Mr. Poad

Eco-Friendly Practices

Planning for Green Legislation: State-Level Mandates a Preview for Smart Hoteliers

By Jim Poad, Director of Client Solutions, Advantage IQ

Government regulation of carbon emissions is slowly, but surely becoming a reality. Whether the federal government will demand a cap on greenhouse gas emissions, or require offsets and purchase of clean energy, is no longer an "if" but a "when." These changes are coming and promise to revolutionize the way America does business over the next few years.

The first businesses to feel the immediate effects of pending federal legislations will be the energy producers, and in turn, every energy consuming business. Regulations on carbon emissions production and requirements to be greener can be safely associated with higher costs and higher prices for end consumers. Companies who purchase energy to operate multiple sites, like big box retailers, restaurant chains, and hotel chains should take a close look at changes happening at the state level to be prepared for the day when their own states' energy producers are expected to meet similar guidelines, and they in turn see prices jump.

More than half of the continental United States is now either a member of, or observer of, a regional climate initiative, including the Western Climate Initiative, Midwestern Regional GHG Reduction Accord, or Regional Greenhouse Gas Initiative. Many state governments have already passed legislation, targeting industry, to reduce greenhouse gas emissions. The majority of noteworthy regulations set emissions standards for power plants-the biggest contributors of climate changing carbon emissions. Some states have set forth goals for statewide emissions reductions and enacted regulations on vehicular emissions and environmental impact of new construction. These states are taking legitimate action as a precursor to pending federal mandates.

Savvy business owners will pay attention to state-level legislation in place around the country. It's the perfect preview of what will likely come to their state, and in some instances even be required of them in coming years. California, Massachusetts, New Mexico, and Washington can all provide useful examples of state level initiative taken to address greenhouse gas emissions.

California

California, which is the second largest producer of greenhouse gases, behind only Texas, has taken serious action at the state level to get their emissions under control. The state has issued an Energy Action Plan (EAP), which states that "in meeting the state's energy needs, it would first invest in energy efficiency and demand-side resources, followed by renewable resources, and only then in clean conventional energy supply."

Having passed the Global Warming Solutions Act of 2006, the bill sets an economy-wide cap on California greenhouse gas emissions to 1990 levels with a deadline of 2020. This aggressive goal represents approximately an 11 percent reduction from current emission levels, and a 30 percent reduction from the level it is projected the state would reach by 2020 with no action taken. California's action on this front is a landmark; this was the first statewide program in the country to mandate an economy-wide emissions cap that includes enforceable penalties.

The California Public Utilities Commission (CPUC) enacted a policy based on state legislation that requires the Public Utilities Commission and the Energy commission to implement an emissions performance standard for all retail providers of electricity in the state. For any long-term commitment (defined as five years or longer) to buy or build generation to serve California retail customers, emissions must be limited to 1,100 pounds of CO2 per MWh of electricity delivered. California is a member of the Western Climate Initiative.

Massachusetts

Massachusetts has long been a leader on the emissions reduction front. In 2001, it became the first state to require an existing power plant to reduce CO2 emissions. This same year, the state signed The Climate Change Action Plan, agreeing to reduce its statewide greenhouse gas emissions to 1990 levels by 2010-10 percent below 1990 levels by 2020 and 75-85 percent below 2001 levels in the long term.

Today, all new building projects including generation plants, businesses, and factories must propose measures to reduce greenhouse gas emissions in the Environmental Impact Assessment. Massachusetts is also a member of the Regional Greenhouse Gas Initiative (RGGI).

New Mexico

New Mexico has established a few different regulations to help their ultimate goal of reducing emissions to 2000 levels by 2012-10 percent below 2000 levels by 2020 and 75 percent below 2000 levels by 2050. The state has established that all new power plants must consider the cost of greenhouse gas emissions at the price of $8, $20, and $40 per tonne of carbon dioxide emitted in their long-term planning for power. This allows them to determine the impact the emissions will have on the price of electricity produced.

In addition, New Mexico requires that all public buildings over 15,000 sq. ft. have a LEED Silver certification. The Leadership in Energy and Environmental Design (LEED) Green Building Rating System was developed by the U.S. Green Building Council (USGBC) to set standards for environmentally sustainable construction. To reach the Silver level of certification, building projects much earn 33-38 of the possible 69 points for green building practices and design.

Washington

Another member of the Western Climate Initiative, Washington state committed to reduce statewide emissions to 1990 levels by 2020-25 percent below 1990 levels by 2035 and 50 percent below 1990 levels by 2050. The state requires new power plants to offset approximately 20 percent of their anticipated carbon dioxide emissions, and King County and the City of Seattle require companies to quantify greenhouse gas emissions.

Washington also has LEED certification requirements. All capital-funded projects over 5,000 square feet must meet qualifications for LEED Silver certification.

Projections

There are now 18 states that seek to cap carbon dioxide emissions for industry, and another 25 states in support of mandates for renewable energy. The states appear to be leading by example when it comes to taking the initiative with regards to energy and emissions reductions, use of renewables, and sustainable practices. As of late, there have been some widely publicized rifts between state and federal government about everything from how much and what types of renewables are appropriate, what are acceptable levels of carbon emissions, what reductions are reasonable, what timeframe is realistic to reduce emissions, and how to fund these initiatives. Working through the intricacies of a wide scale program to reduce national carbon emission levels will take time.

Within the year, we will begin to see additional states take voluntary steps to understand the impact of their carbon footprints and determine what action, if any, they will take. At the national level, it is a big ship to turn as the carbon dioxide producing industries now under the lens are the foundation of this country's economy.

What Businesses Can Do

For hotel business owners and operators, it's important not to rush into a plan for purchasing renewable energy or starting a carbon offset program without a well thought out strategy. Launching a sustainable endeavor without a plan can leave your company exposed to public scrutiny, or even worse, a costly fraudulent renewable purchase.

Carbon consultants recommend beginning the process by finding out what your specific carbon footprint is and where your carbon exposure lies. Doing so will identify whether you have a carbon emission problem to be concerned about, and if so, how severe. Once you know whether you need to address an emission issue, the next step would be to determine a percentage of emissions you would like to offset, and by when. Most companies are taking this step one year at a time, and many for the benefit of public relations.

Customers, stakeholders and investors who pay close attention will know whether you are doing this for the PR or for environmental reasons, by watching what you do on a yearly or year-round basis. If your company is truly serious about going green, it's recommended you develop a minimum of a two- or three-year renewable energy strategy upfront to show you are committed to establishing more sustainable business practices and not greenwashing your business for marketing value.

Because the renewable energy market is so new, it's like the "Wild West" as far as regulations are concerned. Make absolutely sure you are working with a reputable company that can back up your purchases with verification paperwork, and don't be afraid to ask a lot of questions. A good carbon consultant will take a reasonable, well thought out approach to your environmental commitment. If what you are about to do seems like its happening too fast, or the purchase feels too expensive or overwhelming, it probably is. Don't move forward with any commitments or purchases unless or until you and your company feel comfortable with what you are about to do.

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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