Steps To A Sustainable Energy
Future For Albuquerque

By Dennis Church

Keynote Speech: Symposium On
Community Energy Planning

City Of Albuquerque

December 5, 1991

On the face of it, Albuquerque's energy future is secure. In fact, I'm sure that its not new news to you that you're sitting on an energy gold mine. New Mexico's reserves of natural gas, oil, coal, and uranium are very impressive, and as U.S. oil reserves dwindle and more stringent air pollution regulations take hold, natural gas will become the conventional fuel of choice. Beyond traditional markets, it will be used increasingly in industrial cogeneration facilities and as a vehicle fuel. Today's depressed market scarcely reflects what the future holds in store.

And if this is not enough, your potential for development of wind, geothermal and solar resources is nothing less than fantastic. Based on data contained in the new -- and I think quite excellent -- State Energy Policy, you have first rate wind resources within a stone's throw of Albuquerque, and state-of-the-art wind farms today are producing electricity at seven cents per kilowatt hour. Your geothermal resources are mind boggling -- estimated at the thermal energy equivalent of more than 100 billion -- that's billion -- barrels of oil. And geothermal energy, in direct-use applications, can be produced at a cost five times less than natural gas. For solar, New Mexico experiences substantially more hours of sunshine per year than most other states in the Southwest. And to top it all off, the presence of the national labs gives you a leg up in terms of the technical expertise needed to develop these resources.

So just how does sustainability apply to Albuquerque? Stepping back to look at the larger context, we encounter the concerns being raised on a global level. Population growth, the greenhouse effect, damage to the ozone layer, loss of biodiversity and the extinction of species -- these and other threats are causing many to fear for the future.

Experts worry that mankind may be destroying the natural foundation upon which our lives depend. Listen to William Ruckelshaus, the first director of the Environmental Protection Agency, writing in Scientific American:

"In willful ignorance," Ruckelshaus writes, "and in violation of the core principle of capitalism, we often refuse to treat environmental resources as capital. We spend them as income and are as befuddled as any profligate heir when our checks start to bounce . . .

"Sustainability is the nascent doctrine that economic growth and development must take place, and be maintained over time, within the limits set by ecology in the broadest sense --

"We need to face up to the fact," Ruckelshaus continues, "that something enormous may be happening to our world. Our species may be pushing up against some immovable limits on the combustion of fossil fuels and damage to ecosystems . . . ." Unquote.

The challenge of sustainability is to modify our institutions and living patterns so that the way in which we go about meeting the needs of the present does not compromise -- and indeed supports -- the ability to meet the needs of the generations to come.

The opportunity of sustainability, for Albuquerque, is to develop natural gas and renewable resources in a way that will contribute to meeting global needs while building a prosperous future for this community. And perhaps most important in the near term, to develop the least expensive and least environmentally harmful energy resource of all -- efficiency. Because New Mexico's per capita energy use is substantially higher, and growing substantially faster, than nationally, there is -- again in the words of your new State Energy Policy, -- quote -- "an enormous opportunity for New Mexico to reduce energy demand through dramatic improvements in energy efficiency."

So how can the City of Albuquerque build a sustainable energy future. I'd like to devote the first portion of my comments this morning to outlining the key elements, or steps, in the development of an energy strategy and program. I'll conclude by outlining just a few of the more important specific programs and policies you could pursue.

Step 1 in building a sustainable energy future involves setting a quantitative and time-defined objective for your city's energy program. Albuquerque has already set such an objective -- a 10 percent per capita reduction in energy use by 1995.

This is ambitious, but an ambitious objective is useful because it forces everyone to stretch. At the same time, an achievable objective is critical to the morale and motivation of those whose task it is to do the job, and actually meeting or exceeding your objective is essential to the credibility needed to ensure long-term community and political commitment.

The objective also needs to be widely understood. You can set it as a percentage, and translate this percentage into megawatt hours, therms, and gallons, but these numbers will be abstractions to most people. Consider translating your objective into terms that will allow its significance to be more easily grasped.

For example, if energy use would have grown by two percent per capita each year over the next five years, and if you stop that growth, that would be a real accomplishment -- even though less than your stated target. If your achievement is expressed in those terms, however, you'll have a very difficult time communicating its significance and value. Based on a rough calculation, such an outcome would save Albuquerque 150 million dollars over the next five years. It would cut air pollution and greenhouse gas emissions by many thousands of tons, and it would save lives that would otherwise have been lost to traffic accidents.

If you express your objective in terms of benefits that people can relate to, the value of your program will be widely understood. If you express it as percentages or megawatt hours or barrels, you'll spend enormous effort trying -- probably unsuccessfully -- to explain why it ought to be taken seriously.

Step 2 in building your program is to cultivate wide spread and enthusiastic public support -- from all segments of the community.

Now, a superficial reading of the polls might lead an enthusiast to believe that this support can be had for the asking. But it won't be quite that easy. Support for environmental programs is a mile wide but only an inch deep. A survey completed for Albuquerque showed that 80 percent of your citizens support extra funding for environmental programs. That sounds great. But when asked about priorities relative to police services and human needs, less than 10 percent thought environmental programs were the top need. Only another 10 percent indicated it would be their second priority.

If you can show the community that energy conservation is not only a means to protect the environment, but is also a means to fund improved police services and human service programs, you can turn your thin ice of support into a two foot layer you could drive a semi on.

By linking energy conservation to other benefits -- environmental, economic and social -- a much stronger constituency of support can be developed. A brief review of the benefits and beneficiaries will illustrate this strategy:

Business leaders want low utility costs, affordable housing for their employees, good transportation facilities, and a low tax burden. Energy efficiency can contribute significantly to every one of these objectives. And because energy efficiency increases the retention of dollars in the local economy, it will increase spending in retail, entertainment and restaurant businesses. If presented properly, business leaders should love your program.

Homeowners and neighborhoods will benefit. Carefully located and designed, with proper traffic mitigations and required contributions to parks and libraries, medium to higher density mixed use developments can be an asset to many neighborhoods. In older areas, blighted properties can often be redeveloped to improve neighborhood character and property values.

Tree planting programs cut summer peak air conditioning loads, but they also increase property values, buffer noise, and improve aesthetics. Housing preservation and rehabilitation and maintaining neighborhood streets contribute to reducing energy use while serving to protect and improve neighborhoods.

Step 3 in developing your energy program is to select initiatives that most clearly demonstrate the value of energy conservation. There are hundreds of possible energy conservation programs. With some of them, the benefits will be widely perceived. With others, they will be less obvious. With some programs, no one will feel threatened. With others, true or not, there will be a perception of a threat. At the beginning of your program, when you are establishing your public reputation, perception is important.

Step 4 is to design programs that put to their best use all the tools at your disposal. Define exactly who you want to get to do exactly what with a program, and then methodically consider all of the means you have available to accomplish that.

Education and advocacy will only work when no real barriers exist and the incentives are compelling. Be realistic.

Identify barriers, and see if your program can reduce or remove them. As for incentives, business generally expects a three year payback, and consumers are borrowing on their credit cards at 18 percent. Be realistic.

Technical assistance will work if the only real barrier is lack of access to technical information at an affordable price -- and if incentives are strong.

Education, advocacy, barrier removal, and technical assistance will often work as a package, but will often work better if the group you want to motivate knows that regulation is a real-life near-term prospect if results are not forthcoming.

Assess existing incentives, and see if your program can strengthen them. Strengthening incentives can move the above package from marginally successful to very successful. Look for ways to remove subsidies to energy waste, and consider changing fee or tax structures to better reflect the economic and energy costs of the services being provided.

Advocate good strong state legislation. You are a big and important part of New Mexico, and could have real influence if you try. Some incentives can only be created at the State level, and regulations are sometimes better for business if they are imposed throughout a market area and thus allow costs to be passed on without losing market share.

And finally, of course, you should consider regulations. They will be an important part of your program, but only a part.

It is only realistic to acknowledge that a program to produce the quantity of energy conservation you have targeted will require significant new expenditures and/or regulations -- probably both. Since these are the hard part, let me offer a few suggestions.

Local government funds are always in short supply, enthusiasm for new taxes doesn't exactly take your breath away, and energy efficiency cannot expect to beat out police and fire services for general fund support.

Yet without significant new funding, the city will not be able to set an example and its advocacy will appear hypocritical. And without funding, community-focused efforts will be reduced to ineffectual preaching or an exclusive reliance on regulation. Preaching won't be very effective, and excessive regulation will generate resentment and reaction.

For energy conservation in city operations, expenditures will be repaid by savings. The need for funding is -- in essence -- the need for financing of conservation investments until the payback comes in. The trick is to find financing that does not require new general taxes or competing with higher political priorities. Look at cost recovery fees, capital funds, enterprise funds, interfund loans, interest transfers, revolving funds, grant funds, and private sector participation. Be creative, but keep general fund requests low.

For programs where the savings flow to the community, the trick is to develop what amounts to a social contract under which citizens and businesses support spending based on a belief that your programs provide net cost savings. It is a bootstrapping effort, in which the modest funding which the political process will support now grows gradually as programs prove their value.

In terms of new regulations, don't overplay your hand. Use early efforts to build support and understanding. Before you suggest a new regulation, get decision maker buy-in to the importance and reasonableness of a specific objective. For example, can new homes be made more energy efficient? How much? How much will it cost, and how much money will it save? Start by making sure decision makers have considered these questions and concluded that steps should be taken.

Next, make sure decision makers have a chance to review all the alternatives -- to really understand their respective costs and relative prospects for success. They must see and agree that education, advocacy, barrier removal, technical assistance, and strengthened incentives have been thoroughly evaluated, perhaps tried -- and judged inadequate to the task -- before they'll be likely to support regulation.

If you decide to try a non-regulatory approach, be sure to build in a means of quantitatively assessing success. Get buy-in at this stage that if the program does not meet a well defined measure of performance, regulatory alternatives will be considered.

If you decide a regulatory approach is needed, either at first or after trying a non-regulatory program, don't develop the regulation in isolation. Convene the affected parties, and review how and why you have decided to consider a regulation. Lay out clearly that your decision makers have embraced the objective, and have concluded that non-regulatory approaches aren't adequate. Once you have reached this stage in the process, you want to engage in discussion on the question of how, not if, a regulation should be developed.

State -- and mean -- that your goal is to develop the least costly and burdensome regulation that will do the job. A well-crafted regulation minimizes delay and uncertainty. Let's be clear about this. Hurting business is a bad thing. Delays cost real money, and uncertainty translates certainly into increased costs. Often, as in the example of making new homes more energy efficient, it is the consumer who will ultimately pay. It is in everyone's interest to accomplish the objective at the lowest possible price.

In the field of energy conservation, business profitability and regulation should be compatible. Government officials should make it their business to ensure that this is so.

Step 5 in developing your energy program is to manage for visibility and accountability. If an energy objective is to be useful in management terms, it must refer to quantifiable accomplishments of specific efforts. The city must document the results of its program and distinguish them from the results of the efforts of others.

You could spend the next five years, and all of the funding you're likely to get, just creating projections and defining measurement tools. Don't waste your time and money. Do a quick projection of what energy use would have been in each year between now and 1995 without your program, and quantify your objective in terms of kilowatt hours, therms, and gallons of fuel.

Clearly, documenting individual and overall program results will be difficult. Your choices are to operate without accountability for quantitative performance, to spend the next five years studying, or to take the risk and make your program accountable now. The first two choices are unworkable. Your program will not be funded adequately nor will sufficient regulations be enacted based on vague or speculative measures of performance. The risk must be taken.

Consider creating a five-year program development plan. Such a plan is essentially three spread sheets -- one each for electricity, natural gas and vehicle fuel. On the vertical axis, display separate lines for new housing, existing housing, new employment structures, existing employment structures, outdoor lighting, government vehicles, corporate vehicles, and so on. The horizontal axis shows years one through five. Each box in the spread sheet should show the target for energy saving and the estimated city expenditure. Early on, some of the boxes may simply say "To be developed." At the top of the sheet, in big bold letters, you should say "Targets and expenditure numbers shown are based on very rough preliminary estimates and will be revised as program experience is gained." Attached to each spreadsheet should be descriptions, to the extent you have developed them, of the programmatic activities planned in each box.

Creating the first five-year program development plan will be overwhelmingly difficult or breathtakingly arbitrary. Since if you want to get to work implementing programs anytime soon it must be the latter, your only protection is to advertise rather than hide this fact. It is nothing to be ashamed of. You have to start somewhere.

The plan, once created, should be revised annually -- and on a cycle that will allow it to be an input to the budget process. It should be approved all the way up the line -- from the chief administrator to the Mayor and Council. Since you have Council committees, assigning the plan to the appropriate committee for regular review, and for review of major implementing contracts, preliminary and final program designs, and so on will further improve visibility and help keep decision makers current on progress.

Accountability should be nailed down by including in each annual plan a report on the performance of the previous year's program.

As demanding as it will be, this process has many benefits:

The sixth and final step in creating your energy program strategy and plan is to establish some means to coordinate the overall program. Someone must manage the process of creating and annually revising the energy strategy.

Nearly every aspect of city government has a role in your energy program. The interdepartmental cooperation and collaboration essential to an effective program won't happen by itself. Even if a department's activities have important energy implications, its management may not consider energy conservation to be a central part of its mission. In tight budget times, when expectations exceed the ability to meet them, tangential assignments tend to fall off the priority list altogether.

All of this points to the need for a pro-active coordinating function.

Opportunities For Albuquerque

Having described steps to an energy strategy and plan, let me offer some ideas for programs.

Before doing that, however, let me say clearly that by necessity of time I'll not be mentioning a great many possibilities. Some of what I will suggest below may be underway already, and no offense is intended by seeming to overlook much good work already done.

Equally, although I have attempted to inform myself about Albuquerque's situation, much information of which I am unaware will help determine what you choose to do. And that is how it should be. There is no one right answer to apply to each and every community, and no outsider can possibly understand enough about your situation to say for sure what is right for Albuquerque.

I'll start in-house because community-focused programs and regulations will not be credible unless you practice what you preach.

Moving on to community-focused programs, a conservation effort designed to reduce electricity and natural gas use requires an effective working partnership with your energy utility.

The number one priority for electricity and natural gas conservation should be to actively push for legislative and/or regulatory action to make conservation very profitable for the utility. State regulators generally set a rate of return on capital investment, and state rate-setting regulations should treat conservation expenditures as capital investments.

If this is to be effective, the utility should not have to spend and then apply for those expenditures to be considered capital investments. And, to be most effective, the rate of return on conservation investments should be better than the rate on new energy supply.

In terms of new buildings, incentives for builders to make their product more energy efficient are pretty weak. In spite of the savings for the ultimate occupants, not much marketing or pricing advantage flows to the builder.

A charge for a new building to hook up to the grid can be an incentive if it is lower for more efficient buildings.

Home Energy Rating Systems may provide some benefit, but most home buyers will pay more attention if financing institutions provide loan qualification incentives.

For structures designed before they are sold, regulations will likely be the most effective approach. But before moving to new requirements, its worth evaluating technical assistance. It may work for those elements were energy efficient design can save money in construction, and may have some promise for elements involving very little if any additional cost.

For existing buildings owned by businesses who pay the utility bill, city provided technical assistance and cost-benefit analysis has real potential.

Another possibility for business structures is a retrofitting on resale ordinance similar to San Francisco's. It may be particularly needed for buildings not owned by the utility bill payer. If you go the technical assistance route, make sure program results are carefully measured so that if the program doesn't produce, the foundation will have been established for regulation.

Two other possibilities should be mentioned for business structures. The first is lobbying for new state regulations that provide stronger incentives for cogeneration units. And the other is consideration of a study to assess the feasibility of district heating and cooling systems employing geothermal energy.

On the residential side, you might start by identifying currently available weatherization and retrofitting programs. If lack of awareness of their availability is slowing utilization, an information and referral service may be useful.

Another near-term possibility is to require an energy retrofit in all city funded or financed housing rehabilitation. Low income housing assistance programs should also be evaluated for incorporation of energy elements.

If new funding can be found for weatherization and retrofitting services, give priority to low-income households. Federal CDBG funds support such efforts in some communities. Joint efforts should be considered between the city and other agencies providing low income housing, and discussions should be undertaken to determine the utility's interest in collaboration.

Finally, a regulatory effort is possible -- likely a retrofit on resale approach -- again similar to San Francisco's. Generally the real estate industry opposes these ordinances, and a careful process will be needed, as outlined above, for such an effort to be successful.

In the transportation arena, improving incentives also tops the priority list.

The majority of the cost of vehicle use is not paid by users in proportion to use. Instead, it is imbedded in general taxes and in purchased goods and services. The cost is paid in mortgages and building leases. Nearly every time we buy something, we help pay for parking lots and street improvements. The taxpayer funds streets through General Obligation bonds. Vehicle fires and traffic law enforcement are major duties of police and fire departments, and much of the cost is paid from general revenues. The list could go on and on.

If drivers paid the true cost, the payment could easily be a dollar a mile or more. As we think about reducing vehicle miles driven, we are confronted with the paradoxical fact that we are trying to reduce a behavior we are at the same time encouraging with tremendous subsidies.

How much less likely would people be to chose homes and jobs far removed from each other if they paid the true cost of that decision. Or how much more likely would they be to use transit or other alternative means of transportation if their cost-effectiveness were experienced directly.

Removing any subsidy is politically challenging, but even reducing auto subsidies will be extremely tough. Nevertheless, to the extent the city can influence the legislature, and to the extent that some of these decisions are in the city's hands, I would encourage you to increase the use of gas taxes, parking fees, variable registration fees, and other use-based charges to pay for constructing your roadway system and for the maintenance and services that system requires.

There are two other basic things Albuquerque can do to conserve energy in transportation.

First, it can increase the energy efficiency of its roadway system by doing more to provide a smooth street surface and smooth traffic flow.

Every little crack, bump and pothole your car encounters is a mini-collision that robs it of a bit of its momentum. A smooth surface offers little resistance -- a rough surface offers a great deal. Studies indicate that fuel use can increase 56 percent on "poor" roads and 34 percent even on "fair" roads.

Out of a total of nearly fifteen hundred miles of Albuquerque streets, nearly 700 are rated in "poor" condition and about 600 are rated as "fair." From these facts, its clear that improving and maintaining your streets can produce major energy conservation benefits.

In addition to the direct energy savings of good street maintenance, it can also avoid the need for reconstruction. Rebuilding streets takes more than just tons and tons of rock. Albuquerque has invested the energy equivalent of perhaps 20 million barrels of oil to build its city streets, and avoiding the need for reconstruction can save a huge amount of energy -- and money.

You can also improve the energy efficiency of your street system by improving traffic flow. State-of-the art centrally controlled traffic signal timing systems reduce stops and idling time, and this cuts energy use. Similarly, flow can be smoothed and energy saved by removing bottlenecks, adding stacking and turning lanes, creating procedures to quickly remove accidents and spilled materials that tie up traffic, installing only those stop signs justified by safety considerations, and similar measures.

The second major thing Albuquerque can do to conserve energy in transportation is to increase the percentage of persons who commute and take other trips using something other than a single-occupant automobile. This conserves in two ways -- directly through the greater energy efficiency of transportation alternatives, and indirectly by reducing congestion for those cars remaining on the road. Taking even a relatively small percentage of vehicles off the road does a lot to improve the smooth flow of those remaining, and a vehicle moving under free flow conditions can use 20 percent less fuel than if moving through stop-and-go traffic.

There are a variety of mechanisms for promoting transportation alternatives -- in addition to charging more realistically for auto use. They include:

Be sure to provide employers substantial involvement in helping to design the effort -- their willing support and cooperation is essential.

Beyond these steps, you should consider lobbying the state to create registration fee, rebate or other incentives to the purchase of more fuel efficient vehicles as well as offering as city educational programs to encourage and assist vehicle owners in learning about fuel efficient operating and maintenance practices.

Now, some comments on conserving energy through improved land use planning. I need to begin with the simple statement that I think Albuquerque will grow -- and probably grow substantially -- in the coming years. My own view is that the most important issue now is not how much growth will ultimately be permitted but rather what sort of pattern will be created by that growth.

Certainly, sustainability requires checking the global population explosion. And certainly, sustainability means not overtaxing the carrying capacity of your region. But local population carrying capacity is largely a question of per capita resource consumption and pollution generation, and decisions to accommodate more people can be mitigated -- up to a point -- by using resources more efficiently and producing less pollution per person.

I understand that growth west of the Rio Grande is a topic of contention. An adequate discussion of this issue is beyond the scope of these comments, but let me offer a few observations on growth and energy conservation.

Finally, let me offer a short comment on achieving energy conservation through community education.

In a community the size of Albuquerque, you could spend a quarter of a million dollars a year on generally-focused energy education -- such as an energy curriculum for the schools -- and not make a discernable difference in energy consumption.

Most energy education dollars should be spent in direct support of the specific programs you decide to offer.

There is one significant exception to this. Educational programs that promote a broad community understanding of the interconnection between energy conservation and economic and social well being will serve an invaluable role. This focus is in direct support of a strategy.

I hope these comments will be helpful as you undertake your discussions today, and I'm looking forward to listening in. Good luck to you.

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