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Climate Change and Building an Ecological Civilization:
An Optimistic View
by
Roy Morrison

At the start of Spring it was over 80 degrees, where I live in Webster, NH, warmer than Orlando, Florida. Global warming, somehow, has become the truth that politicians dare not mention.

On the surface, we're stuck, and it's frightening and depressing. President Obama proclaims, steps toward completion of the Keystone oil pipeline, while Newt Gingrich flogs his plan for $2.50 a gallon gas through more drilling.

Despite the apparent paralysis of politicians to deal with the clear and present danger, there are reasons for optimism. It's darkest before the dawn. And a new dawn is coming. And it's not all unpleasant, except for the most inveterate polluters.

Everyday market realities, as well as emergence, the fundamental potential for sudden qualitative change, can assist in reversing the pell mell race toward global climate catastrophe, and help us build an enduring ecological future.

There are new tools, which will allow us to shift our paradigm from fossil fuels to renewable energy. With Advanced Energy Performance Contracts (AEPC), we can use the market to ease our shift without raising taxes, without cap and trade schemes, and without raising utility bills. Advanced Energy Performance Contracts combine the high income stream from efficiency with the income from renewables to allow the market to finance an efficient renewable transformation. This is being done at SNHU, Southern New Hampshire University on a micro scale. The AEPC adapts successful tools of Performance Contracting, Competitively Bid Feed-in-Tariffs, Efficiency Utilities, and Renewable Portfolio Standards to enable an energy transformation.

Using Ecological Consumption Assessments to replace income taxation can make the market send price signals for sustainability. What's sustainable will cost less, become more profitable, and gain market share. We could abolish the income tax entirely, and balance the budget using ecological consumption revenue, such as an Ecological Value Added Assessment (EVAA) on all goods and services. The EVAA will be phased in while income taxes are phased out. A negative income tax will phased in to deal with the regressive nature of all consumption taxes, which will be used to end both welfare and poverty.

Emergence

An Ecological Civilization presents more than just the replacement of oil derricks with wind turbines and solar panels. An ecological civilization presents a qualitative change, a healing response to industrial excess, the emergence of a new way of life that will change almost all aspects of how we live for the better. It will affect not only technology, but all aspects of our society, how we live and how we work, how we produce and consume, how we believe and how we dream.

Emergence is a fundamental principle, the appearance of new phenomena from the current existing conditions. Solid matter, such as the earth, suddenly emerged from a quantum world of largely empty space. Planets are an emergent phenomena of the universe. Life is an emergent phenomena of planets.

Consciousness is an emergent phenomena of life. Self-Consciousness is an emergent phenomena of consciousness. An ecological social order is an emergent phenomena of consciousness in response to industrial excess.

Implementation

It's time for us to realize, first, that “business as usual” is self-destructive and unsustainable.

Second, that democratic, market based solutions like Advanced Energy Performance Contracting and ecological consumption revenues are available tools that can help bring us toward a sustainable ecological future. Third, we don't need revolutions or new inventions. We need to use our power as free people to demand change, and to be the change we seek.

Roy Morrison is a sustainability consultant and solar farm builder. His book in progress Sustainability and Liberation is available at www.ecocivilizationweebly.com.
Fact Check:
Advanced Energy Performance Contracting (AEPC) also Called Competitively Bid Feed-in-tariff (C-FIT):
See detailed discussions at www.ecocivilizationweebly.com.
AEPC combines and modifies aspects of existing successful programs including:
1.Efficiency Utilities,
2.Efficiency monetized as Negawatts,
3. Competitively bid Feed-in-Tariffs
4. Renewable Portfolio Standards
5. Recovery of Efficiency Investment through Rates
6. Performance contracting
AEPC works by:

1. Periodically soliciting competitive bids for a combination of efficiency and renewable energy (currently in ratio of roughly 3$ efficiency investment to 1 $ renewable investment) to provide demonstrable energy savings plus renewable energy supply.
   
   
2. Winning bidder obtains private loan financing
   
   
3. Recovering costs from rates with payments from utility for negawatts and renewable kilowatts to winning bidder to cover finance costs, overhead and profit.
   
   

Successful Programs adapted for AEPC:
1.Efficiency utilities: see Efficiency Vermont www.efficiencyvermont.com/
2.Efficiency as Negawatts : http://www.ccnr.org/amory.html
“The Negawatt Revolution 
-- Solving the CO2 Problem --”
Address by Amory Lovins
at the 
Green Energy Conference Montreal 1989
2 a. Efficiency to Replace Power Plantshttp://articles.chicagotribune.com/2011-06-17/business/ct-biz-0617-bf-replacing-coal-20110617_1_energy-efficiency-power-plants-megawatt-hourIllinois' options for replacing coal-fired power plants
June 17, 2011|By Julie Wernau, Tribune reporter
Illinois receives 46 percent of its electricity from coal-fired power plants — a cheap source of power but also one of the dirtiest. With some companies unwilling to pay for scrubbers and pollution controls required by pending environmental regulations, many plants will close. That raises the potential for consumers' electricity bills to jump 40 to 60 percent over the next few years as more expensive power fills the void...

What follows is a look at what's on the drawing board and an examination of possible costs. The prices represented are "levelized costs," a measure that takes into account the cost of building and operating a generating plant (or in the case of energy efficiency, the cost to reduce power) over the lifetime of the technology. A megawatt hour is roughly equivalent to the amount of electricity 330 homes use in one hour.

Energy efficiency

What it means: reducing power use through behavioral changes, or automated or technical upgrades without altering the level of service.

Price: $0-$50 per megawatt hour

Percentage of Illinois generation: 1-2 percent reduction in electricity usage.

Benefits: The lowest-cost and lowest-emission option available, energy efficiency is about taking away the need to build more power plants. By ramping up energy efficiency, the ComEd service region could reduce 14 to 23 percent of the electricity that is used today. Jobs would be created through retrofitting buildings to make them more energy efficient...

Demand response

What it means: Having electricity customers power down at critical times or in response to market prices.

Price: Between $16 and $127 per megawatt day (i.e. companies are paid every day of the year for agreeing to cut back on their electricity every hour of the day during times of peak demand. For every megawatt — enough to power 1,000 homes — they receive $127).

Percentage of Illinois generation: Beginning in 2014, 14,118 megawatts will be available to power down in the PJM Interconnection, the regional transmission system that oversees the electric grid for 54 million customers in 13 states, including the ComEd region of Illinois. That's like simultaneously turning off the electricity in 14 million homes.

Benefits: Because the most expensive forms of generation kick in when demand is highest, lowering demand quickly during peak times helps lower electricity costs for everyone...
3. Competitively Bid Feed in Tariffs and Renewable Portfolio Standards
http://www.renewableenergyworld.com/rea/news/article/2010/12/the-california-way-auction-trumps-feed-in-tariff
California:
Renewable Auction Mechanism (RAM)
“The California Way: Auction Trumps Feed-In Tariff”
By Ucilia Wang, Contributor
December 10, 2010
California regulators plan to consider an incentive program to boost renewable electricity generation from medium-size projects. Proponents say the plan is better than feed-in tariffs.
California, USA -- There has been no shortage of debate on the best way to boost renewable electricity generation. Feed-in tariff or renewable portfolio standard (with competitive bidding)? Throwing money at project developers or consumers and businesses that use the energy?
California regulators are set to visit a new proposal to encourage mid-size projects next week. It’s called Renewable Auction Mechanism (RAM), and it will require developers to submit non-negotiable bids for a chance to build projects of up to 20 megawatts each. The three large investor-owned utilities in the state will hold auctions twice a year and select the lowest and plausible bids. The state proposes to cap the program at 1 gigawatt.
The California Public Utilities Commission has been tweaking this proposal for about a year and half, and it’s set to review the RAM plan next Thursday. CPUC drafted the proposal to expand a feed-in tariff (FIT) program it approved in 2007. The FIT is one of several state incentive programs designed to help the three utilities meet a mandate to have 20 percent of their electricity from renewable sources by the end of the year. The next goal is 33 percent by 2020.
Under the FIT program, projects wouldn’t be larger than 1.5 megawatts, and many types of renewable sources are eligible, including solar, wind and geothermal. It was opened to retail customers of the three utilities, but the tariffs have been far from attractive. Regulators have set the prices based primarily on the cost of producing electricity from combined-cycle natural gas power plants, not on the cost of building and operating the more expensive renewable energy projects.
Feed-in tariffs, by the way, are supposed to be fixed prices that utilities must pay in a long-term contract. The tariffs are higher than the prices paid for electricity from conventional source such as coal and natural gas. Such policy has made Germany and the rest of Europe the largest solar market in the world. Spain’s program fizzled because policy makers failed to put in mechanisms to rein in an explosive growth that came at the expense of ratepayers.
The Canadian province of Ontario, inspired by the success of Germany and Spain, launched a FIT program in October 2009. Ontario, too, saw a huge interest and had to adjust the pricing so that its ratepayers wouldn’t see a huge hike on their bills.
California’s proposal isn’t the same as the European variety, and some critics have bristled at the idea of even calling California’s version a feed-in tariff. Purists say feed-in tariffs are the opposite of competitive bidding or auction. The state’s proposal doesn’t allow price negotiations – developers have to submit non-negotiable bids. But it does set what it calls a “simple preapproval threshold,” or SPT, to help determine what should be the maximum pricing for each contract (when the electricity is delivered to the grid throughout the day will affect the pricing). The idea is to set a limit so that consumers don’t end up overpaying for renewable energy.
“We adopt an SPT recognizing that a 1,000 MW capacity cap provides important protection, but does not itself protect against excessive cost for any one individual contract. The adopted mechanism provides the right balance of streamlined administration, preapproved cost recovery for the (utilities), reasonable resource portfolio administration, and focused Commission consideration of the prudence of entering into certain contracts,” according to the CPUC filing.

The SPT in the proposal would be 150 percent of the market price referent, which is the price of a long-term contract with a combined-cycled natural gas power plant. The RAM would be open to project developers, not just retail customers of the three utilities. 

“I really like the program. It’s a unique way to do something that a FIT program does but without running into some of the pitfalls that FIT has hit,” said Shayle Kann, managing director of solar research at GTM Research. ”The main worry I have is the possibility of underbidding in order to win that contract.”

The CPUC proposal includes measures to protect utilities and consumers from unscrupulous or inexperienced developers who fail to deliver their projects. One measure will require developers to put down a security deposit of a set price per kilowatt. A second measure requires a deposit for guaranteeing the power output of each project. For a project that is less than 5 megawatts, the performance deposit would be $20 per kilowatt. Larger projects would require 5 percent of their expected revenues.

The CPUC staff included this interesting comment from Southern California Edison, which explained why performance deposit is a good thing:

"SCE's experience, however, is that developers continuously reevaluate the financial performance of their project as their operating and maintenance costs, the energy prices available elsewhere in the market, and their tax incentives change over the life of the contract. Determinations are made whether continued performance under a contract is warranted versus other alternatives that may be available to maximize the developer's return on investment. Developers have in the past and continue today to seek ways to terminate their obligations under existing contracts because they believe a better deal may exist. Performance assurance [deposit] is designed to mitigate the consequences of SCE having to replace the failed project with a similar project."
Efficiency Power Plant Investment Recovered by Rateshttp://www.reeep.org/index.php?asset&assetId=22Efficiency Power Plant (EPP) Implementation in Jiangsu, ChinaPurpose
To help the Jiangsu Economic and Trade Commission (ETC) and its Demand-Side Management (DSM) Center to strengthen implementation of its DSM/EPP programme.
Main activities and outputs
Prepare DSM Implementation Manual.
Co-ordinate DSM Monitoring and Verification Protocol.
Develop case studies on EPP design and implementation for two large-size, energy-intensive factories, with recommendations for integrating the ESCO industry.
Conduct research on appropriate DSM fund management mechanisms for China.
Organise China's First International DSM Forum.
Organise four training sessions for Chinese experts and utility officials on DSM incentive mechanisms, programme planning & design, project screening and selection, implementation, monitoring and verification, and ESCO integration.

Publish technical and scholarly articles in English and Chinese on DSM/EPP implementation in Jiangsu and China.

Initial studies indicate that DSM energy efficiency financial incentives could both save enough energy to meet eight percent of Jiangsu's projected electricity growth, and reduce China's total coal consumption by 167 million metric tons by 2015, eliminating 613 million metric tons of carbon emissions, all at a net cost reduction

Expected impacts

Help Jiangsu achieve greater electricity and carbon savings, and pave the way for scale-up to full EPP implementation, by developing appropriate management and oversight procedures and capacities for ensuring that DSM funds are used in the most cost-effective manner and that the savings can be fully monitored and verified.
Help Jiangsu to become the "California of China" - a national model for successful EPP programme planning, implementation, oversight and funding.
Increase capacity to build EPPs in other parts of China through training, pilot projects and development of technical implementation materials.

Performance Contracting http://www.kingandwood.com/article.aspx?id=Energy-Performance-Contracting-in-China&language=en

Energy Performance Contracting in China, as a global example

Energy Performance Contracting in China
 By Kalley Chen and Xu Zifeng*
Energy service company ("ESCO") uses Energy Performance Contracting ("EPC") to provide energy-saving services to the customers. Under an EPC, an ESCO and a customer establish energy-saving target. A customer repays the ESCO its costs and returns by using the energy cost savings from the reduced energy consumption. Compared to other conventional energy conservation methods, EPC has been the most effective in conserving energy in western countries since 1970s. First, EPC, by using ESCO’s expertise to promote greater energy efficiency, reduces energy cost of the customers and even, the whole society. Second, EPC shifts much of the cost and risk associated with energy efficiency projects from customers to ESCOs. As a result, customers are more open to take the initiative in energy conservation, and consequently speed up the energy-saving process of the entire society.

I.EPC Practice in China

In March 1998, China and the World Bank and Global Environment Fund introduced the EPC model under the "China Energy Conservation Project". Phase I of the project supported the establishment and development of three pilot ESCOs in Beijing, Liaoning and Shangdong which have demonstrated significant achievement in energy conservation. Launched in November 2003, Phase II established the World Bank Project Department in the China National Investment & Guaranty Co., Ltd. to provide loan guarantee for small and medium-sized enterprises. Additionally, it established the Energy Conservation Service Industry Committee of China Energy Conservation Association ("EMCA").

By the end of 2009, there were 502 ESCOs operating in China. Among them, Haerbin Jiuzhou Electric Co., Ltd. （Ticker Symbol: 300040）was publically listed on ChiNext on January 8, 2010. Shenzhen Das Intellitech Co., Ltd.（Ticker Symbol: 002421）was publically listed on the Shenzhen Stock Exchange on June 3, 2010. Some well-established ESCOs in China EPC market, such as Beijing Shenwu Thermal Energy Technology Co., Ltd. and Sinowyde Energy Technologies (Beijing) Co., Ltd., received venture capital investments.

II.National Policies

A. Policies on Energy Conservation and Emission Reduction
China established a series of energy conservation policies and targets to encourage the development of the EPC industry in China. In 2006, China announced a plan to reduce energy consumption per unit of GDP by 20% and reduce major pollutants emissions by 10% by 2010. (1) In 2007, China officially established energy conservation as one of its fundamental national policies. (2)On November 25, 2009, China committed to lower its 2005 carbon dioxide emission level by 40%-45% in 2020.(3) 
B. Policies on EPC
Chinese central government began to formulate the policies specialized on EPC in 2010. These policies include the Opinions on the Acceleration of the Implementation of Energy Performance Contracting to Promote the Energy-saving Service Industries (Guofaban [2010]No.25)(4) ("Opinions"), the Interim Measures concerning the Administration of Financial Incentives to Fund the Energy Performance Contracting(5) ("Interim Measures"), and the General Technical Rules for Energy Performance Contracting (6) ("General Technical Rules").

a. Development Target
The Opinions set forth two development goals. The Chinese government aims to support a few professional ESCOs and develop a few large scale ESCOs with full scope of energy-saving services and establish a regulated energy efficiency market by 2012. By 2015, China hopes to build an advanced energy efficiency service system and make the EPC model one of the main energy efficiency methods.
b. Financial Incentives
The Opinions entitle EPC projects to receive investment fund from the central finance budget and the central finance fund specializing for energy efficiency and emission reduction. Under the Interim Measures, qualified ESCOs and EPC projects will receive financial incentives. On the central finance level, the standard is RMB240 for 1 ton of standard coal equivalent. (7) On the provincial finance level, the standard is at least RMB60 for 1 ton of standard coal equivalent. The Opinions also encourage banks and other financial institutions to provide project financing and factoring services to meet ESCOs’ financial needs.


1. Tax Preference
Pursuant to the Opinions, ESCOs are exempted from business tax for revenue generated from EPC projects and VAT on the free transfer of the EPC assets to customers. After the first revenue-generating year, ESCOs will also be exempted from income tax for the next three years. ESCOs will enjoy a 50% percent income tax reduction for three years beginning the fourth year. In addition, all reasonable fees paid by the customers to the ESCOs pursuant to the energy performance contracts shall be tax-deductible. After the energy performance contract expires, any EPC project assets transferred by the ESCO to the customers shall be treated as depreciable assets or the assets exempted from amortization period and not as the ESCO’s revenue.
d. Accounting Method
   
   


Under the Opinions, EPC projects of governmental agencies, public institutions and enterprises are subject to specific provisions regarding accounting method. In addition, the EPC project assets transferred by the ESCO to the customers after the expiration of the contract shall be treated as donations.
e. General Technical Rules
The General Technical Rules set forth EPC’s terminologies, conceptions, contract types, technical requirements and contract forms. In essence, these rules direct the Chinese government to promote the EPC mechanism and regulate China EPC market.

End
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