Mr. Kiesner

Eco-Friendly Practices

An Efficient Approach for Climate Change

By Steve Kiesner, Director of National Accounts, Edison Electric Institute

The widening public debate over what the U.S. should do to reduce its carbon dioxide (CO2) and other "greenhouse" gas (GHG) emissions is creating welcomed awareness about how important it is to use energy more efficiently.

Getting the most use out of every therm of natural gas and kilowatt-hour of electricity a home or a business buys can help the country to lower its GHG emissions. And as every successful hotel company knows, it can improve the bottom line as well.

Advanced, energy-efficient technologies are the key for cutting emissions and saving money. With Congress now drafting legislation to reduce the country's GHG emissions, we are urging it to adopt a technology-driven approach that is economy wide and keeps energy affordable, which will benefit both consumers and the nation's competitiveness alike.

We also encourage you to specify energy-efficient technologies whenever you are building, remodeling, or just replacing light bulbs. Besides their cost savings and environmental benefits, energy efficient climate-control, water heating, cooking, and lighting systems will also create a building that is more comfortable and productive for guests and employees alike.

According to the U.S. Department of Energy (DOE), if you incorporate energy- and resource-efficient technologies from the start of a building project, you can earn energy savings up to 50 percent compared to traditional hotel designs. Renovations to existing hotels-replacement of inefficient boilers, lighting, and other systems-can save up to 30 percent on annual energy costs. Even implementing no-cost and low-cost solutions can yield savings up to 10 percent or more.

I encourage you to learn more about the high tech advances in equipment and building design. There are many resources to guide and even reward you, including your electric utility.

One source for more information on improving your company's efficiency is the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program. The U.S. Green Building Council (USGBC) is the nation's foremost coalition of leaders from every sector of the building industry working to promote buildings that are environmentally responsible, profitable and healthy places to live and work. The Council's LEED program is the nationally accepted benchmark for the design, construction, and operation of high performance green buildings.

LEED promotes a whole-building approach to sustainability by recognizing performance in five key areas: sustainable site development, water savings, energy efficiency, materials selection, and indoor environmental quality. For more information on LEED, please visit the Green Building Council's Web site -- www.usgbc.org

Another resource for you is the U.S. Environmental Protection Agency's (EPA) ENERGY STAR program. ENERGY STAR is a voluntary program that gives businesses and institutions information, tools, and other assistance to improve their energy efficiency. According to EPA, reducing energy use by just 10 percent across the hospitality industry would save $285 million.

By partnering with ENERGY STAR, your organization can also get the recognition it deserves through a variety of promotional opportunities with EPA. This will help you highlight your company's energy-saving achievements within the organization and to the public. For more information on ENERGY STAR, please visit: www.energystar.gov

Electric utility energy efficiency programs and services are another resource for help in becoming more energy efficient. Electric utilities have been offering efficiency-related services since the early 1970s. And these efficiency efforts have made a difference.

From 1989 to 2005 alone, electric utility efficiency efforts saved more than 796 billion kilowatt-hours of electricity-enough to power nearly 74 million average U.S. homes for one year, according to the U.S. Energy Information Administration (EIA). These savings are equal to the annual electricity output of slightly more than 336 baseload power plants (rated at 300 megawatts each).

All electric utilities have free, energy-saving advice. Many utilities also offer incentive programs to encourage businesses to use electricity more efficiently. These can include:

The federal energy law, the Energy Policy Act of 2005 (EPAct), complements the utility industry's efficiency efforts with its own energy-efficiency initiatives. EPAct contains a variety of measures that can help businesses and consumers use their energy more efficiently. One is setting higher energy-efficiency standards for new commercial products that use large amounts of energy.

EPAct contains a variety of tax deductions and credits to encourage businesses to purchase high efficiency products and appliances. For example, commercial buildings that are built to exceed by 50 percent the energy efficiency rating of a "baseline" building in the American Society of Heating Refrigeration Air Conditioning Engineer's (ASHRAE) building code 90.1-2001 can qualify for a tax deduction of $1.80 per square foot.

If the whole building does not reduce energy use by 50 percent compared to that standard, it can still qualify for a tax deduction of $0.60 per square foot per "sub-system". There are three eligible sub-systems: interior lighting; heating, cooling, ventilation, and hot water systems; and the building envelope (essentially everything that separates the inside from the outside). These sub-systems must exceed the energy efficiency of a "baseline" sub-system in the ASHRAE 90.1-2001 building code. The window for these incentives is scheduled to close on December 31, 2008.

To get the deduction, the U.S. Department of Energy (DOE) has determined the energy and cost calculation requirements (based on the guidelines of the 2005 California Nonresidential Alternative Calculation Method Approval Manual). DOE has approved "qualified computer software" to use for these calculations. There is also a certification process that has been defined by DOE, which mandates inspection and testing by qualified individuals, meaning contractors or engineers who licensed in the jurisdiction where the building is located.

One caveat to this is that ASHRAE has published new commercial building codes: 90.1-2004 Standards. The International Code Council also updated its Energy Conservation Code in 2003 (IECC 2003). At least 20 states have adopted ASHRAE 90.1-2004 or IECC 2003. And both are more stringent than 90.1-2001.

I encourage you also to check to see if the state(s) you operate in has already adopted the 2003 or 2004 codes. If they do have the codes, the buildings are already more efficient and may qualify for the lighting portion of the tax deduction.

As with the other tax credits and deductions, you also should try to combine the federal credits with any applicable utility or state incentives. EEI has a list of electric utility incentive programs at:
http://www.eei.org/industry_issues/retail_services_and_delivery/wise_energy_use/programs_and_incentives/progs.pdf

Two good web sites that show state programs are DOE's Energy Efficiency and Renewable Energy site:
(http://www1.eere.energy.gov/femp/program/utility/utilityman_energymanage.html);
and the Consortium for Energy Efficiency (www.cee1.org/com/bldgs/bldgs_ps2005.pdf).

Based on the amount of money set aside, the best states for incentives are: Northwest (WA, OR, ID, MT), Northeast (NY, NJ, and ME), Upper Midwest (MN, WI, IL, and IA), CA, and Florida.

EPAct is also offering federal tax credits for on-site distributed generation systems-solar energy, microturbines, and fuel cells-that meet certain efficiency requirements. Although discussions are underway to extend them, the deadline for tax credits now is December 31, 2007. Businesses can find more details about the tax credits and deductions available through EPAct at www.energytaxincentives.org

The climate change debate is heating up. One solution must be using our energy more wisely. I encourage you find out more about how efficient technologies can help your company not only reduce GHG emissions, but also become more competitive.

Steve Kiesner is Director of the Edison Electric Institute’s National Accounts Program. Based in Washington, D.C., Edison Electric Institute (EEI) is the association of United States shareholder-owned electric companies, international affiliates and industry associates worldwide. Our U.S. members serve approximately 90 percent of the ultimate customers in the shareholder-owned segment of the industry, and nearly 70 percent of all electric utility ultimate customers in the nation. They generated almost 70 percent of the electricity generated by U.S. electric utilities. Mr. Kiesner can be contacted at 202-508-5000 or skiesner@eei.org Extended Bio...

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