Climate Compass Blog

New business models plus public support can boost investment in EV charging

More than 300,000 electric vehicles (EVs) are already on the road in the United States, but to ramp up adoption of this technology, consumers will need more access to charging beyond their home or office.

C2ES has identified business models that, combined with near-term public support, could boost investment in publicly available EV charging and expand the environmental benefits of EVs.

The business models are detailed in a new C2ES publication, Strategic Planning to Implement Publicly Available EV Charging Stations: A Guide for Businesses and Policymakers. The guide draws on research from a two-year initiative in partnership with the National Association of State Energy Officials (NASEO) to explore innovative financing mechanisms aimed at accelerating the deployment of alternative fuel vehicles and fueling infrastructure.

This figure illustrates the business challenge facing charging service providers presently. Over the expected life of the charging equipment, the direct revenue for the provision of charging services is less than the cost of owning and operating the charging station.

Private investors concerned about high upfront costs and uncertainty about demand for charging services often choose to step back from public charging projects because they are unlikely to earn back their investment in five years or less.

Indirect revenue streams can make a big difference. For example, an automaker and an EV charging station operator could share the revenue generated by additional EV sales that could come from an expansion of charging services. Or a group of retail businesses could co-host a charging site, sharing the costs and attracting new customers.

These and other business models were analyzed using a tool, developed by C2ES and Cadmus Group, that helps investors evaluate the financial viability of publicly available charging station projects.

The charging projects in Washington and New York assume 60 percent of the project capitalization cost is financed through debt. The baseline interest rate used was 8 percent, as indicated in this figure.

Even with these business models, some projects may still not be profitable soon enough for investors. So the report recommends near-term public support, such as grants, low-interest loans, and vehicle purchase incentives. Grants help lower initial costs to speed return on investment, and low-interest loans provide access to investment capital. Incentives to buy EVs, like the wide array of policies outlined in a recent report on EV promotion in the 25 largest U.S. cities, can help expand the demand for charging stations. 

Publicly available charging not only helps travelers with EVs get where they need to go; it also helps reduce emissions contributing to climate change that affects us all.

As with many new technologies, EV charging will need creative business models and public support to capture the environmental benefits of electric vehicles. With continued public support in the near term, new business models that capture indirect revenue can gradually make publicly available charging projects profitable for private businesses.

Putting the UNFCCC to the test

There’s a theory I’ve been advancing for some time and the upcoming Paris climate talks will, for the first time, put it to a test.

The issue is whether the United Nations Framework Convention on Climate Change (UNFCCC) is capable of delivering. Established nearly a quarter century ago as the global forum for countries to take on climate change, the UNFCCC enjoys universal participation – and is universally deemed a disappointment.

The harshest assessments came in the wake of the ill-fated Copenhagen conference in 2009, when many quietly, and some openly, began urging governments to abandon the UNFCCC as a place worth investing any effort or hope.

But governments chose to stick with it. The following year, in Cancún, they hammered out an agreement through 2020. And the year after that, in Durban, they launched a new round of negotiations culminating next month in Paris. The aim: a new global agreement beyond 2020.

Anyone who’s closely tracked the UNFCCC knows that the process is ungainly and byzantine at best – and, at worst, a highly politicized, dysfunctional mess.

I’ve maintained over the years, though, that the UNFCCC’s lack of progress is a reflection less of the process itself, than of the meager political will that governments bring to it. The UNFCCC, in other words, has never been fairly tested.

Paris will provide that opportunity.

The collective will among governments to address climate change, while still lacking, is stronger than ever. The United States and China – the world’s largest economies and emitters, and long-time climate adversaries – are jointly leading the call for a new agreement. More than 150 countries have formally offered their intended contributions (how they’ll limit or reduce their emissions). And, as I describe in a recent post, there’s growing convergence in high-level discussions on the core elements of a deal.

At the table, though, this collective will and convergence have yet to translate into agreed text. In the final pre-Paris negotiating session two weeks ago in Bonn, many parties seemed more intent on preserving favored options than on moving to common ground. The 51-page text that emerged is more coherent, with clearer options, but is still a far cry from a ratifiable agreement.

This is disappointing but not surprising. The UNFCCC operates by the unofficial rule that nothing is agreed until everything is agreed. So all issues, and there are many of them, must inch along it the same pace until an acceptable overall package begins to emerge.

Negotiators will no doubt have to work through the night(s) in Paris to get to a final deal. But the ultimate landing zones have been fairly clear for some time (see, for instance, the report from C2ES’s recent negotiators dialogue). So it’s not only possible, but probable, negotiators will get there.

The outcome, in all likelihood, will fully satisfy no one and leave many once again disappointed. But while destined, by some measures, to fall short, the agreement taking shape could prove a major turning point – even transformational.

Here’s what I think we can count on: a binding agreement that gets all of the major players on board, uses strong transparency to hold countries accountable, and works to build ambition over time. If successful, this would build confidence that everyone is doing their fair share, which will enable everyone to keep doing more.

If we leave Paris next month with that kind of agreement, I think we’ll be able to say that the UNFCCC, finally put in a position to deliver, has proven that it can.



Are 2015's extreme weather events driven by climate change or El Niño?

Hurricane Patricia (Photo: NASA Earth Observatory)

Record warmth, increased precipitation, and more intense tropical cyclones.

These are just a few of the consistent predictions from models investigating our future in a world with climate change. Or, it’s a list of some of the impacts of the periodic weather pattern called El Niño.

So which one has been driving some of this year’s extreme weather events?

A record year for Pacific tropical cyclones

The National Hurricane Center reports that eight major hurricanes (Category 3 or higher) have developed in the eastern North Pacific Ocean so far this season. This is consistent with the characteristics of El Niño that have been shaping up over the course of the year.

During an El Niño year, the surface ocean in the Eastern Pacific basin warms (it’s usually very cold) and the trade winds in the area weaken. These two meteorological developments favor the formation of tropical cyclones, the general term that includes hurricanes and related systems. Hurricane Patricia achieved record strength in a record short period of time this month, becoming the strongest Pacific hurricane to make landfall. Meanwhile, climate change will probably not change the number of hurricanes overall, but warmer ocean surface temperatures and higher sea levels are expected to intensify their impacts.

Driver: El Niño

Remember when Boston was buried in snow?

The Northeast saw record amounts of snowfall during the 2014-2015 winter. The extreme snow amounts were caused by two factors. First, a weakened polar vortex (the global wind pattern that usually keeps Arctic-cold air trapped over the poles) brought extended periods of bitter cold weather to the region. Then major storm systems arrived, bringing large amounts of moisture that fell as snow.

It’s unclear if or how climate change affects the polar vortex. But it’s very clear that a warmer world is a wetter world. Warmer air causes more water to evaporate over the oceans, forming storm systems heavy with moisture. When these systems hit cold air, as they did repeatedly this winter, that means lots of snow.

Driver: Climate change

More record high temperatures

Final global average temperature data is in for September 2015, and it was the hottest September ever measured. Moreover, this year is on track to be the hottest year ever recorded. While El Niño makes many (but not all) parts of the world warmer than normal, the effect is strongest in winter months, so it probably had little effect in September.

A record-setting month for temperature probably sounds like familiar news because records for high temperatures have been broken over and over again in recent years. This is one of the most certain outcomes of climate change. As the climate warms, it means not only hotter summers, but warmer autumns and springs, too.

Driver: Climate change

While climate change isn’t the cause of all extreme weather events, it contributes to many of them. And it is playing a role in making other long-term weather phenomena like El Niño more impactful. That’s why it’s critical to both build resilience to climate impacts and also reduce climate-altering emissions so that those impacts aren’t more than we can bear.



There's growing business momentum for climate action

Can you feel the momentum?

With negotiators meeting in Bonn this week and only six weeks to go until Paris, the business community is not only stepping up to the plate, but is swinging for the fences on its support climate action (Yes, it’s playoff season, so baseball is also on my mind).

This week’s announcement that 69 companies have joined the White House’s American Business Act on Climate Pledge brings the total to 81. Many of these companies pledging to reduce their emissions, take other actions to tackle climate change and support a strong international agreement include a number of members of our own Business Environmental Leadership Council: Alcoa, Bank of America, GE, General Motors, HP, IBM, Intel and PG&E. Together the 81 companies represent a combined $3 trillion in revenue and 9 million employees.

And last week, 14 companies with a combined revenue of $1.1 trillion and 1.5 million employees signed a statement organized by C2ES in support of a Paris climate agreement, that began “Paris presents a critical opportunity to strengthen efforts globally addressing the causes and consequences of climate change, and to demonstrate action by businesses and other non-state actors. ”

But these companies aren’t just talking about climate change; they’re doing something about it. They’re making commitments to reduce their own emissions, and some are even committing to use 100% renewable energy through the RE100 campaign.  They are also working both internally and with communities and cities to increase climate resilience.

Now it’s time to take this enthusiasm and put it to work. We know there is growing support for a strong agreement in Paris, and hopefully that’s what we’ll get in December.  But that’s just the first step—we’ll need to ensure that countries live up to their commitments, and back here in the United States, we’ll be working with businesses, states, and cities to build partnerships that harness the power of the markets to reduce emissions, develop innovative financing for clean energy and strengthen our resilience to climate impacts.

We have some real momentum going now. Let’s make the most of it.

Cities are driving climate solutions

Cities and counties are increasingly emerging as climate leaders, becoming laboratories and incubators for climate solutions. These solutions take a fresh approach to emerging local challenges, and could drive progress at a larger scale.

Here are two key ways cities are stepping up:

·      Local governments are creating an invaluable knowledge base for efficiency and sustainability efforts.

To reach your destination, you have to know where you are starting from. That’s why it’s so important that cities are taking advantage of ever-improving data collection and analytical capabilities to become the providers of rich databases of energy and water use in their jurisdictions.

Philadelphia's Energy Benchmarking program requires large commercial buildings to disclose their energy use. As a result, the city has a baseline of energy usage by nearly 2,000 buildings across multiple sectors. By sharing this data with building owners and energy managers, the city is focusing more attention on saving energy. And by sharing building data online with potential tenants, the city hopes to create a market for efficient buildings.

A similar program in New York City has had promising results. The disclosure policy corresponded with energy savings of nearly 6 percent - worth more than $260 million.

·      Local governments are leveraging technology to save energy and reduce greenhouse gas emissions.

A partnership between the City of Charlotte and Envision Charlotte, a local nonprofit, was among the examples of this strategy featured at the recent Smart Cities week in Washington, D.C. Working with the city and Duke Energy, Envision Charlotte has installed shadow meters in uptown commercial buildings to gather real-time energy use data that informs customized training for building managers. Recent assessments document a 16 percent drop in energy use over a 2010 baseline.

Envision Charlotte plans to reach more buildings in the city and is developing an app to engage office tenants. It’s also partnering with the White House to launch the newly unveiled Envision America program, which aims to achieve similar energy savings in other cities.

In both of these cases, access to strong data is helping to identify candidates for educational programs and investment opportunities to improve building performance. Local leaders know that these activities can strengthen their communities and local economies, and cities have a growing track record of facilitating such projects and ensuring they are implemented and monitored successfully.

As programs like these show, cities can be valuable partners as states and companies seek to improve sustainability and save energy. They can also play a key role as states seek emissions-cutting strategies under the Clean Power Plan.

That’s why local governments are playing a key role in the new C2ES Solutions Forum initiative. By sharing their experiences with states and businesses, cities and counties will help inform decisions and promote climate solutions that work.