Navigant Research Blog

Distributed Biogas Gains Footing in Revised Standard

— September 8, 2014

In July, the U.S. Environmental Protection Agency (EPA) finalized an extension of the beleaguered Renewable Fuel Standard (RFS2) to carve out a pathway for renewable biogas to qualify as a cellulosic fuel.  Expanding the scope of the RFS2 beyond liquid transportation markets could have promising implications for the slow-to-emerge cellulosic biofuels market.

Under the RFS2, the EPA requires domestic refiners and importers of transportation fuel to blend increasing volumes of renewable fuels into conventional gasoline and diesel.  The EPA sets the renewable volume obligations for various renewable fuels every year, and regulated entities must demonstrate their compliance by acquiring and retiring renewable identification numbers (RINs), which are publicly traded credits that fluctuate in value.

RINs provide an important financial incentive for the nascent advanced biofuels industry, helping these fuels compete with conventional fuels in the marketplace.  Cellulosic biofuels, a fuel pathway slated to deliver the greatest volume under the rule, have fallen short of expectations every year due to less capacity being built than otherwise predicted.

Expanding Universe

Under the expanded rules, biogas-derived compressed natural gas (CNG), liquefied natural gas (LNG), and electricity used to power electric vehicles would qualify for cellulosic RINs.  The final rule is likely to lead to a substantial increase in the production of cellulosic biofuels and create new markets for materials previously regarded as waste.  Opportunities for upgrading biogas to so-called bioCNG or bioLNG – also referred to as biomethane or renewable biogas and already used in fleet applications like garbage trucks and municipal buses – currently show high promise for biogas-to-transportation fuel.

As outlined in the U.S. government’s Biogas Opportunities Roadmap report released last month, biogas has broad applications across a range of diverse industries.  Livestock farms, industrial wastewater treatment facilities, industrial food processing facilities, commercial buildings and institutions, and landfills all produce biogas – either directly or in the form of waste feedstocks that can be converted into biogas.  According to Navigant Research’s Renewable Biogas report, the biogas capture market across the United States is expected to reach more than $4 billion in annual revenue by 2020.

All in all, biogas remains a vastly underutilized resource across the United States when compared to countries like Germany that have used a range of incentives to drive investment, particularly in agricultural applications.

The Curse of Versatility

The challenge for biogas in the United States is that to some it’s a fuel source, to others a waste mitigation strategy, and to others a distributed generation resource.  That makes it difficult to tailor policies that address all potential opportunities.  Adding to the confusion, distributed biogas is often treated by utilities as a strategic resource alongside solar PV and small wind, when in fact it can be utilized in the form of a traditional generator set, a fuel cell, or sometimes concurrently, in combined heat and power configurations.

With these issues in mind, the EPA’s final rule relating to biogas introduced a relatively novel and subtle feature for renewable energy markets: incentive flexibility.  Under the rule, the EPA not only expands the scope of RFS2, but allows the same amount of renewable electricity derived from biogas to give rise to RINs for transportation applications and renewable energy credits for electricity generation, while also qualifying for incentives under state renewable portfolio standards.

This potential for multiple revenue streams unlocks the versatility of biogas as a resource and is likely to attract new investment in the U.S. biogas market.

 

Rethinking Water Use in Buildings

— September 8, 2014

Bad news about the water supply keeps rolling in.  In July, a study on the groundwater in the Colorado Basin found that 53 million acre-feet of water (65 billion cubic meters) had been depleted between December 2004 and November 2013.  The historic drought in the western United States is so severe that it is causing mountains to rise.  And ominous signs of water scarcity are not limited to the United States.  Farmers in Vietnam are converting rice paddies to shrimp farms as the dry season gets dryer and the rising South China Sea turns coastal freshwater ponds salty.  Water scarcity threatens much of the world economy, from the food industry to the mining industry to the petrochemical industry.

Though climate change accounts for a part of the unfolding water crisis, water management practices are driving the problem.  Water has long been treated as a free and inexhaustible raw material.  As a result, it’s used inefficiently.  While great progress has been made in increasing awareness of energy efficiency, water continues to be taken for granted.  Without major changes, two-thirds of the world’s population could be living in water-stressed conditions by 2025.

Water Scarcity and the Built Environment

Buildings account for about 12% of water use in the United States.  Already, water conservation efforts and greater efficiencies in using water have led to a reduction in water withdrawals.  But, for further gains, fundamentally rethinking the built environment is necessary.  For the most part, everything that needs water in a building is provided with potable freshwater.  Similarly, all wastewater is treated the same.  But not everything needs potable water.  And rather than being disposed of, some wastewater can be recycled.  Water from a sink can be reused to flush a toilet.  Water from a bathtub can be used for landscape irrigation.  When water is cheap and abundant, it makes sense to have a single system for all water needs and a single system to dispose of all “used” water.  But meeting all water needs with potable water may soon no longer be an option.

Similar recycling efforts can be achieved with stormwater runoff.  Many municipalities treat stormwater runoff and domestic sewage the same, using a combined sewer system to transport them in a single pipe to a sewage treatment plant (though heavy rainfall or snowmelt can create undesirable outcomes for combined sewers).  Rather than building infrastructure to capture and transport stormwater through gutters and sewers, capturing it to recharge groundwater or for direct nonpotable consumption can directly improve the water situation.  Indeed, the Pacific Institute estimates that urbanized Southern California and the San Francisco Bay region have the potential to increase water supplies by 420,000 to 630,000 acre-feet per year simply by better managing stormwater runoff.

One Word: Graphene

Of course, when we talk about water scarcity, we refer to only freshwater, which accounts for only 2.5% of total global water.  Desalinating abundant seawater is a seemingly attractive workaround, a way to solve water scarcity without the difficult task of changing water use habits.  Unfortunately, desalination, for now, is expensive and energy-intensive.  The most common form of desalination, reverse osmosis, forces seawater through a polymer membrane.  The membrane allows water molecules to pass, but blocks salt molecules.

Graphene, an allotrope (i.e., a different structural form) of carbon, which shows promise in battery technology, quantum computing, health monitoring, and solar cells, could reduce the cost and energy associated with desalinating water.  The gaps in polymer membranes are determined by the physical and chemical properties of the polymer used.  Gaps in graphene must be punched, so they can be sized to reduce the amount of pressure needed to pass water through but still prevent salt from passing through.  Lockheed Martin and the Massachusetts Institute of Technology are both working on overcoming the engineering problems associated with graphene membranes.  Commercial viability may still be several years away, but graphene may make desalination accessible enough to meet the world’s needs for clean water.

 

Winners and Losers under the U.S. EPA’s Clean Power Plan

— September 5, 2014

The most cost-effective and accessible way for states to replace retiring coal plants and comply with the U.S. EPA’s proposed carbon regulation (the Clean Power Plan, or CPP, released in June 2014) is through demand-side measures.  These include the energy efficiency programs that the EPA uses to calculate emissions rate targets in the CPP as well as other measures, such as demand response.  Analysis by Navigant and others shows that measures that cut demand growth will cut compliance costs.  However, most states cannot meet their targets by energy efficiency alone.

It’s in electricity customers’ best interest for states and utilities to implement the CPP with as much emphasis on energy efficiency and demand response as they are physically and financially able to.  For this primary reason, states and utilities will expand programs where they already exist and introduce new programs where there are gaps.

Accelerating Retirements

The costs to comply with the CPP, in addition to costs to comply with other environmental regulations as well as competition with low-cost natural gas, will drive approximately 45 GW of additional coal retirements by 2025, beyond anticipated retirements without the CPP (according to Navigant’s analysis).  The aging U.S. coal fleet already faces troubled times, with low natural gas prices expected to continue and the Mercury and Air Toxics Standards (MATS) requiring hundreds of coal plants to install costly emissions controls or shut down.  As coal plant owners look ahead to a carbon-constrained future, they are weighing complex decisions about whether it makes sense to invest in improvements in the near term when the long-term future of their coal fleets is uncertain.  Much depends on what the EPA’s final regulation will look like and how states will choose to implement it.

While the discussion around coal retirements tends to center on replacement by natural gas, wind and solar will also play a role.  The CPP will drive solar and wind generation above and beyond existing renewable targets, even in states that do not currently have a Renewable Portfolio Standard.  Growth will be particularly strong in areas that have high potential for solar and wind, such as the Desert Southwest and the Texas Panhandle, and where higher power prices make renewables more cost-effective.  Although much of the new solar capacity will be distributed customer-scale generation, wind installations will continue to be larger, utility-scale deployments.

New Questions Raised

The power sector has been expecting federal-level climate change policy or regulations for years.  This has been a major area of uncertainty for future generation planning.  However, the release of the proposed CPP has not led to any concrete assumptions for the future, and it has likely generated more uncertainty than it has quelled.  How will the EPA fashion its final regulation?  Will states choose to band together to implement the regulation, and will the basis for their implementation be rate-based or mass-based targets?  How will energy efficiency be measured and verified?  How will differences between states be reconciled in a system where electricity is constantly moving across state lines?  The answers to these questions will drive broad changes in the power sector and have ripple effects across the national economy.  These ripples will be felt by all industry players that are electricity customers (i.e., everyone) and, indirectly, by the healthcare industry (handling fewer conditions brought on by poor air quality) and the insurance industry (facing lessened impacts of climate change).

It’s not surprising that the CPP will transform the domestic power generation landscape, reducing coal use, lowering demand growth (due to energy efficiency and conservation programs), and increasing gas-fired and renewable generation.  Thinking globally, the plan could be just what the international community has been calling for: leadership on climate change from the United States that will push other nations (notably China and India) to follow suit.

 

A Conversation with Sharon Alton, Executive Director of USGBC Colorado

— September 3, 2014

On August 13, the U.S. Green Building Council’s (USGBC’s) Colorado chapter held a commercial real estate forum to highlight green building projects in the state, particularly Denver’s recently reopened Union Station, which is pursuing LEED Gold certification. 

Following the event, I sat down with USGBC Colorado’s executive director, Sharon Alton, to discuss the state of green building and LEED in Colorado.

Madeline Bergner: Are any particular commercial building types adopting LEED more than others?

Sharon Alton: Colorado actually mirrors the rest of the country.  Office is by far the highest building sector percentage of LEED-certified buildings, and I think the reason for that is that it’s the most common one.  LEED for homes, either single-family or multi-family, comes in second behind office, and LEED for schools is third.  We have a big conference every November, the Green Schools Summit, which highlights green building in schools.

MB: What are some of the drivers of energy efficiency in new construction and retrofits in Colorado?

SA: A lot of investors are demanding LEED certification for buildings in their portfolio, so that’s definitely a factor.  Technology is the other key one.  As technology is improving really quickly, it’s just going to make the whole green building process that much easier and more economical.  Ten or 12 years ago, certain aspects of green building technology were more expensive, and they’re not now because they are more efficient and new technologies have started to drive down the cost.

MB: On the other side, what are some barriers to green building and LEED certification?

SA: If decision makers don’t adopt LEED early in the planning process, costs can increase.  A green building doesn’t need to cost more than a non-green building.  However, many times, because people think about pursuing LEED too late in the process, then it does end up costing more, and that’s what gives green building a negative reputation.  As a result, part of what we need to do is educate people and explain to them that they need to adopt this early on in the process, and therefore costs won’t need to increase.

MB: Is green building activity in Colorado mainly concentrated in Denver? What other kinds of projects are going on around the state?

SA: Since Denver is the most dense, populated area of the state (as well as other areas along the Front Range), that’s where you’ll see the most green building.  However, there are great projects going on throughout the state.  We have a group in Aspen that promotes green building there, and there are some interesting projects in the area.  USGBC Colorado gives green building awards, and we received some great award applications from Grand Junction, Colorado Springs, and other parts of the state.  You’ll find green building all over, but along the Front Range is where most the green building is, purely because it’s where most of the buildings are.

MB: At the forum, one panelist said that the ultimate goal of USGBC and similar organizations was to no longer exist.  Is this how you see the future of green building?

SA: If we get to a point where everyone is doing sustainable things and utilizing green building, that’s going to become the status quo.  As we try to push the envelope and make things greener and greener, and get to net zero, LEED Platinum may end up someday just being the code that all buildings have to build to.  So then you wouldn’t call it a LEED building, it would just be a building.

 

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