A white paper by:
David Room of Energy Preparedness
Version 2.0
24 February 2008

Today’s energy outlook is marked by uncertainty. Resource nationalism intensifies in Asia, South America, and Africa. Unrest is deepening in the Middle East. Reserve statistics are unreliable, and transparency is nonexistent. Constraints on supply – both ongoing, as a function of geology, and probable, as a function of geopolitics – have been paired with a surge in demand driven by rapidly industrializing Asian economies as well as oil exporting nations. The result has been a tightening of the oil market over the past several years, manifested as higher prices and greater volatility. Scenario exercises such as Oil Shockwave indicate that small disruptions in supply due to geopolitical events could lead to oil prices over $160 per barrel.

• What would the effect of soaring oil prices ($161 per barrel for example) be on the city’s capability to provide essential general fund services such as police, fire, and emergency services?
• What general fund services may need to be scaled back or curtailed?
• What would the effect be on fee-based services such as water, sewage, and trash collection?
• When should municipalities alert constituents to the possibility of service cutbacks and/or sharp increases for fee-based services?
• Will the requisite price increases in fee-based services be affordable for constituents?

While it is still uncommon for municipalities to face such energy issues head on, frank conversations are happening in a number of cities in Northern California, Kinsale in Ireland, Denver in Colorado, Franklin in New York, Ottawa and Burnaby in Canada, and other cities and towns worldwide.

A Municipal Framework for Energy Preparedness
Cities are the largest consumers of energy and goods, and are egregiously dependent on energy and distant places for the goods they consume. This reliance makes them particularly vulnerable to high energy costs (directly and embodied in the products they consume) and energy supply disruptions, both of which are prevalent now in developing countries and will be exacerbated (and likely more prevalent in industrial countries) as demand further exceeds supply. Cities sorely need a framework for navigating the new landscape of oil supply vulnerabilities and coming era of energy descent.[3] Municipalities need to increase their level of energy preparedness.

While the stages of the framework are intended to commence in the given order, they overlap as well. Furthermore, each stage interacts with and informs other stages. For example, the energy budget completed in the Mitigate stage may provide insight into low hanging fruit for conservation and efficiency policies in the Commit stage.

The following sections elaborate on each stage of the framework, highlighting the recommendations of the Oil Independent
Oakland by 2020 task force report which represent the most comprehensive municipal energy preparedness strategy.

Mitigate-C-R
The Mitigate stage of the M-C-R framework is about assessing vulnerabilities and managing risks due to energy price escalation and supply disruptions. In the municipal context, this requires identifying vulnerabilities and external dependencies, estimating their severity and relevance, and as appropriate identifying mitigation strategies.

Once a municipality has passed a resolution or otherwise committed to study their oil vulnerability, the first steps in the Mitigate stage are to:

1. Develop an understanding of the structure and energy uses of the municipality. What services does the municipality provide? Which are general fund and which are fee-based? What is the budget of the departments that provide the services? What types of energy do they use? What aspects of city services do they outsource and what is the pricing structure?
2. Develop a municipal energy budget that provides quantity (e.g., in kwhs, gallons, therms) and dollars spent for each energy and fuel source by department and month for the previous fiscal year.
3. Analyze the energy data. Calculate the percentage of each department's budget that is spent on energy. Identify the departments with the highest energy use and percentage of cost, and determine their energy mix.
4. Get the current planning assumptions for future energy/fuel pricing used in budgeting. Use these as the low case. Develop at least one plausible energy price scenario (or use those developed by Energy Preparedness) that assumes energy prices will continue to escalate similar to their rise in the past several years. You may also consider appropriate levels of volatility for each scenario.
5. Perform a sensitivity analysis to see the impact of using alternative planning assumptions on the costs by department and if desired on the cost flow.
6. Develop energy supply disruption scenarios. Energy Preparedness suggests using several time scenarios such as 3-7 days, 2 weeks to several months, and several years as well as various availability levels (e.g., 0%, 50%, and 75%).
7. Develop new and/or refine existing contingency plans for energy supply disruption scenarios and determine the extent to which existing systems will be able to operate in the case of supply disruption (e.g., two weeks of water in storage).

Some cities are beginning to think in these terms. For example, the Oakland Oil Independent by 2020 report (released in February 2008) recommends that Oakland develop a contingency plan to address future oil price and supply shocks that addresses a seven-day fuel outage as well as a slow creep in prices. The report says the city should require that new development, municipal and regional agencies, and large employers within the City to develop contingency plans.

The results of the above steps can be used to identify the municipality’s key energy vulnerabilities. This provides a foundation for identifying and selecting key mitigations as appropriate using some combination of common sense, contingency planning, and risk management.

M-Commit-R
The Commit stage of the M-C-R framework is about taking a stand for a path that is less energy intensive and following through with the requisite changes to meet energy reduction goals. This stage requires the development of systems and processes for measuring progress towards goals.

Once one comes to terms with the significant possibility of energy price escalation and supply disruptions and the corresponding ramifications for municipalities and their citizens, it is incumbent upon local governments and constituents to begin thinking about how their locale might navigate energy descent in manner that promises the least disruption to city services and community life. Leaders with integrity will push for the rapid development of an overall strategy and philosophy that can be used to guide subsequent action. Clearly we need to invest in sustainable energy.

Clearly we need to begin using much less energy and oil.

Sweden provides a stellar example of leadership and commitment. In January 2006, Minister for Sustainable Development Mona Sahlin declared that Sweden will be the first country in the world to break dependency on fossil fuel energy. Sweden will phase out oil by 2020 and eventually renewable energy will deliver the country’s entire energy supply. This will require among other things eliminating gasoline-run cars and oil-heated homes. Sahlin says “A Sweden free of fossil fuels would give us huge advantages, not least by reducing the impact from fluctuations in oil prices.”

One way to commit to reducing oil consumption is to adopt the Oil Depletion Protocol. The protocol which is currently being championed by Richard Heinberg among others requires that importing countries decrease their imports by the world depletion rate. While the protocol was originally intended for adoption by national governments, cities that adopt the protocol and act accordingly will benefit to the extent that they lessen their dependence on oil and gas. Already many cities, states, and regions in the United States are reducing CO2 emissions in alignment with the Kyoto Protocol. Cities adopting the Oil Depletion Protocol would need to reduce their oil consumption about 3% annually. Some cities, especially where peak oil is acknowledged as an issue, may choose to set more aggressive oil use reduction goals.

The “first and foremost” recommendation of the Oakland Oil Independent by 2020 task force was for the City formally adopt the Oil Depletion Protocol locally and to take immediate steps to implement it. While other cities including San Francisco [4] have already endorsed the protocol, Oakland would be the first government at any level in the world to officially adopt and implement the protocol. The Oakland report recommended that Oakland households be encouraged to make a commitment to reduce their oil use by 3% per year as well which would require less driving since transportation represents 97% of Oakland’s direct oil consumption.

Cities that support national adoption of the protocol (as well as cities that choose to adopt the protocol locally) should also endorse and advocate national policies that reduce oil consumption and increase energy preparedness such as tax shifting from income to carbon, subsidy shifting from fossil fuels to renewables, rebuilding the rail system, and lower speed limits.

To meet their goal of phasing out fossil energy by 2020, Sweden is considering or has partially implemented the following:

• Large-scale investments in renewable energy and in research.
• Expansion of district heating initiatives including cogeneration and the use of waste industrial and utility heat for residential needs
• Energy and carbon dioxide emission taxes were raised, while other taxes including payroll were decreased by an equivalent amount
• Exempting CO2 free fuel from energy and carbon dioxide emission taxes
• Exempting efficient vehicles from Stockholm’s congestion tax
• Municipalities receive grants to invest in environment-friendly technology
• Progress is charted through 70 national indicators.

Hopefully, in the near future, cities will realize the energy preparedness advantages of adopting the protocol locally (either formally or informally) and begin their reducing oil consumption accordingly. Once a municipality adopts the protocol, policies and actions for conservation and energy efficiency will need to be pursued immediately to ensure that reduction targets are met in the near term. Of course, while conservation and efficiency may be sufficient initially, over time they will yield diminishing returns. Significant oil and energy consumption is built into the economic system and locked in by the built environment. Additional reductions in oil consumption will require restructuring economies and cities.

M-C-Reengineer
The Reengineer stage of the M-C-R framework is about reconfiguring economic relationships and physical infrastructure to garner large reductions in energy consumption. In the municipal context, this means re-localizing the local economy and reconfiguring the built infrastructure for less transport and energy.

Localization (or relocalization) is the process through which a community reverts from ever increasing dependence upon the global economic system back to local networks of economic interdependency. Localization brings production closer to consumption obviating the need to rely on long supply chains and distant markets so that communities can largely provision themselves. Local production strengthens the local economy, creates worthwhile jobs, and increases local self reliance. Refocusing the economy locally will necessarily revitalize the community, increasing camaraderie, cooperation, and support for local culture and a sense of place.

In the wake of the devastation wrought by Hurricane Katrina, regional officials have become increasingly concerned about how the San Francisco Bay Area would fare if another 1906-style earthquake were to occur. The San Francisco city government and CORE - Citizens of Oakland Responding to Emergencies (as well as the national emergency preparedness sector in general) are strongly recommending that people get prepared to live for 3 days without major infrastructural support (i.e., electricity, running water, supermarkets, etc).[5],[6],[7],[8] Only 3 days? Remember what happened after Katrina.

Considering the potentially long term disruptions of an earthquake, failure of the levee system in the Sacramento Delta [9], or other catastrophic event and the inadequacy of the government response to Hurricane Katrina, clearly the next step for preparedness is to be able to function without major infrastructural support for a longer time period. While preparing families to provision themselves for several days assumes some sort of stockpiling, pushing that timeframe out several weeks or months implies among other things, local food production and decentralized renewable power sources.

Economic localization brings production of goods and services closer to their point of consumption, reducing the need to rely on long supply chains and distant markets so that communities and regions can, for the most part, provision themselves. Reducing transport lowers CO2 and other pollutant emissions and reduces dependence on burning fossil fuels. This is particularly important considering that the transportation sector is the largest emitter of CO2 and a near consensus of scientists believe that global CO2 emissions need to be reduced about 80% to have a possibility of stabilizing the climate. This will not occur without reconfiguring our economies and cities for much less transport and energy consumption. While it is certainly not possible to produce every kind of good and service locally, economic localization seeks to restore an efficient balance between local production and imports that reduces local economic vulnerability and minimizes the negative social and environmental externalities of free trade.

The Oil Independent Oakland Task Force recommends the development of a comprehensive localization strategy that includes targets for food, energy, and vital goods. Such a strategy would include policies to use local materials, rebuild the capacity for local production, encourage locally owned businesses and cooperatives, educating the public on the importance of localization, and creating local markets for locally produced goods. The report suggest the first step in the development of a localization strategy would be to do an inventory of Oakland’s assets (e.g., vacant parcels, municipal rooftops) that could be used to forward localization.

The report also suggests that Oakland extend its localization strategy to be an explicit focus in collaborations with nearby cities such as the Green Economic Corridor initiative with Berkeley, Emeryville, and Richmond.

In August 2005, the City of Willits (in Northern California; population 13k) and WELL signed a joint statement toward a healthy sustainable community that recognizes, in light of both climate change and oil and gas depletion, the need to “localize” their economy. The City of Willits and WELL will focus initially on food and energy production and on shifting economic development to small, local community enterprises. Implementation of these changes will create businesses and avenues for local youth to express their creativity, improve the landscape, and will provide a “quieter, less expensive, and more dependable set of services, while providing an array of interesting employment.” The statement commits the city to a series of community events, news articles, reports and forums in subsequent months that will provide opportunities for citizens to learn more.[10]

Along with WELL and the Willits Ad-Hoc Energy Group, City Councilman Ron Orenstein sponsored an energy independence report for the city of Willits. Entitled, “Recommendations towards Energy Independence for the City of Willits and Surrounding Community,” the report paints a picture of an urban area that could, given timely action, adjust to expensive energy by achieving energy independence and emerge as a strong, organized and self-sufficient municipality. It also does not sugar-coat the consequences of apathy. The report states, “… if we want to be able to develop alternative sources of energy in order to maintain some semblance of our society today, we need to do so now while energy is still cheap and plentiful. We cannot afford to wait until fossil fuels decline to the point of severe economic impact – the changes to ensure our survival need to begin today. Those same fossil fuels we save by striving for energy independence today will provide the basis for sustaining agriculture and healthcare tomorrow.”[11]

The report points out that the process of achieving energy independence can be positive stimulus for the local economy. “In presenting these potential steps that the city of Willits can take, every effort has been made to find ways that the transition results in revenue streams to the city and community, with the long-term objective being a stronger self-sustaining economy.”

Another vital part of reducing overall energy demand involves reconfiguring our settlements so that they demand less energy from those who live in them. Cities are the largest things that we create and their structure drives patterns of material and energy consumption and transportation. According to Richard Register of Ecocity Builders, the most effective way to reduce energy consumption, and the only way to produce ecologically sustainable cities, is to reconfigure the cities themselves in a way that fosters ecological health.

Beyond the oil depletion protocol, the two most important recommendations of the Oil Independent Oakland task force were to reduce the need to use personal automobiles:

• Begin the process of gradually redesigning the city so that residents can reduce their automobile dependence. This can be done by creating vibrant neighborhoods where jobs, housing and a full range of services are available within short distances.
• Advance transportation alternatives so that when residents do need to travel, they have options other than driving private automobiles. [12]

The task forces recommended that Oakland develop urban villages that such that neighborhoods have a wider range of businesses and services to provide the daily needs of the residents and workers, while reducing trips in private automobiles. The task force report says developing urban villages

would entail strengthening vital focal points of the City, such as neighborhood centers, transit centers like Fruitvale and downtown with more development. That development would be “village-like” in having most of the full range of life’s activities all provided for close together: living, working, commercial, social and cultural spaces. Integral to the “urban villages” notion is removing development outside the concentrated cores steadily over the years to open creek systems, expand community and commercial gardens for food production and security, for parks, sports, recycling and other open space uses. The overall pattern of change thus will support bicycle, transit and pedestrian access and thereby create the foundation in urban form for greatly reducing demand for energy and land, and thus creating a basis for adding exactly the right technologies and jobs that fit a more localized economy and an energy conserving and benign renewable energy future. That is a potential future so low in demand for energy that oil independence becomes a real possibility. [13]

The report lays out a “sliver sequence” of ordered steps that for the first time integrates ecological city principles into a municipal planning process.

Being Energy Prepared is Prudent – It may be Now or Never

Energy Preparedness is increasingly important as we have entered an era of energy scarcity, characterized by a tightening of energy markets, increasing demand, and softening supply. This is happening now with global oil supply and with natural gas in the European Union and North America. Energy Preparedness means being ready for plausible energy pricing and disruption scenarios. It means taking a leadership role in initiating ongoing programs to reduce energy use and change culture. It means embarking on long term programs to restructure local economies and the city’s built infrastructure. All of this is embodied in the municipal perspective of the M-C-R framework.