THINGS WE CAN AGREE ON.
YCER Young Conservatives start a grass-roots movement.
SEPTEMBER 2012
SOLYNDRA
NEW MARKETS
Hype and Reality
Globe-trotting to find new markets and strategies to access them.
2
LET THE CONVERSATION BEGIN.
All energy comes from the sun, is caught and processed to become fuel as food, fire, raw materials, chemicals and more. Energy is both infinite and finite: without intermediaries to turn the sun into energy that we can use, we can only warm ourselves briefly. We have become increasingly dependent on an extremely high quality of electrical energy. Our very lives and livelihoods are dependent upon a continuing, uninterrupted flow of electrons into our homes and offices; and onto our phones, computers, tablets and televisions. We want the government to help keep the energy flowing, and we resent the government for interfering in our businesses. We fear a crumbling energy infrastructure, as we fight a national plan to address the problem. We want to support new ideas that could lead to energy independence, but we don’t want to pay more for the privilege. We trust the government to ensure that utilities ‘play fair’ as we distrust it to regulate markets. The result of our ambivalence is a chaotic patchwork of local, state and federal regulations, agencies and taxes. It is inefficient and confusing to regulators and businesses alike. In this issue we look at what has happened — how the ARRA funds plan to create new businesses and consumers, as well as how some of the existing policies are working. We asked our readers what they think — and got some surprising answers. We will continue to ask new questions in the coming months. We believe that energy is a national priority, and that coming together for energy reform is not only a ‘good idea’, but an essential one. Let the conversation begin.
A Tana Kantor Publisher
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Features
Stay Connected Join the Conversation Each month THE GREEN ECONOMY posts questions to be included in the next issue of the eMagazine. Questions are posted on Facebook, our Linkedin group, and our monthly eNewsletter. You can respond by sending letters to editor@ theGreenEconomy.com, or joining any of the social networks listed below. Some letters are edited for brevity. Readers must include name, title and affiliation.
TGEink: Follow us TGEFlash: News we follow Green Econ Green Economy Group Our RSS
06. Reader’s Write Responses to our poll on ‘What Should Government Do?”
08. TGE on the Web Executive Order 9/11 From the Ground Bloomberg & Mitchell 13 year old changes city policy
32. Solyndra Mismanagement, bad timing, wrong technology or fraud?
38. Globe Trotting for New Opportunities Lots of talk about American competitiveness, but not enough about where new markets are and how to take advantage of them.
THIS ISSUE
The Politics of Agreement 10. Young Conservatives for Energy Reform A new organization is reaching out to expand the dialogue.
14. The Tale of the Carrot & the Stick Subsidies, Regulation and Taxes. An overview.
20. The Federal Carrot: ARRA Few people know where the money went. Having spent billions, we talk with DOE and HUD about their role, and delve into Recovery.gov to get the figures.
26. The Federal Stick: Taxes
Tax policy has been driving energy markets since the early 1900s. We ask experts for their opinions on policies for the 21st century.
THE GREEN ECONOMY September | 2012
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What Readers A majority of respondents said government should provide support for production.
“
Government should create demand immediately through mega-scale purchase orders,” said one, adding that the investment would jump-start the energy economy and ultimately cut resource costs.
“
Govt can help but NOT with grants. Should be loans ONLY and paid back so others can benefit, and help keep taxes/fees as low as possible.”
“
Government Tax Credits actually hold back solar and wind today. Need to learn how to phase these things out.”
Respondents were less sure of sector-specific credits.
“
If one sector of the energy economy is subsidized, as in depletion allowances for oil and gas, then emerging technologies and competing forms of production should be similarly treated.”
“
Government is whimsically focusing on the great idea of the moment, with no solid plan for conservation or production.”
Respondents tended to agree that stimulus from government could be useful. Technologies and emerging technologies were strongly supported.
“
I think the proper role of federal regulatory policy is to support R&D and bridge the gap to commercialization. Removing artificial barriers and or disparate subsidies will allow the market to work to choose winners and losers.”
Over 90 percent of respondents agreed that performance standards that leveled the playing field for the energy market were needed for large emitters.
“
As long as traditional energy (oil, natural gas and coal) are priced below their true cost … there are barriers to competing alternative forms of energy.”
Others noted that the federal government is not taking clean energy seriously. Government subsidies are delaying investment in clean technologies by keeping oil and gas prices low and rewarding poor energy practices.
“
The current mindless partisan debate adds no value to the economy or to our long term prospects for emerging from the current economic crisis.”
One idea about how government either helps or harms energy technology was to Stop Obuscating!
“
[Start] simplifying and streamlining legislation & regulations so that any highschool graduate can quickly, easily read and understand.
TGE asked readers their opinions on federal support for energy technologies in a survey about Government Policy and Energy.
What Should the Federal Government provide:
Tax Credits for specific sectors Subsidies and/or grants Loan guarantees Tax credits for production
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
MAYBE NO
Tax credits for sectors
If you think performance standards are helpful, which would you favor? RPS: standards that set a percentage of renewables for utilities Cafe: standards that set miles per gallon targets for fleets RGGI: a regional emission standard for utilities only WCI: a regional emission standard for large emitters
YES
Subsidies or grants
Loan guarantees
120.00% 100.00% 80.00%
YES MAYBE
60.00%
NO
40.00% 20.00% 0.00% RPS
CAFÉ
RGGI
If you agree that some form of government stimulus is a good idea, should it focus on: [pick one] Standards: meet certain emission output or other standard Sectors: energy, transportation, fuels, etc. Emerging technologies: incubator stage Technologies: solar, carbon capture, natural gas extraction, etc. None of the Above
Tax credits for production
None of the above.
8% 31%
WCI
15%
Standards: meet certain emission output or other standard Sectors: energy, transportation, fuels, etc.
23% 23%
Emerging technologies: incubator stage
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TGE On theWeb
Important posts this month:
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EXECUTIVE ORDER: MORE INVESTMENTS IN INDUSTRIAL ENERGY EFFICIENCY. President Barack Obama issued an executive order that includes a national goal of 40 MW combined heat and power (CHP) over the next decade. The Department of Energy’s Office of Energy Efficiency and Renewable Energy says the acceleration of investment in industrial energy efficiency benefits manufacturers, utilities and consumers. The office cites improved competitiveness in manufacturing by reducing energy costs by up to $100 billion over the next decade. More>>
9/11: VIEW FROM THE GROUND. I came to work this morning, taking the PATH train to the World Trade Tower stop in downtown Manhattan, thinking mostly of the coming day’s grind and what I need to get done today. The understanding that today is the 11th anniversary of 9/11 is a background thought. Moving south on Church Street, I angled and cut through Zuccotti Park on my way to Broadway – now completely free of Occupy Wall Street. I felt I could breathe again as I left the crowds behind me. I looked over, and sitting quietly on a concrete bench out of the way of the crowds was a young couple in their early 20s. More>>
THE GREEN ECONOMY reviews industry news and events for a general business audience. Please send press releases or requests for coverage to editor@theGreenEconomy.com. We review all requests daily, and will reply promptly if your release is of interest to our readers. We are nonpartisan, and will not publish material that is politically motivated, contains biased or unsubstantiated information, or is libelous in nature. For our privacy and editorial policies, please see our website at http:// theGreenEconomy.com/about us. For advertising and sponsorship opportunities, please email sales@ theGreenEconomy.com, or call 609.520.0056.
BLOOMBERG AND MITCHELL ON FRACKING RESPONSIBLY New York City’s Mayor Michael Bloomberg and George P. Mitchell, pioneer of hydraulic fracturing technologies, highlights four major benefits to fracking: The process helps reduce energy costs for consumers. Several industrial jobs are created, which stimulates the economy. Reduces a nation’s dependency on coal, improving the environment. Natural gas plants have the potential to produce more renewable energy to supply the electricity grid than coal.
13-YEAR-OLD CONVINCES IL GOV. TO VETO BILL AGAINST PLASTIC BAG BAN Abby Goldberg, a 13-year-old student from Grayslake, Illinois, started her campaign as part of a school project, after trying to lobby for a plastic bag ban in her hometown. The proposed law would have prevented towns in Illinois from issuing bans on plastic bags. Governor Quinn, credited Goldberg with raising awareness about the implications of the proposed law, and thanked Goldberg for her work to protect the environment in Illinois. “I’ve learned that no matter what your age, you can make a difference,” said Goldberg. More>>
However, the swift increase of fracking has generated concern... More>>
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YOUNG CONSERVATIVES FOR ENERGY REFORM
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Michele Combs
A grass roots movement with bright ideas.
Conservatives are championing approaches to energy that tackle what George W. Bush called, “America’s oil ‘addiction’”. Taking a clear-eyed look at the nation’s energy needs, Young Conservatives for Energy Reform (YCER) is advocating a “Made in America” approach, using US technology, skills, and resourcefulness.
Starting with local receptions and rallies — eight so far and five planned for the coming months — YCER was founded on a belief in the power of grass roots organizations. YCER President, Michele Combs, who is also active in the Christian Coalition, wants YCER to both listen and engage. The group is starting with chairs in Florida and the Midwest, and planning to expand from there. Florida State YCER Chairperson Juan C. Lopez-Campillo, Attorney with the Orlando office of Jackson Lewis, LLP Midwest YCER Chairperson Brian Smith, Former investment banker and graduate student at the Kellogg School of Management at Northwestern University.
M
s. Combs, a former ‘Young Republican of the Year’ from South Carolina, is an articulate and personable spokesperson for YCER. She became concerned when, as a motherto-be, she found that there were some fish she shouldn’t eat due to pollutants in the water. Energy production uses — and then discharges into rivers, streams and oceans — 27% of the water used in the
Brian Smith
Juan C. Lopez
Photo: Republican National Convention, 2
US, according to Electric Power and Research Institute (EPRI). Energy production also emits over 40% of the CO2 — affecting our air and water quality, according to US Energy Information Administration (EIA). “We all want clean air and water,” she said. For Ms. Combs, fair and free markets are the fastest route to reducing oil dependence. She noted that some of the policies that could be advocated by YCER are sometimes thought of as “kind of left wing,” but likened the future of energy reform to the bans on tobacco, which are now broadly accepted in spite of a rocky start. Juan Lopez, the Florida state chair, echoed Ms. Combs’ thoughts. He is troubled by
foreign oil, which is still imported to the tune of around $1 billion per day. “Some say drilling here is the answer, but that won’t solve the long term problem,” he said. He supports an approach to energy based on alternative resources ‘in our own back yard’. “Invest here, locally,” he said. “I believe we need to work across the aisle because that’s what Americans want.”
B
rian Smith’s passion was literally forged in fire while at an Air Force Research Lab, where he focused on energyrelated technologies. He found himself on special assignment to the Army in the Middle East, addressing urgent battle-field problems. Young soldiers were dying on roads mined with improvised explosive devices (IEDs). Mr.
Smith’s group was looking not at how to better armor trucks, but to “protect men from dying by keeping them off the road in the first place.” The low-hanging fruit was the over two million gallons of fuel traveling daily to equip forward bases with energy for cooling, transportation and other vital needs. Since simply sending less fuel would compromise the task, Mr. Smith’s team looked at US based technologies that could deliver energy deployed locally, which would significantly reduce the fuel traveling on trucks along dangerous roads. While researching and implementing new strategies, he got a crash course in energy production and management.
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ACORN E NE RGY Nasdaq ACFN
Being smarter about energy isn’t 12turning out lights and using less. It’s
investing in a
smarter infrastructure:
Cleaner Cheap and Abundant More Reliable Safer
That’s what we do. We find new companies with low-cost, high-return technologies that make existing energy systems cleaner, cheap and abundant, more reliable and safer. Given the scale of existing infrastructure, these technologies offer massive “bang for the buck.” Many are hidden in plain sight, and just need the right injection of capital or entrepreneurial leadership to unleash their potential. Join us as we survey the exciting opportunities in the emerging world of digital energy.
We make energy better. Investor Relations Learn More
He came back to the United States and joined Arsenal Venture Partners, the 1 megawatt of energy, venture capital arm of the Army. will cool a tent from 130 While there he became knowledgedegrees Fahrenheit to able about the renewable industry, 110 degrees. seeing some sectors -- such as solar -- that he believes are ready to scale. Scale in renewables means they can produce a significant amount of energy at a Sample of Energy Investments by price that is competitive with fossil fuels. “On Arsenal Venture Partners, energy independence there is broad consensus,” he said. “On the climate change front, the investment arm of the military. High power lithium ion batteries for I believe there is sufficient evidence to have transportation, electric grid services that [climate change] conversation.” and portable power. Stabilized end solution for fuels and specialty chemical process. Advanced batteries for standby power, mobility, telecoms, automotive. Distributed energy for action enabled micro grids. Solar energy efficiency. Solar power efficiency. Utility grade solar smart grids and power management for utility distribution and street light poles.
A
s for YCER plans, they are talking with local communities about energy reform and how people are affected on a daily basis. YCER plans to identify the people who care about this issue, energizing them to expand their numbers. As Ms. Combs explained, YCER can “Show those inside the beltway what people outside the beltway are really thinking.” Like Brian Smith, who has been politically active most of his life -- working on Presidential candidate John McCain’s campaign as an advisor — Ms. Combs worked with Lindsay Graham, from whom she learned a lot. “He tried to break that divide,” she said. “He’s a hero for our side.”
Rechargeable lithium battery.
The long term goal will be to develop policies and to advocate for them on Capitol Hill. However, the next six months will be focused on understanding what people really want and which state policies could be brought to the national congressional level.
Fuel cells for mobile devices.
Mr. Smith concluded our conversation by saying, “I’m just trying to make a difference.”
Environmentally developer.
friendly
Power management.
batteries
13
THE TALE OF THE CARROT 14
While battles rage around subsidies and regulations, neither are likely to dissapear in our lifetimes.
Subsidies are government actions that lower the cost — or risk — of doing business. Some are clearly in front of us, such as direct subsidies and tax incentives, while others are more hidden. Examples of subtler support include import/export restrictions, funding for research, below-market loans and requirements — especially by government entities — purchase restrictions that support products ‘made-in-America’.
AND THE STICK
THE QUESTION IS, WHAT DO WE WANT TO DO? Regulations, on the other hand, are meant to control and standardize products and services, while protecting the public welfare, or to provide tax incentives to do — or not do — certain actions. Both subsidies and regulations have played a critical role in the development and maintenance of our energy infrastructure.
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By Louise Coolidge, Managing Editor Illustrations by Samuel Prowse and Stephanie Bailey
Governmental Bodies: The Federal Government offers its carrots and wields its sticks through a number of organizations. For energy, two of the more important are The Department of Energy (DOE) and the Environmental Protection Agency (EPA). The role of the DOE is to address energy and environmental issues that impact US security and prosperity. This means that DOE is involved with the development of energy sources and use. The massive Stimulus Act in 2010 earmarked billions of dollars for DOE to administrate.
legislation — legislation created to address specific issues — is an unpredictable landscape for an industry that needs long term nurturing. Planning is needed, whether the goal is energy independence, renewables, clean air and/or water, or just price controls and predictability. Starting with a definition of goals, the stage would be set for clear, uniform and supportive legislation to achieve those goals.
While some regulatory commissions are under the purview of DOE – the Federal Energy Regulatory Commission, for instance – environmental regulation is largely handled by the EPA. The EPA’s mandate is to enforce federal laws legislated by Congress. In addition, the EPA created the Energy Star© program, which allows consumers to see the energy use of appliances before they purchase. Energy Star has been expanded to include whole buildings.
Making Subsidies and Regulations Work:
Large-scale commercialized products — especially in energy — require a greater incubation time-period than other industries, such as hightech. The investment in innovation and manufacturing often doesn’t show a profit in the short term. Countries, such as Germany and China, have invested heavily in their renewable industries, building manufacturing capacity that is enviable. Many believe that China is ‘dumping’ solar products in the US at below cost. The result is a US backlash that has led to new tariffs — some of which are controversial even within the solar and wind industry. The result of this ‘reactive’
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FEDERAL CARROT: ENERGY, JOBS AND TRAINING Every presidential election cycle, well-meaning politicians propose solutions to challenges that the U.S. faces. With just weeks before voters decide who they want to lead the country for the next four years — President Barack Obama or former Massachusetts Governor Mitt Romney — many observers believe the U.S. is at a critical juncture that will affect generations of Americans to come. Necessitated by the worst economic slump since the Great Depression of the 1930s, President Obama signed the American Recovery and Reinvestment Act (ARRA) in February, 2009. How effective this legislation has been is still being debated, often measured by attitudes toward the role of government in the economy. Reviewing the implementation of one goal — energy and energy efficiency — provides some reality with which to assess the way funds were allocated, and how they affected American businesses.
AMERICAN RECOVERY AND REINVESTMENT ACT DEPARTMENT OF ENERGY “Six Pillars”
HOUSING & URBAN DEVELOPMENT
$35.2 BILLION
$13.61 BILLION
ENERGY EFFICIENCY
MODERNIZING THE ELECTRIC GRID
ENERGY EFFICIENCY AND RETROFITS TO STATE AND LOCAL RECIPIENTS
VARIOUS GRANTS AND LOANS
GENERATION OF RENEWABLE ENERGY
TRANSPORTATION
NUCLEAR WASTE CLEANUP
EXPANSION OF RESEARCH
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The Department of Energy (DOE) received $35.2 billion, which was allocated to six “pillars.” Each of these areas has allotted money in the form of grants and loans to fund large projects that the private sector would implement. The Department of Housing and Urban Development (HUD) was allotted approximately $13.61 billion, which supported smaller, community-based actions, such as energy efficiency and retrofits for state and local recipients. Slightly under half was distributed through competitive grants and loans to local projects.
DOE T The Department of Energy received approximately $35.2 billion in funding, making it the sixth largest recipient of Recovery Act funds. The agency distributed roughly $11 billion in funding for energy efficiency — the largest amount distributed to any of DOE’s pillars of the Recovery Act. DOE provided funding to aid energy efficiency development, research and outreach. This includes several layers of funding to many different programs. Categories include: Advanced Building Control Strategies, Communication and Information Technologies Analysis, Design, and Technical Tools Building Envelope and Windows Residential and Commercial Heating, Ventilation and Air Conditioning (HVAC) and Crosscutting Air Conditioning and Refrigeration Research Water Heating, Residential and Commercial Appliances and Miscellaneous Electric Loads
he Advanced EnergyEfficient Building Technologies and Commercial Building Training Programs, is an example of how the funds are allocated. Awarded $74.64 million, the project is comprised of 58 recipients whose project goals include reducing greenhouse gas emissions through new technologies and employee training in building practices. The goal is to develop a “green workforce” trained to reduce consumers’ energy costs. According to Eric Hass, acting Division Director of Building Programs with DOE, approximately 74 percent of the funds have been appropriated.
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total of 45 recipients have received funding for the advancement of energyefficient building technologies. The projects received a total of $100 million in funding, including $68.4 million in ARRA funds and $31.4 million from private industries. A Funding Announcement Opportunity (FAO) was released in June, 2009, and selected recipients announced thirteen months later in July, 2010. One recipient is Johnson Controls, Inc., which recently completed a project in July of this year. The company’s Integrated Building Management System
technology works in part with the organization’s Panoptix suite of applications for measuring, on a daily basis, the energy savings of energy efficiency projects.
their employee training programs, and the remaining 11 are still underway. According to Hass, DOE anticipates the programs will be widely completed by 2013.
“The DOE project enabled Johnson Controls to develop their Continuous Diagnostics Advisor, a module within Panoptix that allows for fault detections like abnormal energy consumption, anomalies in peak demand, and issues with poor performance in HVAC systems,” said Hass. “With this, building operators can capture an almost real-time picture of system performance regarding energy consumption, as well as systems and issues that need attention.”
Energy & Environmental Building Alliance (EEBA) is one entity that received funding. EEBA is frequently contracted by DOE, state organizations and utility companies, to train residential builders, contractors and architects in energy efficient building practices and principles. The organization received approximately $6,500 per educational class in ARRA funding to finance training sessions.
T
he second component of DOE’s energy efficient building projects is the training of commercial building energy efficiency experts, who will be able to properly monitor and run building heating and cooling systems. In total, 13 projects received funding to develop training programs for equipment technicians, operators and energy auditors. The projects received a total of $9.1 million in funding, $7.6 million from Recovery Act funds and $1.5 million from private industry. According to Hass, two projects have completed
Between 2009-2011, EEBA held 10-12 educational sessions per year. In 2012, 28 percent of the organization’s attendees — 8 percent for auditing and weatherization and 20 percent remodelers — were directly associated with DOE. As with all EEBA classes, sessions are divided into 3 core areas: New Construction Existing Homes Selling of High Performance Homes. “Now more than ever I feel there is adaptation and a sense of urgency to learn energy efficient practices and process changes,”
said Karen Thull, Executive Director of Marketing at EEBA. According to Thull, the organization acts as a resource for understanding and implementing energy efficient practices, as well as training to address code cycle changes within the industry. EEBA’s track record is enviable, with 64 percent of attendees involved with new construction or retrofits of 100+ homes per year, while 36 percent work with — or are — smaller contractors. According to Thull, the EEBA has seen a transition from new construction to remodelers. “The place we have seen the number of professions increase is in weatherization and auditing,” she said. Retrofit education classes focus on viewing the home as a system that works together. EEBA stresses the assessment of the home from a structural perspective and a focus on insulation, weatherization, windows, doors and indoor air quality. However, Thull sees some resistance among low-scale builders and contractors, due to concerns about the costs associated with energy efficient retrofits or construction. “Through the educational classes, they understand how changes can be cost
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effective and improve home performance,” she said. In addition to their traditional educational classes, EEBA also offers attendees online continuing education. Ninety-eight percent of past attendees report taking one or more of the organization’s classes.
HUD
HUD received approximately $23.61 billion in stimulus funding in February, 2009. “This was an unprecedented opportunity to support a much higher level of investment [for HUD] in energy efficiency and green building,” said Michael Freedberg, Senior Advisor for Energy Policy at HUD’s Office of Sustainable Housing and Communities. The agency aimed to implement energy efficiency updates in homes and spur job growth. Since receiving the funds, HUD has focused on the affordable housing sector, including public and private residences. Overall, the agency has overseen competitive bids, as well as formula based programs allocated by percentages to qualified candidates or programs.
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mong the programs funded by HUD, The Green Retrofit Program for Multifamily Housing serves as an example of the agency’s efforts to support people in public housing. In both existing properties and new construction, HUD provided access to energy efficient updates. Federally assisted rental housing received $250 million in funds, to be distributed in the form of loans and grants. The program was designed to improve property energy efficiency, reduce utility costs, improve property owner’s health and spur job growth through home retrofits. Applicants applied in June, 2009 and funds were awarded three months later, in September. Approximately 20,000 housing units underwent retrofits — an average energy savings of 27 percent. Selected units were assessed for energy usage and received up to $10,000 for retrofits, ranging from Energy Star appliances, updated boilers, photovoltaic roof panels and low-flow shower heads and toilets. Canyon Pointe, a senior apartment complex in Boulder, Colorado, was one of several federally assisted housing recipients. The complex received
funding through the Green Retrofit Program, under HUD, as well as low interest financing from another ARRA program. Consisting of 81 one-bedroom apartments, residents pay approximately 30% of their adjusted income towards rent, which includes utilities. In order to help manage energy costs, updates included solar panel installation, air quality improvements and new lighting. The retrofits are expected to provide the development with up to $7,000 of utility savings per year. In conjunction with the updates, Canyon Pointe, along with similar projects, were required to implement an Operations and Maintenance Plan (O&M). The program included training property managers in green management principles and certification as Green Energy Managers. In addition, property owners needed to conduct an Integrated Pest Management Plan (IPM) and reserve funding for future equipment updates, known as a Green Physical Needs Assessment or a Capital Needs Assessment. “The nice thing about that program is not only in front end dollars but setting up a long-range plan for continuing upgrades of the property,” said Freedberg.
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n additional focus of the retrofit program was aimed at the public housing sector. Approximately $300 million was awarded in the form of competitive grants. Selected recipients included 134 housing authorities, totaling 222 energy retrofits for 34,000 units. Freedberg described many of the updates as “low hanging fruit, not focused on innovative technologies, but low cost
measures.� Specifically, 31 of the projects involved photovoltaic installation, and 13 of the retrofits involved geothermal. The program allocated $300 million for new construction, aiming to generate 2,700 new public housing units across the country. New properties are being built to adhere to Enterprise Green Community Standards, requiring integrative design, location
and neighborhood fabric, site improvements, water conservation, energy efficiency, materials beneficial to the environment, healthy living environment, and operations and maintenance. By Kelly Velocci, Special to THE GREEN ECONOMY
RECOVERY. gov WHERE THE MONEY WENT
TOTAL: $526,007,672,241
TAX BENEFITS: $297.8 BILLION
CONTRACTS, GRANTS & LOANS: $241.8 BILLION
PAYMENTS TO INDIVIDUALS: $233.2 BILLION
JOBS BY QUARTER: 152,294
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Tax Benefits
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ARRA
Individual Tax Credits
$135.9B
First-Time Homebuyers. Transportation subsidy. Education benefits. Earned Income Tax Credits.
Making Work Pay
$104.6B
$400 tax credit for working individuals; $800 for working married couples.
Tax Incentives for Businesses
$33.5B
The Work Opportunity Tax Credit added unemployed veterans and 16-to-24 year olds to the list of new hires that businesses could claim. The Net Operating Loss Carryback allows small businesses to offset losses by receiving refunds on taxes paid up to five years ago.
Energy Incentives
$10.8B
Tax credits for energy efficient improvements to residences. Tax credits for alternative energy equipment. Electric Vehicles Tax Credit.
Manufacturing & Economic Recovery, Infrastructure Refinancing, Other
$9.2B
Tax-exempt bonds to expand industrial development. Bonds for investment in infrastructure, job training, and education in high unemployment areas. Increased available New Market credits.
COBRA
$3.7B
Assistance with continuation of health coverage.
Contracts, Grants & Loans Education
$90.9B
State Fiscal Stabilization Fund. Student Aid. Training and Employment Services. Aid for the Disadvantaged. Special Education and Rehabilitative Services.
Transportation
$35.8B
Highway Infrastructure. High-Speed Rail Corridors. Grants for Railroads and Airports.
Infrastructure
$29.5B
Broadband. Federal Building Fund. Highway Construction. Rural Water and Waste Disposal Account.
Energy / Environment
$27.0B
Energy Efficient and Renewable Energy Program. Defense Environmental Clean-up. Electricity Delivery and Energy Reliability Program. Water and Related Resources Superfund Program.
R&D / Science
$13.6B
Fossil Energy R&D. National Science Foundation. National Institutes of Health.
Housing
$13.5B
Public and Indian Housing. Rental Assistance Programs. Homelessness Prevention Programs. Homeowners Assistance Fund.
Health
$11.1B
Centers for Disease Control & Prevention. Indian Health Service. Food & Nutrition Service. National Institutes of Health.
Other Programs
$5.6B
Some administrative and operation costs for Recovery Programs. Offices of the Inspectors General Recovery administration costs.
Public Safety
$5.1B
Wildland Fire Management. FEMA Firefighter Assistance Grants and Emergency Food and Shelter. Violence Against Women Programs. Customs and Border Protection.
Family
$5.0B
Health Resources and Services. Veterans Health Administration. Centers for Disease Control and Prevention. Indian Health Services. Food and Nutrition Services. Supplemental Nutrition Program for Women, Infants, and Children.
Job Training / Unemployment
$4.6B
Community Service Employment for Older Americans. Training and Employment Services. Special Education and Rehabilitative Services. Trade Adjustment Assistance for Farmers.
American Recovery & Reinvestment Act Payments to Individuals [entitlements] Medicaid/Medicare
$93.3B
Medicaid Grants to States; Medicare HITECH Incentive Payments; Program Management.
Unemployment Insurance Programs
$61.1B
Family Services
$43.2B
Foster Care and Adoption Assistance; Child Support; Food Stamp Program; Assistance for Needy Families.
Energy
$15.3B
Grants for Specified Energy Property in Lieu of Tax Credits; Bonneville Power Administration Fund; Western Area Power Administration, Borrowing Authority.
Economic Recovery Payments
$13.8B
One-time $250 payments to Social Security beneficiaries; Railroad Board payments; Veterans payments.
Housing
$5.6B
Grants to States for Low-Income Housing in Lieu of Low-Income Tax Credits.
Agriculture
$0.9B
Assistance for Farm and Aquaculture Revenue Losses Due to Natural Disasters. Trade Adjustment Assistance for Farmers.
MAKE YOUR OWN MAP: FIND OUT WHAT WENT TO YOUR STATE, YOUR COUNTY, YOUR TOWN.
IT’S YOUR MONEY.
RECOVERY.gov
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Federal Stick: Taxes Equalize the Playing Field
S P R CREDIT
TAX
N A O L
PUC
C T P
EQUITY ITC
The recent news about a record setting polar ice melt is convincing evidence on climate change for some. Researchers at the US National Snow and Ice Data Center (NSIDC) recently reported that the arctic polar ice cap has melted to its smallest size on record. Scientists now believe that it’s entirely possible to have an ice-free Arctic by 2030 and an ice-free summer in the North Pole within a few years. For others, the concern is energy reliability and cost. Businesses and consumers are looking to backstop an aging infrastructure with distributed generation — a combination of renewable energy, storage and smart infrastructure. This has left many asking questions about how, amidst rising debt and job concerns, can Americans come together to create an energy age that will help decrease warming while ensuring energy security. These concerns are sparking renewed interest in the role of government in the green economy and cleantech. If investment in a green economy is the answer, what role will US tax laws play?
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Free Market vs Tax Law for Growing an Industry Arguments against using the tax code to stimulate renewable energy development usually center on the idea that the free market economy can take care of itself. What is often overlooked, however, is how oil and gas have benefitted from the tax code, and how those benefits continue today.
This is in contrast with subsidies for renewable energy that have been small in comparative value. Most are time-limited initiatives, which has reduced their usefulness in an industry that can have ten and twenty year project horizons. Some have already expired, or will by 2013. According to Nancy Pfund, Managing Partner and one of the authors of the DBL report, “A century’s worth of tax incentives is going to put a damper on new product innovation and make it extremely costly to switch energy Tax incentives by industry: 2011 Petroleum Natural gas Coal Nuclear - Electric Power Renewable Energy
Tax incentives for fossil fuel development began in the early 1900’s. According to a DBL Investors study, oil, gas, coal and nuclear energy all received more federal support than renewables when they were starting out. In fact, many of those temporary tax incentives remain, permanently embedded in the federal tax code.
sources. A huge driver for renewable energy development in the US would be a price on carbon — or the threat of one — which the coal and oil industries vehemently oppose.” Pfund suggests that a fifteen year period is required for a new industry to take hold. During that time, consistent and stable funding is necessary. She believes
that subsidies are a key factor in success.
Could new tax laws be key to creating an industry boon? Laura Lovelace, Co-Founder and Managing Director of Wellford Energy, thinks so. “Throughout US history the government has been involved in expanding development for industries relevant to national security,” Lovelace explained. “Certainly renewable energy development meets this threshold for security issues surrounding both petroleum displacement (using biofuels in place of imported oil) and power generation (stability of our grid and certainty of continued power generation).”
State or Federal? Which are Most Effective for Stimulating Growth? Yet there is also much discussion over which government bodies should step in to stimulate cleantech expansion. According to Lovelace, “The federal and state governments should certainly work as partners with the private sector to expand renewable energy development in the US.” She points to the Defense Production Act as an example, explaining that it allows the President to list an industry as essential to national security, which gives the military the authority to purchase portions of a producer’s future product, thereby protecting the producer from market fluctuations. In this case, the federal government’s involvement represents a public-private partnership. Yet, in order to get past a grid-locked federal Congress, Lovelace also suggests that,
“The state RPS has certainly been an effective tool for renewable energy expansion. Individual state rulings by certain PUCs [Public Utility Commissions] and utility boards, to allow some costs of Renewable Energy expansion to be included in the rate bases of customers, provided some certainty for Mid-American developers despite the Production Tax Credit uncertainty at the federal level.” She went on to note an Iowa Utility Board decision for MId-American Energy Wind project was an example of the latter approach.
tax and project finance law at Chadbourne & Parke, finds that “federal policies are more effective because developers can master a single set of rules rather than 50 different state rules.” “However, there are examples where state policies have played an important role in areas where the federal government has been unable or unwilling to act. They include the state-level efforts to limit greenhouse gases that contribute to global warming and renewable portfolio standards.”
State-by-State RPS: Renewable Portfolio Standards. Such standards require a set percentage of energy production to come from renewable sources.
When asked whether it should be state or federal government that sets tax laws favorable to cleantech development, Keith Martin, Partner and expert in
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30 “The federal and state governments should certainly work as partners with the private sector to expand renewable energy development in the US.” Laura Lovelace, Co-Founder and Managing Director of Wellford Energy,
“A century’s worth of tax incentives is going to put a damper on new product innovation, and make it extremely costly to switch energy sources.” Nancy Pfund, Managing Partner, DBL Investors
“An MIT study last month said a carbon tax at $20 a ton would raise $1.5 trillion over the next 10 years. Unfortunately, it is hard to see such a tax being enacted under any realistic scenario.” Keith Martin, Partner at Chadbourne & Parke
Carbon Tax: A Win or a Barrier to Investment? A burning question going into the next election remains: could a carbon tax be a silver bullet? The idea is not a new one; consider America’s first cap and trade system, the Regional Greenhouse Gas Initiative (RGGI). An Analysis Group report shows that under the initiative, the majority of power plants subject to the requirements met their compliance obligations within the first three years of the program. Additionally, their carbon dioxide emissions fell by an average of 23% during that time; 16,000 jobs were created; and the regional economy gained more than $1.6 billion in economic value. California is also a pioneer in American carbon tax law with their carbon tax initiative coming into effect in 2013. Through California’s Cap and Trade Program, it is anticipated that revenues from the sale of allowances at auction will generate billions of dollars for the state. Under the California House’s recent bill AB1532, those funds
will be distributed to activities such as clean energy generation, low-carbon transportation, and sustainable infrastructure development. The intention is to reduce greenhouse gas emissions while maximizing economic, environmental and public health benefits to the state, fostering job creation, investing in disadvantaged communities, and providing opportunities for small business, schools and other community organizations to benefit. It remains to be seen how many businesses will respond to the new legislation by simply moving out of the state. In an ideal situation, all states would operate under the same requirements, leaving this option off the table for businesses wanting to remain in the US. That would be the power of a federal law. In general, both Lovelace and Martin believe that a federal carbon tax is useful for spurring cleantech growth. Unfortunately both also see that, despite certain support, it is not currently a politically palatable option. Nevertheless, it may be the only way forward. As Martin explained, “The government has no money to spend on new incentives. A carbon tax would be
a way to provide incentives and help to close the budget deficit. An MIT study last month said a carbon tax at $20 a ton would raise $1.5 trillion over the next 10 years. Unfortunately, it is hard to see such a tax being enacted under any realistic scenario.” Lovelace would like to see lawmakers and policy administrators include a subsidy phase out in tax credits that would “send a signal that this tax credit will exist until a point where some sort of scale and/or cost-competitiveness has been reached. This could help to avoid the yo-yo effects of current tax-extender policy.” She goes on to say that “we are already seeing plenty of US technology invented here and being commercialized in China, which would not be necessary if we had some US policy stability.”
Tax Now Could Avert Expenses to Come
avoided before 2020, an additional $4.3 would need to be spent after 2020 to compensate for the higher emissions.” Given recent events in the Arctic, suggesting that climate change is happening faster than expected, now is the time to take serious action. Will the federal government be the voice of leadership in support of renewable energy development and a green economy? Or will it be left to individual states and ultimately grassroots efforts? Regardless, it seems obvious that in order for cleantech to have a fighting chance, the rules need to be changed, and tax laws may be the way to accomplish that. As Martin put it, “I think the government has to play a role if it wants the US to shift to using cleaner sources of energy more rapidly than the market would shift on its own.” By Maryruth Belsey Priebe, Senior Editor
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In its 2011 World Energy Outlook, the International Energy Agency projects that, “For every $1 of investment in the power sector
More on carbon finance
As the election draws near, the failures and 32 successes of the Federal stimulus funds are in sharp focus. Ed Dodge takes a look at that poster-child for failure, Solyndra, asking — and answering — probing questions.
SOLYNDRA: HYPE AND REALITY
Questions have been swirling since Solyndra went into bankruptcy. What does this bankruptcy indicate about the appropriate role of government in helping new technologies?
Does Solyndra indicate that solar electricity is over hyped and a poor investment, or is it a single business failure due to bad management? Is Solyndra an example of political corruption and crony capitalism or the victim of unfair foreign competition?
Solyndra Solyndra was a manufacturer of an innovative type of thin film photovoltaic panels using CIGS (copper indium gallium diselinde) as the photoelectric material. In an era of high — and thought to be rising — silicon prices, Solyndra’s approach attracted attention and investors.
Solyndra’s other unique technological approach was their tubular panels. Being round instead of flat, they always presented an optimal angle to the sun while also capturing reflected sunlight, particularly when mounted above a white surface. Their tubular modules were intended to be cheaper to install than conventional panels because they came mounted in racks that allowed air to move freely. Air flow meant they were subject to less wind and snow loading, requiring less ballast and structural supports, which translated to reduced installation and system costs.
and Mr. Gronet fueled speculation of political favoritism. A congressional investigation revealed
No other company was attempting the same approach.
no inappropriate lobbying, a fact supported through analysis by Bloomberg, which showed that political criticism was largely overblown.
Political Corruption?
Solyndra was a high profile company. Many respected and well funded venture funds, such as RedPoint Ventures, CMEA Capital and RockPort Capital Partners, invested heavily. One of Solyndra’s biggest investors, George Kaiser of Argonaut Private Equity, was a top fund-raiser for President Obama and a frequent White House visitor. Solyndra’s founder and CEO, Chris Gronet, was himself well known in Washington. The combination of Mr. Kaiser
In fact, Solyndra made its original application to the DOE in 2006. The Bush Administration made its own attempts to fast track the company, but it still took 3 years for the loan to finally be approved. During the process, Solyndra was subject to numerous rounds of detailed financial auditing by DOE professional staff, not by political appointees. The Obama administration then picked up the baton, hoping to claim its success. In the end,
Solyndra became a political catastrophe when the company failed.
Management Ineptitude?
To understand why Solyndra failed, it is instructive to review the company’s history. Documents reveal a firm whose management had faith to a fault in its novel technology, but chewed through cash, while failing to see the shifting winds in the industry. The Chinese government massively funded their photovoltaic industry, leading to a huge surge of panels coming to market, resulting in a 50% price drop from 2009-2011. In addition, silicon prices dropped dramatically, removing the benefits that Solyndra hoped to enjoy by their novel, non-silicon based technology.
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Key Dates May
Solyndra founded.
July
Bush Administration signs the Energy Policy Act of 2005, creating the DOE 1703 Loan Guarantee Program.
2006
December
Solyndra applies for 1703 loan.
2007
Late 2007
DOE approves Solyndra loan as one of 16 companies ready to move forward with application process.
2008
November
Silicon prices remain high. Solyndra is very attractive to investors. Raising $144 million; total now $450 million.
2009
January
Bush administration takes Solyndra before a DOE credit review committee that remands the loan back to DOE for more information.
March
The committee moves the strengthened loan application forward.
June
Chinese silicon begins to hit the market and prices begin to drop. In the next two years PV prices would drop 50%.
September
Solyndra raises an additional $219 million venture capital. The DOE closes on the $535 million loan guarantee after six months of due diligence. Application to closing the process took 3 years.
JanuaryJune
PV prices continue to slide Investors and analysts question Solyndra’s ability to compete. Solyndra pulls its IPO. Raises another $175 million from investors.
May
Obama visits Solyndra facility, is photographed holding tubes while talking with founder Chris Gronet.
July
Gronet replaced as CEO.
November
Solyndra closes Fab 1 facility. Company concentrates on DOE funded Fab 2, on time and on budget.
February
Liquidity crisis. Investors provide $75 million to restructure loan guarantee. DOE chooses to give the company a fighting chance.
March
Republican Representatives complain that DOE funds are not being spent quickly enough. House Energy and Commerce Committee Chairman Fred Upton (R-MI): “despite the Administration’s urgency and haste to pass the bill [the American Recovery and Reinvestment Act] … billions of dollars have yet to be spent.”
August
Amidst falling PV prices, analysts worry that Solyndra cannot compete. DOE refuses to restructure the loan a second time.
September
Solyndra declares bankruptcy. Closes manufacturing facility and lays off 1,100 workers.
2005
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DOE Actions Investor Actions Market Impacts
2011
Through Oct. 2009 Solyndra had raised approximately $970 million through equity financing. The company steadily lost money every year. While not unusual for tech start-ups, Solyndra showed no clear path to profitability. The company consumed vast amounts of capital, showing losses of $27 million in 2006, $114 million in 2007, $232 million in 2008, and $119 million in the nine months of 2009. It also spent $1.38 billion constructing its Fab 2 facility, which involved inventing a custom robotic assembly line. Solyndra projected improved performance and lower prices from its new plant, but the projections were never able to bear fruit. By 2009, analysts were dubious of the production numbers at Solyndra. Based on their overall sales data, it appeared that their panels cost over $6 per watt to manufacture and sold for $3.42 per watt, compared to industry leaders who were at or below one US dollar. On the up-side, Solyndra had significantly lower installation costs than flat panels. At $.50 per watt compared to $2-4 per watt, the lower installation costs could reduce the difference in pricing if the panels performed as advertised.
But by 2010 customers were complaining that the Solyndra tubes were not producing the expected power outputs. The company officially de-rated its listed power output by 3.5% in 2010, which company insiders considered to be a disaster. As a result of internal problems and external industry shifts, Solyndra called off its IPO in 2010. The founder, Chris Gronet, was replaced as CEO in July 2010. Mr. Gronet had insisted on maintaining high prices, and argued with customers who complained of poor product performance. Gronet also abandoned the company’s traditional sales channels in pursuit of higher paying customers. These actions further burned bridges. When President Obama visited the company in May 2010, Solyndra was already in big trouble. It was soon clear that the White House had made a political mistake by attaching itself to Solyndra’s star. Summing up Mr. Gronet’s strengths and weaknesses, a former employee said, “Chris is basically a decent guy, but he’s like many high achievers in Silicon Valley. There was irrational exuberance about the cylindrical design. One of the most dangerous things business people
can do is fall in love with their product.”
Changing Political Landscape Recently the US Department of Commerce and the World Trade Organization (WTO) gave support to the argument that the Chinese policy of heavily subsidizing solar manufacturers was in violation of WTO rules. Chinese manufacturers, such as Sunzone, are able to go through an expedited financing and permitting process in a matter of months, receive low interest loans, and desirable land at well below market prices. China has made a commitment to lowering manufacturing costs to boost exports to the US and Europe, where the governments have subsidized consumers of PV through feed-in-tariffs, cash grants and mandates to utilities to use renewables. In May, 2012 the US Department of Commerce imposed tariffs on imports of Chinese solar panels after finding that Chinese manufacturers were selling panels below cost. However, the changes came too late to help Solyndra.
In the Press Presidential candidate Mitt Romney said on the campaign trail, “This half a billion dollar taxpayer investment, represents a serious conflict of interest on the part of the president and his team.” Congressman Fred Upton (R-MI) Chairman of the Committee on Energy and Commerce stated that the loan program “is littered with failure”. Fox TV Steve Milloy called Solyndra “the poster child for the disaster of green jobs and clean energy” and later claimed that “the solar industry is leading the country ... right down the toilet.” Fox Business guest, Chris Horner of the Competitive Enterprise Institute, claimed that the solar companies “are not responding to demand - they are providing something that doesn’t work.”
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Solyndra loan as percentage of total 1705 loan guarantee. 1705 loan guarantees as percentage of total government loan programs.
}
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The US DOE (Department of Energy) Loan Program was created in 2005 under the Bush Administration. The program enjoyed bipartisan support for financing the growth of innovative clean energy technologies. Solyndra was funded under the 1705 loan guarantee program, which is valued at $16.1 billion and constitutes 1.7% of the federal government’s loan guarantee programs across all agencies. Solyndra’s guarantee of $535 million is medium sized for the fund, representing 3% of the portfolio. Overall, 87% of the funds have been used to back 18 power generation projects, with low risk of default because they were required to have a Power Purchase Agreement (PPA*). The fund was constructed with the expectation that some loans would not be repaid. Of the original $16.1 billion, $2.47 billion was appropriated for project losses. Despite the failure of Solyndra and other recipients, the overall fund has performed as expected.
*PPA is a Power Purchase Agreement that guarantees the purchase of energy, at a set price, produced by the project.
The backlash from Solyndra’s failure continues to ripple through the political landscape. While Solyndra demonstrates the risks inherent in promoting cutting edge technologies, many other start-up companies will fail — or overcome — their own technological, economic or management failures. Investors pick their own ‘failure rates’, subsidizing mistakes by successes. In a risky business, it is nearly impossible to predict which companies will succeed or which possess the eagerly sought-after technological breakthrough. If, as a society, we want vibrant renewable energy industries — with their high capital costs — I believe we are going to need to invest public funds as the Chinese are doing. Solyndra failed due to high costs, management errors and stiff foreign competition, but other firms may be able to learn from Solyndra’s insights and mistakes. As Mr. Zhao, of Chinese manufacturer Sunzone said, “Who wins this clean energy race really depends on how much support the government gives.” The energy industries — coal, oil, gas and nuclear — have long enjoyed some of that support, and they are not alone. Defense, agriculture, utilities, telecom, aerospace, computer and internet businesses all benefit from government largess
and lobby heavily for legal positions that favor their industries. For all the talk of free markets, critics on the left and right only criticize businesses they don’t like, while they always encourage the support of the industries they prefer. Much of the criticism of Solyndra smacks of partisanship and ideology. The Chinese have made a commitment to growing a large photovoltaic industry and have put massive funds behind it. The ultimate question is, what is America willing to do to compete in the international markets? The DOE loan program exists because it is difficult for early stage energy companies to get over the hump from proof of concept to commercialization. The economies of scale are too high for the capital markets to take on the challenge alone. If we want America to have a vibrant clean tech industry, it is going to require some measure of government assistance. Otherwise, foreign competition will beat us to it.
Edward Dodge is an experienced technology professional with a background in renewable energy and information technology. He has an MBA and a BS from Cornell University..
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GLOBE TROTTING FOR NEW MARKETS:
FINANCING, BUILDING AND RETROFITING EFFICIENT BUILDINGS. There is a lot of talk about American competitiveness and jobs, but not enough about where new markets are and how to take advantage of them. With constant buzz about technology and the latest in social media, an unexpected answer is buildings.
People live in buildings, work in them, play in them, learn in them. A world without buildings is unimaginable. Yet, as the planet faces energy constraints, buildings must reduce their use of 73% of our energy and 10% of potable water. The gap when upgrading or retrofiting a building is between who pays for improvements and who gets the benefits from those improvements: the so-called ‘OwnerOccupant Dislocation’. This gap is a prime opportunity for financially and technically sophisticated companies. One approach, that taken by Transcend Equity, is
$300,000
Market Size | US Millions
$250,000
$200,000
Materials Equipment
Emerging Technologies
Services
$150,000
$100,000
Established Technologies
$50,000
$0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Lux Research
to ‘own’ the energy bill, using a cut of the long term savings for building improvements. In this case, Transcend pays the utility bill. For Metris Energy, the customer pays Metris a lower price for energy from Metris-installed improvements, while paying a utility for additional service. “We don’t break the customer relationship with the utility,” said Bob Hinkle, President and CEO of Metris. The building occupants are incented to reduce energy use because Metris is lower per kilowatt than the utility. In addition, one of their chief improvements is building automation, which ensures that Metris and
the building know what is happening on a day-to-day basis. “If their bill went up because they installed a new data center, we can show them exactly what happened and how it is impacting their expenditures,” Mr. Hinkle said. These kinds of approaches reduce debt for REIT’s and other investors, while creating building value, which translates to cash flow for owners. Worldwide, such inventive financing schemes are incenting building owners to invest in sizable retrofits to make their buildings more efficient, or to keep the lights on in factories in areas where electricity can be intermittent.
Market Size Lux Research examined the market for ‘green’ buildings in a free, fact-filled seminar, which can be viewed here. What the chart above shows is that established technologies, such as insulation or efficient lighting, will be a $191 billion dollar global market by 2020, up from $144 billion in 2010. This is a compounded annual growth rate (CAGR) of 3.1%. However, emerging technologies, such as vacuum insulated panels, are projected to reach a 24% CAGR, growing from
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Aerogel: NASA’s Magic Insulation
Designer Velux Lamp Light Well Powered by the Sun (YouTube Video)
Denim Insulation by Bonded Logic
Numi is Kohler’s Smart, Luxe, WaterSense Toilet
Smart Buildings from Siemens (Video)
Water Purification and Reclamation by Process and Water
Water Efficiency for Sinks, Toilets and Showers by Sloan Valve
Creatherm is a Simple, Flexible Radiant Slab for Heating
Sunup to Sundown Solar Tracking for Factory Light Wells by SunDolier
Boral Recycled Bricks
Optimizing HVAC (Chillers) by Optimum Energy
Cyber-Rain is a Sprinkler Control with a Brain
Breathable, waterproof roofing insulation by WebDynamics, Ltd.
Plumen Designer Lights
Electrostatic ‘Smart Glass’ By SageGlass
Green Building Materials Expected to Reach $70 billion by 2015
High Performance Commercial Daylighting by Solatube
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NEW IDEAS
Warmboard Unveils Retrofit Radiant Floor Panel
$13 billion to $83 billion in the same period of time.
Aditya Ranade, Ph.D., Senior Analyst at Lux, talks about the opportunities outside the United States and the European Union, in his presentation, “Globe Trotting for Green Building Hotspots.” He points out where and what to look for. He examines the policies that make markets, and discusses how to take advantage of this huge, growing market.
by independence from unfriendly foreign suppliers. Conversely, for countries like Russia and Saudi Arabia, with large supplies of natural
Voluntary Third Party Standards Voluntary standards, such as LEED (Leadership in Environmental and Energy Design) in the United States provide transparency and procedures that reduce customer confusion about approaches and benefits. In the EU, the standard is BREEM, while China has adopted MOHURD, another Green building standard.
Public Policy Public policy drives adoption by setting standards or goals; by providing bridge loans; and by providing rebates, incentives and other forms of direct financing. In some countries, such as India, energy insecurity from shortages and failures are critical, especially for commercial installations such as factories. Some, like Germany, are motivated
widespread pollution; and to develop new products to sell to the international community. These factors determine how the government engages in creating new opportunities for building retrofits.
gas or oil, ‘green building’ is not a high priority. China is motivated by the need to control costs while increasing energy capacity; to reduce
Standard of Living Countries with a wealthy, informed population are more likely to adopt new policies. As they look to invest in programs,
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About Lux Research they drive government policy for new initiatives. Singapore is an example of a wealthy early adopter. The government provides Retrofit Cash Rebates for projects that qualify. The country also has an active Building and Construction Authority that supports standardization.
Emerging Markets
For emerging markets like India and Malaysia, technologies that rely on the customer’s cash flow — for example, paying for long term improvements from capitalized savings — is a good strategy. Dr. Ranade added that financing, credibility, and an understanding of in-country policies and practices can be challenging. Companies that partner with corporations that have existing market channels tend to be more successful. In India, Panasonic and Johnson Controls have been leaders.
US and Canada For large countries with markets fragmented by regionally inconsistent policies and utility rates, Lux sees a local strategy that can take advantage of supportive policies and higher electricity prices
that make retrofits attractive: The more money you save, the more is available to finance retrofits. They also find that combining channels — working with multiple, smaller entities — can make up for the lack of a financing infrastructure.
The Future Lux expects ‘green lease schemes’ to broaden financial vehicles. Such innovation will become mainstream for investors hungry for long term, predictable income. One of the many advantages of these schemes is the experience that finance companies bring to building owners. For example, they can vet best-in-class technologies, and separate the ‘great in the future’ from the ‘here and now’. They also can implement complex processes in order to minimize the effect on building tenants. Lux’s research shows that developing and underdeveloped countries, such as Indonesia and Colombia, are likely to announce new policy measures that are favorable to investors. Such policies will make them more attractive than the European Union, which may well be encumbered by their debt worries for the near future.
Helps clients find new business opportunities from emerging technologies in physical and life sciences. Offers ongoing technology and market intelligence, as well as market data and consulting services . Has over 250 clients on six continents: Multinational corporations, investors, governments, and SMEs Has a global reach, with over 80 employees in Boston, New York, Amsterdam, Singapore, Shanghai, Seoul, and Tokyo Combines deep technical expertise with business analysis to support strategic decisions.
Lux Research Webinar, “Globe Trotting for Green Building Hotspots
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