February 2005

The Power of Color

by Roger Feldman  --   Bingham, Dana L.L.P.
(originally published by PMA OnLine Magazine: 2005/05/05)
 

Our videogame age has moved past the primitive use of descriptive labels (epithets?) as a shorthand (substitute?) for the expression of ideas to the use of colors to connote public dialogue. There are political state colors; security alert colors; ecology sensitive colors; and patriotic cause colors, to be displayed on ribbons and bumper stickers. Adherents of every public policy must not only advocate their cause, but color it appropriately so a majority of the people will think it is consonant with their thinking.

Poor “Renewable Energy” faces a color identity crisis from its inception, particularly in the electric power field. It is a polyglot of technologies tenuously linguistically linked by the possibility of there being more, in principle, regular recurrence of the energy source from which it came. Its public support has historically sprung from its “greenness” (including proponents of “soft road” energy nonconsumption), and currently funds its most modern expression its carbon displacing, greenhouse gas reduction capability. This coloration strategy worked in the ‘70’s to gain various incentive supports at a time when most renewable technologies did not themselves work too well or even compete too well in the marketplace. It was possible for the same President who brought us Project Independence to permit the creation of EPA. The proponents of renewables could seek to inhibit use of conventional electric energy sources (or aggregate consumption levels), while establishment types could still, somehow, make enough juice flow. Renewables co-existed uneasily with the New Freedom of power deregulation. Price deregulation in some settings afforded some moderate umbrella for developing some “alternative” energies as well as combined cycle plants.

But Century 21 has burst upon us in shades of red and orange. We live in a post big-Red, red state world, in a code red state of alarm, concerned that our green dollars may be siphoned away by red ink trade deficits. So it is a dicier public relations proposition to be, in effect, driving an old green Volvo, proclaiming your goodness when all those around you are driving red SUV’s. And so it is that the green case for renewable energy and conservation has begun to see red and to change its colorful stripes. The immediate genesis of these development s has been the panicked observation by some of the environmental movement’s own leaders that its themes are losing traction as growing and vital ones. Word is cropping up from within the movement that “modern environmentalism must die so that something new can live”.

As the green tide apparently ebbs, the proponents of renewables seeking to wear coats of other colors. The broadest, most obvious initiative by the proponents of renewables has been to argue that national security is undermined by oil overdependence and that use of renewables (along with scientific application of energy conservation techniques) are our patriotic duty. There is a flaw in this simple syllogism, particularly when applied to electric power, which the Cheney Energy Policy exploits: foreign energy can be displaced with domestic coal and nuclear (and Arctic oil) on a far grander (if definitely not greener) scale than by renewables. And the relative economics of doing so can be debated.

However, there is also an emerging recognition in the power field, that there are new colorful arguments driven by the fear of code red situations and the native American abhorrence to red ink after power system disasters, that are now available to be invoked. This recognition has its roots in the fact that average utility system reliability and generator availability may have little value if a disaster strikes: there must be a focus on energy supply continuity and/or rapid recovery of power user systems it involves data or communications systems (private) or waste water treatment and water electric pumps (public). In the first instance, these may appear to be issues which can be dealt with not with renewable power but by hardening the grid and the security of central station facilities. This is too simplistic a response. As the announcement for the ANSI Homeland Security Standards Panel states; “(W)hile the public (grid) must certainly be hardened and protected, most of the responsibility for guaranteeing supplies of critical power at large numbers of discrete private grids and critical power (modes) ultimately falls on the private sector enterprise owner and on the lower tiers of the public sector (governance) — the counties, municipalities and towns.” There is far more to hardening than greater expenditures or transmission. We have learned that:

• “Decentralization, Dispersion and Redundancy” must become new watchwords for “hardness” to be implemented meaningfully and cost effectively. Many different smaller renewable energy technologies such as rooftop PV systems, small wind turbines and fuel cells assume a new value today because of the premium security value which their nature provides, as concrete sources of disaster relief, protection against loss of power, and support for remote telecommunications and cell phone towers.

• Some of the benefits to stressed grid systems might be obtainable from hydrocarbon fueled distributed generation. But these are subject to two types of vulnerabilities to which optimally functioning renewables are resistant: ever increasing fuel costs of larger gas turbines and environmental pollution (notably air quality in non-attainment areas). Green is the ancillary good; needed specialized service is the key.

• In addition to conventional renewables, there is a need to focus on the roles of storage, conservation management and uniform standards in the area of operational security and continuity at the enterprise level. System-oriented solutions are an important viable alternative to excessive reliance on the public electric grid to be available and to be managed in a way which private and public sector participants can carry on securely and continuously.

In short, to be central and competitive in the 21st century, color war over energy, renewables must be portrayed as green ninjas, wearing the red, white & blue. Fortunately, for renewables, there are many circumstances where that colorful reality is. The color of green power will be red, white and blue.

ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon Markets Group has practiced law related to the finance of environmental and energy projects and companies for 40 years.  In particular, he has analyzed and executed a wide variety and substantial value of project financings.  He chairs the American Bar Association’s Committee on Carbon Trading and Finance, serves on the Board of the American Council for Renewable Energy, and has been a senior official in the Federal Energy Administration.  He is a graduate of Brown University, Yale Law School and Harvard Business School.