Solving the Energy Crisis

Nuclear power plant

— It is our feeling that until we put the pieces together where the consumer of energy is a producer of energy, we are not going to create a truly sustainable future, says David Morris, vice president of the thirty-five year old US-based Institute for Local Self Reliance.

 Morris has been an advocate of a decentralized, renewable energy system and a fierce critic of centralized energy models. In this interview he provides the arguments for why the energy crisis will have to be solved at the local level and why energy generation should be democratized.

You have been very critical of large-scale, centralized, renewable energy facilities. Can you elaborate on this critique?

— In the United States, political, business and environmental leaders are aggressively promoting a centralized renewable energy path. Even though renewable energy is found, and could be harnessed, everywhere, they argue that since the winds blow most fiercely in the middle of the country and the sun shines most in the southwestern parts of the country, wind turbines and solar installations should be located there. The electricity would be transported very long distances to consumers in major cities on the coasts. A similar dynamic is occurring in Europe where leaders are talking about northern Africa and the Middle East as the sites of massive solar installations, with the electricity generated at these facilities being transported by extra high voltage transmission lines to European, African or Middle Eastern cities.

From a national perspective of a nation, this makes sense. The cost of producing electricity from wind turbines in North Dakota and from solar installations in Nevada is less than generating electricity from wind turbines in Illinois or solar installations in California. Indeed, North Dakota is capable of generating more than half of the renewable electricity consumed in the United States. Just a section of Nevada is enough to generate all the renewable electricity consumed in this country. So from the perspective of the federal government, the major obstacle is the lack of transmission capacity from these remote areas to population centers.

Many environmental leaders support this dynamic because the end result is replacing fossil fuels with renewable energy resources. We think that this support is short sighted. It reinforces a dynamic in which the people who make the decisions do not feel the impact of the decisions, in which the consumer of energy is located far away from where the energy is generated. It reinforces consumer passivity. Twenty-five years from now the relationship of people in Minneapolis or Oslo to their energy system would be the same as it is today. It is just that the centralized electricity would be differently fueled and differently sourced.

But we believe that sustainability can only be achieved if we have the active participation of consumers. If consumers become producers, even if they are only producing a small amount of their energy needs, they think and act differently than if they are solely consumers. For one thing, they tend to maximize energy efficiency because each kWh or calorie that they don’t consume means one more step toward energy independence. No one installs a geothermal heat pump without first minimizing the building’s use of heat. No one installs a solar array without first investing in improving electricity efficiency.

Having a piece of the supply also changes the new producer/consumer’s relationship to other energy sectors. For example, those with a solar roof might seriously consider buying an electric vehicle. Not only could they fuel the vehicle from their roof, but the car could become a backup power plant if the utility network went dark. You begin to have a symbiotic relationship between your house and your vehicle.

Some time ago I wrote an article for a travel magazine on electric vehicles, and I went up and down California traveling in everything from a glorified golf cart to the new Tesla which accelerates from 0 to 60 miles per hour in 4 seconds. Every person whose car I drove had solar cells on their roof. Some first acquired an electric vehicle and then installed a home solar system. Others began with a solar system and then acquired an electric car. Once one homeowner or business has a solar panel and an electric vehicle, the homeowner or business across the street might say “Why don’t I do that?!” and then even more neighbors might say “Why don’t we do that?!” Then they go to city hall and insist that their electric vehicles improve the urban environment because they have no tailpipe emissions and are quiet, and begin demanding charging stations.  So you have a dynamic which is, if you will, very organic – literarily a grassroots dynamic toward sustainability.

A national government, of course, could pass legislation mandating renewable energy or electric vehicles. But it takes some time before that changes the hearts and minds of the citizenry. Moreover, you have elections every few years, and the next federal government might undo what the previous government did. It is our feeling that until we put these pieces together—where the consumer is the producer and the producer is the consumer—we are not going to create a truly sustainable future.

In a new foreword to your book, Self Reliant Cities, originally published in 1982 and now republished online by the Institute for Local Self Reliance, you write that the energy and climate crisis ultimately has to be solved at the local level. Why is that so?

— There are several reasons why I say that. The first reason is that we live locally. Ninety percent of the population in Europe, the US and other developed countries live in cities. Globally, the number of people living in cities, as opposed to the countryside, recently exceeded 50 percent. Cities are relatively dense places where interaction and communication is facilitated. Cities have large internal markets that can stimulate entrepreneurs and innovation. Cities in most countries have significant authority.  They enact rules regarding land use. They can often borrow large amounts of money on long terms at low interest rates.
You cannot get from here to a sustainable society simply by having national governments, or international governments for that matter, enacting regulations. For example, in the United States the federal government provides a handsome incentive for solar energy. This incentive allows solar energy to become close to economical in many sections of the country. But having such an incentive does not mean that solar energy is simply going to expand rapidly.

A number of states, responding to their citizens’ desire to reduce greenhouse gas emissions, have mandated that a certain percentage of their total electricity has to come from renewable energy. That is a step in the right direction.  But how is that renewable electricity going to develop? Installing solar panels on roof-tops is a local issue. So is installing wind turbines in rural areas.

Ultimately, if we are to achieve a sustainable society we have to embrace new ways of doing things. In European countries and in China, innovations in renewable and sustainable energies (as well as reductions in greenhouse gases) are coming from cities. In fact, cities have begun to engage in a friendly competition with each other in terms of greenness, and they are sharing information on greening.

Many would argue that municipalities and counties—at least in centralized European countries—do not have the power to solve energy questions. How do you respond to such an argument?

— Yes, I think that it is more true in most European countries than in the United States. Certainly the UK has a unitary system of government. France has delegated certain authority to regions and cities but that is a work in progress. On the other hand, in England, a great deal of innovation is coming from the local level and it is also at the local level that you have opposition to national renewable energy mandates with regard to local wind farms. Here is another situation where the national government can dictate something but it must be implemented locally. So I would say that local is still very important even in these countries. Other countries like Germany and Spain give great deal of authority to regions.

Another important point to make is that there is clearly a difference in policy making between small countries and large countries. Norway, for example, has a population only slightly larger than that of metropolitan Chicago. But nevertheless, in Norway, cities like Kristiansand, Arendal, Bergen and others have significant and innovative sustainable programs.

There exists a widespread notion that decentralized renewable energy sources are not sufficient to meet the needs of an advanced industrialized society—that we, in fact, need those large-scale, centralized, renewable energy plants. What is your opinion?

— Yes, you need both centralized power plants and decentralized power plants. The question is what is the balance between the two? Right now we are overwhelmingly focused on centralization. For the residential sector and much of the commercial and institutional sector, decentralized production of heat and power can be the dominant form of energy supply. For energy intensive industries, they cannot. But even there, if we think first of how we can rely on decentralized sources of energy, we approach the issue differently. For example, a steel mill needs centralized power generation. However, a steel mill that relies on recycled steel uses significantly less energy per ton produced than one that makes steel from iron ore.

Renewable energy is also variable so we need to take into account systems that can store heat and power. And we will need fossil fueled distributed generation as backup and peaking plants. These will, and should overwhelmingly be natural gas fired, using biomethane whenever possible or in the case of heating, biomass.

If you take what is the current industrial structure as a given, then, yes, you are going to need centralized power plants. But a new kind of industrial structure will be desirable twenty years from now that may need fewer centralized power plants. For example, the fastest growing part of the economy right now is information intensive industry. This essentially runs on calories, on food.

You talk about democratizing the energy system? For most people, democracy and energy seem like two entirely different phenomena. In your mind, what is the relationship between democracy and energy?

— A democracy allows people to establish the rules that will govern their behavior and influence the structure of society. Democratization of energy happens when people get the right to establish the rules of energy, and we firmly believe that as they establish these rules, they will do so in a way that enables the widest possible generation of energy.

In this country we talk about Thomas Jefferson and Jeffersonian democracy. Jefferson believed an effective democracy depends on the widest possible distribution of property. In his day, property meant farms, which generated much of the wealth of that era. Jefferson was actually very critical of cities because he thought that they were places where people did not have any property, did not own any means of production at all and were merely wage laborers. Today we think of property as consumer goods. But power plants generate the kind of basic wealth Jefferson was talking about. And this allows us to begin to engage in policy making from an informed, self-reliant perspective.

It seems like this requires far-reaching changes in our society in terms of distribution of property and wealth...

— Yes it does. The upheaval in the energy sector—our dependence on imported fuels from unstable and hostile parts of the planet, our concerns about centralized power plants, the decentralizing potential of renewable energy—all give us the opportunity to take the first major steps toward those far reaching changes. Sometimes the very first steps we take are themselves a reversal of a century of development. For example, my home state of Minnesota was the first state in the US to have what is called a net metering law. Before this law was passed, I could generate electricity on-site but if I wanted to export it to the utility, the utility required me to install a second electric meter and pay for it. Then the utility would charge me the retail price for all electricity I imported and pay me the wholesale price, or lower, for all energy I exported. Net metering requires a single meter that runs both backwards and forwards. This is a very simple change of rule, but it developed an entirely new dynamic because the former rules assumed a one way electricity system—where electricity ran from a central power plant, owned by a vertically integrated company, to an ultimate customer. Net metering assumes a two way, more democratic energy system.

In Europe—France, Germany, Spain and the like—you have other rules called Feed-in tariffs. These have in part been developed to stimulate renewable energy, but also to encourage dispersed energy generation. Feed-in tariffs give a higher price for roof-top solar than for ground-mounted solar, and a higher price for small wind generators than for large wind generators.

In the United States, as I mentioned earlier, the federal government is saying that all the customers in the country should subsidize those who are building high voltage transmission lines, and that we need these because the wind energy is located in North Dakota and it has to be brought to Chicago and New York.

But it turns out that Illinois, where Chicago is located, has a lot of its own wind energy and other sources of renewable energy. The Institute for Local Self Reliance recently issued a report called Energy Self Reliant States. It maps the renewable energy potential for each of the 50 US states. When I say potential, I do not mean the theoretical potential, but the existing commercial potential. The report notes that two-thirds of the US states could be self-sufficient, not only self-reliant, in terms of electricity generation by relying on their internal resources, assuming sufficient storage was available. This data provides the empirical evidence that we don’t need to and should not subsidize high voltage transmission lines. 

What I read from this report is that it is also more cost-effective to use local and regional resources. Then why is this not happening today? What are the forces working against a more decentralized, renewable energy system?

— There are natural forces and artificial forces working against democratic energy systems. A natural force is the administrative economies of scale. An artificial obstacle is the rules we write to encourage renewable energy.

Again, let me give you an example from the context of the US. The federal government provides an incentive for wind energy investors. This is a tax credit but it can only be taken against what is called “passive income.” This is income generated from business, not income from wages or dividends. It is the kind of income generated by profitable corporations. This means that only the corporations with a great deal of tax liability will qualify for this incentive. Large corporations, in turn, want to make investments of $50 or $100 million dollars to minimize the transaction costs. They are not interested in making investments of a million or half a million dollars. The result of this tax law is that you end up with absentee owned large wind farms.

It is possible to institute a different tax incentive where the tax credit is refundable. This would mean that everybody receives it on an equal basis. If there is a $500 dollar tax credit and you put $500 dollars into local wind generation, you get $500 dollars back. From the federal government’s perspective, the amount of lost revenue is the same. From the wind development perspective more money ends up in building wind turbines than with the passive income tax credit where the middleman takes a piece of the action.

Changing the present tax credit rule for wind energy would widen the number of investors from a few thousand, maybe only a few hundred, to about 50 million households who have enough money to invest in these things – if they knew they would be getting enough money back the next year, when they pay their taxes. If we change this rule, we would stop favoring centralized and absentee owned facilities and start facilitating decentralized and dispersed energy generation.

Editorial Comment

Published in Communalism #1 (December 2009)