On behalf of a light manufacturing and warehousing facility in New York State, Climate Change & Environmental Services (CCES) is performing an energy modeling study to qualify it for IRS deductions under its Energy Performance or EPAct rule under Section 179D of the IRS Code. This facility recently implemented major upgrades to its buildings, including replacing single pane windows with state-of-the-art double pane units, lighting upgrades, installing additional insulation, and installing a new boiler and switching to natural gas. Energy modeling is necessary to ensure it meets the standards in EPAct to qualify the company for a tax deduction of up to $1.80 per square foot. CCES is collecting the necessary data to enter into and run the appropriate software to compare the building’s likely energy performance with ASHRAE standards to determine the qualifications for the tax deductions. In addition, CCES and team are also applying on their behalf for grant and other financial incentives from local government and the local utility. Besides a major reduction in their costs for fuel usage and electricity, this company hopes to receive some rebates and tax deductions to get the maximum financial benefits out of this energy-saving project.

There is a profound change going on in business attitudes as seen in several business publications recently. A growing focus for companies is on conservation of energy and other natural resources (i.e., water, raw materials, etc.) they depend on for their product. Lately, there has been relatively great volatility in the global supply and demand of many of these, meaning risks (both cost and even business survival – of not being able to make your product in a reliable manner at a reliable cost) are real and potentially significant. For most industries, costs for energy and natural resources are a greater percentage of overall business costs than ever. Controlling these costs – or at least keeping them stable – are of growing concern.

What is driving this price and availability volatility? Our global economy. Currently, we have about 7 billion people on Earth, but of these about 1 billion are “like us”: high energy and resource users. If you are reading this article, you probably are using a smart phone, personal computer, printer, or some combination of all three. And if you own and use these, you probably also own and operate one or several TVs, music systems, automobiles, go on frequent trips, and can control your comfort (heating and cooling) with the touch of a few buttons both at home and at work. Yes, you are a high energy user. There is nothing wrong with this. We work hard and deserve to use and enjoy the latest technologies. But this comes at a cost. According to the demographers who study this, by 2050 we will have about 9 billion people on Earth, but of greater concern is that we will triple the number of people who are high energy and resource users, over 2 billion additional middle class people in less than 40 years. Why? Because of economic growth in the BRIC countries. This is not a theoretical exercise based on a computer model. We are seeing frequent reports of large numbers of people in China, India, Latin America, etc. trading in their bicycles for automobiles, their multifamily, poor housing accommodations for larger, single family, climate-controlled homes, etc. This drives up global demand and prices for all of us gasoline, water, building materials, etc.

However, the resources that everybody on Earth needs to prosper and grow into this lifestyle (energy, drinking water, chemicals, cement, plastics, food) are, for the most part, finite. Therefore, based on discoveries of new sources and availabilities of such resources, both shortages and gluts of these resources have and will continue to occur, affects resource availability and price and the very the operations of any company or plant. For example, natural gas prices are currently quite low in the U.S. because of new sources being successfully exploited. Oil and coal, the fuels of choice in most of the developing economies, leads a growing global demand that will cause their prices to increase for all. Companies dependent on oil and coal to supply heat for processes or comfort will likely be hit hard in the bottom line by future volatility in energy prices and perhaps even availability of the fuel.

Therefore, your role as EHS or Sustainability Manager may need to change in the coming years as companies recognize the importance of conserving usage and diversifying sources. Instead of protecting your company’s emissions and discharges from violating rules and from damaging the local environment and worker and public health and safety and counting carbon and other parameters, your role may also include managing the needs of these valuable, dwindling resources. The less dependent your company is on energy, water, etc. (i.e., the less needed to produce the same amount of product), the lower your company’s costs and business risks are. Similarly, the ability to diversify your sources of energy, water, raw materials, etc. (i.e., ability to combust more than one fuel type, multiple agricultural raw material sources and areas for fresh water) will result in a much lower risk of not having a key resource available and to keep manufacturing your products consistently and to meet your business goals.

For example, I worked on a project several years ago for a U.S. manufacturer which wanted to build two new manufacturing plants in Southeast Asia making certain consumer products. One of their major concerns was the source of energy to power large boilers to produce the large amount of heat needed for prodution. We investigated sources of energy easiest available in that country, including renewable sources, and modeled likely long-term prices. We recommended (and the client accepted) designing the boiler system to combust one fossil fuel and one renew-able fuel source (local, easily regrown trees) for these new plants. These are the most available long-term energy sources, and will reduce their risk of running low on energy.
Business leaders are beginning to acknowledge this critical challenge. Therefore, your role in your firm may grow to include managing critical resources. You may need to keep track of the availability and of prices of these resources and contribute to determining and implementing strategies for your processes concerning usage of natural resources to conserve their use and diversify sources.

Management of natural resource usage does not only involve minimizing your direct dependence on those that you need to make your product, but also should include minimizing their need for use in your products used by your customers. For example, if your products force your customers to have to use (and spend) more on energy to operate them, then your customers will begin to investigate alternatives that are more energy efficient. Conserving resources by your products makes them more competitive.

So watch out for the new buzzwords of resource management being important to a well-being of a company given their growing relative costs. Provide the technical expertise and work with your business professionals to reduce costs and risks for long-term gains.

CCES has the expertise to help your company manage your energy, water, and natural resource needs; to evaluate future needs and devise cost-effective strategies to reduce your dependence on these finite resources, while diversifying them, as well, to provide your company greater manufacturing flexibility and reduce business risk.

May 8, 2012

First, note that this article is NOT meant to provide any legal advice. It does address the issue of certification responsibilities under LEED or any green building performance. While an owner may desire a new or existing building to meet LEED standards and hire an engineer or architect to prepare design documents to achieve this, the owner must understand that LEED certification is met on actual achievements. Thus, construction and implementation of features must successfully reflect the design parameters to meet the green standards. If a standard is not met, how may fault be assigned or breach of contract determined and how do design and construction firms protect themselves?

The two keys to addressing these potential problems are to have a strong team involved and clear contractual language terms. It is best for the engineer or architect to work with a Contractor they know, trust, and knowledgeable of LEED or whatever green building standards need to be achieved – a Contractor that through experience has shown will not “cut corners” and will follow through rigorously on all requested portions of the design documents. While engineers and architects are aware of standards like LEED and their education enables them to understand and appreciate its requirements, construction professionals are less in tune and may have less of an understanding of them. Short cuts – particularly under pressure (perhaps even from the owner) to cut back to meet budget – may result in failing a green building standard. Therefore, researching and developing a relationship with a Contractor that fully understands and will work to meet a green building standard (or at least communicate when there is potential for problems) and insisting that such a firm work on the project is critical.

In addition, the contracts between parties are critical. They should be clear that the engineer, architect, and Contractor do not guarantee that the completed project will meet the desired certification. This is important not just because something may go unexpectedly wrong in the design or construction to fail a standard but also because certification is dependent upon third party approval which is something no party wishes to be beholden to. The contracts should include various green design or construction features and a strong professional effort to meet the goals, while not requiring success in certification. An alternative may be to include wording in contracts that do not tie the project to certification of any standard, but works toward the goal of a more sustainable building. Work with the proper legal professionals to ensure protection from liability of a project not meeting a desired standard while achieving improved building performance.

Once again, this article does not constitute legal advice and should not be construed to do so. Speak to a legal professional. CCES can help you with the technical aspects of designing better performing buildings for your benefit whether to meet a specific green building standard or save money and improve building values and reduce expenses.

April 30, 2012

While the focus of the environmental controversy concerning hydraulic fracturing (“fracking”) has been contamination of aquifers and other water supplies, a recent U. of Colorado study indicates that a much bigger health risk may be air emissions from fracking, such as high levels of air toxic, VOC, and methane emissions. With this in mind, the USEPA promulgated new final rules regulating air emissions from fracking and other production methods of natural gas on April 17, 2012. The rule is really 4 rules, 2 New Source Performance Standards and 2 NESHAP (air toxic) Residual Risk rules for the oil & gas sector. See: http://www.epa.gov/airquality/oilandgas/pdfs/20120417finalrule.pdf Summary: http://www.epa.gov/airquality/oilandgas/

On the effective day of the rule (60 days after it will be published in the Federal Register), VOC emissions from all fracked wells will need to be flared during the well completion period. By Jan. 1, 2015, all natural gas fracking operators will be required to capture exhaust from gas wells, centrifugal compressors, reciprocating compressors, pneumatic controllers, glycol dehydrators, sweetening units, and storage vessels using reduced emission completion (“REC”) equipment (also known as “green completion” equipment). REC equipment allows operators to capture natural gas normally escaping from wells or other equipment which can be used for greater sales. The USEPA estimates that these requirements will enable the industry to net an additional $11 to $19 million per year. In capturing these gases, emissions of VOCs, NOx, and air toxics, known carcinogens, such as benzene and hexane, from a fracking operation would be drastically lowered, by as much as 95%, the USEPA estimates. The USEPA is allowing the delay of REC required usage until 2015 because there is believed to be insufficient quantity of REC equipment available for all fracking operations nationally. Low pressure and research wells are exempted from these provisions.

The new rules also contain reporting requirements. For example, operators must notify the USEPA and/or state/local air agencies at least 2 days before well completion work begins. Well operators must also submit annual reports detailing all well completions for the prior year. The reports must be certified by a company Responsible Official.

CCES can help you assess your compliance status vis-à-vis new or existing federal and state air quality rules. We can devise multiple, cost-effective options for compliance. We can devise compliance systems to integrate with your current systems to reliably monitor your compliance status in the future.

April 24, 2012

The USEPA recently released its 17th annual U.S. GHG emissions inventory, The Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2010 (http://epa.gov/climatechange/emissions/usinventoryreport.html). The report shows overall GHG emissions in 2010 increased by 213 million metric tons or 3.2% from the previous year, despite a recession. About 77% of all GHG emissions derive from fossil fuel combustion. From an industry sector, about 34% of total net GHG emissions (taking GHG emission sinks into consideration) derive from electricity generation, about 27% of the net total from transportation, and about 20% of the net total from industrial. Energy demand reportedly rose in 2010 due to growth attempts by companies and increased electricity demand for air conditioning due to a relatively warm summer in 2010.

Total emissions of the six main GHGs in 2010 were equivalent to 6,822 million metric tons of carbon dioxide equivalents, representing an increase by over 10% from 1990. In the Kyoto Protocol (not enforced because it was never approved by the US Senate), the US was supposed to reduce GHG emissions by 7% from the 1990 baseline by 2012. Although the Kyoto Protocol does not apply to the US, as a member of the UN, it must report net GHG emissions to the UN Framework Convention on Climate Change.

Other significant contributors to the inventory included methane emissions from natural gas systems, fermentation, and landfills; N2O emissions from agricultural practices; and SF6 emissions from electrical transmission. Remember that these GHGs have Global Warming Potentials significantly greater than CO2’s. The inventory also tracks “sinks” that remove CO2 emissions from the atmosphere. In fact, the amount of CO2 estimated to have been removed from the atmosphere by renewed forests rose by under 2% in 2010 compared to 2009. The success of cropland in the US as a sink declined in 2010.

The USEPA will undoubtedly use this information to develop future policy and focus attention on those segments most responsible for GHG emissions when developing new rules.

The Executive Summary of the GHG emissions inventory: http://epa.gov/climatechange/emissions/downloads12/US-GHG-Inventory-2012-ES.pdf

CCES and our technical experts can help you develop a real, successful GHG emission reduction program for your company, building or institution. Most such strategies have economic benefits and have a healthy return on investment. Call CCES now for help.

On March 27, 2012, the USEPA announced a new draft rule regulating GHG emissions from new electric utility generating units (EGUs) under New Source Performance Standards (NSPS), Section 111 of the Clean Air Act. This is a first, as previous new rules regulating GHG emissions have been issued under the New Source Review and Title V Permitting programs. This proposed rule indicates that the USEPA will be strongly targeting power plants, particularly given data from the initial reports of GHG emissions under the Mandatory GHG Reporting Rule which shows that EGUs are the largest category of GHG emitters nationally. However, this may certainly be an indication of the USEPA’s approach across all segments. The proposed NSPS rule was just published in the Federal Register on April 13, 2012.

The Proposed Emission Standard

The NSPS’s proposed emission standard for new EGUs with a capacity of at least 25 megawatts (MWe) is 1,000 pounds of CO2 per megawatt-hour (lb/MWh). This standard is based on measured performance of natural gas combined cycle (NGCC) plants, which the USEPA finds to be the system that yields the least GHG emissions. This technology-based standard contains a rigid emission limit for such GHGs from new proposed EGUs, typical of command and control. There is no alternative to meeting this standard, such as procuring credits under a cap and trade system.

While the proposed rule does not ban the use of any other particular fuel, the USEPA clearly shows it favors natural gas, as its analysis shows that it is “cleaner”, highly available, and relatively cheaper in price. NGCC, the USEPA feels, will be the standard design for new EGUs for the next decade or two for economic reasons, such as it is a less expensive technology to install and the fuel’s wide availability.

High Level of Flexibility

However, this proposed rule certainly contains a wide amount of flexibility, given its rigid emission limits. A new EGU that burns coal can meet this standard and operate, but only if it successfully installs carbon capture and sequestration (CCS) and implements it to capture at least half of the CO2 in the exhaust. While CCS is currently under development (there is no successful CCS installation on an operating coal-fired EGU), the rule would still allow a new coal-fired EGU to be built, as long as the applicant promises to operate CCS in the future. How can that be given that the 1,000 lb/MWh standard cannot be met by CCS currently? Because the rule allows an operator to meet the emission standard over a 30-year averaging period. An operator can operate a new coal-fired plant without CCS and install it later. CCS must be planned in the initial pre-construction permit application. The 1,000 lb/MWh may be successfully met over a 30-year period of operation. For example, a coal-fired EGU without CCS can meet a GHG emission standard of 1,800 lb/MWh for the first 10 years, followed by meeting a 600 lb/MWh standard the remaining 20 years with CCS to meet the overall 30-year average limit of 1,000 lb/MWh. The USEPA is doing this to keep options open for the coal industry. There is no apparent discussion of contingencies in case the future development of CCS technology does not succeed in meeting, say, a 600 lb/MWh level in the long-term future.

The proposed NSPS standard does not apply to simple cycle gas plants (typically, “peakers” used only during periods of high electrical demand) or EGUs that burn biomass or co-fire with a fossil fuel. The proposed standard also does not apply to future modifications or major modifications of existing EGUs, even of coal-fired units. This may result in power companies modifying and expanding their existing units as much as possible and not investing in building new plants, even if electricity demand continues to rise.

The USEPA is also allowing additional flexibility in this proposed rule by providing a one year extension of the effective date. Normally, a new NSPS rule would go into effect for all proposed new plants with NSR pre-construction permits issued and construction commenced by the April 13, 2012 date of publication in the Federal Register. Instead, the rule will go into effect 12 months after that date, April 13, 2013. In other words, a new coal-fired EGU with an approved pre-construction permit that has begun construction before April 13, 2013 would not be subject to the new NSPS standard.

Next Steps

With publication in the Federal Register the “clock” for the proposed rule has started. The proposed rule is now open for public comment until June 12, 2012. The USEPA may modify the draft rule as it sees fit based on public comments. The USEPA’s goal is to finalize the rule within one year. However, there is a significant chance of lawsuits by any of a large array of interests against the rule that may slow implementation or even completely block the rule from being implemented.

There is one addition impact of the proposed rule if it becomes finalized as is. With an NSPS standard in place, the 1,000 lb/MWh emission limit becomes the “floor” for any future “Best Available Control Technology” (BACT) analysis for PSD permitting for GHG emissions of a EGU under the Tailoring Rule. Because the NSPS standard only applies to new, and not modified, EGUs, would this also become the BACT floor for existing EGUs undergoing a proposed major modification? Could an EGU undergoing a major modification not be required to meet this standard? This is not clear.

CCES technical experts can help you prepare for this and any other Tailoring Rule that may be applicable, whether future NSPS rule, New Source Review, BACT Analysis, or Title V Permitting. We have and will continue to provide useful, expert technical advice.

Climate Change & Environmental Services (CCES) announces their involvement in the successful conversion of the boilers at East River Housing (ERH), a 2,600-unit apartment complex located in lower Manhattan from burning heavy No. 6 fuel oil to burning cleaner and significantly less expensive natural gas. CCES served as the chief environmental engineer and the construction manager for the project.
ERH completed the conversion of its first boiler to natural gas in late February 2012. During its first full-month of operation, ERH determined that two-thirds or 215,000 fewer gallons No. 6 oil was burned in March of this year as compared to March 2011. While a milder winter accounted for roughly 20 percent of this reduction, the switch to natural gas resulted in an estimated savings of about $400,000 in energy expenses in just one month. New York City is currently requiring buildings to discontinue the use of heavy No. 6 fuel oil. Natural gas is lighter, cleaner, and currently significantly less expensive than heating oils. Many property owners have experienced significant cost savings of 20 percent or more. As part of New York City’s Clean Heat campaign, the City is making it easier for building owners to make the switch.
CCES is proud of its role in helping ERH reduce its energy expenses while at the same time significantly reducing their carbon footprint and emissions of toxic air pollutants in New York City.
About Climate Change & Environmental Services
Established in 2009, Climate Change & Environmental Services, LLC (CCES) is an environmental consulting firm that specializes in servicing the environmental needs of companies, municipalities, and industrial facilities. CCES provides an array of climate-related services including air quality engineering, environmental and sustainability consulting, energy management and green building conversions among others. CCES is dedicated to providing exceptional service that will maximize efficiency and both financial and environmental benefits for our clients. CCES principal Marc Karell has over 25 years of experience in these areas and has successfully consulted with major firms including IBM, ExxonMobil, Alberto-Culver, Abbott Laboratories, the United Nations and Koppers. For more information, visit www.ccesworld or call 914-584-6720.

April 10, 2012

We are coming up soon on the 2nd anniversary of the BP Deepwater Horizon Oil Spill in the Gulf of Mexico. While the oil spill has been capped, the beaches cleaned, and most businesses returned to normal (or so we’re told), it is important to examine the lessons learned. While petroleum engineers have undoubtedly learned a lot to lessen chances of a repeat blow out, this article focuses on the risks involved in terms of energy supply and environmental impacts, risk factors that can affect the way you conduct business.

The incident brings to the fore the fact that risk is inherent in extracting any source of energy from the ground or sea. Simply put, the easy sources of oil that take little investment of effort or energy are either used up or found in countries dominated by national oil companies (i.e., the Middle East) and subject to cartel effects. Therefore, the sources remaining are difficult to reach or to extract from, such as the tar sands of Alberta (high energy investment just to extract the oil, affecting its profitability) and deep sea and Arctic exploration (human and environmental cost and risk, as well as energy).

With risk comes cost and threat of regulation. We saw that the repair of the Gulf leak was technically difficult so deep in the sea that BP had to borrow NASA-like technology. That cost plus compensating many businesses and the inherent bad publicity is a lesson for us all. Even insurance premiums, which will also rise, as will maintenance and infrastructure costs, will cause all energy costs for consumers to increase.

Where does your company get its energy from to make and transport its products and to heat and power its offices? Are your operations subject to such energy risk such that its cost rises and even its availability be in question? Risk is now an issue for energy; without it being available and at a stable cost, your operations are at great risk.

How can you minimize this risk? Diversify. Modify operations that can use different energy sources, such as dual fuel (natural gas/oil). Investigate the feasibility at each location for alternative energy sources, such as solar and wind. These sources can be taken away. They are cleaner than the conventional sources you likely use (a savings). Plus, because of technical advances costs for these are coming down. Certainly, in the long run, with lower risk, these sources may represent bargains. An energy risk evaluation and diversification program will be beneficial and reduce business risk.

CCES has the technical expertise to evaluate your energy sources and program and assist you in determining viable options to diversify your energy sources, resulting in reduction of risk, other business benefits, and a reduced environmental footprint.

April 3, 2012

Well, the first quarter of 2012 has come to an end, meaning the release of surveys and other studies of sustainability in 2011. The MIT Sloan Management Review Report was recently released (http://sloanreview.mit.edu/feature/sustainability-strategy/). According to their survey, corporate sustainability programs grew markedly in 2011. About 70% of nearly 3,000 executives surveyed said that sustainability was on the management agenda in 2011 and will probably remain so permanently. Two-thirds of those managers surveyed said that sustainability-related strategies are not just “nice” or even adding on to profit, but are necessary to stay competitive. 24% of those surveyed meet their criteria of “Embracers”, companies that have incorporated sustainability in the management agenda, have a business case for sustainability within their company, and feel that sustainability is necessary to stay competitive. About 31% of those surveyed meet their criteria of “Harvesters”, companies that have begun a sustainability program and realize the business case, but have not made it a far-reaching or permanent part of the culture.

What is especially telling are the corporate motivators to become more sustainable. The factor that was said to be the greatest motivator is the belief of customer preference for sustainable products and services (41% of those surveyed). Political pressure (35%) was next, followed by resource scarcity/price volatility (30%), competitors’ sustainability programs (28%), and stricter requirements from customers along value chain (26%).

A study by McKinsey & Company shows that energy efficiency is particularly profitable. Their study shows that proper energy efficiency programs that will generate an internal rate of return of about 17% and would result in meeting a significant percentage of the greenhouse gas emission reductions needed to meet Kyoto Protocol targets. If just the profits were reinvested into other greater cost strategies, then total Kyoto goals can be met at no net cost. These days a 17% return on investment is too good to ignore. This is a study by a leading global business management firm. This and additional studies prove that being more sustainable is not a cost sink, but improves the bottom line of business and society as a whole, driving further growth.

CCES technical advisors can help you start a sustainability program from scratch or to move it along more smoothly to implement feasible projects to generate direct business benefits for your company and for your stakeholders. Others see the value and are doing it. Contact us now.

March 27, 2012

One interesting area that makes sustainability unique is its necessary integration of business concepts as it addresses environmental issues. While in science we look at a wastewater discharge or an air emission by its characteristics, in sustainability we have the opportunity to take a more holistic approach to material and energy usage and look for alternatives to raise efficiency or reduce impacts. A life cycle analysis (LCA) from cradle to grave lets a company see how resources are spent, allowing them to focus funds on the exact steps to get the most bang (i.e., reduced GHG emissions, water use) for the buck. ISO standards now exist to provide standard methodology for an LCA.

This seems like a complex “blackboard” exercise. But an LCA can be simple and offer real-life lessons for companies. For example, I recently performed an energy audit for a high school, and as I was walking down a hall I saw a group of vending machines for beverages, snacks, etc. I noticed that some of the machines had the Energy Star Label prominently displayed, while others did not (presumably not in the program). I explained to the Building Manager that these labeled vending machine have been shown to use 15-25% less electricity than comparable models. He was not impressed. I then asked whether the school makes money from vending machine sales. He laughed and said of course, yes, but did not know how much. Then I said whatever it is, what’s the use if that revenue is eaten away by higher electricity costs. He got it. The school contracted out with various companies to supply food in part to make a few dollars, important in these tough times. But the sales revenue earned can be lost in the added expenses of operating the machines. I told this story to the school’s financial officer who agreed and is considering a purchasing policy that all future purchases (printers, PCs, etc.) have the Energy Star label to minimize costs. While many focus on revenue, this school got it and focused on overall financial gain and, reducing their carbon footprint, too.

LCA can also be discussed in terms of time. I did an energy audit elsewhere and explained that the ROI of a potential project was 3 years. The client said that would be unacceptable to his upper management; the payback was too long. I asked whether they would like a return of 33%. That was great, the client said. Who gets a 33% return on an investment these days? I said a 33% return is a 3 year payback. Given a likely 15 year lifetime, the company has another 12 years to gain profit (avoided costs) for the energy conservation measure. Instead of focusing on short-term “affordable” projects, a long-term, life cycle approach will achieve more financial benefits for your company.

CCES technical experts can perform LCAs for the energy usage, GHG emissions, or water usage of your products using accepted ISO methods, and can develop cost-effective strategies to address sustainability and demonstrate overall financial benefits.