"Persuasion is the only true intellectual process"
--- Matthew Arnold
Can “energy” be a “key component of a city’s competitiveness”? That was the issue I was asked to address at the Toronto Forum for Global Cities held in that Canadian city Dec. 8 and 9, 2008. As a “city” is the most local political unit the question of energy use, and management, within a city is an interesting one by itself. The suggestion of competitive advantage is even more so. I answered the question in the affirmative. Now I need to persuade you that it was correct to do so.
The “energy” aspect of the question concerns the import, conversion, distribution and end use of various fuels for production of electricity, heat or transportation within the city. The historic objective of energy policy has been to obtain an adequate and reliable supply of energy at reasonable prices. This has not always been easy to accomplish. In the 21st century there is an additional consideration. Today mankind must meet a second condition, that of reducing or eliminating the emission of greenhouse gases. This will prove even more difficult.
Energy demand, in the long run, is controlled by population increases and growth in the standard of living. The supply of energy is projected to be adequate but subject to increased costs of extraction, transportation and conversion. The continued use of coal and natural gas in electricity production depends on timely introduction of new carbon capture and sequestration, or CCS, technologies, which are not expected to be ready until 2020 at the earliest. The remaining major non-fossil energy source, nuclear power, is subject to critical popular and political opinion. Renewable energy’s contribution will surely increase but issues remain concerning large scale development, economics and reliability of services.
This brings us back to the issue of the conversion of energy in the city. I suggested in Toronto that two primary energy related objectives should be acceptable to the body politic of a city: 1) to increase the wealth of the community 2) to reduce the probability of climate change. To address these objectives a city administration could bring together public education, engagement of multiple public and private institutions and viable, effective and funded programs. To this must be added the vital ingredient of leadership.
The leadership in a city starts with the recognition that there are effective strategies to reach the objectives of wealth creation and greenhouse gas reduction. The first is promotion of efficiency in fuel conversion and end use. Less fuel use means lower bills and less greenhouse gas emissions. Thus energy efficiency has been described by some as the “fifth fuel” and the “low-hanging fruit.”
The second strategy is that of stimulation of local non-greenhouse gas emitting energy sources such as solar, wind and other renewable energy sources along with the installation of local energy storage. A comprehensive city planning process could integrate – or stimulate the local market to integrate – electric transportation (plug-in hybrid cars) with electric mass transportation, with a smart grid, with distributed generation, with integrated municipal water and sewer systems.
City-based integrated energy policies would provide opportunities for local finance, local employment and local energy conservation, efficiency and conversion entrepreneurs. The roles of the existing electric and natural gas utilities could also be expanded to allow for the inclusion of energy efficiency services as tariff offerings. The result would be more local investment, lower energy bills and more disposable income for the municipality’s citizens. Thus wealth would be locally created.
Jeremy Rifkin’s essay “Four Pillars of the Third Industrial Revolution,” which I read in EER after my Toronto presentation, called for 1) renewable energy, 2) buildings as power plants, 3) hydrogen storage and 4) smart-grids and plug-in vehicles. I am persuaded that cities can start to implement at least three of Rifkin’s pillars today. I hope now that you are too.
*Branko Terzic is the global and U.S. regulatory policy leader for energy and resources at Deloitte Services LP. This column originally appeared in the European Energy Review.