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News & Views Curation

February 27, 2006

Transatlantic Energy

In February 2006, we learned that New York City’s population is expected to grow by one million people by 2025. Several recent analyses have noted New York City already faces a looming electricity shortage, so this may not be welcome news. Increasing population pressures only make the challenge of crafting and delivering a comprehensive, environmentally sustainable, and cost-effective energy strategy that much more difficult.

The Mayor assigned an inter-agency group the task of thinking about where Gotham’s newest residents should live, work and play; how they’ll move around the city; and what other infrastructure changes are necessary to support this 14% increase in population. Part of the infrastructure study involves identifying locations where new power plants could be sited around the city.

Power plant siting is of interest because a 2004 Mayor’s Energy Policy Task Force report suggested that new in-city power plants were one way to meet the anticpated electricity shortfall. In a crowded city like ours, finding a neighborhood willing to host a new power plant is always a challenge. However, if siting iswere to be the only energy issue examined by this long term growth management plan, then it will represent a tremendous missed opportunity.

In many ways, New York’s situation parallels London’s, which similarly expects to grow by 800,000 people over the next ten years. To prepare for this population surge, the Greater London Authority (GLA) undertook a comprehensive planning process several years ago, authoring nine separate policy documents intended to set Europe’s leading city on a rational and sustainable growth path. There is much New York City can learn from London’s approach – particularly its energy strategy.

The first noteworthy idea in London’s energy plan is the way it reflects elements of other GLA policy documents. These strategies – discussing London’s land use, air quality, waste management system, biodiversity, transport, and economic development matters – were each written in a way to deliberately amplify and support ideas discussed in the other plans.

Thus, since 21% of London’s energy consumption relates to transport use, the energy strategy endorses the Mayor’s congestion charge plan and efforts to reduce taxi and bus fuel consumption and emissions. To ensure that people aren’t forced into their cars to shop or commute to work, the energy strategy references the land use strategy, which seeks to increase the density of development near major transport hubs. In other words, London’s approach employs ‘joined up’ thinking, ensuring that its energy policy coordinates with other closely related policy areas.

By following up on recommendations in Mayor Bloomberg’s 2004 Energy Policy Task Force report, the City's Economic Development Corporation, as well as the Department of City Planning (DCP) and other critical government agencies have the chance to emulate the ‘joined up’ model. The Task Force had a narrowly crafted set of recommendations, however, meaning real change will occur only if the City's new analysis goes further, connecting the dots between energy use and the buildings where we live and work. In particular, we should be looking for evidence that the new growth management plan sets targets for on-site power generation, preferably from ultra clean renewable power systems. The plan should also examine which mandates or incentives would be most effective at delivering these goals.

London’s energy plan is particularly instructive, imposing very specific requirements on large new developments. As part of the permitting process, developers must now analyze a new building’s anticipated energy use and document how they will incorporate energy-efficient technologies and natural lighting and ventilation into its design. Large new projects must also generate 10% of their own power on-site through renewable sources (like solar power), and incorporate combined heat and power (CHP) systems “wherever possible” to ensure the site’s power needs are met in an environmentally efficient manner.

There is one planner in London’s City Hall solely dedicated to ensuring each planning application meets these energy requirements. A quick glance at the planning decisions handed down over the past six months shows the GLA doesn’t hesitate to veto projects that violate these rules.

Will Mayor Bloomberg’s new growth management plan be equally bold? New York City is already home to one of the only mandates of this type in the US – a 5% on-site renewables requirement imposed on new buildings in Battery Park City. Imagine the results if such a rule was applied city-wide! Within just a few years, the amount of clean distributed power produced in New York would skyrocket, placing New York in the forefront of green cities around the world. The City may already be moving in that direction, having solicited an Energy Infrastructure Master Plan from Con Edison that examined the role distributed generation could play in new development planned for Lower Manhattan and the Hudson Yards.

There is no question we must tread warily with policies that increase the cost of local construction. Real estate experts estimate it already costs 25% more to build here than it does in New Jersey. From a long-term competitiveness perspective, it is not wise to price businesses out of New York City.

Similar concerns bedevil London’s government every day, yet the GLA believes tough energy standards will make London even more competitive and more desirable within the global marketplace. Energy experts in London also argue these mandates are not a cost burden, because they offer developers incentives to produce highly energy-efficient buildings. This reduces the size of the renewables system requirement, while simultaneously providing long-term energy cost savings to the building owner and tenants.

A final noteworthy piece of London’s energy strategy is its emphasis on creating an energy-based business sector servicing both local and global markets. To date, New York City has not viewed energy in this way. An energy-as-jobs strategy can mean many things, because energy-related employment creates opportunities for New Yorkers of all skill levels:

− Wall Street jobs related to emissions trading or clean energy project finance;
− mechanics for alternative fuel vehicles and high efficiency boilers and chillers;
− technicians who build, install and maintain renewable power systems;
− assembly-line jobs manufacturing sophisticated energy management equipment for buildings; and
− jobs insulating the homes of low-income New Yorkers, thus reducing how much they pay in utility bills.

London is already moving to capitalize on this growth sector. In March 2006, the Royal Institute of British Architects is bringing a delegation to New York City to promote UK design and construction know-how on green building projects. They’ll be meeting with US-based designers, builders, and corporate clients, touting their work in Europe and elsewhere. Will we cede the urban energy marketplace to London-based firms, or should New York’s plan include an assessment of how to grow this industry?

The bottom line is that – conceived properly – Mayor Bloomberg’s new growth management plan can profoundly change how we view, use, and generate energy in New York City. It can build on the foundation provided by the Mayor’s Energy Policy Task Force, and foster better policy coordination among state and city agencies. By scrutinizing the energy impacts of large new development projects, the Mayor’s plan could dramatically increase the number of energy efficient buildings around the city and add dozens of megawatts of clean renewable power to the city’s energy supply. Such a strategy would also create many new job opportunities for city residents.

If, however, the growth management plan views energy in very narrow terms – as simply a power plant siting problem – then it becomes harder to shift away from our current inefficient energy habits. Once a building is constructed, its energy use patterns are essentially fixed for several decades, as are those of the people who live or work in that building. Through this growth management plan, Mayor Bloomberg therefore has an extraordinary opportunity to set New York on a greener energy path, delivering a high performance city to all New Yorkers, new and old.

Come April, it will be interesting to see which path the Mayor has chosen.

Stephen A. Hammer is a consultant and researcher specializing in urban energy systems. He also teaches graduate courses in energy policymaking at Columbia University’s School of International and Public Affairs.

February 24, 2006

"Que Sera" is Not the Answer

Another January has come and gone and with it the televised ritual of the President’s State of the Union Message. Those of us who think that the time is now for action to address climate change and the nation’s “addiction to oil” are faced with the familiar abdication of federal leadership and the attendant lack of concrete policy and resources. Until that changes, we must look closer to home to see what’s new, who’s making it happen and what progress is being made towards carbon neutrality and slowing climate change. In the US this means looking at regional, state, and local developments. For the northeast, the Regional Greenhouse Gas Initiative (RGGI) is a major policy event. For New York State, the Renewable Portfolio Standard (RPS) is a leader.[ i ] At the City level, examples of energy saving and clean power progress do exist, but they’re disaggregated and their impact is hard to measure.

Let’s begin with RGGI - pronounced “Reggie”. What is it? Seven northeastern states, Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont, (with Pennsylvania and Maryland as observers and Massachusetts and Rhode Island as eleventh hour drop-outs) will establish an emissions cap and trade scheme for carbon dioxide and other greenhouse gases coming from power plants with a generating capacity of at least 25 MW of electricity. Although RGGI is less sweeping than the European carbon cap and trade scheme, which encompasses a much wider array of industrial emitters and was developed to meet Kyoto CO2 goals, the northeastern states have probably tailored their ambitions to their administrative abilities. [ii]

Here’s how RGGI is designed to do meet its goals. Starting in 2009, carbon emissions from electric power plants will be stabilized through 2015 and then reduced by 10% by 2020. These benchmarks are not so different from the Kyoto target proposed for the U.S. economy of 7% by the end of 2012. RGGI will begin with a total “emissions budget” of 121.3 million short tons of CO2. This budget will be divided among the seven participating states, with New York at the high end with 64.3 million ton annual limit and Vermont at the low end with a 1.2 million ton limit. Under RGGI, emissions “allowances” are the measurement units for greenhouse gas emissions through trading and offsets. Each ton is equal to one “allowance”. Early in 2006, state regulators and RGGI stakeholders will begin to design the program details that will make RGGI operational in 2009. During this period the institutional mechanism to carry out CO2 trading will have to be developed.

Allowances either can be initially distributed through auctions to raise revenue for RGGI states, or allocated without cost to electric power generators. The choice is up to participating states. It is clear that the architects of RGGI are very price-sensitive and states are likely to adopt what they believe to be the least-cost alternative. Some environmental stakeholders at the RGGI negotiating table argue that consumers would be best served if these initial allowances were auctioned, with the proceeds going to support both energy efficiency that will directly benefit consumers as well as strategies to reduce the long term cost of RGGI, including growth of alternative energy access and expansion of low-income energy assistance programs.[iii] Others hold the view that cost consciousness dictates a policy of free initial allocations to covered utilities to avoid additional charges to consumers.

Once the program is operational, which means that a trading market for allowances is up and running, if the cost of an emissions allowance rises above $7, an “offset trigger” allows the use of more offsets from outside the region, in order to keep a lid on prices. If the trigger price rises above $10, the offset area expands to all of North America. An important question for RGGI is what evidence exists to predict how often prices are likely to exceed $10? In London, the allowances market operates through an autonomous entity with current prices much higher than those projected for RGGI allowances. Such disparities are worrying and there are many opinions about why prices should be so different.

Exactly how participating states will carry out the challenge of RGGI and the complexity of coordinating their programs remains to be seen. In addition to the central cap and trade program, RGGI commits participating states to improving energy efficiency, reducing “highly polluting” energy generation, preventing the price of electricity from inhibiting economic growth and taking steps to encourage non-carbon based sources of electric power. Keep an eye on which state agencies are delegated program responsibilities and how they coordinate with the new “Regional Organization” and what funds are appropriated for implementation and oversight. Since RGGI lacks enforcement provisions, political leadership, institutional buy-in and public support are essential to success.

Turning to New York State, in September 2004, the Public Service Commission issued an order to create the Renewable Portfolio Standard. Governor Pataki first called for an RPS in 2003. By 2013, 25% of electricity retailed in New York State is to come from renewable sources and offsets. The Renewable Portfolio Standard both aims to reduce carbon emissions and, as a corollary, seeks to diversify New York’s energy economy, insulate consumers against price shocks and stimulate new economic development associated with new power technologies and markets. New York is not alone in setting benchmarks for renewable energy; 21 other states around the US have already adopted RPS’.[iv]

As with RGGI, let’s keep track of the resources and tools available for RPS development. For RPS, the New York State Energy Research Development Authority is the public agenacy responsbile for translating these ambitious aspirations into effective realities, although success will also be the result of private investors, as well as consumer and environmental advocates. For some, the direct cost of creating a robust RPS and the cost of electric power from renewable sources remain a concern, but the hope is that - with free renewable power sources - its operating costs will be competitive with carbon-based power. Although 19% of the State’s electricity now comes from renewable sources (almost all hydro) the 6% increase to meet the 25% goal could be a real stretch. Wind power is the current favorite for the RPS, but skeptics point to its intermittent availability. Another program challenge will be whether communities will prove amenable to host wind farms and other RPS technologies. On a more optimistic note, a recent announcement from the global financial services giant Goldman Sachs spotlighting its plan to invest $1 billion in projects that develop alternative energy sources and its role as a wind energy developer and generator might be taken as indicators of maturing markets for renewable power, both in the US and abroad.

Turning to NYC, the first thing to say is that the City does not have an energy policy. Nevertheless, the Mayor’s Energy Report of 2004 projected a rising electric power demand scenario, and called for the creation of 2,600 MW of new power while acknowledging that demand reduction and renewable energy must be part of any credible future. Passage of Local Law 86, the NYC Green Building Law, which places special emphasis on enhanced energy efficiency, could prove to be a big step in the right direction. With this new law on the books, the City has a mandate to make high perfomrance building the "new normal". Early in 2006, the City’s Office of Environmental Coordination and the Design Trust for Public Space issued a Sustainable New York City report.[v] It highlights the salience of high performance buildings for meeting new energy and clean air goals and rightly pointed to the City’s learning curve about high performance building that grew out of the work done by the Department of Design and Construction. These developments must be applauded, but the City can’t stop there. Sustainable New York City, for example, has little to say about devising municipal policies that would directly impact sustainable energy.

City government itself is a major consumer of electric power and fuel – and escalating costs are borne by taxpayers - with no relief in sight. In fiscal year 2006, the City plans to spend more than $614 million on electricity, gas and steam. This is more than 18% higher than FY 2005’s budget figure and does not include the cost of fuel oil. The City, in fact, has taken certain incremental actions that could play a role in lowering energy demand. It operates several programs in partnership with the New York Power Authority, the agency that sells the City most of its electricity, to reduce consumption and lower costs.

The Peak Load Management Program, which encourages on site power generation and the reduction of power demand, paid New York City $1.1 million in incentives for reducing its power demand during 2004’s hottest summer days. The Energy Cost Reduction (ENCORE) program, which started in 1997, is a “major part of the City’s efforts to control energy cots and improve air quality”.[vi] ENCORE provides design and construction services, and, at the City's request, low cost financing for equipment and fuels that improve energy efficiency and decrease greenhouse gas emissions. The Department of Citywide Administrative Services, the City University, and the Health and Hospital Corporation all participate (but not the NYC Housing Authority). By the end of FY 2005, 226 ENCORE projects were completed at a cost of $183.9 million and with annual savings of $17.3 million.[vi]i Unfortunately, no figures on reductions in carbon emissions were provided. Nor were program goals established that could be used as a benchmark to measure achievements over time.

Is this enough? Hardly, but that’s a topic for future columns. For now, where do we stand? Clearly, we need to mobilize widespread public demand and leadership for emerging climate change and energy policies to foster the markets and the mechanisms to innovate system-wide. We also need ways to capture what we learn from these innovations to lay the credible and compelling groundwork for expanding actions to cure our oil addition up to a federal and macro-economic scale. More immediately. for RGGI and RPS, extensive information gathering and reporting will be essential to the ability of program administrators, government budget makers, the media and the public to identify both successes and places for programmatic or technical corrections and improvements. Good public policy needs good evidence and requires diligent oversight. This can be well within our grasp.

The City is to be commended for communicating the follow-ups committed to in its 2004 Energy Policy report. Now it ought to centralize responsibility for developing and executing its sustainable energy initiatives and demand reduction efforts. As Sallan Torchlight “A Closer Look at” noted, the Administration should promptly update and release its Greenhouse Gas Inventory. The City Council can also take an active role in passing smart, targeted legislation to create an effective mix of mandates and incentives on the energy front. Even though much of the legal authority for New York’s electric power system resides in Albany and the market is a major player in setting prices, building power plants and adopting or resisting new power sources and new technologies, there is a great opportunity for New York City to help shape its future. It is pointless to wait for Washington to lead the way.

PS – President Bush proposes to cut $10.8 million from EPA’s clean air and global climate research 2007 budget while reviving his plan for oil drilling in the Arctic National Wildlife Refuge.

i In keeping with Sallan’s mission to advance useful knowledge, see “New York Tackles Climate Change” and
ii For regularly updated information on RGGI see
iii See Environment Northeast, NRDC, and Pace University Law School Energy Project, “Regional Greenhouse Gas Initiative, Consumer Allowance Allocation”, n.d.
iv For an excellent summary of New York’s RPS see Eleanor Stein, “The New York Renewable Portfolio Standard: Case Study in Process and Substance”, Environmental Law in New York, Volume 16, No. 3, March 2005
vii Ibid.

February 06, 2006

New York Tackles Climate Change

February 02, 2006

Extra! Extra!

The New York Times The Times tipped its hat to the City's new crop of high performance buildings in an Arts and Leisure front page story. Robin Pogrebin's piece made pulses race among green building fans and should send lots of visitors to the Green Towers exhibition at the Skyscraper Museum. It was great to see Sallan parter, architect Chris Garvin, co-chair of COTE, confirm, "We're making strides." Another quote, from City Commissioner David Burney about green building "It's almost become as American as apple pie", recalled a recent Tom Friedman zinger,"Green is the new red, white and blue". I wish I'd said that.