The best way to use California's carbon windfall

New studies show that using revenue from California's landmark carbon-trading system for energy efficiency and residential renewable energy programs would yield the biggest bang for the buck, and have the strongest chance of surviving a legal challenge.

Nonprofit group Next 10 commissioned studies to determine the best use of proceeds from the cap-and-trade program effective 2013. Most of the models end up generating new revenue for the state through economic growth and new jobs, with programs that improve residential lighting and make other energy-slashing upgrades generating the most. Here is a link to the report that sums up the findings.

University of California, Berkeley, and Resources for the Future examined ways state officials could spend money - the group used the sum of $100 million although the real figure could be higher - raised by the sale of emissions allowances to non-utililty entitites.
The teams modeled scenarios ranging from giving the money to taxpayers in the form of rebates to creating green lending programs to using it on portions of the high-speed rail project. A rebate program would be the most risky legally because it doesn't directly support the greenhouse gas reduction goals of AB 32, the researchers determined.

Energy-efficiency projects, however, could create many more jobs and pump more money into state coffers, depending upon the program. The strongest potential and least legal risk appear to be with programs that fund energy upgrades in lower to middle-income households.

Funding components of high speed rail with carbon-trading revenue would create fewer jobs and less money for the state. It also would be more risky legally, the analysts discovered.

"The most pro-growth options would invest auction proceeds in expanding energy efficiency and renewable technology at the household level," said the study's author, University of California professor David Roland-Holst.

This San Francisco Chronicle story and  this Sacramento Business Journal piece go into more detail about cap and trade, including other possible impacts - and offsets  - on consumers.

The carbon auction is new, so predicting the outcome of legal challenges is itself a challenge. The authors concluded, however, that the cap-and-trade program was not intended to raise revenue, and thus is not a tax. "If the program is challenged in court, we consider spending scenairos that support the primary goal of AB 32 - to cut or mitigate greenhouse gas emissions - to be relatively 'low risk' from a legal standpoint," said co-author and law professor Daniel Farber of UC Berkeley.

The conclusions of the research don't surprise us. Our nonprofit focuses much of its work on energy-efficiency programs that cut power bills. It is almost shocking the amount of money seemingly simple adjustments can make. The city of Fresno, where I live, crunched utility data and discovered that a widespread energy-saving program could pump $260 million into the local economy. Talk about an economic stimulus!

That is why energy efficiency is called the "low hanging fruit" of the clean energy movement.

California breaks free from from fossil fuels, gradually

California is breaking free of its fossil-fuel addiction.

That's according to Next 10's "2012 California Green Innovation Index." The phrasing was "gradually transitioning."

The report, which looks at the previous year's data, says the Sunshine State surpassed 1,000 megawatts of solar energy capacity, attracted $3.5 billion in cleantech investment in 2011 and accrued 910 green technology patents for a first-in-the-nation performance.

Findings in the 75-page report sound positively radiant, especially in light of news that subsidies like those provided by the American Recovery and Reinvestment Act of 2009 are disappearing, economic and international pressures continue and many renewable energy companies are struggling to survive.

California is unique

But F. Noel Perry, Next 10 founder, offers no apologies. In his prelude, he says, "California’s ability to foster and develop new ideas, markets and technology is unique." He says the purpose of the Index "is to document the impacts of California’s efforts to transition to a low carbon economy in order to understand what works and what doesn’t in driving innovation."

Fair enough.

However, the pace of change has been sluggish and unable to transform much of the economic landscape in what is arguably the best region for solar and biofuel in the state -- the San Joaquin Valley. More than two years ago, the San Joaquin Valley Clean Energy Organization, a nonprofit that employs myself and three others, launched into a program to help cities and counties in the Valley administer highly restrictive and complex stimulus grants.

Striding forward, slowly

The goal of federally funded energy efficiency nearly has been attained but not without huge investment of time and energy. Many dubbed the ARRA grants the most difficult they had encountered. Our partnership with the San Joaquin Valley Unified Air Pollution Control District has spent more than half of a combined total of more than $4 million in grants and expects to save about 5.4 million kilowatt hours of energy. At 12.7 cents per kWh, that's a reduction of $685,800 on the region's utility bills.

Acrocc the state, people were put to work. Energy efficient lights, pumps and air conditioning units were installed.

Yet, energy efficiency is but one component of the clean energy push. Granted, it's necessary before installing renewable energy systems like solar. Still, those of us in the Valley haven't seen much of the effects from what we know is a big behind-the-scenes effort to get more solar capacity into the region. Should that break loose, jobs would follow.

Dashboard indicators
The Index says "dashboard indicators" point to growth. It lists declines in total emissions and per capita emissions and a rise in energy productivity as the result of energy efficiency measures. It says venture capital investment in clean technology remains strong despite the global financial crisis and that new value continues to be created.

Most of that investment has gone to Silicon Valley and the San Francisco Bay Area. The patents look promising. There's an increase in battery technology, hybrid and electric systems technology and solar technology.

New solar in California amounted to more than 300,000 kilowatts capacity in 2011, and employment in the sector is approaching 35,000 for the state. "Despite the Solyndra bankruptcy, California’s solar industry is a hotbed within the state’s renewable energy sector," the report says.

Big deals in the works

Deals highlighted include that between Rabobank and SolarCity. The pair have teamed up to finance more than 30 commercial solar projects in California worth $42.5 million. Warren Buffett also got a mention. In December, he purchased Topaz Solar Farm in San Luis Obispo County. When completed, the 550-megawatt solar farm will be one of the world's largest, generating enough energy for 160,000 homes.

SolarCity was lauded for three additional projects. The San Mateo company is working with Google in a $280 million partnership to build more residential solar projects across the country. It's working with Wal-Mart to bring solar energy to 75 percent of Wal-Mart’s California locations. And it's got a five-year, $1 billion plan to put rooftop solar on up to 120,000 U.S. military housing units.

Big hurdles remain

Sounds good. But many of us are looking for a serious break in the status quo. While renewables are nearing parity with fossil fuels, they have serious issues to work through. For homeowners, the up-front price remains difficult to stomach, and power-purchase agreements, in which somebody else retains ownership of the system, only shave a few percentage points off the average bill.

On a commercial scale, utilities have to work renewable start-stop energy into the grid by upgrading back-up systems and integrating new energy-regulating technologies. It's not a simple marriage.

Change is coming. Hughson Nut, a leading processor of almonds and nut products, just added solar and energy efficiency measures and says it's great. Expect more to follow.

In the meantime, I'm holding out for that gradual transition becoming a little more obvious.

California's Expanding Green Economy

An emerging green economy not only increases demand for skilled electricians and other workers in California, but also is expanding those skills to new tasks and is creating entirely new occupations, according to a just-released study.

The green economy gas generally outpaced total economic growth in all but one of California's 11 regions. The Sierra region was the lone exception, according to the "Many Shades of Green" report by NEXT 10, a nonprofit organization based in San Francisco.

“During the great recession, certain sectors of the overall economy suffered huge losses. The core green economy fared better when it came to retaining jobs and businesses in California,” said Tracey Grose, Vice President and Director of Research at Collaborative Economics, which authored the report for Next 10. “Growing the diverse sectors within the state’s clean economy improves California’s overall economic resilience.”

Here are some other highlights from the NEXT 10 study, which is available on the organization's web site. Here is the link.

1/Between 1995 and 2010, green economy employment expanded 113% in Sacramento, 76% in the Bay area, 65% in San Diego, 62% in Orange County and 22% in the San Joaquin Valley.

2/ Manufacturing represents a strong sector, accounting for 27% of jobs in the core green economy compared with just 10% in the total economy. Manufacturing in the state’s core green economy expanded 1% in 1009-10 and 53 % from 1995 to Jan. 2010.

3/Employment and business growth varies across 15 green industry segments, but energy infrastructure (+14%), advanced materials (+4%), clean transportation (+1%), and energy generation (+1%) bucked recessionary trends, exhibiting growth during the recession from

4/ Some jobs are being expanded to include new tasks such as supply chain managers. New titles, such as chief sustainability officer and energy auditor, are being created, and entirely new occupations - such as solar photovoltaic installers, processing technicians for biofuels and fuel cell technicians - are appearing specific to installation and application of new technology.

5/Households and businesses that increase efficiencies are reaping financial benefits and helping the state’s overall economy achieve greater energy and resource productivity. Products and services developed in the state’s green economy are accelerating and supporting this needed transition

The report notes the recession hit California hard, and that even green employers faced challenges in the last year. It suggests the state's progressive attitude and can-do spirit is a boost, but that incentives and government efficiency would help grow the green economy even more.

"California’s forward thinking public policy record has served to support the growth of markets related to clean energy and related products," the report says. "Further, the state benefits from its population of early adopters of new technology. These combined forces drive the innovation process and place the state at the forefront of the growing global green economy."

How big the green economy becomes in California remains to be seen, but the potential is strong. We just wrote about some serious new jobs at solar facilities (here), which are coming fast and furious in Central and Southern California. And businesses and residents are discovering the power of energy efficiency. Heck, there is even talk of getting power from ocean waves.

The NEXT 10 report has more. "As consumer habits change, they stimulate new markets and new business activity. As new technologies emerge, they can create greater positive impacts for the environment as well as the economy. By raising efficiency standards, streamlining permitting, offering incentives, and providing creative forms of financing, smartly crafted public policy can reinforce and even speed these vital dynamics."