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Archive for the ‘Green Collar’ Category
Tuesday, October 13th, 2009
The explosive growth in funding for utility-led efficiency programs is one of the most hopeful signs for bolstering energy efficiency efforts in the Midwest and across the country. Thanks to a growing number of states instituting energy efficiency portfolio standards, funding levels are expected to multiply in the coming years. Indeed, according to the Midwest Energy Efficiency Alliance, utilities are expected to spend nearly $900 million annually on energy efficiency in the region by 2012. In Illinois, annual funding will top $250 million by then, up from under $10 million just a few years ago. This level of sustained spending could be transformational on many levels.
However, one detail that gets too little attention is the degree to which important policy decisions regarding priorities, goals, and acceptable uses of these funds have fallen to the regulatory bodies overseeing utilities. While extremely competent and professional, these commissions were established to set utility rates, adjudicate grievances, and ensure continuity of services – not administer programs, promote economic development, nor be the driving force behind the enormous task of transitioning the economy to a low carbon future. In essence, we have transformed the judiciary into a unit of the executive branch without any discussion of the benefits, consequences, or merits of doing so. More alarming, we have done so for one of the most pressing and important challenges we face as a nation (and species).
One consequence of managing these funds through the commission process is that decisions are made according to a very narrow set of criteria. Particularly important is the amount of energy saved compared to resources expended – with no consideration given to the overall economic output produced, jobs created or maintained, markets transformed, or dollars leveraged. Nor does the process evaluate the equanimity of how funds are spent, with assurances of equal distribution to all geographies, incomes, and sectors. Accountability is thought of primarily in terms of seeing that the money produces tangible energy savings, not any of the other elements we all expect and demand from government, such as open access, transparency, helping disadvantaged communities and businesses, incenting innovation, etc.
Given the importance of the decisions being made and the coming scarcity of public dollars, we need a healthy debate about which investments should be made, which outcomes and evaluation metrics are most pertinent, and what process should be used for measuring success and impact. Some states, such as Connecticut and Massachusetts, have created new bodies to ensure that investment decisions better reflect a broad array of policy goals. In Massachusetts, for instance, alternative energy investments are directed by the Massachusetts Technology Collaborative, which seeks to increase installed capacity, as well as foster other important priorities, such as driving innovation, improving global competitiveness, and fomenting job creation. Hopefully, the establishment of these new agencies and wider set of priorities portends the start of the necessary and critical discussion about our best way forward.
Tags: Blog Action Day, Climate Change, community development, green banking, Midwest Energy Efficiency Alliance, ShoreBank, triple bottom line
Posted in Green Collar | 1 Comment »
Tuesday, September 8th, 2009
It wasn’t long ago developers thought “green” design made sense only in upscale markets, not in the low to moderate income neighborhoods where we at ShoreBank focus. Thankfully, much has changed in the past few years.
When we began planning for our application for a New Markets Tax Credit allocation–a federal tax credit for commercial investments in low income communities–we had numerous discussions internally about how to use the program to promote green projects in Chicago, Detroit, and Cleveland. Eventually, we made the controversial decision to focus exclusively on financing/supporting projects involving green buildings, alternative energy installations, and energy efficiency retrofits. The assumption was that we could use the subsidy provided by the tax credits to incent borrowers to pursue LEED certification or capital intensive but cost effective green technologies and design features. We were convinced that we would have to tussle with potential investees about the requirements and hold fast to our commitments in the face of significant push-back from the project sponsors.
Interestingly, now that we have been awarded a $35 million allocation of the tax credits, we are discovering a vastly different landscape. Our growing pipeline of potential projects consists of a wide array of building types: retail, hotel, mixed-use, industrial, education, and office. Perhaps the only commonality among them is their intent to achieve at least a LEED Silver certification and inclusion of alternative energy systems and technologies. More telling, all of the sponsors were committed to achieving a LEED rating prior to reaching out to us about tapping our New Markets Tax Credits allocation. We did not have to push the developers or even initiate the conversation about choosing to build green. LEED certification was part and parcel of their plans from the outset.
There are a variety of reasons for the decisions to build green. In many cases, doing so is required for other types of public subsidy, such as TIF assistance, Enterprise Zone benefits, or allocations of low income housing tax credits. But reasons extend beyond these governmental requirements. In some cases, the developers believe “green” offers a competitive advantage. In other cases, sustainability is a fundamental component of the developers’ “triple bottom line” objectives. An example of the latter is the redevelopment project planned for a vacant commercial building on Chicago’s southeast side, not far from some of the planned Olympic venues. For the developer, this green project offers a profitable way to promote development in this very needy tract–the tract is under 20% of the area median income and has a poverty rate above 40%, making it one of poorest in the city. Yet, this project is about bringing not only 100 new jobs to this underserved community, but also healthy food options to residents of this food desert through the opening of an organic produce store.
We are pleased to see this progression in the marketplace and excited to help further the green economy by helping these great projects get off the ground (none could move forward without the subsidy provided by these tax credits). With developers more open to green requirements than we expected, we can push further by catalyzing creation of new types of financial modes involving third party ownership of alternative energy systems, being more stringent around energy efficiency requirements (as well as “green” design), and promoting greater opportunity for residents.
Tags: community development, energy efficiency, green banking, green building, ShoreBank, triple bottom line
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Tuesday, August 4th, 2009
Like the differing reactions to the recent arrest of Henry Louis Gates, environmental justice has always presented a challenge for the environmental community because of its potential to divide activists along racial lines. Thus, it was with some trepidation that I accepted an invitation to speak at a recent event on the topic.
The discussion, sponsored by the Justice in Journalism program in affiliation with the prestigious Annenberg School at USC, brings journalists who are undertaking in-depth explorations of race and poverty at a local level together from all over the country.
The focus of my session was the future directions of environmental justice. The discussion centered on what could be a fundamental shift in eco-justice. In the past, eco-justice largely examined the adverse environmental consequences to the poor and to minorities caused by economic patterns and activities. A paradigmatic example is the respiratory problems and elevated cancer rates experienced in minority communities that live adjacent to large industrial plants or transportation hubs.
Going forward, I believe environmental justice will center on the adverse economic consequences that environmental policies create for the poor and for minorities. While these policies are undoubtedly necessary for a number of reasons, including confronting global climate change and limiting respiratory ailments, many of these policies are likely to hit poor communities hard economically.
Indeed, one of the journalists at the event described just such an instance. In this case, he was researching the implications that the new environmental rules instituted by the Long Beach ports, which ban entry to older trucks, had on Latino truckers. For these independent and, sometimes cash-strapped, truckers, the rules present a significant economic challenge–either spend the capital required to upgrade to newer trucks or lose business at the port. The financial burden these rules pose on Latino truckers’ livelihood is another “toll” on an already vulnerable segment of the population.
I believe changes in environmental regulations should be arrived at without any additional expense and hardship to underserved communities. By staying focused on the triple bottom line, organizations, agencies and individuals can work together to ensure that sustainability and economic development are integrated and create benefits for all. It may take more than a “beer summit” to close the potential divide, but engaging in dialogue is an important first-step towards ensuring long-term environmental and economic justice.
Tags: community development, environmental justice, green banking, ShoreBank, triple bottom line
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Tuesday, July 7th, 2009
One of the more intriguing questions surrounding the stimulus package is the extent to which the dramatic increase in funding for weatherization ($5 billion) will lead to a sharp rise in number of contractors skilled in energy efficiency retrofits. For states such as Illinois, which have not invested heavily in energy efficiency programs historically, and consequently have a very limited base of contractors knowledgeable in energy efficiency basics, the outcome matters a great deal.
Without question, the contractor issue has been one of the thorniest challenges we have faced in our attempts to catalyze the market for energy efficiency. Our programs have demonstrated that banks and other financial intermediaries can stimulate homeowner interest in energy efficiency by coupling information and capital together. However, these efforts may have minimal impact on energy usage without a corresponding effort to organize, train, and certify the contractor community. We simply have no way to guarantee that the work will be done correctly or produce the projected energy savings.
Indeed, anecdotal evidence suggests that the likelihood of achieving the savings may be quite small without substantial training and quality control measures being put in place. One example comes from the Executive Director of the Midwest Energy Efficiency Alliance, who recently installed a high efficiency furnace in her home. Despite the 94% efficiency rating on the furnace, it took the contractor several attempts and lots of re-working to push the performance up from the low level initially seen. Only because this particular contractor tested the system’s performance and understood how to rectify the situation, the furnace performs at its rated level.
There does appear to be some reason for optimism, however. ComEd, our local electrical utility company, has had notable success in its efforts to engage the contractor community around commercial lighting retrofits. We believe that with a determined focus and the necessary resources behind it, a similar program could prove equally effective for the residential marketplace.
Tags: community development, energy efficiency, green banking, green jobs, Midwest Energy Efficiency Alliance, ShoreBank, triple bottom line, weatherization
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Tuesday, June 2nd, 2009
Last week, I attended an invite-only discussion coordinated by the Department of Energy’s Energy Efficiency and Renewable Energy (EERE) group about the business models needed to exponentially expand energy efficiency within the residential sector. This sector is clearly a priority for the Department of Energy and President Obama. Given how inefficient most homes are and the potential for a residential energy efficiency initiative to drive significant job creation, the government will be directing billions in the coming months on this sector.
The discussion covered the usual issues such as the lack of uniform standards; inadequate processes for verification of savings; problems in the credit markets; and ineffective marketing approaches and messages. A more interesting facet of the discussion related to the philosophical differences among the attendees. One critical question centered on the marketing messages needed to catalyze consumer behavior. One school of thought focused on the need to improve how we communicate the financial benefits of energy efficiency to homeowners. A second approach suggested that emphasizing other types of benefits, such as safety, comfort, etc., may be more effective than sticking to the usual economic rationale. While I can see merits in both, I find myself siding with the latter approach. In particular, I look with envy at the way the organic food sector has just exploded – and this is a product that typically costs more than the alternatives, not less.
The second philosophical question reflects whether the large governmental influx of funds will help catalyze the marketplace or stymie its development. In particular, there is some question about whether the government will let the marketplace lead the way or will overly direct how it develops. Personally, I am fearful that in their haste to get stimulus funds into the community quickly, DOE will rely heavily on old models and existing programs. While many, such as the ENERGY STAR brand, have proven quite effective, we need to create and deploy new models, most of which don’t exist today. Moreover, due to the public ire about waste and fraud, officials are rightly concerned about demonstrating success. Yet, experimentation, and, indeed, failure, are critical for market development and expansion. Neither is likely to be seen by DOE as a measure of success, nor a milestone to be touted to the public.
Tags: community development, energy conservation loans, energy efficiency, green banking, green building, ShoreBank, triple bottom line
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Tuesday, May 12th, 2009
Even reaching the low hanging fruit often requires a ladder
Every year, as part of our Earth Day events, ShoreBank hosts a seminar for nonprofits about the opportunities available to reduce energy usage in their facilities and incentives available from utilities and foundation to complete the energy efficiency retrofits. As part of this year’s event, we asked representatives from ComEd, our local electrical utility, to complete an energy audit of a nonprofit facility. ComEd graciously agreed and presented the findings at the event.
The results were typical of our nonprofit customers – lots of low cost opportunities, such as changing bulbs/ballasts to more efficient varieties, switching to LED exit signs, and adding sensors for irregularly used spaces, such as meeting rooms and bathrooms. The identified measures included replacing inefficient lighting in a building that was built less than 3 years ago. In total, the costs of the measures was less than $40,000, with a pay-back estimated under 3 ½ years.
The reaction to the findings was also typical. The CFO was against spending the funds, especially to replace lighting that was only a few years old, irrespective of the large incentives offered by the utility and the quick pay-back on the measures.
Fortunately, the story doesn’t end there. Thanks to a recoverable grant from the Federal Home Loan Bank of Chicago, ShoreBank is able to offer very low-cost loan to cover these upfront cost. With this low cost funding, and an Executive Director committed to making the improvements, the retrofit is moving forward.
The story is instructive for a couple of reasons. For one, it demonstrates the importance of intermediaries such as ShoreBank. ShoreBank was instrumental in connecting the facility owner to the resources needed to understand the options available. In this case, we discovered that for-profits in Illinois are eligible for free energy audits, while nonprofits are not. So, without our focus on this sector, a whole set of owners, who maintain a large number of older buildings, would fall outside of the established programs.
Secondly, the example illustrates the importance of capitalizing loan funds focused on energy efficiency retrofits. In this case, the risk is very limited – it is a small loan to a large and well established nonprofit. But the perceived risks are high – since the loan is collateralized only by the lighting equipment and the nonprofit is dependent upon state grants, at a time where the state faces a massive budget deficit. By utilizing the funding from the Federal Home Loan Bank, we could offer terms that allowed the project to move forward. We see this financing piece as a critical mechanism to providing a ladder to pick the low hanging fruit.
Tags: community development, energy conservation loans, energy efficiency, green banking, ShoreBank, triple bottom line
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Tuesday, April 28th, 2009
April has felt like tornado season as Earth Day, Spring, and nine guests have come and gone through my apartment. Since my apartment is already dirty, that makes it the perfect time to make my Earth Day green change and “green clean” instead of “spring clean”. As I tasked myself to research the best ways that I could green clean, every tip surprisingly made me think, “wow, that is so cheap and doable!” To round out a month of green blogging, I wanted to provide you with my five favorite tips on how you too can green clean.
1. Clean your entire home with only six basic ingredients
Almost every website I visited used the following ingredients to clean everything from toilets to carpets to ovens:
• distilled vinegar
• baking soda or borax
• castile or eco-friendly soap
• oxygen bleach powder or hydrogen peroxide
• water
• antiseptic essential oils, such as cinnamon, clove, lavender, and lemon
Thedailygreen.com, whose mission is to show how going green is relevant to everyone, can give you the ingredient combination for your cleaning needs. My favorite combination chases ½ cup of baking soda down a drain with ½ cup of vinegar, covers tightly, and then flushes one gallon of boiling water down the drain to unclog a post-guest drain. And it costs approximately the same as any traditional cleaning product.
Best of all, according to Seventh Generation, if every U.S. household used a homemade green cleaner instead of one 32-oz. bottle of petroleum-based all purpose cleaners, we would use 6800 fewer barrels of oil . I’d say that is one small step for vinegar and one large step for “household kind.”
2. Recycle your paper and old clothes into cleaning devices
Why not look to that hoard of newspapers and clothes you don’t wear anymore to help mop up the grime? Cotton t-shirts are easy to rip into the perfect size reusable cleaning rag. Additionally, most researchers agree that the large pile of newspapers amassing in the corner is ideal for cleaning windows and glass objects before being recycled.
3. Recycle unwanted electronics – they contain precious metals
As I mentioned in my previous post on mobile phones, in a 1.2 billion global mobile phone market, 60% of all purchases replace existing cell phones – while only 1% of them are recycled.
A cell phone contains 14% copper by weight and also contains gold, silver, and about one cent’s worth of platinum. I would not throw away a bracelet if it contained those elements, so why discard a drawer full of mobile phones?
E-cycle these items, just don’t dispose of them!
4. Plant one houseplant per 100 square feet of living area
The EPA estimates that indoor air is 2 to 10 times more polluted than outdoor air due to the synthetic materials in much of our household appliances, accessories, and cleaning products. A NASA study of 15 common houseplants found that they could help remove toxins from the air. Although the EPA did not find any evidence that houseplants could remove significant quantities of indoor pollutants, outside of allergies, what is the harm in trying? Plants that might remove home toxins are spider plants, gerbera daisies, chrysanthemums, peace lilies and bamboo.
And let’s face it: green just looks good in a home!
5. Fresh air and weatherproofing is an energy saving combination
According to The Global Warming Survival Handbook, the average US home creates twice the CO2 of a car in one year. That is 22,000 lbs. Taking advantage of warm weather to increase my household’s energy efficiency could also decrease my energy bill by 20-30%. And it all starts with spring cleaning!
Weather proofing windows with “low-e” coasting, blocks heat and UV rays and can lower energy consumption by 20-30%. Additionally, the natural light that longer days provide, enable me to finally change traditional light bulbs to fluorescent ones, reducing lighting energy consumption by 80%.
Wow! My Earth Day resolution poses a lot to tackle! But as a Chinese proverb states “a journey of a thousand miles begins with a single step.” It’s time to start walking!
Tags: community development, energy efficiency, environmental sustainability, green banking, ShoreBank, spring cleaning, triple bottom line
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Tuesday, April 7th, 2009
The City of Chicago recently released its comprehensive and innovative Chicago Climate Action Plan. Chicago now has a very good baseline of existing emissions and a blueprint for its goals of reducing Chicago’s greenhouse gas emissions to 80% of 1990 levels by 2050. Thanks to the leadership of Mayor Daley and tremendous efforts by the City’s Department of Environment, the Center for Neighborhood Technology, and others, such as ShoreBank Corporation board member and former head of the MacArthur Foundation, Adele Simmons, the City now has a clear understanding of what it will take to achieve its ambitious goals.
The steps required to meet the goals are staggering. For instance, the plan calls for retrofitting 400,000 units of housing by 2020. Currently, approximately only 6,000 residences are weatherized annually. This figure should rise substantially given the programs authorized in President Obama’s stimulus package. Even so, the ramp up is considerable.
Interestingly, while the plan offers a great deal of detail on many facets, nowhere does it quantify the expected costs and capital needs for meeting the objectives. Indeed, the capital needs are likely significant. While the exact figures are difficult to calculate since each building will have a different level of capital investment, assuming $7,000 per unit of housing (the estimate used for weatherization costs in the stimulus bill), the housing portion comes to $2.8 billion, and this doesn’t even include the additional costs of more expensive items, such as windows, let alone, higher cost technologies, including geothermal, solar thermal or photovoltaic systems. More likely, given the costs of these items, the capital needs, just for the housing portion (and not including the costs to retrofit the 23,000 commercial buildings), exceeds $4-5 billion.
Such a level of investment would be a huge boost to the region’s economy – indeed, the spending on these retrofits is likely to create tens of thousands of good paying jobs directly, and indirectly support many times that number in the manufacturing, retail and ancillary industries. All told, the investment could support nearly 500,000 jobs regionally. And considering the highest unemployment in 25 years, the dividend on the investment will be an enormous one.
We have seen firsthand how these types of investments impact individuals, families and communities. From the drillers being hired by a geothermal company such as Indie Energy, to the energy raters and installers, active in our Homeowners’ Energy Conservation Loan program, we know that every dollar makes a huge difference reducing energy costs, creating jobs, and protecting the planet, whether its in Chicago, or in any other densely built area of the nation.
To learn more about the Chicago Climate Action Plan’s environmental impact, check out my colleague Karen’s earlier post here.
Tags: Chicago Climate Action Plan, community development, green banking, green building, green jobs, ShoreBank, triple bottom line
Posted in Green Collar | 4 Comments »
Thursday, March 12th, 2009
It’s certainly an interesting time to be a banker, let alone, one focused on alternative energy and energy efficiency. Even the oft-quoted, “best of times, worst of times” quip doesn’t begin to adequately describe the world at hand. Since there is so much bad news about, I will stick to the “best of times” theme for the moment.
One reason for the “best of times” sentiment relates to provisions in the stimulus package. In particular, the change in the investment tax credit (ITC) from a tax credit to out-right grant opens new opportunities for our triple-bottom line orientation. The ITC is available for the owners of solar, wind, and geothermal systems.
The primary benefit of this change is to eliminate the need for a tax credit investor – which, most often, was a very large bank. Now, instead of selling the tax credit to one of these banks, the owner simply obtains a grant from the US Treasury. While these large banking institutions are often fantastic partners, their involvement presented a challenge for many deals, especially for the small, community-based deals ShoreBank is typically involved with.
For one, the large banks weren’t interested in smaller deals because the transaction costs (and hassle) far outweighed the limited upside for these institutions. With billions of tax liability to offset (hard to believe the good old days were just a few quarters ago), smaller deals were simply too onerous to complete given staffing and time constraints. And since even small deals required hundred of thousands of dollars of tax liability, few alternative investors existed. Consequently, it became very difficult to monetize the ITC credits for deals between $250,000 and $5,000,000 in size.
Secondly, the large banks were very risk averse and had numerous limitations on the deal structure – most of these were not unreasonable, given the risks to them, but cumbersome enough that deals were very hard to put together. Probably the most onerous related to restrictions on other loans needed for the transaction and on requirements of the owner/manager. Again, neither worry was necessarily unwarranted, but both definitely made life complicated.
Now that the large banks aren’t needed, we see lots of potential for smaller firms to become the owners of these systems, especially qualified installers who have been active in the energy industry for some time. If the installers are going to provide 5-year warranties anyway, why not collect a portion of ITC grants as additional compensation – this piece of the pie could be worth several hundred thousand dollars.
We believe the change in the ITC structure from tax credit to grant should unlock lots of entrepreneurial potential and open the door for green job opportunities that simply weren’t possible before the passage of the stimulus bill. It’s one reason to be excited to be a banker nowadays.
Tags: community development, energy conservation loans, environmental sustainability, green banking, ShoreBank, triple bottom line
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Friday, February 6th, 2009
Buying time might be one of the few “purchases” that does not require me to spend any money. Yet, the government’s decision to delay the digital TV conversion is just postponing a purchase for millions of Americans. And if we need to spend green, it is also nice to save some green. Regardless of whether or not your household is among the Neilson Media Research estimated 6.5 million unprepared, our analog televisions have a sustainable question to ask us as we face our three upgrade decisions: purchase a digital to analog converter box, purchase a digital television, or subscribe to a cable service.
Each one of these digital conversion alternatives consumes varying quantities of energy and resources. Cable service alone cannot decrease that 50 billion kilowatt hours of electricity US televisions consume. Digital televisions and converter boxes increase the quantity of energy required to produce and run those electronic items. However, should you decide to minimize energy and dispose of our analog televisions, consider that only 18% of consumer electronics, including TVs, are collected for recycling despite making up almost 2% of the municipal solid street waste. How can you possibly make the sustainable selection?
Consider the following if you are:
LiveEarth.org
Adding a converter box or a cable service
• Purchase and plug all electronics into a power strip and turn it off when done watching
• Ask your cable service provider about its cable and/or digital-to-analog converter boxes’ energy consumption when deciding upon or renewing a cable service contract.
• Look for a digital-to-analog converter box with an ENERGY STAR label. If all converter boxes met this spec, we could save 823 million kilowatt-hours of energy and $85 million in higher electricity bills.
• Select the “home” mode for brightness. The “retail” mode or “vivid” mode consumes 10-30% more power.
Purchasing a digital television
• Choose a LCD television. In some cases, LCDs can use 50% less energy than their plasma counterpart. A typical 42-inch plasma TV will cost at least $200 more to operate over the life of the product of a similar sized LCD.
• Purchase a smaller TV. Larger TVs use more energy than smaller ones using the same technology. You can save money on the store and on electricity.
• Ask if the retailer or manufacture will recycle your old TV. Best Buy, for example, will charge $10 to recycle any item with a physical screen and give a $10 gift card to each customer that recycles a television.
Disposing your analog television
• Donate. You can list your analog television on www.freecycle.com or on www.craigslist.org to find it a new home. Another alternative is to give your old TV to a charity organization. However, check whether or not the organization is accepting analog televisions in light of the pending digital transition.
• E-cycle. Investigate the following sites to locate your local e-cycler:
o www.earth911.com
o www.nrc-recycle.org
o www.mygreenelectronics.org
Of course, unless you cease watching television, once we have converted to digital, the next big question is how often to watch our televisions. This transition gives us the opportunity to change our television consumption behavior to create long-term environmental impacts. Let us use this delay to save some green all around.
Statistics Sources:
National Resource Defense Council
Environmental Protection Agency
Federal Communications Commission
ENERGY STAR
Tags: community development, energy efficiency, green banking, recycling tactics, ShoreBank, triple bottom line
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