Energy Exchange

Why EDF Is Working On Natural Gas

By Mark Brownstein / Published: September 10, 2012

Environmental Defense Fund (EDF) is often called upon by those opposed to natural gas development to support a ban or moratorium on drilling. They argue that fighting for tough regulations, as EDF is doing, helps ensure that natural gas development will take place. Some of our friends in the environmental community have questioned why we are working on natural gas at all. They suggest that we should simply oppose natural gas development, and focus solely on championing energy efficiency and renewables. We understand these concerns, and respect the people who share them. And for that reason, we want to be as clear as we can be as to why EDF is so deeply involved in championing strong regulation of natural gas.

Our view on natural gas is shaped by three basic facts. First, hydraulic fracturing is already a common practice in the oil and gas industry. Over 90 percent of new onshore oil and gas development taking place in the United States today involves some form of hydraulic fracturing, and shale gas accounts for a rapidly increasing percentage of total natural gas production—from 16% in 2009 to more than 30% today. In short, hydraulic fracturing is not going away any time soon.

Second, this fight is about much more than the role that natural gas may play in the future of electricity supply in the United States. Natural gas is currently playing an important role in driving out old coal plants, and we are glad to see these coal plants go. On balance, we think substituting natural gas for coal can provide net environmental value, including a lower greenhouse gas footprint. We are involved in an ambitious study to measure methane leakage across the value chain, and we’re advocating for leak reduction in order to maximize natural gas’ potential carbon benefit. We share the community’s concern that we not lose sight of the importance of energy efficiency and renewables, and are working hard to see that these options become preferred alternatives to natural gas over time.

But even if we were able to eliminate demand for natural gas-fired electricity, our economy would still depend heavily on this resource. Roughly two-thirds of natural gas produced in the U.S. is used as a feedstock for chemicals, pharmaceuticals and fertilizer, and for direct heating and cooling. Natural gas is entrenched in our economy, and championing renewables and energy efficiency alone is not enough to address the environmental impacts associated with producing it.

Third, current natural gas production practices impose unacceptable impacts on air, water, landscapes and communities. These impacts include exposure to toxic chemicals and potential groundwater contamination (due to faulty well construction or unsafe disposal of drilling wastewater), harmful local and regional air pollution, greenhouse gas emissions from unnecessary fugitive methane emissions and negative effects on communities and ecosystems. Whatever economic and environmental benefits natural gas may provide should never take precedence over or compromise the public’s right to clean water and clean air. Read More »

Big Data – Launch Pad For Big Ideas

By Andy Darrell / Published: July 13, 2012

Source: TechCrunch

When the internet came along, it transformed our relationship to big data – unleashing innovation, markets and, yes, funny dog videos at a global scale. “Big data” is all the rage these days in the energy sector, as investors, utilities and consumers wake up to what smart use of data can do for them.

A few weeks ago, I posted about Clean Heat – a project in which organizing data about buildings attracted nearly $100 million to finance upgrades to cleaner heating systems. If we can cut soot pollution from heating oil in New York City 50% by 2013 with the power of open data … what opportunities might be out there at even bigger scales?

This week, EDF teamed up with the White House, Google and HonestBuildings to pull together a “data jam” at Google’s New York City headquarters in the impossibly hip meatpacking district of Manhattan. Todd Park, U.S. Chief Technology Officer, kicked of a brainstorm among tech entrepreneurs, energy experts, finance whizzes, web designers and government agencies, to answer this question: if government makes its energy data open and computer-friendly, what could entrepreneurs invent to “improve energy outcomes for families and businesses?”

For six hours, we divided up into teams and jammed on this question, inspired by the extraordinary public data sets squirreled away in federal, state and city agencies on topics from energy efficiency to power plant pollution, electricity markets, transportation and health. The jam session generated at least ten great ideas, ranging from consumer energy apps to ways to save money on your commute. Teams are coalescing around these ideas – and similar ideas developed earlier this year at a similar data jam at Stanford. The goal is to turn the most promising ones into prototypes over the next 90 days.

Whether any of these ideas make it to market, it’s too early to tell. But if this group can generate so many prototype-worthy ideas in one afternoon, imagine what could happen if consumers, students, entrepreneurs, businesses and families across the country were empowered to harness “big data” to find the best ways to save money, cut pollution and improve quality of life?

It worked for the internet. It worked for smart phones. Now let’s see if it can work for energy and pollution. I’m hoping to be back in 90 days to tell you about the great idea the folks in my sub-group are developing to increase investor confidence in energy efficiency. Stay tuned.

Also posted in Grid Modernization / Read 3 Responses

Saving Lives By Upgrading Buildings

By Andy Darrell / Published: June 13, 2012

NYC Government, Private Sector and Civic Groups Collaborate to Cut NYC’s Soot Pollution from Heating Oil 50% by 2013

At a press conference in the Bronx today, EDF stood with leaders in government, finance and real estate to launch an unprecedented partnership to upgrade thousands of buildings in New York City to clean heating fuel and greater efficiency, with the goal of cutting soot pollution in the most polluted neighborhoods.

EDF President Fred Krupp said “The heating oils used in one percent of New York City buildings create more soot pollution than all the cars and trucks in the City combined – that’s why upgrading these buildings to cleaner heating fuel is the single largest step New Yorkers can take to solve local air pollution.”

This project can only set such ambitious goals – and win – because the right stakeholders are at the table to get it done. Everyone is doing their part:

Government is setting background regulations in a way that gives buildings flexibility on how to achieve the pollution reductions;
Real estate leaders (from supers to landlords and managers) are “doing the math” for their buildings to find the most cost-effective path to solutions that both cut heating costs and reduce pollution;
Utilities and fuel providers are expanding their services to deliver a wider range of cleaner fuels — from low-sulfur oil to biodiesel and natural gas to energy efficiency upgrades;
Banks , entrepreneurs and local government are stepping up to provide financing to buildings that need it in order to swap equipment that can handle the cleaner fuels; and
EDF (and other non-profits) are organizing reams of data to be actionable by government and the private sector, doing outreach at the community level and making the health and business case.

In fact, today’s announcement puts almost $100 million on the table to help buildings take advantage of clean fuels and technologies. This financing, made possible by JP Morgan Chase, Deutsche Bank, Citibank, Hudson Valley Bank, the New York City Energy Efficiency Corporation, and the Community Preservation Corporation, will target low- and moderate- income buildings.

Leading up to this announcement, this teamwork has already resulted in 450 buildings upgraded, even before the launch. It’s one of the largest clean energy projects for buildings anywhere. We expect over a thousand more by the end of the year; and by targeting the most polluting buildings, we will cut pollution from heating oil in half by the end of next year.

Buildings from the legendary Beresford on Central Park West, to St. Barnabas Hospital in the Bronx are on track. I believe that this collaboration is a powerful model for cities around the world. By bringing together government, real estate, finance, utilities, advocates and community leaders, we’re finding practical solutions that work for health, for the planet and for today’s economy.

As New Yorkers, 80% of our carbon footprint is the result of the energy used in our buildings. Mega-cities around the world are huge ecosystems of buildings: imagine if we could take this model of collaboration to scale, across the U.S. and the world. Next week, leaders are gathering in Rio to work on global solutions to help save the planet. I hope they look to what we’ve accomplished, by working together, here in New York City.

For more information about Clean Heat, see NYC Clean Heat’s webpage and EDF’s website describing the background and progress so far.

Also posted in Climate, Energy Efficiency / Tagged NYC Clean Heat | Comments are closed

The Missing Link: Energy Efficiency Data And The Capital Markets

By Brad Copithorne / Published: May 30, 2012

EDF And Bloomberg New Energy Finance Host A Successful Conference

Last week, Environmental Defense Fund (EDF) and Bloomberg New Energy Finance (“BNEF”) hosted 150 property owners, energy efficiency project developers, ESCOs, banks, institutional investors and other thought leaders to discuss how improved datasets could spur the market for energy efficiency (EE) investment. Dan Doctoroff, Bloomberg’s CEO, kicked off the morning by discussing the company’s plans to provide this data and how similar efforts have spurred financial innovation in the past.

Three types of energy efficiency data were the basis of most of the conversation:

Project Performance Data – Accurately forecasting the energy savings from a retrofit project remains an elusive goal due to wide variance in benchmarking and forecasting standards. Chris Lohmann of the Department of Energy discussed a large database that he is developing that will attempt to provide comparisons to historical projects. Elizabeth Stein of EDF discussed a project that she is leading to develop a standardized methodology for estimating savings and pointed out that robust standards for comparing projects will substantially enhance the value of an EE project performance database.

Benchmarking Data – New York, San Francisco and other cities have taken steps to benchmark energy usage for commercial tenants. Riggs Kubiak of Honest Buildings discussed how his company is publishing this data on the web and believes it will allow prospective tenants to compare properties and spur landlords to invest in EE projects.

EE Loan Performance Data – While several EE loan programs have shown strong repayment performance to date, the rating agencies will need a far longer history in order to provide the best terms for securitizations. On-Bill Repayment (OBR) may be able to benefit from the long history of utility bill payments to create a data stream for the rating agencies.

EDF looks forward to working with Bloomberg and other market participants on each of these initiatives.

Also posted in Energy Efficiency, General, On-bill repayment / Comments are closed

Improving New York’s Proposed Hydraulic Fracturing Regulations

By Mark Brownstein / Published: January 31, 2012

Around the country, states are taking a serious look at their regulations to manage shale gas development. New York has the potential to be a leader among these states. Environmental Defense Fund (EDF) believes that strong regulations and aggressive enforcement is critical to protecting public health and the environment from high-volume hydraulic fracturing and other hydrocarbon extraction activities in New York State. To that end, we have submitted detailed comments on the New York State Department of Environmental Conservation (NYSDEC)’s proposed rules and permitting conditions for hydraulic fracturing. The NYSDEC can put New York at the forefront of safe and clean shale gas development by implementing our suggestions in several critical areas:

1) Chemical Disclosure: Full public disclosure is rapidly becoming the industry norm across the country, but the proposed NYSDEC disclosure rules for chemicals used in the hydraulic fracturing process only covers chemicals with Material Safety Data Sheets (MSDS), thus failing to capture perhaps half or more of the chemicals used. This is especially problematic because MSDS only explore hazards in occupational settings and do not consider implications for public health or the environment. Further, the proposed rule only requires disclosure of additive products proposed to be used in hydraulic fracturing, as opposed to the chemicals actually used during the hydraulic fracturing process. EDF feels strongly that operators should disclose all hydraulic fracturing chemicals used on a well-by-well basis, posted on a searchable, publically accessible website.

2) Well Construction: Properly constructed, tested and maintained wells are critical to protecting New York’s precious groundwater and surface water aquifers from contamination by drilling fluid, wastewater and natural gas seepage. The proposed well construction regulations and permitting conditions need improvement to meet industry best practice standards. Furthermore, some of the proposed rules represent potential safety hazards for well pad workers. A model regulatory framework EDF, and others, are developing could be used to greatly improve NYDEC’s proposed well construction regulations.

3) GHG Emissions/Methane Leakage: EDF is a leading advocate of strict standards on limiting methane emissions from natural gas production. Methane is a pernicious greenhouse gas, many more times more powerful than carbon dioxide. To reduce the peak warming and improve air quality, it is critical to minimize the amount of methane vented or flared at the production site or leaked during storage and transmission. We strongly urge the NYSDEC to impose specific Green Completion and other emission-reducing requirements on operators, and to formulate hard emissions targets that provide incentives for operators to reduce methane leakage even further.

4) Wastewater: Hydraulic fracturing produces huge volumes of potentially toxic and radioactive wastewater. New York recognizes this problem but does not seriously address the lack of capacity for processing or safely storing hydraulic fracturing waste materials within the state. Current technology does not allow for safe, cost-effective purification of hydraulic fracturing wastewater at treatment centers for re-introduction into the water system, and should be banned. Insofar as it appears that the final disposition of the bulk of the wastewater produced in New York will be trucked out of state to deep injection wells, the proposed regulations and permitting conditions must grapple with this expensive and perhaps unsustainable practice. Finally, since wastewater recycling will likely be the dominant treatment option undertaken by shale gas operators in New York, this practice needs to be more thoughtfully and transparently regulated.

5) Phase-in: Even with the best rules on the books, it will take time to hire and train the necessary staff to implement and enforce the rules properly. New York is essentially building a regulatory program from scratch. EDF believes the NYSDEC should learn how to walk before it can run. Our suggestion is that New York phase in the regulatory program region by region. In this way, the state can be sure that the pace of drilling activity will not outpace its ability to adequately administer the regulations. So, too, this phase-in approach will allow the state to acquire valuable experience in step-wise fashion. The key is not doing it quickly, but doing it correctly.

These and other adjustments to the proposed rules and permitting conditions are necessary to protect public health and the environment in New York. Shale gas extraction can be made safe through strong regulations and aggressive enforcement to protect communities. EDF is committed to working with the NYSDEC on these issues to produce the most responsible hydraulic fracturing regulatory framework in the nation.

EDF’s full comments on New York’s hydraulic fracturing regulations are available here.

Also posted in Natural Gas / Tagged fracking, Hydraulic Fracturing | Read 6 Responses

Innovations In Energy Efficiency Finance Conference

By Brad Copithorne / Published: September 22, 2011

By: Brad Copithorne, EDF’s Energy & Financial Policy Specialist

Earlier this week EDF and Citi co-hosted a successful conference on energy efficiency (EE) finance at Citi’s headquarters in Manhattan. This is the third similar conference that Citi has hosted. Four years ago, they had 10 people in a conference room. Two years back, it was 40 participants. This week, we were standing room only in a 200-seat venue. More importantly, however, was the diverse makeup of the audience, including bankers, real estate owners, EE project developers, financial sponsors, government agencies, foundations and nonprofit organizations. We are optimistic that this high level of interest indicates that we are close to a tipping point in toward the successful development of this market.

Some of the interesting transactions discussed included:

Public Buildings – Nobel Prize winner, John Byrne, explained an innovative structure that he developed and executed with Citi to aggregate, manage and finance $73mm of EE projects for public buildings in Delaware. Citi is looking to expand this approach in other states. (We hope to have a future blog post with many more details about this idea.)

Unsecured Loans – Cisco Devries of Renewable Funding discussed how he is working to aggregate a portfolio of unsecured consumer EE loans and how, to date, these loans seem to show much lower default rates than would be expected. Several speakers at the conference discussed the importance of getting data on EE loan performance and we understand that there are several efforts in place to collect this data.

Energy Services Agreements – Green Campus, Serious Capital, Transcend, Metrus and Sustainable Development discussed their efforts to further develop this market. We are hopeful for several favorable announcements in the near term.

Measuring and Managing EE Project Performance – Mary Barber of EDF described our project to create protocols to estimate future energy savings so that lenders and other investors can make informed investment decisions. Angela Ferrante of Energi talked about an insurance contract that will guarantee the energy savings for a project.

On-Bill Repayment – Jeff Pitkin of NYSERDA described New York’s innovative plan to provide low-cost loans to consumers for EE projects. The loans would be repaid through the customer’s utility bill. Credit would be improved because nonpayment would eventually result in shut off of power. Additionally, the obligation will stay with the meter if the customer moves. I discussed a similar plan that we hope to implement in California. We hope that the California strategy will work for commercial and multi-family in addition to single family homes.

Philanthropic Capital – Margot Brandenburg of Rockefeller Foundation, Jessica Boehland of Kresge Foundation and John Goldstein of Imprint Capital discussed how targeted investments for mission driven investors can help seed the market for EE finance.

Lessons for Solar Project Finance – Michael Mittleman of SolarCity and Marshal Salant of Citi described the very long effort that was required to make solar projects viable for financing. Currently, billions of dollars of solar projects are financed each year and the market is expanding rapidly. They (and we) are hoping that we will have similar near term success in EE finance.

We want to express appreciation to Citi for co-sponsoring this week’s successful event. Citi has committed significant resources to developing this market well before there is a likelihood of near term returns. We recognize that this type of commitment is not easy to make in a difficult economic environment with shareholders primarily focused on quarterly earnings releases.

Also posted in Energy Efficiency / Read 2 Responses