My Clean Break column this week is kind of a Part II to last week’s column about the need for creating financing programs, such as Property-Assessed Clean Energy (PACE) or Property-Assessed Payments for Energy Retrofits (PAPER) programs, to get the energy-conservation ball rolling in Ontario. Last week I focused on residential retrofits. This week the spotlight is on commercial and multi-tenant buildings, with a look at some early successes by a consortium led by the Richard Branson-backed Carbon War Room and the potential of Toronto’s Tower Renewal program, which like the residential opportunity has been held back because the Ontario government has been slow to make the required regulatory amendments.

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Clean Break

By Tyler Hamilton

Jigar Shah thinks large when it comes to battling climate change.

That’s a good thing, because reducing humanity’s global greenhouse-gas emissions to a manageable level is a titanic problem needing equally enormous solutions.

Shah is the chief executive of Carbon War Room, a Washington, D.C.-based non-profit enterprise co-founded and funded by British-born billionaire Richard Branson.

His mission, as the organization’s name makes clear, is to wage a war against carbon emissions by harnessing the power of markets and entrepreneurs. The trick is to get massive amounts of private capital to flow in the right direction.

Government policy is nice and has a role to play, but in Shah’s words the real action we need will only come about “using greed as a force for good.” And incremental steps won’t cut it. In a world that tends to measure greenhouse-gas emissions by megatons, Carbon War Room is only interested in tackling gigatons.

In other words, go big and move fast or lose the war.

Time appears to be running out – and it’s not environmentalists issuing the warning these days. Fatih Birol, chief economist at the International Energy Agency, said this week “the door is closing” on our ability as a society to keep global emissions and temperatures to within manageable levels.

We already know that temperatures are on course to rise 2 degrees C no matter what we do. We have about five years, said Birol, to put the world on a course that will keep the thermometer from rising much further. “I am very worried,” the economist told the U.K.’s Guardian newspaper.

One area where Carbon War Room is moving fast and aiming at a large target is energy efficiency in buildings, which accounts for about 20 per cent of global CO2-equivalent emissions.

For example, Shah and his team helped bring together a consortium that is aiming to spend $650 million (U.S.), to start, on energy-efficiency retrofits in commercial buildings scattered throughout Miami, Fl. and Sacramento, Calif.

Their approach, revealed in September, builds on the creative financing model I wrote about in last week’s Clean Break column, only in this case it’s focused on commercial real estate.

The consortium is led by Ygrene Energy Fund, which reviews retrofit proposals and then passes them off to technology and engineering giant Lockheed Martin. Lockheed does the building audits, calculates the energy savings that could come from a retrofit, and provides all technology and services required to achieve those energy savings.

Energi Insurance Services reviews what Lockheed promises and insures the deal. To add an extra layer of security, HannoverRe further backs Energi’s insurance policy. The idea is that risk has been reduced so much that Barclays Capital, the financing partner in the consortium, is more than happy to fund it all.

Barclay’s gets paid back through a charge on the building owner’s property taxes that is collected by the municipalities over 15 or 20 years. If done right, that charge is less than the energy savings achieved through the retrofit. And it’s all done off-balance sheet, meaning it doesn’t add to a building owner’s debt load.

Miami and Sacramento love it, too. “They are going to generate 17,000 jobs, and they will see city revenues increase from a jump in building permit fees and sales tax revenues,” says Shah, in Toronto last week to speak at an industry conference.

Carbon War Room’s target is to see $300 billion (U.S.) in capital deployed in this way by 2020, and Shah is convinced a tipping point has already been reached.

“We have 65 cities on three continents begging us to deploy (this model) in their cities right now, and we’re moving as fast as we can,” says Shah, adding that pension funds and big institutional investors, having seen Barclays take the lead, are now coming to the table.

“There’s nothing anyone can do to stop it. It has irreversible momentum,” Shah says. “I’m ecstatic about it.”

That’s the power of aggregation, scale and thinking large. It can tap into massive pools of capital that one-off projects can’t touch.

Toronto has its own program in the works called Tower Renewal, which is aiming to see 1,200 residential apartment buildings in the GTA retrofitted at a cost of about $6 billion over 20 years.

The plan is to create an arms-length entity called Tower Renewal Corporation that would manage the program and arrange all financing. Project director Eleanor McAteer says the potential for energy savings, emissions-reduction and job creation is huge.

“Our approach would be very similar to what we’re reading about in Sacramento and Miami,” she says.

“We’ve had some general discussions with the financing marketplace and yes, there is a great deal of interest, but we need to have regulatory approval from the province before we can enter into any serious discussions.”

The city asked the province to make those regulatory changes in summer 2010. As the end of 2011 fast approaches there’s still no word from Queen’s Park.

So as momentum around the world for this kind of climate solution builds, Toronto is sitting and waiting for a simple action from the province that will come at no cost to taxpayers or ratepayers.

What’s the holdup Premier McGuinty?

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies.

The Canadian government boosted its incentives for home energy retrofits yesterday by 25 per cent for most items, which the Ontario government said it would match. It’s all part of an effort to stimulate “green” home renovations as part of a larger effort to kickstart economic activity.

I said “most” items because solar thermal hot water systems got an even greater boost. The current rebate is $500 from the federal government, matched by a further $500 from Ontario. The feds increased its rebate dramatically to $1,250. So if Ontario matches, as it says it will, that will mean anyone who purchases and installs a residential solar hot water system will get $2,500 back. Not bad, considering you can get a system for as low as $6,000.

Expect more “thermal” and energy efficiency announcements from Ontario in the coming weeks. Here’s my article in the Star if you want some more details.

The U.S. Department of Energy’s Oak Ridge National Laboratory just put out a report on the potential of combined heat and power (CHP) deployments in the United States and has concluded that it is one of the “most proven and effective near-term energy options” available to reduce CO2 emissions, improve energy security, relieve grid congestion, make industry more competitive, and create green-collar jobs. (more…)

The City of Toronto has launched two funds that will make it easier for schools, churches, hospitals and other not-for-profit sectors to reduce their carbon footprint.

The $42 million Toronto Energy Conservation Fund and the $20 million Toronto Green Energy Fund, created as part of the city’s climate action plan, make available zero-interest loans for projects that aim to make buildings more energy efficient or bigger users of green energy. Up to $1 million will be available for individual projects, on the condition that the funding represents no more than 49 per cent of total project costs. Both new and retrofit building projects, including those involving municipal buildings, are eligible.

It’s a great idea, particularly during the current credit crunch, and we need to see more of the same. In fact, the city might want to check out what’s going on in Berkeley, Calif., where residents can install solar panels and pay for them over 20 years through a line item on their property tax bill. A company called Renewable Funding is administering the program, which could apply to a range of renewable energy and efficiency measures.

There’s a tendency during times of economic trouble to cast eco-friendly policies as risky, expensive, dangerous and reckless, and this is exactly what Prime Minister Stephen Harper did in the lead-up to last week’s Canadian federal election. Thanks to the effectiveness of the media soundbite, it worked. The public got scared, embraced the “steady as she goes” line, and pretty much derailed any hope of serious federal action on climate change and clean-technology development (beyond carbon capture for use in enhanced oil recovery). Fortunately, Canadian provinces are picking up a lot of the slack.

Still, it would be good for provincial officials to read a new study out of the University of California, Berkeley, which found that aggressive energy-efficiency policies embraced by California between 1977 and 2007 created nearly 1.5 million jobs, far outstripping the 25,000 jobs such policies eliminated (hat tip to Joe Romm for the tip at Climate Progress, where he provides his own take on the study). (more…)