According to the Scripps Institute of Oceanography, atmospheric carbon dioxide levels will surpass 400 parts per million (ppm) for the first time in human history.
Scientists guess that CO2 levels have surpassed 400 ppm at several points in the past, such as during the Pliocene Epoch. However, scientists estimate during that period global average temperatures climbed 3 or 4 degrees C (5.4-7.2 degrees F) higher than today’s and as much as 10 degrees C (18 degrees F) warmer at the poles. Sea level ranged between five and 40 meters (16 to 131 feet) higher than today.
Activists across the country are campaigning to reduce carbon dioxide levels to 350 ppm–what many scientists consider to be the safe level of atmospheric carbon dioxide.
We would like to congratulate the State Legislature of Hawaii for passing Senate Bill 1087 (SB 1087), innovative legislation authorizing the first ever combination of bond financing and on-bill repayment for clean energy infrastructure, including distributed generation solar PV systems.
SB 1087 will make it less costly to deploy clean energy projects in Hawaiiby creating a loan fund capitalized by low interest utility tariff-financed bonds sold to private investors such as pension funds. SB 1087 will also make it easier for all Hawaii residents to finance solar PV hosted at their residences or businesses by providing them access to low cost loans from the loan fund that can be repaid through on-bill repayment on their utility bill. ClimateWire explains that, “because consumers will pay those back with their monthly power bills, the packages become lower-risk and easier to sell.” The state plans to make $100 million in bonds available as a start. Neil Abercrombie, Hawaii’s Democratic Governor, is expected to sign the bill which would take effect next year.
One benefit of this program is that “everybody, regardless of economic means, can access these alternative energy devices,” as stated to ClimateWire by Lowell Kalapa, President of the Tax Foundation of Hawaii. Previously people with sufficient upfront capital (or the access to capital) were the only ones installing solar PV and taking advantage of available tax credits. With this program, lower-income residents and those who can’t obtain bank loans will have access to low cost financing for solar PV. Additionally, renters of homes will be able to install solar PV panels with the approval of their landlords because the payment is attached to the meter, not the tenant.
As explained to ClimateWire by one of the creators of the concept of Property Assessed Clean Energy – “For the first time, the type of low-cost bond financing that has been available for utilities to build power plants is being made available for homeowners to put solar on their roofs.” He further explained that “this just changes the whole ballgame” and “if it is successful in Hawaii, it will be model that other states will look to.”
CGC has been working with the Hawaii State Legislature for several years to promote low cost financing mechanisms for the deployment of reasonably priced clean energy. The state goal is to have 70% clean energy by 2030; one of the highest in the country. We hope other states will follow Hawaii’s example and adopt similar financing mechanisms.
At the end of last summer, the Obama Administration finalized its historic “54.5 MPG by 2025 “ fuel-efficiency standards. These new fuel efficiency standards require that the U.S. auto fleet (cars and light-duty trucks) average 54.5 miles per gallon by 2025. If successful, these standards would nearly double today’s average fuel efficiency. Luckily, a new report by Jack Gillis and Mark Cooper of the Consumer Federation of America suggests that this goal is not out of reach.
Released just this April, the report presents the results from a series of surveys about American consumers and summarizes numerous government and auto-industry actions, suggesting that 54.5 mpg by 2025 is not only desirable, but also feasible. Government action has served as a catalyst to this trend since 2007, when Congress passed legislation that re-started the fuel-economy standards program. In 2008, the legislation was followed by a tightening of fuel-efficiency standards, sending clear signals to automakers.
Sensing the beginning of a long-term, government-regulated trend, automakers began selling a variety of hybrid and electric vehicles and improving fuel-efficiency standards across all models. In the last five years alone, the number of vehicles getting more than 30 mpg has quadrupled (from 1.3% of all existing models to 9.3%). Although there has always been consumer demand for more fuel efficient cars, introduction of new government standards served as a much-needed catalyst for automakers.
*CAFE = corporate average fuel economy
Luckily, American consumers also support increased fuel-efficiency standards. In a nationwide survey of 1001 representative American adults, a large majority (85%) said they support the new fuel efficiency standards. Furthermore, the support came from both sides of the aisle.
To spur government demand for fuel-efficient cars in the government automobile fleet, Dan Tangherlini, the acting Administrator of the General Services Administration, announced that he will now offer hybrids at the same price as standard sedans. Tangherlini said he is able to remove the extra charge that use to be associated hybrid vehicles because hybrids will ultimately save the administration money through decreased fuel costs. Tangherlini is looking to replace 10,000 cars in the federal fleet with new hybrid vehicles.
This combination of demand, supply, and government standards lays a solid foundation for the 54.5 mpg by 2025 plan. While these favorable trends in the auto-industry continue, we should analyze this trend in other energy industries. Why isn’t demand for solar where it needs to be? How can government emission standards catalyze more wind deployment? How can we achieve this perfect balance of supply, demand, and regulation elsewhere?
For more information:Jack Gillis and Mark Cooper, “On the Road to 54 MPG: A Progress Report on Achievability,” Consumer Federation of America, April 2013New Research: Consumers Embrace new Fuel Economy Standard, are Purchasing More High MPG Vehicles, and Plan to Significantly Increase Fuel Efficiency in Future PurchasesOffice of the Press Secretary, “Obama Administration Finalizes Historic 54.5 MPG Fuel Efficiency Standards,” August 28, 2012, The White House
A recent article published in the Atlantic by Charles Mann, makes the reader think about the seemingly-ludicrous question: What if we never run out of oil?
The question is prompted by a discussion of methane hydrate—a crystalline natural gas found under areas of permafrost and in the ocean floor. This resource is estimated to be twice as abundant as all other fossil fuels combined and has a total volume equal to that of the Mediterranean Sea. The fuel burns like natural gas; however, it burns clean. Discoveries like this seem to support the view of many social scientists that natural resources are not a finite physical entity. Rather, one can think of natural resources as an economic judgment. If demand for one resources plummets and the market stalls, then it’s time to innovate and develop a new market.
Complications abound in a world governed by purely economic judgments, yet don’t they also in a world facing finite resources?
Charles Mann, The Atlantic, April 24, 2013, Available here.
Senator Coons (D-Delaware) has just announced that he will be introducing the Master Limited Partnership Parity Act. This Bill would level the playing field for renewable energy investors by enabling them to adopt a corporate structure that currently gives tax advantages to fossil-fuel investors.
A master limited partnership (MLP) is a business structure that is taxed as a partnership but whose ownership interests are traded like corporate stock on a market. Publicly traded C-corporations are taxed at the corporate and the shareholder level. An MLP, however, avoids this double taxation since the corporation is treated as a partnership and only the shareholders are taxed. The MLP consists of limited partners (investors) and general partners (managers). The numerous limited partners receive quarterly distributions (equivalent to dividends paid to C-corp shareholders) in return for providing capital. Whereas the limited partners play no role in the management of the MLP, the general managers (usually in the form of another company or a group of individuals) have full control of daily operations and typically hold 2% ownership stake. Historically, many MLPs have offered investors stable returns around 6-7%.
Given the attractiveness of the MLP structure, why hasn’t it been able to aid the renewable industry in the past? The catch is that MLPs must get at least 90% of their income from “qualified sources.” Historically, qualified sources have included real estate or natural resources such as crude oil, petroleum products, coal, timber, and other minerals. According to Section 613 if the federal tax code, qualified energy sources must come from depletable sources. $320 billion of the $445 billion in the aggregate MLP capital market have gone into midstream oil and gas pipeline projects.
The MLP Bill will expand the definition of “qualified resources” to include clean energy sources and infrastructure projects including wind, closed and open loop biomass, solar, municipal solid waste, hydropower, marine and hydrokinetic fuel cells, and other clean fuel sources. By extending the MLP benefits to clean energy and infrastructure projects, the Bill will:
- Attract more investors to the clean energy market with relatively low but stable dividends, while reducing project financing costs by up to fivefold
- Increase the federal tax base because new markets will be opened to investors will have to pay taxes
- Bring more total renewable energy and infrastructure projects online
- Enable more Americans to benefit from investments in clean energy because the current tax breaks (Investor Tax Credit and accelerated depreciation) only benefit wealthy entities such as large banks and corporations with huge tax burdens
CGC has a multifaceted mission statement and collaborates on a wide variety of initiatives. However, one raison d’être not to be overlooked is our mission to advocate for tax and finance policies that support investment in energy efficiency and clean energy. CGC is a proud supporter of Senator Coons’ Master Limited Partnership Parity Act and hopes you will be too.
If you or your organization would like to support the Bill please contact CGC for more information by emailing firstname.lastname@example.org
Sources/ For more information:Anthony Reale , Master Limited Partnerships, JP Morgan, Felix Mormann and Dan Reicher, How to Make Renewable Energy Competitive, The New York Times, June 1, 2012.Master Limited Partnerships Parity Act, Senator Coons, April 24, 2013
Here at CGC we are all about innovation and ingenuity. However, it’s important to step back and recognize what limits there are to ingenuity. As James Boyce of Resources for the Future says, “There aren’t many substitutes for the relatively untouched expanse of Alaska’s North Slope if what matters to you is its very wilderness.”
In the famous 1970s Ehrlich-Simon wager, economist Julian Simon bet biologist Paul Ehrlich $1,000 that the combined price of five commodity metals would fall over the next decade. Ehrlich lost the bet. Because commodity metals can be traded and sold on a private market, businesses and consumers eagerly sought substitutes for the hard-to extract and finite resources at the center of the Ehrlich-Simon wager and prices fell.
But what about resources that “you don’t eat or mine and you can’t find on any international exchange or market?” What about resources as abstract and sublime as wilderness? How do we find an innovative substitute for that?
The Clean Energy Future Blog
for links, analysis, and commentary on the world of green banks and clean energy investment