Climate Compass Blog
As the country’s largest landlord, fleet operator, and purchaser of goods and services, the federal government can lead by example in moving the country toward a more sustainable future.
Taking that opportunity, the Obama Administration recently issued a new executive order, Planning for Federal Sustainability in the Next Decade, that builds on energy-saving advances and ups the targets for federal agencies to do even more. Joining in the commitment to cleaner energy and energy efficiency were 14 companies that are major federal suppliers.
A 2009 executive order set a target of reducing federal greenhouse gas emissions 28 percent below 2008 levels by 2020. The March 2015 executive order raises the bar – to 40 percent below 2008 levels by 2025. The goal is expected to save taxpayers up to $18 billion in avoided energy costs.
The order also directs federal agencies to:
- Increase the use of renewable energy sources to 30 percent of total consumption by 2025,
- Reduce per-mile greenhouse gas emissions from federal fleets 30 percent by 2025 and ensure a fifth of the fleet is made up of zero-emission and plug-in hybrid vehicles by 2025, and
- Reduce the amount of water used in federal buildings 20 percent below 2007 levels by 2025.
Complementing the new executive order, 14 large federal suppliers committed to new or expanded emission pledges that would cumulatively reduce their greenhouse gas emissions by 5 million metric tons by 2020. Several members of the C2ES Business Environmental Leadership Council made commitments:
- IBM will reduce its energy-related carbon dioxide emissions 35 percent below 2005 levels by 2020, and buy 20 percent of its power from renewable sources by that year.
- GE will invest $25 billion in research and development in energy efficiency and clean energy and reduce water use and greenhouse gas emissions by 20 percent below a 2011 baseline by 2020.
- HP will reduce the emissions intensity of its product portfolio 40 percent by 2020 from a 2010 baseline.
Taken together, the new executive order and the voluntary commitments from federal suppliers will reduce U.S. greenhouse gas emissions by 26 million metric tons below 2008 levels by 2025, according to White House estimates.
Figure: Fiscal Year 2013 Federal Government Direct Greenhouse Gas Emissions by Category
Federal direct greenhouse gas emissions totaled nearly 45 million metric tons of CO2e in Fiscal Year 2013. Over 60 percent of emissions are from purchased electricity. Transportation emissions include those from passenger fleet vehicle, vehicles, aircraft, ships, and related equipment.
Source: U.S. Department of Energy (2014), "Comprehensive Annual Energy Data and Sustainability Performance"
Federal government emissions are already down 17 percent from 2008 levels, saving taxpayers $1.8 billion in avoided energy costs. Progress has been made by increasing renewable energy use, which now stands at 9 percent, and by deploying energy efficiency solutions for buildings and vehicles.
A variety of tactics will be needed to meet these new goals. One way to help is to use smart meters and grids, telematics transportation systems, telecommuting and teleconferencing, and a range of mobility and collaboration tools to transform the federal workplace. C2ES has examined how federal agencies have begun using information and communications technology (ICT) solutions to reduce energy use and greenhouse gas emissions, and enhance productivity. Our 2013 report found that widespread deployment of ICT solutions could help reduce federal greenhouse gas emissions by 12 percent, saving about $5 billion in energy costs through 2020.
The new goals announced by the federal government and major federal suppliers serve as an example to other nations and other companies that a clean energy future is in our grasp if we are committed to reaching for it. This leadership is important because reducing greenhouse gas emissions will take action by both public and private sectors.
A number of analysts have raised concerns that the proposed Clean Power Plan, aimed at reducing power plant carbon emissions, could threaten the reliability of electric power. But a closer look at the U.S. power system and the safeguards in place suggests that these reliability issues are manageable. The greater threat to reliability, in fact, is the rising incidence of extreme weather driven by climate change.
The North American Electric Reliability Corporation (NERC), which is overseen by the U.S. Federal Energy Regulatory Commission (FERC) and government authorities in Canada, is responsible for keeping our power system reliable. NERC develops reliability standards and assesses the power system to anticipate and minimize the risk of disruption. It was established after a 1965 multi-hour Northeast blackout. Since then, the U.S. population has increased by 65 percent and power generation is more than 3.5 times greater with only one comparable blackout, in 2003.
Last fall, NERC issued an initial report identifying reliability issues under the Clean Power Plan that required further investigation. NERC and other analysts have questioned whether our natural gas system can handle more demand if more power plants switch from coal to natural gas. NERC also questioned how the power system will respond to less 24/7 baseload coal generation and more intermittent renewable generation.
Since the NERC report was issued, the Department of Energy, The Analysis Group and the Brattle Group have offered analyses that suggest power plant emissions can be reduced under the Clean Power Plan without compromising system reliability.
Managing for reliability
Already, our electric system is adapting to changes in electricity production without compromising reliability. For example, natural gas-fired electric power generation has jumped from 17 percent of the mix in 2001 to 27 percent in 2013. At the same time, as natural gas production has steadily increased and become more broadly distributed, the infrastructure to handle it has expanded. Challenges will always exist in siting new infrastructure. However, the amount we’ll need is projected to be modest and manageable.
About 14,600 miles (76.4 bcf/d) of new natural gas pipeline capacity was added between 2000 and 2011, according to a report from CSIS and the Rhodium Group. A recent Department of Energy (DOE) report found that even in a high-demand future scenario, new interstate pipeline infrastructure needed would be significantly less than the capacity we have been adding to the system over the past 15 years.
EPA estimates coal generation could fall 20 percent by 2030 as a result of the Clean Power Plan. Some studies estimate a larger drop. A recent Brattle Group report notes that there is no requirement for coal plant retirements in the Clean Power Plan. If reliability standards were endangered, coal plants could continue to operate at reduced levels or by co-firing with biomass to keep emission rates low until new power transmission or cleaner generation is brought online.
With regard to more intermittent power sources affecting grid reliability, in some areas we’re already seeing higher levels of renewable generation than the Clean Power Plan anticipates -- with no negative impacts on reliability. We continue to improve forecasting the availability of intermittent resources, making it easier to plan for back-up generation or demand response.
A key consideration
After the Clean Power Plan is finalized this summer, states will have one to three years to craft individual or regional implementation plans. This will be followed by additional years before interim requirements must be met. It is reasonable to assume that state regulators and reliability entities will work with utilities and other key stakeholders in crafting plans from inception. In fact, this is already happening, as non-profits and grid operators talk with states about their Clean Power Plan options. Reliability should and will be a key consideration, not an afterthought. Moreover, there is already a robust set of tools, discussed in a recent report by the Analysis Group, that reliability entities like NERC can apply.
The proposed Clean Power Plan will allow states to choose the emissions-cutting strategies that best suit their circumstances. One approach expected to be favored is to reduce electricity demand through energy efficiency programs. Consumers using less electricity will only serve to ease reliability concerns.
The price of failing to act
The reliability of our electricity system is indeed a serious concern to our economy and quality of life. And that reliability will be impaired if the emissions causing climate change aren’t curbed.
In the coming decades, climate change is expected to bring more frequent and intense heat waves, higher sea levels, and more intense storms that will strain our electricity infrastructure. Over time, a range of measures will be needed to ensure that electricity system assets will be able to withstand climate impacts.
Strategies and systems exist to ensure the Clean Power Plan can be implemented without compromising reliability. By beginning to reduce emissions today, we can lessen the effects climate change will have on the power system tomorrow.
Photo by Ellie Ramm
Elizabeth Craig of the EPA (left) speaks with three representatives of 2015 Climate Laedership Award winners, Andy Battjes of Brown Forman, Bridgeport, Conn., Mayor Bill Finch, and Alexis Limberakis of Clorox
When it comes to climate leadership, the way a message is delivered can be the key to success.
Winners of the 2015 Climate Leadership Awards found that being creative in communicating ideas on sustainability and reducing greenhouse gas emissions helped the message resonate with constituents, customers, and employees.
Sixteen organizations, including C2ES Business Environmental Leadership Council members Bank of America and General Motors, won Climate Leadership Awards this year. The awards are co-sponsored by the Environmental Protection Agency (EPA) with the Center for Climate and Energy Solutions, Association of Climate Change Officers, and The Climate Registry.
Three winners -- Bridgeport, Conn., Mayor Bill Finch, household consumer product maker Clorox, and wine and distilled spirits manufacturer Brown Forman – spoke at the Climate Leadership Conference about three ways to connect climate goals to your audience.
1. Link your goals to everyday issues.
Finch, who received EPA’s only individual leadership award, wanted his city to take on the goal of reducing emissions 10 percent below 2007 levels by 2020. He found what he talked about mattered.
“Not polar ice caps,” he said. “But jobs for Uncle Harold.”
In Bridgeport, those jobs were deploying fuel cells, which produce electricity using natural gas and electrochemical reactions with only trace emissions. The Dominion Bridgeport Fuel Cell, spearheaded by Fuel Cell Energy, is the largest in North America, powering 15,000 homes. Construction is set to begin this year on Bridgeport’s Green Energy Park, which includes a smaller fuel cell plus 9,000 solar panels on the site of a former landfill.
Finch also got jobs for Uncle Harold’s nieces and nephews through the Mayor’s Conservation Corps. With the help of block grants, the city hires 40 youths every summer to go door to door, urging people to recycle, use rain barrels, and plant trees.
“Kids are our greatest ambassadors,” said Finch. “They’re helping to change the way we can sell these concepts to the public and change behaviors.”
2. Engage your employees.
At Clorox, Director of Environmental Sustainability Alexis Limberakis said the company got employees on board by tying messages about sustainability to personal motivation.
“Most employees get recycling, but a carbon footprint is over their heads,” she said. “When you connect it to cost savings, that’s when the light goes on.”
When selecting members of its sustainability team, the company didn’t search for experts in sustainability. Instead, it chose people who understood the company’s values and operations. That enabled Clorox to develop innovative ways to reduce waste that aren’t necessarily apparent to consumers but make a big difference.
The EPA honored Clorox for goal-setting and reporting and verifying organization-wide greenhouse gas inventories and achieving aggressive greenhouse gas emissions reduction goals. Clorox reduced emissions 16 percent and increased the efficiency of its product distribution by transitioning from truck to rail.
3. Engage your supply chain.
The climate impacts on Brown Forman’s operations in drought-stricken California were obvious: The company’s water supply, the growing season, and the availability of corn, rye and malt barley used to make spirits were all affected.
When communicating about climate goals to employees and suppliers, “you need a clear linkage to the company’s overall purpose,” said Environmental Health and Safety Director Andy Battjes. “Addressing climate change and other environmental impacts now has an impact on our ability to grow and thrive.”
With that in mind, Battjes said it was easier to convince employees that climate goals are important, especially when cost savings are tied in. After that, they were able to communicate the same message through the supply chain.
“Our employees have good, innovative ideas that have never been tried before. Give them a chance, and they will put it into practice,“ he said. “When you get into suppliers and fellow industries, you get to multiply those effects.”
Brown Forman was recognized for reporting and verifying organization-wide greenhouse gas inventories and setting aggressive greenhouse gas emissions reduction goals. The company plans to reduce greenhouse gas emissions 15 percent between 2012 and 2022 by switching the boilers at its distilleries from fossil fuels to biomass. It also plans to switch the fuel for its steam boiler at a production operation to a less greenhouse gas-intensive fossil fuel.
Climate Leadership Award winners demonstrate the many paths forward to a low-carbon future and serve as an example for others in how to talk about – and take – climate action. The next step is to find even more creative and engaging ways to spread that message to a broader audience.
Photo by Ellie Ramm
Emilie Mazzacurati, founder and CEO at Four Twenty Seven, Inc., spoke at a C2ES-sponsored workshop on corporate climate resilience at the 2015 Climate Leadership Conference.
Many businesses are moving beyond identifying the potential risks posed by climate change impacts and are taking the next step: developing solutions.
More intense heat waves, rising sea levels, and heavier rainfall could lower crop yields and labor productivity, increase energy costs, damage property, and disrupt operations.
None of these impacts are good for business.
More than 80 individuals from companies, cities, and nonprofits shared their climate resilience ideas and experiences at a C2ES-sponsored workshop, “Emerging Best Practices for Identifying Climate Risk and Increasing Resilience,” at the 2015 Climate Leadership Conference in Washington.
Key insights from the session include:
- Businesses will need to move more toward resilience and prevention, and away from traditional recovery and rebuilding after extreme weather events.
- Companies need to work across departments, such as sustainability, risk management, operations, and financing, to address climate risks.
- Engineering standards should be updated to take climate change into account. This would help companies with siting and improving buildings and other infrastructure.
- Public-private partnerships are an opportunity to share knowledge and make maximum use of efforts for risk assessment and resilience planning by companies and city, state and federal agencies. Businesses and public agencies have mutual interests in managing energy, water, and transportation infrastructure, and protecting communities.
Emilie Mazzacurati, founder and CEO at Four Twenty Seven, Inc., said at the workshop that one of the main barriers to corporate resilience efforts is the missing link between collecting climate data and understanding company-specific impacts. She also noted that many companies consider climate change only as a sustainability issue and do not incorporate climate change considerations into risk management.
Dr. Robert Kopp, a climate scientist at Rutgers University, outlined a report that could help companies link the science to the impacts. The American Climate Prospectus: Economic Risks in the United States links a 21st century climate to economic impacts on a state-by-state basis for a variety of sectors, including health, agriculture, and energy.
Pacific Gas & Electric Company has an in-house climate science team to help make the connection. Director of Corporate Sustainability Chris Benjamin said PG&E includes climate change in the risk management process, and develops resilience strategies. He also highlighted the importance of reporting on climate risks in corporate disclosures like the CDP, which gathers information from companies on greenhouse gas emissions, climate risks, and approaches used to address them.
C2ES provided a detailed snapshot of the state of resilience planning among a cross-section of global companies in the 2013 report, “Weathering the Storm: Building Business Resilience to Climate Change.” We’re researching what companies are doing to address their risks for a follow-up to this report, which will be available fall of 2015.
For electric vehicles (EVs) to hit the mainstream and make a meaningful contribution to reducing greenhouse gas emissions, they’ll need a robust public charging infrastructure that lets drivers go where they take gasoline-powered cars now. Our recent work for Washington state identified some promising ways to get the private sector to fund more of that infrastructure in the near term, and fund all of it eventually.
The C2ES study was commissioned by the Washington State Legislature’s Joint Transportation Committee and guided by an advisory panel of state legislators, EV experts, and other stakeholders. The findings, which could be implemented in the state through a bipartisan House bill, demonstrate that, with continued public support and accelerated EV market growth in the near term, the private sector could predominantly fund commercial charging stations in about five years.
A frequent question about funding infrastructure for EVs is, “Why not just follow the gas station model?” Under that model, an investor would pay to install and operate equipment and make a profit by selling the electricity to charge an EV.
Putting aside the fact that gas stations make most of their money at the convenience store or repair shop and not at the pump, this business model doesn’t work for EV charging for three reasons. First, the cost of owning and installing EV charging equipment is high. Second, the market for EVs is small in most places and the demand for charging is uncertain. And third, EV drivers are not willing to pay a high price for public charging when charging at home is cheap and easy.
These barriers are the same whether you’re in Washington state or Washington, D.C.
To overcome them, we first identified three sources of revenue to businesses – the sale of electricity, the sale of EVs, and the sale of other retail products while an EV driver is charging. We quantified the additional revenue that could flow to the electric utility, the automaker, and the retailer from increased EV deployment. We then quantified how an investment to capture this revenue would benefit the financial performance of a charging infrastructure project. Financial performance improved significantly, but not quite enough to earn a payback for the station owner-operator in the time an investor typically seeks (about five years or less).
We then looked at the role of government in supporting the market in the near term to see if that helped. We considered a combination of policy incentives, such as extending Washington state’s sales tax exemption for all-electric cars for five years and subsidizing some of the cost of the charging equipment. We found that if this public sector assistance is offered, and if the EV market continues to develop, after about five years some EV charging business models will be profitable and sustainable with no further public sector intervention.
The near-term success of EVs is critical if we’re going to significantly reduce emissions from the transportation sector, which is responsible for 28 percent of greenhouse gas emissions. We know that private sector investment is crucial, but that the private sector must see a profit if it is to invest billions in EV technology and infrastructure.
Our study reflects what we’re already seeing on the ground, as utilities, automakers and retailers invest in charging infrastructure. Three major electric utilities want to help deploy charging stations in California. In January, automakers including BMW and Volkswagen announced they will work with ChargePoint to install more than 100 charging stations in key markets. And some retailers, including Walgreens, were early adopters of EV charging, partnering with NRG’s eVgo back in 2010.
Our work for the Washington State Legislature shows how policymakers can build a small bridge to a time in the near future when more private businesses will invest in EV infrastructure on their own.
Learn more about our project and download the business model tool we developed to complete this analysis.