Category Archives: Climate Change

The Future Of Energy And Environment Policies Under The Next Administration

October 17, 2016

While most of the analysts predict a Clinton victory and Democratic administration, here are some thoughts about what a Trump administration might look like when it comes to energy/environmental policy and what may change in a Clinton Administration. As I have written in other blog articles, nothing here represents writing in favor or against a candidate or policies, but instead addresses future issues facing the energy/environmental professional.

Should There Be a Trump Administration.

Energy: Donald Trump has been severely critical of current energy and environmental policy and has stated he will reverse many of President Obama’s initiatives. During a May 26 speech, Trump reflected a desire to achieve US energy independence by reducing federal regulations on the energy industry, increase investments in fossil fuel development and infrastructure to bring it to market (such as supporting the Keystone Pipeline), and reduce federal investment in renewable energy, as he has criticized both solar and wind power. Trump also supports increased use of nuclear power.

Environment: Trump has stated he would rescind a number of President Obama’s cornerstone environmental and energy achievements, such as the Clean Power Plan. Trump has also specifically pointed to the Clean Water Act as another regulation he would greatly weaken if he were elected. Reversing or weakening these and other EPA rules would require EPA rulemaking, requiring a public notice process. A Trump Justice Department could just not defend these and other environmental rules as they are challenged in court by industry. Neither approach would ensure success, as environmental and other groups would surely marshal forces in defense of the rules. Furthermore, courts could rule that these regulations are valid, legal, and necessary.

Climate Change: Trump has stated on the campaign trail that climate change has not been proven. In a recent speech, he was more neutral about the topic, but has expressed the feeling that this is not a high priority. He has expressed his intention to withdraw the US from the recent Paris Climate Agreement. With the Paris Agreement officially ratified, it would be difficult to withdraw, although Trump could likely do as little as possible to implement the Agreement, which has flexible objectives and no enforcement mechanism.

Should There Be a Clinton Administration.

Energy: To enable energy independence, Hillary Clinton has outlined a wide ranging list of investments by the federal government, such as clean energy, upgrading energy infrastructure, promoting responsible domestic drilling for oil and natural gas, and building on many of the core energy and environmental programs of the Obama Administration, such as the Clean Power Plan and Paris Climate Agreement. Clinton has spoken out in favor of natural gas development, citing it as a bridge fuel in the transition away from coal, including supports for fracking, although she has stated that deference should be given to localities who wish to ban it in their communities. Despite the “all of the above” approach in energy development, Clinton has stated policies that would discourage coal as an energy source, unless acceptable environmental levels are met. Clinton issued an infrastructure plan, prioritizing the development and repair of large-scale energy infrastructure across the country. Clinton would likely seek to continue the current Administration’s strong support for renewable energy development, call the US a future clean energy “superpower.” Clinton’s specific plan increases the percentage of renewable generation to 25% of total national energy mix by 2025.

Environment: Clinton supports the Clean Power Plan and wants to expand it in other industries in order to implement “smart” pollution and efficiency standards. Clinton has given no specifics, but states she supports additional policies to reduce US greenhouse gas emissions.

Climate Change: A Clinton Administration has committed to continue to abide by the Paris Climate Agreement. The Democratic Party platform stated: “Democrats believe that carbon dioxide, methane, and other greenhouse gases should be priced to reflect their negative externalities, and to accelerate the transition to a clean energy economy.”

Control of Congress.

Remember that while the President wields considerable power through the EPA and DOE, control of Congress is certainly important, too, in “setting the tone”, promulgating new rules and funding existing agencies. Republican control of the Senate and perhaps the House is in play in the upcoming election. A Democratic control could dramatically change the policies of several related committees in the Senate and House.

Senator Lisa Murkowski, the current chair of the Senate Energy and Natural Resources Committee, has been a strong advocate of the “all of the above” approach to energy. She supports energy exploration on federal land, such as in her home state of Alaska. Senator Maria Cantwell is the ranking Democrat on this committee and would likely chair it if the Democrats take control of the Senate. She has billed herself as a champion of “smarter” energy policies to diversify energy sources and lower costs for consumers. Senator James Inhofe, the current chair of the Senate Environment and Public Works Committee, is a noted climate change skeptic and strongly supports scaling back environmental regulations and promoting greater domestic energy production. If the Senate flips to Democratic control, Senator Tom Carper is expected to chair this committee.

CCES can help you evaluate your company’s energy use and environmental impacts and can perform the technical aspects to determine compliance with current rules and develop opportunities to reduce your energy usage and diversifying sources, saving you money and decreasing business risk. Contact us today at 914-584-6720 or at karell@CCESworld.com.

First-in-the-Nation Climate Change Lawsuit Filed

The Conservation Law Foundation (CLF), a foundation specializing in environmental protection in New England through legal action, filed the first-in-the-nation lawsuit on Sept. 29, 2016 against ExxonMobil’s Everett, MA storage facility for its endangerment of communities in MA caused by its alleged disregard of future impacts of climate change. The lawsuit alleges violations of both the federal Clean Water Act and the Resource Conservation and Recovery Act. Now, before I go further, I want to make it clear that this article is written purely to inform readers of this lawsuit. I take no stand in favor or against it. To inform you that it is happening and may be the first of many civil lawsuits.

Earlier this year, a coalition of 17 attorneys general announced a campaign to hold fossil fuel companies accountable for allegedly deceiving customers, shareholders, and the public about climate risk. CLF is the first organization to file a civil lawsuit against such a firm for such an alleged deceit and not preparing for climate change impacts.

The lawsuit’s main allegation is that ExxonMobil has not adequately planned for the effects of climate change-influenced potential disasters, such as flooding of the Mystic River caused by sea level rise and extreme storms which could result in significant release of pollutants from the facility. The lawsuit claims that ExxonMobil has the obligation to study and reasonably prepare for such floods and adapt their processes to minimize releases caused by such future floods. The lawsuit is not attempting to require the facility to perform actions to reduce its actual greenhouse gas emissions.

Whatever the result of this and other lawsuits, one issue that will need to be resolved is the level of analysis of climate risk. It may not be proper for each property owner to develop its own estimate of potential sea level rise. Some type of standard or approved guidance is needed, whether it be FEMA flood maps or other information from the USEPA. Certainly, the facility, using any such standard properly, should therefore be exempt from such lawsuits in the future.

It will be interesting to see if this spurs on other citizen and/or government lawsuits on climate risk for many facilities around the country. Might litigants join forces and file a small number of such lawsuits, like tobacco litigation. This might spur reforms that at least will give a basis of how much (or little) a facility should do to address climate risk.

CCES has the experts to help your facility assess potential climate change impacts on your operations. Contact us today at 914-584-6720 or karell@ccesworld.com.

Is RGGI A Success?

When the Regional Greenhouse Gas Initiative (RGGI), the cap and trade program for greenhouse gas (GHG) emissions from large power plants in 9 Northeast states, was first implemented, the states in the group participated with trepidation. They all wanted a program that would be effective in reducing greenhouse gas emissions, encourage investment and implementation of renewable and other clean energy options, result in funds that would be invested in energy research and implementation of more efficient options to the public, and examine whether a carbon trading system can actually work. But would RGGI work and be a “laboratory”, a model for other states or the federal government to mimic. There were modest goals and flexible plans to allow goals to be met with as little financial damage or inconvenience as possible. The hope was that they would have early success and perhaps make adjustments with revised, “tougher” goals after the first few years and that other groups of states or the federal government would expand its provisions and goals into a nationwide movement.

The RGGI organization recently released a new report “The Investment of RGGI Proceeds Through 2014” (http://rggi.org/docs/ProceedsReport/RGGI_Proceeds_Report_2014.pdf).

Its conclusions:

• GHG emissions have decreased by over 45% since 2005. This occurred while the regional Gross Domestic Product increased by about 8% in that time period, and despite a major recession. One can have energy reduction and environmental progress, while economic growth occurs.

• The total value of RGGI investments reached $1.37 billion through 2014, money that would likely not been invested in energy or other research.

• 58% of RGGI investment went to energy efficiency, with an expected lifetime energy savings of $3.62 billion.

• 13% of RGGI investments went to clean and renewable energy research and other initiative, with an expected lifetime energy savings of $836 million.

In addition, RGGI achieved its GHG emission reduction goal of 10% reduction from the mid-2000’s baseline several years early. RGGI will almost certainly be modified and extended with the hope of bringing in power plants in other states for the benefit of all.

CCES can help your company become more energy efficient, saving major energy costs, extending the life of your equipment, and providing a productive work environment, raising productivity. CCES can find you the government incentives out there and low-cost financing to make the numbers very powerful for your organization. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Fuel Economy Standards Tightened For Heavy, Medium-Duty Trucks – Phase 2

The USEPA and National Highway Traffic Safety Administration jointly issued a final rule with new fuel economy standards for heavy to medium trucks which had kept its fuel economy standards virtually unchanged for many years. While the USEPA had made more rigorous fuel economy standards for passenger cars (Corporate Average Fuel Economy or CAFÉ) and light-duty trucks, medium- and heavy-duty trucks have escaped such tightening of standards for a few decades. Phase 1 standards were issued beginning with model year 2014 heavy-duty trucks. The new Phase 2 standards (https://www3.epa.gov/otaq/climate/documents/2016-08-ghg-hd-final-rule-phase2-preamble.pdf) will be phased in through 2027. The final rule’s impact is estimated to reduce greenhouse gas (GHG) emissions from such trucks by about 10% or about 1 billion tons over the lives of the regulated vehicles, as well as save about 75 billion gallons of (mainly) diesel oil and 25% more fuel efficient.

The new rule covers vehicles, such as big rigs, passenger vans, truck trailers, school and passenger buses, and dump trucks. Medium- and heavy-duty vehicles currently account for approximately 25% of GHG emissions in the US transportation sector.

Phase 2 will provide significant GHG emission reductions and save fuel by:

• Accounting for ongoing technological advancements. Truck owners will be required to procure trucks containing certain fuel and emission reduction technology. While more expensive, the payback is estimated at about 2 years for tractors and trailers and about 3 years for heavy-duty pickups and vans.

• Containing first-time standards for trailers. Phase 2 standards include fuel efficiency and GHG emission standards for trailers used in combination with tractors. Although standards will not be finalized for all trailer types, the majority will be covered.

• Encouraging innovation while providing flexibility for manufacturers. For each category of trucks, performance targets will be set that allow manufacturers to achieve reductions through a mix of different technologies (such as any combination of advanced aerodynamics, engine improvements, waste heat recovery, etc.). Manufacturers will be free to choose any means of compliance.

CCES has the air quality experts to help your firm understand and provide the technical expertise to comply with a variety of air regulations. We can perform a complete emissions inventory of your facility and technical evaluation of compliance with federal and state air rules. Contact us today at 914-584-6720 or at karell@ccesworld.com.

USEPA Proposes Clean Energy Incentive Program

On June 30, 2016, the USEPA published a proposed rule laying out its Clean Energy Incentive Program (CEIP), found in the Federal Register, Vol. 81, No. 126. CEIP is a voluntary early action program within the federal Clean Power Plan of 2015 (CPP), regulating CO2 emissions from existing power plants. To provide greater compliance flexibility, including having a pool of allowances for subject power plants to buy to comply, the USEPA would like to have this available when CPP goes into effect in 2022.

Implementation of CPP has been hobbled by a stay put on it by the US Supreme Court in February 2016. While some have argued that all compliance deadlines must be postponed because of the stay, the USEPA is continuing efforts for full implementation of all aspects of the Plan, including the proposed CEIP program.

The publication contains proposed guidelines for states that wish to participate in CEIP, including procedures for states to distribute allowances or to issue emission reduction credits (ERCs) for approved energy efficiency (in low-income communities) and zero-emitting renewable energy projects (in all communities). The proposed rule lists solar, geothermal, hydro, and wind as eligible renewable projects; it does call for comments on whether it should expand the definition to include CHP and nuclear. An entity which has successfully implemented an approved project by 2020 may get matching ERCs from the USEPA and can sell or transfer the ERCs or allowances to subject power plants to comply with their CO2 emission reduction goals from CPP. The USEPA is limiting the pool to 300 million short tons of CO2 emission allowances to distribute, based on its estimation that this will be the level that subject power plants will reduce CO2 emissions as part of CPP. These allowances will be distributed to states based on its share of the estimated reduction.

The proposed rule contains administrative requirements for states that choose to participate in the CEIP and the requirements for energy projects to meet CEIP eligibility. In general, a renewable energy project will receive 2 ERCs for every 2 MWh of renewable power generated. This ratio doubles for projects in low-income communities. For a project to be eligible to obtain ERCs, it must be implemented in a state that is participating in CEIP, and has demonstrated that it is replacing electricity production from a subject power plant in 2020 and 2021.

CCES has the technical experts to help you plan, design, select, and fully implement an energy efficiency or renewable energy project and help you obtain ERCs under this program, when it comes into force. We can maximize not only the revenue you can make selling ERCs under this program, but also maximize the financial benefits of your projects for your bottom line, as well. Contact us today for a free, no-obligation discussion at karell@CCESworld.com or at 914-584-6720.

White House Issues Final Guidance On Climate Change Analyses in NEPA Reviews

On August 1, 2016, the White House Council on Environmental Quality (CEQ) released final guidance on how federal agencies should consider the direct and indirect impacts of climate change, including from greenhouse gas (GHG) emissions, in environmental reviews conducted under the National Environmental Policy Act (NEPA). See https://www.whitehouse.gov/sites/whitehouse.gov/files/documents/nepa_final_ghg_guidance.pdf. This final guidance is not part of rulemaking and, therefore, is not binding regulation. However, some courts consider CEQ guidance when evaluating NEPA reviews. The guidance is effective immediately, and encourages agencies to use it for all new proposed agency actions for which NEPA review is required.

The final guidance confirms the importance of climate change and its effects and GHG emissions fall under NEPA’s perview. In performing such a review of a proposed project, it is fair to evaluate its GHG emissions and the potential effects of physical climate change impacts. The guidance does not give exact criteria that must be followed in terms of GHG emissions and climate change (a change from the draft guidance), but gives each federal agency the flexibility to use its preferred experts and methods to assess impacts and options. For example, the guidance does not contain a threshold level of GHG emissions that would require review or action, but allows the individual agencies to make that determination.

The guidance calls for a quantitative analysis of potential GHG emissions from a proposed project if appropriate and reliable tools or methodologies are currently available. Stating that GHG emissions are “negligible” or expressions like this are discouraged. A quantitative analysis is also required in discussions of alternatives to a proposed action. However, the guidance does not require the decision maker to select the alternative with the lowest level of GHG emissions. A balanced environmental approach is preferred.

The guidance also calls for agencies to consider how climate change impacts, such as increasing sea level, drought, heavy precipitation, etc. could affect a proposed action. Given that certain aspects of projects, such as development in floodplains or on or near a coastline, could be vulnerable to climate change, agencies should either reject such projects or identify opportunities for adaptation to these effects.

CCES has the technical experts to help your firm perform a quantitative evaluation of GHG emissions and assess potential climate change impacts on a potential project. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Insulation: Another Way to Save Energy Costs

Pipe and building insulation are proven strategies to reduce energy usage and, therefore, costs. Don’t try this at home or at work, but imagine how hot a metal pipe in steam or hot water service is and then imagine the reduction in heat loss when it is properly insulated. That heat loss stays inside the pipe with the steam or hot water, making it more effective and necessitating less energy usage (fuel combustion) to produce that steam or hot water. Properly and completely insulating a bare surface in steam or hot water service can easily reduce heat losses by over 90% and therefore, reduce your need to produce steam or hot water significantly, saving you fuel costs, improving safety (workers not touching the hot pipes), and reducing emissions of greenhouse gases and of toxics that may impact your plant and neighbors.

To illustrate the cost-effectiveness of insulating pipes in steam or hot water service, see this example. A facility produces and pumps steam at 350°F from an oil-fired boiler operating at an average efficiency of 80%. Oil is purchased at $2.50 per gallon. The 4-inch steam header is insulated with 2 inches of fiberglass pipe insulation. The North American Insulation Manufacturers Association (NAIMA) has software to estimate the energy savings. Let us say that the insulation reduced heat loss from that bare pipe by 95%. Assuming the boiler is used only during the heating season, this can easily save the building $100-$150 per foot per year, for the avoided cost of oil not combusted to replace the lost heat. This figure can be much higher if the cost of oil rises or if the boiler is used for other purposes and is used all year. This also reduces greenhouse gas emissions significantly, too.

Savings can also occur for cold piping, too. Cold water – from electric chillers – transported through pipes can be insulated to save the use of these chillers, reducing electricity usage. While oil prices are relatively low these days, electricity prices are at all-time highs and projected to rise even more. Anything that can be done to reduce electric usage, will save you money.

August is the time of year many buildings – residences, offices, and industry – check their boilers and chillers to make sure they are maintained so they run reliably in the upcoming months. Part of your evaluation should be whether there are pipes that are uninsulated or with insulation that is cracking and damaged. Of course, look out for asbestos and, if present, make sure its removal is managed professionally and via the law. If you see such areas that are uninsulated, underinsulated, or insulated with damaged or cracked insulation, now is the time to re-insulate it properly. That extra time and cost for insulation will be paid for in savings this winter.

CCES has the experts to perform an energy audit of your building, and examine this and many other energy issues to help you save energy and other costs reliably and effectively. Contact us today at 914-584-6720 or at karell@CCESworld.com.

USEPA Releases New Final Landfill Emissions Rules

August 2, 2016

On July 15, 2016, the USEPA released a new final amended rule limiting emissions of greenhouse gases (GHGs) and other compounds from both existing and newly-constructed municipal solid waste landfills. This is the first modification to the federal landfill emission rule in 20 years and, for the first time, addresses GHG emissions. There has been the realization lately that any approach to successfully reduce GHG emissions nationally mist include reduction of methane emissions, a major component of landfill gas, because it is 21 times more potent on a mass basis than the main GHG, CO2, which had been the focus of most GHG reduction strategies. Therefore, came this focus on amending the main federal municipal landfill air quality rule.

Newly-constructed or modified landfills after July 17, 2014 will have emission limits found in New Source Performance Standards (NSPS) or Sect. 111(b) of CAA. See https://www3.epa.gov/ttn/atw/landfill/landfills-nsps-2060-am08-final-signature.pdf For existing landfills built before this date, emission guidelines have been published to be implemented by each state in their specific plans. See https://www3.epa.gov/ttn/atw/landfill/landfills-eg-2060-as23-final-signature.pdf. The USEPA estimates that the new standards will cover over 1,100 new and existing landfills at a combined compliance cost of approximately $60 million by 2025.

The new standards apply to landfills that have design capacities of 2.5 million metric tons and 2.5 million cubic meters or more of waste, no change in the current rules promulgated in 1996. Under both the rule and the guidelines, facilities that meet the design thresholds and emit over 34 metric tons of non-methane organic compounds (NMOC) per year will be required to install a gas collection control system (GCCS), such as flares, an enclosed combustion system for energy generation, or gas treatment system for its sale or beneficial use. A landfill may be exempt from GCCS requirements even if it meets this applicability threshold if it can demonstrate that the surface NMOC concentration is below 500 ppm for consecutive quarters.

The rule and guidelines will take effect 60 days after publication in the Federal Register (which has not occurred yet as this article is posted). Any facility that exceed the design capacity and NMOC emissions thresholds will have 30 months to install GCCS. The USEPA estimated that > 100 newly-built or modified landfills will install GCCS by 2025.

Capturing landfill gas can be beneficial as it is combustible and can be useful in generating electricity, heat, or hot water. So while being mandated to capture landfill gas can be costly, it is a “free” source of energy that can be converted to useful energy to reduce your energy costs.

CCES can provide for you the technical portion of the advice to determine which federal and state air quality rules are applicable to you and the most cost-effective strategies to maintain compliance. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Energy Trends That Will Continue in the Foreseeable Future

2015 will pass by soon. While we live our day-to-day lives and careers, it is easy to miss trends that establish themselves in a small number of or even in a single year. Yet, this is happening with energy. Some new “realities” are coming into the marketplace, likely unstoppable by those who prefer the status quo or by industries who resist change. It is likely that next month’s Paris Climate Summit will drive the establishment of these changes, as both developed and developing nations are starting to unify on the need to reduce greenhouse gas (GHG) emissions and encourage more renewable energy.

What a difference in public opinion and the market that has occurred since previous recent climate summits. These influences will likely stay with us in the future.

Global and US use of renewable energy has and will rise significantly.

In just the last few years, solar panel prices have fallen over 80% and, therefore, the overall cost of the energy from solar per kwh has dropped by over half. The market has taken notice, and there have been major private investments in solar, wind, and other renewable sources in the last few years, an over 6-fold increase. Not just on homes, but whole solar and wind power plants. In 2009, the International Energy Agency predicted that solar would produce about 20 gigawatts of power worldwide by 2015. Solar now produces nearly 10 times that amount! Who would have thought that nearly half of the new electricity installed in the US in 2014 would be solar? And look at the massive wind farms being constructed in Texas. In Texas!

Power companies, besides helping states meet renewable power commitments, are also learning that the upfront costs of building solar and wind farms are lower than a new fossil fuel plant, and the source of energy is and should remain free. Companies, such as Apple, are even building their own renewable-powered power plants.

Energy storage will be the ultimate game changer.

Of course, solar and wind have one major drawback, their variability. The sun does not shine at night, when most residential users have their greatest demand for electricity; wind varies from hour to hour and may also be out of synch with demand. What can be done with the excess power a farm may generate while the energy source is plentiful to supply electricity for the times it is not, while demand is high?

The answer is energy storage. Hundreds of millions of dollars are currently being invested in energy storage R&D on a large scale by major firms like GE, Tesla, Lockheed Martin, and others. Energy storage is currently available on a small scale, and it is inevitable that breakthroughs will be achieved on a grander scale allowing solar and wind farms to independently deliver electricity to meet all variable demands throughout a year. Given the cost of renewable energy is now comparable or cheaper than for fossil fuel-powered energy, this would be the breakthrough renewables need to operate competitively without additional fossil fuel-fired plants to balance load and at a lower cost than a fossil fuel only-powered plant.

New energy regulations are coming in the US – and many see additional benefits.

The USEPA recently published the final version of its Clean Power Plan containing GHG emission limits for US power plants that are estimated to cut GHG emissions by over 30% by 2030. This rule will further encourage greater renewable power and conversion to less polluting fossil fuels. Therefore, there will be significant reductions in emissions of other air pollutants, many of them known to be toxic. Public health studies show that this will greatly significantly reduce the incidents of asthma attacks and lung and other cancers, resulting in great economic benefits (people living longer and being more productive and saving governments money in Medicaid and Medicare payments).

While there are interests and certain states fighting the new rule in court, most states and companies appear to be accepting the new rule as here to stay. In fact, many prefer this to the uncertainty of an unregulated world. Governments and business like certainty for planning and financing reasons. States that are embracing renewable energy are benefiting, such as California and Texas. California has a tradition of forward-thinking climate change-based legislation. They will easily manage this and other new rules. And Texans have benefited tremendously from their large amounts of undeveloped land and its high incidence of sun and wind.

The USEPA has also proposed new rules specifically for methane emissions. Methane, the combustible portion of natural gas, is 21 times more potent as a GHG than carbon dioxide. While natural gas is thought of as the “bridge” to renewable power, a fuel source that emits less GHGs when combusted compared to coal or oil, it is recognized that natural gas infrastructure (its mining and capturing and transport thousands of miles) results in leaks of methane into the atmosphere during these stages. And the disproportional climate change effects of methane may make up for the gains of lower carbon dioxide emissions of switching from coal or oil. The USEPA is committed to getting more serious about controls to reduce methane leakage and drive up efficiency.

Major US corporations are coming on board for Climate action.

As discussed in a recent blog (http://www.ccesworld.com/blog/giant-firms-demand-strong-carbon-deal/), a dozen of the largest companies in the world, including some thought to be totally against climate change action, came out publicly in favor of a comprehensive climate change deal in Paris, so that they can smartly plan for the long-term future. In addition, a number of Fortune 100 US firms have issued statements in favor of climate change action. With these gigantic firms in favor of meaningful climate change action, it is likely that their money and weight will influence government and public opinion, too, despite what some current US presidential candidates are saying.

These signs of improved technology, acceptance by the public, favorability of the market, and acceptance of powerful corporate interests demonstrate that Climate action is now her to stay, with tangible benefits for people and businesses in the future. The Paris Climate Summit is likely to be the crown for 2015 as the year that climate change became mainstream and becomes a portent of great changes in energy in our future.

CCES can help your firm prepare for the upcoming climate change realities and obtain the greatest benefits from smart planning as far as energy and sustainability go. We can develop climate change and sustainability plans for you and help you minimize use of energy, water, and other resources. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Climate Change After the Pope’s Visit

The Pope came to the US last month and made very forceful and well-publicized arguments about the importance of addressing climate change soon. Of course, he emphasized the moral imperative: how wealthy countries contribute more to climate change, yet poorer countries will likely suffer more. This blog has discussed extensively the practical and business benefits of addressing climate change. One may not “believe” in climate change, yet benefit your company or entity financially by addressing it smartly. But with the aura of the Pope’s visit and his framing of the moral dimension and the upcoming meeting in Paris for potential rules and goals for GHG reduction, how does climate change affect not just the US as a whole, but your company, too? What are the most effective ways to meet the moral and financial priorities of climate change? Should we address climate change wholeheartedly or is it better to address it slowly?

The momentum to address climate change is growing, as a number of national polls show that climate change is being accepted as true and something that needs to be addressed by a growing majority of Americans (despite the demagoguery of some Presidential candidates). Climate change introduces a number of new, significant risks to our nation and institutions. And, many of the steps to be implemented to address climate change (reduction of GHG emissions) also provide direct economic benefits.

As a result, the trend to encourage companies and people to use less or de-carbonized sources of energy will likely continue. For example, Northeast power generators, forced to reduce GHG emissions because of the RGGI rule, have greatly exceeded the rule’s reduction goals, in part, because of the price differential between cleaner fuels and fuels used before the rule went into effect. Because of renewable goals that many states have set, large investments in renewable power are being made. Quietly, the fraction of power from renewable sources in the US is growing. There is also a growing movement of governments and utilities to encourage improved energy efficiency to save money on expensive energy infrastructure upgrades if power demand continues to grow. Energy efficiency is now understood as an investment that pays a better return than the vast majority of banks and Wall St. investments, and has ancillary benefits, such as reduced GHG and air toxic emissions, reduced O&M costs, and increased asset value.

Should the US, the states, and companies invest now in energy efficiency and in clean or cleaner energy technology now or should they wait? There is an argument that it may be better to wait to invest in reduced-carbon energy or energy efficiency, as initial costs of such technologies are expected to fall in the future as they become more common. On the other hand, there are significant costs to waiting to become more energy efficient and use lower-carbon or renewable power, such as:

• paying significantly higher energy costs for more energy used while waiting;

• probable future rules will reward those who reduce GHG emissions early; and

• the potential lower future value of carbon credits in the future as more entities reduce GHG emissions.

Similarly, should companies go “all in” now on reducing GHG emissions or should such moves wait for final global or US regulations to come out of the Paris UN conference or for other priorities to shake out? While the answer depends on the “culture” of each company, it is important to understand that actions to reduce GHG emissions almost always have not only direct, long-term cost savings benefits, but also harder-to-quantify benefits, such as reduced O&M, improved worker productivity, increase in asset value, and more productive tenants, that also improve the bottom line.

Therefore, waiting for exact requirements from the federal government, which will take years, even if US authorities make pledges in an approved agreement in Paris, can result in missed business opportunities for many companies. Just performing a basic GHG emission inventory (“carbon footprint”) and studying and eventually implementing energy reduction projects does not need to wait for an exact finality of regulatory requirements, and will likely not involve any re-inventing of the process.

Besides reducing GHG emissions as a response to climate change and the Pope and/or UN initiatives, another climate change issue that a company must assess is risk. What effects caused by climate change may affect a business.

Four types of climate change risk that could affect a business include:

1. Competitive (cost) risks
• Effect of a decline in consumer demand for energy-intensive product
• Rise in costs for your necessary processes which are energy intensive
• Rise in costs for necessary transportation fuels

2. Reputational risks from perceived inaction on climate change

3. Regulatory/compliance risks from future tightening legislation

4. Physical risks of climate change-influenced events (i.e., extreme weather, rising sea levels, etc.):
• Asset damage
• Inability to make or transport product, raw materials
• Health and safety risks
• Project delays
• Crop damage or agricultural transition as certain crops no longer are viable in certain areas and new supply chains become necessary

Outside the US, many companies have recognized and begun to study and implement strategies to minimize climate change-related risks. US companies have been slower to react. But as climate change is more recognized and accepted, spurred on in part by the Pope’s visit, this is something that is also important for many companies. Entities understand risk affecting operations, revenue, and even existence and deal with this routinely. Climate change represents another set of risks that entities should understand and address – independent of the Pope’s visit and the upcoming Paris UN conference.

CCES can help your firm develop a climate change program and prepare strategies to not only minimize risk, but also take advantage of energy realities to maximize financial benefits while reducing GHG emissions. Contact us today on this at 914-584-6720 or at karell@CCESworld.com.