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President's Message 1st Quarter 2011

By Robert Thornton posted 06-16-2017 20:02

  

From District Energy Magazine, First Quarter, 2011


Rob Thornton

The political pendulum has swung to the right in Washington, D.C. And with that, the change in majority in the House of Representatives will result in wholesale shifts in committee chairs, including the Energy and Commerce Com-mittee, Environment and Public Works Committee and the shuttering of the Special Committee on Global Warming. The handwriting on the wall says legisla­tive activity related to climate change mitigation and limiting carbon emissions is effectively shelved at the congressional level, yet regulatory activities at EPA will continue to move forward. In the near term, we will need to evaluate the emerging legislative landscape to gain more congressional sponsors of the Thermal Renewable Energy and Efficiency Act (TREEA). With nearly 200 organizations signed on in support of TREEA, there is widespread recognition of the importance of thermal energy in pending clean energy legislation. At the same time, we must continue to work with EPA so that the energy efficiency advantages of district energy and combined heat and power are properly recognized in emerging regulatory policies and subsequent rule-making.

Since Federal energy policy portends to be more fractious in the near term, we may need to direct our immediate attention and advocacy resources to the state and municipal level in order to capitalize on new opportunities for district energy and CHP. Working through our relationships with the eight Department of Energy Regional Clean Energy Applications Centers, we will emphasize and seek to promulgate more effective state policies such as the Massachusetts Alternative Energy Portfolio Standard (APS) and the North Carolina CHP Investment Tax Credit Standard. If the fulcrum of policy leverage is moving to the states, we need to engage more effectively at that level, too.

Around the globe, district energy is gaining visibility at the municipal level as an integrative energy strategy for low-carbon solutions for cities and communities. Particularly in Canada, we see that mayors, planners, municipal utilities and developers are looking for local energy solutions to take advantage of indigenous thermal energy resources like surplus industrial heat and municipal waste streams, renewable cooling from oceans, lakes and rivers, and a variety of biomass options like waste wood, corn stover and biofuels. In fact, prior to the U.N. Conference on Climate Change in Cancun in December, 132 mayors of major cities formed the World Mayors Summit on Climate to help galvanize city leaders as a singular block committed to advancing clean energy strategies. Urban leaders are seeking greater recognition as first responders and understandably want greater access to financing in order to actually implement climate mitigation strategies.

If you think about it, cities play a strategic role in advancing energy efficiency at scale. Today, more than half of the world's population resides in urban areas, accounting for 60 percent of global energy production and 70 percent of greenhouse gases. Mayors control policies on transportation, water and solid waste management, street lighting and the energy efficiency of buildings. Many cities own municipal utilities that provide services and can serve as an effective conduit to develop new district energy systems and influence citizen behavior toward energy efficiency. And district energy is by its very nature local energy that allows municipalities to take greater control of their destiny.

A key advantage of district energy is that it allows energy dollars to recirculate in the local economy, creating jobs and pro­ducing operating and tax revenues at the municipal level. For example, one mayor in western Canada recently commented that the operating revenue generated by the municipal utility was equal to a 4.5 percent property tax decrease; the utility income supports schools, libraries, parks and other community services, allowing the city to hold down other property taxes. Much like the growing awareness of sourcing local foods, mayors and planning directors across North America are looking for smarter grid solutions and sustainable energy options to differentiate their communities and attract new business. Progressive real estate developers are looking to achieve a competitive advantage by integrating district thermal energy services as a way of differentiating their space as a more valuable and sustainable offering. Greener and more energy-efficient properties are demonstrating that sustainability enhances value and accelerates absorption. College presidents have fully embraced the objective of carbon neutrality and are investing in district energy/CHP as a primary strategy for greater energy efficiency and lower greenhouse gas emissions.

District energy also facilitates the use of surplus heat which, in turn, solves a number of other problems: excess thermal pollution to waterways and atmosphere is reduced; potable water used to quench excess heat is conserved; recycling surplus heat displaces combustion of other fossil fuels used for heating and cooling buildings; and recovering surplus heat conserves liquid fuels for more critical uses like transportation. Look ahead forty years. Would you rather be mayor of the city whose economy is fuel-flexible and low-carbon or the city that continues to rely on distant power stations and imported fuels, and pays tipping fees to others for exporting waste? As an industry, it is essential that we alert mayors and planners to the benefits of district energy and position its infrastructure as an integral economic advantage in a sustainable community.

At our upcoming annual conference in Toronto in June, we plan to assemble a group of professionals from around the globe to discuss policies and practices that expand opportunities for district energy. In Canada, Finland, South Korea and Sweden, tax policies and municipal planning has featured approaches such as energy improvement districts (EIDs) to support growth and stimulate community engagement. It will be informative to explore a range of different approaches to more fully inform mayors and community planners on strategies for system development. While federal policy makers may have cooled on the need for legislation to cut carbon emissions in the U.S., across the world many economies are advancing policies to reduce reliance on fossil fuels and increase energy efficiency. For example, Denmark has committed to achieving a fossil-free economy by 2050 through enhanced reliance on district energy that integrates renewables, CHP and waste energy recovery. With a total population of 5.5 million, the country of Denmark is smaller than many of the world's mega-cities with populations of 20 million or more, but has demonstrated impressive economic growth and environmental progress leveraged by efficient district energy.

In today's legislative and economic climate on Capitol Hill and across the EU, programs or policies that hint of "New Deal" infrastructure investment or gov­ernment largesse are not likely to survive committee review or capture meaningful funding. Competition for capital is fierce, credit remains overly tight and the mood for public expenditures is vexing at best. But here in the U.S. we are facing a Sputnik moment while countries such as China, South Korea and Singapore are ACTUALLY INVESTING BILLIONS IN CLEAN ENERGY. In order to generate real economic growth, cut foreign trade deficits and compete for jobs in the clean energy sector, the U.S. needs to adopt a more hybrid approach to public/private partnerships that are succeeding in these other vibrant economies. Our global competitors in the new clean energy economy have deep and deliberate government support for expanding their markets domestically and globally. As a noted economist said, the invisible hand of capitalism is best balanced by the visible hand of functional government direction. Even conservative columnist David Brooks has decried the swinging political pendulum that denigrates all government infrastructure investment as "socialism" when he posited that the Eisenhower-era investment in the U.S. interstate highway system was "certainly not a government plot run by Bolsheviks." America's robust transportation infrastructure is widely acknowledged as a critical asset for interstate commerce. Now's the time for a renewal of essential infrastructure for our nation's cities, including water, energy and waste systems.

Both Denmark and China have chosen to invest heavily in urban district energy/CHP infrastructure, but transposing the Denmark energy taxation model or the Chinese com­mand/control regime to the U.S. government is not likely. We need to find a middle ground policy mechanism with government loan guarantees, revolving funds or tax-exempt bonding as the means to support initial capital investment in district energy. Unlike regulated utilities that essentially act as monopolies with an obligation to serve everyone in their territory, district energy in the U.S. is a wholly competitive endeavor where building owners can decide whether to connect or install their own in-building boilers and chillers. Investment or production tax credits may help to attract private capital or improve ROI's but policies to diminish development risk are also needed. In the Middle East and Asia, public-private partnerships have stimulated huge growth in district energy investments.

Today, more than half of the world's 6.3 billion people live in cities. By 2050, U.N. research predicts global population will increase to nearly 9 billion people and nearly 70 percent - or 6.3 billion - will live in urban centers. Taken another way, in 40 years, today's total global population will have moved virtually altogether into our cities and even mega-cities with more than 30 million inhabitants. In order to support this dense energy and environmental concentration, we will absolutely need thermal energy infrastructure to utilize surplus heat from power stations and convert municipal waste from landfill liability to useful energy. Even today, we can ill afford to throw away two-thirds of the fuel we burn to make electricity, let alone when urban populations have nearly doubled.

We can be encouraged by the tre­mendous success in increasing urban energy efficiency that IDEA members have already demonstrated in their com­munities. For instance, UT Austin's focus on modeling and managing the efficiency of its CHP/district energy system allows it to serve twice as many square feet of cus­tomer space today with the same volume of fuel as 20 years ago. District Energy St. Paul has shown similar results, now serving twice the customer square footage as it did in the 1980s with the same fuel volume, and its switch to renewables has also cut urban CO2 emissions by nearly 240,000 tons per year. In Toronto, Enwave's investment in lake water district cooling reduced peak power demand by 90 percent and cut emissions equivalent to taking nearly 16,000 cars off the road.

These real-world cases demonstrate that district energy is not only proven, readily available and highly effective; it is essential infrastructure for a sustainable city. Our challenge is to educate a range of audiences on the near-term potential for district energy and direct finite resources where we can achieve the greatest benefit for our members. If half the world is moving to cities, maybe we should too.



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