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Dreaming the Impossible Dream:

A Regional SREC Market for the Northeast

While it would be natural to think of strong solar resources as being the major driver for the installation of solar, that is not the case. The major drivers are: (1) high electricity rates; and (2) strong policy incentives. Which is why Germany is the world’s solar leader, despite solar resources that are about as dismal as Alaska’s.

It’s also why the Northeast could become a national solar powerhouse. As a region, the Northeast (including the nine New England and five Middle Atlantic states) has some of the nation’s highest electricity rates and many of its states have enacted — or are in the process of enacting — innovative solar incentives. New Jersey, in particular, has become a national solar leader as a result of its widely imitated solar program, which rewards businesses and homeowners that generate solar energy with Solar Renewable Energy Certificates (SRECS), performance-based financial instruments representing the environmental benefits of solar that are purchased by utilities in order to meet state-mandated requirements for solar electricity generation.

These state-mandated requirements, called Renewable Portfolio Standards (RPSs), when implemented in connection with SREC markets, are the most effective incentive for solar. In order to promote the implementation of solar, the RPS in many states includes a “solar carve-out,” which stipulates that a certain amount of electricity be generated from solar. In the Northeast, five states — Delaware, New Jersey, Maryland, Massachusetts and Pennsylvania — have implemented SREC markets as a means of meeting solar carve-outs; two others, Connecticut and New York, are considering them. While still a relatively new concept, SREC markets are expected to grow nationwide from approximately 520 MW in 2011 to nearly 7,300 MW in 2025, according to the National Renewable Energy Laboratory.

The major reason behind this anticipated growth is that the states recognize that solar is good for business. Solar helps businesses compete by reducing operating costs. Many businesses that install solar are able to offset most, if not all, of their electricity load, resulting in savings of tens or even hundreds of thousands of dollars annually. Solar also serves as a hedge against future rate increases, which are a given considering the Northeast’s overburdened distribution systems and outdated generation facilities. The financial benefits of solar have spurred the installation of commercial solar in states with strong incentives. New Jersey, for instance, has surpassed sunny California as the nation’s leader in commercial solar installations. Also, because solar production is greatest during periods of peak demand — i.e. during the day — the widespread installation of solar also helps utilities cope with increased demand during these periods, thus contributing to grid reliability.

The Northeast needs the economic shot in the arm that solar can provide. Since the loss of its industrial base in the mid-20^th century, the region has lagged behind the rest of the nation in economic development as a result of its older demographics, high cost of doing business and inadequate and congested infrastructure. The widespread implementation of solar could give the region a competitive edge, not only nationally, but globally as well. Just as Germany is betting on its commitment to solar to stimulate economic development, so can the Northeast. German Chancellor Angela Merkel believes her country’s transition to a renewable energy economy will bring opportunities in the form of “exports, developing new technologies and jobs.” Similarly, solar could become the catalyst that turns the Northeast into a renewable energy powerhouse. The Northeast could become the nation’s “renewable energy belt,” just as the energy-rich states that supply the nation’s gas and oil are its “energy belt.”

In order for this to occur, however, there has to be long-term stability and transparency in the SREC markets: businesses and investors are discouraged by incentives that are here one day and gone the next, or SREC values that bounce all over the place. Innovative new policies also need to be implemented to promote solar in sectors ignored by existing policy initiatives. Finally, holdouts such as Maine and New Hampshire have to get on board. Much of this is already happening. Recognizing the need to iron out the kinks in New Jersey’s groundbreaking solar legislation, policymakers recently enacted a solar “resurrection bill” to address some of the problems. New policy initiatives such as virtual net metering, which promotes solar in the public, multi-family and other sectors, are also being enacted. Finally, the holdout states will soon have stronger incentives to implement SREC-type incentives once electricity rate hikes associated with upgrading the grid that are now in the works take effect.

Although these achievements are commendable, it will take regional cooperation to get to the next level. The Northeast needs to promote a regional SREC market by doing away with fractured, state-specific regulations and replacing them with a single, unified SREC market. Eliminating geographic barriers to SREC trading will create a consistent, long-term SREC market that will accelerate regional investment in solar. While this might seem as daunting a task as getting the European Union countries on board with regard to fiscal policy, the major requirement — the commitment of many of the region’s states to an SREC market — has already been accomplished. Moreover, the precedent for such a regional initiative exists in the form of the Regional Greenhouse Gas Initiative, a cooperative cap-and-trade effort to reduce greenhouse gas emissions among nine of the 11 New England and Middle Atlantic states.

Those who may consider a regional SREC market an impossible dream should look back at how far we have come. As of Aug. 31, 2012 my home state of New Jersey had nearly 18,000 solar installations, compared to only 3 in 2001. In Germany, renewables now supply more than 25 percent of the nation’s energy. In order to get where you are going, you have to have a destination in mind. If we don’t look ahead to establishing a regional SREC market, we will never get there. — Stefanie Matteson

My late brother, who used to work in the agriculture industry in California’s Central Valley, liked to tell the story of the local farmer who made a small fortune growing okra. Realizing that the farmer was onto a good thing, his neighbors all started growing okra too. The result? They flooded the okra market and lost their shirts.

Something of the same story was expressed at an Innovative Energy and Environmental Technology Workshop earlier this year on “Power Generation from Sustainable Biomass in New Jersey.” For those who aren’t aware of it, New Jersey is the garbage capital of the nation, perhaps even of the world. A Rutgers study on biomass (http://bioenergy.rutgers.edu/biomass-energy-potential/njaes-biomass-assessment-finalreport.pdf) noted that New Jersey produces an estimated 8.2 million dry tons of biomass annually, about 75 percent of which is produced directly by the state’s population. According to the study, much of this (5.5 million dry tons) can be used to produce energy in the form of power, heat or liquid transportation fuels. As one presenter at the conference said, “It’s amazing how much biomass is out there, and nobody is harnessing the power.”

But if the conference, held at the Rutgers EcoComplex in Bordentown, is any indicator, a lot are thinking about it. And while the prospect of producing power from an underutilized resource such as garbage holds great allure, the cloud in this rosy picture is the okra problem: if everyone decides to get into the act, the economic edge evaporates. Right now, this plentiful resource is better than free — garbage haulers will actually pay biomass companies to take it off their hands. But what happens when everyone jumps on the bandwagon? As Gearoid Foley of the U.S. Department of Energy’s Mid-Atlantic Clean Energy Application Center asked, “Will my tipping fee still be $70 a ton if everyone else is doing it?” The same is true of other alternative energy resources that are now viewed as ripe for the plucking. Wood pellets, for instance. Like garbage, wood pellets are viewed by many as a cheap and abundant energy resource that can be used for heating, electricity generation or liquid transportation fuels such as gasoline, diesel and jet fuel.

But when the law of supply and demand goes into effect, wood pellets will no longer be cheap. In fact, it’s already happening. A strong market for American wood pellets has developed in western Europe, which views wood pellets as a carbon neutral substitute for coal. Countries such as Sweden, Austria and Finland are using wood pellets from Maine and the Southeast for household heating and large-scale electricity generation. The demand from Europe for wood pellets is expected to triple between 2010 and 2020. Add increased demand in the United States to the exploding demand in Europe, and an okra situation could develop.

No matter. The history of energy use is one of successively identifying, exploiting and exhausting a series of energy resources: from whale oil to Middle Eastern petroleum. If the price of garbage or wood pellets becomes too expensive, the invisible hand of the market will identify another potential resource. Algae anyone?

— Stefanie Matteson

The biofuel industry is one defined by dynamism, creativity and constant innovation. Unfortunately, the same cannot be said about the arguments put forth by the some of industry’s critics.

Since the implementation of the first Renewable Fuels Standard (RFS) in 2007, which mandates what percentage of U.S. fuel is to be derived from renewable sources, the biofuel industry has evolved at a rapid pace, with commercial-scale advanced biofuels plants (plants that produce biofuels from non-food sources) slated to come online starting next year.

Even ethanol, the granddaddy of biofuel technologies and the most heavily criticized biofuel, has made great strides in production techniques, improving process efficiencies and yields while reducing its carbon carbon footprint.

During this same period of technological innovation, however, arguments put forth by the biofuel industry’s most vocal critics have remained stagnant and repetitive, failing to account for advancements made within the industry and in ethanol production. Corn ethanol, which accounts for a significant majority of the renewable fuels produced in the United States today, is an especially easy target because it uses a major U.S. staple food crop.

On July 31, the New York Times ran an Op-Ed entitled “Corn for Food, Not Fuel,” authored by two frequent disparagers of ethanol and biofuel mandates – professor Colin A. Carter from the University of California, Davis and Henry I. Miller, a public policy fellow at Stanford University’s Hoover Institution. Carter and Miller posited an argument that has long been pushed by industry opponents – corn ethanol is a wasteful use of resources and it stands for everything that is wrong with government’s support for renewable fuels.

But despite the abundance of studies and figures refuting critics’ arguments, opponents are not swayed. And trust me, they really will not budge. Take a look at other pieces authored by Carter and Miller appearing in Forbes (2011), World Politics Review (2008) and the Washington Times (2007), and you’ll notice their rhetoric has changed barely at all in five years.

All of these pieces push the same core criticisms: corn ethanol policy raises the price of corn, exacerbating global problems of hunger, food security and slow economic growth; ethanol does not lower the price of gasoline or make the United States any less dependent on fossil fuels; and ethanol does not benefit the environment in any major way.

Despite the authors’ insistence to the contrary, all of the above statements represent extreme exaggerations of the facts or are simply untrue. Bob Dinneen, CEO of the Renewable Fuels Association, promptly responded to these claims in his own letter-to-the-editor sent to the New York Times, where he presents a strong counterargument.

But what is most disconcerting is that these criticisms also assume a fundamental fallacy – that corn ethanol is not competitive enough without subsidies to survive in the free market, and that they are being “pushed” onto consumers and energy companies by federal authorities.

Ethanol production is an important industry in the United States, especially in regions like the Midwest, and even if the RFS were to go away tomorrow, it is likely that ethanol production would continue at a comparative volume. Statistics compiled by the National Corn Growers Association support this claim (granted, corn growers would be in favor of continued biofuels mandates, but facts are facts).

Over the past five years, ethanol production volumes have exceeded RFS requirements by 14 percent on average, and in 2011, production volume exceeded the requirement by 11 percent. Why would the industry be producing more than necessary if there was no demand? Ethanol is also selling for $1 per gallon less than gasoline, even after an ethanol tax credit expired at the end of last year, so there is a clear financial incentive to blend ethanol with gasoline.

Additionally, U.S. ethanol exports run close to 10 percent of total production. In 2011, the United States exported 1.2 billion gallons of ethanol, some of which went to countries with no biofuel requirements at all, meaning that there is a huge foreign market for the fuel that does not rely on any sort of mandate or subsidy. And finally, ethanol is a powerful octane booster that can turn sub-octane gasoline into pump-quality fuel, a serious asset for energy companies.

More importantly, however, the benefits of corn ethanol go beyond the ethanol industry itself. As more advanced biofuel technologies come online, they can piggyback off the success of the ethanol industry, and in some cases they can adapt existing ethanol production facilities into advanced biofuel production facilities. Corn ethanol has paved the way for the rest of the industry, and by spurring the federal government into action it has stimulated an entire industry, which will one day play an important role in our national energy strategy.

Ethanol is not a perfect solution to a petroleum-based economy, and I’ll admit that it does seem to have certain limitations, but it certainly is playing an important role in our energy future. Furthermore, government support for the industry has proven vital in stimulating the initial ethanol boom, which has led to our current situation, in which the industry is no longer wholly reliant on the government to survive. Feel free to disagree, but if you do, please don’t continue to recycle a five-year-old Op-Ed.

– Tomi Maxted is a Senior Account Executive at Antenna Group. Follow Tomi on Twitter @TMaxted.

Note: This article by Keith Zakheim, CEO of Antenna Group, and Caroline Venza, executive vice president, originally appeared in the Saturday, July 21 edition of the Star-Ledger, New Jersey’s largest newspaper.

Mark Twain’s famous remark, “Reports of my death are greatly exaggerated,” made after his obituary was published by mistake, could apply in equal measure to New Jersey’s solar industry. Despite widespread references to “death,” “collapse” and other expressions of doom and gloom, the state’s solar industry is doing fine: In the first quarter of 2012, the Garden State surpassed California as the nation’s leader in installed solar capacity.

But the fact that the declining health of the solar industry may have been overstated doesn’t mean it doesn’t need some TLC: While not totally moribund, it hasn’t been a picture of blooming health, either. Which is why the governor’s signing of the solar “resurrection bill” recently passed by the state Legislature, scheduled for Monday, is so important. It will serve as a nostrum to get the solar industry — which has created thousands of vital green jobs — back on its feet.
The source of the industry’s trouble is a state financial incentive called an SREC, or Solar Renewable Energy Certificate. Utilities must buy SRECs, which represent the environmental benefit of solar, from solar producers in order to meet a mandate called a Renewable Portfolio Standard, which requires that they produce an increasing amount of power from solar each year. If they don’t meet the mandate, they must pay a penalty, which serves as a de facto cap on SREC prices.
This incentive has been too successful. Motivated by federal incentives such as a cash grant (now expired), which covered 30 percent of the cost of a solar project, and by SREC prices in the $600-plus range, businesses stampeded to install solar, creating a solar “gold rush” that persisted through 2011. The result was the flooding of the SREC market, which caused prices to drop precipitously, thus inspiring the death knells.
The new solar bill puts the solar industry on a firmer footing by moving the RPS forward starting in energy year 2014 (which begins on June 1, 2013) — in other words, by calling for more solar now, less later. The aim is to create a greater demand for SRECs, increasing the financial feasibility of solar projects by propping up SREC prices.
This is a good thing. Although our solar industry has grown exponentially, there’s still plenty of room for more. In fact, we have the potential to become a world solar leader. The reason? All those flat-roofed commercial buildings that drivers see from the New Jersey Turnpike, which are ideal for solar. Because of our location at the heart of a huge distribution network, we have the nation’s largest per capita concentration of such buildings, of which only a fraction has yet been tapped for solar.
In terms of solar growth potential, the comparison has often been drawn between New Jersey and Germany, which is the world’s largest solar market, despite a lack of solar resources. Germany produces more than 50 percent of the world’s solar energy, with 80 percent being generated by on-site rooftop systems, as in New Jersey. Germany is actively promoting renewable energy with the goal of becoming a world leader in the new “green” economy.
There’s no reason why New Jersey can’t do the same, especially given our history in solar, which includes two of the technology’s greatest achievements: the awarding of the Nobel Prize in physics in 1921 to Albert Einstein, then a resident of Princeton, for his discovery of the law of the photoelectric effect, which serves as the scientific foundation for solar electricity generation, and the introduction of the first commercial modern silicon solar cell by scientists at Bell Labs in Holmdel in 1954.
Given our achievements in solar technology and our position as a national solar leader, we can challenge Germany’s global solar dominance by becoming — as one state energy official put it — “the Saudi Arabia of rooftop solar.” The solar bill that the governor is due to sign this week is a major step along that path.

As an incentive for installing behind-the-meter renewable energy generation systems, many states and utilities have adopted net-metering programs in which the utility offers credits — usually at retail rates — for energy produced by these systems, essentially turning back the dials.

For example, if you consumed 10 kilowatt-hours of electricity in the month of May and you produced 8 kilowatt-hours from your rooftop solar system, the utility credits your account so that you’re only responsible for paying for 2 kilowatt-hours.

Net metering benefits both consumers and utilities. Consumers benefit from having lower — and, in some cases no — utility bills; and utilities benefit from the fact that power is generated on site, potentially requiring less investment in transmission and distribution infrastructure.

Net metering is also seen by many as the key to preserving New Jersey’s thriving solar industry.

In New Jersey, the solar industry is experiencing an overbuild scenario, in which the state has enough installed solar to meet its Renewable Portfolio Standard (RPS) for solar through energy year 2014 and possibly 2015. The RPS is a standard set forth by the N.J. Board of Public Utilities that requires utilities to produce a certain amount of energy from renewable energy sources, in this case solar.

The overbuild is due to the rapid growth of solar in New Jersey, which is a consequence of generous federal and state incentives, including New Jersey’s Solar Renewable Energy Certificate (SREC) program. SRECs are a financial incentive representing the environmental benefit of solar that are sold by system owners to utilities. The overbuild reduced demand for SRECs, hence lowering their value and discouraging solar development by increasing the payback period for solar systems.

The N.J. Legislature recently passed a bill that would absorb much of the SREC glut by accelerating the RPS. The bill creates new demand for solar development by increasing the amount of solar to be installed over the next few years. Another consequence of the legislation, which Gov. Christie is expected to sign soon, is that it promotes net-metered projects as opposed to utility-scale projects that feed electricity directly into the grid. Grid-tied projects contribute to the SREC oversupply because they generate a large number of certificates.

New Jersey is now the top commercial solar market in the nation thanks largely to net-metered projects on flat-roofed commercial buildings. But despite the fact that we have the country’s largest concentration of such buildings, we haven’t even begun to tap into their solar potential. The new legislation will promote the deployment of solar on commercial buildings, thus helping businesses reduce their operating costs, reducing peak power demand and contributing to energy security.

The Legislature should be commended for legislation that supports its thriving solar industry and increases the state’s attractiveness to business.

As President Obama noted in his “Blueprint for a Secure Energy Future,” which laid out his energy policy, a key to energy security is simple conservation. Although he has adopted an “all of the above strategy” toward boosting domestic energy production, which includes increased drilling as well as renewable energy technologies such as solar and wind, he has noted that “the easiest way to save energy is to waste less energy.”

That point was hammered home to me when my daughter recently moved out. Despite my constant hounding to turn off the lights, turn off the TV, turn off the computer, turn off the fans, stop standing in front of the open refrigerator, use cold water in the washing machine, etc., my reprimands fell on deaf ears — her deaf ears, and those of her small army of friends, who were trooping in and out all day and evening through the electric garage door, which was in continuous up and down motion. As many parents of teenagers and young adults can attest, it sometimes seemed as if I was spending all my time following her around the house turning off lights and appliances.

But despite the skirmishes over energy consumption, I was still absolutely floored when I got my June electric bill — the first after she had moved out. The household consumption for June was 616 kilowatt-hours, compared to 1,099 kilowatt-hours for May. In other words, the household’s electricity usage had been almost halved. The bill went from $174.15 to $85.04 – a monthly savings of $89.11, or 51 percent. To a penny-pinching single mother who is paying off college tuition bills, that’s a lot of money. I never calculated the difference after my son moved out, but if it was similar, which I suspect it was, I have probably reduced my electricity bill by two thirds or more. And the recent reduction would no doubt have been even greater had my daughter’s move occurred during the summer, since turning on the air conditioning unit and then leaving for the day seems to be her standard operating procedure.

Of course, I can’t really say that her departure has helped the national energy conservation effort, since she will no doubt continue to burn up kilowatt-hours elsewhere until the day arrives when she is the one who is paying the bills. But it does point out the stunning effectiveness of conservation as an energy-saving measure.

Now I’m eager to see what the difference is in my oil bill when cold weather rolls around.

– Stefanie Matteson

A rainbow at midnight in Alaska.

Ask “ What is your favorite day of the year?” and you may expect to hear Christmas, Thanksgiving, my child’s birthday or my anniversary, but for me it’s Summer Solstice — the day that the sun shines longer than on any other day of the year. To me the sun has always represented promise — the promise that things will grow and that life will go on, even during our deepest pain or hardest struggles. So on the day that to most symbolizes the official beginning of summer, I look to the sky and see the promise of bigger and better things to come.

My love affair with the long, sun-filled day of the Summer Solstice began far before I began working at Antenna Group with companies that harness the power of the sun to provide energy. But now that I am here it seems like a natural fit for my soul, and for me. After all, the sun provides me with strength, so of course it should power my world as well.

In my quest to enjoy the longest possible Solstice day, I once spent it in Alaska, where I found myself rafting in

Class 5 rapids at 10:30 p.m. with hours of light still to enjoy. While the trip was marked with amazing

Prince William Sound

adventures, including kayaking in Prince William Sound and rappelling into a crevasse of the Matanuska Glacier, one aspect of this experience impacts my thoughts and my work every day. This is the fact that there I found people so committed to conserving resources and caring for the earth that this desire shaped nearly everything in their lives.

The owner of the tour company that I traveled with, Exposure Alaska, lives completely off the grid.  His home has no indoor plumbing; rather, his family uses an outhouse — all of the time. (This may be farther than I am willing to go). He has a solar powered hot tub in his yard (I can get down with that) and a vegetable garden to eat from (works for me). The tour group spent nearly our entire week living this same way: we camped in tents, used the “facilities” wherever we could find a little privacy, cooked on campfires and even enjoyed a cheesecake that our guide made by chilling it in a glacial runoff stream. Who knew you could do that?

Isn't nature awesome?

Would it have been easier to head back to a comfortable hotel room and take a long, hot shower after an exhausting day of hiking, kayaking, etc? Of course it would have. But the experience not only helped the members of the tour group bond with each other, it also bonded us with the earth. Perhaps more importantly, it taught us how much we can live without and, for some of us, how dependent we have become on amenities that may make our life easier at the moment but don’t help our spirits soar or our earth thrive.

Does taking the car for a short trip to the store save time?  Yes. But would the walk have made your lungs take in fresh air, forced your blood to pump and perhaps given you the opportunity to see a beautiful sunset that you may have missed while focused on making it through a yellow light before it turned red? Probably.

So on this, the longest day of the year, I encourage you to feel the power of the sun and let it energize you. While it is likely that I’ll still need my Starbucks for an extra midday boost, I just may walk to get it. How will you celebrate the Solstice?

Laura Finlayson

– Laura Finlayson is not a ninja, guru or maven; she is just a seasoned PR pro with expertise in social media program development and execution. When she is not working you might find her doing extreme sports like climbing glaciers, hiking in the desert in extreme heat, rappelling off 200+ foot cliffs, or simply chilling in the Bronx watching her beloved NY Yankees. Follow Laura on Twitter @lauramfin.

Denver is ground zero for the U.S. renewable energy industry this week, as ASES (http://ases.org/), the American Solar Energy Society, and the World Renewable Energy Forum (WREF) join forces for the first time to collocate in the LEED-certified Colorado Convention Center. The result? A solar conference that is breaking free from traditional PV events by happily sharing the stage with wind, storage, energy efficiency, electric vehicles and other synergistic technologies.

For those of us that have been a part of the cleantech movement over the past decade, solar has long been positioned as the heir-apparent to the energy generation challenge, with a multitude of different flavors (Si, aSi, concentrated, thin film) and applications. And while solar has unquestionably taken root, it, like the other renewable technologies, has remained virtually siloed.

Panelists discuss the market opportunities for EV and PV

So, at WREF it was encouraging to hear the solar conversations evolve beyond talk of simple PV installations and instead reveal the new avenues in which solar is fulfilling its potential in the nation’s renewable energy portfolio.

Representatives from REC Solar and Schneider Electric join the panel on the intersection of PV and EV

Yesterday gave way to insightful talks on new directions in which solar is evolving, ranging from PV’s integration with energy efficiency and demand response to solar’s emergence as a new financial asset class. I even had the pleasure of moderating a panel on PV’s growing role in the electric vehicles movement, which showcased three pioneers—ECOtality www.ecotality.com, REC Solar www.recsolar.com and Schneider Electric www.schneider-electric.com —that are driving industry collaboration. Each has achieved impressive milestones towards the creation of a new national infrastructure based on years worth of behavioral data, technical advancements and demand dynamics.

My last image of the panel was the sheer knowledge of the audience. 10 years ago most members would have struggled to decode the acronyms and techo-talk being tossed about, but today’s Q&A underscored just how far we’ve come, both as a nation and as a united industry.

- Caroline Venza

Global warming doomsayers may have taken an ironic satisfaction from the fact that the cocktail reception and exhibition at the recent 4^th Annual Mid-Atlantic Cleantech Investment Forum was held in the dinosaur hall at the Academy of Natural Sciences of Drexel University in Philadelphia. In their view, the mass extinction of the dinosaurs offers a preview of their apocalyptic vision for the destiny of humankind if we don’t take strong steps to prevent man-made global warming from overheating the Earth.

Under the shadows of more than a dozen full skeletal mounts of Cretaceous-era titans such as Tyrannosaurus rex and Corythosaurus casuarius, or duckbill dinosaur, the conference participants munched on hors d’oeuvres and traded notes on what they were doing to prevent such a fate.

The reception followed a conference focused on clean tech opportunities and challenges in the mid-Atlantic region that included panels on “fostering clean tech investment” and shale gas development, the latter being only fitting since most of Pennsylvania is covered by the Marcellus Shale Formation, the world’s third largest reserve of natural gas. The panels were followed by a cleantech showcase highlighting companies involved in enterprises as diverse as OmniWind’s wind turbines and Primus Green Energy’s technology to transform biomass and natural gas into a high octane, drop-in gasoline.

But if the conference were to be distilled down to a single idea, it would be energy efficiency, which was the theme of keynote speaker Mark Fulton, the managing director and global head of Climate Change Investment, Research & Strategy for Deutsche Bank Climate Change Advisors. While politicians may still be debating the existence of climate change, investors at financial institutions such as Deutsche Bank are planning how to deal with it. Fulton coordinates a team of analysts who publish white papers on key industry, policy and strategic topics that are used to advise investment managers on climate change-based strategies across their asset management platforms.

Drawing on a  research study conducted by Deutsche Bank Climate Change Advisors and the Rockefeller Foundation (http://www.rockefellerfoundation.org/news/publications/united-states-building-energy-efficiency), Fulton said that proven technologies to retrofit buildings — from upgrading lights to replacing heating and cooling systems and building controls — can both conserve energy and create a large number of jobs. He noted that buildings consume about 40 percent of the world’s energy and are responsible for 40 percent of global carbon emissions. According to the study, an investment of $279 billion in the residential, commercial and institutional energy efficiency market segments could yield more than $1 trillion of energy savings over 10 years, which would be the equivalent of saving approximately 30 percent of the annual electricity spend of the United States. Perhaps more importantly — at least from a climate change perspective — the retrofits represented by such an investment would reduce greenhouse gas emissions in the United States by nearly 10 percent.

But the report also noted that, despite the market potential and rapid payback of energy efficiency upgrades and retrofits, this “low-hanging fruit” in the energy and climate space has consistently proven to be farther out of reach than expected. In his address, Fulton profiled various financing models with the potential to scale investment in these markets and to overcome supply- and demand-side barriers. He concluded that the Energy Services Agreement (ESA) model holds the most promise for the near term, given its potential to scale without the need for policy initiatives or regulatory changes. Under such a model, the lender funds the costs of improvements and assumes responsibility for the payment of the energy bill. The property owner is then charged back based on historic consumption, thus allowing the lender to capture the energy savings. For more on the benefits and drawbacks of the various financing models, please consult the report.

We hope that the climate change prophets of doom, many of whom say we have only a few years left until we lose the levers of control, are wrong. But if we are well on our way to environmental annihilation, as the zealots aver, learning to control the carbon emissions produced by the built environment, while not especially glamorous, would seem like an eminently sensible way in which to forestall catastrophe while we are waiting for those magic bullet technologies that the optimists predict are on the horizon.

- Stefanie Matteson

We’ve all heard about the role of biofuels in reducing reliance on foreign oil, enhancing national security, creating jobs, promoting national prosperity and reducing greenhouse gas emissions. U.S. Secretary of Agriculture Tom Vilsack, in an eloquent address to the Advanced Biofuels Leadership Conference held recently in Washington, D.C., cited these and more in his keynote address before the more than 500 conference delegates. But he also spoke of an overlooked role for biofuels: as a preserver of American values.

Vilsack noted that while much of the American population is focused on personal gain, farmers by the very nature of their occupation recognize that prosperity is a two-way street: their livelihood depends on conserving and protecting natural resources such as soil and water through those venerated American values of hard work, sacrifice, patience, self-discipline, prudence and thrift. The nation was founded and built upon agricultural values in which the role of stewardship plays a paramount role, the secretary said, noting that the agricultural community’s contribution to the nation — for instance, in terms of military service — has always been disproportionate to its numbers. (Note: I am paraphrasing his remarks.) The perpetuation of these values is now threatened by the aging of the farming community, he said. According to a recent agricultural census, the fastest-growing age group of farmers is the cohort over 65. But all of this may be changing. The growing biofuel industry promises to revitalize the farming community, attracting new blood, bringing new wealth to dying communities and restoring the importance of the heartland as a repository of American values whose influence extends throughout the country. In other words, biofuels could create a comeback for rural America.

If the trends are any indicator, Vilsack may be right. Nearly 40 percent of the nation’s corn crop is already devoted to the production of ethanol, which by mandate makes up 10 percent of the fuel we use in our cars. Biofuels are already enriching agricultural incomes. And that’s without even taking into consideration the potential impact of the cultivation of advanced (non-food) biofuel crops such as switch grass and Miscanthus that the industry is now focused on for use as feedstocks in the production of fuels, chemicals, plastics, fragrances and flavors.

The “Go Big. Stay Strong” theme of the conference was a reference to the commercialization of biofuels, with “strong” referring to the danger of becoming overextended on the path to expansion. But “strong” can have another meaning as well: namely, the role of biofuels in making the country stronger. In Vilsack’s view, biofuels hold the promise of strengthening the values of the nation so that it can continue to serve as a beacon to the world. If he’s right, the restoration of those values lies as much with the revitalization of the imperiled farming community as it does with changes in behavior or beliefs fostered by government, religion or the social order.

- Stefanie Matteson