The Small Steps That Will Lead to a Low-Carbon Economy

BEIJING, CHINA - 2014/12/16: A charging station for electric cars.  To fight the 'war on pollution' , Chinese government is i
BEIJING, CHINA - 2014/12/16: A charging station for electric cars. To fight the 'war on pollution' , Chinese government is increasing public and private charging facilities to encourage the development of electric vehicle market. (Photo by Zhang Peng/LightRocket via Getty Images)

As the world heads toward the Paris Climate talks in a few weeks, we will focus on the big ideas and large steps that will lead to a renewable resource-based future. There is a time and place for big ideas, and this year the COP21 talks in Paris are the time and place for those discussions. But after the conference, when everyone comes home, these large-scale policy discussions will be replaced by small-scale management decisions and the day-to-day actions that will reduce emissions of greenhouse gases and other pollutants. Energy efficiency, microgrids, household solar installation, and electric vehicle charging stations are some of the local level initiatives that will be employed to meet the targets that nations are bringing to Paris.

As we make the transition to a renewable resource-based economy, the low hanging fruit in the battle to reduce greenhouse gas emissions is energy efficiency. In most parts of the United States a large source of greenhouse gas emissions is from transportation. In New York City, we use a higher proportion of energy in our buildings than in transport. This is because most of our travel relies on mass transit, and because many of our buildings are old, energy inefficient apartment buildings. Last week, the nonprofit organization Energy Efficiency for All released an excellent report principally authored by Jonathan Flothow of Steven Winter Associates. According to the report:

Multifamily housing is the largest building sector in New York City, comprising 64 percent of square footage in buildings above 50,000 square feet. Heating is the largest energy end use in this sector, causing the vast majority of carbon emissions. Approximately 76 percent of this square footage is heated by steam. Most of this steam is generated site by boilers that burn fuel and some is provided by the Con Edison district steam grid. Much of this heat is wasted through building overheating. Based on building inspection data, apartment temperatures are often above 80 degrees Fahrenheit, with residents complaining of excessive heat and opening their windows. These systems also function poorly, with clanging pipes, no resident control, and simultaneous cold and hot apartments. The upgrades that ameliorate these problems improve resident comfort while reducing owner operating costs.

The report advocates a number of low cost changes in heating equipment and training that they estimate could save $147 million dollars and 312,000 tons of carbon a year. While the basic source of energy for New York's boilers remains gas and oil, we can still reduce the amount we burn while remaining warm and comfortable in the winter.

Another place where energy is wasted is in the process of transmitting energy from generating plants to homes and businesses. The process of moving from the current century old power grid to a new, computer-controlled and more efficient smart grid will likely be built through the development of a series of interconnected microgrids. New York State's Energy Research and Development Authority (NYSERDA) is promoting the development of microgrids through an innovative set of small scale planning grants and a $40 million dollar competition. According to their website:

Microgrids are defined by the U.S. Department of Energy as a group of interconnected loads and distributed energy resources (DER) with clearly defined electrical boundaries that acts as a single, controllable entity with respect to the grid and can connect and disconnect from the grid to enable it to operate in both grid-connected or island mode.

The Authority's $40 million New York Prize is an inducement for communities to begin the public-private partnerships required to build microgrids. In the build up to the New York Prize the state has already granted 83 communities about $100,000 each to develop feasibility studies to build these energy enhancements. The state's strategy for promoting this innovation is a phased approach to encourage the modernization of the grid. It starts with about $8 million for about 80 feasibility studies in every region of New York. Then, ten of the most feasible microgrid sites will be selected for million-dollar design grants that will move the microgrids even closer to reality. One major requirement of the design phase is to: "Develop formal commercial terms/contractual relationships between project participants..." This requires detailed specification of the public-private partnership that will actually construct and own the microgrid. Finally, seven of the ten microgrid sites will receive $5 million grants to help support the build out and construction of microgrids. Presumably, one of these seven sites will win the New York Prize that will provide even more resources to develop a microgrid in a single community.

This pilot project, demonstration grant approach can be an effective way to learn how to develop the new institutional and financial arrangements required to build this new form of electric infrastructure. The regulatory, financial, organizational, technical and political obstacles to microgrids will be identified and hopefully overcome in this process. Governor Andrew Cuomo, NYSERDA Chair Richard Kauffman, and NYSERDA CEO John Rhodes deserve praise for putting in place a modest, but creative program to start the process of building a smart grid in New York.

If only the federal government could do the same. The renewable energy tax credit, now in place, has been dramatically successful in seeding the solar energy industry. Currently 30% of the cost of the new technology is provided as a tax credit. In January of 2017 that number goes down to 10%. It is impossible to project the impact of this reduced tax credit on new solar installations, but it can't be helpful. Solar has great momentum behind it and this is not the time to make it less attractive to finance.

According to the Solar Energy Industries Association (SEIA), 40% of all the new electrical generation capacity brought on line during the first half of 2015 was solar-generated. According to Rhone Resch of SEIA in an EcoWatch piece:

Without question, the solar Investment Tax Credit (ITC) has helped to fuel our industry's tremendous growth. Since the ITC was passed in 2006, more than 150,000 solar jobs have been created in America, and $66 billion has been invested in solar installations nationwide. We now have 20 gigawatts (GW) of installed solar capacity--enough to power 4 million U.S. homes--and we're helping to reduce harmful carbon emissions by 20 million metric tons a year. By any measurement, the ITC has been a huge success for both our economy and environment.

While correlation is not causality and we don't really know what might have happened if there was no tax credit, it remains hard to believe that a lower price for solar installation had no impact. Even if we don't know all the factors leading to this trend, the tax credit is clearly part of the story. Moreover, given the importance of transitioning to renewable energy, can we really take the risk of removing an incentive at this point in time?

Finally, there is the small but crucial step of building the infrastructure for public charging of electric vehicles. The difficulty in finding public charging stations is even causing conflict in California where the number of electric cars has far outpaced the availability of charging stations. As Matt Richtel reported in the New York Times last month: "About half of the 330,000 electric vehicles in this country are registered in California, and Gov. Jerry Brown wants to increase that number to 1.5 million by 2025. He has pledged a sharp increase in charging stations." Even as battery range continues to grow, public charging stations will be needed for people who live in apartments without garage spots and for people traveling away from their homes.

These small scale improvements to steam heat in New York City, modernize the electric grid, save the 30% renewable energy tax credit and build electric vehicle charging stations may not have the glamor or media spotlight of global climate talks, but they are the front line of the transition to a renewable energy economy in the U.S. The transition will take at least a generation, and while it has already begun, its speed depends on the attention we all pay to the nuts and bolts of implementing these changes in our homes, businesses, organizations and communities.