work.  Nor is anyone suggesting that a previously unheated building should remain unheated once it is occupied.  The issue is whether when older buildings are repurposed, they must be brought up to the standards that make them livable and workable for the new user, or whether they must go beyond that, to meet the rather extraordinary standards that the City has chosen to apply to new construction.  Almost by definition, if the costs of coming up to code made economic sense to the owner and the new user, they would be doing it without the code requiring it.  So these are costs that don’t make sense on their own, by any economic measure that matters at the time someone is trying to reuse the building.  The pay-back period for many of the improvements is longer than the commercial market will tolerate.  But more important when the objective is to reuse an existing building, the sort of non-profits and small commercial users who tend to engage in this reuse often cannot trade long-term operating costs off against initial capital costs.  The financing of these projects is not like that.  They must complete the construction within the funds available, and the fact that there would be a long-term reward from spending more money up front is simply irrelevant.  The upshot will be that what start as marginal projects will not happen.  How often that will occur, only time will tell.

Back in October of 2011 the Seattle City Council passed a resolution “committing” the City to become a zero-net greenhouse gas emitter by 2050.  Although individuals, cities, and governments or organizations in general seldom achieve lofty goals without first setting lofty goals, we all know that lofty goals are more easily set than met.  So I indulged in a certain amount of cynicism at the time, suggesting that the resolution was an easy thing to pass, and it would get much more difficult when it came time to actually take the steps that reduces greenhouse gas emission.  To use a football analogy, there are no Hail Mary passes available for this – it is all about the ground game, where every yard has to be earned.

Seattle is now developing its amendments to the 2012 state energy code.  The goal is to have adopted a new Seattle Energy Code that will apply to permit applications filed after September 1, 2013.  The 2012 Seattle Energy Code will affect only non-residential buildings, but nonetheless is one of those places where over time, actual energy use can be reduced and the energy that is used can become lower-carbon.

The problem, not surprisingly, is that those energy improvements come at a price.  The challenge in adopting an energy code meant to drive a significant reduction in energy use is to find the sweet spot – if you can call it that – which drives the most energy reduction consistent with not driving development to someplace cheaper or causing owners of the existing building stock to delay or abandon upgrades of their buildings because of the cost of the energy upgrades the City will require.  In this case, “someplace cheaper” could be as close as across Lake Washington, since none of the suburban cities around Seattle have taken up the challenge of achieving zero-net greenhouse gas emissions, and tend to be much more sensitive to maintaining the ability to build buildings inexpensively.  So Seattle tends to encourage growth to go to the suburban cities when it sets standards for things like energy codes that don’t make economic sense.  As to discouraging upgrading of existing buildings, cities can be a material cause of their own run-down neighborhoods, and they need to find a balance between encouraging reinvestment in existing building stock and encouraging energy improvement in that building stock.  While most of the buildings we will have in 2050 have already been built and thus improvement in building energy efficiency can and should come from the existing building stock, improved energy efficiency is not the only imperative for those existing buildings.

One of the things that complicates any sort of balancing of priorities in adoption of an energy code is that energy codes have become highly technical.  Quite literally, only a mechanical or electrical engineer has a clue what most of the code means.  Most of us have no idea whether, for instance, “default U-Factors for Skylights” are appropriate. (See Table R303.1.3(4). Scroll on down, and it gets less and less understandable.)  To actually have a conversation about the code, you need to in effect be bilingual – speaking both mechanical engineering and political language.  Very few mechanical engineers speak politics, and probably fewer elected officials speak mechanical engineering.  The upshot is that the elected officials who adopt the code are unlikely to understand much about what they are adopting – which makes it hard to know if they have made a reasoned and balanced decision.

With that caveat – and I don’t speak mechanical engineering – the big issues that are on the table appear to be:

• Renewable energy requirements and solar-ready roofs.  The existing code requires new buildings to incorporate renewable energy production into the building.  But there is an escape alternative – a developer can instead buy renewable energy credits (RECs).  The upshot is that all the developers have bought RECs – which means that the actual energy reductions tend to occur somewhere else.  The proposed code reduces the amount of renewable energy that is required, but eliminates the REC option.  The thinking apparently is that if the code didn’t require so much renewable energy, it would be more reasonable to expect that there be some included in the building.  And since it would still be easier and cheaper to just buy RECs, if the City actually wants renewable energy in the buildings, it can’t allow that opt-out.  On the other hand, what are the renewable energy sources?  Solar panels or solar hot water heating on the roof is probably the most obvious choice.  But the draft code acknowledges that solar is not yet cost effective.  So, the draft code would require that new buildings be “solar ready” – that they maintain a solar zone, and be built with the conduits in place that would make installation of the solar equipment at a later date less expensive.  Once the City has acknowledged that solar is not yet cost-effective, it is hard to imagine how they think the renewable energy requirements will be met for new buildings today.
• Metering and plug load controls.  The draft language for this is not available yet.  But smart grid experiments have shown that people make different choices when they have real-time feedback on their energy use.  For commercial buildings, it may be appropriate that each tenant actually has a meter for their electricity, so that a business will make informed choices about their energy use.  And, the amount of energy used by our computers and other devices, even when they are turned off, is remarkable.  So stopping the flow of current to their plugs when no one is using them may also be a real source of energy savings.  Whether this makes sense depends on the ultimate language – and it isn’t available yet.
• What do you do about substantial improvements in an existing building?  Under what circumstances can you have floor-to-ceiling glass?  I asked for the draft language on this one, and was told that it is still in the process of review within the Department of Planning and Development.  If there is any place where politics and the mechanical engineering need to collide, this is probably it.  So I am not surprised that there is significant review going on within the Department of Planning and Development before they release the language.  (This is “part 1” on the Seattle Energy Code, because I’ll write another post when the language on all these is actually available.)
• Commissioning the building.  One of the remarkable discoveries (well, duh) of the last few years is that a significant amount of potential energy savings from energy-efficient mechanical equipment is never realized, and people tend to not like energy-efficient buildings, because after the energy efficient systems were installed, no one learned how to use them correctly or checked to make sure they were functioning correctly.  The concept of “commissioning” is that once you have the systems installed, you need to make sure they are functioning and teach the people who will be managing the buildings how to use them.  It is a pretty common sense notion.  On the other hand, it is not cheap.  It undoubtedly pays for itself in the long-run.  But building owners faced with a need for a certificate of occupancy and closing their permanent financing are often not thinking long-term.  The current energy code requires commissioning, but apparently the intent is to strengthen that requirement.

The Seattle 2012 Energy Code will take shape over the next few weeks, and as more details become available I’ll report on ones that raise significant issues.  In the meantime – Happy New Year, and best wishes for not only 2013, but for 2050 as well!

BPA was formed in 1937 to sell the power generated by the Bonneville Dam, and now operates the system of federal dams on the Columbia River that generate about one third of the electricity consumed in the Pacific Northwest.

Wright’s tenure has been challenging because it has coincided with both an increase in awareness and concern about the impacts of the Columbia River dams on salmon populations, and litigation by Native American tribes and others against BPA.  BPA has found itself needing to spend billions of dollars to mitigate the impacts of those dams.  On the other hand, there is some evidence that those efforts are paying dividends, as more adult sockeye salmon passed the Bonneville dam this year than in any year since 1938.  That is an accomplishment he is proud of.

Wright’s tenure has also been challenging because BPA has sought to integrate 4,300 megawatts of wind power into its system.  That has led to an over-supply of power at times.  Although water can be spilled over the dams without generating power, at times spilling too much water harms fish and violates the Clean Water Act.  So, BPA is struggling with what to do with all its wind power when high winds coincide with high water.

Wright is proud, however, of the fact that the Bonneville power dams allow the Pacific Northwest to have the lowest cost electricity in the nation.  Washington’s electric rates average about half of California’s, and about a third of rates in Connecticut.  During Wright’s tenure BPA has signed long-term (20-year) power supply contracts with most of the private power companies in the region, assuring them that their future power will be based on cost – not market.  That means that the region is reasonably immune from the greedy eyes of other parts of the country, which wonder why federal dams can’t share the wealth by raising rates in the Northwest and using the added revenue to reduce electric rates elsewhere.

That low cost hydropower may have been the single largest factor in the economic development of the Pacific Northwest.  During World War II it allowed most of the aluminum in the planes that flew over Germany and the Pacific to be made in the Northwest.  It provided cheap power for Boeing.  It allowed the economical settlement of a region that was previously sparsely populated.

It has also spared the region both the dirty air of historic coal-fired power plants in the East and Midwest, and the billions of dollars that will be required to clean up and convert those plants to cleaner burning fuels.

Today, as the region seeks to move to a clean-energy future, it provides some significant advantages.  For one, electric vehicles make more sense here than anywhere else in the country.  Electric cars don’t use petroleum – but they do need power.  In much of the rest of the country, that power is generated from coal or natural gas.  So while the carbon emissions are not from the tailpipe, there are, nonetheless, emissions.  And, the electricity to power cars is not cheap.  But, while fossil fuel power plants can be “dialed down” to at least some extent as demand for power drops, dams have water spilling over them 24/7.  That means they can generate power during periods of low energy demand, with no carbon emissions and minimal additional cost.  With timers on home charging stations to start charging cars after demand has dropped in the evening, the Pacific Northwest could charge much of its stock of automobiles with the water spilling over dams in the middle of the night that currently is wasted as a power source.  No one is thinking much yet about differential rates to create incentives to charge cars only during low-demand periods, but we’ll get there.

On the other hand, the lowest electric rates in the country has its disadvantages.  Chief among them is that it makes a host of power saving opportunities less cost-effective.  Most industrial facilities waste remarkable amounts of energy, a significant amount of which could be reclaimed with co-generation.  A co-generation plant typically requires significant investment, and whether that investment pays off depends on what the power can be sold for or would cost if the company had to buy it.  In the Northwest, lots of manufacturing facilities have looked at installing co-gen plants; a much smaller number have done so, because it doesn’t pencil here the way it would pencil in other regions.  Commercial buildings also frequently have opportunities for small-scale electric generation – through solar panels on the roof, reclaiming heat lost in the mechanical system, or other innovation.  But again, the incentive to make the investments necessary for these green energy innovations are not as strong here as in parts of the country where avoided costs of buying power are much higher.

Are those disadvantages worth it?  Well of course.  We must count the low-cost power of the federal dams BPA administers as one of the great blessings of this region.

But if the Northwest truly wants to move to a clean-energy future, it needs to recognize that the fact of low-cost electricity comes with a price.  Much as low-cost petroleum for a hundred years drove the automobile industry to focus more on style, size and performance, and less on efficiency, the Northwest’s low cost power, while it will encourage the conversion to electric vehicles, will tend to discourage other forms of clean energy innovation.

I had the opportunity to spend three weeks in Spain in July and August – and since this isn’t a travel blog, the question I want to talk about is, what did I see that may help account for the fact that according to the most recent data that I could find (not as recent as I would like), Spain’s annual per capita energy consumption is less than half of that in the United States?

First – their cars are smaller.  Lots smaller.  Is that because of the fact that their gasoline is more expensive?  Well, perhaps in part.  But their streets are smaller.  The streets in their old cities feel like you could touch the walls of  the buildings on both sides of the street if you stretched out your hands.  In Boston or Philadelphia, the old streets were sized so that two horse-drawn carriages could pass and ladies on the sidewalk didn’t get splashed.  In Madrid, Barcelona, Seville and Granada, the old city streets appear to have been sized for one guy pushing a cart.  People zipped through those streets in tiny little cars.  On the other hand, I watched some guy inching his mid-size Cadillac down a street in Seville, with his tires scraping on the curbs of the street as he went.  I couldn’t hear what she was saying, but his companion clearly had a running commentary going about his driving.  I can’t imagine someone wanting to do that regularly.  And Spanish parking spaces are smaller.  We rented an Audi A3 to drive through southern Spain, and we never found a public parking garage that had any spaces larger than what we call “compact” spaces in Seattle.  Most of the spaces were smaller than we require for compact spaces.  On-street parking spots tended to be smaller still.  So there are a lot of reasons why “small” is the only size car that is practical in Spain.

One of the reasons I hear why people don’t want small cars in the United States tends to be a variation on, “sometimes I just need to carry a lot of stuff.”  That appears to happen in Spain as well.  And when it does, it can be an amazing sight.  This car, getting off the ferry in Tangier, Morocco, was just the one I happened to photograph.  The most amazing examples were gone before I could get my camera out.

I have no idea how they deal with getting the kids’ soccer team to practice – which of course does not lend itself to rooftop carriers.

Sticking with transportation, Spain has invested a lot of money in high-speed trains.  We took the high-speed train from Madrid, Spain’s largest city, to Valencia, its third largest city.  They are 190 miles apart, and the trip took an hour and a half – center city to center city, no airport security, 44 Euros (about $55) one way.  Compare that to any way you ever want to get from Seattle to Portland, which is 15 miles shorter but takes 3 hours or more.  There are also subways in much smaller cities in Spain than you find in the United States, as well as good bus service.  Of course the Spanish government has spent money like they minted it, which in the Euro Zone, they clearly do not.  That spending has not just been on transportation infrastructure, but on a panoply of public projects, at least some of which are unlikely to ever pay off.  But the fact that you can get quickly from one city to another and can get around in the cities with public transit takes some of the pressure off the need for a larger car.

We also saw wind farms that seemed huge compared to any I have seen in the United States.  Making heavy use of wind energy can be a function of the good fortune of winds that are patterned to coincide with peak electrical use.  We took this picture in the south of Spain on an afternoon when the temperature topped 100º and the wind was blowing like mad.  Overnight, the winds dropped as the temperatures dropped, and the next morning not only were the windmills that were operating turning much more slowly, but most of the windmills had been turned off.  (Their blades were turned to avoid catching the wind.)  The area apparently has winds that pick up and blow regularly as temperatures rise – which would make wind power a good source to meet the peak loads of air conditioning. 

What conclusions can be drawn from those observations?  Maybe three.

First, although the cost of gasoline has an impact on the desirability of small, and thus fuel efficient, cars, other factors also matter.  It is a whole lot harder to drive and park American-sized cars in Spain, and thus they are less fun and less satisfying.  That is a function of how the United States has built its roads and its cities, and how Spain has built its roads and its cities.  There isn’t much that can be done to change that.

Second, luck helps.  Wind power works best when it is useful for meeting peak load, not supplying base load.  If you happen to have an area where the wind rises to a howl when the temperature rises, that will make wind power more useful with peak load – and make it more viable economically.

Third, public investment matters.  High-speed rail has huge up-front costs.  So do subways.   But once the investment is made, it allows quick, easy, even cheap transportation without a car.  The long-term value of that investment is hard to predict at the moment, as Spain struggles to right itself from too much public investment, as well as a housing crash as bad as the worst we experienced in the United States.  But long-term, it will reduce Spain’s energy demands while allowing people to get where they want to go with ease.

Then came the recession, and no politician wanted to be anywhere near an argument that they might have thought about doing something that might hurt, or might be thought to hurt, the state’s economy or jobs.  So cap-and-trade in Washington – either Washington – was dead.

I’ve thought that there are a lot of reasons to make sure that the price of carbon fully accounts for the costs carbon imposes on the larger society.  I have also criticized the supporters of cap-and-trade for what seemed to me to be arguments that shouldn’t be taken seriously. In short, I have been glad it was not my decision.

Now, though, I would really like to see some economics master’s degree student do a careful analysis of a recent report coming out of the Regional Greenhouse Gas Initiative (RCCI).

RCCI is an cooperative of nine Northeastern states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont – which set out to reduce power sector CO₂ emissions 10 percent by 2018 through a cap-and-trade program.  The program was implemented in 2008, and recently released a report claiming that they have experienced a 20% greater reduction in per-capita carbon emissions than non-RGGI states.  The report also claims that the RGGI states have had twice the growth of per-capita GDP than non-RGGI states.

For any economic study, you would have to read the details and carefully examine the assumptions in order to know whether it is biased or accurate.  I’m not qualified to render economic opinions.  But I did look at how unemployment in the RGGI states has compared to unemployment in the United States as a whole over the last four years.  You can do it yourself.  While the unemployment rate in Rhode Island has been above the national average – both before and after the RGGI was adopted – and New York has recently trended up, every other RGGI state appears to have had an unemployment rate below the national average throughout the period that the cap-and-trade program has been in place, and throughout the recession.

That raises some questions that merit further study.

• Are these results anomalous or did the opponents of Washington’s cap-and-trade proposal overstate its potential effects on the economy?
• Why didn’t the RCCI program have more adverse impacts on jobs in the RCCI states?
• Were there other adverse effects that need to be taken into account?

There may well be answers that suggest that the rhetoric of the Washington State debate was on point.  It may be that the drop in the price of natural gas over the period from 2008 to the present made it a particularly opportune time for electrical utilities in the RCCI states to move away from coal power generation, and made meeting the initial carbon reduction goals easy.  It may be that the fact that the RCCI states were not, by and large, the focus of the housing bubble made their employment statistics look better than the national average.  It may be that their progress since 2008 is not sustainable over a longer period.  It may be that the WCCI program, which was not primarily directed at power generation sources of carbon, would have been much more onerous.

On the other hand, it may be that in the larger scheme of things, there will always be forces that essentially swamp the economic effects of increasing the price of carbon, so that in the end, it will often be the case that it is impossible to attach blame for economic ills to increasing the cost of carbon.  If so, it would be important to understand that.

In what I do, which is primarily litigation, decisions are based on evidence.  They also tend to be based on looking back at a contested series of events.  But at the end of the day, in litigation, judgments are made based on facts, not prognostications.  On the other hand, in the political arena, where people make new laws, legislators are required to try to figure out what the future consequences of their decisions will be.  The prognostications of Washington’s cap-and-trade debate are essentially unavoidable, because the question in any new legislation is necessarily one trying to predict the future.  That leads to the sort of rhetorical divide that we see in Washington’s debate on cap-and-trade, because both parties are operating without actual facts to rely on.

The RCCI experience gives us some evidence.  It is undoubtedly not conclusive, but it is still worth looking at carefully.  What we know is that humans continue putting the carbon that was sequestered in fossil fuels over millions of years back into the atmosphere at a vastly faster rate than it can be re-sequestered.  We know that climate change is upon us, in the form of stronger storms on a more regular basis.  So we know that there are consequences to not acting to increase the cost of carbon and thereby make alternative sources of energy more competitive.  If the adverse consequences of raising the price of carbon have been overstated or not fully understood, it is important to know that.

Now I may have to rethink that.

Why am I so negative on the initiative?  Basically, because it 1) allows single-issue groups to get their single issue addressed, in a complex world where everything is connected and addressing one issue invariably affects other issues, and 2) it relieves our elected legislators of the burden of dealing with the complex competing demands that we elected them to reconcile, and allows them to escape accountability if they fail.

The initiative sprang from the Progressive Era of the early 20^th Century.  Today 27 states have some form of the initiative or referendum.  Of those, 22 amended or adopted their state constitutions between 1898 (South Dakota) and 1914 (North Dakota) to give the people the right to take control of legislation from their elected legislatures. The majority of states with the initiative are in the Midwest and West.  The concern was that state legislature had become too beholden to powerful corporate interests, and the people should be able to seize back the legislative power that had been usurped by those interests.

The difficulty with the initiative is that initiatives tend to adopts laws that make for easy sound bites – capping taxes, decreasing school class size, improving education for home healthcare workers, etc.  They gain the majority of the vote because they are stated in ways that no one can say they are against.  Or, in some cases, because they are stated in ways that cause most voters to say, “who cares,” and allow a minority of voters to make the law.

But governing a state requires much more complex balancing of competing priorities than sound bites are suited to.  Legislatures must fund things they have no desire to fund, such as prisons.  Then there are the things that consume huge amounts of money that no one is “against,” indeed everyone wants to be “for,” but which account for such a large portion of the state budget that raiding the budget becomes too tempting.  Put public schools in that category.  And then there are the things we would like to do, or are required to do by federal law, such as implementing the Clean Air Act, the Clean Water Act, etc.  Every legislator has things they would like to accomplish for their communities, most of which cost money.  And the job of the legislature is to figure out how to do as many of those things as possible, within the resources that the public is willing to put at their disposal.  As with most of life, it is impossible to make everyone happy.  Hard choices are required.  And legislators are supposed to have to explain their choices to the voters every few years, who can send someone else to the legislature if they don’t like the judgments the sitting legislator has made.

Let me use two contradictory initiatives – to both cap taxes and decrease public school class sizes, as an example.  Those are easy concepts to understand; no one is opposed to them; but when you adopt them both through initiatives, as Washington has, you take the complex, difficult task of balancing a state budget while maximizing public services and minimizing costs, and simply throw a monkey wrench into the process.  It relieves the legislators of responsibility for the fact that they cannot balance the budget – “the voters did it.”   Legislators are supposed to deal with complex issues that require thinking in complete sentences, not sound bites.  That is what we elect them to do.  When sound-bite analysis substitutes for the sort of sophisticated thinking that the task requires, we get not just a mess, but a mess for which no one is accountable.

So why am I rethinking my opposition to initiatives?

On May 1, Graham & Dunn hosted a luncheon at which State Representative Deb Eddy was the speaker, talking on the subject, “Why It’s So ^@%*!# Hard to Modernize the Grid in Washington State.”  Representative Eddy has long been one of the thought-leaders in the Washington Legislature regarding not just whether it’s a good idea to increase the use of renewable energy, but how state government could actually make a difference in accomplishing that.

She talked about a bill she had introduced in the last legislature, which would have done two seemingly modest things.  First, it would have raised the size of distributed renewable energy projects that were eligible for net metering from one hundred kilowatts (about enough to power one home) to two megawatts (the size of solar panels on a Costco store), and it would have raised the amount of a utility’s load which was eligible for net metering from 0.5% of the utility’s peak demand to 5% of the utility’s peak demand.  Arguably it would have made businesses more competitive in Washington, because they could reduce their costs of energy by selling excess energy from on-site generation back onto the grid.

The bottom line is that the bill died, with opposition from all corners.  Why?  It is not because corporate interests have seized control of the legislature, as may have motivated the original adoption of the initiative in the early 1900s.  Rather, it is because so many interests have lobbyists – the utilities, the business rate payers, the consumers, the environmentalists – and each of them speak for groups with a vested interest in the status quo.  As Representative Eddy said, “the only interest that doesn’t have a lobbyist, is the future.”

Utility regulation is not for the faint of heart.  It is an arcane body of law that has built up over the last 120-years, with layers of state and federal statutes, regulations, court decisions and regulatory decisions.  Smart people spend their entire careers becoming expert on single parts of the system.  It is thus essentially impossible for legislators to talk about utility regulation with as much knowledge as the lobbyists for the various vested interests can bring to the discussion.  And with every possible interest competing to maintain the status quo unless a change is helpful to them, any movement of any kind may be impossible for the legislature.

So that is where the initiative becomes thinkable.  There are some things that are so complex, with so many competing interests, that the initiative becomes the only way to change the law.  The Legislature simply cannot do it.  That, not surprisingly, has its own problems.  Once an initiative is passed, it may be next to impossible to amend it, even if time and changed circumstances make it completely outdated.  But for major change in energy regulation, that may be the price that must be paid.

A combination of better fuel efficiency and increased domestic oil production have significantly reduced oil imports into the United States over the last six years.  Thanks to new CAFE standards for automobile fuel efficiency, that trend is expected to continue.  With recent developments in hydraulic fracturing and horizontal drilling, moreover, Mouwad reports that conservative estimates are that the United States now has a 75-year supply of natural gas.  City-gate prices for natural gas are now less than half their 2008 peak.  Futures prices have plummeted over the last year.

And Mouwad points out the many benefits that may come with an energy-rich future.  The United States’ dependence on politically unstable countries that don’t like the United States will lessen.  The United States’ trade deficit might be cut by 60 percent by the end of the decade.  American manufacturing may see resurgence, as low-cost energy is one of the factors that manufacturers are attracted to.  Conversion from coal to natural gas for electrical production suddenly gets easier, making possible the earlier retirement of heavily polluting electrical plants in much of the eastern United States.  Retailers will see lower prices as costs of transporting goods go down.  In a country weary of the Great Recession, that is all good news.  It includes some good news for the planet, because although burning natural gas puts carbon dioxide into the atmosphere, it has lower emissions than either coal or petroleum.

But – abundant natural gas will fundamentally skew the economics that have encouraged development of renewable energy or more efficient use of energy.  Today we have technologies that could greatly reduce our consumption of fossil fuels.   Co-generation is a classic example.  Many, if not most, industrial processes waste huge amounts of energy in the form of heat or partial combustion.  Co-generation could today take that wasted energy, turn it into electricity, and send it out to the local or, if properly situated, the regional grid to reduce the need to burn fossil fuels at electrical generating plants.  Dairy digesters can turn dairy waste into electricity – powering local communities with what once would have polluted their rivers.  But co-generation plants and dairy digesters require significant capital investments, and those investments only make sense if electrical rates will support them.  Scientists are hard at work developing better batteries to store electricity, which would make wind and solar power far more useful, if power generated when the weather was right for creating electricity was available when that electricity was needed.  The next 20 years could see development of new technologies that radically change the need for fossil fuels.  But again, that research takes money and bringing a new technology from prototype to scale takes major investments.  In the world of 2006-2008, there was a will to make those investments.  It was the product of a political consensus among environmentalists on the one hand and consumers dreading increased energy prices on the other.

Will a political consensus exist, or can it be created, if increased oil production combined with abundant natural gas keeps the price of fossil fuels low?  Nancy Sutley, head of the White House Council on Environmental Quality, was in Seattle this past Thursday, to see what Seattle is doing to innovate in the fields of green energy.  And, Seattle is arguably doing a lot.  Seattle City Light, Mayor Mike McGinn told a reception for Sutley sponsored by the Greater Seattle Chamber of Commerce, is carbon free.  It made its garbage haulers convert their trucks from diesel to compressed natural gas, a process developed by a company in Renton.  Seattle is building some of the lowest energy-use buildings in the world.  It has set a goal of being carbon neutral by 2050 – and it is taking steps towards that goal.  But, Seattle is one of the most liberal, progressive, greenest cities in the nation.  Its enthusiasm for energy conservation is not shared in parts of King County, much less across Washington State, and far less across the United States.  There are pockets where energy conservation and innovation will remain politically correct and where such efforts will continue.  But listening to Sutley, who extolled what Seattle was doing and how nice it was to see, but had little to say about how that might be translated into national policy, it was clear that Seattle is an outlier.  In the current political environment, there is no reason to think any politician will spend much political capital to increase research funding, increase economic support for investment in new technologies, or increase the cost of carbon so that new technologies are more cost competitive in their early stages.

What that suggests, however, is that creative politics are essential.  I don’t have the answers.  But I am reminded of the story my law school professor, Burke Marshall, told of his days as head of the Civil Rights Division of the Justice Department for President Kennedy.  It was clear that major legislation was the only way to make essential progress on civil rights.  Without legislation, segregation would continue unabated.  But President Kennedy faced a certain filibuster by Southern Democratic senators.  And Northern Democrats didn’t have the votes to end the filibuster.  Midwestern Republicans had constituents who either weren’t concerned with civil rights or who would oppose federal involvement in local and personal decisions.  So based on politics as usual, there was no hope.  But that wasn’t acceptable.  The solution?  The Civil Rights Division quietly started working with the National Council of Churches to make civil rights a moral issue.  When Protestant preachers started talking about civil rights in the Midwest, conservative Midwestern Senators like Roman Hruska  started listening.  And ultimately it was a coalition of Northern Democratic and Midwestern Republican Senators who broke the filibuster and passed the 1964 Civil Rights Act.

Is that a direct analogy?  Undoubtedly not.  But it does suggest that those concerned with supporting the technological change that will reduce American dependence on fossil fuel need to be looking for who else, other than liberal pockets and purebred environmentalists, can be brought to the task of marshaling votes.  A 75-year supply of natural gas is but a moment in time when compared to the time it takes to make new fossil fuels.  That means we would be running out of natural gas about the time my grandchildren approach retirement age.  At the same time that we celebrate and appreciate the benefits that we will reap from abundant natural gas, the task of replacing it must continue unabated.

There was one bill that I appreciated – 2SSB 5343, which provides an extended compliance period related to Clean Air Act permitting requirements concerning sulfur for anaerobic digesters of dairy waste.  I appreciate the bill not so much because of its breadth or vision – it doesn’t have a lot of either – but because anaerobic digesters of dairy waste are one of the world’s few potential win-win-win ideas.  Milk of course is a product that needs to be “pure, fresh and local.”  But dairy cows, indeed cows in general, are major polluters.  EPA estimates that a single dairy cow produces about 120 pounds of wet manure per day, or roughly the waste produced by 20-40 people.  In an earlier era, that  waste made its way to waterways, and was a major source of water pollution.  Today, at least in Washington, the Clean Water Act and Washington’s Water Pollution Control Act require dairy farmers to manage their cows’ waste to minimize pollution of waterways – but dairy farmers spend millions of dollars on that management.  At least in concept, using that waste to generate electricity to put on the grid in distributed form could create a new source of revenue for hard-pressed farmers, while reducing future demand for major power generating facilities and keeping waste out of rivers and streams.  Unlike many forms of distributed energy, dairy waste is not weather dependent; cows keep producing it whether or not the sun is shining or the wind is blowing.  Thus dairy digesters contributed to the electric base load.  2SSB 5343 gives anaerobic digesters with a capacity between 750 and 1000 kilowatts that were in operation at the date the bill was passed, are located on agricultural land of long-term commercial significance, and are not in a federal non-attainment area until 2016 to meet the sulfur requirements for Clean Air Act permits in Washington.

The limitation of the bill to dairy digesters in operation at the date of bill passage makes the bill timid.  There are only five dairy digesters in operation statewide.  To actually make a significant difference in electricity supply, or water pollution control, or the economics of dairy farming, digester technology has to become sufficiently widespread to reduce its cost.  Five digesters is not the goal; at least one digester in every agricultural valley with dairy cows, if not more, needs to be the goal.

Beyond the Clean Air Act extension for the five existing dairy digesters, however, the Legislature didn’t seem to do much on the green energy front this session.  That is not because there was no groundwork laid for more and better.  As we had reported earlier, Rep. Deb Eddy had spent months working with various stakeholders to find ways that the state could encourage distributed energy.  The Washington Utilities and Transportation Commission did a comprehensive report on both rule changes and legislative changes that could improve the deployment of distributed energy.  But those efforts appear to have failed to yield fruit thus far.

Why?  Has Washington lost its progressive way?  Is this a foreshadowing of things to come?

The Legislature has, of course, spent the entire session – and now the first special session – focused on how to close the budget deficit.  These are not times when it is easy, or even possible, to find money for new initiatives.  The “big ideas” in government at the moment seem to be about how to make government leaner and less intrusive, not about how to make it more of an agent for structural change.  And the economic recovery remains fragile, with no one in either political party having any willingness to be perceived as doing anything that would hold the recovery back.  With the 2012 state elections putting control of the governor’s mansion in serious play for the first time in years, neither party seems to be interested in being the party of big ideas in the energy area.

At the same time, the collapse of natural gas prices over the last four years since their high in 2008, has fundamentally changed the economics of many alternative energy projects.  The advent of hydraulic fracturing or fracking may return the United States to an era of cheap fossil fuels for the foreseeable future, thereby making alternative forms of energy much less viable.

That said, they did stop making fossil fuels many millennia ago.  The earth continues getting warmer, and the weather wilder.  The economy is improving, and in due course it is likely that the state of Washington and its Legislature will once again turn with more vigor to the question of how to achieve a greener energy future.