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 President's Message
Robert P. Thornton,
President,
International District Energy Association
rob.idea@districtenergy.org
Fourth Quarter 2007, District
Energy Magazine
In the U.S., the end of
summer brings the end of the regular major league baseball
season. The arrival of autumn marks the beginning of the
playoffs and ultimately the October Classic, otherwise known
as the World Series. As any sports fan will attest, playoff
season is much more interesting when you have a team in
contention, a horse in the race. Somehow, the stakes seem
higher and you stay more engaged in the outcome, planning your
evenings or travel around game schedules. (I can still recall
a few magical nights in 2004 as the Boston Red Sox
historically roared back from a 3-0 deficit to overcome the
Yankees and ultimately sweep the World Series.)
Post-Season Energy Playoffs
This fall, IDEA has a couple of
exciting playoff prospects as we enter post-season debate on a
new federal energy bill on Capitol Hill in Washington, D.C.
Over the past year, during the regular lobbying season, many
IDEA members helped us succeed in advancing key items into the
respective U.S. House and Senate energy bills, such as a
revolving fund for district energy, a renewable combined heat
and power and thermal energy production tax credit and an
investment tax credit for CHP. Now we are in playoff phase,
where a congressional conference committee will be assembled
to hash out the final components of an overall energy bill.
We will soon learn the lineup of
respective House and Senate participants in the energy
conference committee, where reconciliation between the House
and Senate versions of the bills takes place. Once we have the
roster of legislators, we will be linking the conference
committee players with IDEA members who reside in their home
states or congressional districts. Since legislators are much
more interested in hearing from hometown constituents, to
advance our legislative issues ahead into the next playoff
round, we will need IDEA members to get in the game by
writing, phoning and faxing their respective legislators. This
is the time when we need to bring in the right players to make
the proper pitch. IDEA will be circulating a member “sign-on”
letter and we will ask everyone to stand up and raise both
arms high. Just like the wave at a stadium, it is important
that everyone participate with enthusiasm.
- To advance our legislative issues ahead
into the next playoff round, we will need IDEA members to
get in the game.
To win in any sport, you need a
game plan that accounts for the strengths and weaknesses of
your team. Additionally, if your strategy is to succeed, it is
important to scout the opposition to know where to position
your defense. In this era of federal budget deficits and
‘pay-as-you-go’ protocol, it will be very important that our
provisions compare favorably from an economic perspective to
the myriad other suggestions under the committee’s
consideration, if they are to compete for funding or sources.
A Synopsis of the Bills
On the Sustainable Energy
Institutional Infrastructure Act, the principal beneficiaries
would appear to be colleges and universities, municipalities
and other public entities that would potentially utilize
program capital to help fund district energy investments. But
on closer inspection, most of the IDEA team stands to benefit
as consultants will advise, engineers will design, and
suppliers will be selling equipment for these new energy
investments. In this case, nearly every industry player can
speak out in favor and cheer for this piece of legislation.
Our strategy will be to connect
key constituents with their respective committee members to
convey the importance of supporting the IDEA provisions in
this bill. To win, we will need every voice to be heard, every
possible participant to contribute to the process. In certain
instances, key votes may reside with specific committee
members, and therefore, it will be very helpful to call on the
best efforts of IDEA members to achieve the greater good.
The CHP Investment Tax Credit
(ITC) is intended to stimulate renewal and upgrade of central
plant heating facilities to cogenerate and help relieve grid
demand. As a policy mechanism, a tax credit requires a
tax-paying entity somewhere in the project mix. On the
surface, public institutions might be indifferent to a policy
that could potentially engender privatization or asset
transfer. But there are numerous project structures to capture
and transfer an ITC benefit without relinquishing asset
control or compromise mission-critical operations. While some
facilities may be cautious in considering cogeneration, in
many instances, demand growth and fuel cost increases are
causing asset owners to evaluate CHP in their facility
expansion plans.
Underpinning CHP investment are
the potential environmental gains through reduced emissions,
greater fuel efficiency and lower peak electric demands on
constrained utility grids. Across the country, college
presidents are signing on to sustainability measures and
pledging greenhouse gas reductions while seeking innovations
to accomplish significant cuts in carbon dioxide emissions.
While not everyone is a fan of CHP, and it won’t be an easy
fit in every setting, in most cases, converting to CHP can be
a grand slam by improving power reliability, increasing fuel
efficiency, cutting operating expenses and reducing greenhouse
gas emissions. Depending on the mix of votes in the conference
committee, it may be critical for a key legislator to hear
from a public institution constituent in support of the CHP
ITC.
Similarly, with the Renewable
Thermal Production Tax Credit, where the benefit will accrue
to investments that tap renewable sources such as geothermal,
biomass, waste wood and others, some people might discount
this provision because a renewable solution may not pertain to
their specific situation. However, I would submit that
ignoring the playoffs because your team isn’t in the race will
not help all of us involved in the game. Just because you are
not a fan of the Boston Red Sox doesn’t mean should ignore the
pennant race this year. It is especially important that
industry participants, particularly constituents of the
conference committee members, put aside personal preferences
and cheer for the industry overall.
It’s Time to Come Together
Now that we are in the playoffs
and the energy bill is in play, rather than focus on
individual stats or batting averages, now is the time for the
IDEA community to emerge as a team and advocate for these
legislative provisions. Why?
- Because there are enormous
quantities of energy currently wasted that could be recycled
for heating and cooling through district energy systems, and
district energy systems are a key infrastructure investment
to tap local energy sources.
- By harvesting recycled
heat or using more renewable sources, district energy
systems can contribute greatly to national goals such as
increasing fuel flexibility, cutting greenhouse gas
emissions and increasing power grid reliability.
- District energy
investments are capital-intensive, and many public entities
will need investment support from these policies to
stimulate broader market penetration.
- Ultimately, it is likely
the U.S. will develop a carbon policy that will reward fuel
efficiency. District energy systems can position communities
to capture greater economic benefits from a cap-and-trade
market for carbon. In the final analysis, positive policies
for the industry stimulate investment and growth, and
growing the market for district energy serves the interests
of the whole IDEA community.
So, during this playoff season,
whether you, your company or your institution see a direct
benefit of an ITC or the revolving fund, if you are located in
the congressional district of a key energy committee member,
it is very important that you step up to the plate for the
industry. We need every constituent to think and act as a
member of the industry team when called to bat. You might be
asked to contact your legislators to seek their support for
the revolving fund legislation, even though it isn’t a clear
winner for you or your organization. Given the lineup of
conferees, you might be the best person to make the call in
support of the CHP ITC.- During this playoff season,
it is very important that you step up to the plate for the
industry.
-
In making the call to your senator or representative, it
might feel like you are hitting a sacrifice fly or laying
down a bunt for the team. We won’t ask anyone to break the
rules, take steroids or get hit by a fastball to get on
base, but advancing to the next round may demand commitment
to winning as a team. Although you might have made an out,
if the run crosses the plate, we will all benefit from the
score. Just like the Red Sox, you can’t take it for granted
when you might make it back to the World Series.
Click below to view earlier
columns:
3rd Quarter 2007
2nd Quarter 2007
1st Quarter 2007
4th Quarter 2006
3rd Quarter 2006
2nd Quarter 2006
1st Quarter 2006
4th Quarter 2005
3rd Quarter 2005
2nd Quarter
2005
1st Quarter 2005 |
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