Creating Jobs and a Sustainable Energy Future

Transcription

1 Creating Jobs and a Sustainable Energy Future An Action Plan for Department of Energy s Management of Economic Stimulus Funds Author: Phil Mihlmester, ICF International

2 As the proposed Economic Stimulus Bill advances toward passage, the focus will shift to moving funds rapidly to support activities that will produce jobs quickly, increase energy efficiency and affordability, and reduce greenhouse gas emissions. Spending billions of dollars (See Appendix A) expeditiously poses enormous challenges to the U.S. Department of Energy (DOE) and the state and local governments that will be responsible for administering these sums in a short period of time with little preparation or infrastructure to support efficient expenditure (See Appendix B). Institutions and private businesses also will need support to effectively deploy direct funds or make the investments that tax incentives will spur. At the same time, accountability at an unprecedented scale will be critical. This paper proposes seven action steps that could greatly increase the prospects for effective and efficient use of the energy-related stimulus funds. These steps are described below. 1. Establish a DOE Energy Economic Stimulus Program Management Office. The functions of this office, which we envision as centralized but could also be established at the Office level, would be: a. Overall coordination of agency efforts across all the offices and field entities, reporting directly to the Deputy Secretary b. Development of necessary infrastructures to ensure fast flow of funds, as well as centralization of management, oversight, and metrics functions for the Agency c. Recruitment of a core staff of experienced DOE managers drawn from the affected offices, primarily Energy Efficiency and Renewable Energy, Electricity Delivery and Energy Reliability, and Fossil Energy with support from Procurement and General Counsel Offices. Staff would be supplemented by one or more contractor teams with significant experience in PMO operations and fielding large Federal outlay initiatives, as well as substantial energy sector expertise. 2. Implement a Grants Management System. A key responsibility of the Program Management Office will be to implement an effective grants management system by expanding/supplementing existing DOE systems. This will ensure that the Office has the requisite capacity to manage and track significantly expanded grant funds. DOE currently has several procurement mechanisms through which such a system could be quickly established. 3. Develop and Implement Effective Metrics. Unprecedented accountability is a priority for the Administration and is cited in many sections of both the House and Senate versions of the stimulus package and in public statements made by the White House. It will be absolutely essential for DOE to develop and implement a program of effective metrics and concomitant program oversight and direction. Because much of the money will be provided to states, local governments, and nonprofits for implementation, the metrics must be clearly communicated to them; data must be captured, preferably in real-time, to support reporting and information fed back to grantees on their performance. The U.S. Department of Housing and Urban Development s (HUD) HOME Program is an example of a block grant program that has successfully used metrics to enhance grantee performance by publicly sharing performance data a powerful incentive to use resources wisely. This function could be placed in the new Program Management Office or in a separate organizational entity to ensure independent measurement. Appropriate metrics may include: a. Number of jobs created; b. Activity measures such as energy saved or transmission capacity deployed; ICF International, Inc. All Rights Reserved.

3 c. Leverage of Federal dollars with state, local, and private sector investments; d. Cost-effectiveness of Federal dollars spent; and e. Greenhouse gas emissions prevented. This function will support essential program oversight, reporting to Congress, and a program of continuous improvement. Metrics must emulate and improve upon the general constructs of the Government Performance and Results Act and ensure all stakeholders (the public, Administration, and Congress) that public funds were wisely spent and yielded important returns on the investments. DOE should ensure that expertise in program evaluation, monitoring, measurement, and evaluation are included and properly staffed in all stimulus functions. Moreover, how these metrics are communicated to recipients will be crucial, e.g., desktop dashboards, as they contribute to a culture of performance management within an organization. 4. Leverage Public-Private Partnerships. Much of the stimulus agenda will require partnerships with the private sector to deliver products and services in the field, foster joint RD&D initiatives, and support DOE in designing and managing the supplementary systems and processes needed to make these efforts succeed. DOE currently supports many public-private partnerships in a variety of areas, such as energy efficiency deployment, demonstration programs, R&D, infrastructure security, etc. The Program Management Office will work closely with affected program offices to support and expand these partnerships, as necessary, to facilitate stimulus objectives. 5. Create a Best Practices Clearinghouse. To help state and local agencies quickly learn from their peers, and thus ensure that best practices for future energy initiatives are captured from the expenditure of stimulus monies, a Best Practices Clearinghouse should be established. The Clearinghouse (a version of which was authorized under the Energy Policy Act of 2005) would: a. Identify and disseminate key studies, data, and resource materials and trainings related to energy efficiency and clean power generation; b. Share standard documents such as requests for proposals, loan and grant agreements and contracts so that grantees need not reinvent the wheel; c. Ensure materials are Web accessible and complemented by print versions; d. Build on and extend the communities of practice that enable state, local and private sector participants in the program to collaborate through a peer support model network in finding and adopting solutions and responding to implementation challenges. The basics of these networks exist among state energy offices, weatherization professionals, and energy engineers, but their functionality must be improved and expanded to support unprecedented needs for expertise and services. 6. Establish an Energy Efficiency Training and Technical Assistance (TTA) Center. Just as the new Program Management Office will assist the Agency in disbursing funds, the TTA Center will assist state and local governments, tribes, weatherization agencies, etc., in ramping up to receive and spend the funds quickly and effectively, creating jobs and economic activity. The TTA Center could be set up regionally, with at least one branch office in each state. (For example, the Northwest Center could be based in Portland OR, where most support activities would emanate, but have at least one smaller branch in each of the other Northwestern states.) The TTA Center functions would be multifaceted and would include: ICF International, Inc. All Rights Reserved.

4 a. Assistance in grant management and reporting; b. Training of program managers; c. Extending networks of experts and service providers to support rapid mobilization of expanded field delivery capacity; d. Recruiting and training of eligible workers to be assigned to the actual delivery agents (such as community action agencies); e. Centralized procurement support for key tools and equipment, such as blower doors to support home air leakage diagnosis and reduction, etc. Expedited competitive acquisition through GSA Schedules or existing DOE vehicles could be used to procure and stand up the TTA Center rapidly. Staffing by personnel experienced in related DOE programs such as weatherization, ICP (Institutional Conservation Program), SEP (State Energy Program), Electric Reliability, and various RD&D programs, etc., would be a key component. The HOME program operated by HUD is one model of this type of support and offers many years of experience addressing similar issues to those facing DOE. At the national level, providers like ICF develop training materials, write model guides, Web-based training and other e-products, conduct large national conferences and carry out model technical assistance programs. At the HUD field office level, each office has grant funds that it can use to access these technical assistance providers to provide training/workshops/ conferences or provide demand-response (on-call) technical assistance on a wide range of topics. 7. Develop a Regulatory Support Function. As stated previously, many aspects of our energy system are regulated at the state and local level. To accomplish the goals of the stimulus package, DOE must be able to deploy expertise and support to assist utilities and other energy sector entities to gain necessary regulatory approvals, conduct cost-benefit analyses, apply for loan guarantees, comply with NEPA and state environmental requirements, etc., to be able to deploy rapidly in areas such as transmission construction and smart meter installation. This function could be housed in the TTA Center with a related function in the Program Management Office. It will provide expertise on both Federal and state regulation to assist funding recipients to rapidly gain approvals and begin construction on new renewable generation, transmission construction, clean coal demonstration, and related projects. This function could draw upon existing efforts such as the National Action Plan for Energy Efficiency. The Action Plan described above is only a starting point. But it provides an initial roadmap for effectively administering stimulus initiatives that will strengthen the Nation s energy infrastructure, while at the same time creating jobs and jumpstarting the economy in the near term. It also enhances energy affordability and security, and starts us on the road to controlling greenhouse gas emissions ICF International, Inc. All Rights Reserved.

5 What ICF Has to Offer ICF has technical expertise and considerable programmatic experience across the breadth of Stimulus Program areas. This includes: Energy Efficiency: ICF implements energy efficiency programs for states and utilities throughout the United States. ICF also supports the national energy efficiency infrastructure of the ENERGY STAR program, through which it works closely with most of the major energy efficiency program sponsors nationwide. More than 150 ICF staff are dedicated to our energy efficiency practice, and ICF leverages this workforce many-fold through its teaming and networking arrangements. ICF knows what it takes to mobilize large-scale programs on short notice and administer the delivery of energy efficiency services in the field. Renewables: ICF supports regulatory approval and financing for numerous renewable projects throughout the U.S. ICF can capture and deploy this understanding through the Training and Technical Assistance Center and the Best Practices Clearinghouse. Energy Asset Development: ICF is one of the country s leading due diligence and asset valuation consultants for energy asset development. Climate Change: For the third year in a row, ICF has been voted Best GHG Advisor by the readers of Environmental Finance Magazine, and currently supports every regional climate cap and trade initiative in the U.S. ICF can advise on the efficacy of different measures and help assure that greenhouse gas emissions reductions are accurately captured and reported. Transmission and Smart Grid: ICF has supported OE and FERC on transmission issues, and is currently supporting two utilities in the construction of a major transmission project in the Northeast. Clean Fossil Fuels: ICF is supporting several DOE R&D initiatives in the areas of carbon sequestration and alternative transport fuels, Regulatory Support: ICF has provided expert testimony before numerous State commissions on clean coal generation, transmission construction, integrated resource planning, renewables development, and energy efficiency potential and program design. ICF has performed, under tight deadlines, comparable Federal grant programs that leverage Federal dollars to communicate best practices, rules, and regulations through TTA to grantees at the state and local level including HUD s Community Development Block Grant (CDBG) and HOME programs. ICF has managed several large clearinghouses for the Federal Government that are used to capture and communicate best practices, transmit materials, and assist government entities, non-profit institutions, and private citizens to learn from others successes. ICF has designed and implemented grants management systems for a variety of clients including the Departments of Homeland Security, Justice, and Housing and Urban Development (HUD). In each of these tailored implementations, ICF also developed appropriate grants management processes related to planning, executing, monitoring, and control. As part of the monitoring and control function in most of these implementations, ICF established metrics to provide objective measures of performance to improve service ICF International, Inc. All Rights Reserved.

6 delivery and accountability. We worked with HUD to establish the performance metrics for its grantees under the CDBG program. ICF has existing contracts with DOE: GSA Mission-Oriented Business Integration Services (MOBIS), Contract # GS-23F-8182H GSA Logistics Worldwide (LOGWORLD), Contract #GS-10F-0578N GSA General Purpose IT- Schedule 70, Contract #GS-35F-4121D OPM Training and Management Assistance, Contract # OPM GSA Environmental Advisory Services Schedule 899, Contract # GS-10F-0124J Energy Information Administration, Sub to Decision Analysis Corporation, Contract #De-AM01-04EI42004 National Renewable Energy Laboratories, Energy-Related Analysis and Technical Assistance Task Order Contract, Contract # KACX National Energy Technology Laboratory Research & Development Support Services, Sub to Research and Development Solutions, Contract # DE-AM26-04NT41817 Oak Ridge National Laboratory -- New Technology Commercialization, Contract # Oak Ridge National Laboratory -- Combined Heat and Power and Distributed Generation Applications, Contract # The authors of this white paper are senior staff of ICF International, a firm with 40 years of experience in energy policy, energy program development and delivery, and the design and development of public-private partnerships. The views expressed in this paper and any errors are those of the authors and not necessarily those of ICF International. For more information, contact Phil Mihlmester at pmihlmester@icfi.com. About ICF International ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, climate change, environment, transportation, social programs, health, defense, and emergency management markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 3,000 employees serve these clients worldwide. ICF s Web site is ICF International, Inc. All Rights Reserved.

7 APPENDIX A What Will be Spent on Energy? The Stimulus Bill will emphasize several broad themes: 1) using existing authorizations and statutes to rapidly move funds, 2) focus on activities that produce jobs quickly, 3) contribute to energy security through increased efficiency or use of clean, American energy, 4) contribute to environmental security through reduced emissions of greenhouse gases and other environmental issues, such as water and food availability, and 5) ensure unprecedented accountability for the funds expended. The following are the key energy-related areas of focus that will fall largely to the U.S. Department of Energy (DOE) to administer (programs and funding amounts are based on the House bill, are approximate and are likely to change in the conference bills): Significantly increase funding for weatherization of low income homes (as much as $6.2 billion). Expand energy efficiency grants and loans to institutions (such as schools and hospitals) ($1.5 billion). Fund state and local government energy efficiency block grants ($6.9 billion). Make Federal Government buildings more energy efficient ($6.7 billion). (Significant portions of these funds may flow to GSA, but DOE support will be critical.) Install up to 40 million smart meters and develop an intelligent Smart Grid. Construct more than 3,000 miles of new or modernized electric transmission lines. Double renewable energy generating capacity, including geothermal energy, over the next 3 years by implementing loan or loan guarantee programs. Develop alternative transportation options, such as biodiesel and plug-in hybrids. Expand energy efficiency and renewable energy research ($2 billion). Expand RD&D in clean fossil energy systems to allow these domestic resources to be used in a climate constrained world ($2.4 billion). Expand industrial energy efficiency demonstration projects ($0.5 billion) ICF International, Inc. All Rights Reserved.

8 APPENDIX B Existing DOE Infrastructure and Past Experience Accomplishing the anticipated missions in the shortest possible time would be a daunting challenge for any Agency. Fortunately, the U.S. Department of Energy (DOE) has many established procedures and experience managing these types of programs, albeit on a much smaller scale and over a longer timeframe than anticipated by the proposed legislation. Clearly, the Agency will need to access supplemental resources and draw upon institutional memory to field these programs quickly and effectively to achieve maximum impact. What follows is a proposed Action Plan to help DOE to accomplish these objectives. Existing Infrastructure and Past Experience DOE has experience and infrastructure in several of the above areas, but will need to scale up. Other areas will require new approaches. The following represents a very high level summary of past experience and infrastructure available to draw upon. Weatherization. For more than 30 years, DOE has managed the low income Weatherization Assistance Program (WAP). The Program entails Federal grants to the states, which typically subgrant the funds to local community action agencies and other delivery organizations that manage the intake and deliver the weatherization services to eligible low-income households. The challenge will be to scale up this Program from approximately 150,000 homes per year to more than 1 million. It is estimated that this increase would create 40,000 60,000 jobs in the field, and a range of management and support positions. Mobilizing this new workforce will require innovative training, technical assistance, and management approaches. Institutional Conservation. DOE has a history of delivering grant funding to eligible institutions (e.g., historically schools and hospitals) under the old Institutional Conservation Program. This Program and its infrastructure would have to be revitalized. The previous multistep process of preliminary energy audits, energy audits, technical assistance, and grants must be compressed to deliver projects on an accelerated schedule. Federal Energy Management Program (FEMP) and Other Federal Energy Efficiency Institutions. DOE s FEMP has played a leading role in administering Energy Savings Performance Contracts to promote energy efficiency retrofits throughout the Federal Government. This Program has significant monitoring and verification features and strongly leverages private capital. FEMP s institutional knowledge can be key to effectively promoting energy efficiency retrofits in Federal Government buildings, but it must be coordinated effectively with GSA, DOD and other agency efforts. State Energy Program. DOE has extensively funded and worked with the States, usually via State Energy Offices (SEOs), to deliver conservation programs and other related support, such as fuel supply and price outlooks. SEO capacity, in grants management and program management, will need to be significantly ramped up to deliver the range of services called for in various stimulus package proposals. Local Government. DOE has historically worked through the States in its dealings with local government. DOE does have direct experience in local programs, for example, the Rebuilding America and Clean Cities Program. To fund a greatly-expanded direct grant program for local government energy efficiency, some form of block grant structure, similar to HUD s CDBG program, would need to be built and managed. And at the local level, the ICF International, Inc. All Rights Reserved.

9 challenge of building effective grant and program management capacity, plus training, technical assistance, and peer support, is even greater given the number and diversity of participants and needs. Electric Transmission and Distribution. DOE s Office of Electric Reliability and Energy Assurance has a strong history of working with States and the utility industry on these issues. However, actual construction of transmission or installation of smart meters in homes and businesses would have to be accomplished by regulated utilities operating under the guidance of state regulators, and in some cases the Federal Energy Regulatory Commission. DOE will need to evolve an infrastructure and systems to fund these initiatives in conjunction with the utility industry and the regulatory community. Regulatory support across several domains (such as transmission siting, NEPA compliance, rate impacts, and time differentiated rates for smart meters, etc.) would be a key aspect of this mission. Renewable Generation. Again, actual construction of renewable generation is a function of the private sector, the financial community, and the regulatory community. State Renewable Portfolio Standards and the Federal Production Tax Credit currently drive renewable development. Conversion to or addition of an Investment Tax Credit (possibly refundable) would be expected to significantly expand renewable generation project development. To double renewable generating capacity, DOE must determine how it can deploy and manage tax and non-tax credit Federal funds, and also how it can deliver regulatory and financing support and enable access to transmission. This will require the ability for the DOE renewable program offices and OE to work closely with the private sector (e.g., renewable project developers, the financial community, and Federal and State regulators, as well as Regional Transmission Organizations, the North American Electric Reliability Corporation (NERC) and the Federal Energy Regulatory Commission (FERC)). RD&D. Fortunately, DOE has a long and successful record as an energy RD&D agency, funding extensive RD&D programs in energy efficiency (e.g., the Building Technologies Program, including Build America), renewable energy, and clean fossil fuels. In addition, DOE has long funded RD&D efforts in industrial energy efficiency and transportation energy efficiency and alternative fuels. A significant ramp up of these programs and the strengthening and expansion of public-private partnerships to effect commercial scale demonstrations of new technologies will be needed. Again, working relationships with industry, the regulatory community, and the financial sector will be critical to success. A major thrust of the RD&D efforts will be focused on maintaining energy affordability and energy security in a carbon constrained world ICF International, Inc. All Rights Reserved.