Blue vs. Grey Over Green in Murray v. EPA; Cross-Border Rule Goes Ahead

Happy Monday!  

As I posted earlier, in Murray, et al v. EPA , plaintiff Murray Energy Corporation seeks to enjoin EPA's Clean Power Plan rule even before it has been issued as a Final Rule.  The Clean Power Plan proposes to regulate the carbon emissions of existing power plants under the Clean Air Act. 

 Last week, the states of New York, State of Connecticut, State of Delaware, State of Maine, State of New Mexico, State of Oregon, State of Rhode Island, State of Vermont, State of Washington, Commonwealth of Massachusetts, District of Columbia filed notice of their intention to participate as amicus curiae 

In June, Alabama, Kentucky, Oklahoma, South Carolina, West Virginia, Alaska, Nebraska, Ohio and Wyoming also filed an amicus brief in this case.

Assuming that the northeastern states support the Clean Power Plan, it sets up a sort of "Blue v. Grey over Green" battle, with the western states thrown in as well.   

There was also an interesting decision in the D.C. Circuit last week, lifting a stay on the EPA's Cross-Border Pollution Rule.  But, additional issues remain to be resolved in the DC Circuit case, so there will likely be more action on this critical rule.    

DOE Issues Final Rule on Federal Green Building Standards

The Federal government has long been a leader in constructing green buildings, and LEED has been the Federal standard of choice. The Department of Energy issued a final rule updating its recommended certification standards and levels for all Federal buildings on October 14, 2014. 

The Final Rule does not tell Agencies which rating system to use.  Rather, if the Agency chooses to use a rating system, such system must meet the following characteristics:

  1. Allow assessors and auditors to independently verify the criteria and measurement metrics of the system;
  2. Be developed by a certification organization that (i) provides an opportunity for public comment on the system, (ii) provides an opportunity for development and revision of the system through a consensus-based process;
  3. Be nationally recognized within the building industry;
  4. Be subject to periodic evaluation and assessment of the environmental and energy benefits that result under the rating system; and 
  5. Include a verification system for post occupancy assessment of the rated buildings to demonstrate continued energy and water savings at least every four years after initial occupancy. 

Sounds a lot like LEED to me, so unless something else comes into the marketplace, Federal buildings are likely to use the LEED standard.

The DOE's rule is based, at least in part, on a General Services Administration (GSA) report on green building rating systems issued on October 25, 2013, and available here.  The GSA recommended LEED-2009 Silver or 2 Green Globes v 2010.  It also contained a variety of other recommendations, including keeping current with the rating systems as they evolve. 

The GSA's recommendation is an interesting one for two reasons:

(1) the GSA requires its buildings to be LEED Gold, and

(2) the recommendation was not supplemented to recommend LEED v4, even though the GSA did evaluate LEED v4. 

Since the Final Rule does not have a recommended rating system, and most agencies are unlikely to parse whether a particular rating system other than LEED complies with these characteristics, the GSA's recommendations are likely to become the Federal default.  

 

Can Utility Energy Efficiency Programs Make "MPGs" for Homes Mainstream?

 I was at a presentation by the Department of Energy on Wednesday (hosted by the Northeast Energy Efficiency Partnerships) where they reviewed the status of their Home Energy Score program.  Like the fuel economy stickers on cars, these systems aim to create easy to understand energy ratings for buildings. 

The idea is grounded in basic human behavior--if people know how much energy a building uses and how much money they can save, they will purchase more energy efficient homes and/or invest in energy efficient retrofits.  Several cities have begun to harness the power of energy transparency for commercial buildings through benchmarking laws.  The Institute for Market Transformation has a map of jurisdictions with these laws here. 

However, while long called for, this type of program has not really gotten off the ground for small commercial or residential buildings.  The resistance has been strongest from the National Association of Realtors, who believe that such information would prejudice buyers against certain houses. The National Association of Realtors' position on energy efficiency and disclosure is available here.

There are really only two ways to overcome this resistance--make the disclosures mandatory as part of the owner's disclosures or to make them so common that purchasers demand them. 

Interestingly, some states, like Connecticut and Vermont, are considering incorporating these ratings into their utility energy efficiency programs.  Perhaps this is a way to get a sufficient number of houses benchmarked that it becomes a commonplace part of residential transactions.  

It would be even more interesting if states made residential benchmarking part of their programs under the new Clean Power Plan (the existing power plant carbon emissions rule).  That would help to reach the "tipping point" for residential energy use disclosure. 

Learning from Advocacy for Energy Efficient Building Codes

As the reaction to EPA's Clean Carbon Plan has demonstrated in living color, environmental regulation is tough in the United States in 2014.  For many years, there has been many efforts to use innovative tools to promote adoption and enforcement of energy efficient building codes.  I think there is a lot to learn from these efforts, as I discuss in my piece at RegBlog, the blog of the University of Pennsylvania Program on Regulation.  

Use the Construction Industry Model to Regulate the Sharing Economy

Welcome back from vacation.  To ease you back into the workday routine, I want to share a post I wrote for RegBlog, the blog of the University of Pennsylvania Program on Regulation, about regulating sharing economy companies like Uber, Lyft and Airbnb. 

In short, the most efficient route to regulating these companies is tweaking existing regulatory structures to accommodate these new models.  This has been the model for years in the construction industry--residential construction is regulated under the same scheme as commercial construction, but with different requirements. 

You can read the whole post here...

Can Don Draper Save The Planet? Plus a GIVEAWAY!

There have been memorable social marketing campaigns over the years--Smokey the Bear, the sizzling egg that is your brain on drugs and the coining of “Obamacare” come to mind. Now Grist reports that Martin Glaser, the advertising genius that came up with the "I Heart New York" logo, has turned his communications brilliance to Climate Change.  

As I said in my earlier post on the importance of communications to public policy, Madison-avenue style marketing should not be reserved for toothpaste and cell phone plans.  Policy, like anything else, needs to be sold to the public in order to be accepted and effective.

The slogan is "It's not warming.  It's dying." You can see the campaign here.  I like the slogan, it captures the urgency.  But more than the slogan, I like the graphic of a green circle being overcome by a black shadow.  I think it is quite effective

If Madison Avenue can get Americans to believe that 4 out of 5 dentists agree that sugar free gum is good for you, then hopefully Martin Glaser can improve Yale's survey finding that "only one in three Americans thinks people in the U.S. are being harmed “right now” by global warming in the United States." 

I am giving away a "It's Not Warming, It's Dying" to the first 5 people that Tweet this post! 

 

Can Don Draper Save The Planet?

There have been memorable social marketing campaigns over the years--Smokey the Bear, the sizzling egg that is your brain on drugs and the coining of “Obamacare” come to mind. Now Grist reports that Martin Glaser, the advertising genius that came up with the "I Heart New York" logo, has turned his communications brilliance to Climate Change.  

As I said in my earlier post on the importance of communications to public policy, Madison-avenue style marketing should not be reserved for toothpaste and cell phone plans.  Policy, like anything else, needs to be sold to the public in order to be accepted and effective.

The slogan is "It's not warming.  It's dying." You can see the campaign here.  I like the slogan, it captures the urgency.  But more than the slogan, I like the graphic of a green circle being overcome by a black shadow.  I think it is quite effective

If Madison Avenue can get Americans to believe that 4 out of 5 dentists agree that sugar free gum is good for you, then hopefully Martin Glaser can improve Yale's survey finding that "only one in three Americans thinks people in the U.S. are being harmed “right now” by global warming in the United States." 

 

 

The Slow Grind of Justice for EPA's Carbon Emissions Regulations

It was inevitable that EPA's Clean Power Plan, regulating carbon emissions from existing power plants was going to generate law suits.  Even if the suits are ultimately unsuccessful, an injunction against the Plan's adoption or implementation may slow or stop the EPA's ability to move forward for years. The wheels of justice grind slowly, after all.  

The first of these actions was filed on June 18 by Murray Energy, the largest privately owned coal company in the country (the complaint can be downloaded here). Murray alleged that EPA had exceeded its statutory authority under the Clean Air Act, and asked the D.C. Circuit Court of Appeals to stop the EPA from enacting the Clean Power Plan regulation.  A week or so later nine states — West Virginia, Wyoming, South Carolina, Ohio, Nebraska, Oklahoma, Alaska, Alabama, and Kentucky —petitioned to join the Murray Energy suit.

In essence, Murray is claiming that EPA and the states cannot double regulate power plants.  Certain specific "Hazardous Air Pollutants" from power plants are already regulated at the Federal level under Section 112 of the CAA.  Murray's argument is that Section 111(d), which allows state plans for regulation of emissions, only applies to sources that are not regulated under 112.  to interpret it otherwise would be to allow double, and potentially conflicting, regulation of the same sources.   

I wish I could say that the suit has no merit, but I cannot.  It is a close question, which is well analyzed here by Robert Nordhaus and Ilan Gutherz at the Environmental Law Institute.  My opinion is that EPA's authority to regulate will be upheld.  

However, the recent Supreme Court decision in Utility Regulatory Group v. EPA makes me wonder whether off-site energy efficiency programs and cap-and-trade protocols will be allowed as control technologies.  In the Utility Regulatory Group decision, Scalia all but invited a follow-up suit on the control technologies EPA chooses to implement its regulations, particularly energy efficiency:

We acknowledge the potential for greenhouse-gas BACT to lead to an unreasonable and unanticipated degree of regulation, and our decision should not be taken as an endorsement of all aspects of EPA’s current approach, no ras a free rein for any future regulatory application of BACT in this distinct context.

Regardless of the outcome of the suit, it simply should not be this hard to regular carbon.  EPA has been forced to take a challenging path to regulation because Congress has refused to act directly on this critical issue.  

I'm Not Dead Yet: Is coal doomed regardless of whether EPA regulates carbon emissions?

 I want to pass along three interesting articles I have read over the past day or so about coal's decline (or alleged decline) in the United States totally unrelated to EPA's recent proposed rule on carbon emissions from existing power plants. Here are the takeaways:

  1. From former Sierra Club CEO Carl Pope at EcoWatch:  Hundreds of years of mining existing coal seams has made coal harder and more expensive to extract.
  2. From Berkeley Professor Meredith Fowley at The Energy Collective: The low price of natural gas and limited opportunities for exports (at least not yet) has made it economically attractive to switch fuel sources. This article has some very nice graphs about the decline of coal as a fuel source. 
  3. From Rebecca Leber at the New Republic:  Retrospective of pro-coal ads shows that coal has been predicting its own demise for over 40 years. I especially love the 1976 Coal Ad about the OPEC energy embargo. 

Reading these articles reminds me a bit of the scene in Monty Python's Holy Grail about the bubonic plague.  Coal may be dying, but its not dead yet. 

 

Does The EPA Have A Thing Against Building Energy Codes?

What if there was a technology that had a 20 year track record of saving 4.8 quads of energy and 41 million tons of carbon, while saving consumers more than $44 billion over the past 20 years, and was anticipated to save consumers up to $230 billion on their utility bills, 53 quads of energy and 3,995 million tons of carbon from 2012-2040? 

What if the return on that technology was $400:$1--for every $1 of government program money spent, the return in cost savings was $400?

You would think that the EPA would have that technology at the top of its list of ways for states to reduce energy use and carbon emissions to comply with its new Clean Power Plan regulations. Instead, the EPA's response was "meh:"  

[Building energy codes*] might have substantial impact[], and the EPA does not want to discourage their implementation in state plans, but they might require development of appropriate quantification, monitoring, and verification protocols. The EPA and its federal partners intend to discuss the development of appropriate EM&V protocols for such measures with states in the coming years.

Federal Register, Vol. 79, No. 117, Wednesday, June 18, 2014 at 34921.

I don't know why the EPA seems to have a thing against energy codes.  Perhaps it is that energy codes do not require cool new technology like carbon capture.  They do not require states to implement new programs or hire new personnel, because all 50 states already have building codes in place, either at the state or municipal level.  Or maybe it is because when you go to a cocktail party and start to talk about building energy codes, people feel compelled to refill their plate of cheez-its.       

But what I do know is that the EPA's concerns about building energy codes seem to run contrary to recent scholarship and state experience with building energy code programs.  

Two recent publications—one from the Pacific Northwest National Laboratory and a joint study by the Northeast Energy Efficiency Partnerships, the Edison Foundation and the Institute for Market Transformation—have protocols for measuring and verifying building energy code program savings.  In addition, over 10 states have included building energy code programs in their utility energy efficiency programs, many of which include M&V protocols.  

Even if the EPA is correct that there is some uncertainty and variability in M&V of building energy codes, the evidence of energy and carbon reductions for other compliance pathways that EPA supports, like carbon capture and storage, are much, much less certain.  

You have until October 16, 2014 to submit a comment on the proposed rule, letting EPA know that building energy codes should be at the top of its list of compliance paths, not the bottom.  

* Building energy codes are  minimum  standards for energy efficient design and construction for new and renovated buildings.  Like all construction codes, building energy codes are adopted as law by states and municipalities, and enforced by building code officials.          

Greater Energy Efficiency Could Be An Unlikely Outcome of the Ukrainian Crisis

It seems like an odd “butterfly effect”—a plane shot down over Ukraine could boost energy efficiency?  But it is not as far-fetched as it seems. 

“Fuel switching”—changing power plants over to natural gas from coal—is one of the compliance paths for achieving the carbon emission reductions in the EPA’s proposed existing power plant carbon emissions reduction rule.  Fuel switching is expected to be a popular compliance path because power companies are already taking advantage of the economic attractiveness of cheap natural gas (vs. coal) to convert their power plants.  Natural gas conversions have been a significant contributor to the 15% decrease in carbon emissions since 2005.  

When the Ukrainian crisis first emerged this spring, discussions in Washington turned to accelerating natural gas exports in the event that Russia was either unable (due to sanctions) or unwilling to sell its NG to Europe.  The Energy Information Agency predicts that increased exports of natural gas will lead to lead to increased prices for natural gas domestically.  (See page 6 of the report).  

If the cost of natural gas increases, the comparative economic attractiveness of fuel-switching versus energy efficiency will change as well.  Energy efficiency applications that were previously not cost effective or more costly than fuel switching become more attractive.  As a result, states are likely incorporate more energy efficiency into their compliance plans than relying exclusively or largely on natural gas applications to achieve their emission reduction goals. 

Shari Founds Calliope Communications; Restarts GBLB

I have received a lot of requests for me to re-activate GBLB, which I am excited to do as part of my new venture, Calliope Communications.  

After 14 years in the corporate world, I founded Calliope to focus my work on research, policy development and cause marketing.  My practice will be largely dedicated to energy, environmental and construction issues, but my experience in these fields is also applicable to other highly technical areas involving complex regulatory environments.   

I look forward to (re)connecting with all of you and keeping you updated on the rapidly changing world of buildings and the environment.  

You can find out more about the consultancy at my website or contact me directly at shari@calliope-communications.com.  

Very best regards,

Shari

Mind Your Administrative P's & Q's When Rejecting Energy Code Changes

The Court of Appeals of the State of New Mexico handed down a limited win for energy code advocates, holding that adopting changes to building codes that removed energy conservation provisions without any justification violated administrative procedure. The decision is available here.

Between 2006 and 2012, the construction and energy codes adopted in many jurisdictions have incorporated provisions increasing the energy efficiency of buildings built to code by 30% (15% from the 2006 to the 2009 codes, and an additional 15% from 2009 to 2012). 

As I have posted about previously, there is a trend nationwide to resist adoption of the 2012 codes, in part based on the increased energy conservation requirements. In the case of New Mexico, the state had adopted codes which had energy conservation requirements beyond those in the 2009 energy codes. 

The New Mexico Construction Industries Commission (the "Commission") sought to adopt changes that would have removed any energy conservation provisions from the New Mexico codes that exceeded the 2009 International Energy Conservation Code (IECC).

The Commission held several public meetings and solicited public comments on the code changes.  Then, at a June 2, 2011 meeting, after a brief and (frankly) confusing statement by the Chair of the Commission, the Commission voted to adopt the code changes without further discussion.

Several groups including the Southwest Energy Efficiency Project, Environment New Mexico, several green builders, the Sierra Club and other sued to overturn the Commission's decision for (among other arguments) being "arbitrary and capricious" due to the Commission's lack of discussion and justification for the decision. 

The Court of Appeals held that the Court could not even determine whether the Commission's decision was valid because the Commission failed to provide "what facts and circumstances were considered and the weight given to those facts and circumstances."  Southwest Energy Efficiency Project v. New Mexico Construction Industries Comm'n, No. 313838, April 4, 2013 (N.M. Ct. Appeals) at 10.  The Court remanded the Codes to the Commission for reconsideration, with a justification of its reasons for its decision. 

The reason why I characterize the decision as a "limited win" is that, assuming that the Commissioners are the same, there is no reason why the decision on the code adoption will change. If the code revisions are again adopted, with justification, the Plaintiffs will have to institute another legal action, and demonstrate that the justification provided by the Commission is arbitrary and capricious. 

However there may be value to the plaintiffs simply by filing the suit and making the Commissioners justify to the citizens of New Mexico in writing why the homes they live in should not be energy efficient. 

Pennsylvania Executes one of the First Residential Energy Efficiency Loan Bundling Transactions

After long and diligent work, my own Commonwealth of Pennsylvania announced last week that it had successfully bundled 4,700 residential energy efficiency loans, and obtained $23 million in cash and $8.3 million in deferred payments, for a projected total of $31.3 million.  The press release is available here.

This is a holy grail of sorts.  People have been saying for years that energy efficiency loans should be able to be bundled and sold, a la mortgages and credit card loans. In theory, bundling the loans would allow private capital to invest in pools of energy efficiency loans, as opposed to individual projects, injecting more capital into the market for energy efficiency upgrades and lowering the interest rates.

Although it seemed like a workable idea, few before the Pennsylvania Treasury had accomplished it.  Energy efficiency loans were considered too weird, too complicated, too risky, etc. to be bundled.  Most critically, financial institutions mostly considered energy efficiency loans to be too risky because there was an insufficient amount of data on energy efficiency loan defaults.

In light of these issues, the Pennsylvania transaction still does not really recognize energy efficiency loans as a unique asset class.  By this I mean that the stream of income from the saved energy is not being recognized as part of the transaction.  As far as the investors are concerned, the loans could be for HVAC equipment or Manolo Blahniks, they are all just unsecured consumer loans.  In addition, Treasury still had to put up significant credit enhancements to make the loan pool desirable. 

In addition, the transaction took a long time and had high transaction costs.  A private entity probably would not have had the resources or perservernce needed to cross the finish line.  Future transactions will need to be more standardized, both with in terms of assets and documentation.

Nonetheless, the Pennsylvania transaction and the many lessons its staff learned along the way may be a very important step in accessing greater pools of capital for energy efficiency.   

 

Join me at the PA/NJ Sustainability Symposium on March 12

For all my Pennsylvania and New Jersey fans, I will be speaking at the third annual PA/NJ Sustainability Forum on March 12, 2013.  To get more information and register click here.

The half-day forum will bring together over 600 industry, education and community leaders to share best practices, address challenging issues and provide cutting edge information about sustainability in the Delaware Valley. 

My panel will cover:

Codes and Disclosure Mandates: The key to market transformation?

The other members of my panel are: 

• Katherine Gajewski: Director, Mayor’s Office of Sustainability, City of Philadelphia
• Cliff Majersik: Executive Director, Institute for Market Transformation
• Priscilla Richards: Program Manager, New Construction, NYSERDA

In addition, Mayor Michael Nutter and Rob Powelson, Chairman of The Pennsylvania Public Utility Commission will be keynote speakers.

The details are as follows:

Tuesday, March 12th, 2013
7:45 AM - 1:30 PM

Temple University
Performing Arts Center
1837 North Broad Street
Philadelphia, PA 19122