Energy & Technology
Rate-Based Compliance Under the Clean Power Plan
As negotiators in Paris put the finishing touches on a new global climate accord, it’s worth reflecting on how much the summit has already accomplished.
One event or agreement by itself can’t completely reverse the climate problem. But like other important moments in history, such as the drive to land on the moon in 1969, Paris can inspire innovations across society.The U.S. space program would not have been possible without technologies that still benefit us today like scratch-resistant lenses, computer microchips, smoke detectors and solar panels. Nearly half a century later, many businesses, cities, states and nations are taking new, bold steps to reduce emissions and move toward a clean energy economy.
Whether it’s paving the way for rapid, wide-scale development of renewables, investing in energy efficiency technology and lower carbon electricity, or building resilience to climate impacts, a huge wave of innovation has already been unleashed.
Consider just some of the announcements made before and during the Paris talks:
- Leaders of 20 countries announced they’ll seek to double investment in clean energy research and development over five years. Backing up this effort, called Mission Innovation, are more than two dozen investors led by Microsoft founder Bill Gates who have pledged to fund early-stage clean energy technology coming out of Mission Innovation.
- India and France announced an international solar alliance to dramatically increase the reach of solar energy to more than 100 countries in the tropics.
November 12, 2015
Contact: Marty Niland, firstname.lastname@example.org, 703-516-0600
Fleet operators could save money with natural gas vehicles
WASHINGTON – Public and private fleet operators could save money by switching to natural gas vehicles using the business model that energy service companies (ESCOs) apply to energy efficiency projects, according to a guide released today by the Center for Climate and Energy Solutions (C2ES).
Although switching to natural gas vehicles (NGVs) can lower costs, many fleet managers have not converted their fleets. Strategic Planning to Enable ESCOs to Accelerate NGV Fleet Deployment: A Guide for Businesses and Policymakers helps investors and state and local policymakers make decisions about deploying natural gas vehicles in public and private fleets, which are among the most initially promising areas.
The findings are part of a two-year initiative, in partnership with the National Association of State Energy Officials (NASEO) and with funding from the U.S. Department of Energy’s Clean Cities Program, to develop innovative finance mechanisms aimed at accelerating the deployment of alternative fuel vehicles and fueling infrastructure.
The guide analyzes the cost-saving potential for switching tractor-trailer truck, school bus, and light-duty vehicle fleets. Among the key findings:
- Incorporating natural gas vehicles into fleets can significantly reduce petroleum use and harmful emissions, especially with tractor-trailer fleets.
- The major factors affecting the financial performance of natural gas vehicle fleets are the fleet’s vehicle technology and vehicle usage patterns.
- Natural gas vehicle projects for tractor-trailer fleets result in net cost savings under nearly every fleet size and travel scenario considered in the guide’s analysis.
- Using natural gas to fuel school bus fleets also results in net cost savings for fleets whose vehicles travel about 20,000 miles per year.
- An energy service provider can help with the transition to natural gas by familiarizing fleet managers with new technology, identifying a project’s greatest savings potential, reducing financial risk, and helping maximize financial payoff.
“Switching from diesel to natural gas is a net cost-saver for fleets in many cases. But even the most cost-conscious fleet manager can hesitate to switch to a new technology, especially in a time of low oil prices,” said Nick Nigro, a C2ES senior advisor and lead author of the report. “The fleet market can learn a lot from ESCOs and how they’ve deployed energy efficiency technologies by offering valuable services and training in exchange for a share of the cost savings.”
“Many of NASEO’s members, the 56 State and Territory Energy Offices, are eager for solutions and strategies supporting the use of domestic and clean transportation fuels,” added David Terry, Executive Director of NASEO. “The Strategic Planning Guide is an important addition to states’ toolboxes in their efforts to reduce reliance on imported oil, improve air quality, and stimulate economic growth.”
Read the report.
Learn more about the initiative.
The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address our climate and energy challenges. Learn more at www.c2es.org.
TransCanada’s proposed Keystone XL pipeline has emerged as a symbolic flashpoint in the complex debate over energy, the environment, and the economy. Pipeline advocates argue that the project will create tens of thousands of jobs and – by increasing the flow of Canadian oil into the United States – will lower gasoline prices and strengthen energy security. Pipeline opponents counter that any such benefits will be minimal and far outweighed by the project’s environmental consequences, including an increase in climate-warming greenhouse gas emissions.
While each argument has some merit, the reality is less black-and-white than either suggests:
- If rising demand for oil continues to drive development of the Canadian oil sands, the oil is likely to reach global markets with or without Keystone.
- Increased imports from Canada would reduce U.S. reliance on oil from more volatile regions such as the Mideast. But because oil is a global commodity, prices are largely a function of global supply and demand, and the U.S. would still be vulnerable to price shocks as a result of geopolitical instability and other factors affecting global oil price.
- Most of the greenhouse gas emissions come from the tailpipes of vehicles powered by gasoline produced from the oil sands. But because the process of extracting oil from the oil sands is so energy-intensive, its total carbon footprint is larger than that of most “conventional” oil. More can and should be done to reduce the carbon emissions generated on the production side. But in terms of impact on the climate, the overall level of oil consumption is far more critical than the relative carbon profiles of different supplies.
Whether or not Keystone is built is likely to have only marginal implications for the price of gasoline or the pace of global warming. The most effective response to both challenges is to reduce demand for oil and over time end our reliance on it.
Here is a more detailed look at the issues behind the Keystone debate:
Figure 1. North America Pipelines
Source: Theodora. 2008. http://www.theodora.com/pipelines/north_america_oil_gas_and_products_pipelines.html.
Key: Crude oil pipelines (Green), Natural gas pipelines (Red), and Refined petroleum products (Blue).
Figure 2. Keystone Expansion Map
Source: TransCanada (2011)
What is Keystone? An extensive network of pipelines carries crude oil, natural gas and refined petroleum products across North America (Figure 1). One piece of that network is the 2,150-mile Keystone pipeline system operated by TransCanada (solid orange line in Figure 2), which has the capacity to deliver 730,000 barrels per day (b/d) of Canadian crude oil from Hardisty, Alberta to Wood River and Patoka, Illinois; Steele City, Nebraska; and Cushing, Oklahoma.
Keystone XL (dashed line in Figure 2) is a proposed expansion of the existing Keystone system, and is one of a number of projects being proposed to transport greater volumes of Canadian oil sands crude to world market. It would transport Canadian oil sands crude to the U.S. Gulf Coast for refining or export. The planned expansion consists of a northern and southern segment:
- The approximately 1,200-mile northern segment would travel from Hardisty, Alberta to Steele City, Nebraska via the Canadian Provinces of Alberta and Saskatchewan, and the U.S. states of Montana, South Dakota and Nebraska.
- The 532-mile southern segment, referred to as the Gulf Coast Pipeline and Houston Lateral Project (or Cushing Marketlink or Southern Keystone) would run from Cushing, OK to Port Arthur, TX and Houston, TX.
Keystone is not the only oil pipeline from the Canadian oil sands. The Alberta Clipper, a 1,000 mile crude oil pipeline operated by Enbridge between Hardisty, Alberta and Superior, WI, went into service in 2010 with an initial capacity of 450,000 b/d and will have an ultimate capacity of up to 800,000 b/d.
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Where does the Keystone XL proposal stand? In November 2015, President Obama denied TransCanada a permit to build the pipeline, stating that it would not make a meaningful long-term contribution to the U.S. economy. The move came after TransCanada had requested that the State Department put its application on hold while issues regarding the pipeline's route in the state of Nebraska were resolved.
On January 31, 2014, the U.S. State Department issued its final environmental impact statement on the northern segment of the pipeline. In April 2014, the State Department announced it was delaying its review, citing a Nebraska court challenge over a law allowing the governor to authorize the pipeline’s route. In January 2015, the Nebraska Supreme Court ruled the law was constitutional, clearing the way for the pipeline. The State Department has asked eight federal agencies (Departments of Defense, Justice, Interior, Commerce, Transportation, Energy, Homeland Security, and the Environmental Protection Agency) “to provide their views on the national interest with regard to the Keystone XL Pipeline permit application” by February 2, 2015. There is no explicit timeline for the permit process beyond the February 2 date. At the same time, a newly elected Republican majority in the Senate attempted to approve the pipeline via legislation; however, the measure was vetoed by the President in late February.
TransCanada first applied for a permit in 2008. In November 2011, the State Department delayed a decision pending further environmental review. The delay stemmed from the State of Nebraska's decision to seek an alternative route for the pipeline that would avoid the environmentally sensitive Nebraska Sand Hills. Congress then enacted legislation forcing a quicker decision. In January 2012, citing inadequate time to assess the pipeline’s environmental impact, President Obama denied the permit, but left the door open for an alternative route for the contentious northern portion of the pipeline.
TransCanada submitted a new application proposing alternative routes for the northern portion in April 2012, aiming for an in-service date of 2015. On January 22, 2013, Nebraska Governor Dave Heineman submitted a letter to the State Department announcing his approval of the route reviewed in the Final Evaluation Report of the Keystone Nebraska Reroute by the Nebraska Department of Environmental Quality (NDEQ). On March 1, 2013, the State Department issued a draft Supplemental Environmental Impact Statement (SEIS) on the project.
Construction on the southern portion of the pipeline, which did not cross the US-Canada border and so was not subject to State Department review, began in August 2012 and the renamed Gulf Coast Pipeline went in to service in early 2014. The project will have the initial capacity to transport 700,000 b/d to the Gulf Coast, and can be expanded to transport 830,000 b/d.
Why does TransCanada want to build Keystone XL? The impetus for this pipeline’s construction is to transport a greater volume of Canadian oil sands crude to world markets. Currently, infrastructure for transporting this crude to international ports is inadequate. Increased supply, both from the Canadian oil sands and U.S. oil production in North Dakota (Bakken formation), is currently bottlenecked in Cushing, OK. Additional pipeline capacity, including the reversal of the Seaway pipeline  and the construction of the southern portion of Keystone, is likely to reduce this bottleneck. Oil sands producers are also attempting to secure permits to build the Northern Gateway and TransMountain pipelines, which would provide an outlet to world markets via the coast of British Columbia. Furthermore in August 2013, TransCanada announced its intention to construct the Energy East pipeline to deliver 1.1 million barrels per day of oil sands crude to refineries and ports in Eastern Canada (Quebec and New Brunswick). At the same time, crude shipments by rail are underway and expected to transport more than 500,000 barrels per day by the end of 2014.
The long-term supply impact of adding Keystone XL to the North American crude oil transport system depends on a number of factors, including global supply and demand over time and whether other pipelines are built to carry Canadian oil sands out of Alberta. In the short run, a rise in deliveries of heavy Canadian oil sands crude to U.S. Gulf Coast refineries is likely to fill a supply gap being created by declining imports from traditional heavy crude suppliers, notably Mexico and Venezuela; a gap that would otherwise be filled by increases from other foreign suppliers, notably from the Middle East. Therefore, it is likely in the near-term that Canadian oil sands would be refined and consumed in the United States. In the long term, with changing market conditions, Keystone XL could help facilitate exports of crude or refined product from the Gulf Coast.
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How much does the U.S. rely on oil from Canada? Canada is the largest supplier of U.S. oil imports. In 2011, Canada, Mexico and Saudi Arabia were the top three suppliers of U.S. oil imports. Canada supplied nearly 24 percent of U.S. oil imports, while Mexico and Saudi Arabia each accounted for around 10.5 percent. In 2010, Alberta oil sands supplied 15 percent of U.S. oil imports. In 2011, total oil supplied by Persian Gulf countries (Saudi Arabia, Kuwait and Iraq) averaged 1.8 million b/d, compared to total Canadian imports of 2.7 million b/d.
Total U.S. oil imports peaked in 2005 and 2006 at an average of around 13.7 million b/d. In 2011, U.S. oil imports averaged around 11.36 million b/d. The decline was due in part to a sluggish economic recovery and increasing domestic supply. Imports from OPEC countries are down around 19 percent over the same period (2005 to 2011), and total imports from Canada have increased by 24 percent.
The Energy Information Agency (EIA) predicts that U.S. oil consumption will grow very slowly over the next 25 years, because of policies that that boost the fuel efficiency of cars and increase the use of renewable fuels like ethanol.
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Oil sands are a mix of naturally occurring bitumen, sticky oil and abrasive sand; each sand grain is coated by a layer of water and a layer of heavy oil.  According to the Alberta Energy and Utilities Board, (2007) oil sands deposits total 173 billion barrels of proven reserves. About 26 billion barrels are under active development. Technologies for oil sands production are steadily improving, decreasing greenhouse gas intensity and cost of extraction while increasing the volume of recoverable reserves.
Table 1. Top 20 Countries’ Crude Oil Reserves (Billion Barrels)
United Arab Emirates*
Source: U.S. Energy Information Administration, International Energy Statistics
Currently, about half of the oil sands production is from surfacing mining, and half is extracted in place, or in-situ. Ultimately, about 80 percent of the proven oil sands reserves are expected to be produced in-situ. Surface-mined oil sands production is similar to traditional mineral mining; shovel-excavated sands are transported to processing facilities by very large trucks. Crushed sand fragments are added to swirling water (continuously recycled), and the slurry is agitated and piped to an extraction facility, where the oil can be skimmed from the top of the flow.
Figure 3. Surface Mining and In-Situ Production
Source:Nexen Incorporated 2012. http://www.nexeninc.com/en/Operations/OilSands/Process.aspx
Surface mining is used for shallower reservoirs – those less than 75 meters below the surface; however, 80 percent of the oil sand reserves are deeper and not economically recoverable with surface mining; they require in-situ extraction. There are two main in-situ extraction techniques referred to as steam assisted gravity drainage (SAGD) and cyclic steam stimulation, in which steam, solvents and/or hot air is injected directly into the oil sands in order to get the material to flow into collection pipes. For both processes, extracted bitumen is then upgraded into a lighter (lower viscosity) and sweeter (lower sulfur content) crude oil and later refined into gasoline or diesel fuels.
The Great Canadian Oil Sands (GCOS) project began operations in 1967, with rapid growth occurring over the 1990 – 2006 period. Oil sands production is projected to grow from 1.5 million b/d in 2010 to 3.7 million b/d in 2021. Overall, total Canadian oil production is expected to grow from 2.8 million b/d in 2010 to 4.7 million b/d in 2025.
Source: Canadian Association of Petroleum Producers (2011)
The U.S. Midwest is currently the primary export market for western Canadian crude oil supplies due to its geographic proximity and established pipeline infrastructure. Growing supplies of crude oil from western Canada could find a market on the U.S. Gulf Coast or world markets once they reach Canada’s West Coast, including California and Asia.
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What are the greenhouse gas implications of developing the oil sands? The draft SEIS issued by the State Department in March 2013 concluded that the Albertan oil sands will continue to be developed whether or not the Keystone pipeline is built and, therefore, that allowing the pipeline would not lead to a net increase in global greenhouse gas emissions. However, the International Energy Agency in its World Energy Outlook 2013 concluded that current expansion plans for the oil sands are contingent on the development of major new pipelines.
The production of oil sands crude is more energy-intensive, and therefore more greenhouse gas-intensive, than most conventional crudes. Due to the nature of the deposit, additional processes are required to extract the oil, remove the sand and get the oil to flow in a pipeline. Each of these processes, including the use of power shovels and trucks, operation of intermediate facilities, and so forth, requires energy. In addition, in-situ production (because it requires steam generation) is more energy-intensive than surface mining.
Several analyses of the well-to-wheels life-cycle emissions of transportation fuels produced from various crudes (emissions from both the production and the combustion of the oil) conclude that Canadian oil sands are among the most carbon-intensive. The State Department’s draft SEIS found that oil from the Canadian oil sands is 17 percent more carbon-intensive than the average oil consumed in the United States. (A report from the Congressional Research Service put the figure at 14 percent to 20 percent.) It is estimated that the U.S. greenhouse gas footprint would increase by 3 million to 21 million metric tons per year, or around 0.04 percent to 0.3 percent of the 2010 levels, if Keystone is built.
This relatively small increase in projected U.S. emissions reflects the fact that the majority of greenhouse gas emissions associated with oil result from its combustion in vehicles. Well-to-pump emissions, also known as non-combustion emissions, account for 20 to 30 percent of total life-cycle emissions, while fuel combustion accounts for 70 to 80 percent of total life-cycle emissions (Figure 5). Combustion emissions do not vary with the origin of the crude oil. Although oil sands-derived crudes are more energy-intensive than the average oil consumed in the United States, there are several types of crudes that are also higher than the U.S. average. Other carbon-intensive crude oils are produced, imported, or refined in the United States, including Venezuelan heavy, California heavy, and Nigerian.
Figure 5. Life-Cycle Greenhouse Gas Emissions
Source: IHS CERA, “Oil Sands, Greenhouse Gases, and U.S. Oil Supply.” (2010)
While the emissions intensity of oil sands are higher than the U.S. average, steps are being taken to mitigate their greenhouse gas intensity. According to the U.S. State Department, oil sands mining projects have reduced greenhouse gas emissions intensity by an average of 29 percent between 1990 and 2008. Additionally, carbon dioxide emissions from oil sands production can be lowered through technological processes such as VAPEX. VAPEX captures carbon emissions from power plants and industrial sources as an injectant for in-situ production while simultaneously sequestering carbon. In 2008, the Alberta government announced a $2 billion fund to support a combination of sequestration projects in power plants and oil sands extraction and upgrading facilities. Two large projects have received funding: Alberta Carbon Trunk Line and Shell Quest. These projects are expected to reduce Alberta’s greenhouse gas emissions by 2.8 million tonnes annually (15.8 million tonnes at full capacity) beginning in 2015.
In the future, the difference in carbon intensity between the Canadian oil sands and other crudes is expected to narrow. Emissions from surface-mining oil sands are expected to remain relatively stable over time, while advances in in-situ production are expected to lower its emissions. At the same time, tertiary recovery of other crudes is expected to become more energy-intensive.
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What other environmental concerns does Keystone XL raise? Additional environmental concerns arise from the siting of the pipeline in the United States and at the source of the oil sands production in Canada.
The proposed path of the northern branch of the Keystone XL would cross the Ogallala Aquifer. This aquifer is a significant source of drinking and irrigation water from South Dakota to Texas. Some groups are concerned that a potential oil spill could result in the fouling of this water source.
In Canada, there are a host of environmental issues, ranging from land disturbance, leveling of the Boreal forest, air pollution, water usage and fouling, interference with migratory animals, and the altering of ecosystems.
Figure 6. Surface Mine and a Tailings (Waste Water) Pond in Fort McMurray, Alberta
Source:Center for Climate and Energy Solutions 2009. http://www.c2es.org/blog/shipleyj/midwest-leading-edge-oil-sands
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What are the long-term solutions? Solutions are available to address issues associated with oil demand, oil sands production, and Keystone XL pipeline construction. Operators have a responsibility to ensure the highest levels of pipeline safety. Ongoing investments and improvements in maintenance and monitoring are imperative, and systems should be in place to minimize accidents over the life of these long-term assets.
Additional steps should be taken to reduce the greenhouse gas emissions that are the direct result of Canadian oil sands production. Techniques like VAPEX and carbon capture and storage, as well as advancements in reducing the energy intensity of in-situ mining, should be promoted and encouraged.
In the long term, the most effective way to reduce the greenhouse gas emissions associated with the oil sands is to dramatically reduce our oil consumption. This can be achieved through technological advances, including development of alternative transportation technologies like plug-in electric vehicles (PEVs) and crude oil substitutions like lower-emitting biofuels for transportation and industry consumers. Crude oil demand can be further reduced through policy initiatives, including increased fuel efficiency Corporate Average Fuel Economy standards, renewable fuel standards, and internalizing the external cost by adding a carbon price to crude oil, such as a carbon tax. The current fuel economy standard for a manufacturer’s light duty fleet is 27.3 mpg. This will increase to approximately 50 mpg by 2025. Our 2011 report titled Reducing Greenhouse Emissions from U.S. Transportation identifies cost-effective solutions that will significantly reduce transportation's impact on our climate.
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 The Seaway pipeline is a 50/50 joint venture between Enterprise Products Partners, the operator, and Enbridge. It runs from Cushing, OK to Freeport, TX, just to the south of Houston. It was initially intended to deliver crude from south to north, but work to complete its reversal was completed in May 2012. Its initial capacity is 150,000 b/d, and this is expected to reach 400,000 b/d by early 2013. This is expected to relieve the glut of oil in Cushing.
 Energy Resources Conservation Board, “Oil Sands.” http://www.ercb.ca/portal/server.pt?open=512&objID=249&PageID=0&cached=t...
 Energy Resources Conservation Board ST98–2011 Alberta's Energy Reserves 2010 and Supply/Demand Outlook 2011–2020 (ERCB, 2011).
The federal Clean Power Plan gives each state the flexibility to use its own ideas on how best to reduce greenhouse gases from the power sector. One proven, cost-effective approach is to use market forces to drive innovation and efficiency.
The options available to states go beyond creating or joining a cap-and-trade program or instituting a carbon tax. Pieces can be put in place, such as common definitions, measurement and verification processes, so that states or companies could be in a position to trade within their state or across borders. Modest programs that allow companies to trade carbon credits could be explored.
In an op-ed published in The Hill, Anthony Earley, CEO of California energy company PG&E, and C2ES President Bob Perciasepe urge states to give these options serious thought.
Read The Hill op-ed.
The latest working group meeting of the Montreal Protocol in Paris produced much useful discussion, but few concrete results due to limited but vocal opposition to an amendment to phase down hydrofluorcarbons (HFCs), a fast-growing, extremely potent family of global warming gases.
Efforts to achieve an amendment at the upcoming Meeting of the Parties in November had gained considerable momentum over the past year. Four proposals for an amendment had been submitted by India, the European Union, the Island States, and North America (Mexico, Canada and the U.S.). Beyond those proposals, the African States also have voiced their clear support for an amendment and recent meetings between President Obama and his counterparts from Brazil, India, and China had produced joint statements in support of action on HFCs under the Montreal Protocol.
Despite support for these proposals from nearly 100 countries, the week-long meeting in Paris this month failed to reach agreement on even starting the negotiating process through the creation of a contact group. After opposing these efforts over several meetings, Saudi Arabia and Kuwait (and other Gulf Cooperation Council countries) voiced their willingness to allow a two-stage process to move forward, but Pakistan stood firm in opposition, blocking any agreement.
In the absence of a mandate to begin negotiations, a number of sessions in Paris focused on a very useful exchange of views on issues raised by the four amendment proposals. India, China and others identified concerns about the costs and availability of alternatives to HFCs (including concerns about obstacles created by patents), the performance of these alternatives in high ambient temperatures, the time required to address flammability concerns of some key alternatives, the importance of energy efficiency, and the need for financing through the Protocol’s Multilateral Fund.
All agreed to hold another working group session prior to the November Meeting of the Parties. But time is fast running out on this year’s efforts to reach agreement on an HFC phasedown amendment.
What can be done to break this stalemate?
In the past, the executive director of the United Nations Environment Programme (UNEP) has sometimes played an active role convening senior representatives from key countries and driving needed compromise. During the early years of the Protocol, UNEP’s Mostafa Tolba was masterful in bringing key countries together to find a workable solution. Through informal, senior-level consultations, Tolba either forged a compromise text acceptable to all, or developed his own proposals that he would offer as a way forward.
While times have certainly changed, it may be that the moment has now arrived for Achim Steiner, UNEP’s current executive director, to actively engage with senior officials from key countries with the goal of advancing efforts at bringing HFCs into the Montreal Protocol.
PREPARED REMARKS BY BOB PERCIASEPE
PRESIDENT, CENTER FOR CLIMATE AND ENERGY SOLUTIONS
INNOVATIVE FINANCE & CLEAN POWER, A SOLUTIONS FORUM
JUNE 25, 2015
Welcome everybody and thank you for being here. I especially want to thank our co-host for today’s event: The George Washington University Law School’s Environment and Energy Program.
My name is Bob Perciasepe and I’m president of the Center for Climate and Energy Solutions, or C2ES.
I think many of you know us, but for those of you who don’t, we’re an independent, nonpartisan, nonprofit group dedicated to bringing diverse interests together to solve our climate and energy challenges.
Today is a perfect example of how we go about doing that. We’re going to be talking a lot about energy efficiency and renewable energy – and how innovative financing can help us increase investment in those areas. I’m pleased to be bringing together top financial experts from Bank of America, JPMorgan Chase, and the Coalition for Green Capital; state leaders from Tennessee and Pennsylvania; and energy leaders from Schneider Electric and Duke Energy. I think this group in itself shows you the mix of people who have to start working harder together to make sure we can make progress on clean energy and energy efficiency.
Finance may or may not have been your favorite class in college, but much of the progress we need to address our climate challenge – more efficiency and more low-carbon energy -- comes down to one question: How do we pay for it? Financing and using markets are ways to accelerate the rate of change.
On the other side of the coin, we’re already paying mounting costs worldwide for climate impacts like increasingly frequent storms and intense heat waves. We’re seeing rising sea levels creating higher risk in coastal areas. We face the prospect of more damage to our infrastructure and more disruptions to our supply and distribution chains, as well as our power and water supplies.
The primary cause of these problems, and you can take this all the way to the Vatican, is us. We’ve been pumping heat-trapping gases into the atmosphere for generations. Last year was the hottest since we started keeping records over 100 years ago.
But we know that there are things we can do. We know what some of the solutions are. We know how to make progress within a generation to change that trajectory. We need cleaner energy, cleaner cars, and more efficient ways to use energy.
Here in the United States, the No. 1 source of carbon emissions is the generation of electricity. EPA is in the process of finalizing a plan that will put a lot of responsibility on states to look at how they can innovate to develop clean power plans to reduce emissions from electric generation. We already have a process underway with light duty vehicles and heavy duty trucks, making them more energy efficient. And we have a lot of opportunity to think about how to do this at the state level for power.
The beauty here is while we continue to think about how to deal with this at the national level, cities and states and businesses are already innovating. They’re already making progress not only in reducing emissions but also in finding ways to accelerate the rate of change and stimulate innovation.
Of course, we want not just clean energy, but also affordable energy. This is a balance we have to have. We’re seeing solar and other renewables drop in price, something that can continue with increased deployment. Efficiency reduces how much energy we use, so that even if there’s a slight uptick in rates, a homeowner’s bill can stay the same.
The objective of having cleaner power and also using less of it provides a real opportunity to find that sweet spot of maintaining that affordability. It’s like what we’re looking at with automobiles. If you use less fuel, the actual cost to own the car is cheaper. The same can be said of energy efficiency in the home, business, and industry.
C2ES found something interesting on affordability when we recently looked at six economic modeling studies of the Clean Power Plan. All of the models project energy efficiency will be the most-used option to implement the plan. The majority of the studies project either cost savings to consumers or total costs of less than $10 billion a year, Per household, that’s about 25 cents a day.
So, how do we get to this future of affordable clean energy and energy efficiency? It takes investment, and that’s what we’re here to explore. How do we catalyze that investment? How do we leverage public funds to get more private dollars? What innovative business models are already working, and how do we scale those up?
It’s not simple. We face some barriers to investment like high upfront costs. If you invest in new windows and solar panels for a high rise, it will take a while to recover those costs in lower energy bills. Another barrier is lack of familiarity. People aren’t sure about new technologies and new financial products, which can make them harder to buy and sell.
Fortunately, there are ways to overcome these barriers. We have a brief overview of some of these options. I’ll mention two: Clean Energy Banks, sometimes called Green Banks; and Energy Savings Performance Contracts.
Clean Energy Banks are generally government-created institutions that can leverage a small amount of public money to increase private investment in clean technologies. Several states have them or something like them – Connecticut, New York, Kentucky, and Hawaii. And others, like Maryland, California, and D.C are thinking about them.
They can provide direct loans, but they also have other tools, such as credit enhancements, letters of credit, and loan loss reserves, that can help lower the risk for private lenders and investors.
So far, Connecticut’s green bank, the nation’s first, has attracted about $9 of private investment for every $1 of public money invested in clean energy projects. The bank oversees more than $100 million in assets.
The second example is an Energy Service Company, or ESCO, whose business model is based on establishing Energy Savings Performance Contracts with customers like cities, hospitals and universities. These contracts let a customer get energy-saving or clean-energy technology at little to no upfront cost. They pay the investment back over time from the money saved through reduced energy bills.
The City of Knoxville, Tennessee, has a 13-year energy performance savings contract that will fund energy efficiency measures at all city buildings, parks and sports facilities. Each year, Knoxville will pay the ESCO a fee based on expected savings from things like better lighting, water conservation, weatherization, and heating and cooling upgrades.
Innovative financial tools are not a panacea, but they are an essential tool to overcoming many of the barriers facing a new technology. They can also engage a broader group of investors, bring more capital to the table, and reduce costs. Those are the conditions that allow new technologies to spread.
We’re going solar!
Our middle-class, suburban family of five, with two children in college, two mortgages and a pile of other consumer debt, is getting a brand new, 7 kilowatt photovoltaic rooftop system worth roughly $31,000 – without us paying a penny out of pocket.
That’s right. We’re paying nothing upfront for the ability to generate up to one-third of the electricity our 1,500-square-foot split-foyer home would use in a typical month.
How’s that possible? With a power purchase agreement.
The Earth is undoubtedly warming. What’s the cause, what are the impacts, and what can we do about it?
Below is a list of resources to learn more about the impacts of climate change, what individuals can do to help, and which policies can make a big difference
What are the Impacts of Climate Change?
The Earth is warming and will continue to do so if we keep releasing greenhouse gases into the atmosphere. This warming brings an increased risk of more frequent and intense heat waves, higher sea levels, and more severe droughts, wildfires, and downpours. To learn more:
What can you do to help?
C2ES works to help individuals learn how they can save energy at work, school, and home. Learn some of the steps you can take to make an impact:
What would make a huge difference?
Sensible policies can spur demand for clean energy and technologies and reduce carbon emissions cost-effectively. Learn about some of the options:
Key Insights from a Solutions Forum on
By Jason Ye
Energy efficiency is a critical component of the proposed Clean Power Plan. It offers states a least-cost pathway for reducing carbon dioxide emissions from the power sector. A C2ES Solutions Forum held May 18, 2015, brought together city, state, and business leaders to explore how intelligent efficiency can drive reduced energy usage and emissions under the rule.
Among the questions C2ES discussed at this event:
- What is intelligent efficiency and how can it reduce costs and emissions?
- Can intelligent efficiency also help with reliability?
- What role will energy efficiency play in the Clean Power Plan?
- What are some cities, states and businesses doing right?
- What role can cities, states, and businesses play together in using energy efficiency to implement the Clean Power Plan?
- What would help cities and states use energy efficiency under the Clean Power Plan?
- Why would a utility want to sell less of its product – electricity?
C2ES will continue the conversation with cities, states, and businesses to share insights and innovative ideas that will help us get to a clean energy future. Our third Solutions Forum on June 25 will explore innovative ways to finance clean energy technology and infrastructure.
For more information about the C2ES Solutions Forum, see: http://www.c2es.org/initiatives/solutions-forum