Mr. Poad

Eco-Friendly Practices

New Administration, New World for Going Green

By Jim Poad, Director of Client Solutions, Advantage IQ

In January, the United States inaugurated its forty-fourth commander in chief and ushered in what's largely considered to be a landmark administration. President Barack Obama, Vice President Joe Biden and their cabinet, have promised sweeping policy changes in several areas.

Among the list of Obama's priority issues are the economy, healthcare, foreign policy, and of course energy and the environment as global climate change is one of the fastest growing points of anxiety for America. His plans to address global climate change caused by carbon emissions have been intensely analyzed by policy makers and the media.

For business operators who have launched green initiatives or incorporated them into their 2009 budget, it is important to consider how changing energy policy could potentially affect plans to go green. In general, the proposed policies will make green initiatives more of a financial priority for businesses. At the same time, more businesses will be able to meet newly set emission standards with access to cheaper green energy and efficiency technologies.

Proposed Energy Policy and Effects

The proposed energy plan features two key plans of action with the potential to dramatically affect the way American businesses consume energy: A $150 billion investment in clean energy and energy efficient technology over the next ten years, as well as a plan to implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions.

"Show Me the Money" An infusion of $15 billion a year, while not enough to solve the environmental crisis at hand, is a solid start. This much needed investment will drive innovation in renewable energy and clean, efficient technology.

On the renewable energy side, those planning to draw from sustainable energy sources in the coming years can hope to see innovation in the development, storage and distribution of solar, wind, and geothermal power. In the coming years, assuming this investment does indeed foster growth in the renewable energy industry, business operators will see prices of renewable energy fall.

What are a few of the areas that deserve investment in research?

• Battery technology is critical. The ability to economically store electricity from wind farms to minimize transmission line investment, as well as, smaller scale batteries for small scale solar application will improve the cost effectiveness of these two technologies.

• The next generation of solar cells has set new efficiency records in the laboratory and hold high promise to significantly reduce the current cost of solar power.

• Turbines for lower wind resources will open new areas for wind development which are closer to population centers, thus lower the cost of transmission. Smaller scale wind turbines will be beneficial to on-site consumer projects.

Many in-house energy managers cite cost as the number one reason they haven't yet incorporated renewables into their energy load. Especially in this economy, your average business doesn't have the wiggle room to trade up for clean energy, but as the rules of supply and demand dictate, when prices fall, consumption will rise. This innovation will make green energy more accessible to businesses.

For those businesses already purchasing green energy, they'll have the opportunity to incorporate even more into their energy load, and further reduce their carbon output.

Putting a Cap on Carbon

Obama's proposed economy-wide cap-and-trade system, like his plan to invest significantly in R & D in the green energy industry, aims to drive innovation. By placing a cap on carbon emissions, American businesses of all sizes will have to consider their carbon output, and take action to reduce it. Those above the cap would be forced to change the way they do business. They'll invest in clean technology that increases efficiency, reduces carbon emissions and minimizes consumption, purchase renewable energy, or trade their carbon surplus with businesses that are over their limit. In the short-term, businesses are more likely to trade in order to meet regulations, but in the long-term, it will make more economic sense for businesses to give themselves a green facelift to get under the limit.

The Renewable Energy Certificate Option

When a business has done everything it can to reduce its energy consumption and carbon output, there is the option to purchase Renewable Energy Certificates ("RECs") to address their carbon footprint.

For every kilowatt hour of electricity generated by a renewable energy source (wind, solar, etc.) there is an environmental attribute that is created based upon the avoided environmental cost of emitting harmful carbon dioxide into the atmosphere. By purchasing RECs, companies can off-set their carbon emissions without making sweeping behavioral or policy changes within the organization. RECs can provide a quick way to integrate renewable resources into your energy profile.

Assuming the government would still allow REC purchase in the case of a cap-and-trade system, there will likely be a limit on the amount of carbon output that can be offset by purchasing RECs, as this solution skirts around the real issues. But it will be a popular way for businesses to meet carbon emission limits, especially in the early days of a cap-and-trade system.

Emissions Measurement and Reporting

Accurate measurement and reporting of energy consumption and carbon emissions will be more important when the government is enforcing a carbon emission cap.

Understanding how your business uses energy is the starting point in managing carbon emissions. Installation of utility meters to track consumption will be much more prevalent. Utility invoices are another great source of the energy consumption data that easily converts to emissions output, commonly reported as carbon dioxide equivalents (CO2e). Having a tool to track energy consumption and its associated CO2e will create the foundation for benchmarking the effects of energy conservations measures over time.

The best way to curb carbon emissions is by using less energy. There is a lot that can be done to reduce energy consumption. Companies like Advantage IQ, who provide energy consulting services, understand where and when organizations have excessive energy use. Through solid, data-driven energy management practices, businesses can identify meaningful areas of improvement and take action. These include low-cost activities such as improving operational practices, benchmarking building portfolio performance for outlier identification, and implementation of equipment and building construction standards.

The policies proposed by the new administration will begin the long process of changing the consumption behavior of American businesses.

Jim Poad, a 30-year energy industry veteran, serves as Director of Client Solutions for expense and energy management firm, Advantage IQ. In this capacity, Mr. Poad is responsible for developing and directing the Company’s energy management programs on behalf of clients. He works with clients to develop and implement a customized strategy to better manage energy usage, reduce overall operational costs, and meet overriding corporate objectives. He has helped clients save millions of dollars through the implementation of supply-side and demand-side initiatives. Mr. Poad can be contacted at 608-755-1650 or jpoad@advantageiq.com. Extended Bio...

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