May 21, 2010
by Environmental Building Strategies
in Renewable Energy
Tags: Clean Energy, Government Mandates, Government rebates
Many are aware of the subsidies, tax credits, and grants available to property owners and utilities to install and utilize alternative energy (i.e., wind, solar, biomass, etc.). Unfortunately, many forget that these technologies need to be manufactured somewhere. The majority of the panels that go into a photovoltaic array and the large blades that make up wind turbines are currently being manufactured overseas, often in China. This directly contradicts President Obama’s plan to spur green job growth with the passage of the Stimulus Bill. Enter the SEAM Act.
The Security in Energy and Manufacturing Act extends an existing tax credit (The Advanced Energy Manufacturing Tax Credit (MTC), which provided a 30% of total project cost credit to help fund projects that expanded, or re-equipped clean energy manufacturing plants. The SEAM Act goes beyond a simple extension of the $2.3 billion program, it redefines it. Infusing an additional $5 billion into the program while substituting grants for tax credits, it will allow smaller startups who haven’t garnered the tax liability to apply for tax credits to offset some of the costs of their planned plants. It also prioritizes purely manufacturing projects over assembly plants.
This Act comes at a key time, as there are hundreds of projects that applied for credits under MTC that were denied because funding ran out so quickly. Like the “Cash for Clunkers” program, the actual interest in MTC far outweighed initial projections, proving that it was a successful program.
But why, you might ask, should we focus on clean technology manufacturing. According to the Act’s author, Representative Phil Hare from the 17th congressional district in Illinois,
“As clean energy becomes one of the world’s largest industries, forecasted at over $2 trillion annually, advanced energy manufacturing will offer one of the best chances for the U.S. to restore its manufacturing base and create good-paying jobs domestically.”
This is only one of the many reasons why the US needs to spur clean manufacturing jobs. Over the past several decades this nation has seen its manufacturing base erode. Losing out to cheaper Chinese products, the manufacturing industry, one of the largest employment sectors in the US has seen the largest decline in jobs over the past ten years. According to the United States Department of Labor, in 1998, the manufacturing sector employed the second highest number of workers, over 17.5 million. Sense then, the industry has seen a 2.6 percent annual decrease in jobs, which is double the rate of decline of the next-to-worst sector. Advanced energy manufacturing offers a unique opportunity to pursue an environmentally responsible agenda while creating many permanent, high-paying jobs that are desperately necessary to revive an employment powerhouse in serious decline. With the promise of huge green job creation numbers to live up to, why not focus on the area of biggest potential.
The demand side makes an even stronger case to up clean technology manufacturing. With the new requirement that 25% of each state’s energy portfolio must come from clean, renewable energy being mulled over in Washington, and with the potential for a Carbon Cap and Trade system being introduced, the demand for huge new solar and wind farms will take off. Couple that with the improvements that are being made to the efficiencies of these technologies pushing them towards being on par with coal in terms of the production price per kW, and you start to have not only an environmental reason, and a government mandated reason, but also an economic reason. Maybe the one positive that came of out of the recent oil spill in the Gulf, is that it quieted some “Drill baby Drill” proponents. Clearly an increase in off-shore drilling is not the answer to our energy situation; why not look to an abundant and everlasting source, the sun, which creates not only solar power, but wind power as well.
Looking before the future, at the present, renewable energy production is already taking off. According to the U.S. Energy Information Administration, over the past ten years, wind energy production has increased an average of 24% annually. Over that same time period, energy production from crude oil has decreased an average of 2.4% annually. While crude oil reserves are running out, and the potential for wind and solar production is only increasing, let’s start focusing our efforts and our money on a sector that has some potential. For those of you who wonder where all this money could come from, look no further than the oil industry, which receives huge subsidies from the government so they can continue searching for an archaic fuel source that is destroying our environment. Estimates are that US Oil companies receive, according to Greenpeace, between $15 billion and $35 billion a year from tax payers in the form of avoided taxes.
January 5, 2010
by Environmental Building Strategies
in Energy, Green Building
Tags: Energy, Government Mandates, Green Building
This article was written and submitted by Chris Birk
D.C.’s Green Building Dilemma
By Chris Birk of www.suretybonds.com/edu
When it passed in 2006, Washington, D.C.’s Green Building Act was heralded as an innovative way to incorporate green efficiencies into private and public building projects.
But not everyone was thrilled, especially surety companies — the industry that issues bonds that guarantee work and protect taxpayer and private dollars. Three years later, there’s still a bit of a battle brewing that could jeopardize the course of green building in the District of Columbia and perhaps beyond.
At issue is the idea of a “green” performance bond. In general, performance bonds are a standard risk-management tool and a part of most building projects across the country. They basically guarantee that a contractor performs the job up to code and contract.
Usually, these are the standard fare — surety underwriters examine a contractor’s finances, experience, cash flow and ability to get the job done. Then, they examine the contract to see what specific industry standards are supposed to be met. If everything fits, the surety typically issues a performance bond.
But green building introduces a new, scary wrinkle for surety companies. A contract that demands a contractor achieve a certain degree of efficiency — say, for a decline in carbon dioxide emissions or water efficiency — likely requires certification by a third party, like the U.S. Green Building Council.
That raises immediate red flags for a surety. They’re on the hook financially if a contractor fails to perform. The question is, can they be liable if a contractor fails to achieve the necessary level of energy efficiency — if, for example, carbon dioxide emissions aren’t eliminated to the required level.
That’s a major reason why most surety companies refrain from bonding a contractor when a contract requires specific energy efficiencies or any type of third-party certification.
But that’s the law as written in Washington. The new regulation, which takes full effect in 2012, mandates that projects that fall short of green building standards have to pay claims into a city fund dedicated to green building.
Needless to say, the surety industry has been up in arms over the provision.
After months of back and forth, industry leaders and D.C. officials are working on a compromise while re-examining the law’s language. A public hearing regarding the issue was slated to be held on Dec. 14.
Without a compromise, contractors and project developers in D.C. might have to shoulder more risk than ever before. And that could have serious repercussions for building, not just in the District but across the country.
— The EBS Team —
July 28, 2009
by Environmental Building Strategies
in Energy, Green Building, Uncategorized
Tags: Cap and Trade, Government Mandates, Green Building
HR 2454 or the Waxman-Markey bill, named after its two major supporters Henry A. Waxman and Edward J. Markey of the Energy and Commerce Committee, was passed in the US House of Representatives on June 27. Its major mandate is a cap and trade system though it does have other green practices scattered throughout. There has been a lot of talk recently, because of this bill, of the viability of a cap and trade system in the US. To evaluate the government’s ability to implement this new system we have to first understand it.
The basics of a cap and trade are fairly simple. It is a way to limit emissions through a credit system. Every business acquires a certain amount of credits; depending on the type of system these credits are either auctioned off or given away by the government. These credits represent the amount of carbon that businesses can emit. If the business cannot adhere to the limit of emissions their credits allow, they must buy credits from companies who are below their cap. Thus the companies who are responsible and limit their emissions are rewarded and those who are not as environmentally friendly are punished.
With this particular cap and trade system only 28% of the credits would be auctioned off over the next ten years. The other 72% will be given away for free, especially to heavy users of coal and other fossil fuels to help them cope with the change. The auctioning of the 28% will generate an estimated 276 billion dollars, which will be distributed to a range of places. Low and middle income families will receive money to help them deal with the increases prices passed down as a result. Big carbon emitters will also receive money on top of getting a good chunk of the free credits.
Where the trouble begins
The specifics of the cap and trade system embedded in HR 2454 are a little troubling. Understand that many businesses with currently high carbon emissions are going to have a hard time adjusting to meet the new standards, but giving them free credits is not the way to go. Auctioning off all the credits would generate government revenue – money that could be distributed to more of the people hardest hit from the resulting increase in prices of energy and goods. Maybe this increase in rebates would quell some of the opposition to the bill.
Besides implementing a cap and trade policy, the bill mandates a 17 percent cut in greenhouse gas emissions by 2020 and an 87% reduction by 2050. Considering the mandates being implemented in California and 21 other states (for instance, buildings will use net zero energy or have net zero carbon emissions by 2030), these reductions do not seem extreme.
The public response to this bill has not been good. Googling the bill generated several articles: almost all were in opposition. Sadly, people tote it as another method Obama has found to increase taxes. They claim it is an unnecessary step to solve a group of alarmists’ wild and false theory, Global Warming. Without arguing the validity of Global Warming, one friend put it to me this way:
“If the believers are wrong and Global Warming is not true then we have implemented changes that will improve our environment and the Earth, if the naysayers are wrong and Global Warming does exist and we do nothing, our cities are underwater.”
The United States is the economic leader of the free world and the most powerful nation on the globe, but we have never been a leader on sustainability. We haven’t signed on to the Kyoto Protocol, we have very few “Green” standards in place, and per capita we emit the most carbon out of any country in the world (19.6 metric tons/person/year compared to 3.7 tons/person/ year from second place China).
Many people claim we are alone in this ever-growing crusade to save the Earth. Interestingly, they claim Europe has given up on sustainability because it is not feasible and unnecessary. Amazing how facts can become so skewed. Not only has the EU accepted the Kyoto Protocol, they have also implemented strict green building standards, emissions limits for cars and many European Countries already have an existing cap and trade system in place. Interestingly, they implemented all of these environment-saving standards with their economies intact…
The US has always lagged behind Europe and other developed nations when it comes to environmental conservation measures. Though this bill is flawed it is a positive step forward in its intent and its power to reduce emissions. Nation-wide opinions need to change on the role of sustainability in our society and hopefully the success of this bill can be the catalyst.
–The EBS Team–
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