Citation
Community energy management

Material Information

Title:
Community energy management a strategy for accomplishing local economic development objectives
Creator:
Landers, Martin J
Publication Date:
Language:
English
Physical Description:
iv, 81 leaves : ; 28 cm

Subjects

Subjects / Keywords:
Energy development ( lcsh )
Regional planning ( lcsh )
Economic development ( lcsh )
Economic development ( fast )
Energy development ( fast )
Regional planning ( fast )
Genre:
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Bibliography:
Includes bibliographical references (leaves 80-81).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Master of Urban and Regional Planning, College of Architecture and Planning.
Statement of Responsibility:
by Martin Jay Landers.

Record Information

Source Institution:
University of Colorado Denver
Holding Location:
Auraria Library
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
17464633 ( OCLC )
ocm17464633
Classification:
LD1190.A78 1987 .L354 ( lcc )

Full Text


COMMUNITY ENERGY MANAGEMENT:
A STRATEGY FOR ACCOMPLISHING LOC/.L ECONOMIC DEVELOPMENT OBJECTIVES ,
by
Martin Jay Landers B.A., University of Colorado, 1981
A thesis submitted to the Faculty of the School of Architecture and Planning in partial fulfillment of the requirements for the degree of Master of Urban and Regional Planning
1987


COMMUNITY ENERGY MANAGEMENT:
A STRATEGY FOR ACCOMPLISHING LOCAL ECONOMIC DEVELOPMENT OBJECTIVES
by
Martin Jay Landers B.A., University of Colorado, 1981
in
A
of the
partial fulfi Mast
thesis submitte
School of Archi
llment of the r
er of Urban and
d to the Fac tecture and equirements Regional PI
ulty
Planning
for the degree
anning
of
1987


This thesis for the
Master of Urban and Regional Planning degree
Martin Jay Landers has been approved for the School of Architecture and Planning
Thomas A. Clark
David R. Hill
Peter Pollock
Date Qf / / /81


iii
TABLE OF CONTENTS
Chapter Page
I. INTRODUCTION....................................... !
II. DEFINITIONS AND METHODOLOGIES...................... 6
III. SIGNIFICANT LINKS AND IMPACTS..................... 20
IV. DEVELOPING STRATEGIES............................. 43
V. APPLYING THE STRATEGY............................. 57
VI. CONCLUSIONS AND POLICY RECOMMENDATIONS............ 73


iv
LIST OF TABLES
Table Number Page
1 Energy and Land Use...................... g
2 Energy and Employment by Industry....... 23
3 Summary of Supply-Side Benefits......... 34
4 Summary of Demand-Side Benefits......... 37
5 Carbondale Transportation Sector........ 61
6 Carbondale Housing Data................. 62
7 Intuitive Application Ranking........... 69


ACKNOWLEDGEMENTS
One person, beyond all others, has made this effort possible: my adoring wife, Laurie Susan Landers, who has rendered unrelenting support and understanding of which kings would be envious. I would also like to thank my advisors, Thomas Clark, David Hill and Peter Pollock, who believed in the concept long enough to see its fruition. David McQuire, thank you for your moral support and insights into marathon thesis preparation techniques. Finally, I would like to thank my Epson Equity I computer and Dynax printer, without which this undertaking would still be in progress.


CHAPTER ONE
INTRODUCTION
"Economic life develops by grace of innovating; it expands by grace of import replacing. These two master economic processes are closely related, both being functions of city economies. Furthermore, successful import replacing often entails adaptions in design, materials, or methods of production, and these require Innovating and improvising... city import replacing is at the root of all economic expansion."
Jane Jacobs
Cities and the Wealth of Nations
A community can be a producer of energy goods as well as a consumer, and is capable of implementing programs optimizing supply distribution and utilization. Due to a variety of factors, efforts to manage energy resources at the local level have not gained acceptance as an integral component of comprehensive community planning. Many programs, created by various levels of public and private enterprise and implemented largely autonomous of each other, have either been abandonded or severly curtailed. As federal subsidies and residential energy tax credits have expired, the public incentive to save energy has decreased. The lack of a federal policy ehcouraging stewardship, low oil and natural gas prices, ljlmited state funding, uncertainty by consumers, and municipalities unaware of their potential for economic recovery all inhibit the emergence of local energy planning as a viable tool for community development.


The declining credibility of energy planning begs reaffirmation of its purpose and necessity. Dependence on finite resources of coal, petroleum, uranium, natural gas and similar fuels poorly distributed and consumed is inefficient, expensive, and renders already fragile community economies vulnerable to severe disruption.
Non-renewable resources, most notably petroleum and its by-products, controlled by unstable foreign markets immediately pose national security concerns.
The possibilities for supply interruptions are exacerbated by the highly centralized nature of power plants and transmission facilities, jeopardizing the reliability of power supplies. Such interruptions can create a debilitative effect on communities dependent on exterior energy systems. Energy planning employs localized processes which can mitigate the impacts of sudden supply interruptions.
An environmental perspective ia also evident, in that sensitive habitats are easily destroyed in the quest for coal, oil, and uranium reserves. The extraction, processing, transportation, and burning of fossil fuels pollutes our atmosphere, fouls our waterways, and scars our landscape. On a global view, the release of carbon dioxide and chlorofluorocarbons resulting from the consumption of conventional fuels is believed to damage the atmosphere to the point where climatic change may endanger man. Proper energy planning allocates resources efficiently, emphasizing environmentally clean renewable resources and the maximization of nonrenewable technologies.


3
Lower income social classes are also vulnerable to energy instablity. Expensive energy results in less disposable income and higher rents for those that can ledst afford these costs. Housing stock deteriorates du^ to a general reduction in investment, with corresponding effects on the labor market in the form of increased unemployment. Energy planning can mitigate impacts on low income classes and the unemployed through development of diversified supplies and technologies.
Beyond economic externalities, the credibility of energy planning is dependent upon the "bottom line". Without an economic incentive, energy planning lacks the political support to be implemented. The key to the acceptance of energy planning therefore rests on its ability to be significantly cost effective without external influence, as state and federal assistance can no longer be depended upon.
Many communities are attempting to strengthen thCir economic base through a variety of innovative planning strategies. The purpose of this study is to identify the relationship between energy systems and economic growth, investigate alternatives, and determine tojwhat extent local public policy can influence the choices among energy options to promote economic development. A new strategy for accomplishing economic development objectives can perhaps be derived through such an analysis. The value of energy planning can thus potentially be established beyond its social and environmental virtues as a concrete economic development


strategy adaptable into the local comprehensive planning process.
The study will not attempt to discuss all the complex issues surrounding energy and economic development, but rather focus on specific linkages between community energy management practices and economic self-suffiency objectives that can be formulated into an effective planning strategy. Specific costs for program development are not included, nor are comparisons made between the energy sector and other sectors of local economies.
The scope of this analysis will include principles which can generally be applied to small communities within the United States, and does not extend to large cities or metropolitan areas. The study does not propose multi-jurisdictional planning solutions, instead focusing on only those prospects afforded within the confines of a particular city or township.
Limitations of solar insolence, wind speed, hydroelectric hydraulic head, geothermal activity and other site specific energy resources vary geographically across the country, yet policies encouraging energy conservation within the residential, commercial, industrial, municipal, institutional and transportation sectors of a community can widely be adopted.
The methods of study will include literary and empirical research. Information from surveys, news articles, magazines, books, conferences, colloquiums and various research foundations will be referenced.
The "state of the art" in energy planning as an economic


development strategy will be presented through data collected in the review of literature. A generic strategy will then be developed and tested via an investigation of a Colorado community involved in energy planning and economic development. Principles will be applied where empirical evidence is limited.
The thesis will be organized to logically show the significant relationships between energy planning and economic development. In Chapter Two, definitions will be followed by examples of technique and method. Chapter Three will explore the relationship between energy and economic development, with alternatives investigated and linkages established. In Chapter Four, barriers and opportunities for strategy development will be followed by a synthesized strategy encompassing elements gleened from the data. The strategy will be applied in Chapter Five to an investigation of one community's potential for implementation. The results of the theoretical and empirical analysis will be summarized in Chapter Six, followed by the articulation of policy recommendations.


CHAPTER TWO
DEFINITIONS AND METHODOLOGIES
Energy planning and economic development shall be defined in terms of their context to this research. Each definition will be supported by a practical explanation in the form of a methodology. Through clarification of various concepts, a framework can be established for analysis, investigation, and application of research principles.
Energy Planning
Energy planning, implemented at the local level, is! the assessment of renewable and non-renewable energy technologies. Policies and programs are implemented based on strategies to allocate existing resources effectively and to increase efficiencies of local consumption patterns. In general, demand for imported, non-renewable resources (coal, natural gas, oil, etc.) is discouraged, while renewable supplies (solar, wind, hydroelectric, geothermal, etc.) and energy conservation technologies are encouraged. However, the pragmatic solution is one where an optimum mix of technologies are utilized to meet a particular communities needs. Each community has certain indigenous resources which can contribute to a local energy system. The management of all energy resources, from supply to delivery to consumption, is the essence of energy planning.


While community energy planning recognizes the
need to utilize a variety of technologies, end use is
emphasized over site, or primary, use. Primary use is
the conversion of the physical energy resource to a
deliverable product. How the product is finally consumed
is! its end use. End use analysis provides for the
optimization of a resource through improvements in
efficiency, maximizing indigenous resources before
decisions to attract external supplies are made. The
emphasis on end use analysis stems from the ability to
locally effectuate change as significantly as possible
with any given technology mix.
Local governments can influence energy supply
and consumption in 2 ways: they can provide advocacy
for sound regulatory decisions, and they can provide
1
direct financial investment. Governmental authority is
contained within zoning, code adoption, code enforcement,
highway and mass transit planning, waste disposal,
2
taxation, and bonding. Traditionally, local authorities
have the greatest ability to regulate land use with
either a prescriptive or performance approach. A
prescriptive approach details a specific set of measures,
whereas a performance approach emphasizes attainment of
3
general standards.
The application of energy planning at the local leyel is especially appropriate when considering the relationship of energy to individual land uses. Table One indicates that each land use sector has energy sensitive characteristics particular to specific land use applications. These applications all have opportunities


for efficiency improvements that can effectively be
mandated through the auspices
Table Energy and
Land Use Parcel
Residential Single Family
Multi-Family Mobile Homes
Commercial Food stores
Restaurants General Stores
All other Retail
Wholesale
Office
Hotel/Motel
of local authority.
One
Land Use
Energy-Sensitive
Characteristics
Insulation levels, floor area of dwelling, wall and roof area, caulked and sealed cracks, weatherstripping, storm doors and windows, orientation, proximity to work, shopping and recreation.
Special refridgeration requirements, numerous door openings.
High internal heat generated from cooking facilities and people.
Heating, ventilating, and air conditioning systems vary significantly, based upon physical characteristics such as multi-level structures, elevators, spotlighting, etc.
Insulation, door openings, heating and ventilating system type.
Low internal loads, low thermostat settings for heating, rarely air conditioned, some refridgerated storage.
HVAC system is the primary determinant of energy use.
Internal loads vary with occupancy. Large glass areas. High heating, cooling and electrical equipment loads.


9
Hospitals
Parking
Industry
Municipal Outdoor
Lighting
High space conditioning demands for environmental cleanliness. High electrical and cooling requirements.
Lighting during hours of operation and ventilation systems for underground facilities.
Energy use per employee vary with levels of production. Generally, as productivity increases energy use increases.
Type of lighting used, lighting levels, and hours of use.
Water and Waste
Electrical pumping requirements and facilty
HVAC.
Transportation
Use depends on quantity, type and quality of travel .
Source: Adapted from Hittman Associates, Inc.
Comprehensive Community Energy Planning, Columbia, MD., 1978
Communities that manage their energy resources
implement some form of methodology to achieve their
goals. The basic organizational technique for local
energy action involves a community energy analysis giving
a clear picture of where the communities energy comes
from, how it is used, the present economic effect of
energy costs, expected trends, and the communities
4
vulnerability to energy shocks. This information can then be used to determine alternatives, develop policies, and implement programs.
An energy planning methodology is identified in order to clarify planning principles. One methodology which offers an excellent prescription for energy


10
planning is the "Benson Methodology". It should be emphasized, however, that this methodology is described for the purpose of explanation only, and not by way of limitation in any regard to energy planning.
Based on the principle of "soft energy paths" developed by Amory Lovins, the Institute for Ecological Policies, founded by Jim Benson, prepared a methodology for local energy planning. The methodology was widely applied during the late 1970's, when energy planning was supported by federal and state subsidies, and enjoyed a strong "grassroots" following. Like the "soft energy path" philosophy, the purpose is to provide a nontechnical method to create alternative energy futures.
The "Benson Methodology" is based on a five step procedure. First, local annual energy consumption is estimated. Four basic land use sectors are identified: residential, commercial, industrial, and transportation. Within each sector, subsectors are analyzed as well. For example, the residential sector contains subsectors for single family, multi-family, and mobile home housing.
Energy supplies and their demand are assessed in each sector. On the supply side, electricity, natural gas, heating oil, gasoline, diesel, LPG, coal, and wood consumption are tabulated. Once all supplies are accounted for, their end use, or demand, is determined for each sector. For example, in the residential sector, end uses are space heating, hot water heating, cooling, cooking, lighting, and miscellaneous electric needs.
The second step involves projecting energy


11
consumption to the year 2000. Typically, historical data
is used in either a linear or a modified linear equation.
Energy intensities are assumed to remain constant in the
5
four sectors between the present and the year 2000. The
residential and transportation sector projections are
based on population, whereas in the industrial and
commercial sectors, the volume of goods and services is
considered more closely related to consumption than 6
population.
The third step estimates potential energy savings
7
based on an aggressive energy conservation program. End
uses are analyzed to determine where improvements in
8
efficiency can occur. End uses in each sector (e.g. residential space heating, cooling, electricity, etc.) are calculated for potential energy savings by the year 2000.
Step Four assesses the available renewable energy
resources in the community, and their potential to supply
each subsector beyond improvements realized through 9
conservation. The final step is to initiate community action to reduce local energy consumption. Strategies and policies are designed for each sector and implemented through political and social support.
The Benson methodology thus offers a distinctive community based approach to analyzing a local energy situation. The methodology emphasizes the determination of current and future energy patterns and the analysis of end uses. The methodology also embodies several links to economic considerations, which will be discussed further in subsequent chapters.


12
Economic Development
Economic development is the art and science of
maximizing the net inflow of resources within a community.
Economic development planning measures are designed to
attract new commerce and industry, generate jobs, secure
and expand the economic base, and raise revenues.
Economic development also involves the appropriation of
resources among people, places, and sectors of economic
activity through systems based on equity and necessity.
Traditionally, these goals have been accomplished
through "smokestack chasing" or, more recently, "chip
chasing", the process of outbidding another community for
a limited number of industries or high tech corporations.
Of the few communities that succeed in attracting a
transplant, many may not experience a net gain due to the
high cost of providing infrastructure, tax breaks, and
10
importing workers and exporting profits. Further, the
result of these opportunity costs may involve excessive
dependence on a too highly specialized economic base,
11
vulnerable to world resource prices.
To offset such risks, resources must be allocated
based on their opportunity costs and their relative
efficiency in creating a net economic benefit. The
higher the efficiency achieved, the greater the value
12
extracted from local resources. The benefits of
an efficient and diverse local economy are reflected
in its increased competitive standing and competitive
advantage. Competitive standing is determined by
comparing the profits a firm would realize if it were to
13
locate in one community versus another. Competitive


13
advantage is the ability to attract a firm based on a community's attributes and incentives.
Techniques to effectively maximize and allocate local resources include export production, import substitution, job creation, attracting external investment capital, export valorization, and improving government taxing and spending practices. Select definitions of specific techniques investigated for this research are in order.
Import substitution, whereby local resources are
substituted for imported products, is a potential method
of maximizing and allocating resources for local economic
benefit. Import substitution benefits the local economy
by decreasing the amount of dollars leaving the community
to pay for imports, thereby leading to economic 14
prosperity through increases in locally spent money.
Self reliance is thus developed from within, rather than
from outside, a community.
Several terms regarding job creation as an
economic development technique/objective require
identification. "Non-basic" employment, where jobs are
created because of a need to provide goods and services
to community residents, is emphasized over "basic"
employment, defined as jobs which bring outside money
15
into a community. Non-basic employment offers a greater
prospect for multiplying jobs through the creation of
jobs directly and indirectly in the manufacture and
supply of materials, equipment, and services required 16
on-site. "Direct" jobs are those held by employees in any industry producing or installing a product, in this


14
case, energy conservation or renewable energy equipment.
"Indirect" jobs are those held by employees of industries
that provide goods and services to those that produce 17
equipment. The concept of "induced" employment involves
local employment created by the spending of income earned
by the workforce involved in onsite and multiplier 18
employment, whereas "substitution" jobs are created as
savings from reduced energy consumption are spent in the 19
local economy.
The process of economic development planning involves two components: 1) public involvement and 2) an internal economic change within a community. Generally, constituents are mobilized, problems are inventoried, goals are set, development potential is assessed, strategies are identified, selected and implemented, and the entire effort is then monitored. One excellent application of these economic development concepts is that of the Economic Renewal methodology. Again, this example is identified by way of example, and not by limitation. This particular methodology is chosen due to its kinship to the "Benson Methodology" identified earlier, as well as its potential application within this research .
Developed by Amory and Hunter Lovins and the Rocky Mountain Institute in Colorado, the methodology emphasizes economic renewal through resource management. Community self-reliance is sought in the areas of food and agriculture, health care, housing, waste management, finance and capital, in addition to energy programs.
The Economic Renewal methodology consists of


15
20
seven steps. The first step is community participation.
Citizens, business and community leaders are contacted
and recruited to represent as diverse a background as
possible. Ideological diversification is not only
important for issue identification but critical to the
future acceptance of recommendations and the effective
implementation of policies.
Step two is a community meeting, where the
purpose and process of the project is explained, open
discussion is encouraged, and any questions and concerns
21
can be addressed. Issues are identified and ideas are
generated. The Rocky Mountain Institute or other
qualified consultant would act as project manager,
performing the presentation of program objectives and
fielding questions and concerns.
A third step, a start-up conference, introduces
the "nuts and bolts" of economic development, including
workbooks, presentations on local and national economic
22
issues, and supporting documentation. Participants are
trained to perform economic planning for their community.
23
Step four is a resource analysis. Groups are
organized to focus on each area of self-reliance(e.g. food
and agriculture, health care, etc.). Three economic
24
objectives are identified:
1. Plugging unnecessary leaks of money from the community,
2. Strengthening existing businesses, and
3. Encouraging new local entreprenuers.
Local opportunities are examined for each of these objectives and an evaluation criteria is developed to analyze potential programs, based on values identified


16
in the second step.
Upon completion of the resource analysis, two
separate groups are formed; one to review the criteria
and the other to examine programs and strategies that
25
will strengthen the economy. This latter group also
identifies a fourth objective that of recruiting
outside businesses. However, it is important that new
companies compliment local resources, and not adversely
impact the economic base. For this reason, very careful
selection for "objective-compatable" firms is necessary.
Step Six is the formulation of a plan to
revitilize the local economy. The criteria is used as an
evaluation tool to prioritize proposed programs and 26
policies. A cost/benefit analysis is undertaken to make
27
final determinations.
The final step is the implementation process.
The results of the cost/benefit analysis are weighed
against additional factors commitment, controversy,
short and long term results, required publicity, ultimate
value to the community, abilty to monitor with the most
28
economically viable programs implemented.
The Economic Renewal methodology thus offers a conceptual toolkit which provides a systematic decision making format for economic development activities. Needs are identified, appropriate programs are designed, and local resources are utilized to implement these programs.
Both energy planning and economic development practices can be initiated as methods to improve resource allocation and self reliance by community action.
Although the examples are valid descriptions of practical


17
approaches, some revision would be required to be applicable as a synthesized energy planning/economic development approach. Prior to determining the value of such a synthesis, the significance of linkages between energy planning and economic development must be explored.


18
NOTES
CHAPTER II
1. John H. Alschuler, "Using Local Energy Programs for Economic Development", Management Information Service Report, (Wash, D.C.: ICMA, November, 1980), p. 5 .
2. Alschuler, p. 2.
3. Colorado Office of Energy Conservation, Community Energy Planning: The Basic Elements, (Denver: Department of Regulatory Agencies, 1982), p. 18.
4. Amory Lovins, Brittle Power: Energy Strategy for National Security, (Andover, Ma.: Brick House, 1982), p. 307.
5. Alan Okagaki and Jim Benson, County Energy Plan Guidebook: Creating a Renewable Energy Future, (Fairfax, Va.: Institute for Ecological Policies,
1979), p. 5- -1 .
6. Okagaki and Benson, P 5-2.
7. Okagaki and Benson, P 3-3 .
8. Okagaki and Benson, P 3-3.
9. Okagaki and Benson, P 3-4.
10. Micheal Kinsley, "Economic Renewal Project", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 241.
11. Thomas A. Clark, Community Economic Development: A Primer For Small Cities and Towns, (Denver: University of Colorado, 1985), p. 6.
12. David Morris,"Closing the Loop: Efficiency and Economic Development," Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 3.
13 Clark, p. 37.
14. Rebecca Flora, "Economic Evaluation in Energy Planning" Community Energy Management as an Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 331.
15. Denver Regional Council of Governments, Energy Development Impacts on the Denver Area Economy, (Denver, 1982), p. 69


19
j.6. Steven Buchsbaum, Jobs and Energy, (New York: Council on Economic Priorities, 1979), p. 36.
7. Gary Coates, Jim Dubois and Steve Ernst, "Community Energy Planning as an Economic Development Strategy for Kansas", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 223.
'8. Buchsbaum, p. 36.
9. Coates, p. 223.
20. Rocky Mountain Institute, "Economic Renewal Project Demonstration Packet," (Old Snowmass, Co.: Rocky Mountain Institute, 1986), p. 9.
21. Ibid
22. Rocky Mountain Institute, P 10
23. Rocky Mountain Institute, P 10
24. Rocky Mountain Institute, P 10
25. Rocky Mountain Institute, P 11
26. Rocky Mountain Institute, P 11
27. Rocky Mountain Institute, P 11
28. Rocky Mountain Institute, P 11


CHAPTER III
SIGNIFICANT LINKS AND IMPACTS
A community's potential to maximize the production, distribution, and conservation of energy
su
jplies lies in its ability to manage energy through
proper planning. Many opportunities exist to achieve the goals of economic development objectives: maximizing exports, minimizing imports, job creation, sales tax generation, competitive advantage, and reduced municipal expenditures. Recognizing the inherant relationships between energy management practices and economic development objectives offers new possibilities for planning strategy and policy development. The significance of these relationships, or linkages, varies upon the impact energy has on a local economy, and the alternatives available to conventional procedures.
Imp
f ou low fra tow
act of Energy on the Local Economy
For one hundred years our economic system was
nded on two basic principles: low operating costs and
disposal costs. The result was an increasingly
1
gmented and energy inefficient economy. Cities and
ns are financially dependent on centralized and imported energy technologies over which they exert little control. With an increase in operation and disposal costs, communities are left with a poor energy system and
a poor economy.


Significant energy price increases between 1974
and 1982 required households, businesses, industries and
municipal and county governments to spend a higher
percentage of their income for energy purchases. These
increases in energy expenditures have contributed to a
series of new trends ranging from increased energy
efficiency improvements to the loss of certain industries 2
and jobs.
Energy price escalation threatens the existence
of individual firms and can weaken a communities
economic strength. Marginal businesses have difficulties
accomodating increases in energy related costs. For
large stable firms, a shift in investment required to pay
for energy resources reduces the capital available to 3
create jobs.
The dollar we spend on energy stays in the
4
economy much more briefly than do other expenditures.
When one dollar is spent on natural gas or petroleum
products, 80 to 95 cents leaves the local economy 5
immediately. When one dollar is spent on a basket of
goods, only about 60 cents leaves the local economy. The
energy we consume comes from Oklahoma, Mexico, South
America or the Middle East. It is transported in tankers
and pipelines owned by a few global oil corporations, and
delivered to us via powerplants and pipelines owned by
6
utjility companies. The massive hemorrhage in the local
edonomy prevents the recycling of money from consumers to
7
businesses to suppliers to manufacturers.
The monetary drain caused by energy price increases and consuming imported supplies not only means


22
less local capital for business investment and less
disposable income for consumers, but less tax revenue
8
generation for local government. Further, energy price
increases impact capital project costs and physical plant
operation. The reduction in funds available for city
services adds pressure to raise taxes or go deeper into 9
deficit. A communitys tax base, job retention and
attraction initiatives, commercial revitalization
pfogram, and comprehensive investment strategy are all 10
vulnerable.
Energy production company stock ownership and interregional and interstate trade has a mitigating
11
effect on the economic drain caused by energy purchases. The impact of this effect is difficult to quantify. However, the impact is certainly insignificant when considering the high percentage of dollars exported and the corresponding economic repercussions locally.
A shift in consumer spending from average consumer purchases to the purchase of energy results in
12
anj overall decline in employment in the national economy. Ma|jor energy producing and energy using industries consume one-third of the nations energy, yet only provide
13
ten percent of the nations jobs. The oil, gas, and eljectricity industries are capital intensive, characterized by relatively few jobs per dollar of investment. The industries that supply the plant and equipment are generally capital intensive as well, resulting in relatively low amounts of employment
14
supported by energy production. Power stations are so capital intensive that each one thousand megawatt plant


built destroys almost four thousand net jobs by starving
15
other sectors for capital. Additionally, approximately
$lj00,000.00 in capital is necessary to create one job in
16
tHe petroleum or nuclear energy industries. Table Two sljows the relationship between energy and employment on various industries. In general the less energy intensive the industry, the greater is the possiblity for job creation.
Table Two
Energy and Employment by Industry
Energy Per Employees Per
Dollar Value Added Dollar Value Added Industry Group ( Thousand BTU/$ ) ( Emp./Million $ )
Light Industry 10.5 90
Medium Industry 32 100
Mining & Metals 72 59
Paiper & Chemicals 129 62
Source: The Planner's Energy Workbook, T. Owen Carrol.
An important hidden cost of energy is that of
federal energy subsidies. The primary effect of
subsidies becomes one of concealing real commercial
erjergy costs, misallocating scarce capital and disrupting
17
fair competition between energy sources. Retail
overhead costs, which include building energy charges,
arje passed along to the consumer in the form of higher
prjiced goods. Any restriction on price means a smaller
supply in the future because of less investment in the 18
present. By disrupting competition and favoring high cost energy supplies, subsidies rob consumers of the
19
opportunity to choose the most efficient energy options.


24
The economic impacts of energy consumption
extend beyond price considerations, including uncertain
external costs of toxic chemical and radioactive waste
disposal, the emission of pollutants, and the threat to
global and national security through exhaustion of non-
20
renewable resources. These external costs are also difficult to quantify, although they affect a city's competitive standing.
A communities competitive standing is also
weakened by a persistent inability to ensure energy 21
supplies. Supply interruptions directly result in
22
decreased economic output and increased unemployment.
Workers are deprived of income, and businesses a return
23
on their investment. The increased cost of energy for transportation, space heating, and processing can result
24
in business closures or relocation, costing workers jobs.
Fjjrms may look to more stable energy markets, with the
impacted commmunity suffering a competitive disadvantage.
However, energy costs will not be a major determinant of
locational decisions for capital dependent businesses nor
heavy energy users which must remain close to sources of
25
skilled labor, natural resources, or markets.
Alternatives to Conventional Energy Impacts
Conventional sources of coal, petroleum, and nujclear technologies are the beneficiaries of over $40 billion dollars in subsidies, while renewable reources are supported by just under $300 million dollars, less than 1 percent of non-renewable subsidies. It is important to ensure that the market can fairly compare investments in energy supplies with investments in


25
efficiency and select the most productive use of
26
available capital. Alternatives to conventional energy
impacts must include supplies and technologies that are
competitive. To compete, one must eliminate extraneous
markups and transaction costs, sell in unregulated retail
markets whenever possible, and design business plans to
27
be indifferent to world oil price.
Comparing the costs of alternative with
conventional energy sources is further complicated by
local factors: the availability of fuel, the price of
fuel, the efficiency of the fuel burned (coal, natural
gas, and fuel oil all lose roughly 4% efficiency per 1000
feet of altitude), and the efficiency of the existing 28
appliance. The costs of conventional sources include
that of the existing delivery system to the consumer.
The price of energy from renewable sources depends on
1) their initial capital cost, 2) the cost of financing,
3) the amount of energy supplied annually, and 4) the
29
amount and type of storage required.
Despite the complexity of renewable and non-renewable price comparisons, two principles can simplify economic choices: 1) base investment decisions on uncertainty of oil price, external costs, the rising real costs of non-renewable sources and the reduction of renewable energy costs, and 2) renewable sources offer a greater scope of application suitable to local
30
construction with limited skills and common materials.
In addition, as renewable technologies move into mass production and as new innovations and technical developments occur, the costs of renewable energy


26
31
technologies will decrease. The application of renewable
technologies is thus inherently advantageous to local
communities due to its economies of scale and its
excellent investment potential.
Capitalizing on the new opportunities created by
shifts in energy pricing and energy sources can lead to
32
substantial growth in the local economy. Programs that
encourage energy self reliance reduce the city's cash
hemorrhage and, recycling money in the economy, create 33
jobs. Investments that reduce the outflow of money
involve more local businesses than money spent on new
34
power plants or new oil wells. Even where vulnerable and costly imports are not completely displaced, as is practically improbable for most communities, renewable
energy sources create local income which can help pay for
35
remaining imports.
Investments in conservation and such indigenous fuel sources as solar energy benefit the economy in several ways; a dollar spent locally tends to multiply
its benefits, as much as 2.5 times its value in total
36
economic activity. In addition, efficiency and
renewable resource technology investments are counter-
inflationary, since energy services are provided at
37
little or no additional costs once in place. However,
the magnitude of the fuel dollars saved depends on the
fuel mix and the amount of fuel imported. The amount of
money retained in the community as a result of displacing
imports can be lessened because the replacement
38
technology may cause dollar outflows.
Communities having a work force with a large


27
diversified job skill base will retain a larger share of
any construction related jobs associated with an energy
39
development activity. Employment opportunities exist for
energy efficient equipment construction, planners,
architects, engineers, and energy specialists in the
field of insulation, heat pumps, electronic controls and
40
systems analyses, communications and transportation.
Typically, these jobs are held within small firms
employing less than 50 people, which are responsible for
41
over two thirds of all new jobs created nationally. The increase in disposable income from reduced energy expenditures will create substitute employment, predominately in the form of service industries.
Supply Side Linkages
Several alternative energy technologies which can be substituted to varying degrees with conventional energy technologies offer potential for accomplishing economic development objectives.
These technologies include active and passive solar, wind, hydroelectric, biomass and geothermal energy.
Solar Energy
The value of solar energy is as a fuel saving
device to offset the use of other more valuble fossil 42
fuels. Solar energy technologies include both active and passive systems. Passive systems are more cost effective than active systems, can be effectively incorporated into new housing stock, and provide a long term economic benefit to both the building owner and the community.


28
Passive solar requires minimal added design and
construction cost, estimated at between 3 percent and
10 percent of conventional construction, with payback
from utility bill savings in two to five years for the 43
homeowner. A 5 percent addition to building costs will achieve 30 50 percent of the building heating by passive solar, depending on the local climate and
44
occupant use patterns. Residential space heating, though
not cost effective in retrofit applications as is solar
water heating, is competitive with oil and electricity in
45
new construction.
As a result of passive solar construction,
improved resale values for homes with low heating costs
and an increased rental demand for energy efficient
office space will occur. A reduced monthly energy
payment directly increases a businesses profit potential
46
or a homeowners ability to make payments.
In order to bring solar costs down, mass 47
production is needed. Jobs created for the solar
industry include carpenters, cement masons, electricians,
plumbers, sheet metal workers, air conditioning, heating,
and refridgeration technicians, glaziers, and crane
operators, with new jobs potentially in solar engineering,
architecture, law, real estate and appraisal, sales,
48
zoning, assessment and consumer protection.
Wind Energy
The economic feasibility of Wind Energy Conversion Systems (WECS) depends greatly on local wind


29
speeds. Generally, an average annual wind speed of ten
to twelve miles per hour is needed to run a wind system 49
economically.
By comparing the cost per kilowatt-hour of a wind system with that currently being charged by the local utility company, feasibility can be readily determined. Factors entering into the cost of a WECS system, as with most renewable supplies, include planning, design, material, construction, storage, operation and maintenance costs.
The operation and maintenance of large wind
energy systems requires two to four times the labor force
on a continuous basis as do nuclear fission or coal fired
systems. Employment is also provided in the generator
and electrical component manufacture, sheet metal and
structure steel fabrication, and cement and wire 50
production.
Hydroelectric Energy
Hydroelectric power is renewable, buffered from
price increases, and can be produced in or adjacent to
51
many American communities. As with wind systems, small
scale hydroelectric is best utilized as a fuel saving
device deriving its economic value from the quantity of
fuels saved by conventional power plants not required
52
during hydro generation periods.
Hydropower can be produced for as little as one-
third of one cent per kilowatt hour with existing
facilities. Newly installed hydropower will cost between
53
1.5 cents and 8.0 cents per kilowatt-hour. Although competitive for the long term, initial investment costs


30
for hydroelectric facilities are high. Additionally, transmission costs are dependent on a plants proximity to the end use area, costing between $16,000.00 and
54
$40,000.00 per mile to construct transmission lines.
Because small scale hydroelectric generation is
characterized by a high initial capital outlay, the
abilty to gaurantee debt service is of critical
55
importance in determining economic feasibility. The
Windfall Profits Act of 1980 allows Industrial
Development Bonds to be issued for hydro-electric
projects if 1) the issue is less than 1 million dollars,
or 2) the power serves no more than two contiguous
counties, or 3) the dam was owned by a municipality prior
to October 1979 and has a capacity of less than 125 mega-56
watts.
Biomass
Waste collected and disposed daily of daily at
great expense to our cities and counties is a potential
energy and economic resource. Two factors contribute to
the attractiveness of "garbage" energy: 1) long term
costs of controlling leachate and gas migration
significantly narrow the economic gap between landfilling
and resource recovery practices, 2) transportation costs
57
are escalating due to increasingly distant landfills.
Fuel price increases in the future will only aggravate
the transportation expense.
One ton of municipal waste has the heat value of
about 1.4 barrels of residual fuel oil or one third ton
58
of anthracite coal. Options for the use of the large


31
amounts of energy available from solid waste include
industrial production, institutional heating, electrical
59
generation and district heating.
Capital costs are in the range of $25,000.00 to
$40,000.00 per ton of installed capacity. Thus, a
conventional 200 ton per day facility for a community of
50,000 people will cost approximately $4.0 million to
60
design and install.
In addition to generating energy from waste,
resource recovery offsets the embodied energy costs of
creating new products. The chief economic benefits of
recycling are proceeds from selling the recovered
materials and the savings realized from avoided disposal 61
costs. Further, markets exist for iron, steel, aluminum,
newsprint, cardboard, mixed paper, used motor oil and 62
glass. The basic steps for determining the feasibility
of recycling are 1) assessing the quantity and the
composition of the waste, 2) surveying practical markets,
3) selecting an appropriate jurisdictional approach, 4)
conducting an economic feasibility study, 5) securing
63
markets and 6) obtaining financing.
Wood and alcohol fuels are two other forms of
biomass supply. These supplies, while abundant, cannot
be applied as widely within the United States as can
waste energy and resource recovery technologies.
Sources of wood fuel include mill, logging, and
forest residues. Because of the low energy density of
wood waste material, conversion must occur near forested 64
areas. Wood fired steam or electric generating plants will be higher in capital and operating costs than oil


32
65
or coal-fired plants, but much lower in fuel costs. Several smaller communities may find wood fuels to be practical as a substitution for imported fuels on a limited basis.
Alcohol fuels are the primary alternative energy
66
source for the transportation sector. The primary market
for ethanol is blending with unleaded gasoline for
67
commercial gasahol. However, the potential markets for
gasahol are expanding with recent mandates to offset air
pollution buildup in metropolitan areas.
One of the biggest problems of alcohol fuel
production is the significant cost associated with
harvesting, transporting, and handling low density,
high moisture feedstocks. Processing plants should be
68
therefore be located as close as possible to feedlots. Many agricultural communities have the potential to exploit alcohol fuel production as an economic base.
Geothermal Energy
The economic viability of geothermal development
is entirely site specific, dependent on resource depth,
overlaying geologic features, the temperature,
marketability and chemical makeup of the fluid, the
proximity to end uses, as well as planning, financing,
69
equipment, and distribution costs.
The greatest impediment to geothermal resource development is the financial risk assosciated with
70
resource capacity lasting for the life of the plant.
Another stumbling block for small communities is the high
71
cost of test drilling necessary to determine viability.


33
72
Most resources are too deep for economic development. District Heating
Low temperature distric heating is a method
of distributing a heating source to residences,
businesses, and industry from either power plant
waste heat or other thermal source. Feasibility will be
dependent on a number of factors, including: 1) a
reliable source of thermal energy readily available close
to one or more customers who needed it, 2) few or no
legal obstacles, 3) funding on hand for design and
initial capital financing, 4) private-public cooperation,
73
and 5) high costs for competing fuels.
District heating systems can be used for military
installations, university campuses, government complexes,
74
and commercial, retail, and industrial complexes.
An economic linkage is evident with industrial parks
where the central power plant is the hub of a district
heating system supplying low cost heat to resident 75
businesses. Another excellent candidate for service
are public housing projects, because they tend to
have relatively high heat loads and are in a position
76
to sign long term service contracts. Reducing energy costs for low income families provides additional disposable income which, in turn, stimulates economic growth for businesses in depressed and often blighted areas.
Another form of low temperature energy extraction applicable to communities with wastewater treatment facilities has become available through the use of heat


34
pump technology. Heat pumps can be used to transfer the
available energy from wastewater to the return lines of a
77
municipal district heating system. A wastewater facility could be advantageous as an energy producer if an
industrial or business park is sited nearby.
Table Three summarizes the alternative energy
supplies and related economic benefits they can
contribute to a community.
Table Three Summary of Supply Benefits
Solar Wind Bio- Geo- Hydro mass thermal District Heating
Reduce Energy Costs X X X X X
Reduce Dollar Outflow X X
Increase Local Sales X X X
Creates New Industry X X
Retains Local Industry X X
Creates New Employment X X X X
Demand Side Linkages
The reduction in energy demand within residential, commercial, industrial, transportation, and municipal sectors can significantly benefit local economic development efforts. In contrast to most supply alternatives, energy conservation strategies yield benefits directly to the population of the community, the


35
78
energy end users.
Conservation can be broken down into two types
of measures: 1) life style changes, and 2) technical 79
improvements. Life style changes do not mean that
one's comfort level must be diminished, but rather
habits are changed as a result of an increased
awareness of one's use of energy. Examples of life
style changes are thermostat setbacks during sleeping
hours, using stairs rather than elevators, minimizing
separate trips to the store, etc. With technical
improvement conservation, an initial investment is made
which is recovered over the life of the equipment through
reduced energy consumption, and the resulting reduced
80
monetary expenditure for the energy. An optimal level of
conservation exists for each item of energy efficient 81
equipment.
Regardless of the ultimate extent of efficiency
available, the one time cost of implementing energy
efficiency measures rather than annual subsidies to
82
production provide enormous long term savings.
A new kilowatt of capacity can cost between 7 cents and
10 cents. If an investment in conservation eliminates
the requirement for new capacity, both utility
83
stockholder and energy consumer benefit. The object is
to deliver energy rather than to merely install the
capacity to put energy into a distribution system. The
goal should therefore be to build the energy system which
will perform the desired energy services at the lowest
84
possible economic cost.
The level of conservation possible is determined


36
by the following factors and assumes no government intervention in the form of subsidies: 1) cost
effectiveness, 2) public knowledge of technologies,
3) the financial risk and uncertainty of technologies,
4) the support given technologies by banks, insurance
companies, local governments, and regulatory agencies,
and 5) the current and future shortages of supplies and
85
manpower to install the technologies. However, the
degree of conservation feasible may depend more on market
86
acceptance than pure cost effectiveness.
In addition to fuel savings, energy conservation
practices are capable of producing a number of jobs with
a minimum of skills required, drawing on local unemployed
labor supplies. Rehabilitation and retrofit create more
87
jobs per dollar than comparable new construction. In
general, investments in conservation stimulate jobs but
may not always increase disposable income in an area
where electricity is generated locally and natural gas is
imported. This relationship can exist because jobs are
substituted in lower paying service industries for those
88
in higher paying utility industries.
Specific methods to reduce energy demand in the residential, commercial, industrial, transportation and municipal sectors include weatherizing buildings, improving equipment and appliance efficiencies, promoting alternative transportation modes, and regulating energy intensive land use activities through local codes and ordinances.
The adoption of agressive new building standards results in several economic benefits, including 1) lower


37
rates for homeowners and businesses, 2) reduced payments
out of the community, 3) positive impacts on other
ratepayers in the region, 4) additional expenditures that
stimulate further community spending and 5) lower utility
89
bills for occupants of new structures. Still another
potential benefit is that of increased property values
90
and ultimately increased property tax yields.
The relationship' between energy demand reduction and economic development objectives is summarized in Table Four.
Table Four
Summary of Demand-Side Benefits
Equipment Alternative Local Retrofit Efficiency Trans. Modes Codes
Reduce Energy x
Costs
Reduce Dollar x
Outflow
Increase x
Local Sales
Create New x
Industry
Retain Local Industry
Create New x
Employment
x
x
X
X
X
X
X
X
Energy supply and demand side linkages to economic development objectives offer a base from which justification for action can be developed. Strategy development shall be discussed in the following chapter.


38
NOTES
CHAPTER III
|1. David Morris, "Closing the Loop: Efficiency and
Economic Development", Community Energy Management As An Economic Development Strategy, (Lincoln:
Nebraska Energy Office, 1984), p. 1.
2. Donald Macke, "The Impact of Imported Energy on Communities: Nebraska Case Study", Community
Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 317.
3. John H. Alschuler, "Using Local Energy Programs for Economic Development" Management Information Service Report, (Wash. D.C.: ICMA, November, 1980), p. 3 .
4. David Morris, Self Reliant Cities: Energy and the Transformation of Urban America, (San Francisco:
Sierra Club, 1982), p. 129.
5. Roger Tinklenberg, "Economic Implications of Climate Appropriate Residential Design", Community Energy Management As An Economic Development Strategy,
(Lincoln: Nebraska Energy Office, 1984), p. 102.
6. Morris, Self Reliant Cities, p. 189.
7. Alschuler, p. 3.
8. Center for Renewable Resources, Renewable Energy in Cities, (New York: Van Nostrand Reinhold, 1984), p. 4.
9. Amory Lovins and Hunter Lovins, Brittle Power: Energy Strategy for National Security, (Andover, Ma. : Brick House, 1982), p. 308.
10. Alschuler, p. 1
11. Tinklenberg, p. 102.
12. Steven Buchsbaum, Jobs and Energy, (New York: Council on Economic Priorities, 1979), p. 59.
13. Richard Grossman and Gail Daneker, Energy Jobs, and the Economy, (Boston: Alyson Publications, 1979,) p. 29.
14. Buchsbaum, p. 63.
15. Amory Lovins and Hunter Lovins, p. 285.


39
16. Grossman and Daneker, p. 14.
17. Center for Renewable Resources, The Hidden Costs of Energy, (Washington, D.C.: Center for Renewable Resources, 1985), p. 4.
18. "Economist: U.S. Will Never Run Out of Oil, Natural Gas," Rocky Mountain News, 15 April 1981, P. 75.
|19. Center for Renewable Resources, The Hidden Costs of Energy, p. 2.
20. Skip Laitner, "An Evaluation Matrix for Public Policymakers Comparing Local Energy Investments", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984),
p. 110.
21. Alschuler, p. 2.
22. Alschuler, p. 2.
23. Alschuler p 2 .
24. Alschuler, p. 1.
25. Alschuler, p. 4.
26. SERI, A New Prosperity: Building a Sustainable Energy Future, (Andover, Ma. : Brick House, 1981),
p. 2 .
27. Amory Lovins and Hunter Lovins, "The State of the Movement," RAIN, October/November 1983, p. 14.
28. Colorado Office of Energy Conservation, Renewable Resources in Colorado: Opportunities for Local Governments, (Denver: Department of Regulatory Agencies, 1981), p. 26.
29. Amory Lovins and Hunter Lovins, Brittle Power, p. 374.
30. Amory Lovins and Hunter Lovins, Brittle Power, p. 378.
31. Alan Okagaki and Jim Benson, County Energy Plan Guidebook, (Fairfax, Va.: Institute for Ecological Policies, 1979), p. 2-4.
32. Alschuler, p. 1.
^3. Morris, Self Reliant Cities, p. 130.
34. Morris, Self Reliant Cities, p. 130
35. Lovins, Brittle Power, p. 306
36. Morris, Self Reliant Cities, p. 129
37. Lovins, Brittle Power, p. 285.


38. U.S. Department of Housing and Urban Development,
Office of Community Planning and Development, Energy Division,"Energy and Economic Development: A Report on the Efforts of Ten Localities Selected to Document the Relationship Between Energy Strategies and Economic Development,"(Springfield Va.: SES Inc.,
November, 1985), p. 3.
39. U.S. Department of Housing and Urban Development, p. A.
40. Grossman and Daneker, p. 54.
41. Micheal Kinsley, "Economic Renewal Project", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984) p. 246.
42. Richard T. Sheahan, Alternative Energy Sources,
(London: Aspen Publications, 1981), p. 37.
^3. Colorado Office of Energy Conservation, p. 26.
44. Northern Energy Corporation, Planning the Energy Efficient Community, (Boston: Northern Energy Corp., 1981 ) p. 187 .
j45. Northern Energy Corp., p. 192.
46. Northern Energy Corp., p. 188.
47. Center for Renewable Resources, Renewable Energy in Cities, p. 17.
j48. Grossman, p.70.
(49. Northern Energy Corp., p. 15.
50. Grossman, p. 72.
|51 Alschuler , p. 7
|52 Sheahan , p 86 .
53 Northern Energy Corp., p . 210.
54. Colorado Office of Energy Conservation, P- 49.
£5 Colorado Office of Energy Conservation, P - 50.
56. Colorado Office of Energy Conservation, P- 50.
57. Colorado Office o f Ene r g y Conservation, P 54.
58. Northern Energy Corp., p. 19 .
^9. Phil Oleary, Patrick Walsh, and Frank Cross, "Energy
Production and Markets", Waste Age, March, 1987, p. 71.
60. Northern Energy Corp., p. 221
61. Colorado Office of Energy Conservation, p. 55.


62 . Colorado Office of Energy Conservation, P 55.
63 . Colorado Office of Energy Conservation, P- 58.
64. Sheahan, p. 113.
65 . Center for Renewable Resources, p. 317.
66 . Sheahan, p. 157.
67 . Sheahan, p. 172.
68 . Sheahan, p. 173.
69. Colorado Office of Energy Conservation, P 63.
70. Sheahan, p. 189.
71 . Micheal J. Meshenberg, John Tschanz and Norman Kron,
"District Heating and Cooling Systems and Community Development: Some Preliminary Observations", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 40.
72. Sheahan, p. 189.
{73. Meshenberg, p. 40.
74. Meshenberg, p. 34.
75. Morris,"Closing the Loop", p. 3.
76. Meshenberg, p. 46.
77. Eino Kainlauri, "Energy Planning and Community Energy Systems as Observed in Europe and the USA", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 151.
78. U.S. Department of Housing and Urban Development, p. 23.
79. Okagaki and Benson, p. 6-2.
80. Okagaki and Benson, p. 6-2.
81. Okagaki and Benson, p. 6-2.
82. Center for Renewable Resources, Renewable Energy in Cities,
p. 21 ---------------------------
83. Alschuler, p. 12.
84. Lovins, Brittle Power, p. 222.
$5. Okagaki and Benson, p. 6-4.
86. Okagaki and Benson, p. 6-4.


42
87. James Masler, Fredrick Quivak and Ralph Wittcoff,
"Superinsulation Retrofits: An Effective Integration of Community Economic Development and Community Energy Management", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 10.
88. Nicholas Hall, "Economic Development Through Community Energy Management in Peoria, Illinois", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 206.
89. Jacob Fey, "Energy Efficient Energy Codes and Community Economic Benefits", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p. 125.


CHAPTER IV
DEVELOPING STRATEGIES
The fact that linkages exist between community energy management and economic development objectives ojily serves to identify planning potential. The next t^sk is to examine the factors which can contribute to the development of local energy management as an economic development strategy. These factors include the role of l^cal government, utility companies, and financing mechanisms. Once opportunities and barriers have been identified, a planning strategy can be designed for application to American cities and towns.
Opportunities and Barriers
A community's ability to implement programs designed to stimulate economic development is distinctly different from its ability to implement programs to reduce energy demand and develop alternative energy technologies. The difference lies in the perception of community leaders, the decision makers. Education plays an important role in changing public perception. Beyond education, many opportunities and barriers exist to close tl|e gap between energy planning and economic development as separate programs with disparate objectives.
The most significant opportunity lies with local authority. Local government can take a leadership role through clearly identifying the linkage between energy


se and community activities, establishing reasonable olicies, and implementing programs to minimize energy
1
emand and maximize local contributions to energy supply.
ommunity leaders need the foresight to anticipate
hanges in energy supply and cost, and to make long range
Ians so that their local economy can adjust to changes
2
n the energy situation.
Not every community will benefit equally from
nergy management. As each community has unique
haracteristics, so goes its potential to stimulate its
conomy through proper energy management. The amount of
money that remains in a community is a function of the
3
type of replacement energy fuel and delivery system.
Further, the more diverse the communities economic base
is, the greater the potential for retaining a larger
4
share of the energy dollar. The overiding measure of success, however, will be the capability of local government management functions. The planning process requires that the policy and administrative leadership in a community define energy management as an essential
5
component of a community economic development strategy.
Barriers to municipal activity include
1) uninformed leadership, 2) insufficient control of
^nergy distribution, 3) lack of financial resources,
4) insufficient regulatory authority, 5) the obligations
of crisis management, and 6) the absence of a cohesive
6
political constituency. Local business and neighborhood leaders must become informed of the innovation possible
in order to effectuate change. Without the cooperation of these individuals and groups, a political constituency


[cannot be formed. The need for cooperation extends
Jbeyond local leaders to the energy producers and
distributors the utility companies.
The system consisting of the utility company and
7
Jits customers is burdened with extensive market failure.
The utility evaluates an investment over the life of a
Jpower plant, while the homeowner or businessman wants an
8
Jinvestment that repays itself in two or three years.
JOther examples of the inability of the present energy
supply and delivery system to function adequately can be
seen throughout our society. Low income families and
jsenior citizens on fixed incomes cannot absorb price
jincreases or afford many conservation measures.
Landlords are unwilling, as are tenants, to invest in
[improvements that will benefit both parties. Businesses
Ipass along energy costs to consumers that are unaware of
9
pricing mechanisms. Financial institutions are unwilling jto recognize the value of energy reduction practices in lending and mortgage criteria.
The lack of an industry that can provide energy Jconservation in a single package deal coupled with the {lack of a comprehensive government policy that {establishes energy efficiency as a priority will only serve to prolong the impacts of market failure. Utility [companies must work together with local governments to bliminate market failures inherent in the present system, and to thereby create new opprtunities for market successes.
Utilities companies should rethink management practices to include the following precepts: 1) energy


46
conservation is a producible energy resource, 2) where new capacity is proven necessary, and conservation generated capacity is cheaper than conventional fuel generated capacity, conservation investments should always be developed first, and 3) every utility should incorporate into its resource development plans
10
significant quantities of consumer produced energy.
Wherever renewable supplies can be promoted, utilities
should take an active role in their development. In fact,
1978 federal legislation requires electric utilities to
purchase surplus power produced by renewable resources at
11
a price reflecting new power costs. Conceptions of cooperation resulting in profit losses are outdated and in fact costly: new opportunities to supply consumers and offset long term debt should be actively sought, not shunned .
Several regulatory barriers must be removed in
the utility industry to encourage a greater level of
cooperation. Barriers in the utility sector include
insufficient hookups, regulation of rate return right of
way problems, capital availability, siting requirements,
12
and public opposition to retrofit. State and local
actions possible for inducement include allowing
utilities to finance hookups, establishing service rates
favorable to consumers, allowing utilities an adequate
rate of return, grant utilities right of way, and ease
13
power plant siting requirements.
The lack of financial resources to pay for energy management is the most popular perceived barrier to implementation. Communities will have to


47
attract huge amounts of investment capital to increase
the efficiency of their buildings, vehicles, and
Equipment and to construct and operate humanly scaled
14
^nergy production systems. Financing is a problem for
lousinesses, due to the limited amount of credit available
or the prevailing interest rate, or too long of a payback 15
{period. Individuals, especially low income households, have a difficult time financing energy improvements as well .
Local governments are also faced with financing
program costs. Cost of implementation include: 1) direct
cjosts to government associated with program
implementation including staff time, information
dissemination, and monitoring and enforcement, 2) direct
cjosts to government associated with capital expenditures
^nd direct loans and subsidies, 3) indirect costs to
government associated with reduced revenues from taxes,
ijicenses and/or fees, 4) costs to consumers of increased
tax rates necessary to cover the expenses generated by 16
the program. Similar costs can be attributed to energy utility firms, with some adjustment. For example, ijtilities will have higher advertising expenses and ijnterest rates on loans than local governments.
Despite these costs, local governments and energy ijtilities offer the greatest capability to finance renewable technologies and programs aimed at reducing energy demand. Municipalities and energy utilities share several similarities for financing energy self reliance:
I) access to large amounts of capital for long durations,
2j) long range planning, 3) consolidation of future energy


48
17
costs, and 4) accounting of benefits to members. Local
governments have several additional options for financing
community scale energy projects. Possible sources for
funds include the general fund, tax exempt bonds, private
financial markets, and combinations of private and public 18
finance. In general, however, most communities have
Recess to financing projects through some form of
taxation or bonding. Revenue alternatives through
taxation' include the general sales tax, selective sales
tax, use tax, property tax, occupation tax, severence
tax, local income tax, real estate transfer tax, site
value tax, and land value increment tax. Bonding options
include general obligation bonds, revenue bonds, special
Assessment bonds, industrial development bonds, refunding
bonds, mortgage-backed bonds, and arbitrage bonds.
The emerging movement to gain greater democratic
pontrol of pension funds offers a possible future source
bf capital for long term reinvestment in community
19
renewal and energy conservation. Pension funds can
20
be targeted to support particular types of activities. jThus, local governments can use pension funds to enter the secondary market and purchase loans that support ^nergy technologies favorable to their community. This :concept, although attractive, has yet to be tested for effectiveness.
Many barriers and opportunities therefore exist for the development of local energy management as an economic development strategy. With knowledge of these concepts, local policies and programs can be designed for Application as a general economic development strategy..


Strategy Design
A strategy is a set of policies and procedures designed to achieve desired goals and objectives. In this case, local government sponsored alternative energy planning programs are promoted to accomplish community economic objectives. In effect then, energy planning becomes an economic development program.
Two community based methods of accomplishing local energy and economic development planning were discussed in Chapter Two: the Benson and Lovins methodologies. By synthesizing elements of these methodologies, keeping in mind information presented on linkages, barriers and opportunities, coupled with other planning techniques, a comprehensive strategy can be designed. Strategies ideally should be based on their ability to sustain themselves without external funding, that is, self sufficiency should be emphasized.
Task One
The first task in the synthesized planning process is to develop a local coalition of residents, businessmen, utility representatives, and local government policy makers. This coalition will be the power base from which all policy and program development will be initiated. These individuals must be organized, informed, and willing to devote the time necessary to cultivate innovation.
A coalition is developed by arranging community meetings for the purpose of educating citizens as to the


50
relationship between energy management and economic growth. This has the effect of identifying interest Revels, human resources, and potential political Conflicts. After a series of these town meetings, a core df individuals is formed by consensus to develop a community energy management program.
A second objective of Task One is for the coalition to gain political support from the local utility companies and local government authorities. The ability to gain this support is a direct function of the piower of the coalition. By exerting pressure on elected officials, a resolution can be adopted to support the efforts of the coalition. With a community mandate to promote energy management, energy utilities can be approached for their inclusion in the process, if not already involved in the coalition.
Task Two
The second task is for the coalition to collect d)ata on energy supply and consumption and assess the community's current energy situation. This task is accomplished easiest with the help of municipal planners or consultants. However, methods such as those developed by the Institute of Ecological Policies or Hittman Associates are available and can be modified to a particular community by volunteers within the coalition. The results of the energy assessment are to be used to dommunicate the facts about the impact energy has on the Ijocal economy. This will serve as a basis to develop Alternatives as well as a means to attract further
community support.


Task Three
The third task involves the development of alternatives based on linkages to economic development. The overiding linkage to economic development is that of import substitution. All other linkages facilitate and compliment import substitution. Export creation is de-emphasized, although certain communities can utilize this objective through certain energy management practices. Alternatives are established through an analysis of a community's development capacity.
Development capacity is the ability of a
community to attract and implement programs which will
spur economic development. Knowing ones development
capacity will allow a community to realistically choose
alternatives. There are five dimensions to determining
development capacity: 1) local availability of resources
needed to foster development, 2) scale and quality of
public services and facilities, 3) institutional
readiness to induce development, 4) residential
ammenities needed to attract workers, and 5) the existing
21
base of firms within the community.
Only the first three dimensions are important for this strategy. The availability of conservation depends on to what extent building stock has been retrofitted and the indigenous climate. Solar, wind, geothermal, hydroelectric and biomass technologies offer potential to varying degrees, but are relatively site specific.
The available infrastructure to deliver energy services, such as pipelines and electrical transmission networks


52
can be readily determined. The institutional factors
should be resolved in the first step in order for the
coalition to be motivated and effective. Overall, then,
if he determination of development capacity will weigh the
likelihood and efficiency of alternatives being
implemented through simple accounting, assessment, and
organizational analysis.
Once development capacity is established, the
^election of alternatives can proceed. Cost
effectiveness analysis is the standard tool for assessing
22
alternative policies, programs, and strategies. Four
common ways to determine program cost effectiveness are
payback analysis, cash flow analysis, life cycle cost
23
analysis, and benefit/cost analysis. A fifth means to
cjetermine cost effectiveness is that of technical
^valuation. Technical evaluation involves a numerical
measure of the relative importance of each goal, and each
area of negative impact, after which cost effectiveness
24
analysis is used. Since technical evaluation analysis cjffers a broad ability to measure policy as well as program alternatives, its application to this strategy is quite appropriate.
Technical evaluation cost effectiveness analysis
involves the following steps: 1) standardize impact
treasures on a scale of 0 10, 2) apply importance scores
to standardized impact measures, 3) determine cost
effectiveness ratios, 4) convert cost effectiveness
ratios into rankings of strategic alternatives, and
51) combine short and long term rankings into a composite 25
ranking.


53
In many applications, a technical cost Effectiveness analysis may not be practical. Many small tommunities do not have access to the type of data Required to perform a technical analysis, or the Available data may be incomplete. In these cases, a Modified intutive analysis can be used to select Alternatives.
The modified intutive analysis is essentially a means of prioritizing alternatives based on an Assessment of development capacity. Points are Assigned to each alternative based on its economic ^Linkage to the community. The alternatives with the Aighest point totals are implemented first, with jLower point alternatives either a low priority or Aetermined to be inappropriate for the community.
The advantage of an intuitive analysis over a technical analysis is that additional external Measurements are not required. Issues of community Mommittment, political viability and other socio-economic yalues have already been determined. An example of this analysis will be described in the next chapter, when the entire strategy is applied.
Task Four
The fourth and final step is to implement the
Ahosen alternatives. These alternatives can then be
Aromoted through the local governmental authority. A
rule of thumb on promoting alternatives is to use
information programs to stimulate innovation into action,
code enforcement on those who must be directed to take
26
Action, and incentives for the majority. A monitoring


54
process then must follow to quantify results and justify jor abandon particular programs.
The strategy described is specific to local ^nergy management accomplishing economic development [objectives. The strategy is highly adaptable'to a variety pf situations due to its use of development capacity Analysis in conjunction with, or even without, cost jeffectiveness analysis. In the following chapter, the strategy shall be tested.


55
NOTES
CHAPTER IV
jl. U.S. Department of Housing and Urban Development,
Office of Community Planning and Development,
Office of Energy and Management, Energy Division, "Energy and Economic Development: A Report on the Efforts of Ten Localities Selected to Document the Relationship Between Energy Strategies and Economic Development, (Springfield, Va.:, SES Inc., November, 1985), p. 1.
J2. E. Raedene Combs and Susan A. Hanson, "Energy
Management: An Analysis of Community Endeavors", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984) p. 231.
3. U.S. Department of Housing and Urban Development, p. 5.
4. Ibid
5. John H. Alschuler, "Using Local Energy Programs for Economic Development", Management Information Services Report, ICMA, November, 1980, p. 2.
6 . Alschuler, p. 2.
7. Robert Pauls and Chris Robertson, "Capturing Community Economic Potential Through Utility Conservation Investment", Community Energy Management As An Economic Development Strategy, (Lincoln:
Nebraska Energy Office, 1984), p. 281.
8. David Morris, Self Reliant Cities: Energy and the Transformation of Urban America, (San Francisco:
Sierra Club, 1982), p. 181.
|9. Pauls and Robertson, p. 281.
10. Ibid
11. Morris, p. 194.
12. John Regnell, Van Johnston and David Price, "A Changing World for Utilities: Identifying Problems, Issues, and Policy Approaches", Alternative
Energy Sources: Barriers and Incentives, (Englewood, Co ASPA, 1983), p. 147.
13. Regnell, p.147.


56
14 Mor ris, p. 178.
15. Alschuler, p. 11.
16. Colorado Office of Energy Conservation, Community Energy Planning: The Basic Elements, (Denver: Department of Regulatory Agencies, 1982), p. 133.
17. Morris, p. 189.
18. Alice Levine, "Financing Community Energy Products", Alternative Energy Sources: Barriers and Incentives, (American Society for Public Administration, 1983),
p. 162.
19. Micheal Replogle, "Prospects for Energy Efficient Community Transportation in America: Lessons from Home and Abroad", Energy Planning for Communities,
(St. Paul: St. Paul Energy Office, 1985), p. 128.
20 Morris, p. 197.
21. Thomas A. Clark, Community Economic Development: A
Primer for Small Cities and Towns, (Denver: University of Colorado, 1985), p. 35.
22 Clark, p. 53.
23. Rebecca Flora, "Economic Evaluation in Energy Planning", Community Energy Management As An Economic Development Strategy, (Lincoln: Nebraska Energy Office, 1984), p 331 .
24 . Clark, p. 52.
25 . Clark, p. 58.
26. U.S. Department of Housing and Urban Development, p. 12.


CHAPTER FIVE
APPLYING THE STRATEGY
The four task strategy developed in Chapter Four is intentionally generic for adaption and modification to a variety of communities, from small towns to large cities. Large communities have access to capital, technical expertise, and a variety of alternative supply possibilities. The utility network and services necessary to deliver energy is substantially in place, allowing for adaption by new technologies.
The strategy also appears well suited to small towns, in that it intrinsically requires aggregating a number of divergent political interests into a coalition for action. With fewer political interests to organize, the task of gaining momentum to develop programs will progress smoothly. Small towns may have limitations on the ability to develop alternative supplies, although demand side applications would appear especially attractive due to their diversity of application at a common community level.
Since the strategy is geared for achieving economic development objectives through local energy management practices, an appropriate case study would be one that first emphasizes economic development as a community goal. In Colorado, where energy planning has been carried out at both the state and local levels in a variety of instances, only a handful of communities have


58
attempted to justify planning programs on their economic merits. Of these, only one community has attempted to design an energy management program with the expressed purpose of achieving economic development objectives.
The community, Carbondale, will be analyzed through investigation of existing planning efforts coupled with the application of strategy principles. Conclusions as to the effectiveness of the applied strategy will follow the strategy application.
Case Study: Carbondale, Colorado
Carbondale, Colorado, is located in the Roaring Fork Valley between Aspen and Glenwood Springs, with a population approaching 3000 residents. The declining coal industry, from which Carbondale has traditionally relied upon, has created problems of unemployment and business stagnation. Mid-Continent Energy Resources, the areas largest employer, has been forced to intermittantly layoff and rehire scores of coal miners depending on prevailing market conditions. With the town's reliance on the mining industry, it is faced with a constant "boom or bust" cyclic economy.
In 1983, a community based effort to change prevailing economic conditions through self reliance was initiated in Carbondale. Dubbed the "Pioneer Project", the effort was based on the Economic Renewal methodolgy (discussed in Chapter Two) and underwritten by a $70,000 grant. The Pioneer Project sought to spur economic activity through programs in agriculture, water conservation, health care, housing, financing, and energy


59
planning. The Pioneer Project was completed in February of 1987, to varying degrees of success.
The purpose here is not to detail the Pioneer Project itself, but to analyze the relationship energy management planning has on the economic development of |Carbondale through "grassroots" community action. The analysis will include past planning efforts, current |programs, and future prospects.
Application of Task One
The first step in using energy management to |accomplish economic development objectives is to develop a broad based coalition. In Carbondale, this coalition jconsisted of bankers, miners, students, retailers, utility representatives, the Chamber of Commerce, Jrealtors, and the local media.
The level of success Carbondale had in developing !its coalition is remarkable. Town meetings attracted capacity crowds to discuss their economic situation and !how they could move forward. Although these meetings were not held to specifically address energy management as a strategy, many of the suggestions for achieving [economic goals dealt with energy alternatives.
The community was especially receptive to the cjoncept of energy management. The town had utilized Alternative energy resources and practices since the Rational energy crisis during the 1970's, with many households weatherizing and installing wood stoves and solar collectors, including the mayors residence. During the late 1970's, a 70 percent discount bought a number of solar hot water systems in Carbondale. A solar access


60
>rdinance was enacted due to the increase of rooftop lanels during this era of escalating fuel prices and lucrative state and federal tax credits. The Carbondale Energy Review Board was formed to administer the town's solar access ordinance.
Even after the tax credits expired, Carbondale was fortunate to have the benefit of the Colorado fountain College Solar Program, whose 3 instructors reside in town, as well as the Roaring Fork Energy Office, a state funded agency based in Carbondale to promote home weatherization and low cost solar Installation projects.
These groups and individuals, who also include a town planner experienced in energy management and a utility representative who is an Energy Review Board member, were the energy group of the Pioneer Project.
Application of Task Two
Having a community mandate to pursue economic development goals, the next task of the energy group was to perform an energy assessment.
Carbondale targeted the transportation and residential sectors in performing its energy audit, predominantly due to the high percentages of total energy use they comprise. The commercial, industrial, and municipal sectors are relatively small in Carbondale, so efforts to assess their energy situation were minimized.
The lack of business and industry within Carbondale accounts for a large number of commuters to jobs in Glenwood Springs, Aspen, and Redstone. Only 34


percent of Carbondale residents actually work in Carbondale. These vehicle trips for jobs as well as recreation account for an annual transportation expenditure of almost $1 million. Realizing that 90 percent of petroleum dollars leave the community immediately to pay for the imported product, a significant dollar drain is evident in the transportation sector.
Table Five documents expenditures in the transportation sector. The figures assume a price per gallon of gasoline at $1.10 and 1 person per vehicle at [25 miles per gallon. The number of miles per destination is roundtrip, with micellaneous destinations representing [trips to other areas in the Roaring Fork Valley.
Table Five
Carbondale Transportation Sector
'# Workers Destination # Miles Annual Cost
412 Glenwood 25 $113,000.00
473 Aspen 62 $322,586.00
206 Redstone 36 $ 74,160.00
41 Basalt 25 $ 10,250.00
700 Carbondale 4 $ 28,000.00
226 Miscell. 30 $ 68,704.00
Subtotal $616,000.00
1030 Recreation 100/wk. $206,000.00
Total $822,000.00
jSource: Derived from data provided by Roaring
Fork Energy Office
The residential sector in Carbondale, including two outlying mobile home parks, is comprised of 1120 units, of which 42 percent are heated by natural gas, 33 jpercent by wood, 19 percent by electricity, 4 percent by


62
1
solar, and 2 percent by oil or coal. The homes with gas and electric heating systems are supplemented with wood and solar heating. Solar heating systems are found predominantly with single family detached homes, as are electric heating systems, although a number of townhomes are electrically heated as well. Table Six depicts housing stock characteristics.
Table Six
Carbondale Housing Data Recent
Type % of Total Own Rent Weatherization
Single Family 45% 80% 20% 54%
Townhome 12% 35% 65% 17%
Duplex 8% 46% 54% 32%
Apt. 13% 0% 100% 17%
Condo 7% 41% 59% 18%
Mobile Home 17% 86% 14% 46%
Source: Derived Energy from data Office provided by Roaring Fork
Space heating accounts for 59.6 percent of a typical Carbondale homes' energy usage, followed by water heating at 18.5 percent, cooking at 6.6 percent,
appliances at 6.6 percent, lighting at 4.6 percent, and
2
clothes drying at 4.6 percent. Natural gas is the
primary space heating fuel with use by 52 percent of
households, followed by electricity at 24 percent and
3
wood at 19 percent. For water heating, 60 percent of
Carbondale households use natural gas, 37 percent use
electricity, with the remainder made up of other fuels, 4
such as solar.
Utility suppliers are Public Service Company of Colorado, Holy Cross Electric, and Rocky Mountain


63
Natural Gas. An excess of electrical capacity exists in
the Roaring Fork Valley, with a cost of electricity at an
average of 7 cents per kilowatt-hour. The average annual
total utility cost per household is $939.56, creating an
annual expenditure of $1,052,307.00 for home energy in 5
Carbondale.
Not all fuel expenditures will leave the community in the same proportion. The large utilization of wood fuel serves to keep a higher percentage of energy dollars within Carbondale, with local suppliers residing within the area and spending their energy wages locally. Propane is an imported product but is supplied locally. Natural gas is imported and distributed by two utilities, both of which employ Carbondale residents yet spend their profits outside of Carbondale.
Carbondale also benefits at the regional and national level from the sale of its coal resources for electric generation. The proportionate share of energy dollars lost for electric purchases will be less than those for natural gas, as jobs are created by the coal company, electric utilities, and appliance retailers.
A hydroelectric plant in the region (Reudi Reservoir) also contributes jobs and income to Carbondale.
The completed energy assessment points to the transportation and housing sectors as the premier energy users and thus the primary candidates for targetting with economic development objectives in Carbondale. Task three will articulate this concept through an evaluation
of alternatives.


64
Application of Task Three
The potential for reducing dollar exports through import substitution of alternative energy technologies in Carbondale can be ascertained practically through application of an intuitive development capacity analysis. A technical cost effectiveness evaluation is not practical for Carbondale due to the lack of data and limited time available.
Establishing Development Capacity
Carbondale's development capacity for energy management is determined by the availability of resources, the scale of public infrastructure, and its receptiveness to change.
From an energy management perspective,
Carbondale's development capacity based on its readiness to adopt policies and programs is excellant. The community has the institutional framework in place to carry out community energy management, at least in terms of its human resources.
The local availability of alternative resources in Carbondale, although plentiful, has limited potential for development. In large part, this limitation is due to the lack of public facilities and services which must interact with many of the alternatives available.
With 45% of homeowners practicing some form of conservation activity, and 37% of the population benefitting from cost effective (payback exceeding initial outlay over time) energy supply technologies, Carbondale has a high degree of substitution already in place. The community's "absorption rate" for energy


65
products is to the point where additional conservation demand will be marginally increased relative to the price of natural gas, coal, and electricity. Although many residents are qualified to weatherize homes, the community lacks a service industry to provide a complete home energy package. Property owners must rely on the products available at the hardware store, and are required to complete improvements themselves. Only one company provides a weatherization service, and it is limited to insulating measures.
The weatherization of rental housing offers the greatest potential for energy savings through conservation in Carbondale. Townhomes, condominiums and apartments have had the least market penetration by energy efficiency improvements. Unfortunately, tenants rarely invest in home improvements for their landlord, and many landlords are reluctant to invest in an improvement from which the occupant will be the prime beneficiary. This is a situation where local regulatory authority should be exercised to ensure that a certain performance standard can be met, as market mechanisms seem to be counterproductive. Low interest loans could be provided by banks for efficiency improvements to provide an incentive to those willing to make the improvements without the burden of regulatory authority.
The transportation sector is another area conservation activities can effectively substitute for imported products, in this case, petroleum. Carbondale has several options for developing transportation alternatives. A railroad line owned by the Roaring Fork


66
Railroad could be reactivated to serve the high number of jcommuters to Aspen and Glenwood Springs. The feasibilty of such a venture would require a high degree of participation by Carbondale citizens as well as other residents within the Roaring Fork Valley. One major stumbling block would be servicing two equally large jgroups of commuters to Aspen and Glenwood Springs twice a day, requiring two trains.
A second option would be an extensive car or van pooling program. This program could be targeted to the mineworkers, by shift, who work for Mid-Continent Energy Resources. The high number of commuters to Aspen and plenwood Springs could be organized into pooling programs also.
As a supplement to carpooling, an extended bus pystem could be implemented to service commuters, especially during peak hours. But whether new bus routes, carpooling networks, or rail lines are developed, an educational effort will be necessary to create participation. Commuters must be informed as to the benefits of increasing their disposable income through Reducing their high costs of transportation. A second jstep will be to convince them to spend their incomes in parbondale, rather than their place of occupation.
Alternative energy supplies should be focused on those that will reduce natural gas dependence in the residential sector for space and hot water heating. The difficulty inherant is the widely available, relatively inexpensive, efficient, clean burning and highly adaptable nature of natural gas. To replace it


67
jfor cooking would mean an expenditure for a new stove.
JTo replace it for space or water heating would mean a jnew furnace, and its continued use as a backup supply may even be necessary. The ability to substitute an alternative technology for natural gas is systematically limited at this time.
Alternative fuels available to the area consist pf solar energy, geothermal, and hydropower. Current polar energy use is moderate, although its potential jfor widespread application is somewhat limited by the high number of mobile homes which are difficult to adapt to current solar heating technology. However, a market does exist for solar hot water heating systems on single family homes. With future price increases in natural gas, now a deregulated commodity, the market for solar pot water heating could expand. The resources of the Roaring Fork Energy Office and Colorado Mountain College are beneficial to Carbondale, although again, a service industry does not exist for solar applications.
Hydroelectric potential in Carbondale, with the dlose proximity of the Roaring Fork and Crystal rivers, is limited only by the availability of startup capital, powever, various financing mechanisms, described in Chapter Four, could be utilized by the Town of Carbondale to fund a low head hydroelectric project. Excess electric generation could be sold back to Public Service Company and Holy Cross Electric. However, the current cost of electricity renders a new plant economically infeasible, and the selling of excess capacity to utilities who already have excess capacity is inefficient.


68
Geothermal recovery potential in Carbondale has not been investigated for feasibility, although geothermal reserves are in the area. The practicality of [developing geothermal resources as an alternative energy |supply for Carbondale is dependent on the ability to Attract industrial and business activity in a central [location to gain the benefits of a district heating [letwork. The lack of a pipe distribution network renders use for residences cost prohibitive.
One alternative energy supply potential particular to Carbondale is that of a coal waste powered generation facility. A public-private partnership between the Town of Carbondale and Mid Continent Energy Resources would be necessary for Carbondale to maximize phe benefits of such a venture, with agreements relating to financing, distribution, and employment practices of Special interest. Again, the use of creative financing would be necessary to fund such a venture.
To summarize then, the development capacity jin Carbondale for energy management programs is moderate jin its local availabilty of resources, weak in its scale pnd quality of public services, and marginally strong in jits institutional readiness to induce development.
To clarify the choices Carbondale should pursue, an intuitive evaluation will be used to establish a ranking of energy management options. The analysis will weigh the relative development capacity of each energy management option with selected economic development objectives. A numerical value shall be assigned based on the following criteria:


69
0-3: Low capacity for development due to high initial startup cost, method of recovery, sustainability of resource, lack of delivery system
3-7: Moderate capacity for development due to prolonged payback period, high market penetration, or institutional constraints
8 10: High capacity for development due to availability, recoverability, ease of application, market
acceptance, and quick payback period
Table Seven Intuitive Application Ranking
Job Creation Reduce Energy Costs Increase Local Sales Create Industry
Weatherization 6 8 7 7
Car Pooling 0 9 4 0
Commuter Rail 1 3 3 2
Bus System 2 9 4 0
Solar Heating 9 4 5 8
lydroelectric 3 1 1 3
Geothermal 1 1 1 2
Coal Waste 5 1 1 4
Based on the above assignment of intuitive
values, the energy management programs in Carbondale can be prioritized by dividing the total score of an alternative by the number of economic development objectives. The derived value can be prioritized as either having a low, moderate, or high development potential. The adjusted values for each alternative are as follow: 1. Weatherization = 7.0
2. Carpooling = 3.25
3. Commuter Rail = 2.25
4. Bus System = 3.75
5. Solar Heating = 6.50
6. Hydroelectric = 2.0
7. Geothermal = 1.25
8. Coal Waste = 2.75


70
The ranking of alternatives by development potential is as follow:
High Development Potential
1. Home weatherization with emphasis on rental housing Moderate Development Potential
1. Solar hot water heating for single family residences
2. Bus system serving coal mines, Glenwood Springs, and Aspen during peak hours/shifts.
Low Development Potential
1. 80 MW coal waste powered generator facility
2. Car pooling network serving coal mines, Roaring Fork Valley during peak and offpeak hours.
3. Commuter Rail
4. Hydroelectric
5. Geothermal
Application of Task Four
Once energy management programs have been prioritized, implementation can be initiated. Programs that have a high development potential should be implemented immediately. Those programs that have moderate potential should be further analyzed, with perhaps a cost effectiveness analysis applied to determine feasibility of implementation. Programs with a low potential should not be considered for implementation until factors changing their status are existing.
The only programs implemented to date are those encoraging home weatherization, which has the highest development capacity of energy management alternatives for Carbondale. The weatherization programs included information dissemination, with energy efficiency literature distributed to the majority of Carbondale homes. The local utility companies provided support by contributing materials, packets, and staff time. Public demonstrations of home weatherization in selected homes


were performed. A raffle for a free home weatherization was also held. The local bank, subsidized by a monies through the Roaring Fork Energy Office, offers low interest loans for energy efficient home improvements.
A discount on weatherization products was similary applied by the local hardware store.
Further program implementation in Carbondale should focus on those that do not require subsidization and offer opportunities for the rental housing. These types of programs would require stronger participation by the Town, with policies developed to emphasize weatherization. A second area that should be developed is the extension of the bus system on an experimental basis. A survey can be performed which would identify the potential ridership and acceptability of such a program prior to approaching the transit authority.
The experience of Carbondale, as applied in this analysis, is positive for the application of energy management to accomplish economic development objectives. However, the lack of quantifiable results undermines the long term effectiveness of such a program in Carbondale. The following chapter will provide recommendations for policy development based on Carbondales experience and other related linkages to energy management driven economic development.


72

NOTES
CHAPTER FIVE
1. "An Economic Profile", Valley Journal, 27 June 1985, p.3.
2 Roaring Fork Energy Office, "Residential Energy Usage -Carbondale, Colorado", (Carbondale: Roaring Fork Energy Office, 1983)
3. Ibid
4. Ibid
5. Ibid


CHAPTER SIX
CONCLUSIONS AND POLICY RECOMMENDATIONS
The preceeding analysis has identified the relationship between energy systems and economic growth, discussed the role of the private and public sectors in managing this relationship, and has offered a synthesized strategy to effectuate action. At this point, results of the theoretical and empirical research shall be articulated, with recommendations on policy formulation to follow.
Summary of Findings
The research identifies an inherent potential for energy management to accomplish economic development objectives, although the extent of such potential is very difficult to quantify. A community's resources can be maximized through their efficient use, and local import substitution has important multiplier effects, including non-basic job creation and retaining capital. Unfortunately, these concepts have not been tested due to :he relative stability of energy prices during the last several years.
Conventional energy technologies, while important :o present institutional arrangements, are capital intensive and employ relatively few workers as an industry. The impact on local communities is parasitic, even when considering those employed in the industry.


The tremendous loss of capital to exported supplies overwhelms any minor economic benefits of conventional energy technologies. The instability of supply markets and their delivery systems poses immediate concerns to the economic foundation of any community, with the potential for radical price increases and their related impacts at any time.
Conversely, most alternative energy technologies are well suited to local application, with a capability to utilize indigenous human and natural resources. With the uncertainty of future oil supplies and the volatility of the pricing structure, energy management provides a hedge against economic interruption and inflation. The presence of linkages between alternative energy technologies and economic development objectives serves as a technical justification for local energy management, beyond social and environmental arguments of the past.
However, energy management, to be successful, must recognize the integration of both conventional and alternative technologies. Alternative technologies take time and capital to develop, and must cooperate with an institutional and physical infrastructure developed for conventional resources. Not all alternative technologies are "better" than conventional technologies on face value alone, and in fact must be analyzed on a case by case basis for application to any particular community.
The synthesized community based strategy for accomplishing economic development objectives through energy management offers a means of focusing planning action and evaluating alternatives. The strategy has


significant opportunities as well as severe impediments to the implementation of energy management programs for local economic purposes.
Opportunities for strategy implementation are a function of defined linkages between energy management and economic development. These linkages (import substitution, job creation, sales tax generation, and increases in disposable income) must be identified for the particular circumstances of a given locality. For communities with an eroding industrial/commercial base and high unemployment, immediate benefits can be realized. For more stable communities, the linkages are a means of additional support and diversification, keeping competitive advantage factors intact.
Local government and utility suppliers have a mutually beneficial role in defining and promoting linkages. The economic benefits to a community and its power supplier can be realized through a cooperative effort to plan, finance, and implement projects to increase energy efficiencies, diversify supplies, and stabilize markets.
The impediments to implementing a new economic strategy are more complex. Institutional constraints are a major hurdle to overcome, especially in areas where non-renewable supply extraction, production, and distribution is a significant portion of a communities existing tax and employment base. In most citys and towns, the established energy delivery network of centralized power plants, pipelines, transmission lines, paved roads for access, maintenance, and operation make


transition to alternative technologies difficult.
The difficulty in quantifying economic returns from an energy management strategy serves to aggravate the problem further, with a natural reluctance to try unproven programs. The variety of supply alternatives available is a geographic factor, with many communities only capable of realizing advantages from demand reduction programs, as with Carbondale. Compounding these impediments are market problems, most notably the disparity in subsidies favoring the proliferation of non-renewable technologies.
Policy Recommendations
Policy recommendations regarding the role of energy management in accomplishing economic development objectives should serve to provide direction for those anticipating strategy implementation. The importance of developing policy statements is essentially from a long term planning perspective, in that communities should be proactive rather than reactive to their local energy situation. The following policy recommendations are offered to facilitate the community planning process for the use of energy management as a means of accomplishing economic development objectives:
o Public education and support is a necessary first
step in removing barriers to municipal activity. Change must occur from within the community, through an understanding of economic concepts as they relate to energy use. Local governments must take the lead in educating its citizens in the areas of economic


77
development and energy management.
o Sustaining economic growth and improving economic
welfare should be adopted as a policy objective within municipalities. Import substitution and job creation should be emphasized as the primary means of accomplishing economic sufficiency, rather than competing on a regional scale for limited industries. A view toward self-sufficiency and long term investments will naturally proceed to the procurement of renewable resources and efficiency improvements, in turn leading to the attraction of new industry through institutionalized competitive advantages.
o Public-private partnerships should be encouraged
with the utility suppliers to promote energy management. Better communication between local government and utility suppliers will serve to identify common goals and facilitate project development.
o Local governments should initiate a community-
wide evaluation of their energy situation. Public planning agencies can become involved in the collection and analysis of data and solicitation of public comment through organizing town meetings. In this way, a community based approach to evaluating the local energy situation can begin as part of the local planning function, with the expressed purpose of exploring available options to stimulate economic development, o The use of development capacity analysis,
technical evaluation, or other means of justifying and prioritizing energy management practices as a means of accomplishing economic development objectives should be


employed for determining the plausibility of programs. Programs should not be implemented unless they produce identifiable economic benefits to a community, o Creative financing methods should be used for
energy management projects. Life cycle costing procedures should be the preferred method of evaluating project and material costs. Subsidies for new technologies should be minimized, with use only where market failure cannot be rectified.
o Prior to program initiation, energy management
must be recognized as a valuble and integral component of the comprehensive community planning process. A policy to promote the efficient supply, allocation, and consumption of energy goods needs to be incorporated into local charters or passed as resolutions. Development review should include an incentive program to promote energy efficient land use, and building codes may need to mandate conservation and passive solar in new construction. Ordinances must be developed to protect the rights of those who are affected by new projects and technologies.
o Local political pressure should be exerted at
the state and federal level to remove the artificial price controls on conventional technologies and allow all resources to compete freely. Pricing should account for external costs as well, perhaps with an environmental or social tax applied to resources, increasing relative to deleterious impact.
Beyond policy recommendations, planners have a responsibility to be farsighted and innovative in dealing


79
with complex issues of social, environmental, and economic concern. Alternative solutions, such as those proposed in this study, warrant the attention of planning professionals. The use of a synthesized strategy that promotes community involvement while providing technical plausibility is one means of accomplishing complex planning objectives, and more specifically, the development of local energy management programs.


80
SELECTED BIBLIOGRAPHY
Alschuler, John H. Jr. "Using Local Energy Programs for Economic Development". Wash. D.C. : ICMA Management Information Service Report, November, 1980.
American Society for Public Administration. Alternative Energy Sources: Barriers and Incentives. Englewood, Co: Health Resources Corporation of America, 1983.
Buchsbaum, Steven. Jobs and Energy. New York: Council on Economic Priorities, 1979.
Center for Renewable Resources. The Hidden Costs of Energy. Wash., D.C. : Center for Renewable Resources, 1985.
Center for Renewable Resources. Renewable Energy in Cities. New York : Van Nostrand Reinhold, 1984.
Clark, Thomas A. Community Economic Development: A Primer for Small Cities and Towns. Denver: University of Colorado, 1985.
Colorado Office of Energy Conservation. Community Energy Planning: The Basic Elements. Denver: Department of Regulatory Agencies, 1982.
Colorado Office of Energy Conservation. Renewable Resources in Colorado: Opportunities for Local Governments. Denver: Department of Regulatory Agencies, 1981 .
Grossman, Richard and Daneker, Gail. Energy, Jobs, and the Economy. Boston: Alyson Publications, 1979.
Jacobs, Jane. Cities and the Wealth of Nations. New York: Random House, 1984.
Lovins, Amory and Hunter L. Brittle Power: Energy Strategy for National Security. Andover, Ma. : Brick
House, 1982.
Morris, David. Self Reliant Cities: Energy and the Transformation of Urban America. San Francisco : Sierra Club, 1982.
Nebraska State Energy Office. Community Energy Management As An Economic Development Strategy: A National Colloquium. Lincoln: Nebraska State Energy Office,
October, 1984.


Northern Energy Corporation. Planning the Energy Efficient Community. Boston: Northern Energy Corp., 1981
Okagaki, Alan and Benson, Jim. County Energy Plan Guidebook. Fairfax, Va. : Institute for Ecological Policies, 1979.
Solar Energy Research Institute. A New Prosperity: Building A Sustainable Energy Future. Andover, Ma.:
Brick House, 1981.
Sheahan, Richard T. Alternative Energy Sources. London: Aspen Publication, 1981.
St. Paul Energy Office. Energy Planning for Communities: A National Colloquium. St~! Paul: St. Paul Energy Office, September, 1985.
U.S. Department of Housing and Urban Development, Office of Community Planning and Developoment, Office of Environment and Energy, Energy Division. "Energy and Economic Development: A Report on the Efforts of Ten Localities Selected to Document the Relationship Between Energy Strategies and Economic Development". Springfield SES Inc., November, 1980.