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.
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.