Green Energy & Development Law Blog : Green Building & Development Lawyer & Attorney : Brad N. Mondschein : Pullman & Comley Law Firm

I would like to thank my colleague Lee Hoffman for this submission:

The Hartford Business Journal is reporting that the State of Connecticut’s use of funds authorized by the American Recovery in Reinvestment Act (“ARRA”) for energy programs is lagging. The article, which can be found at www.HartfordBusiness.com/news14472.html, states that Connecticut has used less than 12% of the $170 million of ARRA funds that have been dedicated to energy projects, particularly renewable energy projects. Connecticut’s experience with these funds tracks the national average where less than 12% of the $27 billion of energy stimulus funds have been spent to date nationwide. 

The article suggests that a lack of preparedness, bureaucracy, difficult financial conditions, and the relative newness of energy programs have all contributed to money not getting spent in a timely fashion. 

There are some bright spots on the state spending of stimulus money, however. For example, the Connecticut Department of Transportation has spent over one fourth of its allocated ARRA funds. In addition, the Office of Policy and Management has noted that the state’s Energy Program received an additional $38.5 million worth of ARRA funds. Under this particular program, Connecticut has been able to spend a great deal of its allocated stimulus money, primarily through the Connecticut Clean Energy Fund and the Home Energy Solutions Program. Connecticut’s spending rate under this program is approximately 23%. This figure is particularly impressive when one considers that 46 states have yet to achieve a 10% expenditure under this program. This funding has led to increased installations of geothermal and solar thermal projects throughout the state. 

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The City of Indianapolis has unveiled a new Green Building incentive program. The program allows for building projects to receive up to a 50% rebate on all building permit fees associated with the green project. 

To qualify for the rebate, projects must meet specific criteria.  The incentive rebate becomes effective on August 1, 2010. All building projects that pursue building permits on or after August 1, 2010 are eligible to receive the rebate.

There are 6 categories that qualify for rebates:  Water Quality/Quantity, Transportation, Energy, Materials, Site and Innovative Design.  A project must meet 3 categories to qualify for the minimum 30% rebate.  For each additional category that the project meets, an additional 10% rebate may be given up to 50%.  The requirements for each category are based on LEED requirements, but LEED certification is not required.

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Source:  PEFC.org.  Forest certification standards from twelve nations have called on the USGBC to accept all credible sustainable forest certification standards. The certification programs pointed out that wood is one of  the best environmental choices for construction, as long as it is from a responsible source – and that fiber certified to the 26 national forest certification programs recognized by the Programme for the Endorsement of Forest Certification (PEFC) meets this demand.

Currently, the USGBC's LEED rating tool only recognizes wood certified to Forest Stewardship Council standards. The USGBC is involved in a process to evaluate forest certification programs, and recently released a fourth round of draft benchmarks for public comments.

Standards from Australia, Canada, Denmark, Finland, Germany, Ireland, Italy, Malaysia, the Slovak Republic, Spain, the United Kingdom and the United States, along with forest industry associations and companies from many of these countries, have joined North American elected and government officials, professional foresters and other leaders who have told USGBC that in order to increase the use of wood in buildings, all credible certification systems, including PEFC and FSC, need to be accepted.

More than 5,800 people from around the world, including countries such as Australia, Austria, the Netherlands, Sweden, Italy, Malaysia, Spain and the United Kingdom, have signed an on line petition posted by the Sustainable Forestry Initiative, a PEFC member that has forests across Canada and the United States certified to its forest management standard.

Non-profit PEFC is an umbrella organization that endorses national forest certification systems developed through multi-stakeholder processes and tailored to local priorities and conditions that meet PEFC's rigorous requirements. About 543 million acres or 220 million hectares are certified to national standards endorsed by PEFC, and none are eligible for the LEED credit. This includes the 377 million acres or 152 million hectares – about 68 per cent of the total – located in North America.

Studies estimate that carbon dioxide emissions of wood-based buildings are 20 to 50 per cent lower than emissions associated with comparable steel- or concrete-based buildings.

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As I reported yesterday, the FERC has ruled that feed-in-tariffs (state mandated tariffs which require a utility to pay above "avoided costs" for renewable energy) are a violation of PURPA and the FPA.  The decision, however, does not affect many incentives that are still available to renewable energy projects.  By reconfiguring statutorily mandated rates into other incentives, States may be able to avoid the clear negative effects of the FERC decision.  Here are some of my ideas:

1.  Projects that did not rely on an above-market rate are clearly not affected.  They can still rely on tax incentives and grants which are broadly available.

2.  Projects that relied on above-market rates can perhaps survive by reconfiguring the incentive.  The idea behind a feed-in-tariff is that the utility will pass along the costs to the ratepayers through absorption of the costs into the rate-base.  Instead of a feed-in-tariff, those same costs can be included in the surcharge on ratepayer bills that support that State clean energy fund or renewable energy projects.  Most states have some type of fund to this effect.  Then, the revenue from such surcharges can be used to give grants (which are still allowed) that are equivalent to the feed-in-tariff incentive.

3.  Increasing tax incentives to offset the lost feed-in-tariff incentive is another means to incentivize renewable energy Projects.  Instead of spreading costs to ratepayers, it will place the burden on tax payers.

4.  Support amended PURPA and the FPA by supporting Congressman Inslee (D-WA) in his quest to improve the nation's renewable energy incentives.

5.  Support PACE legislation by supporting Congressman Israel (D-NY) in his quest to institute nationwide PACE programs and federal loan guarantees.

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I want to thank my colleague, Lee Hoffman, for bringing this case to my attention...

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The California Attorney General filed a lawsuit against Fannie Mae and Freddie Mac for essentially blocking California's PACE initiative.  The PACE (Property Assessed Clean Energy) program stimulates the economy and promotes energy independence by assisting homeowners and small businesses in securing funding to make their properties more energy efficient. Property owners repay the costs of energy improvements through assessments spread out over a decade or more. Under California law, these costs are classified as tax assessments.

Last week, Fannie Mae and Freddie Mac put a huge damper on PACE Bond efforts nationwide by characterizing PACE assessments as loans that must be subordinate to their own mortgages. The Federal Housing Finance Agency affirmed Fannie and Freddie's decision on July 6 over the objections of PACE Bond advocates and congressional leaders.

Almost half the counties in California have developed PACE programs or plan to start one. California risks losing more than $100 million in federal stimulus money. One example of the effects of this: San Diego planned to launch a PACE program this summer but it has now been suspended indefinitely, leaving more than 100 people trained in energy retrofits without jobs.

In his lawsuit, Brown asks the court to apply California law, require Fannie Mae and Freddie Mac to recognize PACE assessments for what they are.

The lawsuit is here.
 

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I want to thank Kent Jeffreys at the International Council of Shopping Centers for bringing me this post....

From InsideEPA.com’s Carbon Control News:

Coalition Seeks Renewable Energy ‘Feed-In’ Tariffs To Cut GHGs

Posted: July 7, 2010

A coalition of clean energy groups and environmentalists is attempting to spur new interest among lawmakers and regulators in establishing “feed-in” tariffs to bolster renewable energy projects and cut greenhouse gas (GHG) emissions. The tariffs require utilities to purchase renewable power at above-market prices through long-term contracts, providing more certainty for investors to fund new projects.

The coalition is bringing together experts from around the world for a July 12 conference in San Francisco to brainstorm ideas for developing feed-in tariff systems that will at first be designed for state use. Rep. Jay Inslee (D-WA), meanwhile, is preparing a proposal calling for a national feed-in tariff to boost renewable energy, though observers do not expect it to be included in pending energy legislation this year.  (see my post from earlier today regarding Inslee's net metering tariff)

The coalition includes the Center for American Progress (CAP), Sierra Club, Pacific Environment, World Future Council, and Alliance for Renewable Energy. Its initial aim is to convince California officials to pursue feed-in tariffs as a way to at least complement the state’s failing renewable portfolio standard.

“I think California has a real potential to play a leadership role in renewables legislation,” says a source with Pacific Environment. “So we need to reignite and get people on the same page about the potential for what a robust feed-in tariff could mean for California. And one way to do that is to get people from around the world where it has worked together in one room.” The “goal of this conference is to get it right in California first.”

A feed-in tariff essentially requires utilities to buy renewable energy at above-market prices for fixed periods of time under contracts approved by regulators. It represents a subsidy program where owners of renewable energy production systems receive a guaranteed, fixed price from utilities for the purchase of renewable electricity that is fed into the broader electricity grid. The tariff is intended to incentivize renewable energy development by making it more appealing to investors. Several California state lawmakers have introduced a handful of feed-in tariff bills in recent years, but none has advanced.

Sources with the coalition hosting the conference say Vermont and Oregon have already implemented narrow feed-in tariffs that are showing promise. About 10 other states either have proposed feed-in tariffs or are showing interest in pursuing them, the sources say. These include Wisconsin, Minnesota, Washington, Michigan, Indiana, Maine, New York and Nevada, says a Sierra Club source.

A CAP source says 90 percent of the renewable electricity capacity built in the world over the last decade was thanks to feed-in tariffs, because they provide regulatory stability and revenue certainty. Experts are now trying to “figure out a way to make it work in the U.S.”

But one of the chief barriers to domestic feed-in tariffs is that the federal regulatory system is based in part on providing least-cost power, even for renewables, under the Public Utility Regulatory Policies Act (PURPA) of 1978, the CAP source says. For example, utilities must pay the difference between the cost of conventional electricity supplies that are being replaced with more expensive renewable sources. State public utilities commissions are “struggling to justify a rate above” this difference, which is what a feed-in tariff would be, the source says.

European countries have different regulatory goals, focusing on the benefits of renewable energy.

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Rep. Jay Inslee (WA) introduced the Americans Making Power Act, or AMP Act, which would establish a national standard for net metering.  While Representative Inslee is touting the legislation as a major step forward for renewable energy, the legislation promulgates the same problems and issues that many state net metering laws have created and which the incumbent electric utilities lobby against altering. 

That is, a retail generator can net meter, but can only offset (and thus get the economic benefit of retail rates) electricity that is used on the site, the excess in any 12 month period is paid to the generator at wholesale rates, which are a fraction of retail rates.  Further, the legislation fails to allow net metering of multiple meters on the same site, or multiple meters of the same customer at multiple sites.  The legislation also fails to allow excess capacity to be paid out at retail rates.  The end result is that retail generators are not encouraged to maximize their ability to generate renewable power.  Instead, the legislation only encourages the generation of a portion of a baseload amount, because that is the amount for which the largest ROI is made and for which a business case can be made for installation. 

This country and its legislators need to start thinking about the bigger picture.  Properly owners should be encouraged to maximize their ability to generate renewable energy.  By allowing net metering of multiple meters and at multiple sites, the policy of renewable energy would receive a huge boost and at minimal cost to the ratepayers.  In addition, it is about time for legislators to realize that renewable energy does not come without a cost to ratepayers.  But, the lowering costs associated with environmental issues of existing plants may perhaps convince those in power to finally realize that the current net metering policies are insufficient to make substantive inroads into moving away from fossil fuel dependency. 

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Fireman’s Fund Insurance Company was the first property and casualty insurance company to offer green insurance to the U.S. commercial marketplace.  They have now introduced new green insurance endorsements that broadens coverage.

Fireman’s Fund is introducing Green Financial Incentive Coverage to provide protection for incentives impacting taxes, utilities, loans and more related to green installations or upgrades.  In the event of a loss, Fireman’s Fund will cover any losses for two calendar years.

Fireman’s Fund’s endorsements contain several additional enhancements, including:

• Broadening eligibility for post-loss green upgrade to include all real and personal property that more efficiently uses energy or water, improves human health or reduces the impact on the environment. In the case of a loss, for example, green power generating equipment, alternative water systems, and vegetated roofs.
• Fireman’s Fund has combined four forms – three commercial and one manufacturing – into a single endorsement, making it easier to use and which includes building commissioning and test and balance automatically as an extension of coverage.
• For a certified building: coverage allows the insured to attain certification at one level above the certified green building level that the insured had prior to the loss or damage.
• Vegetated roof coverage extended to vegetated swales and other vegetation that reduces heat island effect, including vegetated walls. Coverage now applies to both certified and traditional buildings (previously it was only for certified buildings).
• Coverage is expanded to include porous paving - water permeable paving that allows water to drain into the ground to help manage water flow.

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