You will learn about:
Our energy & climate challenges
Renewable energy credits
Carbon offsets
Corporate action
Renewable Choice services
Renewable Choice Energy is a leading provider of climate change solutions including green power, carbon offsets, and renewable energy advisory services. Recognized as a trusted partner to numerous major brands, Renewable Choice was the recipient of the prestigious Green Power Supplier of the Year award in 2012 from the U.S. Environmental Protection Agency and has been featured in hundreds of media outlets. To learn more, visit www.renewablechoice.com.
6. U.S. Energy Infrastructure
Renewables: 2.5% (Biomass: 1.31%; Wind:
0.83%; Solar: 0.01%; Geothermal: 0.35%)
Oil: 1.6%; Other fossil fuel: 0.5%
source: EPA eGRID2010 Version 1.1
7. The Problem
Problems associated with the current U.S. energy generation infrastructure:
Climate change
Toxic gases and metals in the air
Air pollution and smog
Respiratory problems in children
Mercury in water
Mountaintop removal
8. Global Climate Change
Source: (blue) Vostok ice core, (green) EPICA ice core, (red) Law Dome ice core, (cyan) Siple Dome ice core, (black) Mauna Loa Observatory, Hawaii
10. Goal:
Harness commercial and consumer demand to help drive the
growth of renewable energy and clean technologies
• 20% wind by 2030
• CO2 at 1980 levels
“Geo-Greenism"—is not only what we need to save the planet from
overheating; it is what we need to make America healthier, richer,
more innovative, more productive, and more secure.
Thomas Freidman, Hot, Flat & Crowded
12. What is a Renewable Energy Credit (REC)?
• A REC is the accepted way to track and
trade renewable energy in North
America
• A renewable energy source is credited
with RECs as it produces electricity
• A REC represents the environmental
attributes associated with the
generation of electricity from a
renewable energy source
• The owner of the REC receives the
right to claim its environmental
benefits
15. One Commodity – Two Markets
Compliance
Voluntary
Renewable Energy Credits
16. Voluntary Market
• Most organizations lack the
ability to install onsite renewable
energy:
– Zoning restrictions
– Lack of natural resources
– Capital limitations
• RECs allow businesses to
purchase grid-sourced
renewable energy
17. The Green-e® Energy Standard
Board includes members from Environmental Defense, NREL, NRDC, and the
Union of Concerned Scientists
Guarantees that RECs:
• Originate from 100% new renewable facilities
• Are produced in the stated calendar year
• Go beyond existing government mandates
• Pass a process audit by an independent certified public accounting firm
The Green-e logo helps consumers easily identify environmentally superior renewable energy options.
For more information on Green-e certification requirements, call 1-888-63-GREEN or log on to www.green-e.org.
18. Financing a Project:
The Four Legs of Wind Energy
Depreciation
Tax Incentives
Energy Sales
Renewable Energy Credits
19. Value of RECs to Wind Projects
* Value as a percent of 20 year rate requirement
Source: John Deere Renewables
20. Straight From The Developer
"By converting Plant
Mitchell to biomass,
we hope to not only
help grow the
renewable resource
base in Georgia but
also to expand the
market for renewable
energy credits, which
ultimately will foster
additional renewable
energy development.“
~ Mike Garrett,
President and CEO,
Georgia Power
“To any developer
doing a wind farm in
today’s market,
renewable energy
credits are critical to
the revenue stream in
taking a project over
the top. If we do
another one, it
certainly will be a
critical factor.”
~ Dave Osburn,
Oklahoma Municipal
Power Authority
“In ten years, Wind
will be bigger than oil
in Texas.”
~ T. Boone Pickens,
Pickens Plan
“Selling of RECs makes
the construction of
more renewable
energy generation
plants possible and
also makes existing
renewable generation
more commercially
viable.”
~ Tim Swanson,
Director of Origination
for Florida Power &
Light (FPL)
“There isn’t a
single renewable
facility that goes
online in this
country where
RECs aren’t
considered in the
core financing.”
~ Steve Maller,
John Deere Wind
Energy
21. Voluntary Purchases are Critical
• Voluntary purchases
of RECs represented
OVER 50% of all wind
sales in 2008
• Voluntary buyers are
making as big or
bigger of an impact
as state-level
requirements
Source: Lawrence Berkeley National Laboratory and
National Renewable Energy Laboratory
22. Slowdown in Construction in 2010
•
5,115 MW installed in 2010
•
51% less capacity installed than 2009
•
•
Constraints in capital and credit markets
impacting development
2009 was a record-setting year with
•
40,180 MW of total capacity
10,010 MW installed
•
Enough to power over 9 million homes
Sources: AWEA U.S. Wind Industry Annual Market Report - Year Ending 2009; AWEA 4th Quarter 2010 Market Report
23. Renewables Remain < 2% of Generation
Renewables: 2.5% (Biomass: 1.31%; Wind:
0.83%; Solar: 0.01%; Geothermal: 0.35%)
Oil: 1.6%; Other fossil fuel: 0.5%
source: EPA eGRID2010 Version 1.1
25. What is a Carbon Offset?
A carbon offset is also referred to as a
verified emission reduction, or VER
One VER represents one metric ton of
carbon dioxide emissions avoided or
removed from the atmosphere
Purchasing VERs helps fund emissions
reduction projects worldwide
27. Cap and Trade: Its Origins
Cap and Trade first addressed Acid Rain in the 1990’s
•
Achieved 122% of targeted
The Acid Rain Experience
Unprecedented environmental protection at
unmatched cost efficiency
reductions
•
Cost savings of $2 - $23.6
billion per year
•
Demonstrated success of
market based mechanisms
Source: Environmental Defense Fund
28. Cap and Trade continued…
• Kyoto Protocol incorporated cap
and trade based on U.S. Acid
Rain success
• Carbon offsets are the most
efficient way for the market to
ensure cost effective reductions
• A ton of carbon is a ton of
carbon
29. Carbon Offsets:
The Strategic Rationale
• Lowers cost of compliance
• Encourages investment &
innovation in sectors not required
to reduce emissions
• Provides time for regulated entities to
change technologies
• Allows long-term technology
development and deployment
30. The Role of Carbon Offsets in Kyoto
The Kyoto Protocol Expires in 2012…
The world is now preparing for a post-Kyoto system
Source: United Nations Framework Convention on Climate Change (UNFCCC)
31. One Commodity – Two Markets
Compliance
Voluntary
Carbon Offsets
32. Importance of the Voluntary Carbon Market
• Choice and broad participation
• Innovation and experimentation
• Social, environmental & economic benefits to
project hosts
• Economically efficient way to reduce GHG
emissions
• Help pave the way for more projects
• Improve compliance programs
34. Leading Standards
• Verified Carbon Standard (VCS)
• American Carbon Registry Standard
• Gold Standard
• Green-e Climate
• Climate Action Reserve
Standards ensure that reduction projects are real, additional, verifiable and permanent, and that
offsets are retired only once
36. Comparison of RECs & Carbon Offsets
How
RECs
Carbon
Offsets
What
Geography
Units
Help fund generation of
clean power
Renewable energy
U.S.
MWh
Fund reduction of carbon
emissions
Energy efficiency
Renewable energy
Methane capture
Fuel switching
Agriculture &
Forestry practices
Global
MTCO2e
38. State of Corporate Activity
• 75% actively measure GHG emissions
• 60% of corporate boards have carbon
on agenda
• 50% have programs to reduce or
offset emissions
• 15% engage in voluntary emissions
trading
• 40% considering voluntary purchase
• >1000 EPA Green Power Partners
• Green Power Partners purchase >16
billion kWh of RECs annually
Source: The Conference Board, 2006 & U.S. EPA Green Power Partnership, 2008
39. Corporate Motivations
• Fulfill voluntary reduction targets
• Create internal incentives for reductions
• Gain carbon market experience
• Support renewable energy development
• Prepare for regulations
• Enhance the brand
• Differentiate a product
40. The Corporate GHG Accounting Standard
• World Resources Institute
– Greenhouse Gas (GHG) Protocol
– The most widely used standard
– Comprehensive accounting guidelines
41. What is a Greenhouse Gas
Inventory?
A greenhouse gas inventory is a
comprehensive and documented
accounting of all greenhouse gas
emissions attributed to an
organization’s activities
45. Greenhouse Gas Inventories
Understand
•
Establish an emissions baseline to understand and report
your greenhouse gas emissions
Track
•
Conduct a yearly inventory to track your progress toward
a reduction goal
Reduce
•
Identify carbon-intensive activities and target with
process, infrastructure changes or offsets
46. Renewable Choice Offset Portfolio
Renewable Energy Credits
•
American Wind – Green-e® Energy
•
Clean Source – Green-e® Energy
Verified Emission Reductions
•
Choice Carbon
• American Carbon Registry
• Verified Carbon Standard
• Climate Action Reserve
47. Business Essentials
What you get:
• Dedicated Client Services Manager
• CD of images and graphics
• RCE website exposure
• Business Essentials Starter Kit
– Custom certificate of purchase
– Messaging guide
– Window clings and magnets
– Custom poster
– Image library
– Facts and figures
48. Customized Marketing Support:
1.
Determine commitment level
2.
Choose a program that fits your
company’s or project’s communication &
outreach goals
3.
Renewable Choice customizes the
program you choose and provides ongoing consultation and support
Mercury picture is of New Idria - a ghost town located in a remote area of the Coast Range of California, outside of Hollister. It was once a center for mercury (quick silver) and asbestos mining. New Idria was at its peak well before the Gold Rush in California of the 1840s and 60s. There are still high levels of mercury and asbestos pollution in the area.
Solar farm picture – Florida Gulf Coast University (16 acre solar farm). Geothermal is Saltin Sea project we support.
Source: www.dsireusa.org / June 2011
Main Point: In most cases, RECs are the only feasible way to purchase renewable energy in the US, on a residential or commercial scale.
Most parties interested in accessing renewable energy face zoning, resource, or capital restrictions that make such energy generation prohibitive. RECs provide an easy, effective method of obtaining clean, renewable energy.
Main Point: Wind power projects are made possible by four distinct revenue streams. Taking away any one of those streams can cripple wind development.
Wind power projects are made financially viable for developers through the existence of four financing streams: Energy Sales, Tax Incentives, Depreciation, and Renewable Energy Credits. Projects depend on all four of these streams in order to be successful; remove any one of them, and the project may not occur. Market data suggests that without the existence of REC’s, approximately 57% of wind projects would no longer be financially viable.
Main Point: Without the revenue stream provided by RECs, the only option that wind developers would have in order to achieve financial feasibility is to increase the price of energy sales. If this happens, wind power contracts would no longer be competitive with conventional power, and the diminished demand would dry up the market.
(source: Steven P Maller - Manager, Business Process & REC Trading John Deere Wind)
Wind power projects are made financially viable for developers through the existence of four financing streams: Energy Sales, Tax Incentives, Depreciation, and Renewable Energy Credits. Projects depend on all four of these streams in order to be successful; remove any one of them, and the project may not occur. Market data suggests that without the existence of RECs, approximately 57% of wind projects would no longer be financially viable.
In this market driven economy, Renewable Energy Credits help drive the value of wind projects. On average, REC’s make up 13% of the controllable revenue streams (REC’s and PPA’s). Whether REC’s are simply pushing a project beyond the threshold of feasibility or providing that extra bit of capital to be reinvested in further development, it is clear that if we are to reach the Department of Energy’s 20% by 2030 target, REC’s will be a driving force in that process.
(energy sales price will increase and power contract cease to be competitive)
Assumptions:
50 MW project
30% NCF
$2,100/KW Capital
Wind Speed 6.7 m/s
Turbine Nameplate 2.0 MW
Debt Term 20 years
NextEra Energy (formerly FPL)
Main Point: The investors behind two of the largest wind farms of all time consider RECs to be critical to their projects success, and it is likely that without the existence of RECs, neither would be have been seen as a worthwhile investment.
As one of the largest oil speculators in the history of Texas, Pickens has turned his attention to wind energy, this year investing $10 Billion in the largest wind farm on the planet.
In 2005, Pickens said: “I was in wind energy for a minute…. I hate it. And when I got to looking at those damn things I said, I don't want to be a part of putting that on the horizon. I think it's homely and I don't like it. We took a loss and got out of it and I'm glad I did.”
Given his history, his change in attitude is largely driven by the newfound profitability of wind energy, which is largely driven by the increased popularity and demand for RECs. The beauty of RECs is that on the small scale, RECs simply make a project financially sensible. However, on the large scale, RECs can make a project quite profitable, in turn drawing large investment from people such as Mr. Pickens who would otherwise be investing elsewhere.
The existence of RECs made this project financially attractive to a man of Pickens’ investment capacity. Had it not been for RECs, Pickens may not have moved away from oil speculating.
Has been updated 09 most current.
Main Point: Voluntary green power purchases match the support for renewable energy provided by compliance markets, making each REC market equally critical to the success of wind energy in this country. Recently, the voluntary market has been growing faster than the compliance market.
Main Point: In 2007, the wind energy market nearly doubled it’s output over the previous year.
In 2007, the wind energy market nearly doubled it’s output over the previous year, with over 5,200 MW of new wind capacity installed, representing 15.9 Billion kWh per year. Currently, the 48 Billion kWh of wind energy produced in the US is accounting for just over 1% of total electricity use. The 45% increase in just a single year helps to move us toward the department of energy’s goal of 20% renewables by 2020.
A wide range of project types with different co-benefits and stories exist including:
Landfill Gas Destruction
Agricultural Methane Destruction
Wind Energy
Biomass Energy
Small Hydroelectric
Large Hydroelectric
Energy Efficiency
Fuel Switching
Cost $1.0 - $1.4 Billion per year compared to cost estimates of $3-25 billion per year!
Main Point: VERs are critical to the environmental strategies of the most forward thinking organizations, from State Governments to NGO’s to Financial institutions.
The most forward thinking organizations in the world buy RECs.
The State of California purchases RECs in the compliance market because they cannot achieve their clean energy objective of 20% renewables by 2020 through onsite generation alone. They turn to RECs because it helps them achieve their targets while also driving investment in wind energy.
The Environmental Protection Agency, one of the worlds most trusted environmental organizations, turns to RECs in order to offset their own energy requirements.
Provides choice to those not in capped or regulated industry to advance GHG reductions
• Contribute to climate protection through real and additional, permanent, and verifiable greenhouse gas (GHG) reductions, while limiting unintended negative consequences.
• Reduce GHG emissions in an economically efficient way.
• Enhance the social and environmental benefits to project hosts.
• Stimulate social and technological innovation and participation by new actors sectors and groups.
• Create and build constituencies for more effective and comprehensive national and international solutions.
• Avoid perverse incentives that could stymie broader climate protection actions and policies.
• Synergistically work with other climate protection measures.Innovation and Experimentation
Broad Participation – Including those not under a compliance requirement
Corporate Goodwill
Cost Effective
Helps make projects happen given long certification process for CERs
Importance of Standards and how they ensure quality – MENTION REGISTRIES
WRI developed the GHG Protocol.
The most widely used and recognized GHG accounting and reporting protocol.
Co-developed by the UN, EPA, multinationals, and NGOs.
It is the definitive guide to GHG accounting that all standards reference. Primary goal is to avoid double counting but also a means of understanding and assigning ownership. And also, more importantly, looked at in terms of defining a strategy to address these emissions.
The appropriate offsetting strategy is based on industry guidelines for classifying emissions.
Emissions are classified into three Scopes.
The scopes were established for inventory and accounting purposes.
Scope 1 - Direct emissions – company owned assets:
fleet, cogeneration facility, boilers, other industrial processes
2) Scope 2 - Indirect emissions from purchased electricity
3) Scope 3 - “Everything else”
The verifying and certifying standards for the voluntary market provide explicit
guidelines on the type of offsets appropriate for the type of Scope of emissions.
Scope 1 – Carbon offsets. Conceptually, and organization is emitting pollution
and purchases a carbon offset to balance this emission.
Scope 2 – Renewable Energy Credit. Primarily a US commodity.
RECs ensure that renewable energy is put on grid for the energy you consume.
Scope 3 – Carbon offsets. RECs only apply to purchased electricity.
Current standards recommend
RECs for Scope 2 emissions
Carbon offsets for all Scopes