Tuesday, November 20, 2012
Using Carbon Credits To Pay For Energy Retrofits
By Justin Gerdes
One of the signal achievements of the Obama administration is a success hidden in plain view. Scorned by Republicans and rarely mentioned by Democrats, the American Recovery and Reinvestment Act (ARRA), or simply “the stimulus,” was many things at once – tax cut, lifeline for cash-strapped states and local governments, and, as noted by Michael Grunwald in his important new book The New New Deal, “the biggest and most transformative energy bill in U.S. history.”
The stimulus directed $3.2 billion to the Energy Efficiency and Conservation Block Grants program. As I wrote at this blog in January and again in June, these grants have enabled dozens of California cities to slash their energy bills by investing in LED streetlights and other energy-saving upgrades.
The stimulus also included a one-time supplemental appropriation of $5 billion for the U.S. Department of Energy’s Weatherization Assistance Program. In December 2011, DOE announced it had reached its goal, three months ahead of schedule, of weatherizing 600,000 low-income homes nationwide. According to DOE data, as of January 2012, 612,390 homes or apartments had received energy retrofits courtesy of the stimulus.
Many states dramatically scaled up staffing and other resources to handle the surge of energy efficiency-related stimulus funding. What happens now that the ARRA spigot has run dry?
Weatherization and carbon trading
In a September 19 post at Home Energy magazine’s blog, Macie Melendez reported on a plan that could enable states to maintain their scaled up weatherization programs. A major topic of discussion at the recently convened annual conference of the National Association for State Community Services Programs (NASCSP), Melendez wrote, was how to keep weatherization programs relevant and funded in a post-ARRA world. Carbon markets just might be the answer.
One of the presenters at the NASCSP conference was the organization’s new Carbon Trading Project Director, Jo-Ann Choate. Melendez recounted Choate’s plan:
Weatherization reduces carbon but states/companies/organizations aren’t currently being monetarily rewarded for doing so. In order to leverage additional funding for WAP [Weatherization Assistance Program] and receive those ‘rewards,’ NASCSP is currently developing a national framework to measure carbon emission reductions from weatherization activities and sell carbon offsets in the voluntary carbon markets in compliance with the Verified Carbon Standard (VCS).
The NASCSP would verify, register, and sell carbon offsets for the participating states. After credits are sold in carbon markets, NASCSP would distribute the proceeds back to each state.
The plan is not without precedent. In December 2010, the Verified Carbon Standard approved the first new methodology for crediting reductions of greenhouse gases achieved through home weatherization. The methodology was developed by MaineHousing for the Efficiency Maine program. The operating assumption is that weatherized homes that perform better than a pre-determined benchmark are eligible for salable carbon credits.
The Maine program has been beset by controversy surrounding its cost and alleged conflict of interest among its key stakeholders, but many states are keen to press ahead. Melendez reported that 17 states have signed on to participate in NASCSP’s Carbon Trading Initiative.
How confident can NASCSP or Verified Carbon Standard be that a weatherized home produces measurable energy and carbon savings? In search of an answer, I recently spoke with Mark Aschheim, Professor and Chair, Department of Civil Engineering, Santa Clara University (SCU). Aschheim and Jorge Gonzalez, a former SCU mechanical engineering professor now at City College New York, co-lead a team that developed a carbon metering method that quantifies real-time energy savings in buildings and associated carbon offsets. The technology, Carbon Meter, was developed to measure the energy performance of Santa Clara University’s entries into the 2007 and 2009 Solar Decathlon. One of the goals of the Carbon Meter, Aschheim told me, is to be able to measure the gap in performance of a house or commercial building performing to a baseline (say, California’s Title 24 building energy efficiency standards) and one going beyond it. Once you quantify that differential, he said, it opens up other possibilities, including salable carbon credits. The meter also quantifies the benefit of electricity generated by photovoltaic cells.
With the ability to measure real-time energy performance, Aschheim said, you can quickly develop a thermal model for how the building is performing – as a system, not just individual components. “That can be useful because you can verify that performance met the intention,” he said.
LEED and other green building rating programs are good on paper, Aschheim commented, but not so good with verification. “This is a way to field verify that you’re getting the performance you intended,” he said. “It might tie into guidance as to what the best retrofit options are – given that your house is performing this well and you have these kinds of windows and insulation, here’s the best bang for the buck.”
California regulators have approved four categories of carbon offsets in its soon-to-launch cap-and-trade program: forestry, urban forestry, ozone depleting substances, and agricultural methane. On September 17, Reuters reported on an American Carbon Registry study finding that California’s carbon market could be 29% short of offsets in its pilot phase (2013-2014) and 67% short of offsets in its third phase (2018-20), unless regulators expand the categories of approved offset project types.
At a minimum, the Carbon Meter represents for California regulators a potential new offset category: carbon savings from retrofits. Coupled with NASCSP’s Carbon Trading Initiative, the Carbon Meter presents California and other states with the means to generate a source of salable carbon offsets that could help keep weatherization programs alive.
Aschheim conceded that he and his team have focused more on the technical demands of the Carbon Meter project than financial returns. They filed both an invention disclosure and patent application but have not marketed the tool.
The Carbon Meter is listed at the Stanford University Office of Technology Licensing portal. (Stanford handles intellectual property for Santa Clara University, Aschheim told me.)
“It’s out there waiting to be grabbed and used,” he said. Entrepreneurs, get on it.
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