Monthly Archives: April 2011

The Spotlight Shines On Natural Gas

You may have seen the many articles that came out this week on a new peer-reviewed paper in the Journal of Climatic Change by Professor Bob Howarth and others at Cornell.  The paper compares the carbon footprints of natural gas and coal and concludes that natural gas contributes to global warming as much as coal, or even more, when assessed on a life-cycle basis.

Though we have questions about Professor Howarth’s paper’s emissions estimates, it nevertheless highlights the critical importance of obtaining and sharing better data so that we can accurately characterize air pollution from natural gas development — including the short-term climate impacts of methane.  Because of methane’s powerful heat-trapping ability during its roughly decade-long atmospheric residence time, or life span, reducing methane emissions from production increases the chances of meeting critical climate targets, such as limiting global warming to a two degree Celsius temperature increase. 

Professor Howarth’s research should also help focus attention on the methane leakage issue.  EDF has been concerned for some time that methane leakage in the natural gas development process could significantly diminish its inherent low-carbon advantage relative to other fossil fuels.  There is consensus that a methane leak rate during production, processing, and transportation of 5% (of total gas production) is the approximate break-even point at which natural gas and coal used to generate electricity have similar climate impacts on a 20-year time horizon.  Examining the warming potential of natural gas over a 20-year timeframe is important, rather than the customary 100-year timeframe, given the need to reduce global warming in coming decades.  What we don’t fully know is whether the leakage rate today is lower than that break-even point, though the Environmental Protection Agency’s (EPA) most recent assessment estimates the leakage to be between 2 to 3%.    

Bottom line: We need better data on methane leakage from natural gas production and transport.  The natural gas industry, which touts itself as providing the “low-carbon” fossil fuel, should drop its lawsuits against EPA to require disclosure of its global warming pollution and take aggressive steps to both curb the loss of its product into the atmosphere and maximize the greenhouse gas benefits of natural gas.  Numerous cost effective opportunities exist to capture leaking gas and turn it into increased fuel sales.  And less natural gas leakage will mean healthier air for communities, since raw natural gas contains both cancer-causing and smog-forming pollutants.  

If the industry wants people to trust that natural gas is a clean alternative, it would do well to spend less time fighting pollution disclosure requirements and more time addressing environmental and public health concerns.  EDF is eager to work cooperatively with the natural gas industry to accomplish this.

Posted in Natural Gas / Read 1 Response

New York City’s Split Incentive “Trifecta”

By: Elizabeth Stein, EDF Attorney

Today, New York City is pioneering a new solution to the long-studied problem of the “split incentive” that prevents commercial landlords and office tenants from saving money and cutting pollution with energy efficiency.   This is not just an academic exercise – the solution will be rolled out in the heart of Manhattan, at the Gold LEED-certified 7 World Trade Center site, and modeled in the government’s own leases across the city.  This can be a game-changer for energy efficiency nationally.

Energy efficiency is the fastest, most cost-effective way to reduce greenhouse gas (GHG) emissions in the United States. Americans waste an extraordinary amount of energy in inefficient buildings – and that means we’re wasting money too. In New York City, buildings account for a staggering 80% of the city’s carbon emissions and $15 billion in energy costs.  Applying today’s technology, many buildings could cut energy use by between 20 and 40% through investments that have the potential to pay for themselves.  Investments in energy efficiency will reduce greenhouse gas emissions, lower energy costs, and create jobs when we need them most.

Today’s commercial leases, however, stand in the way of unleashing that savings stream –  hence the split incentive conundrum.  Why would a landlord upgrade a building’s energy systems if the cost savings accrue only to the tenant?  Something as simple as the way a lease is drafted can block access to the cheapest and fastest way to solve air and climate pollution.

To solve this problem,  Mayor Bloomberg’s administration teamed up with EDF, NRDC, NYSERDA, real estate consultants HR&A and Cycle-7, and senior real estate attorney, Marc Rauch, among others, to reinvent the commercial lease in a way that lines up the incentives so that landlords and tenants will want to upgrade their buildings and cut waste.  The new lease language is simple, straightforward, and can be used by any commercial building, anywhere.

The basic idea is to realign the business deal on energy costs, so that both landlords and tenants are motivated to stop wasting energy.  Under the new lease announced today, part of the cost savings from energy efficiencies are made available to pay for upgrades to cleaner technology.  Tenants save money and buildings end up with newer lighting and heating and air conditioning systems that cost less to operate.  The new lease also solves a tough measurement and verification challenge by applying an easy-to-understand discount to the upfront cost-savings projections obtained by a landlord’s engineer, in order to protect against variances between cost savings projections and realities over time.

By changing the business deal between landlord and tenant, the lease structure announced today creates a way to save money, cut pollution, and modernize building systems.  It’s the ultimate win-win for New York City’s commercial landlords, tenants – and for any of us who breathe the air in a city with lots of power plants.  I think of this as a split incentive “trifecta:” it’s being adopted by the private sector in a true market transaction at the World Trade Center site, the City itself is committing to use the approach in leases where it is a tenant, and the Real Estate Board of New York (REBNY), New York City’s leading real estate trade association, is speaking favorably about the solution.

This is a great example of what can happen when government, advocates, and the private sector roll up their sleeves together to solve a problem.  This forward-thinking business deal serves as a model for every commercial building in the country.  Help us spread the word, and let’s see if we can use this to open up the marketplace for energy efficiency globally.

For more information, please see the City’s Energy Aligned Lease fact sheet and model language.

Posted in Energy Efficiency, New York / Comments are closed

Thinking Long Term On America’s Energy Future

On Wednesday, President Obama, speaking at Georgetown University, set out a multi-pronged approach to boosting America’s energy security.  We agree that America “cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again.”  President Obama’s goals to leverage alternative fuels, increase efficiency, and invest in smart grid technology, advanced vehicles, high speed rail, and public transit are critical steps toward a truly clean energy economy.

The core objectives of our Energy Program are to help accelerate the deployment of large-scale, clean technologies into the nation’s energy system and remake the market for efficiency and innovation.  Our goal is to reduce the environmental impact of energy production, delivery, and use.  Why?  Because investments in clean technology will bring about the clean energy revolution we need by greatly reducing our use of dirty fuels and improving air quality and, thus, the health of millions of Americans – especially children and the elderly. 

We can improve our energy independence and end the economic hardships imposed on American families by spiking energy costs while preserving our air, land, and water for future generations.

As important as the energy, environmental, and public health outcomes are, this revolution also benefits our economy and creates jobs.  American workers have tremendous opportunities related to energy efficient and clean technologies, which are creating well-paying jobs and helping companies compete in the global market.  

One of EDF’s main areas of focus is on smart grid technology.  President Obama’s Advanced Research Projects Agency-Energy (ARPA-E) funds projects that will help modernize our antiquated electricity system.  A smarter grid can adjust demand, reducing the need to build costly, new power plants.  It will enable extensive new wind and solar energy to integrate into an upgraded grid so that we can rely far more on clean, renewable, home-grown energy.  The result:  less environmental damage, more jobs, and a more efficient, reliable, and resilient electricity system.  A smart grid will also facilitate the switch to electric vehicles, making it possible to “smart charge” them at night so they can be ready the next morning for commuters who will no longer be paying for gasoline.

Another key point that the President made was on responsible development practices for natural gas.  Natural gas can play a significant role in achieving our clean energy future – but it needs to be developed safely and in an environmentally sound manner.  Protecting citizens’ health and the environment will require that we “get it right from the start.”  That means putting rules in place to guarantee that our water and land are protected from contamination and ensuring that leakage of harmful air pollution is minimized.

The President’s call for increased transparency in the use of hydraulic fracturing chemicals is a necessity.  The natural gas industry is engaged in a public perception war that it is not winning.  Participating in the development of transparency within the industry is the first step necessary in attempting to rebuild public trust.  A balance between creating a sustainable market for business and ensuring the health and safety of the public should not be a source of division, but instead our common ground. 

While Congress is negotiating the federal budget, members would do well to recognize the essential need to make long-term investments in a 21st century clean energy economy that will reduce America’s dependence on foreign oil and put Americans back to work.

EDF commends the President for his willingness to look to the future.  If we can do that, we will all benefit from a stronger economy, energy security, and a cleaner environment that protects our public health and maintains our quality of life.

Posted in Climate, Energy Efficiency, Grid Modernization, Natural Gas, Renewable Energy, Washington, DC / Read 1 Response