False Hope or Hardship? Comments on Pope and McKibben Essays

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February 4, 2009

By Pat Murphy
Executive Director, Community Solutions

Carl Pope, head of the Sierra Club, in a January 22, 2009 article entitled “Moving the U.S. off Carbon with Less Pain, More Gain” takes issue with Bill McKibben’s November 5, 2008 article entitled “President Obama’s Big Climate Challenge.” (Both published in Yale Environment 360, a publication of the Yale School of Forestry and Environmental Studies). McKibben identifies the scale and risk of the challenge noting it will be unpopular and could damage Obama’s political future.

Pope begins his critique by acknowledging that he shares McKibben’s conviction that we need to reduce greenhouse gas emissions by 80 to 90% by mid-century. But Pope argues that the right investment in technology is all that is needed to manage this reduction. The essence of his position is that a well-designed package of market reforms — which does not require austerity — will lead to a prosperous, low-carbon future. He writes, “The assumption that the costs of climate recovery will be prohibitively high simply does not stand up to scrutiny.”

I believe that it is Pope’s positions that do not pass scrutiny and that it matters a great deal whether Pope is correct. Pope himself says there’s a fundamental difference between a mind-set that concludes sacrifice is needed and a mind-set that sees only an economically attractive transition. He labels this as the difference between “sacrifice” and “reform.” Of course, “sacrifice” sounds disconcerting, even scary, while “reform” sounds comforting and moderate. Pope has thus slanted his argument against what he calls sacrifice. By implication, Pope’s position is that no significant lifestyle changes will be required from us.

Pope’s main arguments begin with a reference to a McKinsey & Company report, which says reducing U.S. emissions by 2030 could be achieved with a negative cost, since the need for reductions represents investment opportunities that would increase the productivity of the overall U.S. economy. Pope discusses the case of California, pointing out that in a 35-year period the state’s residents maintained constant per capita energy consumption while the rest of the nation increased 50%. Unfortunately for Pope’s thesis, this period of California’s history is not one of reduction in energy use. Remember that Pope conceded we need a national reduction of around 90% in greenhouse gas emissions. To achieve that reduction, Californians per capita will still need to make reductions on the order of 50 to 60% by 2050 (while the rest of us may need to reach a full 90%). Is Pope suggesting that Californians can make 50 to 60% cuts in their energy use without sacrifice?

Pope next presents a picture of today’s creaky and anachronistic energy system. He says, “Right now, we generate electricity in power plants designed — and in some cases built — in the Taft era (hydro), the Coolidge era (coal), or the Kennedy era (nuclear). We ship electricity in transmission grids equipped with electromechanical switches whose fundamental design goes back 80 years. We burn gasoline in internal combustion engines that haven’t changed much since Henry Ford, and those engines are in SUVs built on 40-year old assembly lines. And 50 percent of the fuel we use to heat and cool our buildings radiates directly into the sky because many of those buildings have never been modernized for energy performance.”

Pope’s portrait is, at best, highly misleading. He does not propose replacing the Taft-era dams with new ones. (And why would he? I suspect their generators have been replaced or rewired many times.) Aging coal plants are not necessarily inefficient. It’s true that coal plants were once less than 20% efficient and now are near 35% (including the latest ones) but there is little room left for improvement in the technology of turning water into steam. Electromechanical switches are not high energy consumers and replacing them with electronic ones will save little fuel. Contrary to Pope’s assertion, the internal combustion engine has in fact improved by about 1.5% per year ever since Henry Ford’s time. (The best-explored alternative, the fuel cell engine, has never made it out of prototype phase.) In short, Pope’s evidence does not support his implied conclusion that there are significant reductions in fossil fuel use to be gained by modernizing the nation’s electricity generation and auto assembly processes.

Pope moves on to endorse a complaint we often hear from business interests, namely that rapid improvement will come to energy markets if we only eliminate barriers to innovation. But what barriers does he have in mind? It isn’t barriers to innovation that explain the snail-like process toward carbon capture, or the recent cancellation of Future Gen in particular – it’s the sheer technical challenge of storing billions of tons of CO2 underground for thousands of years. IGCC power plants on a world-wide basis have not proven themselves reliable and efficient. Improvements in wind and solar technology have come from massive amounts of government subsidies, including major contributions from the government’s own research labs like NREL. Both wind and solar are now growing at 50% per year (still with subsidies) and there has been massive public and private investments in both technologies – but prices remain high, and the sum total of their contribution to the nation’s electricity supply remains under 2%. Pope seems to imagine that shifts in U.S. government policy can mandate rapid technical breakthroughs. But the evidence shows that governments in other nations have subsidized and invested for years without earth-shattering results. Wind power still requires a big propeller and a generator.

Fortunately, Pope does accept that a rapid national transition to a low-carbon economy will not be without some pain and expense. He acknowledges that some parties will not be as better off as others. He admits that there will be a significant price tag to accelerate the transition. But he aims to convince us that this price tag will come from making those who emit carbon pay for their pollution and the costs of climate disruption. Somehow, in his view, taxing the emitters will both accelerate the transition from fossil fuels and make the overall global economy fairer. But he ignores the basic fact that the emitters of carbon are us! It’s not the Ford or General Motors plants that are the problem, it’s the trucks and SUVs that we Americans have chosen to drive and the big houses we have chosen to inhabit. Does Pope believe that we will call a significant new tax on personal carbon emissions a “reform” rather than a “sacrifice”?

Pope says he agrees with McKibben when the latter says, “Doing what actually needs to be done . . . would involve — directly or indirectly — raising the cost of continuing to live as we do right now.” But then he focuses on the wastefulness of people who drive Hummers, or air condition rooms that have fires blazing in the fireplace. (This is a miniscule part of the population) He acknowledges how much “energy waste happens because ordinary people live in leaky buildings with outdated appliances” but doesn’t recognize the sacrifice implied when he also concedes that such people “cannot easily or affordably upgrade.” He expresses sympathy for small business people buying a Ford Econoline with an old design that gets 15 mpg, but then wonders why they don’t drive modern hybrid panel trucks that get 30 mpg. (He criticizes Detroit for not offering such a vehicle; but I doubt any global manufacturer offers one.) Pope seems to conclude it is Detroit’s fault for not offering better vehicles, while completely ignoring the choice of tens of millions of Americans to drive SUVs when more efficient cars are available. This familiar environmentalist refrain – blame the producer but not the consumer – serves to obscure the financial hit (another sacrifice, perhaps?) that millions of owners of low-mileage vehicles are now bound to take.

Pope claims to share McKibben’s despair over U.S. materialism but insists that austerity for the American people will not be required. He hypothesizes two schools of thought on this issue. One school suggests modest carbon reduction goals to mitigate economic pain or the give-away of carbon permits to businesses. The other school compensates those who use carbon sinks. He notes in this case that Peabody Coal does not own the Amazon, nor Exxon-Mobil the Maldive Islands, but the corporations use the Amazon and Indian Ocean to absorb their emissions at huge cost to others. Who are these “others”? I assume Pope means me and all the other citizens – citizens, that is, who use electricity from Peabody Coal and drive vehicles fueled with Exxon oil. Once more, in Pope’s version of the story, the responsibilities of citizens are not called into question – oil companies are the sole evil-doers.

Pope goes on to compare his views on revenues from carbon permits with those of McKibben, and finds the latter’s lacking. Pope wants to use the revenue from carbon permits to aggressively pursue better technologies. He argues for investing in energy efficiency rather than new power plants. He believes that serious energy market reform and regulation of the producer can rapidly reduce the demand for fossil fuels of the consumer by putting a price on carbon emissions. Pope then calculates that a carbon price of around $30 per ton can be funded by a gasoline tax of approximately 30 cents per gallon. Revenues would go to the U.S. Treasury, and Congress would allocate them first to low-income consumers to mitigate the increased costs of gasoline and electricity, and second to investments in climate change solutions with a focus on energy efficiency and renewable energy. Finally, he wants building codes to reflect the American Institute of Architects’ goals of achieving carbon-neutral buildings by 2030 (new construction only), ignoring the 100s of millions of existing inefficient buildings.

Pope proposes incentives including upping the price of carbon generated to send a more powerful signal to investors to back low-carbon alternatives if progress is slow. Other incentives would return some carbon taxes to the citizens to allow them to buy more efficient products. About $60 billion to $180 billion a year would go to the government to meet the various costs of transitioning to a low-carbon economy. Pope acknowledges that he does not know how fast we can improve the energy productivity and lower the carbon/energy ratio of our economy. One might suspect that he also doesn’t know how much it would cost. He argues for redirecting benefits from the polluting and uncompetitive technologies of the past to cleaner, higher performance, new energy options. Finally he says the level of sacrifice we face will fall in direct proportion to how effectively we use carbon revenues to motivate and deliver the new energy options. However, he provides no analysis or estimates of time and costs to achieve reductions – seemingly just hoping the technology is there somewhere.

What Pope does not see is that by taking the positions discussed above, he has not refuted McKibben’s call for sacrifice. Americans are perfectly free to purchase new energy-saving products and technologies right now, but would have to sacrifice some other purchase to do so. There are triple-paned argon-filled windows on the market, for example, which would reduce home heating costs. But they are expensive enough that many would call buying them a “sacrifice.” Gas-saving cars using advanced technology have been available now for a decade. But hybrid sales are still less than 2% of the market. High-mileage Honda Fits and Toyota Yarises are available for those who can’t afford a hybrid – granted these models require sacrifices of size and comfort compared to SUVs. Americans can buy a host of energy efficient products today — assuming they are willing to give up comfort, convenience, and cash. Their cars might be a bit more crowded and might not be as safe. Americans can buy more energy-efficient houses – if they are willing to put more of the construction cost into a better building envelope, and sacrifice larger rooms. Utility bills can be lowered by settling for smaller appliances or turning off the extras in the garage. Compact fluorescent bulbs can be installed immediately, though few Americans have actually done even this. Americans have consistently rejected energy-saving technologies for the sake of style, one-upmanship, comfort and convenience.

In my view, Bill McKibben said something important and accurate when he pointed out that if Americans are to achieve the ecologically necessary reductions in carbon dioxide emissions, they will need to sacrifice many things – and not just those which are considered to be luxuries. Carl Pope, by contrast, suggests that we will not need to give up anything. Technology and innovation, spurred by simple changes in government policy, will provide us a 60 mpg 4,000 pound SUV and a 3,000 square foot McMansion that will use less energy than an electric bike and a modest apartment.

Mr. Pope’s paper came out at roughly the same time as the January/February issue of Sierra magazine. The cover of that magazine included a figure painting a cartoon house green. (Yes, the term “green-wash” came to mind.) On page 12 of the magazine, the columnist “Mr. Green” responded to a woman in Dayton, Ohio inquiring about the cost-effectiveness of solar panels on her home. Mr. Green responds that installing a solar energy system to generate power for the average household costs roughly $80,000 after rebates and tax credits. Will this woman be able to add panels without sacrifice? I think not – Americans have no such deep pockets to make these changes.

A second article in the magazine entitled “Emerald Cities” suggests in an upbeat manner that major changes are happening in urban areas and refers to LEED building standards, product of the U.S. Green Building Council which has certified only two thousand of the nation’s 5 million commercial buildings. And LEED buildings at best reduce energy use by only 25%. He does not seem to know that the so-called “green” LEED standards and Energy Star appliance ratings have saved only a few percent of the energy consumed in buildings — after pushing their brands for over a decade. And what about the 100,000,000 existing homes? How much will they cost to retrofit and can Americans do this while maintaining their current life style? I think not.

Bill McKibben’s essay, by contrast with Pope’s critique, is grounded in a realistic sense of the difficulties we face. It will be long and hard to gain significant efficiency for a new infrastructure when so called “green” buildings and cars offer on average no more than a 15% improvement in efficiency. Making the existing infrastructure energy efficient involves change of an almost unimaginable scale. This will not be achieved without massive sacrifice from Americans, voluntary or involuntary. The idea that investment in technology is all that is needed is naïve and dangerous. The crisis is huge and Winston Churchill’s comments come to mind as he readied England for a long war: “I have nothing to offer but blood, toil, tears, and sweat. We have before us an ordeal of the most grievous kind.” There was a war on then – and there is no less a war on now as we battle the U.S. materialism over which Pope says he shares McKibben’s despair.

Pole calls for a new environmentalism. And McKibben and millions of others, including myself, share this sentiment. But a new environmentalism based on the market economy and the now discredited thesis that greed is good is essentially no environmentalism at all. Environmentalists who claim there will be no need for sacrifice, and reject Churchill’s call, are part of the problem, not the solution.

The Risks of Plan B

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By Rob Content
Program Manager, Community Solutions

The details are still under intense discussion in Democratic Party power centers like Chicago and New York. But there is good reason to expect that within the coming weeks and months the Obama administration will announce a broad set of policy initiatives, likely including a heavy dose of executive orders. These policies will be designed first and foremost to address the deepening economic collapse by reassuring bankers, autoworkers, and road crews across the United States that they will still have work-sites to go to. Many of the jobs the government will try to save will involve energy and transportation, such as the construction and maintenance of today’s low-mileage car models, and the repair of roads and bridges on which fleets of commercial trucks deliver consumer goods to retail shelves.

Efforts such as these can be seen as attempts to extend business as usual, or “Plan A.” Plan A, to which the Bush-Cheney administration closely hewed, consists of encouraging the fossil fuel industry to extend its traditional dominance of the nation’s energy supply operations. This includes mining and drilling, refining and transporting, and, more generally, defining and shaping public understanding of where electricity, transport and heating fuels, and fertilizers and pesticides/herbicides all come from. Plan A may have suffered a bit of a dirty face the last eight years at the hands of the Iraq War, expanded public concern over global warming, and spikes in prices at the pump and in utility bills. Nevertheless, it remains hugely profitable, deeply entrenched in the nation’s infrastructure, and responsible for supplying the lion’s share of the energy on which the consumer/commuter’s daily lifestyle utterly depends.

But the Obama administration’s policies on energy and the environment are also likely to include some key elements that differ significantly from those of the departing Bush administration. As such, they will deserve to be recognized as the opening stage of a distinct “Plan B.” Current indications are that we will see pages borrowed from Jimmy Carter’s conservation playbook – surely a good thing, and one to be welcomed by most in the peak oil and climate change community. Also likely to win general endorsement would be an effort to publicize and extend the “greener cities” approach spearheaded by Richard M. Daley in Chicago. And many among us will likewise be pleased to see a more prominent place at the table for the wind and solar industries.

Unlike Plan A, Plan B will emphasize waste reduction, the development of alternative energy sources (especially renewable ones), and investment in higher efficiency technological innovations. We should not underestimate the space still available for Plan B to be fully explored, and then deeply embraced, by American consumers. Acceptance of the hybrid car has been steady but also slow; nearly a decade passed before the first million vehicles were on the roads. By and large, Americans still “want” gas-guzzlers – even if many breadwinners can no longer find the credit to purchase them or always afford to fill their gas tanks. Our home insulation efforts lag behind our generally low awareness of their affordable benefits. Only a tiny fraction of Americans purchase carbon-offsets for their airplane trips or electricity consumption. The experience of long-distance travel by air or car, for business or for pleasure, remains a fixture of “the good life,” one to which many are eager to return just as soon as the government delivers its solutions to our current problems. For these reasons (and many more), a shift in our national discussion of energy issues in which Plan B finds its voice alongside Plan A should probably be acknowledged as a profound – even perhaps a revolutionary – change.

And there’s the rub.

For many in the Peak Oil community – and certainly for us at Community Solutions – the success of Plan B is a long shot. Any administration, however well-advised and civic-minded, that commits itself and our remaining resources to Plan B is gambling. The success of Plan B depends upon a series of technological breakthroughs which in turn will depend upon the availability of massive financial resources to sustain technological research over at least several decades; even more massive resources would then be required to implement the results. Committing so much to such an uncertain approach indicates to us a limited understanding of how dire our energy predicament has already become.

Those of us who see the brightest prospects for a secure and sustainable culture in widespread voluntary curtailment of energy consumption – what we call “Plan C” – therefore harbor a set of serious reservations about Plan B. We begin with mixed feelings at best about fresh infusions of research funds for carbon capture and sequestration, so-called “advanced” bio-fuels, and carbon nuclear fusion. We are concerned that political speeches and policy goals contain so few acknowledgements that these unproven technologies may in fact turn out to be unprovable. In addition, we will find it hard to swallow endorsements by the new Administration of such pale green approaches as LEED standard building construction, intensive new public subway or trolley developments, and “green” consumerism. (Our Executive Director Pat Murphy has also now developed a highly critical evaluation of the pluggable hybrid car – which, as he argues, should more credibly be called “the coal car” since its batteries would be recharged with electricity generated mostly by coal-burning power plants.)

At Community Solutions, we therefore advocate instead a set of much deeper green approaches. (We have discussed labeling them “red” to signal our sense of urgency.) We support Passive House building construction standards – particularly as they may be used to retrofit existing homes, a Smart Jitney approach to mass ride-sharing using the existing vehicle fleet, and a significant curtailment of the consumer economy in favor of a simpler, healthier, non-affluent style of life. What the elements of Plan C have in common – and so what distinguishes them from the bulk of Plan B approaches – is that they require no technological breakthroughs, can be implemented starting immediately, and would be far less time and resource-intensive to complete.

No doubt others involved in Peak Oil discussions would change a point here or there in their own assessment of Plan C’s advantages over Plan B. Strenuous disagreement over certain points would expected and respected as well. But my aim here is to draw attention to a larger dynamic – and the potential consequences of failing to understand that dynamic in advance.

The dynamic is this: An energy transition from Bush’s Plan A to Obama’s Plan B is likely to be felt as a major and decisive shift in U.S. national consciousness, as well as in policy detail. This shift of plans may be as wrenching and controversial a change in national character as has been achieved since the gradual awakenings of the civil rights era. It should be no surprise that a shift of this magnitude would contain some risk of failure, and the possibility that Plan B might fail therefore merits open and serious discussion. We should be talking about whether Plan B is really a risk worth taking – and  even if so, whether some investment should simultaneously be made in the low-risk, high-reward Plan C.

As a contribution to this discussion, we suggest a challenge to policy planners in the new administration: Invite the public to articulate its greatest concerns about how and why Plan B might fail. We believe there will be many concerns along these lines. Our own top three are the following:

• The scale of financial investment in the electrical grid, as well as the power plant infrastructure, that would be required to meet national energy needs through wind and solar generation (and the fossil fuel supply required to back them up during periods of intermittency).

• The time-scale to replace 100%, or even 50%, of the electricity supplied by today’s conventional coal-burning plants with electricity generated from alternative energy sources, either nuclear or renewable.

• The additional demand on the national electricity supply if 20 million Americans, or even 10 million, purchase cars that are recharged by plugging in to the grid (and so at best achieve carbon dioxide emission reductions no better than those of today’s non-pluggable hybrids).

As the Inauguration of Barack Obama approaches, we find ourselves waiting, like many of our fellow citizens, to see what a charismatic, talented, and credentialed new generation of leaders will offer us. And we find ourselves concerned that they will come up short. Any version of Plan B based upon the core elements outlined above will be in our estimation too little, too late.

The new President’s program on energy and the environment will also be, on deeper analysis, his approach to the declining availability of fossil fuels and to global climate change. As such, it will represent our nation’s best chance to address these fundamental challenges at their roots. Should this opportunity be missed, we will all experience the consequences of further delay in making the deep changes that are required – the kind of realistic, practical changes that characterize Plan C.

Promoting the Passive House – A Report on the 3rd Annual North American Passive House Conference

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December 10, 2008

By Pat Murphy
Executive Director, Community Solutions

The passive house could play a major role in cutting energy consumption and offers the best way to radically alter our building practices. I have been involved with the organization promoting the concept in America – the Passive House Institute US – for two years. I attended its 2nd annual conference in Urbana, Illinois last year, and this spring I agreed to take part in the founding meeting of the Passive House Alliance, a group of about 20 people building and teaching about passive houses. I was also pleased to be asked to make a presentation at the 3rd annual conference held last month in Duluth, Minnesota.

I have also begun to implement passive house principles in my own buildings and around my hometown. Last year I retrofitted a 1,000 square foot house in Yellow Springs using passive house techniques – it now has a tenant with extremely low heating bills. I also had the pleasure of introducing architect Katrin Klingenberg, the organizer of the annual U.S. Passive House Conferences and co-director of the Passive House Institute US, to an organization in Yellow Springs who is now using her as a consultant for a multi-family building to be constructed next year.

While 2008 saw the third conference in the U.S., this year marked the 12th European Passive House conference, held each year in Germany. Over a 1,000 people attended the 12th European conference in Germany, compared to about 150 who attended the US conference in Duluth. It is only recently that this important movement has been brought to the U.S., largely through the efforts of Katrin and her partner, Mike Kernagis. Together, Katrin and Mike co-direct the Passive House Institute US, as well as ECO-Lab , a non-profit organization that designs energy-efficient buildings for low to middle-income families. I have visited three of these homes and they are delightful, affordable, and environmentally healthy.

To be called a “passive house,” a building must meet the passive house performance standards which are set by the Passive House Institute in Germany. The basic standard is that a building must consume no more than 15 kilowatt-hours per square meter in heating energy per year (equivalent to 4746 BTU per square foot per year). This is achieved by constructing a building envelope, (floors, walls, ceilings, and a roof) that is extremely well insulated and air tight. This means R40 in the walls and R60 in the roof and floor. The building must not leak more air than 0.6 times the house volume per hour at 50 pascals of pressure. The result is a building that uses 90% less heating and air conditioning energy than a typical building according to the Passive House Institute US’s website,

“A Passive House is a very well-insulated, virtually air-tight building that is primarily heated by passive solar gain and by internal gains from people, electrical equipment, etc. Energy losses are minimized. Any remaining heat demand is provided by an extremely small source. Avoidance of heat gain through shading and window orientation also helps to limit any cooling load, which is similarly minimized. An energy recovery ventilator provides a constant, balanced fresh air supply. The result is an impressive system that not only saves up to 90% of space heating costs, but also provides a uniquely terrific indoor air quality.”

Last month’s conference opened with a presentation by architect Katrin Klingenberg. Born in East Germany, she came to the U.S. several years ago and settled in Urbana, Illinois. Unknown to her at the time, the University of Illinois had been one of the leading institutions focusing on low-energy-consumption building in the 1970s and 1980s, during the first U.S. energy crisis. This happy coincidence placed Katrin’s new low energy building movement in a historically hospitable location and the juxtaposition has benefited both the Passive House Institute US and the University. In her talk Katrin gave a history of the passive house, including its remarkable performance characteristics.

Katrin noted that saving energy may no longer be a matter of choice; it may be necessary for survival and world peace. She notes that if we start building only passive new houses today, and we retrofit all homes fully to the passive house standard, then we will be able, with renewable energy sources, to stabilize our climate by 2030.

A big cost advantage of the passive house comes from eliminating the furnace and using the energy recovery ventilation system as a back-up furnace and air exchanger. We not only can get to near zero energy use this way, but to near zero emissions. In addition, Katrin said that we can’t think only about the energy used to operate a house; we must also consider the energy embedded in it, and about the emissions its operation causes. The experiences of passive house builders in Germany show that all this can be done, Katrin said. She noted that the passive house is not a purely European conception – in fact, it walked in its baby shoes here in the U.S. with the work of people like William Shurcliff, author of many books in the 70s and 80s on super-insulated houses and solar energy. Katrin envisioned a time when the way we run our building construction industry is going to be completely changed. Finally, she emphasized that the benefits of passive house building go beyond low-energy use and carbon dioxide emissions. It’s also about comfort, well-being, and air quality. Katrin likens living in a passive house to living outside.

I followed Katrin with a presentation on Plan C, which is both the focus of our organization Community Solutions and the title of my recent book, Plan C: Community Survival Strategies for Peak Oil and Climate Change. I noted how I had been affected by a presentation at the Affordable Comfort, Inc. Home Performance Conference in April 2007 where Dr. Brendt Steinmueller from Germany gave a plenary speech introducing the German Passive House to the U.S. I also had the opportunity to attend a special meeting set up by Linda Wigington of Affordable Comfort, Inc. titled “Moving Existing Homes Toward Carbon Neutrality,” which kicked off an ongoing retrofitting white paper. I showed pictures of our own deep retrofit using the passive house approach and equipment and advocated retrofitting the full stock of 100,000,000 existing American residences to the passive house standard.

The next speaker was Dr. Stephan Tanner who entitled his talk “The Green Bridge.” Stephan says that we can either continue increasing our overall energy demand but replace 85 percent of the fossil fuel supply with other energy sources (the active keep burning approach), or we can improve efficiency by 85 percent and thereby reduce our need for fuels (the passive save fuels approach). We need a green bridge, he said, to carry us from the active to the passive approach. Stephan then noted that the technology for reducing energy use by 85 percent is already available at no additional cost, and asked why we aren’t choosing this. His own answer is that we view the world incorrectly. In particular, we see only the world’s industrial age, and must shift our view if we are to solve the problem of energy efficiency. The mindset we already have won’t get us where we need to go, according to Stephan. Holistic optimization is the key, he asserted, if we are to shed the blinding assumptions of the industrial age and lead a new renaissance.

The passive house is a manifestation of a different approach because through it we can see the world differently, and therefore make different choices. Stephan also noted that because of today’s collapsing real estate market, many people may be stuck with their existing homes and so see the wisdom of making energy improvements. He observed that many of us have yet to overcome the “buy cheap, sell high” mentality when it comes to buildings. Stephen brought widespread laughter from the audience when he ended his talk by saying, “If clients are serious about greatly reducing their energy consumption, I’m happy to work with them. If they want a plaque, I send them to LEED.”

In the afternoon session Mike McCulley, now an associate professor at the University of Illinois School of Architecture, offered a historical perspective. He showed a variety of older houses, including his own, which he had designed and built to use little energy. He described details of his experience building super-insulated houses during the nation’s 1970s energy crisis, including his contribution to the design of an important early experiment in low energy building, the so-called “Illinois low-cal house.” Mike discussed the evolution of the passive solar house concept during that period, including the discovery that devoting 10 percent of a wall to triple-glazed windows resulted in optimal energy efficiency. Automated thermal shutters added even higher savings. Mike noted that such learning ran counter to the conventional thought that on the south side of a house using passive solar design, the more glass the better. Mike described almost being lynched at passive solar conferences in the 1970s for refuting this belief. In America, we tend to think that if a little is good, then a lot is better, when actually moderation is best in many cases. A “more is better” approach to passive solar design often results in overheating and the fading of interior furniture, rather than increased energy savings. Mike was careful to point out some of the limits of the super-insulated houses in that earlier period. The need for reliable ventilation strategies was evident in the 1970s, but equipment able to meet the need was not available. Early heat exchangers required a great deal of energy to operate and ductwork located in unheated spaces wasted energy.

Mike summed up his historical perspective by saying that work on super-insulated houses in the 70s had made great strides, which have been built upon and refined in more recent work on the passive house. He noted that different cultures at different times have taken the lead in developing knowledge and improving technology. For example top work was done in Sweden for a time, and today the leadership role is being taken in Germany. Since the passive house is now generating interest worldwide, it is possible that other nations will now contribute major jumps in innovation. American efforts of the 1970s were not in vain and we should be grateful for the work that was done by early pioneers such as Mike.

The next speaker, Manfred Brausem, is a German architect and developer who has been building to the passive house (known as Passivhaus in Germany) standards for well over a decade. He built the first passive house development in 1998. He is currently at work on projects worldwide including a passive house pilot project in Chile. Manfred’s presentation, titled “What’s in the Box?” was more like Santa Claus delivering presents than a technical presentation. The audience of builders and architects felt like kids in a candy shop. Manfred literally reached into a large aluminum box he’d brought along, and pulled out examples of the best and newest technologies that are being used in passive house building. His box contained items both familiar and strange. In many cases he presented us with things we had never seen before.

Especially impressive were the fascinating devices and materials now available to construct the intricate passive house ventilation systems that replace conventional heating and air conditioning systems, such as the bulky ductwork that often runs through unconditioned attics or crawl spaces, wasting much energy in the process. Manfred’s talk was enough to make any student of the passive house approach begin planning to attend future conferences in Germany. That country is several years ahead of the U.S. and moving forward at an astounding rate – in large part because the German government’s commitment to the Kyoto protocol has created a business environment in which firms are rewarded for helping citizens cut their per capita energy use.

Mike LeBeau and Rachel Wagner talked about their experiences and processes in building high performance homes. Mike’s firm, Conservation Technologies, has been specializing in high performance and low energy building solutions for cold and very cold climates. He first heard of passive houses many years ago, and attended one of the early conferences in Europe. Rachel Wagner is the co-owner of Wagner Zaun Architects in Duluth, a firm that specializes in sustainable design. Since 1996 she has specialized in designing energy efficient residences for cold climates. Rachel and Mike’s joint presentation about how they design and implement projects was highly impressive, offering us excellent preparation for field trips two days later to visit both a house they completed last year and their project currently under construction. Seeing the theory embodied in practice was very educational. The mechanical systems designed by Mike were eye-opening, and Rachel’s architectural design was beautiful as well as functional from an energy standpoint.

Linda Wigington opened the second day of the conference with a talk on “Deep Reductions in Existing Homes – Beyond Business as Usual.” Linda is a founder of Affordable Comfort, Inc., an organization promoting building performance, and helps put on its annual conference. She has been a consultant for residential energy programs throughout the country. In 2002 she received the American Council for an Energy Efficient Economy’s (ACEEE) “Champion of Energy Efficiency” award. Linda’s presentation focused on retrofitting existing homes. I had seen a version of this talk at the July conference of ACEEE where Linda challenged the attendees to go further than the conventional goal of reducing home energy use by 10 to 30 percent. There was a mixed response at her ACEEE presentation, but this was not the case in Duluth. At the Passive House conference she was speaking to the converted –to attendees all committed to very deep energy savings. Linda described her Thousand Home Challenge, an effort to achieve deep retrofits for 1,000 homes around the nation as quickly as possible. Linda’s marriage of the relatively new passive house movement with the more established weatherization movement makes her a very key player in the energy reduction effort. Linda has spoken at several Community Solutions conferences and has achieved an impressive low energy life style.

Marc Rosenbaum is a Licensed Professional Engineer in mechanical engineering with bachelor and graduate degrees from MIT, and special expertise in heating, ventilating, and air conditioning (HVAC) He is the principle of Energysmiths, an organization founded in 1979, to show that sustainable communities can only be based on renewable resources. Marc has focused on integrating renewable energy systems, day-lighting, high performance envelope design, health-sustaining mechanical systems, food production and storage, ecological waste systems, efficient electrical and water systems, and benign, resource-efficient materials selection into his projects. He described an impressive recent super-insulation project on an existing house. He shared his view that, “It’s not what’s sustainable that matters, but what’s survivable.” He hopes that he is wrong about the seriousness of the problems facing us and that a Plan B approach based on renewable energy will work, but he highly doubts it. Marc envisions people living in smaller spaces, and farming in the suburbs. Marc showed a delightful series of cartoons describing the future of our current housing stock: some will be bulldozed, some will be shared, some will be used only in the summer, and in others people will combine households. And a certain number, he trusts, will have deep energy retrofits that provide comfort while using as little energy as possible.

Father-and-son team Ty and Ben Newell’s presentation was entitled “Design and Operation of a Conditioning Energy Recovery Ventilator (CERV) for Passive Houses.” Ben is the President of Newell Instruments and Ty is a retired faculty member in mechanical engineering at the University of Illinois. They are currently attempting to design an integrated unit that will provide whole-house heating, cooling and humidity control for passive houses. Their prototype system is about the size of a window air conditioner. The engineering details of the project were described. They emphasized that integrating the different air treatment machines (heat, cooling, moisture control) allows small units to perform all three functions because a passive house itself is so efficient that conventional units are oversized, expensive and wasteful. This kind of breakthrough is critical. I could not help but think of the legions of engineers working at GE and other giant corporations laboring away to wring out another few percent of energy savings from devices built for big energy wasteful homes.

Mark Hoberecht and Ed Shank presented “Challenges and Benefits of Using Straw Bale Construction to Meet Passive House Standards. “ Mark has degrees in Engineering, Science and Sustainable Systems and has made a career in natural building techniques. Ed is a mechanical engineer with extensive experience in designing mechanical systems for LEED buildings. They provided an analysis of straw bale buildings and how they compare to other passive structures. There are several straw bale buildings in my town and I am familiar with the details of their construction. This presentation carried what I know a step further, demonstrating new and innovative ways to use straw rather than simply stacking the bales with a post and beam structure. It is interesting to me to see how straw bale technology, at least in my area, has shown developments parallel to those of the passive house approach to super-insulation.

Ludwig Rongen was the second speaker who had travelled from Germany. His talk was on “Quality in Passive House Planning and Construction – Assuring Home Owner Comfort.” He emphasized that the passive house is not a high-tech house but rather a low-tech house. He noted that construction managers must pay special attention to the workmanship of a continuous airtight cover and make sure there are no thermal bridges. Less is more when it comes to penetrations in the passive house. He noted the importance of qualified components, like double-sided scotch tape. Ludwig described the Caritas House Network, which is the first passive house senior housing project in Europe and slated for completion in April 2009. Ludwig says that the increased cost to build a passive house in Germany is about five to seven more percent for a single family house that is 100 square meters (about 1076 square feet) but that there is no additional cost for a larger home or a multi-family building. He asserted that the passive house is now really the cheapest type of house to build when life-cycle considerations are included as well as building costs. As Europeans tend to understand better than Americans, life cycle costs include the lifetime cost of energy to heat and cool the house. From a financial perspective, Ludwig concluded, it makes no sense not to build a passive house.

Chris Benedict and Henry Gifford have been busy retrofitting large multi-family buildings in New York City. They are focused on how to build a passive house type of building without increasing the cost, a key factor for persuading consumers, bankers, and others to consider the approach. Chris noted that in the public and political realm, people are now thinking about renewable energy sources. She wondered what the best word would be to describe people building low energy buildings – “Reducibles”? “Reductibles?” She described being upset with seeing buildings called “green” just because their designs included a lot of glass. Chris and Henry said that they are competing with more than 40 non-profits who are doing energy efficiency audits in New York City (or at least say they are), but who don’t really measure anything. I was amazed to learn from them about the challenges of dealing with energy use and ways to reduce it in large apartment buildings and delighted to hear about their innovative solutions. Henry, on his web site Henrygifford.com, has an article arguing that many LEED-certified buildings are actually using more energy than conventional buildings. I am sympathetic with his critique. There is a great deal of pure hype about green building these days, and the small improvements being touted by some of the leading organizations are not really making a dent in our energy/CO2 problem.

A great deal of technical information and a variety of theoretical perspectives on energy efficient building were presented at the 3rd annual Passive House – US Conference. Some were complex, focusing on mechanical systems and new products (such as those presented by Manfred and by Marc). It was heartening to get a deeper sense of the integrity and promise of this organization and the insights that inspired it. In general I continue to be solidly impressed with the passive house models and encouraged by getting to know more of the practiced builders and architects who appreciate its merits. It seemed that in the U.S. hardly anyone has quite achieved the full standard yet, but the approach has been successfully adopted by many builders and designers who understand that practice makes perfect.

At the end of the conference I talked with Linda Wigington about the relationship of the passive house model to her Thousand Home Challenge. She is less concerned with meeting the exact passive house specifications than with encouraging creativity and inspiring more experiments. The biggest problem with the passive house criteria today, she said, is that it doesn’t account for different locations or house sizes. (Larger houses should really use less energy per square foot, not the same or more.) Fortunately, Ludwig reports that the Passive House Institute in Germany had received a grant to develop specifications for five climate zones, which will probably cover the various zones found here in the U.S. New specifications may also include the Passive House standards recommendations to build smaller homes.

This was an exciting conference both because of the talented and experienced presenters and because of the committed and growing audience. Everyone here was focused on implementing solutions – not just on measuring the problem. It was a far cry from conferences where presenters do nothing more than talk about billion dollar government and corporate investments in fanciful solutions. The passive house movement is composed of people who are doers, and they should be commended for their work.

Plan C Bailout Strategy – Dealing with Cars

Filed Under Transportation | 13 Comments

December 2, 2008

by Pat Murphy
Executive Director, Community Solutions

As we move toward government socialism for major corporations and industries, new opportunities arise, as these corporations seem to be at a loss for any innovative ideas. This is not surprising since they have screwed up so badly in recent years and the same people are still in charge. For some time, corporations have held immense power to set the priorities for nations with politicians supporting their efforts since corporations provide campaign financing. Now the shoe is on the other foot. Car and finance CEOs are coming to Washington, hat in hand, begging for bailouts. The elected representatives of the people suddenly have the right to govern – for a while. And this gives them a chance to generate some new perspectives and innovative solutions.

One can see this in the so-called bailout for the American car companies. Detroit is asking for tens of billions of dollars to make the transition to more fuel-efficient cars, along the lines of the Energy Independence and Security Act of 2007 passed in December of that year. The new CAFÉ standards require that automakers increase fleet wide gas mileage to 35 mpg by 2020, including “light trucks” (SUVs). This is well below current existing standards in the rest of the world. With these companies implying they may not be around in six months, it seems silly to be talking about providing government money for such relatively minor goals 12 years from now.

It takes time to develop engineering teams to make good quality small cars. If Honda and Toyota would stop development for five years, then maybe Detroit would be able to catch up. U.S. companies will make a few bad models and learn from them, the way most things are done. But what is the point? In terms of fuel-efficient vehicles, the rest of the world is far ahead of the US and the thought that we can easily catch up is arguable – we haven’t so far. This is true for regular cars, diesel vehicles, hybrid cars and even the long delayed fuel cell car. General Motors is advertising its Volt electric car while acknowledging that there are no batteries available yet to make it feasible. Batteries for cars are still the province of the Japanese, particularly Panasonic, which will provide the batteries for a PHEV that Toyota has announced will ship in 2010. It’s hard to visualize GM begging the government for money to build a technology that can beat Toyota. (Recall that GM made a decision in the past to forego EV and hybrid cars for the doomed fuel cell car.) Toyota is also adding more energy efficient vehicles beyond its highly successful Prius, including a natural gas Camry hybrid. It is also resurrecting four RAV4-EV models to be used in Portland Oregon. In addition to the PHEV, Toyota will also market an all-electric commuter car in the early 2010s. http://earth2tech.com/2008/09/25/toyota-to-debut-natural-gas-car-launch-rav4-ev-project/

Detroit senior executives do not inspire much confidence as innovative leaders. Rick Wagoner, CEO of General Motors, in an interview with Motor Trend magazine in 2006, said his most regretted decision was axing the EV1 electric-car program and not putting the right resources into hybrids. Ford’s CEO Alan Mulally was a Boeing executive for 40 years before switching to cars just a little over two years ago. During his tenure Ford’s stock price has declined 75%. Robert Nardelli, after a long career at GE and a 6 year stint at Home Depot, took over the presidency of Cerberus (who bought Chrysler in August 2007). His experience in retail at Home Depot may or may not have prepared him to be head of an automobile company. It seems strange that the American automobile industry has been unable to develop sufficient leadership depth to deal with the challenges. The nation needs fuel-efficient cars but we don’t need engineering departments and managers who are not able to build them. It just may not be possible psychologically for American car companies to make the shift away from the SUV.

One solution is to buy the designs or manufacturing rights from Honda and Toyota and begin manufacturing high quality Japanese cars in volume in this country with American workers. As a happy owner of one of the first hybrid cars made in this county, the Honda Insight (with a Prius as a second car), it’s clear to me that very reliable high-mileage designs have been available for about a decade. This would keep the vast majority of the American manufacturers’ work force employed along with dealers and other service organizations. U.S. engineers can then take some time to study these cars, make a few errors – and then develop the next generation of vehicles. Simply put, let’s invest a few billion dollars into manufacturing already well-designed cars here. Japan will probably be delighted to provide the designs for a fee – especially since their horded dollars will be worthless if America as a nation goes out of business.

We are in an emergency situation now and car companies should be required to operate as if this is the case. One way to hunker down is to stop building new models every year. A lesson we might adopt from the airplane industry is that there is no more need for model years. When a new airplane design becomes available every five years or so, the aerospace companies then build it. Even today, Detroit does not design and build a new engine or new transmission each year for every model. Most of a new “model” consists of cosmetic body changes – unnecessary except for styling. If we replace 20-mpg SUVs with 45-mpg Toyota Priuses and Honda Insights we will use far less material and labor. We will therefore need fewer production plants. Twice the number of cars would come out of the factories using half the workers and selling at half the price of the big behemoths we would stop making.

What would we do then with the excess capacity of workers and production plants? I suggest they should begin building buses. (GM used to build buses but sold that business a long time ago). Better mileage cars are not a complete answer to our long-range energy problem in spite of the hope for PHEVs (a.k.a. the coal car). Mass transit is needed and that can be provided most rapidly by buses. Currently U.S. cars and light trucks (SUVs) use 60% of transportation fuel – buses use less than 1% (.7%). Medium and heavy trucks use 18.7% of the fuel. There are 222 million cars and light trucks (SUVs) and only 83,000 buses in the U.S. (Transportation Energy Data Book 2008. Table 2-6 and Table 2.12.). One Greyhound bus takes an average of 34 cars off the road, and achieves 184 passenger miles per gallon of fuel. (http://www.greyhound.com/home/en/About/FactsAndFigures.aspx)

How quickly could we do this? GM began building the CCKW, the first version of the so called “deuce and a half” military truck in 1941. The company produced 43,000 CCKWs in 1941, and ramped up to 111,000 in 1942 and 131,000 in 1943. Could all the extra capacity plants in the U.S. deliver 100,000 buses per year after ramping up? Does this mean we could take 3.4 million SUVs off the road each year? Now that’s progress!

We can also lower the speed limit immediately. On October 28, 1942, a War Speed Limit of 35 mph was set. In the first energy crisis of the 1970s the nation adopted a 55 mph speed limit which had the added benefits of significantly reducing deaths from automobile accidents. The fact that we have not already slowed down in response to the current crisis is a reflection of our “fast is best” cultural outlook since that time. We refuse to give up speed – even though doing so would benefit our children enormously. But we will learn.

These approaches may all seem rather prosaic. Energy-aware commentators periodically call for something more dramatic – like a new Manhattan Project to save the nation. But isn’t it more than a bit ironic to hear a call for us to repeat something that represents the worst in human beings – the development of atomic weapons (which we might recall are still set to be fired when the computers decide conditions are right). We might also recall that WWII was essentially over when the bombs were dropped to show their scientific feasibility and I guess to punish the Japanese. The war was really won with CCKW trucks, airplanes, victory gardens and other social mechanisms that required effort and sacrifice from a willing citizenry. Throwing a few billion dollars to the National Labs and asking them to repeat the military innovations of the 1940s would deprive the mass of today’s citizens of the chance to contribute their own efforts and show their willingness to bear some responsibility for our common future.

Some Peak Oil proponents such as Matt Simmons and James Kunstler have called for a rebuilding of the national railroad network. This would take decades – if it is even possible. I am sure they will think of buses as unimaginative. Light rail and bullet trains have all the excitement of high technology. Thoughts of racing between Paris and London on the Eurostar evoke the thrills of speed and cultural exploration. But an extensive investment in buses would not require that we build any new parallel transport rail-based network (presumably running alongside our existing roads). The magnitude of the effort to re-build a national rail system has not yet even been described. People seem to think there are some rusty tracks just waiting to be dusted off, which is not the case.

Table 1: Railroad Line Miles and Track Miles

Year

Line miles

Track miles

1929

229,530

381,417

1947

214,486

355,227

1960

207,334

340,779

1970

196,479

319,092

1980

164,822

270,074

1990

119,758

200,074

2000

99,250

168,535

Source: “Railroad Facts.” Washington, DC: Association of American Railroads, 2004.

The number of railroad line miles and track miles has been decreasing steadily and dramatically since the 1930s, as shown in Table 1, while car traffic has increased enormously. By 1920, car vehicles traveled approximately 45 billion miles on roads annually. Vehicle miles of travel increased more than 66-fold during the intervening 85 years to approximately three trillion vehicle miles in 2004. Road mileage also grew during those 85 years to 3.99 million miles in 2004. If mileage driven has expanded 66 times since 1920 and there are about four million miles of roads, how would we size a rail effort? If we had continued to build railroads from 1929 on, rather than moving to roads, how many miles would we have built? Would it have grown by a factor of 10 to 20 million miles? Since we increased miles traveled by 66 times, maybe a factor of 10 is too low. But in any case, laying a new network of tracks on top of the now-existing road system will result in a huge number of crossings. At present there are about 2.4 crossings per railroad line mile. Will we need 20 million new crossings? How many of them will be hugely expensive viaduct projects (bridges over rail tracks)?

There seems to be a horrible fear in the American psyche of any change that can be experienced as “going backwards,” a fear of what it will mean to reject the “progress” we have made by developing Hummers, jet airplanes, nitrogen fertilizers, McMansions, credit cards, credit swaps and derivatives. The thought of going back down the ladder of so-called progress from cars to buses to bikes to walking fills us with despair. So we cling to faith in innovations – such as light rail, pluggable hybrids and government bailouts – that are already best understood as fading dreams, misguided steps toward an increasingly barren future. More optimistic people, people who never really thought that all this stuff was the core of life, have a different view. They see the coming change as an opportunity for creativity. Why not just bail out Detroit with a government bus program? Maybe growing food in the backyard with neighbors could be a source of joy. Wearing sweaters doesn’t seem all that great a sacrifice. Buses might be a way to meet interesting people. Could dealing with climate change, Peak Oil and bad debts actually be fun?

Curitiba, Brazil has implemented a Bus Rapid Transit (BRT) system. The buses run frequently and reliably, and the stations are convenient, well-designed, comfortable and attractive. Curitiba has one of the most heavily used, yet low-cost, transit systems in the world. The above ground system offers many of the features of a subway system. Vehicle movements are unimpeded by traffic signals and congestion. Fare collection is done prior to boarding. Quick passenger loading and unloading is featured and the systems are above ground and visible. It would be easy to implement such a system in an American city that has had some bus transit experience and this kind of system can eliminate a lot of the problems with American road mass transit. It’s interesting to see the rest of the world dealing with the energy/CO2 problems of today using existing systems. Maybe we should try it!

The Market Has Spoken – Go Plan C!

Filed Under Economy | 5 Comments

November 25, 2008

By Pat Murphy
Executive Director, Community Solutions

Our book Plan C – Community Survival Strategies for Peak Oil and Climate Change hit the book stores in July of 2008. In that month the Dow Jones Industrial Average (DJIA), the barometer of what is most meaningful in modern U.S. culture, was around 11,000, down about 3,000 points from its high of slightly above 14,000 in October, 2007. Since July of 2008 the DJIA has dropped another 3,000 points to around 8,000. Comparisons with the pattern of the DJIA in the late 1920s abound. Arguments suggesting we cannot be in a depression for various reasons are constantly being proposed – and countered by new negative events. We are told that in the Great Depression government failed to provide bailout loans, something which world governments are now doing with abandonment. But these are no more effective in stopping the decline than the opposite actions of governments of the 1920s.

At the core of Plan C is the action of curtailment – a word I selected to make a distinction from mere conservation. The definition of curtailment includes both the act of curtailing, which implies voluntary actions, as well as the state of being curtailed, which can be construed to be involuntary. To curtail means to cut back, to shorten, to abbreviate, to retrench, to reduce. These words now need little detailed definition because people are experiencing them daily (albeit some more than others). Some are having their work hours shortened. Many are retrenching in every way possible. In our office we are cutting back on our use of natural gas for heating, wearing heavier clothing, and sometimes putting on gloves with the fingers cut off to keep our hands warm while typing. Home thermostat levels are being lowered, and extra blankets laid out in the living room to be used when the sun goes down. Trips to speak at conferences are now being reconsidered and driving has been reduced. Curtailment is upon us and it is uncomfortable to everyone and painful to many – particularly those that are being laid off.

We may have been physically more comfortable a year ago. But at that time a deep fear was growing in our souls that the human race might not make it. James Hansen recently called for us all to cut back our CO2 emissions to 350 parts per million (ppm), down from the current 387 ppm - and way down from the official estimates that we could (probably!) survive at 450 ppm. The International Energy Agency (IEA) in its November 2008 report expressed the seriousness of the situation in newly bleak terms, noting that “Preventing catastrophic and irreversible damage to the global climate ultimately requires a major decarbonization of the world energy sources.” There are many other sobering statements in this report, including projections of existing oil fields depletion rates in the range of 4-6 percent annually. In support of this, recent reports from intelligence and defense agencies darkly acknowledge the high probability of future resource wars.

In terms of CO2 generation we have a significant new source of hope. Curtailment is happening! And at a rate that may meet the reductions recommended by the climate scientists, namely about four percent per year. That’s not a lot–at least for the first year. But with overall vehicle miles being reduced this year, and our domestic car companies heading for bankruptcy because they have no really good fuel efficient vehicles, we are seeing a turnaround in driving habits. With layoffs and shorter working hours we can guess that many thermostats are being set back by at least four percent as well. Utility companies report drops in electricity consumption at rates that are more than four percent annually. Maybe some people are even beginning to cut back their food intake–a positive step since we consume 30 to 40 percent more calories than is healthy, and most of us are overweight.

Did all of America read Plan C in the last few months? Book sales numbers suggest not. And we have had no invitation from Oprah to appear on her TV show. So did Americans somehow intuit for themselves the curtailment recommendations of Plan C? Or did the finance gods simply decide to punish us for buying derivatives and credit swaps–violating some obscure commandment dealing with fiscal responsibility? Has something happened in the culture that woke up old ancient survival memories buried in our DNA? Are we experiencing a disquieting common dream in which the muses whisper “Hard times are coming?” I have my view–which is simply that Americans are beginning to wake up to evidence and their own experience. They are starting to see that greed is not good. They are beginning to question the cultural story that material consumption is our reason to live and what makes us great (meaning superior). They are losing confidence in the American view of the good life. They are starting to recall spiritual roots that warn against the pursuit of Mammon (the ancient Christian false god of riches and avarice). They are remembering Matthew 19:24–“And again I say to you, it is easier for a camel to pass through the eye of a needle, than for a rich man to enter into the kingdom of God” and Matthew 6:26–“Look at the birds of the air; they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they?”

What is the stock market collapse essentially? I see it as a loss of confidence in the American system. Americans are now realizing that oil companies like Exxon have been funding anti-climate change lobbyists for decades. They are seeing that American car companies continued to make gas guzzlers in the US while making efficient cars abroad. And they have experienced a most awful shock upon discovering that the venal and manipulative management that prevailed in those kinds of industries was also in control of the finance industry, which meant that their life savings have been subjected to foolish risks. Americans are now beginning to understand that supposedly staid Wall Street bankers in fact more closely resembled Las Vegas casinos. The big-money players knew that the house would take its percentage and support them in casting the dice again and again. Citizens of Las Vegas know that there may be criminal elements behind the casinos; they assume their interests are being watched over by law officials subject to manageable levels of graft and bribery. But citizens of America did not have that protection.

To have discovered that the quasi- criminal elements behind the banks had as little regard for honest citizens as do Mafia dons, and that government officials and Congresspersons were part of the financial manipulation, has been a blow. Oil companies and car companies were only too easy to hate. But banks and financial institutions were supposedly to be pillars of trustworthiness. And now we are observing those very same officials who invented the financial instruments which defrauded us (Henry Paulson, for example) demanding that Congress pass bank bailouts of a magnitude beyond belief. We have watched CEOs take excessive pay for years, backed up with golden parachutes. Now we’ve learned from David Korten (in his essay in the winter issue of Yes magazine) that in 2007, the 50 highest-paid private investment fund managers averaged $588 million each in compensation, 19,000 times as much as the average worker’s pay.

Let’s consider some basic questions, questions that as citizens we should be prepared to answer. Why, for example, do stock markets seem to go up and down constantly? Certainly fundamental business conditions don’t change that rapidly. Review the stock markets of 40 years ago and you will find their daily swings were much less than today’s. This has a lot to do with confidence and the view of the market’s possibilities. One barometer that measures the confidence is the Price to Earnings (P/E) ratio of stocks. Over a long period of time, this ratio increases and decreases depending a lot on the mood of the country. Figure 1 illustrates this ratio, and the “irrational exuberance” that has existed in the first decade of the 21st century is apparent in it. When people buy into the story that they can “get something for nothing,” the P/E ratio rises. And when that bubble pops, P/E ratios decline regardless of the popular delusion (pushed until recently by securities sales people) that sophisticated financial schemes have taken the risk out of the market.

http://www.generationaldynamics.com/ww2010/g070818c.gif

But the “investment party” (for which a more accurate term might be the “speculation binge”) is now over – whether it be in internet stocks, rapidly increasing housing prices, gold, or oil stocks. A lot of paper profits for companies, for stock holders, and for home owners have disappeared. Friends with 401 K programs from respectable corporations and educational institutions tell me they now plan to add years to their work life because their retirement funds (based on the stock market) have lost so much value. No one I know believes that things will return to the way they were. But sadness at this loss of the “good life” is tempered a bit because we know that if things do return to the way they were, oil consumption and CO2 generation will once more threaten the lives of all beings on the planet.

It’s easy to blame the CEOs and board members of our institutions, for as leaders they have indeed failed the people. But we were all complicit. Automobile unions supported the building of SUVs since it increased their wages and retirement benefits. The huge population of workers who entered financial services was smart enough to recognize a financial bubble. But like most people, they hoped to get their stake and get out before collapse occurred. We continued to elect politicians who promoted growth prosperity as the end all and be all. We were not forced to take out home equity loans and remodel our kitchens and take vacations with money borrowed from an uncertain future. To quote the famous Pogo Possum, a character in a political satire comic strip by Walt Kelly popular during the first energy crisis, “We have met the enemy and he is us.” We selected a path that our grandparents knew would lead to perdition.

So we are now “in the state of being curtailed” and we must accept that and begin “the actions of curtailing.” Books and tip sheets abound to tell us how to live more frugally. Most of us now understand better that energy is at the heart of our challenges and that we must move beyond simple and easy efforts like recycling paper and plastic to big steps in reducing our personal energy consumption. Chevron, a major oil company, is running ads in which individual Americans announce “I will leave the car at home more,” “I will carpool to work,” “I will use less energy,” “I will replace three light bulbs with CFLs”, and “I will finally get a programmable thermostat.” When oil companies run curtailment advertising campaigns, can the people be far behind?

What can we expect from the new Obama government? This is hard to predict but we do know that our chances are hugely better with the end of the George W. Bush era. Bush’s administration will continue to practice damage control for the economy, bailing out banks and maybe car companies, but without a coherent overall plan or convincing explanations of what they are doing. For now, the bailout is being extended to whoever has political clout. Some corporations are even buying small banks so they can list themselves as financial institutions in hopes of staking a position at the cash trough. But even proponents are already questioning the Troubled Assets Act. Preliminary loans of hundreds of billions to the financial institutions have not resulted in a resurgence of loans. Even if the banks regain a level of confidence that will allow interbank lending, will consumers jump again at the opportunity to speculate in consumer and housing goods? This is highly unlikely. The early years of the Great Depression were a time of experimentation, and this period will likely be no different. We can expect little reassurance from the government for at least some months. And any effort they make will be risky. A core strategy of simply printing more electronic dollars to send either to banks or underwater mortgage holders or car companies merely patches a system that has been torpedoed and is rapidly taking on water.

The necessary steps for any and all of us are to understand and deal with the reality of what is happening. Hard times are coming. We are beginning a grieving process for a way of life that is passing. Many are now still at the first stage – denial. Watching the Dow Jones Industrial Average and (for the better off) checking our 401 K programs will make believers of us all. The second stage – anger – is probably predominant now, with the targets being banks, appraisers and government home-lending agencies. The third phase – bargaining – is probably best illustrated by the huge number of bailout scenarios. “Give us a few paltry billions and we will create a corporate miracle!” The fourth stage – depression – is a loaded term, since it can describe either a difficult emotional state or the long-term pain of an extended economic disaster. Hardly anyone who is paying attention is fully free from emotional depression as they see an economic depression coming. Unfortunately either kind of depression can last for many years.

The fifth and final state is acceptance – facing our losses and moving on, focusing our efforts more positively again, and setting appropriate new goals. Many people working on Peak Oil and climate change, local organic farming, and home weatherization are in this stage. They are as yet small in numbers but strong in effect. They form the beginning of a larger grassroots movement which will be vital to a successful transition. We cannot afford to wait for a miracle from Washington. One of the most important reasons that Cuba survived their economic hell (caused by the cutoff of oil exports from Russia) was that the government informed the people that it did not know what to do. Instead, the government enlisted the people in solving the problem. And in many cases the government itself learned from innovative local efforts and helped most by disseminating those efforts around the island. Could things get so bad here that we might even listen to ideas from a socialist nation? Our very recent efforts of socialization of corporations and banks may make us more open to this possibility.

Curtailment has arrived – it did not wait for an invitation. Circumstances and our own greed for goods have brought it to us. Five years of talking about peak oil and climate change combined with the huge decline of housing and stock values over the last two years (possibly precipitated by crude oil prices, as some economists claim) have brought not only America but all nations to an understanding that massive change is in the offing. The continuing failure of techno-fixes to provide any really substantial help in these years has not been overlooked by the public. As a people, we will continue to drill (Plan A) and to build windmills and solar panels (Plan B). But in our hearts we know this will not be enough. The crises have been coming too fast and the scientists have been too Pollyannaish about new technology to have kept our trust. Plan C has won by default. Unpopular and painful though it may be, it is the only game in town for long term adaptation. The current system is rotten; its financial benefits have accrued to the few who are rich, and its huge negative externalities to the multitudes of the middle class and poor. Justice calls for a change.

In the meantime the market, which sums up the views of hundreds of millions of people, has spoken. It has told us (or maybe we are telling ourselves), “The party is over.” Today’s market reflects a reality that people are beginning to experience and understand. People are “hunkering down.” They no longer trust their financial leaders. The task is damage control, not expansion. Our job is no longer to determine rationales and schemes to avoid the difficulties but rather to develop strategies and tactics for managing them. This is what the changing market now demands.