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

The wild west is alive and well, and in New Jersey. 

I have a client there who consults with farmers who own wide swaths of land and with renewable energy companies that are looking to develop solar farms on that land.  He describes the phenomenon as a "land grab," where the renewable energy companies are trying to tie up the land available for large scale renewable projects, and landowners are trying to find the best deal for their land.  The land grab is fueled, in part, by the favorable incentives New Jersey provides for solar projects, and a renewable energy portfolio standard of 22.5% by compliance year 2020-2021.

California--the site of the original gold rush--is primed to see another one.  On September 24, California regulators raised the state's renewable energy portfolio standard, the requirement that power companies obtain a certain percentage of their power from renewable sources,  to 33 percent by 2020.  California's renewable energy portfolio standard was already 20%. 

The fever for gold in them there hills (and valleys and rooftops) could soon spread nationwide.  Sens. Jeff Bingaman (D-N.M.), Sam Brownback (R-Kan.), Byron Dorgan (D-N.D.), Susan Collins (R-Maine), Tom Udall (D-N.M.), and Mark Udall (D-Colo.) introduced the Renewable Electricity Promotion Act on September 23, which would: 

install a renewable portfolio standard (or renewable electricity standard, in D.C. parlance) requiring states to generate at least 15 percent of their electricity from renewable sources by 2021

 DSIRE has a nice map with all the portfolio standards for states nationwide.

What does this mean? 

Where green buildings are concerned, higher renewable energy portfolio standards will mean that utilities are looking for additional sources of reneable energy, so it will pay for large scale projects like big box stores, hospitals and manufacturing facilities to incorporate solar into their designs.

Also, because the real estate market has been largely dead for big projects, open space that might have once been yet another shopping mall or housing development may be more likely to go to solar farms and other large scale renewable energy projects. 

But, optioning land for renewable energy projects does not mean that all the renewable energy potential will be realized.  For example, Goldman Sachs, no stranger to the speculation business, has tied up land in Nevada for solar farming:

A Goldman Sachs & Co. subsidiary with no solar background has claims with the BLM on nearly half the land for which applications have been filed, but no firm plan for any of the sites.
 

For the policy makers, the key will be to incentivize projects coming to fruition, not to facilitate  pyramid scheme of tying up land with the hopes of flipping it to later developers of power projects. The task is to balance spurring the growth of the renewables market without creating a solar bubble in the process.  

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I have discussed many issues related to regulating green here at GBLB (for the Regulating Green best practices series, go here).  Some communities seeking to regulate green building, clearly with the best of intentions, have gone astray.  The most vivid examples of this were the Las Vegas green tax credit which threatened to bankrupt Nevada and the Albuquerque regulation which the City Solicitor failed to analyze for federal preemption issues.  But small communities are not immune from regulatory snafus: 

Recently, I came across a density bonus regulation for Madison, New Jersey.  The regulation reads as follows (emphasis mine): 

Maximum dwelling units per acre: 12 units per acre base density, with bonuses as follows:

(a) Incorporation of green building/design techniques to achieve at least a Silver level LEED-certified project: bonus of 10% over base density. (NOTE: The applicant shall demonstrate the ability to achieve this standard prior to receiving preliminary approval and shall commit to providing those systems, site improvements and design features consistent with Silver LEED certification.)
 

This regulation would be acceptable if the word "qualify" were substituted for "achieve."  There is simply no way for an applicant to demonstrate their ability to achieve a certification which is in the hands of a third party agency at the outset of the project.  Moreover, what design professional would be able to provide this type of guarantee? 

The Madison, NJ example demonstrates the importance of a good understanding of the LEED system (or other certification system) before utilizing it in regulatory drafting.  Design professionals need to be aware of the obligations they are assuming when a project seeks to comply with local regulations.  Finally, project owners need to ensure that they can comply with the local regulations, or seek legally binding representations by the government entity ensuring that their efforts to comply are sufficient. 

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On Tuesday, Chris Christie (R) was elected as Governor of New Jersey.  His predecessor, Jon Corzine (D), instituted a number of programs through the state's administrative agencies to promote sustainable practices and green building.  So, what does this change in administration mean for green building in New Jersey, a leader among states in promoting green practices? 

Christie campaigned hard on issues like "controlling spending" and lowering New Jersey property taxes. He also proposed:

• Immediate freeze on proposed new agency rules and regulations.
• Sunset provisions for all new programs after 4 years. 

This will mean that anything in the pipeline of the administrative agencies will be frozen, and new green programs will be automatically sunsetted.

Christie seems to be pro-renewable energy, campaigning that he will:

• Renew NJ and the Choose New Jersey Energy Campaign. Consolidate all renewable energy manufacturing efforts and have New Jersey undergo a brand makeover to market and sell New Jersey’s resources to energy producers, innovators and developers.
• Incentivize energy manufacturing with tax credits. 100% of the corporate business taxes or the insurance premium tax for any wind turbine and manufacturing facility that locates in New Jersey.
• New Jersey will create higher-paying clean energy production jobs in the next four years. Commit to a 5/1 ratio of higher-paying, clean energy production jobs to lower paying, efficiency jobs. While New Jersey has one of the strongest renewable portfolio standards in the country, according to the US Energy Information Administration, the state actually ranks 43rd when it comes to generating renewable energy. 

The most interesting of these is "Commit to a 5/1 ratio of higher-paying, clean energy production jobs to lower paying, efficiency jobs." 

It is energy efficiency jobs which are predominantly blue collar, easy entry to work jobs.  And according to a recent McKinsey study, the economic and job vaue of energy efficiency has huge potential:

[B]etween 2009 and 2020, energy efficiency retrofits could generate between 500,000 and 750,000 direct, indirect and induced jobs through 2020.

Moreover, the low hanging fruit for energy savings and environmental stewardship--not to mention social equity--comes from energy efficiency, not renewable energy. According to the CleanTechies blog:

 A study done by a Lawrence Berkeley National Laboratory scientist claimed that commissioning all of the nation’s commercial buildings would yield the greatest energy savings per dollar spent of any option, including wind and solar energy production. Commissioning involves fine tuning a building’s existing energy systems to improve performance and eliminate wasteful energy use.

 Hopefully, a candidate who campaigned on the concept of fiscal responsibility will realize the value of investment in energy efficiency programs before putting all of New Jersey's eggs in the renewable energy incentive basket.  Stay tuned...

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