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Our home to share our thoughts and host an (e)discussion about the opportunities sustainability presents and how our world will be changing as a result. From savvy strategies for clients to our fleet of Schwinn 10-speeds and everything in between; we invite you to the conversation and hope that we can explore true.green. together.


I’m really hoping this is not news for most of you, but I’m running to represent Subdistrict 5 on the Omaha Public Power District Board of Directors in the upcoming general election. Running for office was not something I was ever planning to do, but life threw a few things at me, and I decided it was time to step up.

craigmoodyoppd_poster-copy-shrunk-for-mailchimp

Why am I running, you might ask? Three reasons.

First, I think I’m actually well suited for the Board. Given that I work in the energy industry on a daily basis, I have a really good level of knowledge that will be immediately advantageous for the Board. I also have a background in finance with an MBA so I’m also able to fully understand all the financial implications of OPPD’s activities.

Next, I would really like to see the Board be more open and transparent. It’s a public utility; we own it. And OPPD can do a much better job of sharing and soliciting information from its customer-owners.

Finally, the energy industry is changing very quickly right now. New technologies are popping up all the time. Wind and solar energy are not only getting more efficient, but they’re decreasing in cost. That pace of change is only going to continue. My hope is to help OPPD take advantage of all these changes. They’re coming whether they want them to or not. How can we pursue them as opportunities? What must we do to ensure we have a long future of clean and affordable energy?

You can learn more at craigmoody.org. Or call me anytime if you’d like to discuss further. I’m always more than happy to chat!

And, of course, I would greatly appreciate your vote!

#GetintheMoody

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Everyone who cares about the natural environment recycles, right? Paper, plastic, glass…but what about money? It can be almost just as easy to recycle energy investments to address the serious global issue of climate change if you set up a Green Revolving Fund (GRF).

What is a revolving loan fund?
A revolving loan fund is a dedicated funding mechanism used to support specific projects that payback project costs to such fund. Often using cost savings from funded projects, loans given are repaid into the revolving loan fund. Then the money repaid to the revolving fund is lent again to finance additional projects.

What is a green revolving fund?
A green revolving fund (GRF) is a revolving loan fund used to finance projects that have specific ties to energy conservation or efficiency, renewable energy, or other natural resource-saving projects. Specifically tracked savings from projects funded are returned to the green revolving fund to be used for future projects.

How do GRFs perform?
Colleges and universities with GRFs have reported a median return on investment of 28 percent over the life of a typical project (see Sustainable Endowments Institute’s (SEI) Greening the Bottom Line 2012). GRFs are often focused on projects with a payback window of no more than five or ten years. The investments make economic sense. Often the biggest hurdle is working out the mechanisms to allocate savings appropriately within the constructs of a university’s current budgeting and finance structures.

To start brainstorming for high payback projects, review McKinsey & Company’s Global GHG abatement cost curve beyond business-as-usual, in its report Pathways to a Low-Carbon Economy. This chart and report provide insight into the investments that reduce greenhouse gas emissions with the highest financial payback. Of course, most everyone knows that changing an incandescent light bulb to a LED often pays back its investment in less than a year, but this report will get you thinking beyond lighting. If the McKinsey & Company report is too academic for you, just start talking to your facilities and maintenance leaders. They know what needs to be replaced and upgraded. Starting from there, look at your options for more efficient technologies. More energy efficient options often cost more upfront, but that additional cost will often be more than recovered in energy savings over the life of the equipment, saving money and reducing emissions.

glf

Image included with permission from Sustainable Endowments Institute

 

Who is using GRFs?
The most common users of GRFs are colleges and universities. AASHE has a database of information about many of the institutions that have started GRFs. The Sustainable Endowments Institute (SEI) has coordinated The Billion Dollar Green Challenge to encourage colleges, universities and other nonprofits to investment a cumulative total of one billion dollars into green revolving funds. As of July 2016, SEI has $131 million committed from 62 participating institutions. See if your alma mater is on the list, or your child’s dream school. As of July 2016, the University of Vermont boasts the largest GRF, with a $13 million fund started in 2012. They look for projects that pay back within seven years and cost no more than $3 million per project. Harvard University’s well know $12 million fund, established in 2001, has supported nearly 200 projects which now cumulatively save the school over $4 million each year (yes, each year!) on energy bills.

Schools have found that a GRF is a reliable mechanism to support cost-saving capital improvements even in the midst of budget cuts and rising energy costs. GRFs regularly outperform the investment returns for schools’ endowments and thus some endowments have become involved with initial funding support to GRFs.

Are you at a small institution or one that doesn’t have access to millions of dollars? No problem. The range of sizes (both regarding enrolled students and school endowment size) among colleges and universities with successful GRFs suggests that any school could implement a GRF. SEI reported that initial capital investments in GRFs are evenly distributed in the ranges: below $100,000, between $100,000 and $1 million, and above $1 million. The fund I helped start began with only $50,000 and is added to annually from various sources. As a result of projects funded by this GRF and through a number of other small cost behavior-based changes on the campus, the energy bills are down, and the institution is saving more than $400,000 annually on energy costs compared to a business as usual scenario.

How is a GRF formed?
GRFs are formed in many ways. The most common sources of start-up funding are one-time administrative budget allocations, prior efficiency or utility savings, private donations or foundation grants, and endowment funds. Although administrative involvement and support for a GRF is key, students are frequently involved in creating the GRF at colleges and universities.

Verdis Group helped Omaha’s Henry Doorly Zoo & Aquarium (“Omaha’s Zoo”) set up a GRF, starting with seed capital from a grant and growing through utility lighting rebates, recycling-focused grants, direct contributions, and of course energy savings. One of the hurdles the Zoo’s Green Team faced was having money to fund even small sustainability projects, and this fund has almost entirely resolved this issue. Each year projects are selected that are both high payback projects, such as lighting updates, and low or no payback projects, such as adding recycling infrastructure to make recycling easier, faster and more complete. These GRF bundles use the high payback projects to support the projects that don’t financially payback on their own, and everyone is happy—the accountants who are saving money on energy bills, the Green Team who now has funds to make the changes they view as most important, and the environment which benefits from resource conservation and reduced pollution.

How is a GRF administered?
It is important to get your administration and tracking set up before jumping into a GRF. There are many administrative models among GRFs. On college campuses, the governance of the fund often depends upon how it was formed. Typically, a small group oversees the finances of the fund, while a larger, more diverse group reviews project loan applications on an ongoing basis. Funds typically require projects to have a maximum payback period to ensure timely replenishment of principal to the fund. Some funds charge interest while others simply require repayment of the principal. Interest allows the fund to grow organically over time; however growth can also come from additional external contributions or allocations from operating funds. Other funds require a percentage of real energy savings to be paid to the fund even after the principal amount of the loan is returned, allowing the fund to grow from the additional savings.

At Omaha’s Zoo, Verdis Group currently administers the GRF in partnership with the Zoo’s accounting group. The Zoo wanted its GRF to financially benefit its general operating budget and serve as a continuing funding source for green projects. Thus, savings in the Zoo’s GRF projects are allocated with a percentage to the Omaha Zoo’s general operating budget and the remainder to replenish the GRF. Since the creation of the Zoo’s fund, SEI has developed a GRF tracking system (GRITS 1.5) that helps institutions manage and analyze project-level energy, financial and carbon data without developing a new process or tool just for the GRF tracking. SEI’s experience with GRFs is exceptional and the GRITS tracking tool has made setting up and tracking a GRF even simpler.

What are common GRF goals?
A GRF can focus on energy efficiency goals, such as reducing energy expenses and cost savings (a.k.a., fighting climate change with the bonus of saving money). In other cases, the GRF may support innovation and engagement projects that do not have direct significant financial payback. In the latter example, a GRF is replenished by grants or other funding, rather than repayment of project savings. GRFs are often operated as hybrid funds that fund both high payback projects along side engagement projects with low or hard-to-measure payback.

At Omaha’s Zoo, a hybrid fund was formed because engaging the staff and providing funds to implement staff-generated green projects was important. Yet, ensuring the revolving nature of the fund endured was critical because an ongoing source of contributions beyond savings was not guaranteed. Verdis Group works with the Omaha Zoo annually to analyze potential projects, determine project paybacks, and guide the Omaha Zoo’s GRF selection committee toward a group of annual projects that meet financial payback, employee engagement, and environmental goals.

So get out there and start recycling something even more interesting than those old aluminum cans – recycle your energy investments!

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OPPD is considering a rate restructuring, which the Board of Directors will discuss November 12th. The proposed change would increase the basic service charge for residential and small business customers from $123/year to $420/year in fixed charges while slightly decreasing consumption costs.

To give this ‘basic service charge’ some context, the Wall Street Journal reported a typical rate of “$5 or so” per month ($60/year), and the ACEEE reported fixed fees of $5-10 per month ($60 – $120/year) as of late 2014 for average residential customers.

The proposed rate structure is bad policy for the following reasons:

  • Low use customers will pay more ($60 – $180 annually) including many low-income residents and fixed income seniors, while high use customers (higher income) will pay less by roughly the same amount;
  • Apartment & small home dwellers who conserve will pay more for the same energy;
  • Reduced incentive to for all customers to be more energy efficient and conserve;
  • Increased wasteful use of energy, adding to air pollution and climate change;
  • Makes investing in renewable energy harder to justify economically.

I urge OPPD to strive to live their new slogan – “Leading the way, we power the future.” Lead our community in its battle against poverty and its goals to care for the natural environment. With the Pope’s recent encyclical in mind, OPPD’s rate restructuring is a real life decision where care for the poor and care for the environment go hand in hand.

The proposal to lower the cost of a kWh, the rate you pay for the electricity that you actually use, is counter to the future power-generation plan OPPD recently approved. Lowering the rate a customer pays for the electricity consumption reduces the incentive to conserve energy. Often, customers and small businesses look at how long a technology investment will take to recover its upfront cost in energy savings – financial payback. Lower rates result in poorer paybacks, which will slow investments in energy efficiency and renewable technologies that are important for our planet’s long-term health.

UNO’s report, “Nebraska Energy Burden Study: 2013 Update” provides the following statistics for Nebraskan’s energy expenses:

  • For households making less than $30,000, the average cost of energy was $1984 per year.
  • For households making more than $40,000, the average cost of energy was $2451 annually.
  • Households making more than $100,000 had an average cost of energy of $2738 per year, more than $750 above households making below $30,000.

This data demonstrates that low-income households pay less for energy than high- income households, as they should. They use less, they should pay less. The new rate structure begins to shift the current, rather equitable distribution of costs so that the poor, elderly, and environmentally conscience pay for large homes or other homes that consume larger portions of the energy load.

I’d like to see a map from OPPD that shows which customers’ bills are going down and which are going up. Real data, real addresses, mapped over the OPPD territory. Board members and OPPD leadership should be asking for this to ensure they fully understand the impacts of this change. Such an exercise will quickly tell who is paying for whom in the community under the new rate restructuring.  I can’t help but think that the map would look something like this one.

As an accountant who cares about both the poor and the environment, here are my thoughts:

  • It doesn’t matter whether a business has fixed costs or variable costs. The customers are not responsible for the costs. Customers pay for the products they purchase. A business’s executive leaders, accountants and finance folks are in charge of managing both fixed and variable costs, and that’s one of the many reasons accounting and finance is sometimes complex. It’s also why it’s great that Nebraska has public power, which shouldn’t feel the same pressures as shareholder-owned utility companies to meet quarterly earnings projections.
  • Customers are not buying a part of a power plant, part of a power line, nor are we asking to take on a week’s salary of an OPPD employee. Customers are buying electricity delivered into their homes. That’s it, nothing more, just kWh.
  • If OPPD has missed budget targets or future purchase forecasts have changed, they should adjust the price of the product being delivered, kWh. If I built a house that’s too big for my budget, I don’t go to my boss and say, well gosh, I’ve got a big fixed mortgage now, I need a raise.

The reality is that OPPD has a pretty significant budget shortfall. So rather than solely poking holes in their proposed plan, I’ll offer three ways for them to narrow that budget gap:

  • Increase kWh rates for all users, which lets everyone share the load equally.
  • Do what you do with your large business customers, charge a demand charge to residential customers and small business customers too. Demand charges continue to incentivize energy efficiency, because consumers can affect the amount charged by reducing consumption.
  • Move to a time-of-use pricing structure, where electricity costs more when it is most expensive to produce, usually during the late afternoon hours of the summer.

OPPD has made great progress in the past few years, with wind power purchases and decisions to retire three coal units in North Omaha. I am truly amazed that our power company will likely be 1/3 wind and 1/3 nuclear by 2018, both very low carbon and affordable power sources.

This is a public power state. We, the people, own our utilities, and we are represented by elected officials that are supposed to represent the consumers by definition.

The OPPD Board will hear from staff and the community at their November board meeting on Thursday, Nov 12th at 10:00 a.m. The public will have an opportunity to make 3 minute statements to the Board or you can email the Board at their website.

Speak up residents and small business customers – speak up and help OPPD lead us in the right direction!

 

For more information:

Meeting tonight with OPPD, Nov 9th

Rocky Mountain Institute – Fixed Charges don’t “Fix” the Problem

News on fixed charge changes – approved in Wisconsin, rejected in Minnesota

Similar rooftop solar fixed fee news

Featured Image courtesy of Watie White.

 

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At Verdis we are all driven to reduce our impact on the environment; at work and at home. Everyday, we work with clients to develop and implement changes to reduce energy use, reduce waste, recycle more, and simply reduce our collective impact on the natural environment. Beyond working with our clients, all of us individually pursue our passion to make the environment healthier in other ways. Craig chairs the group Mode Shift Omaha working to broaden active transportation options in Omaha, and Daniel serves on the Metro Transit Authority Board. I’ve been working on my personal impact on the environment, and have been building my dream home in the most sustainable manner we could.

House

What were we able to accomplish from a sustainability perspective on our new home?

 

My husband and I are quite proud of our HERS 32 Rating.  A Home Energy Rating System (HERS) rating is a score that compares a home’s energy use to a modeled house that is the same as your house, but built to 2004 International Energy Conservation Code. For a HERS rating, the lower the better. A home that scores zero is a Net Zero home, meaning it produces as much energy as it uses, typically through solar or wind power. Our HERS score of 32 means that our house is 68% more efficient than the HERS reference/modeled home. The U.S. Department of Energy determined that a typical resale home scores 130 on the HERS Index, so we are 98% more efficient than a typical resale home! My understanding is that only a handful of homes in Nebraska receive a HERS score this low on an annual basis, and once we add solar – net zero here we come!

 

Here are the highlights of changes we made from a typical home, which make our home more energy efficient and lessen our environmental impact:

Mechanical Systems

  • Open loop geothermal heat pump uses the 52 degree ground water temperature to heat and cool the home. We don’t need an air conditioner! And we expect our heating & cooling bills to be only $39 a month on average. The cost of this system is significantly supplemented by the Federal Tax credit.
  • Hybrid heat pump water heater uses the energy in our basement’s air to heat our hot water (along with electricity). This water heater is twice as efficient as a regular hot water heater (expecting to cost only $9 a month for hot water heating).
  • A variable frequency drive (VFD) on the well pump allows the pump to use only the energy needed to pump the amount of water needed at the time, instead of only having two options of “on full speed” or “off.”
  • A desuperheater transfers excess heat from the geothermal system to the water heater to preheat the water.
  • An Energy Recovery Ventilator (ERV) acts as the home’s lungs bringing fresh air into the house, while recovering some of the energy in the stale air before its removed from the house 

Construction Methods

  • rigid foam2×6 framing of the walls to allow for two extra inches of insulation (57% more), compared to traditional 2×4 construction
  • One inch rigid foam insulation used continuously on the exterior (instead of plywood) provides additional insulation and air sealing (see image at right)
  • Borate only treated blown in cellulose insulation in wall cavities, mainly used for health reasons, but also because cellulose is a great insulator and made from recycled paper. We used Green Fiber insulation made in Norfolk, NE
  • Energy efficient windows by Gerkin made in Sioux City, NE
  • Some Forest Stewardship Council (FSC) wood during construction, bonus from Millard Lumber – thanks!
  • Caulking the top and the sill plate before insulation to seal air gaps
  • Capillary breaks under and around foundation (plastic under the basement floor and waterproofing spray between the foundation walls and footings) minimizes the water that can enter the basement through the concrete
  • Passive radon mitigation system that allows radon under the home to exit through closed pipe that goes out the roof
  • Rough in for future solar, hopefully installed before the tax credit expirescarpet tile

Lighting, Interior Finish, and Other Sustainable Choices

  • LED lighting, we found screw in bulbs in traditional fixtures were the most economical, especially when bulbs were purchased in Council Bluffs.
  • A detached garage (attached garages often bring unhealthy air into the home)
  • East and south windows to warm the house in the winter, and larger eaves to keep the sun out in the summer
  • Energy Star appliances
  • No and low VOC paints/stains
  • Low flow water faucets, toilets and showers
  • Recycled carpet tile samples in our office / guest room (see image at right)
  • Products made close to home to minimize transportation emissions. For example, pre-finished wood floors are often finished in Asia with significant emissions from that transport; ours is wood floor from the United States and manufactured in the United States.

Implementation Evaluationsblow door smallestestest

  • Blower door tests evaluated air sealing. We did this before paint, trim and floors were installed, to see if the house was sealed well at a point – it was!
  • Personal inspection of the items that were different from what our builder usually used, like the blown in cellulose insulation

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So with all of these great energy saving strategies – What can I tell YOU about saving energy at your home?

  1. If you have incandescent lights in your home, go to Home Depot in Council Bluffs ledsTODAY and buy LED light bulbs to replace all the lights in your home. REPLACE them TONIGHT.

If you have a large home, this could add up to a couple hundred dollars investment, but the investment will pay for itself in electricity savings over the course of a year or less if you are replacing incandescent bulbs. The payback if you are replacing compact florescent lights (curly cue ones) is not as good. This Home Depot has the best prices I’ve seen for LEDs; a 60w-equivalent bulb is usually $5-7 each. On sale for $3 a week or two ago… After the first year, you’re saving lots of money in electricity each year! Here is a handy calculator to see this savings.

  1. If you are building or want to do a more significant project in your home, air sealing and insulation are the most cost effective ways to save energy. I would suggest getting your home’s HERS rating calculated. Then I would talk to the rater that does this calculation to see what you could do to improve your specific home in a cost effective way. I used American Energy Advisors (AEA) here in Omaha for this, and was very happy with the work they did for us and the advice they provided throughout the building process.
  1. If you are installing new insulation, take the day off and oversee the installers. The installers my builder used had never installed blown in dry cellulose and were given insulationno instruction on how to do so. When the ‘finished’ insulation was reviewed by the manufacturer representative to ensure it met manufacturer specifications (at my special request), it was short about 25% of the needed material. I’ve heard of other installers in town just skipping entire wall cavities. My advice here is to get lots of references before you choose a company, spend 20 minutes learning what you need to on the internet about how things should be installed, and then be there while the job is happening to actively review the installer’s work.

At the end of the building process, when AEA brought their infrared gun to check wall temperatures on a very cold December day, I was happy with the temperatures on the walls at this point. We’ll see a few years down the road, whether the insulation settles or not, a check we can do with an infrared gun that reads wall temperatures.

  1. If you want to build a green home, make sure you find a builder in the area with some experience with this, and just as importantly, a builder that is interested and willing to learn. Based on my research and conversations with others in the green community, there doesn’t seem to be a go-to green builder in Omaha.

We asked Landmark Performance Homes to build for us, and the owner Steve Faller was great throughout the entire project. Whenever we had a green practice in mind that Landmark had never done before, we talked through it. Steve gave us his insight based upon years of building experience and together we chose the best path forward. This was critical to keep our costs under control and to ensure that best practices in green building were incorporated whenever possible. I found Building Science and Green Building Advisor to be the most helpful websites when sorting out detailed questions on what to do.

  1. If you are buying a new home, check out the HERS scores before you buy. Here is the Residential Energy Services Network’s (RESNET) database of all HERS scores. Also, keep an eye out in realtor descriptions for HERS scores; local builders are working to get HERS scores included as part of the Multiple Listing Service (MLS) system where all realtors share listing information. If you are buying a home with a lower HERS score, this will save you money every month and should tip the scales when selecting between homes.

 

In the end, we love our dream home, and we are proud to have built a home that will stand for hundreds of years, making a small ongoing impact on our environment.

And if you wake up to this view everyday, how can you not want to protect our environment.

sunrise 11 inch

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Nebraska’s businesses and economy face a great risk due to climate change, according to a new risk management study that assesses the impacts of climate change on jobs, crop yields, infrastructure, and energy production.

A bi-partisan group including former New York Mayor Michael Bloomberg, former Wall Street titan and Treasury Secretary Henry Paulson, and other prominent businesspeople and public officials launched the Risky Business Project that developed this study called “Risky Business.”

Our current economy and society have been organized and built around normal weather patterns with some resilience to occasional extreme weather events. Due to climate change, weather events that are today considered “extreme” will soon be considered “normal.” This increase in extreme weather poses risks to our current economy and societal structures.

Through a risk assessment, the study looks at the likelihood of possible future scenarios and the risks associated with each. If we continue with carbon emissions associated with business-as-usual, the risks for Nebraska by 2050 include 2x-3x more days over 95°F each year than currently and average summer temperatures increasing by 1°-3°F.

Nebraska is likely to see anywhere between 22 and 46 days over 95°F each year and average summer temperatures between 75-78.6°F by mid-century.

Nebraska is likely to see anywhere between 22 and 46 days over 95°F each year and average summer temperatures between 75-78.6°F by mid-century.

This rise in temperature could increase the demand for electricity, primarily from air conditioning, by 2.2 – 6.7%. With increased electricity demand across the region, Nebraskans could see energy expenditures increase by 2.0 – 10.6%. The heat will also reduce labor productivity by as much as 1%, primarily for outdoor workers in such industries as construction, utility maintenance, landscaping, and agriculture.

By mid-century, Nebraska farmers could see crop yields either slightly increasing by 1.5% or dropping as much as 24%. By 2080-2099, crop yields look even worse with a decrease between 10-57%.

From the defense industry, to insurance companies, to healthcare, several of Omaha’s largest industries are studying the impacts of climate change on their organization in order to manage risk. The report indicates we must take action immediately:

“If we act today to move onto a different path, we can still avoid many of the worst impacts of climate change, particularly those related to extreme heat. We are fully capable of managing climate risk, just as we manage risk in many other areas of our economy and national security—but only if we start to change our business and public policy decisions today.” –Risky Business

So what can we do?
The value of a risk analysis is to help prevent or minimize negative surprises and unearth new opportunities. With climate change, there are two necessary approaches to minimizing risk: mitigation and adaptation.

Carbon dioxide and other greenhouse gases stay in the atmosphere for hundreds of years. What we emit today will impact our climate for at least another 100 years. To mitigate risks associated with future climate change, we must reduce or eliminate emissions today.

Organizations in Omaha have begun to take steps to reduce emissions. OPPD has taken a bold step by outlining its plan to reduce electricity demand while simultaneously increasing renewable energy generation, both of which reduce greenhouse gases.

And we have clients that are taking major steps forward as well. The University of Nebraska at Omaha is working on a Sustainability Master Plan that will outline steps the university can take to reduce emissions and improve its bottom line. Omaha’s Henry Doorly Zoo and Aquarium has already cut energy use per square foot by 7%, while saving over $100,000 each year, and the Omaha Public Schools have cut emissions over 42,000 metric tons and saved $2 million in the last four years. Just to name a few.

Adaptation is also necessary, because the impacts of climate change are already being felt from coast to coast.

Many businesses are developing adaptation plans that include both addressing new challenges as well as discovering opportunities they didn’t know existed. Farmers continue to shift to sustainable agricultural practices and use technology to adapt to changing weather. Irrigation research and technology continues to enable farmers to use less water while maintaining or improving yields, and the Land Institute cultivates perennial crops. Each of these practices saves farmers money while improving resilience to the risks of climate change.

For more systemic change, the report authors say “it is time for all American business leaders and investors to get in the game and rise to the challenge of addressing climate change.” This includes investors incorporating risk assessment into capital expenditures and balance sheets, and the public sector instituting policies to mitigate and adapt to climate change.

Ultimately, this is a problem of today, not some far off generation. Every decision we make today will either increase the likelihood of negative climate impacts or will help us manage the risk so we can thrive in Nebraska.

How does your organization plan to mitigate and adapt to climate change impacts?

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On Thursday, June 19, Omaha Public Power District’s Board of Directors approved their 20-year generation plan and took a serious and bold step forward with its energy generation portfolio.

There are three things that stick out as noteworthy:

  1. Three coal-fired units in North Omaha will retire by 2016, and the remaining two will transition to natural gas by 2023
  2. OPPD will maintain at least 33% of their portfolio in renewables once they hit that mark in 2018 (context: MidAmerican Energy is at 39%)
  3. OPPD plans to reduce demand of 300 MW through energy efficiency and demand-side management programs

The net result, according to figures from the Sierra Club:

  • 49% reduction in CO2 emissions
  • 85% reduction in mercury emissions
  • 74% reduction in NOx emissions
  • 68% reduction in SOx emissions

With such a bold, audacious, and dare I say pro-environment (gasp!) plan, one would expect that rate payers would have to pony up some cash to make it happen, right? Wrong! (said in Dana Carvey’s unbelievable John McGlaughlin impression.) Rate payers should expect an overall rate impact of 0–2%. Yup, you read that right; basically no net financial impact to rate payers.

So what does this mean for the average Joe? Less pollution, for starters. Levels of pollution, especially SOx, in and around North Omaha are above average. Cleaner air = healthier air = healthier people = happier people.

The reduction in CO2 is nothing to sneeze at either; by reducing these emissions so significantly, OPPD has really helped those organizations that set climate reduction goals.

Finally, the demand-side programs could reduce energy costs, especially for larger customers, if and only if they participate in them. I repeat, companies will need to take advantage of them. Lighting retrofit, anyone?

A round of applause is due to OPPD, its board of directors and management team. Their stakeholder engagement process resulted in a pretty exceptional outcome, which is not always the case with these types of efforts. And kudos to those individuals and organizations that advocated for clean and healthy energy policies; it’s a pretty exceptional feeling when all that hard work culminates in such a great outcome.

Now let’s get to work with implementation!

Onward and upward.

 

 

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As an advocate for increasing the use of renewable energy as one action to slow climate change, I am disappointed by the news that the South Shore Heights Homeowners Association has forced one of the neighborhood residents to remove solar panels from the roof of his house.

Over the weekend the Omaha World Herald published a story summarizing the struggle and conclusion of one South Shore Heights (SSH) resident’s attempt to have solar panels on his home. Resident Tim Adams installed the panels on his roof in 2010 and has been battling the SSH Homeowners Association (HOA) ever since. The two sides recently settled a lawsuit (prompting the OWH story) and Adams agreed to remove the panels by July 1. I want to summarize the arguments on both sides and then add my own two cents.

Tim Adams’ Argument

Mr. Adams created a website to tell his side of the story and to “educate Omaha homeowners about solar power and the lawsuit” with SSH. His primary argument is that solar panels are not prohibited by any language in the SSH covenants. Moreover, Mr. Adams argues the HOA board has for years failed to follow protocols in the covenants for approval of external improvements and has been inconsistent in approving certain improvements.

A view of the rear of Mr. Adams house in South Shore Heights.

The HOA’s Argument

In challenging Mr. Adams’ solar panels, the HOA board relied upon covenant language requiring external improvements to conform to the “look, feel and style” of the neighborhood. The board argued that allowing solar panels on Mr. Adams’ house would reduce property values and make it more difficult to sell the home, in addition to being ugly.

My Perspective

Even though the HOA was on the winning side, I think the HOA was on the wrong side.  The evidence that global warming is already happening is growing, and even though Nebraska won’t disappear due to sea level rise—unlike many island nations—Nebraskans should start preparing for more frequent and severe drought, more wildfires, and changes to wildlife and insect inhabitants as climate change impacts the midwest. (What do you think these impacts will do to our agricultural economy?) Our past burning of fossil fuels and the associated emissions are starting to catch up with us. The future costs of the impact of climate change are going to make the supposed aesthetic concerns of the SSH HOA insignificant. The SSH HOA seems out of touch with the causes and effects of climate change.*

Climate change is likely to increase the frequency and severity of drought in the midwest, meaning that reservoir lakes such as Lake Zorinsky near South Shore Heights, will eventually disappear as water supplies decrease.

Although I do not know if the SSH HOA has challenged other exterior improvements in the neighborhood, other HOAs around the country have fought with homeowners over such frivolous items as holiday decorations, yard signs, types of pets, use of clotheslines for drying clothes, and allowable flora and fauna. There have also been other HOA challenges related to more significant items like the on-site use of renewable energy for a home. As a society we need to get past the point where aesthetics and short-term economic concerns prevent one individual from making a decision to reduce his family’s contribution to climate change by investing in solar energy.

I suspect that Mr. Adams thoroughly educated his neighbors on the financial case for on-site renewable energy and the environmental benefits of preventing climate change. However, I wonder if he mentioned the more immediate impacts of pollution from OPPD’s coal- and natural gas-based electricity generation, and the immediate health benefits to everyone in the Omaha region from reducing the emissions from nearby power plants. These emissions are directly tied to respiratory irritation across the population but especially in the very young and very old, linked to asthma and bronchitis, send mercury into the atmosphere and environment, and emit gases that lead to acid rain.

Selection Bias In Action

Regardless of the SSH HOA’s right to exercise its authority pertaining to the “look, feel and style” of the neighborhood, I think that Mr. Adams was right not to back down right away. The HOA may not have fully considered the practical value—as opposed to any aesthetic value—of the panels, because it appears the board members were likely making decisions using selective bias. Selective bias is a human tendency to perceive information that reinforces preexisting beliefs while ignoring information that challenges existing beliefs. In such cases, convincing others to act on information alone is quite difficult. Instead, those individuals need to come to the conclusion on their own either through their own experience or over time. It seems the SSH HOA already has a bias against renewable energy regardless of its practical value, and did not truly consider or weigh that value against any preexisting biases.

The settlement between the parties reinforces the apparent presence of selective bias. In addition to restricting Mr. Adams from taking future legal action or filing complaints against the HOA, the settlement does not allow him to make any future public comments about the case or the HOA and its members, whether on Facebook, his website, or other media. Although I don’t agree, I can understand the settlement requiring removal of the panels and preventing future legal action, but the restraint on Mr. Adams’ speech seems only to underscore the HOA’s bias in this situation. The HOA was able to block Mr. Adams from using renewable energy on his home, but why should he also be restricted from making future comments about the case? The answer is that it reinforces the HOA’s apparent bias against on-site renewables: The HOA had an opportunity to remove a voice from the table that it didn’t agree with by imposing this bias on Mr. Adams’ would-be audience. In other words, the HOA appears to have shifted from the internal bias of “I don’t care what you have to say and I’m not listening,” to the external “Because I don’t want to hear what you have to say, I won’t allow you to say it to anyone else either.”

Conclusion

By filing for a court injunction to force Mr. Adams to remove his panels, the SSH HOA could have set a very damaging precedent to the future use of private renewable energy generation in the Omaha area. Even though it is disappointing that the HOA ultimately achieved its objective to remove the panels, it is better that it occurred through a private settlement rather than a court decision. The next time an HOA threatens renewable energy on a private home in Omaha, I hope Omaha residents can galvanize support for city-wide changes that ensure any homeowner can take action to his or her carbon footprint by investing in private, on-site renewable energy generation. Nebraska’s net metering statutes presumes that residents have the ability take such action, and allowing distributed generation increases the security and reliability of our electricity grid by spreading out the generation and reducing the need for transmission, in addition to mitigating climate change.

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*The South Shore Heights website “about” page states that SSH is “situated within a quarter mile” of Lake Zorinsky, and features a panoramic image of the lake. The implication is that the neighborhood derives value from its proximity to a natural place, and I am sure that is true. However, there is a disconnect because Mr. Adams solar panels would reduce greenhouse gas emissions, which is an action that mitigates climate change, and thereby helps preserve natural places as we now know them. Without greater action to mitigate climate change, scientists predict more frequent and severe drought in the midwest, which has the potential to perpetually dry up reservoir lakes such as Lake Zorinsky as water resources become more scarce.

 

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Phew! The world did not end on 12/21/12 as many deduced it would based on the rollover of the Mayan calendar. That is great news. Now we only have to wait for global warming to become as alarming and “interesting” as the possible end of the world.*

As more people are concerned by global warming, more people will want to act to prevent global warming and be willing to contribute to the effort. Those contributions will have to be both action-oriented and financial, but many Americans are weary of making that financial commitment in a recession when they aren’t sure climate change is even linked to human activity.**

The United States was long the world’s largest producer of greenhouse gas emissions, but China has recently surpassed the U.S. In spite of the recession, the U.S. remains the second-largest emitter in the world (producing nearly 20% of worldwide emissions) because of the availability of energy. When I say availability, I mean that energy is both easy to use (accessible) and cheap to buy in the U.S.

Cheap?… Cheap! Cheep!

When many Americans hear politicians advocate for cheap energy, they often respond like baby chicks with an enthusiastic, supportive, and approving “Cheap? Cheep!” without much concern for where that energy comes from or the actual cost of supplying that energy. And realistically speaking, who doesn’t want energy to be as low-cost as possible? The problem is that when you only talk about energy being cheap in terms of the dollar cost to the consumer, you miss a lot of the hidden costs associated with fossil fuel energy.

But why is fossil fuel energy so cheap in the U.S. (Cheap? Cheep!)? I’m not an economic guru, but can share a couple of fundamental factors of which I am aware. One reason energy is cheap in the U.S. is that the extraction and production of fossil fuels is heavily subsidized by the federal government. In fact, the federal government subsidizes fossil fuels with about 5 times as much money as renewable energy in the form of tax breaks and direct spending. For example, from 2002 to 2008, the government provided $70 billion to fossil fuels and only $12 billion to renewable energy.

Secondarily, the presence of these subsidies on fossil fuels incentivize the effort to search for and extract fossil fuels. This increases the supply of these sources beyond what a free, unsubsidized market would support. According to the economic “laws” of supply and demand, a greater supply leads to lower relative demand and lower prices. We know the impact of large subsidies on fossil fuel extraction is real because even the relatively small production and investment tax credits from the U.S. government for wind energy have created a tremendous wind energy boom in the past five years. The policy problem with putting our chips behind fossil fuels now is 1) that fossil fuels eventually run out, and 2) while we burn fossil fuels at a rate far greater than our ecosystem can safely absorb the associated emissions (and pollution) we are changing the atmosphere and environment. These changes are starting to warm the planet and create foreseen and unforeseen consequences. There is no way to accurately predict the financial cost of these changes, but they are estimated to be very large.

Taxes, Fees, and Caps

In order to level this playing field, and provide price signals to consumers about the actual known and unknown/unquantifiable cost of burning fossil fuels and releasing greenhouse gases into the environment, experts, citizens, and Congress have explored various methods to create pricing signals.

Taxes on emissions are often generically referred to as “carbon taxes” because the element carbon is one of two elements present in carbon dioxide, the most prolific and infamous greenhouse gas. These taxes could work similarly to traditional taxes on specific items like gasoline, cigarettes, or alcohol, and would apply to fuels that produce carbon dioxide through combustion. The government would collect these taxes and in theory use them to support programs and projects that mitigate and adapt to climate change.

Other experts have advocated for carbon fees. Generally, carbon fees would be collected similarly to taxes but distributed directly back to citizens rather than being doled out by the government. The benefit of fees is that they would directly help citizens purchase energy or efficiency measures and thereby help them with the increased cost of goods and services.

Finally, cap-and-trade is a notorious proposed solution to reduce emissions in the U.S. Cap-and-trade basically involves setting a limit on an entity’s emissions (a cap) and then allowing that entity to either use less energy (by reductions or efficiencies) or obtain emissions offsets from other entities that produce fewer emissions than their limit who sell credits for those reductions. This scheme affects the price of carbon by creating an economic market for the capacity to produce greenhouse gas emissions.

What Have We Now?

I think many Americans are opposed to all of the above options because they would inevitably increase the cost of energy, which would increase the costs of goods and services that use energy for production and transportation. However, as demonstrated by the lesson of Omaha’s $1.6 billion combined sewer project, if we aren’t willing to pay a little bit today and over time, we are going to have a very large invoice from mother nature before the end of the century, and it will probably make the cost of hurricanes Katrina and Sandy look like my allowance in first grade.

But here is the thing, your cost of energy already tracks the related emissions. The only difference between what we have now and the above options is that, in many cases, no percentage of the current cost is specifically designated as being tied to emissions. As an example, take a look at the graph below showing the average annual total greenhouse gas emissions and average annual total energy cost for 83 OPS schools over the past 24+ months. The two lines are nearly identical in shape! What does that mean? Simply put, it means that you can figure out emissions simply based on energy spending, and therefore that the cost of energy somewhat incorporates the related emissions. But we are not yet calling a component of that cost a carbon tax or fee.

Graph comparing the average total annual emissions (previous 12-month period) with the average total annual energy expenses (previous 12-month period) for 83 OPS schools.

Download a .pdf of the above graph by clicking this link: OPS Emissions v Expenses.

The pricing schemes mentioned above would simply shift the cost line up slightly while retaining the same overall shape. Yes, it would probably increase the monthly energy bill by a certain amount, but if we apply the additional marginal revenue toward energy efficiency, clean energy, and renewable energy, we will over time be investing in measures that prevent a future lump-sum bill that is likely to exceed anything we can imagine. For example, one expert has calculated that for every $1 New York City spends today to prepare for and prevent climate change it will save $4 in future repairs.

Conclusion

My personal conclusion is that there is no reason to fear a slight increase on your energy bill today (assuming the increase leads directly to climate change mitigation and adaptation) when there are clear indications that the cost of not making that investment will be, for lack of a better word, huge. Cheap energy might seem desirable, but if we aren’t careful to think about what it really means to have cheap energy we might all be shouting “Cheep? Cheap!” while civilization as we now know it risks the same fate as the infamous dodo bird.

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* Climate experts are predicting that future warming due to past emissions already has the potential to change many aspects of civilization as we now know it.

** Climate experts are certain that the current changes to earth’s climate are the result of human activity.

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