August 18, 2006

Interview with Municipal Project Coordinator Daniel Lerch on Post Carbon Institute’s forthcoming book, “Responding to Energy Vulnerability: A Guidebook for Municipalities.”

In October 2006, Post Carbon Institute will publish “Responding to Energy Vulnerability: A Guidebook for Municipalities.” Written specifically for municipal officials, managers and planners in the United States and Canada, the Guidebook will help decision-makers understand and respond to the challenges that world oil supply uncertainty is already creating for local government.

We spoke with Daniel Lerch, coordinator of the Municipal Guidebook project, about the impetus behind the Guidebook, the research being done to develop it, and the benefit municipalities might expect to gain from it.

Post Carbon Institute: First of all, what is meant by “Energy Vulnerability”? Why is that, and not “Peak Oil,” the subject of this Guidebook?

Daniel Lerch: “Peak oil” is a useful shorthand for the peaking and gradual decline of world oil production, but it doesn’t really tell us anything useful about the possible consequences. The problem is not that we’ll run out of oil. The problem is that we’re facing a future of uncertainty and volatility in oil prices as oil markets adjust to rising global demand and falling global supply, and that we’re also seeing similar trends in natural gas. Oil price gains resulting from Hurricane Katrina last year, or the shutdown of Nigerian oil production earlier this year, showed how much more sensitive oil markets are becoming to disruption.

Oil and natural gas together account for two-thirds of U.S. energy use. If the supply and price of these two energy sources is going to be erratic and unpredictable for the foreseeable future, then communities across the industrialized world are going to face some serious vulnerabilities in their energy supply until a new stable system of energy production and distribution is in place.

Other than fueling police cars and keeping the lights on at City Hall, why would energy vulnerability be any more of a concern for municipalities than for a large business? Most local governments have nothing to do with the distribution of electricity or fuels.

In both the U.S. and Canada, municipal governments can have an enormous range of responsibilities, from providing basic services like water, police and schools to implementing long-term plans for future land use and transportation patterns. All of these responsibilities are affected, in the short run or in the long run, by energy supply and price.

For example: Nobody knows if the price of oil will steadily increase by 100% over the next five years, or spike next month for just a week, or stay right where it is for a decade. But each scenario will have different implications for municipal responsibilities, and municipalities need to think through what’s possible, what the ramifications may be, and what they should do about it. This can be from as simple as, yes, “How might this affect the municipal budget for vehicle fuel,” to as complex as, “How might this affect regional goods movement, and thus the local economy, and thus municipal tax receipts and the demand for municipal services?’

Nobody has really had to think about these issues since the oil and natural gas crises of the 1970s because the global system of oil production and distribution was able to ensure the availability of oil and a relatively stable price. As a municipal leader, this meant you could do everything you needed to do, from updating the annual operating budget to getting multi-million dollar transportation projects into the federal funding process, without needing to consider the price or availability of energy in your community as a significant variable. That global oil system is now fundamentally changing, so municipal leaders and planners need to change their assumptions.

If energy vulnerability could have the broad implications you’re describing, how can a municipality of limited means even begin to approach such a complex problem systematically?

I think the key part of that question is how to approach it systematically. It’s one thing to pursue energy-substitution initiatives, like putting the city bus fleet on biodiesel, or promoting renewable electricity purchasing and investment. But because oil and natural gas volatility is ultimately a system problem — that is, the inputs of oil and natural gas affect a system of complex relationships that change as those inputs change — it’s really important to take a very broad view and do a broad assessment of vulnerabilities.

In July of this year, I interviewed over 20 elected officials, planners, engineers and scholars across the U.S. and Canada to get a sense of the current thinking out there about energy vulnerability and municipal responses. The consistent message I got was that energy vulnerability is an enormously complex issue that municipalities simply cannot approach as a mere resource problem or economic problem. It is a complex system problem that will require systems thinking to address in an adaptive, iterative process. We’re actually thinking of including a kind of “Systems Theory for Planners” crash course section in the Guidebook, just to introduce people to some of the analytical tools available for approaching these kinds of problems.

Are there any examples of cities that are already tackling this problem?

Over the last two years there has been a steadily growing number of municipalities that have begun to address energy vulnerability in some formalized way. Many of them started by simply going through the list of City responsibilities and functions and asking, “How might this change if the oil/gas input changed? What do we need on a day-to-day basis to run critical services?”

One California community I talked to that conducted an energy vulnerability assessment found that their town water system was at risk because it was 100% dependent on electric pumps. It wasn’t a surprise, of course, that they used electric pumps; but from this system vulnerability perspective they now realized that there was a direct link from the availability and price of natural gas, to the gas-fired turbines that provided peak electricity loads, to their water distribution system. And this was California, so the threat of future blackouts was very real. It’s a perfect example of how taking energy availability for granted can mask a vulnerability.

So it’s very important to take this broad, system view. Here’s another example: A colleague of mine is doing an interesting study of a pipeline shutdown in a North Carolina following a recent hurricane. It turned out that a huge amount of finished motor fuels was distributed through those pipelines, and when they were shut down, municipalities on the receiving ends faced a shortage. When they asked for access to the State fuel reserves, they found that the State didn’t really have a plan for municipal energy shortages and was holding on to the fuel for their own needs. So they were left on their own.

Prior to the hurricane, probably no one in any of those local governments would have thought to ask such a big picture question as “How does our community’s motor fuel get here?” because it was reasonable to assume that the sophisticated national and regional systems of fuel production and distribution were taking care of themselves. But clearly, municipalities now need to be asking those big picture questions.

Certainly it would make more sense for energy and energy emergency issues to be coordinated at state/provincial or federal levels. Why not just work for change there instead of at the fragmented local level?

The higher levels of government are extremely important for this, of course, and some energy emergency coordination infrastructure does exist in both the U.S. and Canada. But there are three big reasons why municipalities still need to look out for themselves.

First of all, the views from these different levels of government are at very different scales. To use the previous example, there was no state/provincial or federal body actively looking out to make sure that Smalltown, North Carolina would have the fuel it needed immediately following an emergency. And in some ways, you wouldn’t really expect them to — at those levels they’re thinking about hundreds or thousands of municipalities, and larger scale supply chains.

Second, because of that scale difference there’s a clear time lag for higher level responses. Municipal governments are a kind of “first responder” to local problems, whether the problem is within their realm of actual responsibilities or not. For example, a growing concern among municipalities in colder climates is the rising cost of heating fuel. Higher level programs exist to help people heat their homes, and to help local agencies run winterization programs. But in any given winter month, if a family suddenly can’t afford a new delivery of fuel oil, or there’s a problem with natural gas distribution (which has started to happen in other countries because of shortages), it’s the local government that will be the first to deal with the repercussions. It’s also often the local government that’s best placed to undertake preventative measures, such as opening temporary cooling centers during a heat wave.

Finally, a lot of people don’t realize that much of the emergency response planning that does take place at federal and state/provincial levels is really more focused on disaster preparedness. Here in the Portland area, there’s a regional body that coordinates emergency management across five counties; but their focus is on earthquakes, terrorism and avian flu. Energy vulnerabilities will certainly play a role in such preparedness thinking —they will have thought about an earthquake knocking out some fuel distribution capacity, or a terrorist attack targeting local oil reserves— but that’s a very different approach than considering the vulnerability of local energy needs to what are ultimately national and global market forces.

Why write a guidebook for both the U.S. and Canada? Don’t cities function quite differently in the two countries?

They do in some ways, but comparing the two can actually be very instructive. You have strong bodies at supra-local level in Canada, like the Greater Vancouver Regional District or the Federation of Canadian Municipalities, which enables a degree of higher-level policy, coordination and investment than is possible in most parts of the U.S. On the other hand, urban governance in the U.S. is practically a giant experiment of approaches. You have a wide variety of government forms, from giant public bureaucracies that run everything, to “contract cities” that have privatized nearly every municipal function. You also have a wide variety of supra-local coordination and planning structures, from the quasi-governmental regional bodies of southern California to the perpetually toothless Regional Plan Association of the New York City area. With such a wide variety of governance approaches, there’s a wealth of “best and worst practices” that municipal leaders in both countries may learn from.

In a nutshell, what will people get out of the Guidebook?

The Guidebook will include those “best and worst practices” and a “toolkit” of things like an Energy Assessment Tool and sample energy risk management policies, as well as a contextual issue overview to help people understand the issue and frame it as an approachable policy issue. The basic message, however, is: (1) understand the issue, (2) assess your local vulnerabilities, and (3) build local resilience to address those vulnerabilities and mitigate your risks.

How do you mean, “building local resilience”?

Building local resilience, in short, is about developing the capacity of your community to withstand outside shocks and deal with outside problems on its own terms and with its own resources. This has a lot to do with the social and economic networks that make up every community, from neighborhood associations and local faith communities to business associations and local supplier-distributor-retailer relationships.

The stronger these networks are, the more their members (whether households or businesses) can share information, help each other out, and respond collectively to problems. Such relationships create flexibility and foster innovation in ways that more linear or bureaucratic relationships cannot. Some large corporations have known this for years, and of course countless communities around the world have been living this for millennia.

This is where the “relocalization” work of Post Carbon Institute really comes into play. “Relocalization” is about recognizing that the more we meet our economic and social needs from the people and firms we share our community with, the more we all benefit economically and socially in the end. One benefit of that is increased community “resilience” against disruptions to our local economic or social system.

For more information about the Guidebook, or to send your questions and comments, please contact Daniel Lerch (daniel@postcarbon.org), Municipal Project Coordinator.