Last week ten states, joining together as the Regional Greenhouse Gas Initiative (RGGI) hosted the first U.S. carbon-credit auction. Participating states netted a total of $39 million for investment in renewable energy. Plans are in place for the cap-and-trade auction to be held quarterly.

Maryland walked away with $16 million and Massachusetts $13 million. Other states that took part in the auction include Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

The regional auction of allowances will enable the participating states to reduce emissions from carbon sources and have funds on hand to invest in renewable energy instead.  The states sell emission allowances at auction and invest the proceeds in consumer benefits -- energy efficiency, renewable energy, and other clean energy technologies -- spurring innovation in the clean energy economy and thereby creating green jobs.

Each credit sold for a mere $3 a ton at this first auction. Most experts believe that $40 -$100 a ton is needed in order for us to make the switch to a post-carbon economy. 

The states participating in RGGI had already agreed on an initial regional cap on carbon emissions -- 188 million tons per year -- that will be enforced through 2014. Starting in 2015, the cap will be reduced 2.5 percent each year.

The 233 power plants in the ten states are required to pay for each ton of carbon dioxide they emit, as part of the pollution-reduction legislation already passed among the 10 states that limits the amount of carbon dioxide power plants are allowed to emit.

Alternatively, the power plant can find a way to reduce its pollution. One such option would be utilizing combined cycle heat and power technology, creating twice the energy on a per-ton of carbon basis. CS technology is among the efficiency measures funded under the renewable energy incentives in the federal legislation finally signed into law last week attached to the bailout.

State-based legislative innovation like the Regional Greenhouse Gas Initiative has historically led the nation in jumpstarting the green industrial revolution.

California is one example of where this has already happened. Zero-emissions vehicles requirements in CARB legislation in the '90s created a talent pool of engineers that sparked an entire new startup electric car industry in California (with names such as Tesla, Phoenix, ZAP, Miles and AC Propulsion) and provided the initial boost that propelled Ford, Toyota and GM into the electric car industry, by requiring auto companies make at least some zero emissions vehicles, in order to sell in the state.

Large car companies fought that legislation, ultimately succeeding in defeating it.  Yet in different ways the legislation led to the production of zero-emissions vehicles from Big Auto that could revitalize the U.S. auto industry here.

Ford's THINK, developed in response to CARB legislation, is about to return to these shores, albeit now under Norwegian ownership. Rising from the ashes of the EV1, GM is now dedicated to getting the Volt to market in time to save itself. Toyota got a tremendous amount of help from its own government with consumer subsidies to meet the CARB deadline that produced the Prius.  Toyota has become something of a de facto U.S. automaker with Prius-dedicated plants popping up in the states. 

Regional clean energy legislation can thus have very far-reaching effects.

So it will be interesting to see how the RGGI states invest in renewable energy. Boston's MIT, home to a wealth of innovative ideas in need of startup funding, will no doubt have an influence on the direction that Massachusetts decides to take. Maryland's ideas include helping low-income families weatherize their houses and providing upfront funding for home solar panels.

"This is the moment we've been waiting for," said Brad Heavner of Environment Maryland, who pushed lawmakers to join RGGI. "Everyone wants more clean energy, and there's a widespread acceptance that it's a good thing to do to put public resources into it. But we've never been able to come up with the money."
 

 

In the world of climate change, no figure looms larger than Al Gore. From his Oscar-winning documentary to his 10-year clean energy challenge, Gore has been at the forefront of the push to sustainability. But the environmental drum major sounded a slightly different note at a Clinton Global Initiative meeting in New York City this week, urging “civil disobedience” among young Americans to stop the construction of new, non-sequestering coal power plants. 

While I admire the sentiment at the root of this call to arms, I’m wondering if it won’t prove to be more of a divisive force among the people pushing the shift toward sustainable businesses and activities. Up to this point, the public image of the newer sustainability movement has had a distinctly separate tone than the environmental movement of years past. 

Although for many, the term “environmentalism” conjures up images of hippies, the people most associated with reducing their carbon footprint, or offsetting the impact of their Ford Excursion are generally portrayed as affluent, successful Americans, the sort of consumerists many “old” environmentalists—Edward Abbey, for example—decried in their work. 

While these “new” environmentalists may have all the passion of those who strove to protect the planet in decades past, they also have a lot more to lose. Chaining oneself to heavy equipment at a coal plant construction site could have a tremendous impact on a current career and future job prospects, especially with the massive proliferation of cameras and access to information in today’s society.  Furthermore, a desire for many young people to dissociate themselves with the “treehugger” image associated with past acts of environmental civil disobedience might further reduce response.

Most of all, I think that civil disobedience in this case will have little impact on effecting change. From the Salt March to Dandi to sit-ins in at segregated lunch counters in the American South, the most successful acts of civil disobedience have always presented a larger economic challenge. Illegal salt-making cut British revenues, and a sit-ins hurt businesses.  But short of outright property destruction—which I doubt is what Al Gore has in mind—protests will do little to stop the construction of new plants.

Instead, Americans concerned about coal plants can do what they should—and perhaps have—been doing all along: reducing their consumption of energy.  Less demand on the electrical grid severely undermines the arguments that renewable energy sources can’t provide enough power to fuel America’s needs, and reduced demand drops the price of energy in deregulated markets, limiting profits for utility companies that ignore consumer demand for clean power.

So while a bold call, I think civil disobedience in pressuring industry toward more sustainable practices will provide as much division as motivation among clean energy advocates, and in the end, prove fairly ineffective in slowing harmful climate change. 

Photo by Flickr user Simone Brunozzi

 

 

 

Concerns about climate change are prompting states and the federal government to find ways to reduce greenhouse gas emissions produced by power plants.

This emphasis on energy efficiency and conservation conflicts with the business models of many for-profit utilities, which traditionally have depended on increasing the amount of power sold to grow revenue. For utilities to remain in the black while producing less power, the regulations on how they set rates may require a major overhaul.

That means the way utilities make money "has got to change significantly," says Rick Weston, a partner with the Regulatory Assistance Project (RAP), who adds that achieving an 80 percent reduction of greenhouse gas emissions by 2050 (as California intends) will take "wildly expanded investment in end-use energy efficiency in the electric sector."

Weston’s organization advocates decoupling -- an alternative utility revenue-collection approach promoting energy efficiency.

RAP, a non-profit organization funded by philanthropic groups, the U.S. Department of Energy and the Environmental Protection Agency, provides policy assistance to federal and state electricity regulators and energy officials.

In traditional monopoly services regulation, rate cases involve a state's public utility commission, utility company representatives and others to determine a price per unit. This is achieved by estimating the cost of providing service for a year and dividing it by the number of anticipated sales units (the amount of electricity to be sold).

That creates a strong selling incentive, says Weston. Utility companies often derive "a lot more revenue per kilowatt hour than it actually needs to produce it," he adds. When end-users become more energy efficient, that results in lower revenues.

By contrast, rate programs based on decoupling establish a target revenue figure for the utilities, Weston says. This removes the incentive to sell more power to existing customers. If the utility collects more than expected, it's returned to consumers. If it collects less, the difference is collected through rate surcharges.

Electricity decoupling is now the rule in California, Connecticut, Idaho, Maryland, New York and Vermont and is under consideration in Arkansas, Colorado, the District of Columbia, Delaware, Hawaii, Iowa, Kansas, Massachusetts, Minnesota, New Hampshire, New Mexico and Wisconsin.

According to a June 2008 RAP study of decoupling initiatives across the country, decoupling "gives the firm a strong incentive to improve its operational efficiency. Indeed, it is only through such productivity increases that the company will be able to earn increased profits."

Former President Bill Clinton is firmly behind decoupling, and recently calling for it to be a federal mandate.

"Decoupling simply allows the utilities to recover their authorized revenues regardless of differences between forecasted sales and actual sales volumes," says Terrie Prosper, director of communications for the California Public Utilities Commission. "With decoupling, the utilities track any over or under-collections, and adjust rates prospectively as needed."

Prosper adds that decoupling is revenue-neutral in terms of a utility’s profitability and has no "direct" relationship to service quality.

Minnesota’s legislature in 2007 passed an energy bill including a provision that its Public Utilities Commission study decoupling criteria and develop pilot projects. "Decoupling proponents say its main advantage is removing the disincentive to save energy," says Burl Haar, the Minnesota PUCs's executive secretary. "They also believe it'’s important to build in measures to make sure utilities take further steps toward achieving greater energy efficiency."

RAP's Weston says decoupling gives utilities a firm number for annual revenues to use for decision making, and offers incentives, such as managing its own costs more wisely. "The utility now no longer cares about how many kilowatt hours go across the wire because its revenues are already set. In fact, it's interested in anything reducing its cost," he says. A utility may then focus more on the power cost of service than wires and substations, he adds.

"Decoupling recently has only applied to the wires portion of service cost (transmission lines to customer locations), which comprises up to 50 percent of service cost," says Weston. "Power cost is treated separately. Decoupling power costs gives very strong incentives to invest in efficiency. "Wires are 'fixed' costs driven by the number of customers, not by electricity sales," Weston says.

Decoupling a rate system is more common for natural gas utilities. End-user efficiencies have reduced natural gas demand in contrast to electric utilities' 3 percent growth. To stabilize rates, 10 states have adopted gas decoupling, while another 9 are considering it.

The idea of decoupling is not well-received by everyone. "It promotes mediocrity," contends John Anderson, CEO of the Electricity Consumers Resource Council. "It guarantees profitability to the utility. It shifts a significant amount of business risk from the utility to the consumers."

Anderson says it's better to utilize third-party businesses for energy efficiency implementation as is done in North Carolina, New York and Vermont.

Critics contend that if a utility no longer has an interest in increasing sales, “Arguably it doesn’t care whether the wires fall down,” but. RAP's Weston sees holes in that line of reasoning. "That's ludicrous. If the wires fell down, regulators and politicians would go nuts. Even under traditional regulation, there are service quality standards."

Weston says utilities with sales that increase faster than their customer numbers view decoupling as blocking profit potential. He says Florida Power & Light "made it very clear they’re not yet interested in it" during a recent workshop. "If I were a regulator, that would not stand in the way of decoupling. More important things have to happen. It's a regulated monopoly for a reason."

Florida's Public Service Commission is preparing a report on decoupling to present to the state’s legislature by January 1, says Bev DeMello, assistant director for the office of public information, adding it is "premature" to address its focus.

Decoupling is not meant to put utilities out of business or take money from shareholders, says Weston. And regulators still need to be vigilant in decoupling, ensuring no one can predict windfalls or shortages, such as happened in Maine in the early 1990s, where numbers were off by "tens of millions of dollars."

Weston says decoupling is gaining more attention: "With serious discussion about global warming and high energy prices and everything attendant to those significant challenges, folks are taking another look at decoupling."

Image courtesy Wikimedia commons

The U.S. Department of Energy has announced up to $7.3 million in funding for 14 research projects focused on advanced water power technology. The chosen plans vary widely, with some updating old technology and others developing brand-new eco-apps.

I've been really impressed with the cool tidal/wave projects happening abroad. America's progress in this arena has been decidedly lackluster to date. After building the epic riverstoppers of the golden age of dams, the U.S. didn't seem to bother innovating along these lines, so I'm excited to hear about this shot of new capital.

DOE's awards cover the areas of technology development, market penetration, and the development of marine energy centers. The winning entries are listed below:

First Topic Area: Technology Development (Up to $600,000 for up to two years)

• Electric Power Research Institute, Inc (EPRI) (Palo Alto, Calif.) Fish-friendly hydropower turbine development & deployment. EPRI will address the additional developmental engineering required to prepare amore efficient and environmentally friendly hydropower turbine for the commercial market and allow it to compete with traditional designs.
• Verdant Power Inc. (New York, N.Y.) Improved structure and fabrication of large, high-power kinetic hydropower systems rotors. Verdant will design, analyze, develop for manufacture, fabricate and thoroughly test an improved turbine blade design structure to allow for larger, higher-power and more cost-effective tidal power turbines.
• Public Utility District #1 of Snohomish County (SnoPUD) (Everett, Wash.) Puget Sound Tidal Energy In-Water Testing and Development Project. SnoPUD will conduct in-water testing and demonstration of tidal flow technology as a first step toward potential construction of a commercial-scale power plant. The specific goal of this proposal is to complete engineering design and obtain construction approvals for a Puget Sound tidal pilot demonstration plant in the Admiralty Inlet region of the Sound.
• Pacific Gas and Electric Company (PG&E) (San Francisco, Calif.) WaveConnect Wave Energy In-Water Testing and Development Project. PG&E will complete engineering design, conduct baseline environmental studies, and submit all license construction and operation applications required for a tidal energy demonstration plant for the two WaveConnect sites in Northern California.
• Concepts ETI, Inc (White River Junction, Vt.) Development and Demonstration of an Ocean Wave Converter (OWC) Power System. Concepts ETI will prepare detailed design, manufacturing and installation drawings of an OWC. They will then manufacture and install the system in Maui, Hawaii.
• Lockheed Martin Corporation (Manassas, Va.) Advanced Composite Ocean Thermal Energy Conversion (OTEC) cold water pipe project. Lockheed Martin will validate manufacturing techniques for coldwater pipes critical to OTEC in order to help create a more cost-effective OTEC system.
  

Second Topic Area, Market Acceleration (Award size: up to $500,000)

• Electric Power Research Institute (Palo Alto, Calif.) Wave Energy Resource Assessment and GIS Database for the U.S. EPRI will determine the naturally available resource base and the maximum practicable extractable wave energy resource in the U.S., as well as the annual electrical energy that could be produced by typical wave energy conversion devices from that resource.
• Georgia Tech Research Corporation (Atlanta, Ga.) Assessment of Energy Production Potential from Tidal Streams in the U.S. Georgia Tech will utilize an advanced ocean circulation numerical model to predict tidal currents and compute both available and effective power densities for distribution to potential project developers and the general public.
• Re Vision Consulting, LLC (Sacramento, Calif.) Best Siting Practices for Marine and Hydrokinetic Technologies With Respect to Environmental and Navigational Impacts. Re Vision will establish baseline, technology-based scenarios to identify potential concerns in the siting of marine and hydrokinetic energy devices, and to provide information and data to industry and regulators.
• Pacific Energy Ventures, LLC (Portland, Ore.) Siting Protocol for Marine and Hydrokinetic Energy Projects. Pacific Energy Ventures will bring together a multi-disciplinary team in an iterative and collaborative process to develop, review, and recommend how emerging hydrokinetic technologies can be sited to minimize environmental impacts.
• PCCI, Inc. (Alexandria, Va.) Marine and Hydrokinetic Renewable Energy Technologies:  Identification of Potential Navigational Impacts and Mitigation Measures. PCCI will provide improved guidance to help developers understand how marine and hydrokinetic devices can be sited to minimize navigational impact and to expedite the U.S. Coast Guard review process.
• Science Applications International Corporation (SAIC) (San Diego, Calif.) International Standards Development for Marine and Hydrokinetic Renewable Energy. SAIC will assist in the development of relevant marine and hydrokinetic energy industry standards, provide consistency and predictability to their development, and increase U.S. industry’s collaboration and representation in the development process.
  

Third Topic Area, National Marine Energy Centers (Award size: up to $1.25 million for up to five years)

• Oregon State University (OSU), University of Washington (UW) (Corvallis, Ore. and Seattle, Wash.) Northwest National Marine Renewable Energy Center. OSU and UW will partner to develop the Northwest National Marine Renewable Energy Center with a full range of capabilities to support wave and tidal energy development for the U.S. Center activities are structured to: facilitate device commercialization, inform regulatory and policy decisions, and close key gaps in understanding.
• University of Hawaii (Honolulu, Hawaii) National Renewable Marine Energy Center in Hawaii will facilitate the development and implementation of commercial wave energy systems and to assist the private sector in moving ocean thermal energy conversion systems beyond proof-of-concept to pre-commercialization, long-term testing.

Image courtesy Wikimedia Commons

As a companion piece to McCain's 50 Votes Against Clean Energy, published last week, this article lists Senator Obama's votes on the same clean energy bills. Obama joined the Senate in 2005, so his list begins at vote number 27.

 

Obama was not present for the last three clean energy votes, so I contacted his Senate office to find out how he would have voted.  His energy staffer told me that he would have voted "yes" on all three, which is consistent with his record, as these were repeat attempts to pass legislation that he had voted in favor of previously.

I had recorded "no" votes for McCain on the 13 that he missed  because his staff had told a Forbes reporter that that's the way McCain would have voted on the bills in question. Further, the staffer said that McCain would have supported the Republican filibuster, as he had done in the past. 

Since his Senate debut in 2005, Obama has had 24 opportunities to vote for clean energy, and he chose clean energy 23 of those times. The one time he did note vote with Boxer was in 2005 when he voted for nuclear power subsidies as part of the McCain-Lieberman bill. By contrast, McCain scored at the Inhofe end of the scale.

Summary

Obama's first vote: 1-(27) '05 (D) Increase clean energy R&D funding
Boxer Yes
Obama Yes
Inhofe No
McCain No
passed 53-46

2-(28) '05 (R) Appoint Stephen L. Johnson to head of EPA
Boxer No
Obama No
Inhofe Yes
McCain Yes
passed 61-37

3-(29) '05 (D) Clean energy incentives
Boxer Yes
Obama Yes
Inhofe No
McCain No
failed 47-53

4-(30) '05 (D) Try again to establish a RPS
Boxer Yes
Obama Yes
Inhofe No
McCain No
passed 52-48

5-(31) '05 (D) Tax oil company windfall profits rebates to consumer
Boxer Yes
Obama Yes
Inhofe No
McCain No
failed 35-64

6-(32) '05 (D) Tax oil companies windfall profits to fund clean energy
Boxer Yes
Obama Yes
Inhofe No
McCain No
failed 41-65

7-(33) '05 (R) Cap and trade funded nuclear subsidies McCain-Lieberman
Boxer No
Obama Yes
Inhofe No
McCain Yes
failed 38-60

8-(34) '05 (R) Let wind NIMBYs prevent wind development
Boxer No
Obama No
Inhofe No
McCain Yes
failed 32-63

9-(35) '05 (R-D) Energy funding: both fossil and clean energy
Boxer Yes
Obama Yes
Inhofe Yes
McCain No
passed 85-12

10-(36) '05 (D) Tax oil to fund energy efficiency assistance
Boxer Yes
Obama Yes
Inhofe No
McCain No
failed 48-50
11-(37) '07 (D) Cloture vote tax incentives for clean energy
Boxer Not present
Obama Yes
Inhofe No
McCain Not present
failed 57-36

12-(38) '07 (D) Increase science and new technology funding
Boxer Yes
Obama Yes
Inhofe No
McCain Not present

13-(39) '07 (D) Cloture vote tax incentives for clean energy
Boxer Not present
Obama Yes
Inhofe No
McCain Not present
passed 62-32

14-(40) '07 (D) Tax incentives for clean energy
Boxer Not present
Obama Yes
Inhofe No
McCain Not present
passed 65-27

15-(41) '07 (D) To expand liquid natural gas development
Boxer Yes
Obama Yes
Inhofe No
McCain Not present
failed 37-56

16-(42) '07 (R) Inhofe coal-to-liquids fuel subsidy
Boxer No
Obama No
Inhofe Yes
McCain Not present
failed 43-52

17-(43) '07 (D) Ensure that "renewable fuels" are green
Boxer Yes
Obama Yes
Inhofe No
McCain Not present
passed 58-34

18-(44) '07 (D) Include RPS in final energy bill
Boxer Yes
Obama Yes
Inhofe No
McCain Not present
passed 56-39

19-(45) '07 (D) Cloture to vote on bioenergy funding
Boxer Yes
Obama Yes
Inhofe No
McCain Not present
failed cloture 55-42 (cloture needs 60)

20-(46) '07 (D) Cloture to vote on 2007 Energy Bill included PTC
Boxer Yes
Obama Yes
Inhofe No
McCain Not present
failed 53-42 (cloture needs 60)

21-(47) '07 (D) Cloture Full 2007 Energy Bill still including production tax credits
Boxer Yes
Obama Yes
Inhofe No
McCain Not present
failed by one vote* 59-41 (cloture needs 60)

22-(48) '07 (D) 2/3 stripped down 2007 Energy Bill: only CAFE
Boxer Yes
Obama Not present (staff said: Yes)
Inhofe No
McCain Not present
passed 86-8

23-(49) '07 (D) Cloture to extend the PTC solar and wind incentives
Boxer Yes
Obama Not present (staff said: Yes)
Inhofe No
McCain Not present
failed 52-44 (need 60)

24-(50) '08 (D) Cloture to extend the PTC solar and wind incentives
Boxer Yes
Obama Not present (staff said: Yes)
Inhofe No
McCain Not present
failed cloture 53-43 (need 60)

Obama was not the first choice of nearly half of the Democratic voters. Compared to Hillary Clinton, his support for nuclear power, shown by his vote for McCain-Lieberman (35) was troublesome to many Democrats. Before he voted with most of the Democrats against Inhofe's bill to fund coal to liquids fuels (42) he let Inhofe think that he would support it.

As a result, a roar of disapproval went up among environmental activists, and Obama (along with eight others) disappointed Inhofe with a change of heart, as CNS newsman, now Inhofe staffer Marc Morano bitterly noted on the Environment Committee website at the time.

Senator Bingaman then inserted an amendment (43) that only low-carbon synthetic fuels (such as genetically engineered algae biodiesel) could qualify for subsidy, which Obama supported. While this has made for good, strong policy, many Clinton supporters felt that a truly "green" president should have been already aware of this problem, even though Obama ultimately voted "no" to coal-to-liquids fuel.

However, based on Obama's consistently pro-environment voting record, he is apparently far from the wolf in sheep's clothing that Hillary voters feared. There is virtually no discrepancy between Obama's frequently voiced concern with climate change, and his voting record on how to deal with it.

Related stories:
McCain's 50 Votes Against Clean Energy
Obama Plans Zero Energy Buildings Nationwide By 2030

Photo by Flickr user jurvetson

 

 

As the United States continues to shop around for a carbon reduction plan amenable to a majority of its legislators, inspiration has most frequently been drawn from the decidedly more progressive nations of the EU.  Yet this week, a prominent British scientist put forth a report that casts serious doubt on the validity of the United Kingdom’s currently enacted climate change solution.

The main thrust of the report is that a full third of all British power sources will be shut down due either to the carbon restrictions, or to old age by 2020. That leaves what the report termed a “yawning gap” of some 23 gigawatts, or roughly 400 of the world’s most powerful wind turbines, constantly operating at peak efficiency. 

The study also raises questions about the massive subsidies currently being offered by the British government for research and development of new clean energy sources. With some two billion dollars handed out last year, the total taxpayer money spent on developing new clean energy resources could top 60 billion dollars by the year 2020, when many of the existing power sources are set to go off-line. That same figure could fund the construction of fifteen nuclear power plants, more than enough to cover the gap in energy demand. 

Having said that, the report doesn’t entirely sell me on economic grounds. Nuclear reactors are very expensive to build, but they’re also pricey to run. To guarantee return on investment for anyone putting money into the new plan, the report recommends that the government fix the cost of power, regardless of availability or demand.  A fixed price both limits the incentives consumers have to save electricity, as well eliminating many of the cost advantages to additional power development in the first place. 

It’s also worth noting that the report is hardly an example of free and independent science. Its author is a noted and fervent supporter of nuclear power, and the man who commissioned the report, Andrew Cook, is a life-long industrialist and businessman, who may face significant financial expenditures to bring the processes of his company into line with the stringent carbon limitations.

While it’s clear that an eventual transition to clean power sources will present many challenges, reverting to non-renewable energy out of fear hardly seems like a reasonable solution. Even in a worst-case scenario of rolling blackouts and brownouts, continued growth is still possible.  India’s current rise as an economic powerhouse continues despite pronounced electrical shortages. 

Nevertheless, measures like allowing energy costs to float freely with availability and demand, and in-home energy use monitors, should allow—and indeed, motivate—consumers to use almost exactly as little power as they need, softening the clean energy transition, and setting the stage for a more sustainable future. 

Photo from Wikimedia Commons

 

 

Not long ago, most people viewed energy conservation as turning off the lights when they left a room or closing the windows when the AC is running. But the energy conservation programs of today ask us to take a much more involved, hands-on role. Utility companies across the country now offer incentives to add green building features to our homes, upgrade appliances, and generally take a more proactive approach to energy conservation. In some states these programs have already enjoyed notable success, but in most of the country there is still a feeling-out process underway: utilities touting new programs, customers asking questions, and both sides trying to agree on the best way to pursue energy conservation.

Building the Incentives

The success of energy-efficiency programs is hard to measure when you consider all the variables that come into play -- population growth, fluctuating energy prices, and program costs -- but groups like the National Resources Defense Council (NRDC) are working to put standards in place and promote the independent verification of results.

The areas of the country with the most developed and successful energy conservation programs are California, Texas, New York, New England and the Pacific Northwest, says Sheryl Carter, the co-director of the energy program at the NRDC. With utilities and government agencies anxious to create more conservation programs, the NRDC is advising these groups and promoting legislation that will help the programs succeed.

"States that have never had programs before are contacting us, regulators and utilities both. It's important how you design the program, and we look for aggressive targets and making sure the portfolio is cost-effective and there is independent verification [of the program's results]," says Carter. "At that point, there are so many different designs, but we do know that regulators need to be more involved."

While federal, state, and even local governments use incentive programs to encourage conservation and investment in renewables -- often in the form of tax breaks and grants -- the majority of these programs are offered directly through utility companies. Many of the incentive programs are aimed at small businesses and large commercial customers because they can make the biggest impact in the shortest amount of time. However, utilities increasingly are targeting residential customers, offering everything from rebates to loan programs and giveaways that are designed to appeal to both their wallet and eco-conscience. The primary goals are to increase energy efficiency and lower energy prices, but most utilities are still in the early stages of building out these programs.

"The important thing is to go after a whole package of policies," said Carter. "Light bulb programs are cheap and offer the quickest bang for the buck, but you need to look at plug loads for all of our electronics. HDTVs are now a major energy user, and there isn't a good standard or labeling, so there is a lot of work to do in that area as more efficient designs become clear."

Some of the most prominent green building incentives in the commercial sector are tied to LEED, a certification system that awards points for site selection, materials, energy and water efficiency, and renewable technologies, among other things. On the residential front, utilities offer rebates on home improvements such as insulation, double-paned windows, energy efficient lighting and air conditioning systems, solar water heating and photovoltaic (PV) systems. Utilities that give rate discounts to encourage residential energy efficiency often use the federal Energy Star program as a guideline, and offer the owner or tenant a percentage discount on each month’s electric bill.

The Database of State Incentives for Renewables & Efficiency has a comprehensive listing of renewable energy and energy efficiency incentive programs and regulatory policies administered by federal and state agencies, utilities, and local organizations. Even with all of this information available, however, customers still need to do some legwork to figure out how the programs work, which can entail anything from researching solar technologies and foam insulation to having a home energy audit done.

Utilities sometimes struggle to get enough customers involved to make these programs pay off, and this is where effective education and marketing comes into play. In addition to informing customers about technologies and concepts that are often complex and difficult to comprehend, the utilities need to offer the right type of financial incentives to get more customers involved. And this is where things can get sticky.

The Marketing Conundrum

When Florida launched energy incentive programs in 2003, the promise was to bring more clean energy to the state, and to reduce the price of energy for all its customers through conservation. However, when it was revealed that most of the money collected from customers was used to pay for administrative and marketing costs, it caused an eco-uproar, and in July state regulators shut the program down and launched an investigation.

Florida Power & Light (FPL) hired eco-utility provider Green Mountain to market the Sunshine Energy Program to create demand for more than 1.2 million megawatt hours of renewable energy and over 450 kilowatts of new solar projects in Florida. Under the program, some 39,000 customers agreed to pay an extra $9.75 per month for renewable energy projects, but when a recent audit showed that three quarters of the $11.4 million collected from FPL customers since 2004 went to administrative, marketing and management expenses, customers started to complain. The problems escalated when FPL customers found out about an eight percent rate hike this summer, and another eight percent increase planned for January to cover costs associated with solar projects.

Sunshine Energy customers were promised renewable energy credits and solar development, and according to Green Mountain the costs for sales and marketing were $5.8 million, which resulted in 38,000 new customers in four years. So where did all that money go? Since 2004, Green Mountain made 56,000 hours of telemarketing calls, mailed 3.6 million pieces of direct mail, delivered 38 million enrollment forms on customer bills and sent 7.6 million bill inserts to market the program to FPL customers.

The Green Mountain case highlights the importance of educating customers not only on the energy program, but also the costs and other details of the programs. In California, about 15 percent of the money collected from customers enrolled in Silicon Valley Power's Green Power program goes to administrative and marketing costs, and in Georgia Power's green energy program about 1 percent of the money collected is spent on marketing and about 14 percent on administration.

Of course, for utilities that are trying to promote green programs for the first time, the marketing costs represent something of a Catch-22: without effective marketing, customers may not understand the programs and incentives for them to participate. But if the costs go too high, they run the risk of upsetting and alienating the very customers they want to attract.

"Marketing and education is critical and the way to resolve it is to have a portfolio of programs, so if some are more expensive it makes the marketing more cost effective. It's done that way here, and in California and the Northwest," said Carter. "You also have to take into account the life of the program, which is 10-15 years for some, and put it all together and present the value of the costs."

In addition to determining the costs, utilities also have to report the results of these programs in order to justify their continuation.

"These incentive programs have become an important part of earnings, and we need to be sure they can verify and validate performance. There are people who are skeptical and raise questions because the reporting and monitoring system is fairly elaborate," said V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies (CEERT). He also noted that utilities are better at validating performance in the commercial sector, but there is more work to do with residential programs.

Case Study: Austin Energy

Austin Energy is a community-owned electric utility that has one of the most successful energy efficiency programs in the country, which has been growing for more than 20 years and is focused on renewable energy, green building and solar rebates. Energy efficiency has become a major part of Austin Energy's generation plan, which aims for 55 megawatts of carbon offsets every year.

"We think energy efficiency is the least expensive form of generation," said Ed Clark, the communications director at Austin Energy. The utility's overall goal is to offset 700 megawatts of energy between 2003 and 2020, and it is already approaching 200. By 2020, 30 percent of its power will be from renewable sources, and it expects to hit 11 percent by end of year, according to Clark.

When new batches of renewable energy come onto the grid, Austin Energy offers fixed-rate plans that are locked-in for a period of 15 years. Clark said that 80 percent of this renewable energy is sold to some 500 businesses around town, but about 10,000 residential customers are in on the action, too.

"We're entirely different from Florida because we contract for wind power and give customers the benefit of the costs," said Clark. "We do not add profit to the price we charge, so it costs 5.5 cents per kilowatt hour, fixed for the life of the contract.

Austin Energy’s Home Performance with Energy Star program offers rebates and loans for energy-efficiency improvements, and since 1982 more than 200,000 Austinites have participated in the utility’s energy efficiency programs. The Power Saver program offers customers rebates up to $1,575 for air conditioning, attic insulation, solar screens, and similar green upgrades, and the utility will also pay for as much as 75 percent of the cost of installing solar panels, and has rebates of as much as $2,000 for solar-water heaters. All in all, Clark said that Austin Energy gives back about $15 million in efficiency rebates every year.

One of the keys to Austin Energy's success is that it has a built-in marketing and outreach infrastructure and doesn't have to spend much money on marketing. With significant support from contractors, heating and cooling and other companies that support and carry out the green programs, the word gets out to an already green-minded community. So with annual revenues of $1.3 billion, the utility spends only $2 million per year for all of its marketing programs, and does very little advertising. Clark said that Austin Energy gets frequent calls from other utilities around the country asking for advice on how to build up their energy efficiency programs, which is a long and involved process.

"A utility starting from scratch can have a long list of things to go through to get a comprehensive program going, and they need a way to pay for it that doesn't create a burden on customers," Clark says. "They also need to figure out rebates and how much to pay – is it enough to entice customers and keep you in a reasonable cost framework?" he adds.

Another factor in Austin Energy's renewable program success is that it's publicly-owned and managed by the city, so green initiatives can be proposed and passed at the discretion of the city council and voters. In the utility biz, not having to answer to investors – who may not be as concerned with long-term benefits and environmental concerns – can be a big advantage. According to an American Public Power's annual report, there are 2010 publicly-owned utilities, 882 co-ops, and 217 investor-owned companies. However, the investor-owned utilities account for almost 70 percent of the customers nationwide.

A Bumpy Road Ahead?

In 2005 the EPA launched its National Action Plan for Energy Efficiency, a private-public initiative that is meant to get utility companies and regulators working together to create new incentive programs. While this may bode well for the success of new programs, there is still resistance to some of the offers that have been proposed by utility companies trying to get customers on board. In some instances, customers are accusing utilities of taking advantage of the situation, and are simply using conservation programs to boost profits.

In North Carolina, there is an ongoing and heated debate over Duke Energy's Save-a-Watt program, which rewards the utility for cutting energy demand in the state. Opposition has come from all sides -- consumer and church groups, environmentalists, the City of Durham, and the state's consumer protection agency – and critics charge the program would raise prices for customers while rewarding shareholders and delivering only modest energy savings. The North Carolina Utilities Commission is expected to rule on the Save-a-Watt proposal later this year, and its decision will likely impact the program's success in the other four states where Duke Energy provides power. In those states, the utility is already negotiating terms that are more favorable to customers, and put caps on shareholder profits.

Despite the setbacks of individual programs, there is little doubt that energy conservation programs will be a major source of reducing carbon emissions into the future, but informing customers about the programs' expenses and goals will be an important part of the equation.

"Utilities have had a good experience in the commercial sector, but the residential market will remain a challenge," says White.

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UK Serves Up Mouth-Watering Greencentives

Photo by Flickr user sequacious

 

As energy prices continue to rise, human beings have turned to ever more diverse sources to meet their energy needs. But as a string of innovative products has demonstrated recently, one of the cleanest running and most reliable power sources might be lying right below our noses. Boise-based startup M2E is serious about delivering you added power from your everyday activities.

Certainly, the notion of human power is nothing new. From butter churns to bicycles to kinetic watches, human beings have provided power to nearly every process imaginable at some point. But the concept of human motion being captured and stored as electricity is a relatively new idea. 

M2E has already announced plans for a commercial charger that taps the motion of your body to create energy and store it in a $40, iPod-sized unit with a USB port. The company claims it can provide you with an extra hour of talk time on your cell phone—not bad considering the increasing drain newer models are placing on their batteries. In theory, if you limited your talk and phone time strategically, or strapped on enough battery packs, you could power your phone entirely with your own movements, eschewing the coal-heavy power supply entirely.

There is, however, some debate about whether human power is truly clean. While The Matrix depicted a future in which human beings were grown wholesale as a power supply, the film overlooked that humans, by the laws of thermodynamics, must consume more energy than they provide. In fact, due to carbon emissions inherent in the production and delivery of most food, some have theorized that walking is less carbon-friendly than driving. 

While many impacts of human activity are detrimental to the environment, the biggest problem involved with human-powered technologies isn’t efficiency but power. While a fit cyclist may be able travel roughly 53 miles on the energy contained in a burrito, with sustained power outputs of only 200-300 watts, the trip will take several hours.

Fortunately, the human-movement power systems offered by M2E are currently being developed into wider motion-based energy solutions. Things like the rocking of a car’s suspension may someday help to power its windshield wipers, and other motion-based technologies, such as hydrokinetic power, may also make massive gains from the research. As M2E’s engineers have already improved output from their systems some 300 to 700 percent, the investment you make in an iPod charger one day may help you power your house the next.

Photo by Flickr user woodleywonderworks

If you think the energy situation is bad today, wait a few years. That's the glum reality outlined in "Profit From The Peak: The End of Oil and the Greatest Investment Event of the Century," by authors Brian Hicks and Chris Nelder.

Written from the perspective of capitalists with a conscience, the authors systematically depict the world of dwindling energy supplies and rising demand, and provide guidance on how to prosper in a post fossil fuel era. The authors make their case by drawing on a wealth of energy research from government agencies, universities, independent analysts and industry groups. They provide useful links to online resources that enable the reader to delve deeper into the data that supports their strong arguments.

While the authors reference the environmental impact of fossil fuels, they refreshingly write as principled pragmatists rather than as all too familiar Earth-first advocates. (Al Gore isn't mentioned.) They instead cite the impending high cost of fuel and energy independence (quoting ideas from security hawks including James Woolsey and George Schulz) among their rationales for fleeing fossil fuels. With an accountant's acumen, they calculate the hidden cost (when factoring in tax breaks to the oil industry and military costs) of a barrel of $75 oil being $480.

The first half of the book focuses on the current and short-term prospects for meeting our energy needs using fossil fuels, and it doesn't look good. Hicks and Nelder convincingly argue that the clock is running out on energy as we know it. Oil's inevitable countdown is well known to peak oil enthusiasts, but the authors go further to state that all non-renewable energy sources -- coal, oil, natural gas and even high grade nuclear materials -- will be past their peak (when half of what has been identified as a usable energy source is gone) by 2021. Pitting shrinking supply against the backdrop of the future's accelerating global energy demand (driven largely by China and Asia) spells market disruption and escalating prices.

The authors then shift to making lemonade from these lemons by dispassionately identifying the investment opportunities during the shift away from fossil fuels. It will be renewable energy and energy efficiency to the rescue, and those who are smart will start investing today, before energy prices spike dramatically higher.

Based on the research that the authors have identified as the most reliable, they pinpoint the potential as well as the limitations of each type of clean energy, and suggest the public companies that are the best bets to capitalize on these emerging markets.

Biofuels, for example, are not a panacea for transportation, the authors contend. "...Nowhere in the world is there enough unneeded arable land and water to grow the requisite feedstock for the immense volume of biofuels we will need...." Because of this reality, people must drive less and take public transit more, according to the authors. Smart investors should follow the path of billionaires including Warren Buffet, Bill Gates and George Soros, who have been putting millions into railroads, they conclude.

Hicks and Nelder consider neglected or unpopular ideas to solving the energy conundrum as long as they make business sense, such as increasing gas taxes (acknowledged as political suicide) or giving U.S. tax dollars to China to develop renewable energy to minimize competition for diminishing fossil fuels.

The authors are unafraid to draw conclusions based on the analysis they have chosen to cite. Contrary analysis does exist, but Hicks and Nelder have carefully selected studies that have been vetted and supported by most energy experts. They take stock in a recent projection that the carbon markets could become the world's biggest commodity market, as well as believing that carbon taxes are a more efficient mechanism than a carbon cap and trade system.

The authors take their most critical tone in deflating the hype around the proposed "hydrogen economy." The financial and energy costs of trying to remake the energy infrastructure around hydrogen don't come close to adding up, according to the authors.

Hicks and Nelder take a page from the non-profit group Apollo Alliance and others by surmising that the impending energy pinch calls for a drastic response in the form of a "Manhattan Project" for energy. They state that we need to "rethink and remake our entire infrastructure, our economics, and even our culture."

The authors fall short, however, of detailing what role government should play in spurring these changes. Instead they lay out the free market solutions, including wind, solar and wave energy, as well as the less-than-sexy but potentially lucrative arenas of smart grids, demand response and combined heat and power systems. Human ingenuity and a thirst for wealth are assumed to take care of the rest.

In straightforward language that informs and engages, "Profit From The Peak" reveals that the emperor has no crude, and urges investors to plan for a turbulent tomorrow today.

It's worth a peek and more.

("Profit From the Peak" is available for purchase from our bookstore)

Though the United States Army might fill the popular imagination as a slow-moving, bureaucratic entity, when the situation demands it, that same behemoth is capable of moving with incredible purpose and agility. Faced with the challenge of increasing energy costs and a warming planet, the Army’s comprehensive response should serve as a model for energy conservation and carbon reduction for organizations worldwide.

Historically, the Army has a positive record on the environment. Teddy Roosevelt, widely known for advancing environmental protection and reigning in the excesses of big business, secured his place in the national consciousness during his Army service in the Spanish American war. The Army Corps of Engineers, meanwhile, has been managing and protecting America’s waterways since the Rivers and Harbors Act of 1899.

But even with that history of environmental stewardship, a sea change swept over the Army on January 24th, 2007, when President Bush issued Executive Order 13423.  According to an Environmental Management System Support Contractor who declined to be identified, “The order is what most of the military runs on, and everyone on the base is aware of it.  It directs that we reduce energy, use post-consumer content and look for alternative fuels.”  

Just over a year and a half since its inception, the impact of the Executive Order can be seen everywhere at Fort Eustis. From the labeling of post-consumer products in the PX, to the CFL and LED lighting systems throughout the base offices, to low-flow showerheads and toilets in base housing, the concerted effort to reduce and reuse has left no stone unturned. Families living on the base are even given a consumption threshold; beyond that point energy and water use must be covered out-of-pocket.

As the home of the Army Transportation Corps, the Executive Order has made Fort Eustis home to a variety of cleaner-running vehicles. Hybrids, flex-fuel, E85 ethanol vehicles can all be found on the base.  New electric vehicles from GEM are being considered as well, as the base speed limit of 25 mph eliminates the shortcomings of the GEM's low top speed.  A study is even underway at Fort Eustis to evaluate the efficiency gains of nitrogen-filled tires, which are estimated to leak more slowly than those filled with unprocessed air.

Energy conservation isn’t the only consideration of the Executive Order. Environmental stewardship remains a primary focus, as evidenced by efforts to stem the advance of the invasive Phragmites australis in the area around the base. The Environmental Management System also provides training support, collecting lead rounds from the firing range before they can leech into the local water supply.

Perhaps the total effect of Executive Order 13423 is most clearly displayed when local utility companies anticipate higher demand, and enact substantial cost increases. Base-wide notifications go out ahead of these so-called “peak days”, resulting in all-out efforts at conservation. During 8 such days in 2007, Fort Eustis was able to cut its power consumption by a staggering 40%.  

All told, Executive Order 13423 aims to effect greenhouse gas emission reductions of 30% over 2003 levels by 2015—an impressive goal for a Presidency demonized for not falling in line with global emissions caps.

When carried over into combat zones, the rigors of conservation can end up saving more than just carbon.  In combat zones from Iraq to Afghanistan, supply and fuel convoys have proven popular targets for insurgent forces.  By reducing the demand for energy, the Army has been able to reduce the number of convoys it uses, thus reducing the number of troops it puts in harm’s way.  

A similar trip reduction theory has spurred the development of the Army’s TIGER project, which looks to process waste products into fuel to power an electric generator. “When you're over in a combat area and people are shooting at you, you still have to deal with your trash,” quips Army Rapid Engineering Force project officer John Spiller "How would you feel if somebody was shooting at you every other time you pushed [trash] down the curb?" Along with cutting dangerous disposal trips, the TIGER and other waste reduction projects have helped combat the health threat posed by large garbage dumps in populated areas.

When asked if people ever complain about the energy-saving measures underway at Fort Eustis, the Environmental Management System Support Contractor replied, “Oh, definitely. People want what’s convenient for them. But if it can be done on a military base, it can be done anywhere. Low-flow toilets and low-flow showerheads are things that any large business can do. Or any small business or home, for that matter.” 

Considering the ambitious conservation goals the Army is currently on track to meet, and the massive savings that will no doubt result, I’d say it sounds like a pretty good idea.

Related articles:

The Army Isn't AWOL on Carbon Reduction
U.S. Military Tests Trash-to-Fuel Technology

 

Photo: Contractors install the Tactical Garbage to Energy Refinery, or TGER, at Camp Victory, Iraq. By Jerry Warner, Defense Life Sciences