Navigant Research Blog

Cities: The Focal Point of Climate Action

— November 17, 2017

This blog post was written by Richard Boehnke.

Cities are a focal point of climate action, both individually and as signatories to large networks dedicated to climate mitigation (e.g., Covenant of Mayors and C40). However, efforts to pledge support, sign an agreement, and publish a local climate strategy with an emissions target do not equate to implementing meaningful climate action. Little data is available to support whether cities are on track to achieving targets or if their targets can be met. For example, with the Netherlands reporting only a 3.8% emissions reduction between 2010 and 2015, municipal governments will be required to take the lead in climate action. Yet, with limited budget and staff working on mitigation, most municipalities are also falling behind on individual climate targets. Ecofys, a Navigant company, investigated which existing best practices could be used by local governments to work towards achieving climate goals.

Opportunities for Local Governments: Best Practices in Climate Action

The study examined 26 best practices from 13 Dutch municipalities. These ranged from community energy ambassadors in Almere, to an energy coalition in Den Bosch, to the investment scheme that led to the construction of large wind turbines in Nijmegen. Civil servants stated the goal of these practices was to act as facilitator, engaging the public and businesses to mediate regulatory and institutional processes. However, more needs to be done to meet ambitious targets.

The First Missing Piece: Collaboration

Listening to other departments’ targets and collaborating on projects is crucial to developing citywide climate solutions. Climate projects typically involve several aspects of city development and are frequently cut due to varying priorities when considering the expense of a specific climate measure. It is possible to use mitigation actions to achieve municipal targets because of the broad impact these actions can have beyond reducing CO2 emissions, like air quality improvement or job creation. Achieving climate targets can be considered a co-benefit when conducting successful and profitable municipal projects.

The Second Missing Piece: Monitoring

Databases like the Klimaatmonitor—which contains key energy and climate statistics for Dutch municipalities—are extremely useful for overviews of municipal progress and national trends. However, there are no clear data or monitoring schemes of local climate projects. This gap limits decision makers because the effects of any given project are not known. Without this data, pilots are less likely to be scaled, best practices are difficult to develop and replicate, and real-time progress cannot be assessed.

A Way Forward

Clear, actionable climate plans are necessary to realize the potential of local climate action. Local governments lack public short- and long-term plans in areas where emissions will be locked in (e.g., district vs. electric heating, hydrogen vs. e-transport, in-depth vs. cursory building renovations). There are several tradeoffs when considering each of these paths, but inaction will only delay the inevitable choice and reduce related short- and mid-term benefits. Robust climate plans require:

  • Emissions targets
  • Emissions baseline
  • Budget
  • Stakeholders
  • Clear measures
  • An implementation plan and timeline
  • A monitoring scheme

If full-bodied plans are implemented, municipalities can share each step of their projects and monitor progress towards achieving local climate goals. With public long-term planning, citizens, cooperatives, and businesses can participate, invest in, and adapt to the municipal energy transition. Municipalities will have to invest a lot more than the currently allocated budgets and manpower to become climate neutral in 20-30 years.

Research conducted for the municipality of Utrecht (350,000 inhabitants) shows that if all measures were realized within the city limits, becoming climate neutral would require investments of about €9.5 billion. However, if the municipality agreed to take part of its investments outside of Utrecht (e.g., funding offshore wind in the North Sea), total investments could be reduced to roughly €4 billion. Ecofys, a Navigant company, proposes that national and municipal governments should agree on a fair effort sharing to reduce overall societal costs.

For more information, please get in touch with our team.

 

Postcard from Hawaii to Nation’s Capital

— June 29, 2017

The mood at the second annual VERGE conference in Honolulu, Hawaii last week was upbeat about the future of clean energy, despite pushback on the US mainland. Apparently, those committed to a clean energy agenda, including the private sector, are more motivated than ever to push forward with aggressive programs to bring renewables resources online. They aim to not only combat climate change, but also create jobs.

Conference attendees clearly supported the supposition that clean energy is here to stay, no matter what might be unfolding in Washington, DC. The proposed dismantling of the federal Environmental Protection Agency’s Clean Power Plan and recent withdrawal of the United States from the Paris Agreement on climate change only seemed to serve as motivation to push forward even harder.

Hawaii’s Renewable Energy Vision

Hawaii is the first (and so far) only state in the United States to commit to a 100% renewable energy future. Governor David Ige of Hawaii didn’t seem to blink in the face of counter currents flowing from the Trump administration. A confessed energy geek, he seemed to take particular delight in the fact that Hawaii has emerged as a key testing ground for bolstering commitments to infrastructure needed to integrate variable renewables for both power and transportation services. Since each island of Hawaii is its own separate electric grid control area and retail costs are high due to such a reliance upon imported sources of fossil fuel, Hawaii is in a unique spot. The economics in the state clearly favor renewable energy.

Industry Momentum Is for Renewables

Even Connie Lau, CEO of Hawaiian Electric Industries, reported that her investor-owned utilities brethren have all bought into the clean energy agenda. If the administrative about-face on clean energy had occurred 8 years ago, then the momentum for renewables and other clean energy may have been halted, but that time has passed. Past government and industry investments have driven down the price of solar PV, wind, and batteries while software innovation to manage such resources has scaled up.

Nevertheless, there are challenges in implementing aggressive clean energy goals. Just look at California, where the state is paying neighboring states to take excess solar production. Many models show that once one reaches 80%-90% renewables penetration, the cost of integration can jump dramatically.

One of the key tools Hawaii will rely upon to reach its 100% renewable energy goal is to integrate devices like energy storage into self-balancing distribution networks such as microgrids. As of now, over 90 MW of new energy storage devices has been authorized by state regulators to be installed among the Hawaiian islands, with the majority of that capacity—70 MW—to be installed in Oahu.

Continuing Conversation

I had the pleasure of helping to run a 4-hour workshop on how to overcome challenges to developing a microgrid at VERGE with cutting edge microgrid market makers such as ENGIE and Spirae. I also moderated a session on how microgrids boost clean energy on islands, with featured speakers from ABB—which is pushing forward with a 134 MW microgrid designed to reach 50% renewable energy on the island of Aruba by 2020—and representatives from Hawaii and the US Navy.

Ironically, there may still be some room for collaboration between Hawaii and Washington, DC in the clean energy space. As I noted in a previous in a previous blog, one area where the interests in promoting national security in DC and a clean energy agenda in Hawaii align is the microgrid space. Watch for a report on that topic later this year.

 

Political Posturing Won’t Stop Climate Action

— June 12, 2017

The debate over climate change wages on in Washington, DC, but the businesses that lead the national economy are taking action today. Even without regulatory mandates, corporations are making significant investments in energy efficiency, clean energy, and other sustainability initiatives to combat climate change. Uncertainty is bad for business, and climate change forces corporate risk analysis and planning. The upside is that smart investments can help combat climate change and deliver bottom-line benefits.

The Evidence: Action at the Top

Fortune  500 companies have been making commitments on climate for decades at this point. Nearly 50% of these industry majors have committed to greenhouse gas emissions reductions. More specifically, the effort of RE100 has recruited over 95 companies pledging to rely on 100% renewable energy. Pressure from shareholders and customers has driven investment in renewables and emissions reductions requirements across the supply chain.

When the top of the Fortune 100 list fail to lead, there is significant backlash. At the end of May, for example, Exxon Mobil faced major shareholder push back on the company’s failure to address climate risk assessment. According to The Washington Post, 63% of shareholders voted in favor of the oil giant assessing and disclosing the climate risk against long-term financial performance. This motion by Exxon’s shareholders echoes efforts with many other major fossil fuel-based companies in the last year, according to the advocacy group Ceres.

The Benefits: Loyal Customers, Happy Shareholders

Walmart, the world’s largest retailer, has faced its share of controversy around corporate social responsibility. However, when it comes to climate change and sustainability, some of the company’s major recent efforts are showcasing it as a leader. In 2016, the company set science-based targets for 18% greenhouse gas emissions reductions by 2025 from 2015 levels. This is a notable effort, bringing commitments inside the fence as opposed to the extensive pressure the company has historically put on its suppliers.

Walmart is demonstrating the business benefits of leadership on climate change and sustainability. As Joby Carlson, director of Energy and Operations Sustainability, explained in Energy Manager Today, “We try not to do anything that doesn’t have a good financial return. Sustainability has to hit the balance among the economics, the environmental, and the social side. Energy efficiency has been our bread and butter. We are a low-cost retailer so we are sensitive about the cost of operations. Optimizing and reducing our energy demand has translated into millions and millions [in savings].”

Corporate America is leading the charge and moving forward with combating climate change, and in the process, redefining sustainability as a metric of business success. As companies focus their efforts inside their operations, there is more opportunity to leverage technology that delivers emissions reductions while also delivering cost savings and other broad business benefits, including loyal customers and committed investors.

 

Technology and Buildings – A Solid Foundation for Sustainability

— June 6, 2017

The idea of corporate sustainability risks becoming a business paradox—a symbol of commitments without funding or substance that, in themselves, become unsustainable. However, political uncertainty, understanding of climate risk, and shareholder demands are redefining corporate sustainability strategies. Technology innovation has set the groundwork for a transformation of sustainability strategy, and intelligent buildings are a perfect starting point.

#1: Business Response to Political Uncertainty and Climate Risk Awareness

In early May, a full page ad campaign in The New York Times, The Wall Street Journal, and the New York Post made a call to President Donald Trump to commit to the Paris Agreement. The signatories, 24 companies with a market cap of over $3.2 trillion, proclaimed that US leadership on climate change would strengthen the country’s economic competitiveness, create jobs, and reduce business risks. Uncertainty is bad for business, and a unified approach to study, combat, and adapt to climate change is an imperative for the economy.

#2: Shareholder Demands

Ceres convenes institutional investors for climate change education and advocacy. Climate change risk disclosure is a major focus area, and the group tracks shareholder resolutions that demand portfolio resilience analysis. Ceres cites the resolutions filed at 15 major fossil fuel companies as one line of evidence that shareholders demand climate change preparedness and investment in mitigation. Along the same lines as #1, shareholders see uncertainty as bad for their investments, and with more unity, major investors are demanding action and planning on climate change.

Start with Intelligent Buildings

On May 4, I moderated Energy Efficiency in Buildings – Technology Helping to Set New Benchmarks, a webinar for Realcomm. The roundtable discussion and results of real-time polling support the argument that technology can provide measurable improvements on sustainability and tie to climate change commitments.

A question to the audience highlighted the confusing state of branding and opinions around sustainability. The audience was asked, “Would you rather your company be considered ‘green’ or ‘efficient’ by your customer base?” The results were striking: 80% chose “efficient,” while only 20% chose “green.” This result underscores the challenges companies have faced with sustainability initiatives that failed to rely on technology or reflected measurements in time rather than ongoing improvements.

John Seaton, director at RealFoundations, helped illustrate how technology can deliver bottom-line benefits and change the face of sustainability. In two case studies, RealFoundations identified significant energy and associated cost savings with data analytics in 4-star ($20,000 energy savings) and 5-star ($10,000) NABERS Energy (the Australian equivalent to LEED) scored buildings. This evidence sets the stage for how technology can amplify the benefits of sustainability commitments.

There is power in aligning technology and sustainability. An intelligent building is defined by a data infrastructure for ongoing monitoring and operational changes. Once a commercial building has the IT backbone for capturing detailed data on a continuous basis, there is a platform for systemic change that can deliver sustainability benefits while supporting the bottom line. The dataset is the input and the output is a near endless array of business metrics—utility cost savings, equipment maintenance reports, occupant satisfaction, or carbon emissions reductions. The real benefit is that as a tool for sustainability, an intelligent building delivers quantifiable energy, resource, and traditional sustainability metrics. It also delivers business improvements that keep executive decision makers committed and budgets lined up.

 

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