This is the era of Big Oil. Could the next be the era of Big Efficiency?

A new report by the American Council for an Energy-Efficient Economy suggests the possibility. Re-invented with today’s smart energy technologies, energy efficiency could displace 40 to 60 percent of our total energy needs by the year 2050, according to The Long-Term Energy Efficiency Potential: What the Evidence Suggests.

Sound far-fetched? ACEEE says history backs its assertion. Over the last 40 years we tripled the US economy, “and three-quarters of the energy needed to fuel that growth came from an amazing variety of efficiency advances—not new energy supplies,” said the report. Energy forecasters at the time predicted we would be using far more energy than we do now. The advent of the computer, the Internet, energy savings appliances and other efficiencies saved us a lot of money and a lot of oil. In 1970, our economy required 15,900 British Thermal Units of energy to support $1 of economic activity; by 2010 we needed only 7,300 Btus.

But there is a problem in repeating this feat. Today’s energy policy begins with the premise that we need to build more power plants, more refineries and more delivery systems. We do not try to first achieve greater efficiency. In other words, we build more energy infrastructure before we try to wring more work out of each unit of energy we produce. If we instead pushed efficiency first, the US could save $400 billion per year in energy costs, amounting to about $2,600 per household, according to ACEEE.

“The U.S. would prosper more if investments in new energy were not crowding out needed investments in energy efficiency,” said John A. “Skip” Laitner, ACEEE director of economic and social analysis.

In short, we are thinking small about efficiency, when we should be thinking big.

ACEEE further warns that the deck contains at least three jokers, or unwelcome wild cards, that could threaten our hand if we fail to pursue energy efficiency. These include 1) diminishing supplies of cheap and available energy; 2) a slowing rate of energy productivity and 3) climate change.

How do we keep the jokers buried? The report says it requires “a different recipe of technology investments” than we are now making.

“The question is will we choose to make those more productive investments?” says ACEEE.

ACEEE’s full report is available here.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

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A series of recent policy-related developments within the biofuels industry may have set the stage for what could prove to be a significant shift in biofuel geopolitics over the next decade.

To recap: the European Court of Justice (ECJ) affirmed an earlier ruling that held the imposition of carbon taxes on flights touching down or taking off on EU soil did not infringe international law or the Open Skies Agreement; a U.S. District Court ruled that California’s Low Carbon Fuel Standard (LCFS) violates the U.S. Constitution; and the long-standing U.S. ethanol producer credit (aka “VEETC”) slipped quietly into the history books.

Where do these developments leave the industry?

While the inclusion of airline emissions in the EU’s ETS indicates that the buzz around aviation biofuels won’t fade anytime soon, the threat of costly trade wars by the United States and China in response to the ruling could put a crimp on the expansion of international biofuel trade flows.

Meanwhile, just as the expiration of VEETC eliminates an estimated $6 billion worth of annual subsidies to the ethanol industry, the lucrative California fuel market is (at least for now) once again open for Midwest ethanol producers, and likely at the expense of Brazilian ethanol (more on this below).

On the whole, the decisions are generally good for advanced biofuels and corn-based ethanol alike.

Aviation Biofuels Lack Production Volumes, Not Willing Buyers

In the case of advanced biofuels, the decision to uphold the carbon fee suggests that international carriers will not escape the added costs associated with doing business in Europe, adding further incentive to integrate carbon-cutting technologies. As I discussed in an earlier blog, the combination of impending offset purchases and high oil prices appears to be forcing the aviation industry’s hand when it comes to fossil fuel alternatives, which has been signaling strong demand for sustainable advanced biofuels in recent years (note that first-generation biofuels lack the performance characteristics necessary to power commercial and military aircraft).

Although expected, the ruling is generally good news for energy feedstock producers looking to commercialize next generation feedstocks like camelina, jatropha, switchgrass, and algae, and seeking reliable markets and off-take contracts to offset the risk associated with growing relatively unknown crops.

But the advanced biofuels story is not about lack of demand, which suggests that the ECJ decision may actually not have much impact at all. In the case of the aviation industry, rising oil prices mean that demand for biofuel alternatives is deep, durable, and widespread. Even without the EU tax, assuming adequate supply, price parity with petroleum-based fuels, and sufficient distribution logistics, aviation fuel buyers would be clamoring to lock-up every last drop of advanced biofuels production.

Meanwhile, with the threat of trade wars from the United States and China among others, costly tariffs and other punitive measures could actually stifle biofuels development, an unintended consequence of the aviation tax.

Corn-based Ethanol Gets a Boost

Over on the other side of the pond, Judge Lawrence J. O’Neill’s December 29 decision declaring California’s carbon fuel standard unconstitutional represents a significant victory for Midwest corn ethanol producers (see my 2010 article on the LCFS and Green Federalism for more on the legal issues). The California Air Resources Board’s (CARB) policy, introduced in 2007, aims for a reduction in the “life-cycle carbon intensity” of fuels consumed in the state by 10 percent over the next decade. Due to corn ethanol’s inherent inefficiencies, the policy excludes most of the corn-ethanol produced in the United States from one of the world’s largest fuel markets.

Implementation of the policy had led to the peculiar situation where Midwest ethanol producers were shipping their offending product 6,000 miles to Brazil to make up for a shortfall in sugarcane ethanol production. Midwest corn’s exclusion from California, coupled with a national blending wall policy, put a serious constraint on U.S. producers’ scale-up ambitions. The ruling may put corn ethanol back in the domestic driver’s seat, at least for now.

Looking Beyond 2012

As discussed in Pike Research’s report, Biofuels Markets and Technologies, we expect the production of conventional biofuels – namely corn- and sugarcane-based ethanol – to increase steadily over the next decade as demand for alternatives to petroleum-based fuel outstrips advanced biofuels production volumes. The corn-based ethanol industry appears to have established viability, and even without the VEETC, we foresee an increase in production as access to markets like California and the likely raising of U.S. blend walls (e.g. implementation of E15 or expansion of E85) opens up new opportunities for producers.

The key question raised by these decisions: where will the production go over the next decade? As corn-based ethanol ventures beyond VEETC, the industry will need to fight for market access at home and abroad despite this most recent victory. Meanwhile, the EU may be positioning itself as the primary market for advanced biofuels at the expense of U.S. and China.

Article by Mackinnon Lawrence, appearing courtesy the Matter Network.

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For the first time, an inventory of the largest stationary greenhouse gas emitters in the United States has made been made publicly available. On Wednesday, the U.S. Environmental Protection Agency published the first-ever inventory of greenhouse gas emissions from large polluters. The inventory, which catalogs the 2010 direct emissions of the 6,700 largest stationary emitters across nine industrial sectors, shows that nearly three-quarters of industrial greenhouse gases (GHGs) are emitted by power plants. When the emissions generated by the second-largest stationary source, oil and gas refineries, are added to that figure, 78% of GHGs can be contributed to those two segments of the fossil fuel sector.

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Renewable Energy Certificates (RECs), also known as Green Tags, are becoming increasingly important in a country that has set serious goals for enacting renewable energy. In general, there are currently two types of RECs. Some REC’s are used to meet compliance targets or emissions requirements; a second group of RECs, called voluntary RECs, are driven by corporate sustainability efforts.

Voluntary RECs are just what they sound like they would be. These are RECs that are purchased of the purchaser’s own accord, not because there are compliance requirements forcing them to buy them. Voluntary RECs are not purchased in order to meet certain requirements. Instead, it’s the desire to use renewable energy that drives the purchase of voluntary RECs.

Though this system has been criticized for its lack of accountability, most RECs both domestic and corporate are still purchased voluntarily in the United States.

Besides the desire to reduce harmful greenhouse gasses, voluntary RECs are also purchased because they help the buyer cut back on energy bills. Every megawatt-hour of electricity that is generated from a renewable energy source is one for which users don’t have to pay utilities.

Consider that there are huge paybacks for corporations who choose this path to going green. This is especially true in the industrial sector; at 33 percent, the industrial sector represents the largest energy user in the U.S. Further. voluntary RECs help to offset the effects of energy consumption growing faster than energy production in the U.S. over the last 50 years.

REC certification may be obtained through the Center for Resource Solutions (CRS). To get certified, you must submit a Verification Process Audit annually. All relevant transactions must be recorded in the audit, so that it is assured that you or your company meet the requirements. Third party verification is required for REC certification. This can be performed by either a certified internal auditor, or an independent public account. The CRS has a list of auditors who meet their criteria.

Of course, any time people adopt voluntary procedures, there is personal and – in this case – corporate commitment to success. Adoption of Voluntary RECs is certainly a positive indication that people may not always need to be mandated to do the right thing. As such, this program has a great chance of being a long-term player in the push toward renewable energy adoption.

Bari Faye Siegel is a technology writer and marketing consultant at Noveda Technologies, an innovative leader in real-time, web-based energy monitoring, solar PV monitoring and water monitoring. Noveda also offers real-time collaboration tools that leverage social media to educate and empower stakeholder communities and make the smart grid a reality today.

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My loyal readers may have been surprised (or relieved) by my hiatus from publishing.  I was not idle, however.  I led a study on Energy Efficiency Policy in New Jersey and Pennsylvania on behalf of the Department of Energy-funded Greater Philadelphia Innovation Cluster for Energy Efficient Buildings.  I completed the work last week, and it will be released soon. 

I have also been advising New Jersey Governor Chris Christie on developing the 2011 Energy Master Plan for New Jersey.  The draft plan is available here.  The findings of the eight-person work group on clean energy will be made public shortly, and public hearing is being held on October 21 from 9:30-12:30 at the Rutgers Eco-Complex.  Details are available here. 

My public sector work has given me some new insights into green building and energy efficiency policy, which will be developed in further posts over the next few months. 

Among the most interesting findings is the difficulty in crafting public policy initiatives to break through the “efficiency gap”—the gap between a customer’s actual investments in energy efficiency and those that appear to be in the consumer’s best interest.

Most policy efforts are aimed at eliminating the "first cost" barrier to energy efficiency.  In other words, providing grants or loans to minimize the upfront investment required for energy efficient systems.  

Making these programs work to achieve scale and realize significant energy savings has proven devilishly difficult.    With the influx of ARRA funds, state and local jurisdictions have invested $650 million in loan programs for energy efficiency projects, with loans generally provided to customers at low- or zero- interest rates. 

The author of a May 2010 nationwide study of state, utility and municipal loan programs by the National Renewable Energy Laboratory concluded:

Despite the advantages of state, utility and municipal loan programs, participation to date has been modest, and they appear to be incapable of driving a large scale transition to a clean energy future by themselves.

A study just released in September, 2011 by the ACEEE which reviewed 24 financing programs nationwide concluded that participation rates were generally low across programs, and do not generally track energy savings.  The report concluded:

While several programs have many years of experience and have issued thousands of loans, this market has yet to come to scale. 

So, it is clear that transforming the energy efficiency environment will require more than providing low cost capital from government sources for at least two reasons.  First, because government capital and capital deployment mechanisms are not robust enough to create scale, and second, because the barriers to energy efficiency are not merely financial.  Psychological barriers, cultural barriers, resource barriers and technical barriers also play important roles.  [This report nicely summarizes the various barriers to energy efficiency investment by sector.]

From my research, policymakers must focus on better stimulating private capital deployment and integrating financing with tools to address other barriers to energy efficiency. Understanding consumer motivation, providing resources to address the less concrete barriers to energy efficiency, and partnering with private capital sources to bring financing to scale  should be the goals of energy efficiency policies going forward.

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At first blush, the economics of energy efficiency seem straightforward.

A business installs lighting controls or some other improvement. The business then sees its energy costs drop. From the savings, the business repays the investment over weeks, months or years, and then turns a profit on the asset.

While that equation holds true, analysts increasingly value the worth of energy efficiency in other more complex ways as well. The energy efficiency industry, for example, is creating new jobs. Energy efficiency also improves US energy intensity, the amount of energy it takes to support each dollar of economic activity.

And now a report by PwC links a business’ sustainability story with its success undertaking an initial public offering (IPO) before the US Securities and Exchange Commission (SEC).

“It literally can pay to ask: if the company files its registration statement with the SEC tomorrow, what sustainability and corporate responsibility story would it tell to prospective shareholders?” says ‘Factoring Sustainability into IPO Planning: Disclosure trends reveal a changing landscape,’ by PwC Transaction Services.

The report looked at 120 IPO-related filings before the SEC from 2010 and early 2011 across eight industries sectors. PwC found that companies are increasingly addressing energy efficiency and other sustainability issues as part of a larger corporate accountability trend.

In fact, over 84% of IPO filings had some level of disclosure related to sustainability – and not just because they were required to do so by regulators. About 68% of sustainability disclosures came about for other reasons, such as in discussions about weather-related risk or to showcase corporate accomplishment.  A full one-third of companies in the consumer sector reported either energy efficiency or emissions reductions programs.

Moreover, the report found public companies, in general, now focus more dollars on sustainability efforts. Roughly $1 of $8 under professional management in the U.S. today involves a strategy of socially responsible investing. In addition, such investments are trending upward. While the universe of professionally managed assets rose only 1% during 2007-2010, assets related to sustainable and socially responsible investing grew 13%.

The report says that companies can increase value when going public by capitalizing on sustainability efforts. PwC recommends that before undertaking an IPO companies develop a clear understanding of how their sustainability story positions them against competition and enhances their appeal to investors. Companies also should consider how sustainability programs can increase revenue and decrease expenses for their goods and services.

This advice comes at a time when IPOs appear to be on the rise after losing steam following the 2008 collapse in financial markets.  While there has been some recent volatility, a “robust pipeline” of companies remains in the process of going public as of third quarter 2011, according to a separate PwC report. And as they do so, their energy efficiency becomes an increasingly important part of the economic story they present to the investment world.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

photo: twicepix

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Politicians often tout the benefits of going green from both an environmental and economic standpoint. After all, going green helps the economy by expanding the energy sector to one reliant primarily on fossil fuels to one that includes alternative and renewable sources which tend to be cleaner for the environment. Yet, there are varying numbers about how many jobs are truly created in a “Green Economy.” Determining how many jobs are created is difficult because defining what is green and what is not is open to all kinds of interpretation.

The Center for American Progress seems to suggest that the green economy can create a lot of jobs through infrastructure rebuilding. For example, The Center for American Progress reports that “This green recovery and infrastructure investment program would: Create 2 million new jobs in the nation over two years, Bolster employment within construction and manufacturing. Construction employment has fallen from 8 million to 7.2 million over the past two years due to the housing bubble collapse. The Green Recovery can, at the least, bring back these lost 800,000 construction jobs.” When framed in terms of manufacturing and infrastructure, perhaps the green economy can create 2 million jobs. So, for example, installing things like wind mills and solar panels on homes definitely has huge upside and can create the 2 million jobs cited by The Center for American Progress.

However, when calculating how many jobs are truly created in a green economy, the count can include activities that are not truly green in terms of not emitting carbon dioxide. For example, some biofuel and biomass production may come in the form of using fossil fuel inputs such as chemically derived fertilizers and pesticides. Yet, biofuels and biomass that involves such things as using fossil fuel inputs would be counted as part of the green economy in the same manner as the installation of solar panels and windmills that are part of the new green manufacturing and infrastructure program cited by The Center for American Progress. So, two million jobs may be created, but it comes with caveats as to how we define the term “green.”

Nevertheless, restoration of the manufacturing sector here in the U.S. is definitely a plus and can be part of the green economy. Even if 500,000 jobs are truly created in a green economy, that is progress especially given the prolonged recession the U.S. is currently experiencing. There is no question that there are green jobs available, but the question is how many are truly “green.” The Center for American Progress makes a compelling argument about how there are green manufacturing jobs and creating those types of jobs in this recession is certainly a must to improve the overall economic outlook and to help the environment.

Article by Patrick Kenney, appearing courtesy Justmeans.

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Imagine paying less than $15 a month for electricity and gas. Imagine living in a home without air conditioning or heating vents. If the price sounds right, but the house itself sounds either drafty or stifling, think again.

If you were living in a passive house, you wouldn’t have traditional heating and cooling equipment, but you’d still be warm in the winter and cool in the summer. And your home would use the energy equivalent of a 100-wall light bulb.

You would be living in what’s called a “passive house,” just like Cathy O’Neill who is the proud owner of California’s first certified Passive House in the Sonoma wine country.

What’s a passive house? Much more common in Europe than the U.S., a passive house is an extremely well insulated, virtually airtight building heated primarily by passive solar energy and the energy generated by its occupants and electrical equipment, etc.

O’Neill’s house uses a small heat exchanger which heats or cools depending on the desired temperature. The house also contains state-of-the-art insulation, triple-pane windows, a solar water heater, and energy-efficient European appliances.

O’Neill’s house uses a small heat exchanger which heats or cools depending on the desired temperature. The house also contains state-of-the-art insulation, triple-pane windows, a solar water heater, and energy-efficient European appliances.

In an article in the New York Times, it was estimated that there were approximately 25,000 certified passive structures, including schools and commercial buildings as well as homes in Europe, but only 13 in the U.S. as of last September.

According to the San Francisco Chronicle, O’Neill decided to retrofit an existing home into a passive house because she wanted to use less of the world’s resources and to lower her carbon footprint. And, the Passive House Institute-U.S. estimates that the passive house concept should reduce heating energy consumption of homes by 90 percent. Currently, according to data from the U.S. Energy Information Administration, buildings are responsible for almost 50 percent of greenhouse gas emissions annually, and nearly 80 percent of all electricity generated by U.S. power plants goes to supply the building sector.

While the U.S. is developing “green” building certifications and rating systems such as the federal government’s Energy Star for Homes Programs and the LEED (Leadership in Energy and Environmental Design) rating system from the U.S. Green Building Council, these programs aim for energy efficiency of about 15 percent over conventional construction.

Passive homes using photovoltaic solar panels or other energy harvesting systems could well become zero-energy-use houses, according to the Passive House Institute-U.S. The passive-house movement’s sanctioning body is the Passivhaus Institute based in Dramstadt, Germany. The Passive House Institute-U.S. has educated roughly 160 architects, builders, and engineers through a series of training programs.

One of the problems facing U.S. builders of passive homes is the costs associated with their construction. In Europe, according to the Passive House Institute-U.S., the additional cost for a passive house as compared to a conventional home is now less than five percent. In the U.S., thicker walls, specially constructed windows, and other materials make building a passive house much more expensive. O’Neill’s renovation cost well over $1 million. (http://www.clam-ptreyes.org/Light-PassiveHouse.pdf )

Not far from O’Neill’s house in Sonoma, the non-profit Community Land Trust Association of West Marin recently completed a $200,000, 750-sqare-foot, one-bedroom passive home for low-income occupants in Point Reyes Station, and the San Francisco Zen Center broke ground in September on a passive house dorm for its staff members at its Green Gulch Farm in Muir Beach.

Article by Julie Mitchell, appearing courtesy Celsias.

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Amid the flurry of local and state ballot initiatives Californians will be voting on next month, we’re here to highlight two that have tremendous implications for our clean energy future:

Prop 23: Puts Climate Change Action & Renewable Progress on Hold:
VOTE NO

Funded by out-of-state oil companies, Proposition 23 would suspend California’s landmark greenhouse gas law – AB 32. As if that’s not bad enough, Prop 23 isn’t just about cap-and-trade. A number of California’s clean energy policies, including our 33% renewable energy requirement and low carbon fuel standard, are wrapped into the state regulator’s AB 32 authority. If Prop 23 passes, that whole suite of clean economy policies are at risk too.

Prop 26: Restricts Funding for Environmental & Public Health Regulation:
VOTE NO

Although it has received just a fraction of the attention of its Prop 23 compadre, Prop 26 (also backed by big oil, along with big alcohol & big tobacco) could be just as detrimental to green economic growth. Prop 26 seeks to redefine a number of “fees” that currently fund most of our environmental and public health initiatives as “taxes.” That’s not just semantics. Fees can be passed by a simple majority vote, but taxes require two-thirds majority, a tall order for our decidedly log-jammed legislature. In the entirely likely case that the two-thirds vote can’t be reached, funding for these critical programs shifts from polluters (for example) to general taxpayers – or the programs are simply cut in these times of tight budgets. AB 32 is just one of many programs likely to be hurt if Prop 26 passes.

These environmental policies have helped make California the leader in clean tech innovation and business growth that we are today. Just last week we got two timely reminders of the economic opportunity that’s at stake here. The Solar Foundation released its national solar jobs census – California claimed the top position with 36,000 solar jobs, more than five times the number 2 state. SEIA’s Solar Works for America website helped put a face on those jobs. Then the same week, a whopping 32 California cleantech companies made the Cleantech Global 100 list of up-and-comers likely to make big near-term market impacts – an auspicious number, to be sure, and one that far outstrips any other state or country.

Prop 23 would put the state’s successful green policies on hold, and Prop 26 would undermine their funding. Both propositions pose a major risk to California’s growing clean energy economy. And neither are options that California can afford.

Here’s a great new ‘No on 23′ video if you want to learn more about the proposition’s impact on health, jobs, national security and the economy:

Every vote counts, so please get to the polls or mail in those ballots to VOTE NO.

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.

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Lucky for Americans, information technology doesn’t appear to be owned by any one political party. If it were, Congress would still be squabbling over whether or not to support the Internet and you’d be reading this on paper rather than online.

Not so for energy. Generally speaking, Republicans tend to be pro-fossil fuel, while Democrats typically come down on the side of green energy. This feud – which is a key reason Congress cannot pass an energy bill — confuses me. Does a coal-fired plant represent some conservative ideal not found in wind power? What’s liberal about the squiggly light bulb illuminating my desk?

How can electrons be partisan?

Okay, I know I’m over-generalizing and bound to attract admonishments from readers who will point out where liberals are sometimes pro-brown and conservatives pro-green. But I think we’ve seen the debate come down along party lines enough in the United States that my assumption is fair.

That’s why it was intriguing to see the recent report “Pro-Partisan Power,” a combined effort of think tanks on both sides of the political spectrum: the Brookings Institution, Breakthrough Institute and the American Enterprise Institute.

In the words of the report authors:

Today, few issues in American political life are as polarized as energy policy, with both left and right entrenched in old worldviews that no longer make sense. For the better part of two decades, much of the right has speculated darkly about global warming as a United Nations-inspired conspiracy to destroy American sovereignty, all while passing off chants of “drill, baby, drill” as real energy policy. During the same period much of the left has oscillated incoherently between exhortations that avoiding the end of the world demands shared sacrifice, and contradictory assertions that today’s renewable energy and efficiency technologies can eliminate fossil fuels at no significant cost. All the while, America’s dependence on fossil fuels continues unabated and political gridlock deepens, preventing real progress towards a safer, cleaner, more secure energy system. The extremes have so dominated mainstream thinking on energy that it is easy to forget how much reasonable liberals and conservatives can actually agree on…”

The report goes on two make four key recommendations: 1) Invest in energy science and education; 2) Overhaul the energy innovation system; 3) Reform energy subsidies and use military procurement and competitive deployment incentives to drive price declines; 4) Internalize the cost of energy modernization and ensure investments do not add to the [federal] deficit.
The authors say this can be done at a cost of $25 billion, which can be recovered through small fees on imported oil, electric utility surcharges, a very low price on carbon or other means that will not cause great pain to any one group.

You may or may not agree with the recommendations. But it is hard not to be impressed with how the authors suggest we portray energy – not as a battle between left or right, but as a technology play, as innovation. I suspect this is what Rhone Resch, president and CEO of the Solar Energy Industries Association, meant when he said that solar energy is an industry, not an issue, as reported recently in Renewable Energy World North America Magazine.

Americans left or right can’t argue with innovation. It has brought us things we all like, our cell phones, our downloadable music, air conditioning, meals we can heat in minutes, and voices that tell us which way to drive our cars so that we don’t get lost — which all somehow have managed to remain free of any partisan taint.

The full report is available here.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

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