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What Drives Water and Energy Improvements?

June 9, 2013

??????????????????????????????????????????????When I started this article, the answer seemed clear. Shockwaves resounded as I drilled down on this rather complex subject. Judgment is tempered on the possibility of a misunderstanding of the data.  Read on.

The formula to get clean water and drive energy to cleaner and more efficient resources is well known but poorly followed. Improvement resonates between environmental economics and policy. Incentives and investments by the public sector rarely achieve the desired results. Rather federal regulations followed by investments from the private sector are the formula for success. This then is the thesis of this discussion.

The ancient Greeks may have had it right after all. They believed the essential parts by which everything is based upon consists of earth, water, air, and fire.  It is somewhat strange why they did not include the sun and time within the portfolio of basic elements.  Nevertheless, the world as we know it is a subtle interplay between these classical elements. When it comes to the life, water and energy are the two requisite resources that sustain almost all life forms and brought man from caves to cities.

Society advances by finding better ways to harness water and energy.  Emerging civilizations use water to generate energy. Developed civilizations use energy to distribute water and improve its quality. With few exceptions, energy and water are inextricably linked – more power requires more water and cleaner water requires more energy. Improvement of energy and water resources resonates between environmental economics and policy.

From an improvement standpoint, is water and energy treated differently? Differently from the perspective ways and means to improve quality, where energy providers strives for cleaner and more efficient and reliable sources and water strives to distribute cleaner supplies for agricultural and human consumption.  Where way and means include investment, grants and regulations. While cost is ultimate driver to achieve these goals, the government tends to take a different approach to improve power and water resources. That is, improvement of America’s prosperity by addressing its energy challenges through transformative science and technology solutions.

Energy has the U.S. Department of Energy “to ensure America’s security and prosperity by addressing its energy, environmental and nuclear challenges through transformative science and technology solutions.” On the Federal level, the Federal Energy Regulatory Commission (FERC) regulates the interstate transmission of electricity, natural gas, and oil. However, FERC does not mandate resource allocation.

In an over simplification of a rather complex political, financial, technical, environmental and regional model, the DNA of renewable energy lies in a delicate balance between Renewable (Energy) Portfolio Standards (RPS) benchmarks and federal and state incentives and investments. Like most commodities, the cost and reliability of renewable energy remain the key drivers of installed capacity.

Regulation of the type of energy resource lies in the loosely controlled RPS mandated by each state. According to the National Renewable Energy Laboratory (“NREL”), “an RPS is a statutory requirement to achieve a renewable energy goal by a certain date. RPS programs create a mandate for Load Serving Entities (LSE) to provide renewable energy; they create a lucrative captive market for renewable energy producers who are eligible in a particular state’s RPS program to issue Renewable Energy Certificates (REC) or Solar Renewable Energy Certificates (SREC).

The LSE weighs the relative price of the REC and the cost  of Alternative Compliance Payment (ACP) or Solar Alternative Compliance Payment (SACP) to determine whether it is financially advantageous to purchase REC / SREC (add capacity) or pay the ACP (defer additional capacity).   ACP or SACP is the amount that Load Serving Entities (LSEs), i.e. electricity suppliers, must pay per MWh of electricity that they are unable to generate themselves or buy rights to through REC or SREC purchases in order to meet the state’s RPS requirement. While the ACP or SACP is fixed in any given year, the price of REC or SREC varies based on the market forces of supply and demand.

Mostly vanished from today’s U.S. energy landscape  is a series of federal incentives such as renewable energy grants, energy investment tax credits (ITC), and production tax credits (PTC) amongst others. Also, federally mandated programs to stimulate use of clean energy resources including carbon credits were never a reality.

Figure 1 shows the actual and projected renewable energy consumption from 1980 to 2034 in the U.S. From 1980 to 2010, there was a negligible increase in the consumption of renewable energy. The Energy Information Administration (EIA) projects that by 2035 the U.S. economy will show only a 3% increase in renewable energy usage.

Figure 1: U.S. Actual and Projected Renewable Energy Consumption from 1980 to 2034

Figure 1

As shown in Figures 1 and 1A, about 9 percent of total energy consumed in the United States in 2011 was from renewable resources. Excluding hydropower, which in the conventional state (dams) is not always considered a renewable resource, the net contribution of renewable energy declines to less than 6 percent. The figures bear out the fact that the immediate contribution of solar and wind energy is much less than pundits would have you believe.

Figure 1A: 2011 U.S. Energy Consumption by Energy Source

Figure 1A

Energy consumption increased 1.2 percent to 97.3 Quads in 2011 from 96.2 Quads in 2001, according to data from the U.S. Energy Information Administration, see ( ). During this period, the U.S. population increased 9.2 percent to 311.5 million in 2011 from 285.3 million in 2001. This translates to a 7.4 percent decline in per capita energy consumption in the U.S. from 2001 to 2011. The decline in energy use per person comes largely through gains in appliance efficiency as well as an increase in vehicle efficiency standards.

From 2000 to 2014, the Department of Energy (DOE) allocated on the average only 5.4% of its budget to Energy Efficiency and Renewable Energy (EERE) technologies aimed at clean energy applied Research, Development, Demonstration and Deployment (RDD&D) programs, see Figure 2. During this period, the total expenditure on EERE programs was approximately $20 billion.

There is no dedicated Federal Agency regulating the type of energy resource.  There are agencies, such as the U.S. Environmental Protection Agency (EPA), that approve the construction of power generation facilities. However, the approval system is based on construction and output requirements rather than the type of fuel used to generate power.  The EPA is a non-legislative agency that ensures people in every small community in America will have clean air, drinking water, waste disposal and related services that safeguard their health in a friendly and sustainable environment.

Figure 2: FY 2000 – 2014 Total DOE and Energy Efficiency and Renewable Energy Budgets

Figure 2

U.S. Federal Agencies that ensure America’s prosperity by addressing its water challenges through transformative science and technology solutions includes Commerce and USDA. The regulatory aspects of water are the responsibility EPA, which was created 40 years ago.  Improving protection for public health, water quality and the environment falls under the Clean Water Act (CWA) and Safe Drinking Water Act (SDWA). On March 13, 2013, Michael H. Shapiro, Deputy Assistant Administrator, Office of Water, U.S. EPA  reported to the U.S. House of Representatives that “Our nation’s drinking water meets standards as protective as any in the world, and we have improved water quality and increased public health protection in streams, lakes, bays, and other waters nationwide.”

These acts enabled progress through the construction and operation of wastewater treatment facilities and drinking water systems and pipe. Shapiro’s testimony goes on and states,

“Two of the nation’s most important sources of water infrastructure financing are the Clean Water and Drinking Water State Revolving Fund (CWSRF and DWSRF) programs. In 2012 the SRFs provided 7.7 billion in funding to more than 2,600 communities across the country. Through FY 2012, total funding contributed by Federal appropriations and by states over the life of the two programs is closing in on $120 billion, with only $52.6 billion of these funds having come from Federal appropriations. The CWSRF program has made available approximately $97 billion for loans, and more than 32,000 individual loans have been made.”

Expenditures are one thing, their net impact is an entirely different another matter. Finding current and historical data on the quality of U.S. water inventory was difficult at best. Reports are too old, too narrow or too subjective to give a reliable picture on the current progress towards reducing groundwater contamination and improving the quality of drinking water.  This includes EPA’s “Progress in Water Quality an Evaluation of the National Investment in Municipal Wastewater Treatment,” June 2000; “Section 319 Nonpoint Source Success Stories;” “National Aquatic Resource Surveys;” and the ”Testimony of Michael H. Shapiro, Deputy Assistant Administrator, Office of Water, U.S. Environmental Protection Agency, before the Subcommittee on Interior, Environment, and Related Agencies and Committee on Appropriations U.S. House of Representatives,” March 3, 2013. We will return to Mr. Shapiro’s testimony later in this piece.

Serendipity stuck in finding EPA’s website “Watershed Assessment, Tracking & Environmental Results” ( ). The site provides information on water quality conditions for reporting years 2002 to current (considered 2012).   To the extent that states report data to EPA under the Clean Water Act, the EPA collects information from the states on the total amount of water (miles, acres, or square miles) assessed for the reporting cycle for each type of water (e.g., rivers, lakes, bays, coastal shoreline, wetlands and Great Lakes shoreline). Assessed waters are those for which monitoring or other types of information are used by the states to judge whether designated uses are being met. For definitions, terms and phrases see “FY 2012 NWPG Water Quality Measure Definitions,” (

Figures 3, 4 and 5 gives the Total Assessed Waters of the U.S. for Reporting years 2012, 2002 and Changes between each type of water resource for these years, respectively. The upper section of each Figure is a copy and paste from the EPA’s website. The lower section is my analysis of “Attainment Status” for Good, Threatened and Impaired Waters, in percent of Total Assessed Waters .Figure 5 gives the differences between the percentages given in Figures 3 and 4, i.e., subtract 2002 from 2012 numbers. Negative numbers indicate a reduction; positive numbers indicate an increase. For example, the attainment status of River and Streams shows a 4.9 percent reduction of “Good” water in 2012 from 2002. Similar, there was an 8.3 percent increase in “Impaired” water for Rivers and Streams in 2012 from 2002.

The data shows the percent of:
• “Good” water decreased in all but one of the eight categories,
• “Threatened” water slightly increase for the two reporting categories, and
• “Impaired’ water increased in all but one of the eight categories.

Figures 3, 4 and 5

Without exception, there was a significant increase in water resources assessed from 2002 to 2012. Yet, as long as the EPA data is valid, the proportion of “Good” water decreased and the proportion of “Impaired” water increased. This was a rather startling finding and 180 degrees out of whack from that considered at the start of this piece. As to why, one must go back to Mr. Shapiro’s testimony before the House, ( ). He stated:

“We have come a long way in improving protection for public health, water quality, and the environment under the Clean Water Act and Safe Water Drinking Act since the creation of the EPA over 40 years ago.”

Mr. Shapiro further mentions:

“Our nation needs significant water and wastewater investment. According to the EPA’s surveys, America needs $300 billion in wastewater and $225 billion in drinking water infrastructure improvements over the net 20 years.”

It is certain that Mr. Shapiro has measures to support his statement. Just not, clear where to find that information. This may explain the nebulous note in EPA’s website:  “because of differences in state assessment methods, the information in this site should not be used to compare water quality conditions between states or to determine water quality trends.” That is, nebulous in terms of comparing individual state-to-state trends or year-to-year trends of the collective data from all the states.

Finally, the June 2000 EPA report “Progress in Water Quality: An Evaluation of the National Investments in Municipal Wastewater Treatment” describes the progress made in cleaning up America’s water, see . The report documents the water quality benefits associated with the more than 16,000 publicly owned treatment works (POTWs) across the country. The report also emphasizes the role of the federally funded Construction Grants Program, which provided $61.1 billion in grants to local authorities from 1972 through 1995 to help finance improvements to the nation’s wastewater treatment facilities.

The report states: “Prior to Clean Water Act and federal funding, many of the nation’s waters were too polluted for fishing and swimming, or in severe cases, to sustain wildlife. Approximately 7 million tons of untreated wastewater was being dumped into America’s water every day. The 1972 Clean Water Act established goals to eliminate the discharge of pollutants into the nation’s waters and make its waters fishable and swimmable.”

Since the site “Watershed Assessment, Tracking & Environmental Results” starts in 2002, it is difficult to compare current information with that from the 2000 report. It is our perception and possibly experience that the quality of water across U.S. rivers, lakes and estuaries have improved. However, the current data profiling the last 10 years tends to refute that notion.

EPA is probably correct in saying “In 1997, on the twenty-fifth anniversary of the Clean Water Act, it was reported that more than 60 percent of the nation’s waters supported fishing, swimming and other uses, with the goal of continued improvement into the future. Despite population growth, pollution levels in the nation’s water were reduced 36 percent between 1972 – 1996.”

In conclusion, no definitive conclusion can be drawn regarding the thesis of this discussion – what is more effective – regulations, technology investments or government loans to drive clean up our water resources and get us in the business of clean energy.

If one considers, that federal investments of $20 billion will achieve a few percentage point increase in renewable energy resources, then possibly funded research, development and demonstration programs are the way to go. Efficiency improvements or just being smart how we use energy can go only so far without R&D and innovation. If society is serious in energy security and a cleaner environment, then a paradigm shift must occur in the ways and means we use energy.

Strong regulations backed up by stiff penalties in combination with a loan program to the private sector may be more effective in achieving results. This requires resolve by our lawmakers on Capitol Hill. It’s probably easier for Congress to legislate spending money we don’t have rather than taking the bull by the horn. With energy, we are investing for the unseen future and easy to skate the issue today.

In contrast, water remediation is a more complex subject in terms of scope, variability and its immediacy. This is underscored by the countless tens of billions of dollars spent and hundreds of billions of dollars needed to support, sustain and improve the water we drink and use. If the rhetoric and data can be believed, water quality improvements may have peeked some years ago and now taking a dip. It appears the more surface water we assess the more we find it not so good.

It would be helpful to have innovative ways to clean up water. Yet, with a plethora of available water treatment technologies, the regulatory rather than R&D pathway is a pragmatic approach to improve water quality throughout society. Federal loans are therefore a necessary fact of life. This is not to say research, development and demonstration programs are not needed, they are, but just not high on the priority list when it comes to water. Nevertheless, for the most part, it is a question of throwing conventional technology at an ever-growing problem. With water, we are investing for today. So what price is life?

The one thing that is hard to argue, without legislation, regulations, grants, sponsored RD&D, and loans the situation would be much worse for both clean energy and usable water. Now how do we pay the debt?

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