Energy Exchange

New York City’s Split Incentive “Trifecta”

By EDF Blogs / Published: April 5, 2011

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

What People Need And Want From Their 21st Century Electricity Grid

By EDF Blogs / Published: February 17, 2011

By: Derek Walker, Director, California Climate Initiative & Deputy Director, States Climate Program

For most people, the “smart grid” is just another nerdy-sounding concept, a little like the Internet was 15 years ago. Back in 1995, only a crystal ball would have given a hint of the rapid explosion of the information age and the changes it would bring about in our daily lives. The “smart grid” is in its infancy, but the benefits it offers are starting to become clear: reduced air pollution, more reliability, and greater control for the people and businesses that use energy. Not to mention some very cool gadgets that can do everything from remotely starting your washing machine to telling you, in real time, how much money you are spending to power your iPad.

Last month, the 2011 State of the Consumer Report was released by the Smart Grid Consumer Collaborative (SGCC), an organization (EDF is an affiliate member) whose mission is to listen to, educate, and collaborate with consumers to ensure the most efficient and effective transition to the “smart grid” of the future. After all, billions of dollars will be spent in the next 20 years to upgrade our electricity infrastructure, and we need to get the most bang for every buck. That means the best technology, the most cost-savings, and the greatest degree of consumer empowerment possible.

The SGCC report combines the insights from over 80 studies and white papers to give a thorough snapshot of what consumers want, need, and expect from new energy technologies and the modernized “smart grid.” The result is a template for innovators, policy makers, and consumers themselves about how best to get and stay engaged in the exciting changes that are coming…and in many cases, are already here.

The results of the studies clearly show that people are intrigued, but that there are many different kinds of people that have different needs and require varying levels of engagement. It also shows that those fascinated with new gadgets and those with the greatest interest in doing their part to create a healthy environment and reduce pollution are the most likely ‘first adopters.’ The report concludes that to generate more widespread enthusiasm for the “smart grid,” it is important to emphasize how the increasing costs of energy can be cut through a “smart grid” and how simple and user-friendly new clean energy technologies can be.

Ultimately, people want and embrace what they can see, feel and touch. That means that tangible benefits such as energy and cost savings, more reliability, and the ability to pick and choose technologies and pricing schemes are vital. The report touches on a basic truth about human behavior: the gap between intention and action. Consumer education, engagement, and empowerment are critical keys to successfully unlocking the myriad benefits of the “smart grid.”

Posted in Grid Modernization / Comments are closed

Let The Science Do The Talking At Weyburn

By EDF Blogs / Published: January 21, 2011

By: Tim O’Connor

Canadian academics, government officials and petroleum industry insiders have undoubtedly had their hands full these past two weeks.

On January 11, EcoJustice, a Canadian non-profit organization broke a story that Canada’s most prominent carbon capture and sequestration (CCS) project in Weyburn, Saskatchewan had been leaking CO2 for several years, expressing concern that no one in Canada was doing anything about it.

The press release, citing a recently published site assessment performed by Petro-Find, referenced measurements of high CO2 concentrations in the air and soil, nearby animal carcasses, visible oil sheens, algae growth and foaming gravel pits as indications that something was drastically wrong with the project that has been injecting CO2 1,500 meters below the surface for the past 11 years.

If these observations reflect leaking CO2, the Petro-Find report would call into question one of the world’s best examples of a successful CCS project (more than 13 million tons sequestered up to this point), dealing a major setback to a technology that many consider a critical tool for fighting climate change.

To understand the issues raised by the report, the Canadian research institution Petroleum Technology Research Centre (PTRC), a group comprised of Canadian CCS experts from academia, government and industry, released its own report on January 19, questioning the methods and findings of the Petro-Find study.

Where Petro-Find had concluded that high CO2 concentrations were from the CCS project, PTRC noted that natural soil biological processes were likely responsible for the observed patterns. Where Petro-Find said it was practically irrefutable that Weyburn was leaking, PTRC found problems with the analysis and suggested that the conclusions were flawed, questionable at best, with little evidence that anything was happening.

So, what’s the truth? Is this a case of whistle blowing, exposing problems with decades of international scientific research corroborated by the International Energy Agency, or is it, in the words of one skeptic, a hoax involving a dead cat? Well, the truth has to be based on where good science leads us, and something that both CCS supporters and opponents need to focus on: the science, not the rhetoric.

In the rush to find the silver bullet to solve climate change, there will be some good ideas that work, and there will be some ideas that remind us of the early reports of cold fusion from the 1990s. While we aggressively work on real solutions, it is important to remain outcome neutral and let the science do the talking. If the science shows that the solution works, great. If the science shows that we have a busted hand, let’s ask the hard questions and be open to exploring other ideas.

CCS is a solution that has been corroborated several times by science. Yet science tells us that you can’t just dig a hole, stick a pipe in and expect it to work. The trick is following the correct procedures, choosing an appropriate location and performing rigorous monitoring to make sure everything is going according to plan. Weyburn, by all reports, seems to have been doing things right for years.

Of course, the reports of oil sheens on surface ponds and bubbling soil pits near Weyburn are concerning– especially if people or animals have been affected. The Canadian research institution IPAC-CO2 is said to be looking into the Weyburn situation and doing more scientific measurements at the site. This sounds like the right way to go to me.

Posted in General / Read 1 Response

TCEQ: At It Again

By EDF Blogs / Published: February 11, 2010

Dr. Elena Craft, toxicologist We hear a lot about the jobs that will be created as we transition to a clean-energy economy, but as a toxicologist, I like to focus also on the improved air quality that will result. However, until the day comes when everyone drives plug-in hybrids and industrial facilities are non-polluting, we must take immediate steps to ensure cleaner air for ourselves and our children.

That’s why I was encouraged by the turnout in support of cleaner air at an event last week. The EPA held one of three national hearings in Houston on its proposed new national ambient air quality standard (NAAQS) for ozone. The hearings gave the public the opportunity to Read More »

Posted in General, Texas / Read 30 Responses

Understanding the water and energy relationship

By EDF Blogs / Published: April 6, 2009

Most people who watch the news are aware that we have both energy and water problems in Texas. What a lot of people may not realize is that these two issues are related and affect the water we use every day and the energy we bring into our homes.

In order to better understand this relationship, I helped author a new report with the University of Texas Jackson School called Energy-Water Nexus in Texas that was released today. Check out the video below which gives a quick summary of the report’s findings.

[kml_flashembed movie="http://www.youtube.com/v/lWNoNu0MpPM" width="375" height="300" wmode="transparent" /]

The truth is that energy and water are related in just about every way you can imagine. The water supply sector utilizes large amounts of energy to transport, treat, and deliver water. On the flip side, vast quantities of water are required to generate power.

As Texas continues to grow and pressure increases on our water and energy resources, the linkages between water and energy become more important. The cycle goes like this: A growing community needs more power, which requires more water, which uses more power, and so on.

Understanding this relationship highlights the importance of conserving water and practicing energy efficiency. For every kilowatt saved, water is also saved. For every gallon of water not used, energy demand is reduced. Investments in and incentives for energy and water conservation must be our highest priority.

Posted in General, Texas / Read 44 Responses