Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

Today, Senator Kent Conrad (D-N.D.) introduced a "comprehensive energy bill" entitled the "Fulfilling U.S. Energy Leadership Act" or "FUEL."  The bill is available for download here. 

According to his press release:

Senator Kent Conrad today introduced comprehensive energy legislation intended to lessen America's dependence on foreign oil, reduce gas prices, and strengthen the national economy.  [The FUEL Act] is a blueprint for a national energy policy that would support domestic oil and gas production, including an environmentally responsible expansion of offshore activity, while also investing in the development of renewable fuels. The bill also promotes more alternative fuels and clean sources of electricity, including clean coal, and nuclear energy.

Regardless of the other positive things the FUEL Act may contain to achieve all of these ends, the bill has almost no provisions that address building energy efficiency, and mostly they simply extend the incentives already in place until 2016.  The only provisions for building energy efficiency in the FUEL Act are Section 601 and 611-614:

Section 601--Authorizing $4.9 billion for the Rural Utilities Service to provide interest-free loans to rural electric cooperatives to provide low interest loans to qualified consumers to implement energy efficiency measures.

Section 611--Increasing to $3.00 and extending through 2016 179(d), the commercial energy efficient property tax credit;

Sections 612-614--Extending through 2016 the existing tax credits for energy-efficient homes and appliances;

According to a McKinsey report, energy efficiency is one of the most cost-effective ways to minimize the dependence of the United States on foreign oil and reduce greenhouse gas emissions. Increasing building energy efficiency in the United States by 23% by 2020 would :

• Reduce end-use energy consumption by 9.1 quadrillion BTUs, roughly 23% of projected energy demand;
• Eliminate more than $1.2 trillion in waste—well beyond the $520 billion upfront investment (not including program costs) that would be required;
• Result in the abatement of 1.1 gigatons of greenhouse-gas emissions annually—the equivalent of taking the entire US fleet of passenger vehicles and light trucks off the roads.

Despite these facts, it appears that energy efficiency is still the red-headed step-child of energy policy.  It is true, appliance standards, building codes, loan guarantees for energy efficient buildings and other solid energy efficiency proposals are not as sexy as electric vehicles or as viscerally connected to what people pay at the pump.  On the other hand, a cost-effective and achievable 23% reduction in fossil fuel usage should be at the forefront of national energy policy.  

I hope there is a larger strategy at play.  To the extent that Conrad's bill may get bogged down in politics about fossil fuels, subsidies, domestic drilling and so forth, it may be an advantage that many of the energy efficiency policy proposals contained in ESICA, the energy efficiency bill introduced last month by Senators Shaheen and Portman (described in further detail here) were not rolled into the FUEL Act.  If the FUEL Act does become the leading energy policy, I recommend incorporating the programs in ESICA to make the FUEL Act a more complete energy package.   

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I posted last week that the Deepwater Horizon Spill might be a "Love Canal" moment spurring federal environmental legislation.  I am not the only one who thinks so. According to EE News (subscription required):

About two-thirds of respondents believed that Congress needs to take action that will be "more than a Band-Aid" and to "pass real reforms to hold polluters accountable and invest in clean American energy," according to the poll, which was conducted by Benenson Strategy Group and released by the League of Conservation Voters and the Clean Energy Works campaign, a coalition that includes environmentalists, labor unions and a number of other interest groups.

Public outrage + environmental disaster = regulation.  Stay tuned.

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Last week, Senators John Kerry and Joseph Lieberman debuted the American Power Act, their Senate compromise energy bill which was supposed to be nominally bipartisan, until Lindsey Graham decided to back out at the last minute. Among the compromises that Kerry, Lieberman and Graham appear to have made is to gut energy efficiency provisions from the Act.

Technically, provision for energy efficiency, and the building code, it is still nominally there, in Section 1603 of the draft bill, on page 199 for those of you following along at home. However, it looks nothing like the versions in Waxman-Markey and prior senate versions. In the Kerry-Lieberman version, states are allocated between 2.5% and 1% of all green house gas emission allowances. Of that allocation, .5% must go to Indian Tribes. With the remainder, the states may use for a variety of programs, including energy efficiency, renewable energy and transportation. Specifically:

1) Energy efficiency purposes, including implementation of programs related to—
(A) building codes that improve energy efficiency;
(B) energy-efficient manufactured homes;
(C) building energy performance labeling;
(D) low-income community energy efficiency improvements; and
(E) energy efficiency retrofits of existing buildings.

(2) Renewable energy purposes, including—
(A) deployment of technologies to generate electricity from renewable energy sources; and
(B) deployment of facilities or equipment, such as solar panels, to generate electricity or thermal energy from renewable energy resources in and on buildings in an urban environment.

(3) Cost-effective energy efficiency programs for end-use consumers of electricity, natural gas, home heating oil, or propane, including, if appropriate, programs or mechanisms administered by local governments and entities other than the State.

(4) Enabling the development of a Smart Grid (as described in section 1301 of the Energy Independence and Security Act of 2007 (42 U.S.C.14 17381)) for State, local government, and other public buildings and facilities, including integration of renewable energy resources and distributed generation, demand response, demand-side management,and systems analysis.

(5) Providing the non-Federal share of support for surface transportation capital projects under—
(A) sections 5307, 5308, 5309, 5310, 5311 and 5319 of title 49, United States Code; and
(B) sections 142, 146, and 149 of title 23, United States Code; except that not more than percent of allowances distributed to each State pursuant to this section shall be used for the purposes described in this paragraph.

The distribution among the states will be based on a complex formula:

(A) 1⁄3 of the allowances shall be divided equally among the States.
(B) 1⁄3 of the allowances shall be distributed ratably among the States based on the
population of each State, as contained in the most recent reliable census data available from the Bureau of the Census of the Department of Commerce, for all States at the time the Administrator calculates the formula for distribution.
(C) 1⁄3 of the allowances shall be distributed ratably among the States on the basis of
the energy consumption of each State, as contained in the most recent State Energy Data
Report available from the Energy Information Administration (or such alternative reliable
source as the Administrator may designate).

Essentially, Kerry Lieberman took the best, easiest and cheapest means of reducing greenhouse gas emissions—through energy efficiency—and gave them the very short end of the stick, meanwhile allocating the vast majority of federal resources to cap and trade. Is this a good compromise?
 

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Kerry and Lieberman are due to unveil their long awaited--and until Lindsay Graham's recent exit, nominally bipartisan--cap-and-trade bill this week.  But in a less heralded move, Harry Reid indicated that he could do a smaller energy bill which would likely include national energy efficiency codes.  According to EENews (subscription required):

The "smaller" proposal Reid referred to centers around legislation (S. 1462) the Senate Energy and Natural Resources Committee approved last June. The bill, which won the votes of four Republicans, would impose a national renewable electricity standard, overhaul federal financing for "clean energy" projects, establish a suite of efficiency measures, mandate new federal electricity-transmission siting power and allow wider oil and gas leasing in the eastern Gulf of Mexico.

So, even if cap-and-trade fails, this year may be a big one for federalizing green  building regulations. 

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I don't often post twice in one day, but this came across my desk and I simply had to comment. 

I have written extensively about the progress of the Climate Bill in Congress.  Today, Lindsay Graham, Republican participant in the Kerry-Lieberman-Graham effort to put forward a bipartisan Senate version of a climate bill announced that he would not participate in developing climate legislation because of the BP oil spill.  According to the New York Times:

“In addition to immigration, we now have to deal with a catastrophic oil spill in the Gulf of Mexico which creates new policy and political challenges not envisioned in our original discussions. In light of this, I believe it would be wise to pause the process and reassess where we stand.”

What? Let me see if I understand this correctly--we have a huge environmental problem, so we cannot deal with our...huge environmental problem? Does anyone see this as a cynical pretext for actually having to particpate in putting forward a  bipartisan effort towards getting a climate bill passed? 

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Jennifer Simon practices environmental law at Obermayer Rebmann Maxwell & Hippel, LLP. She focuses her practice on alternative energy project development, permitting, and O&M with an especial emphasis on offshore renewable energy projects. She maintains a blog on offshore renewable energy at www.offshoreenergy.blogspot.com

Yesterday, Shari suggested that Obama’s “last ditch effort” to enact a watered-down energy/climate bill is just not worth the effort. As Pennsylvanians, Shari and I both live in a state that has identified “clean coal” resources (like coal gasification) as renewable resources, so we know a thing or two about ineffectual climate policy. Given Pennsylvania’s apparently futile approach to climate change, I am not surprised that Shari is uncomfortable with President Obama’s proposed energy/climate bill. However, I would suggest that this bill could provide the foundation upon which a comprehensive legislative solution could be built.

Congress has been dithering around with potential climate legislation for more than half a decade while various government entities have questioned whether climate change science is accurate, whether regulations can be effected under current statutory schemes (e.g., the Clean Air Act), and whether the costs of regulation outweigh the benefits of saving life on planet earth. Meanwhile, emissions from energy generators, buildings, and mobile sources continue to rise and the predictions of dire consequences attributable to climate change continue to become direr and more imminent.

In the late 1970s, scientists announced that the dangerous thinning of the earth’s atmospheric ozone layer was due to anthropogenic causes, legislators and regulators were equally paralyzed by competing interests and apathy. But in 1978, EPA took an affirmative—if not remotely comprehensive—step by banning aerosol chlorofluorocarbons (“CFCs”). As social consciousness and international pressure increased, this initial regulatory ban on aerosol CFCs ultimately led to the U.S. signing and ratifying the 1987 Montreal Protocol—a far reaching and comprehensive international treaty which will likely yield statistically significant improvement over the next 50 years.

Climate change, like ozone depletion—or healthcare for that matter—is a hot button issue where legislative consensus is a near impossibility. But we need to start somewhere, don`t we?

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According to EENews, the Obama administration is trying a last  ditch effort to get a hybrid energy/climate bill passed:

President Obama is striving for consensus on a path forward that can deliver substantial greenhouse gas emissions reductions and satisfy concerns in the Senate about energy security. In an address to the nation's top CEOs at a Business Roundtable meeting scheduled for Wednesday, Obama is expected to discuss his energy plans. According to several sources, one of the proposals under discussion is to find ways to incentivize coal-burning power plants to switch to cleaner-burning natural gas.
 

Economywide cap and trade or carbon tax? Maybe not.  More nuclear, probably and more "clean coal" investment, almost assuredly.  So why pass this watered down, milquetoast version of a climate and energy bill?  

There are times in lawyer's lives when they must adopt a different hat--after all the risk identifying and negotiating and hand wringing is over, there must be a signature on the dotted line.  A lawyer must advise their client that the deal is as good as its going to get, that the settlement is worth the risk.  Because no one can predict the future, there is no absolute guarantee that the deal that is struck in advance of events is as good as what could happen if events are allowed to unfold and decisions are made based on actual events.  But dealmaking has value--it allows parties to have security and allows disparate parties to come to terms that are acceptable to all, if ideal for none. 

But I wonder if this is that deal.  Let's say Obama inks this settlement, shepherded on the Republican side by Senator Lindsey Graham.  The question must be--Will the environment really benefit, not Did We Get Something Passed.  Doing something is not always better than sticking to your guns and fighting on.  The best lawyers--and politicians--know when the deal is as good as it's going to get.  I don't think we're there yet.

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I wonder whether we are entering an era where the ethical corporations and citizens will  be divided from the unethical--the green pioneers from the greenwashers--in terms of their willingness to lead on climate change legislation.  Evidence suggests that such leadership will need to come from more than the usual suspects to be effective--WalMart's efforts will carry more weight than Whole Foods. 

Today, Excelon joined a growing number of utilities who resigned from the US Chamber of Commerce over its resistance to climate change legislation. According to the Philadelphia Inquirer:

Chairman and CEO John W. Rowe, in an address to the American Council for an Energy Efficient Economy, said his Chicago company is so committed to climate legislation that it will let its chamber membership lapse.

“Because of their stridency against carbon legislation, Exelon has decided not to renew its membership in the U.S. Chamber this year,” Rowe said.

Oskar Schindler was a German businessman who saved almost 1,200 Jews during the Holocaust by employing them in his enamelware and ammunitions factories.  Similarly, It is up to the corporations that lead this nation to use their dramatic influence to enable the passage of effective climate change legislation.   

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I have been reading here, there and everywhere that green is a safe haven in this time of economic turmoil.  Today's information about Pennsylvania's Energy Fund proves otherwise. 

In the summer, Pennsylvania passed a $650 million progressive Energy Bill, with financial incentives for solar, high performance buildings, energy efficiency and so forth.  See article here by the folks over at Red, Green and Blue.

Everything seemed to be progressing nicely, setting the stage for an increase in renewable energy in the Keystone State.  Unfortunately, much of the $650 million Energy Fund was supposed to come from a bond offering.  Today, Pennsylvania state officials announced they were putting off floating the bond because the bond market has dried up.  Pennsylvania is not alone.  Apparently, New York/New Jersey Port Authority tried to borrow $300 million, and they got no takers.

This is very bad news for the sustainability community.  First, lack of access to financing makes governmental incentives almost impossible to fund, taking away one of government's best tools to use market drivers to encourage sustainable practices.  Second, lack of government incentives reduces the market of renewable providers.  Third, in a moment of low gas prices, lack of government incentives makes renewables less cost competitive.  In short, it is a lose, lose, lose situation.  

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I have written extensively here on the federalism issues associated with regulating green buildings and climate change in general, which I believe is going to be a major factor in whether the United States can effectively manage climate change. In another example of the states regulating and the feds deregulating (or actually just preventing climate change laws from taking effect), Delaware made revisions to its state implementation plan under the Clean Air Act, making carbon dioxide a regulated pollutant. http://ehscenter.bna.com/PIC2/ehs.nsf/id/BNAP-7JEFLD EPA Region 3 approved Delaware's SIP with the carbon dioxide regulation in place. Now, the EPA is reconsidering the approval of Delaware's SIP.

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Tom Freidman's column in today's NY Times is entitled "It's Too Late For Later"--http://www.nytimes.com/2007/12/16/opinion/16friedman.html?hp. Based on the Energy bills passed this week (see my previous post), our government is not listening.

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There have been two energy bills passed last Thursday which have caught my attention. First, of course, is the Senate Energy Bill which passed 86-8 (see the nice summary article in Forbes here http://www.forbes.com/business/energy/2007/12/13/energy-senate-bill-biz-wash-cx_bw_1213bizenergy.html), and the Senate of my home state of Pennsylvania passed its version of Governor Ed Rendell's Energy Bill 44-5 (Philadelphia Inquirer article here http://www.philly.com/philly/wires/ap/news/state/pennsylvania/12428436.html). What is notable about both of these bills is that 1) they are extremely watered down versions of the original energy bills proposed, 2) they required the votes of both Democrats and Republicans to pass, and 3) it happened at both the state and federal levels.

The U.S. Senate bill eliminated the extension of existing production and investment incentives for wind and solar power, dropped the tax increases on Big Oil, and dropped the renewable electricity mandate. The only notable remaining provisions was an increase in biofuel production and increased CAFE limits. In short, the bill became less of a comprehensive reexamination of our energy sources and demands, and more about making nibbling changes at the edges.

In Pennsylvania, Governor Ed Rendell had originally proposed a bill which included an $850 million Energy Independence Fund, among other provisions. The bill which passed the Senate provided only $250 million, and provided $25 million subsidy to help utilities comply with mercury regulations. It provides only $5 million for consumer energy efficiency assistance.

What the US and Pennsylvania Energy Bills demonstrate is a remarkable lack of political will. I would have hoped that after the war in Iraq, a scientific onslaught of global warming evidence, higher gas prices, a Democratic Congress, increased awareness of environmental and energy issues and a ridiculously low presidential approval rating that the lawmakers would have the political will to make real change on energy issues. But apparently the time has not yet come.

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Late last week Governor Schwarzenegger vetoed three California bills which would have mandated green building requirements for commercial and residential buildings over the next decade. http://www.greenbuildingsnyc.com/2007/10/18/schwarzenegger-vetoes-california-green-building-legislation/ I discussed the prospect of these bills here in the context of the overall need for regulation of green building--http://greenlaw.blogspot.com/2007/09/regulation-it-really-works.html.

The Governator did, however, approve a bill providing tax credits for sustainable low-income housing. http://www.californiachronicle.com/articles/viewArticle.asp?articleID=40629

I am currently working with some political candidates in Philadelphia in considering the most efficacious road to encouraging green building. I have ended up in several "carrot-or-stick" conversations--in other words, is it better to have laws mandating green building practices like those that have been passed in Washington DC and Boston, or to provide incentives (financial and non-financial, like fast track permitting for green projects)?

Obviously, the two are not mutually exclusive, but there is a philosophical divide on the appropriate role for government in green building. Is sustainable development more like fire safety--something which costs builders money to install but benefits everyone to such an extent that government must mandate its installation--or like arts and culture which government encourages through spending and education, but does not mandate? I would argue that it needs to become more like fire safety--the impact of buildings on the planet is simply too great to leave to the vagaries of the marketplace. For the impact of buildings on global warming, see the UNEP study available here http://www.unep.fr/pc/sbc/publications.htm.

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I have spent the last few days parsing the hideously convoluted legalese which is Title IX--Energy & Commerce of the House's recently passed--and much touted--Energy Bill, which I wrote about generally earlier in the week. http://greenlaw.blogspot.com/2007/08/at-long-last-energy-bill-post.html

Title IX contains most of the provisions related to green building. Below is a non-comprehensive tour through some of the provisions of interest to me.

Sections 9001-9020 relate to the energy efficiency of appliances, raising the required energy efficiency for dehumidifiers, washing machines, dishwashers, refridgerators, etc.

Sections 9021-9030 relate to energy efficiency of lighting. There is some neat provisions in this section, including 9021 which requires the Secretary fo Energy to issue regulations prohibiting the sale of 100 watt general service incandescent lamps after January 1, 2012, and specifying ever increasing efficiency ratings for other lamps. However, three way lamps are exempted from the requriements. I have a problem with this--many, many lamps are three-way. What is the point of this exemption? Is there a three-way lamp lobby? Section 9023 mandates the use of energy efficient lighting fixtures and bulbs by the Federal government.

Sections 9031-9040 relate to residential building efficiency. Section 9031 requires states to update their building codes to be more energy efficient. THIS IS A BIG DEAL! It provides funding, support, etc. for the states to do so. Section 9034 provides additional financial assistance to consumers for home weatherization.

Sections 9041-9060 relate to commercial building efficiency. Section 9042 establishes an Office of Federal high-Performance Green Buildings to, among other things, coordinate the green building activities in various Federal agencies, identify and develop Federal high performance green building standards to be used for Federal facilities and research budget and contracting practices that affect achievement of green buildings. In an effort to employ more of us green-building types, Section 9043 establishes an Office of Commercial High-Performance Green Buildings. This Office is tasked with managing a public-private partnership program (Section 9043 (f)) which shall, among other things,further development of green buildings, study and refine a national goal to reduce commercial building energy use (Section 9044), and create a national high-performance green building clearinghouse of information. Sounds like a nice job, perhaps they will hire me. Section 9052 provides up to $100,000,000 for loan guarantees for renovation projects that will result in a building achieving LEED "certified" level. Several other provisions in these sections provide funding for the establishment of various green building pilot programs.

All in all, there are many good-sounding programs in Title IX, but we shall see what remains when the House and Senate bills are reconciled.

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I apologize, readers, for the 10 day hiatus in posts, but I have been on vacation, and then thinking about what to say about the Energy Bill passed in the House on August 4, 2007.

Earth2Tech has a nice summary of the features of the bill here http://earth2tech.com/2007/08/05/house-passes-energy-bill/.

I want to disuss what the bill doesn't do. The Bill does not remotely address our dependence on fossil fuel and coal. It basically just nibbles around the edges, establishing programs like the Advanced Research Projects Agency-Energy, for energy research, and requiring the Department of Energy to establish a green building clearinghouse, and providing funds and incentives for alternative fuel research and use. An increase in the fuel efficiency standards for cars, for example, was removed from the bill.

What really needs to happen is large scale, expensive change--a carbon tax, and a cap-and-trade program for emissions. The Federal government needs to create legislation to build the actual cost of environmental damage into each and every energy transaction to effect real change. Now that Democrats have some governmental power, they must push for the large scale change that will really make a difference, as opposed to wasting political capital on band-aid pallitives.

The bill does have some positive aspects--it cuts the $16b subsidy to Big Oil, and it creates milestones for the Federal government to reduce its carbon footprint. But we need to stop playing around, global warming is not a problem that lends itself to partial solutions. It requires large scale political change which will impact large corporate players. The Democrats in Congress do not appear to be ready to think big.

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Action by Federal and Municipal Representatives

There have been two actions taken recently which reflect the interest in green building at both the federal and municipal levels. On March 27, 2007 Senators Clinton and Kerry the "Zero-Emissions Building Act of 2007." The bill directs federal agencies to immediately require that all new federal buildings or major renovations reduce carbon dioxide emissions by 50 percent as compared to a 2003 baseline. In 2010, and every five years after that, the emissions reduction level would increase by 10 percent, until new federal buildings become "zero-emissions" buildings in 2030. The legislation would also apply to major renovations of existing federal buildings. The Act is available here--http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s1059is.txt.pdf.

On the municipal level, mayors are banding together to support green building. For example, at their 75th annual meeting in Los Angeles recently, the 1,100-member U.S. Conference of Mayors (USCM) unanimously voted for a green schools resolution. The resolution urges Congress to support K-12 green school demonstration projects. The resolution is available here--http://usmayors.org/75thAnnualMeeting/resolutions_full.pdf. The Conference also passed a resolution pledging local totake local action to significantly reduce greenhouse gas
emissions and to support stronger federal policy and action on climate change.

These two actions are largely symbolic--it is unlikely the Clinton/Kerry Bill will be passed, and the USCM resolution has no legislative impact. However, they represent a recent change in the zeitgeist where the environment is a priority, and green building initiatives are a mechanism for acting to improve the environment.

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