Topic: energy efficiency

STATEMENT: WRI Response to the State of the Union

Michael Oko — Tue, 12 Feb 2013 22:01:05 -0500

In his State of the Union address, President Obama presented his priorities for his second term, including addressing the threat of climate change.

New analysis by the World Resources Institute has identified four essential steps the Obama Administration can take to reach its national target of reducing greenhouse gas emissions by 17 percent below 2005 levels by 2020.

Following is a statement by Andrew Steer, President, World Resources Institute:

“President Obama made it clear that climate change is one of the great challenges of our generation. It’s a national priority that is essential for the country’s economic future and its global competitiveness. He announced that we ‘must do more to combat climate change.’ If the president puts these words into action, citizens of the United States will be better off, as will citizens around the world.

“The President declared that he will direct his Administration to cut pollution, prepare the country for the consequences of climate change, and shift to more sustainable energy– these policies will be good for people and the economy.

“The President also called on Congress to engage on this issue. This is important. While the President can and should act, the cost would be lower and the benefits greater with market-based legislation that would effectively put a price on carbon.

“Analysis by the World Resources Institute shows that the Administration can make significant progress in reducing emissions. It can start by enacting standards for existing power plants, which represent the largest portion of U.S. emissions. The U.S. can also make progress by cutting emissions of hydrofluorocarbons, tackling methane from natural gas systems, and enhancing energy efficiency.

“By reaching its emissions target, the U.S. can signal that it’s serious about tackling climate change at home while enhancing its credibility on the global stage. With more droughts, wildfires, and extreme weather events taking their toll around the globe, the world desperately needs more action. And, it needs the United States to be a leader on climate change.

“The Obama Administration has the tools. Now is the time to use them.”

–

Read an Op-ed by Andrew Steer in the Hill about how the Administration can reduce U.S. emissions.

Read more about WRI’s new report on U.S. emissions, “Can the U.S. Get There From Here?”

Communicating the "Financeability" of Energy Efficiency Projects (EEPs): Guide to Data Needs for Financing EEPs in China

Sarah Parsons — Tue, 08 Jan 2013 12:12:48 -0500

Executive Summary

The purpose of this guide (Guide) is to help industrial companies (Hosts) finance energy efficiency projects (EEPs) at their facilities as defined in Annex C of this document. The Guide is designed to help Hosts know what information is required of them by financing entities (Financiers) to streamline the evaluation and financing process. This Guide can also help financial institutions, energy services companies (ESCOs), vendors, and other project developers better understand the information required to finance EEPs. The Guide draws from the authors’ experiences and insights gained through extensive work with Hosts, Financiers, ESCOs, prestigious universities such as Shanghai Jiaotong University (SJTU), and other stakeholders in the financing of EEPs. It was developed in partnership with Chinese and global Financiers and energy efficiency experts.

Findings indicate that Hosts can accelerate and enhance the financing process and likelihood of success in three ways:

Communicating with Financiers as early as possible to understand their informational or structural needs, their financing decision-making criteria and processes, as well as any special services that the Financiers provide (i.e., technical assistance in designing EEPs).
Performing a “self-screening” assessment of any proposed EEPs that many Financiers would evaluate, such as type of Host or technology, size of project, and so on.
Providing as much detailed and accurate information as possible at the beginning of the financing process since plentiful data will increase credibility with Financiers.

Hosts often experience delays and rejection of EEP financing because Financiers were not provided critical Host and project data in a timely and accurate manner. This has prevented Financiers from receiving a compelling picture of the benefits and (limited) risks of a promising EEP. Being prepared to present the correct data to Financiers results in a smoother financing process and a much higher probability of success.

This Guide is designed to:

familiarize Hosts with the type of data most Financiers use to evaluate EEPs, as set forth in Annex A: EEP Assessment Indicators, and explain why the data are important;
explain the general indicators used by Financiers to evaluate Host and project attractiveness and why these indicators are used;
explain what information is important during the different stages of the financing process;
help a Host conduct its own assessment of its EEP prior to submitting an application to prospective Financiers, to help improve the quality of the financing application and likelihood of success;
highlight common mistakes Hosts make when seeking energy efficiency financing, and illustrate the impact different financing mechanisms have on a Financier’s evaluation and requirements of the Host and the EEP.

By using this Guide to become more familiar with the financing process for EEPs, Hosts can improve their success rate in securing attractive external financing to increase their facilities’ energy efficiency.

STATEMENT: EPA Finalizes New Clean Air Standards For Boilers - A “Gift for People and the Planet”

James Anderson — Fri, 21 Dec 2012 13:06:04 -0500

The U.S. Environment Protection Agency finalized new standards for boilers and certain incinerators, the Boiler Maximum Achievable Control Technology (MACT) rules, today to protect people from exposure to hazardous, toxic air pollution from industrial, commercial and institutional boilers. By encouraging industry to use cleaner-burning fuels and to make efficiency improvements, the Boiler MACT will modernize U.S. industry, reduce toxins, and cut carbon pollution.

Following is a statement by James Bradbury, Senior Associate, World Resources Institute:

“Just in time for the holidays, this is a welcome gift for people and the planet. These new environmental standards will help spur greater efficiency across a range of U.S. industrial and commercial energy users. The EPA has taken steps to ensure that the rule will promote energy efficiency by improving environmental performance while increasing flexibility for affected facilities. This is good news for the manufacturing workforce, for public health, and for the climate.”

Background:

As required by the Clean Air Act amendments of 1990, major sources of toxic air emissions from coal, oil and biomass-fired boilers will soon be subject to technology-based emissions limits. The rule’s emissions limits will apply to certain new and existing major source boilers, which will have three years to comply by reducing emissions to levels that are consistent with demonstrated maximum achievable control technologies, or MACT standards.

Because the emissions limits under the Boiler MACT affect the largest and dirtiest polluters, 99 percent of the U.S. boilers are either unaffected or can comply with the new standards by conducting periodic maintenance or regular tune-ups. These tune-ups can improve energy efficiency as they reduce toxic air emissions.

Greenhouse Gas Mitigation in the EU: An Overview of the Current Policy Landscape

Sarah Parsons — Thu, 29 Nov 2012 18:33:42 -0500

Executive Summary

In 2009, the European Union (EU) pledged a unilateral greenhouse gas (GHG) reduction target of 20 percent below 1990 levels by 2020, rising to 30 percent if “other developed countries commit themselves to comparable emission reductions” (European Council 2009). The EU’s GHG target forms one pillar of a so-called 20-20-20 package that, in addition to the 20 percent GHG reduction, demands a 20 percent share of renewable energy sources in gross final energy consumption along with a 20 percent improvement in energy efficiency by 2020. In addition to its 2020 targets, the EU has also set a long-term GHG reduction goal of 80 to 95 percent from 1990 levels by 2050.

In the context of these goals, this report provides a summary of existing and emerging EU policies that are likely to reduce GHG emissions across the EU. Our analysis focuses on policies that are mandatory or provide a financial incentive, such as the European Union Emissions Trading System (EU ETS) – a cornerstone of EU climate policy – the Renewable Energy Directive, and the Biofuels Directive. We discuss the relationship of these policies to the EU’s GHG and energy targets, and identify key issues to watch in the EU’s evolving policy landscape.

This report draws on projections from the “Energy Roadmap 2050” to assess whether the EU is on track to reach its GHG, renewable energy and energy efficiency targets. We find that the EU is on track to surpass its 2020 GHG reduction and renewable energy targets based on current policies, but that additional measures will be required to meet the 2020 energy efficiency target and the 2050 GHG reduction goal.

New and emerging policies, including the Energy Efficiency Directive, reforms to the EU ETS, and a proposed Energy Taxation Directive, which aims to restructure taxes on energy products, provide options that can begin to bridge this gap. It will be important to monitor these developments, as well as the EU’s positioning in the international community vis-à-vis the possible strengthening of its 2020 target.

Sustainable Cities Initiative

Christine Potochny — Thu, 04 Oct 2012 16:13:34 -0400

In October 2011, WRI launched a five-year global initiative to advance the progress of building environmentally sustainable and livable cities in China, India, and Brazil. We intend to develop low-carbon city models and pathways for environmentally sustainable urbanization, by partnering with four urban centers to increase energy efficiency, curb greenhouse gas emissions, and improve water quality, urban mobility and land use.

The Challenges of Rapid Urbanization

China, India, and Brazil are among the world’s most rapidly urbanizing nations. In China, experts predict that by 2030 more than 70 percent of its people will live in cities, and that 221 cities will have at least one million residents. In India and Brazil, urban growth is explosive, expanding existing cities and creating new ones. In all three nations, cities have the potential to lift millions of people out of poverty and become powerful engines for social progress.

Rapid urbanization, however, poses substantial challenges. Poorly-planned, sprawling cities have the potential to undermine efforts to sustain economic growth, improve energy efficiency, curb greenhouse gas emissions, and secure clean water supplies. Although China, India, and Brazil are rethinking their approach to urban growth to prevent such setbacks, the leaders of many growing cities lack the training and tools needed to translate concerns into practical, cost-effective action. As a result, these cities risk making poorly-informed development decisions that will have long-lasting consequences.

Recent developments suggest that the time is ripe for meaningful action. In China, urbanization and sustainability issues feature prominently in the national government’s new 12th Five Year Plan, and cities will be required to meet new environmental targets. In India, the world’s fourth largest economy, a growing middle class is demanding better planned, more livable cities. In Brazil, the government has launched a major initiative to fundamentally remake major cities, spurred in part by its commitment to host the 2014 World Cup soccer tournament and the 2016 Olympics.

Project Objectives

Our objective is to create “blueprints” or low carbon plans for environmentally-sustainable and livable cities that we will use, with selected partner cities in China, India, and Brazil, to catalyze and help implement high-impact demonstration projects. We will then use a targeted outreach effort to spread and scale-up lessons learned to other growing cities. Our overarching strategy for replication is to leverage WRI’s existing platforms in each country. These include pioneering work in China on greenhouse gas inventories and low carbon planning, and working through EMBARQ (WRI’s Center for Sustainable Transport) on urban transport and land use issues. National networks of cities, international associations, and major conferences will also be established to provide routes for delivering knowledge to a wide variety of stakeholders in highly communicative, interactive formats.

Project Activities

This Sustainable Cities Initiative has three main activities over the course of five years (2011-2016).

These activities are taking place simultaneously, in regards to the specific needs and conditions in each country.

Blueprints for Environmentally Smarter Growth

We’ve identified key steps toward addressing climate, water, land use and mobility challenges in ways that: a) maximize economic efficiency and social benefits;
b) minimize sprawl and environmental damage; and
c) position the city to become a national and international model for sustainability.

Demonstration Projects

Moving from blueprints to action, WRI has begun to catalyze large, high-profile and integrated projects that address more than one goal. Illustrative demonstration projects include enabling a city to meet its carbon emissions-reduction targets; integrating development, transportation and pollution-reduction; and improving water quality and quantity.

Spreading Success to other Emerging Cities

WRI and its partners will pursue aggressive and targeted communications efforts to highlight the benefits of following new, smarter paths to urban growth among decision-makers in dozens of countries.

WRI 2010 Organizational Greenhouse Gas Inventory

Sarah Parsons — Mon, 06 Aug 2012 11:24:20 -0400

WRI’s 2010 inventory revealed emissions of 4,309 metric tons of carbon dioxide equivalent (mt CO2e). This is 2.3 times the 2009 inventory of 1,326 mt CO2e. This increase is mainly attributed to the inclusion of scope 3 accounting, based on WRI’s recently published GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Previous inventories included emissions from select scope 3 categories (namely business travel and employee commuting), but the 2010 inventory has been expanded to include all relevant scope 3 catego¬ries including purchased goods and services, waste generated in operations, fuel- and other energy-related activities, and end-of-life treatment of sold products. Emissions from these four additional categories account for 67 percent of WRI’s 2010 inventory.

This report also introduces WRI’s new abso¬lute greenhouse gas reduction targets. As the 2010 inventory is WRI’s most comprehensive thus far, 2010 will be used as the base year for our new 2020 emissions reduction targets:

50 percent reduction in scope 2 emissions from purchased electricity;
20 percent reduction in scope 3 emissions from business travel; and
20 percent reduction in all other scope 3 cat¬egories (specifically, purchased goods and services, employee commuting, waste generated in operations, fuel- and other energy-related activities, and end-of-life treat¬ment of sold products).

Finally this report describes examples of WRI’s other sustainability initiative activi¬ties, including our first nitrogen footprint assessment. WRI’s 2009 GHG inventory is included as an appendix in this report, and previous inventory reports can be found in the “Downloads” section above.

Power Almanac of the American Midwest

Kevin Lustig — Wed, 21 Mar 2012 14:07:40 -0400

RELEASE: A Snapshot of Manufacturing Energy Use Across 10 Midwestern States

Lauren Zelin — Fri, 24 Feb 2012 10:27:13 -0500

New data key to unlocking industrial energy efficiency potential in the Midwest

For the first time, new analysis reveals energy use and economic data by subsector for ten Midwestern states, laying the groundwork for increased industrial energy efficiency in the region. Developed by the World Resources Institute (WRI), with the Great Plains Institute, Midwestern Governors Association (MGA), and University of Illinois at Chicago’s Energy Resources Center, the working paper presents manufacturing energy use by subsector for: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin.

The paper, “Midwest Manufacturing Snapshot: Energy Use and Efficiency Policies,” provides a summary of each state’s current policies to reduce energy-related costs and emissions.

“Our goal is to improve policymakers’ ability in the region to identify opportunities to reduce emissions, increase energy efficiency, and drive economic development,” said James Bradbury, senior associate at WRI and the lead author of the paper. “There is a real appetite for high-quality, detailed information regarding manufacturing energy use, and this paper provides a solid foundation for more informed policy choices.”

The Midwest economy relies on manufacturing more than any other U.S. region, but industry has been hit hard with job losses over the past decade. More recently, the manufacturing sector has been a key driver for creating jobs and reviving the economy. Companies in the region are increasingly looking at energy efficiency to become more productive and profitable, further stimulating economic growth and employment.

According to the paper, the Midwest accounted for 30 percent of total U.S. manufacturing activity in 2010. The paper shows that industrial activity consumes more energy than any other sector in the Midwest. And, for energy-intensive subsectors — such as iron and steel, cement, chemicals, and paperboard manufacturing — energy use can account for up to 16 percent of total costs, which has significant implications for companies’ bottom line.

“State governments are particularly well-positioned to identify and encourage opportunities for industrial energy efficiency investment,” said Jesse Heier, Executive Director of MGA. “This paper will help officials to better understand and identify opportunities for increasing industrial energy efficiency as part of an overall economic development strategy.”

Until now state-level energy use data have not been publicly available in sufficient detail to identify how much energy subsectors are using and where the biggest opportunities are. This paper changes that by presenting detailed manufacturing energy use and economic activity data at the subsector level.

“We are very pleased that a variety of stakeholders are seeing the promise of industrial energy efficiency to both economic growth and environmental sustainability,” says Lola Schoenrich, Program Director, Energy Efficiency and Low-carbon Electricity, the Great Plains Institute. “This paper is a great resource for policy makers, utilities, and businesses in the identification and development of best practices for each state in the region.”

The paper discusses emerging policy trends and presents summaries of manufacturing sector energy-use activity, as well as related policies for each state in the MGA.

The paper represents a new line of analysis by the WRI and provides a foundation for further research on industrial energy efficiency in the Midwest.

Read the full paper, including state-by-state analysis, here: http://www.wri.org/publication/midwest-manufacturing-snapshot.

Midwest Manufacturing Snapshot: Energy Use and Efficiency Policies

Kevin Lustig — Thu, 23 Feb 2012 16:22:57 -0500

Summary

The workforce and economies of Midwestern states are more reliant on manufacturing than in any other U.S. region. Like the U.S. as a whole, during the past decade, the Midwest lost one-third of its total manufacturing workforce. With the central focus of state governments on economic development, there is a growing interest in understanding how industrial energy efficiency investments could contribute to regional economic recovery and long-term competitiveness for U.S. manufacturers. However, state-level energy-use data are not currently available from public sources at the level of detail needed to identify which sectors are using how much energy and where.

Introduction

Steel mill in Illinois. Photo credit: flickr/Payton Chung

Manufacturing remains a cornerstone of the U.S. economy, and nowhere is this more evident than in the Midwest. Manufacturers are also significant consumers of energy; yet, manufacturing subsector fuel use data are not available at the state level, which greatly limits the public’s understanding of industrial energy efficiency potential and other related questions of public interest. Given the centrality of manufacturing to the Midwestern economy and energy consumption, policymakers, industry and other interested stakeholders would benefit from more detailed information regarding energy use across all manufacturing sectors.¹

The primary purpose of this paper is to enable a constructive dialogue around effective strategies for achieving complementary environmental and economic outcomes in the Midwest. For the first time, this paper estimates manufacturing subsector-specific energy use for the 10 states in the Midwestern Governors Association (MGA).² Detailed manufacturing energy-use and economic activity data are presented alongside state-by-state policy summaries, giving a snapshot of where energy is being used and current state approaches for reducing energy-related costs and emissions.

Some context for this paper is worth noting at the outset. The year 2011 saw modest economic recovery for U.S. manufacturing, as a whole, after a decade of historic job losses and high energy prices. In 2012, state budgets will likely remain tight and the last of federal Recovery Act funding for state energy efficiency programs will be spent. Many policymakers are prioritizing policies that spur new investments to create jobs and economic development in their states. With these goals in mind, energy efficiency investments offer promising returns, in terms of both economic growth and employment. More productive energy use begets a more productive and efficient economy, now and for decades into the future (Laitner et al., 2012).

This working paper is divided into five main sections. The first section describes national and regional trends in manufacturing energy use and economic activity. The second section describes available public data and our methodology for deriving more detailed state-level manufacturing subsector energy-use data. The third section introduces in greater detail the concept of industrial energy efficiency (EE) and highlights four emerging policy trends. The fourth section profiles the 10 member states of the MGA, including graphics and discussion of state-specific energy use and recent manufacturing trends, as well as high-level summaries of relevant state policies. The final section discusses further work needed to build on the information presented here to more specifically identify policies needed to reduce the energy intensity and increase the cost competitiveness of Midwest manufacturing.

As noted in Section 2 of this paper, public data are available from government sources that describe state-level energy-use and economic-activity by industry and manufacturing, in general. However, no public data sources allow for consistent, direct comparisons on manufacturing subsector energy-use among the states of the Midwest. ↩
Member states of the MGA are Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin. ↩

Two Degrees of Innovation: How to Seize the Opportunities in Low-Carbon Power

Maggie Barron — Fri, 09 Sep 2011 10:38:40 -0400

This paper offers a strategic framework for those seeking to capitalize on the low-carbon transition. The first section presents innovation as a key strategy to achieve economic development, energy, and environmental goals. The second section explains why the innovation process is unique in the low-carbon power sector and introduces the innovation ecosystem. The third section lays out a stepby- step process to identify and capitalize on the enormous potential and emerging opportunities in this sector.

Key Points

A global transformation of the energy infrastructure is urgently needed to meet the need for modern energy services while avoiding a climate disaster.
There is a large and growing global market for utility-scale, low carbon power technologies as this transformation begins. Both developed and emerging economies can benefit from it but competing in the global value chain will require explicitly building innovation capacity.
Innovation—improvements in price and performance—will close the gap between low-carbon technologies today and the low-cost, high performance technologies that are needed.
Innovations include new products, processes, or policies that reduce costs or improve performance and can happen at any point in a technology’s lifecycle—from design through manufacturing through operations and maintenance.
The innovation ecosystem approach captures the complexity, uncertainty, and heterogeneity of innovation processes and identifies the critical services innovators need to thrive. These are the services policymakers need to focus on when investing in innovation.
The framework provides step-by-step guidance to identify the opportunities in the sector and build a robust innovation ecosystem to capture them.

Bottom Line on Public-Private Finance Tools for Energy Efficiency

Maggie Barron — Thu, 30 Jun 2011 08:33:11 -0400

On-bill financing

How does on-bill financing provide capital for energy efficiency?

On-bill financing allows a loan for energy efficiency measures to be repaid over time via an additional line item on the recipient’s utility bill, which decreases repayment risk for the lender. The lender in “classic” utility on-bill financing has traditionally been the utility itself. Hybrid models have also emerged in which public and private funds are pooled to offer low-interest loans, with repayment similarly attached to the utility bill. The utility then collects the payment and returns it to the lender, which lowers the lender’s administrative costs. The utility customer benefits from lower energy costs after retrofits, and typically pays loans back over a period of about 2–5 years.

Where has this model been implemented?

One example of a successful on-bill financing program is the Connecticut Energy Efficiency Fund’s Small Business Energy Advantage Program, which is administered by two electric utilities in the state. The fund finances low-interest loans for projects using pre-approved contractors, and eligibility is determined by the customer’s payment history rather than by credit check. In the case of one utility, United Illuminating, over 25% of the small business customer base has participated in the program.

Commercial Property Assessed Clean Energy (PACE) Financing

How does Property Assessed financing work?

Property assessed financing1 reduces repayment risk and lowers interest rates by securing loans with a tax lien on the property. The key attributes of property assessed financing are that programs offer upfront loans for voluntary energy efficiency upgrades, which are paid back through an extra line item on the property tax bill. Payments should be less than the energy savings to yield a net gain for the consumer.

How are property assessed (PACE) loans channeled to projects?

Some cities issue bonds to raise money that they lend directly to borrowers for upgrades. Another option leverages commercial banks to provide loans, either to property owners directly or to Energy Service Companies (ESCOs). Such programs rely on commercial banks to make loans to companies for retrofits; the city simply assigns the liens on the properties to the bank as security. Loan terms typically vary from 5–20 years and interest rates are low, reflecting reduced risk because the loan is senior to all other obligations.

Was PACE financing deemed a violation of mortgage agreements in the U.S.?

Tax liens are commonly used by cities to fund public services, and the mortgage industry in the U.S. has accepted this as standard practice. However, commercial PACE programs require that property owners obtain consent from their mortgage holders before participating if the PACE loan has priority repayment ahead of the mortgage. This is in part to avoid the resistance that residential PACE programs encountered from major mortgage underwriters, which has largely stopped residential PACE programs in the United States. Commercial PACE programs have thus far been allowed to continue without being deemed a violation of mortgage lending rules.

Where has this model been implemented?

Seventeen U.S. commercial PACE programs are either in operation or planning, and several Canadian cities are considering programs. Proven successes include the Sonoma County Energy Independence Program and Boulder, Colorado’s Climate Smart Program.

Sustainable Energy Utility Model

What is a Sustainable Energy Utility?

A Sustainable Energy Utility (SEU) is an institution whose core service is to facilitate access to energy efficiency. It is typically created through legislation to administer financing programs, offer technical services, and coordinate the services of private ESCO’s and banks. An SEU is not a financing mechanism in and of itself – rather, it is a “one stop shop” that leverages financing tools, reduces transaction costs for lenders, and organizes actors to make energy efficiency significantly easier.

Where are SEU’s already at work?

Vermont, Wisconsin, Oregon, New York, Delaware, and the District of Columbia all have independent not-for-profit providers of energy efficiency services that perform the functions of an SEU. Efficiency Vermont is one of the oldest: founded in 2000, it has significantly reduced the upfront cost to deliver energy savings. It is funded by a “wires charge” on each kWh sold in Vermont, which had previously been given to the utilities to perform demand side management. Delaware’s SEU was authorized to issue tax-exempt bonds and collect funds from other sources. It will create a Sustainable Energy Revolving Fund making loans at 3.5–5% interest rates, and can also award rebates.

Loan Guarantees

How do loan guarantees improve financing?

Energy efficiency investments are often perceived as risky by banks because of their unfamiliarity with the technologies and investment structures used, as well as the monitoring needed. Companies can typically only borrow money to finance these measures if they have good credit and give the lender recourse to their assets as a guarantee. However, when a public agency with good credit offers a loan guarantee, banks can lend at lower interest rates and/or extend the term of the loan because the guarantor has promised to ensure timely repayment. Individual loans or a portfolio of loans can be covered by either partial or full risk guarantees.

Loan Loss Reserve Funds

What is a Loan Loss Reserve Fund?

A loan loss reserve fund (LLRF) is another way of backing energy efficiency borrowers. If the borrower defaults, then the lender is paid back out of the reserve fund, reducing or eliminating repayment risk. A LLRF can secure a single loan or a portfolio of loans, and is often used for the latter. One example is the loss sharing facility implemented by the Global Environment Facility (GEF) and the International Finance Corporation (IFC) as part of the China Utility-Based Energy Efficiency (CHUEE) program. The IFC and the GEF set up a LLRF that guarantees loans made by local commercial banks to energy management companies who finance upgrades for their customers. This “Loss Sharing Facility” will refund 75% of the first 10% of the loan amount in case of default, and 40% of any losses on the remaining 90% of the loan amount. With $USD 50 million in loss reserve funds contributed by the GEF and IFC, the program seeks to mobilize $USD 0.7-1.45 billion for energy efficiency project financing from the private sector.

What is the difference between a LLRF and a loan guarantee?

A LLRF is another way to guarantee a loan without relying on the credit of an institution as Guarantor. An actual sum of money must be set aside in an escrow account, rather than an organization pledging its credit. Either one can be structured to repay full or partial losses in case of default.

Loan guarantees and reserve funds can work in conjunction with other types of loans. They can also be coupled with PACE programs to make mortgage lenders more comfortable that PACE loans will not increase mortgage defaults. For example, California passed a law in 2010 establishing the PACE Reserve Program to help local jurisdictions raise bond revenues at lower cost to fund their PACE programs, and thereby offer lower interest rates to consumers. A LLRF could be seeded by public funds but become self-sustaining if funded by a fee on each loan.

How can governments raise funds to leverage additional private-sector lending?

The five financing programs described above can be implemented by local, state, and federal governments in cooperation with the private sector. Such programs have leveraged significantly more private investment than their cost to administer, but do still require some upfront public investment. Governments can raise funds by establishing a small utility fee on electricity sold, requiring utilities to re-invest some revenues in energy efficiency, and/or issuing bonds.

In summary, barriers to financing energy efficiency can be overcome through public-private financing tools. Small investments by government to reduce the risk of lending to energy efficiency projects can unlock major private sector investment, as well as significant environmental benefits.

Resources for Further Information

New Project Helps Companies in China Invest in Energy Efficiency Improvements

Xiaoyu Shi — Thu, 16 Jun 2011 09:39:19 -0400

Under a new WRI initiative, industrial companies in China can bundle energy efficiency projects to attract investors and reduce costs.

WRI has launched a new pilot project focused on making energy efficiency improvements more affordable for industrial companies in China by “bundling” projects. By working together to secure funding and services for energy efficiency projects (“bundling”), companies can save time and money. China’s 12th Five Year Plan, covering 2011-2015, continues to prioritize energy intensity reductions via national targets, and this project may provide a test case for an innovative approach to achieving energy savings for small- and medium-sized energy efficiency projects in the future.

In March of this year, WRI and partners hosted a workshop introducing the project and the concept of “energy performance contracting”. Seventeen industrial companies in Shanghai expressed interest in participating. Energy performance contracts (EPC) are developed between industrial facilities and energy service companies (ESCOs) for energy efficiency services over time. This allows industrial facilities to benefit from making efficiency upgrades without having to make upfront capital expenditures.

The workshop included a wide range of experts and practitioners who need to work together to ensure success: plant managers, energy managers and engineers, finance managers, and environment, health and safety managers from 34 Chinese, American, and other international companies with facilities in Shanghai. Other representatives included financial institutions, NGOs, consulting firms, and pre-selected ESCOs. Experts presented on the topic of energy efficiency financing and energy performance contracting (EPC) and analyzed the benefits and risks of these approaches to participating companies.

Funded by USAID and the Alcoa Foundation, the workshop was co-hosted by the World Resources Institute (WRI) and its strategic local partners, Shanghai Jiao Tong University, the Economic Commission of Shanghai Minhang District, and the Shanghai Energy Efficiency Center.

Workshop participants also discussed the methods and process of bundling energy efficiency projects to attract investment, in addition to the benefits such as reduced upfront expenses and better pricing of energy efficiency services.

This workshop was well-timed with Chinese government’s new policy and approach to encourage energy performance contracting. The Economic Commission of the Minhang District Government confirmed that they will continue to support the project and will help secure participation of industrial companies in the district in the pilot.

In the next few months, WRI and partners will continue to reach out to the industrial companies who showed interest in participating in the bundling pilot, collect the information of individual potential energy efficiency projects, and together with companies develop and issue a request for proposal to finance and implement the portfolio of energy efficiency projects to attract proposals from qualified Chinese and International ESCOs.

The pilot project is exploring new models to accelerate investment in industrial energy efficiency projects that can be replicated in other regions and countries.

Walking the Talk: WRI’s Sustainability Initiative

admin — Thu, 27 Sep 2007 14:53:46 -0400

Learning by Doing

To put our mission into action both internally and externally, WRI has had a long-standing commitment to “learning and leading by doing.”

In 1999, WRI was the first NGO to complete a greenhouse gas (GHG) inventory and set a net zero reduction target. From 2000–2009, we met that target through the purchase of offsets. Throughout this time, we also provided guidance for other office-based organizations to measure and manage their own inventories.

However, as our total GHG emissions continued to rise over the years, it became clear that just purchasing offsets was not setting the right example for our partners and colleagues or demonstrating the level of commitment needed to mitigate climate change impacts. Furthermore, we recognized that our operations were contributing to other environmental and social impacts that are core to our mission, but were not being addressed through any formal initiative.

These realizations prompted the launch of the sustainability initiative in 2011.

At WRI, we work hard to put ideas into action, meet our mission and goals, and ultimately protect the earth and promote sustainable development. This hard work leads to many results and outcomes, but it also contributes to our own environmental footprint. Each day, the electricity we use to power our offices, the business travel we take to meet with partners, and the goods and services we purchase to complete our projects have an impact on our environment.

Two Main Focus Areas:

Tracking and reducing environmental and social impacts related to our four programmatic goals: climate protection, governance, markets and enterprise, and people and ecosystems; and
Communicating and sharing knowledge with partners and colleagues.

First Milestone: Emission Reduction Targets

The first milestone of this initiative was to set absolute GHG reduction targets around three main sources of emissions:

business travel
energy use
indirect emissions in our value chain due to purchased goods, services, and sub grants (scope 3).

WRI’s 2010 GHG Inventory Report details how we calculated the 2010 baseline greenhouse gas emissions inventory and used those results to set reduction targets.

Next Steps

Moving forward, the sustainability initiative will identify innovative solutions to meet our GHG reduction targets, as well as identify and implement solutions to achieve goals focused on governance, people and ecosystems, and markets and enterprises.

Communicating our goals and progress will motivate us to succeed. We hope this communication will also inspire others to “walk the talk.”

Topic: energy efficiency

STATEMENT: WRI Response to the State of the Union

Communicating the "Financeability" of Energy Efficiency Projects (EEPs): Guide to Data Needs for Financing EEPs in China

Executive Summary

STATEMENT: EPA Finalizes New Clean Air Standards For Boilers - A “Gift for People and the Planet”

Greenhouse Gas Mitigation in the EU: An Overview of the Current Policy Landscape

Executive Summary

Sustainable Cities Initiative

The Challenges of Rapid Urbanization

Project Objectives

Project Activities

WRI 2010 Organizational Greenhouse Gas Inventory

Power Almanac of the American Midwest

RELEASE: A Snapshot of Manufacturing Energy Use Across 10 Midwestern States

Midwest Manufacturing Snapshot: Energy Use and Efficiency Policies

Summary

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Introduction

Two Degrees of Innovation: How to Seize the Opportunities in Low-Carbon Power

Key Points

Bottom Line on Public-Private Finance Tools for Energy Efficiency

On-bill financing

Commercial Property Assessed Clean Energy (PACE) Financing

Sustainable Energy Utility Model

Loan Guarantees

Loan Loss Reserve Funds

Resources for Further Information

New Project Helps Companies in China Invest in Energy Efficiency Improvements

Walking the Talk: WRI’s Sustainability Initiative

Learning by Doing

Two Main Focus Areas:

First Milestone: Emission Reduction Targets

Next Steps