Effective Strategies for Climate Risk Mitigation Tom Kerr US EPA

Overview Background Climate Leaders and corporate GHG management ENERGY STAR and corporate energy management Clean energy investment I will briefly discuss the U.S. approach to climate change and U.S. emissions sources and reduction options. Then I will discuss the specific policy instrument of voluntary programs, highlighting ENERGY STAR, the Landfill Methane Outreach Program, the Voluntary Aluminum Industry Partnership, and our new Climate Leaders program, as case studies of successful industry voluntary programs. Finally, I will describe the accomplishments of these programs and our projections for the future.

EPA’s Climate Partnerships Widespread partnerships 7,000+ partners across industry, service sector, public sector cover all major emissions sources Achieving real results 66 MMTCE reductions in 2001 alone >500 MMTCE locked in through 2012 Spurring investment in cost-effective technologies Delivering value-added tools & services Climate Leaders GHG Inventory Management Plan ENERGY STAR corporate Energy Management Plan Clean energy project assistance The U.S. is pursuing a broad range of climate strategies including: -voluntary private-public partnership programs -research and development investments and tax incentives for energy efficiency and renewable energy technologies -appliance standards that increase the minimum efficiency level of products -financial incentives, such as grants to states and localities -programs to reduce ghg emissions from Federal buildings & transportation These programs are achieving real results: in 2000 alone, the U.S. climate programs have reduced ghg emissions by 66 MMTCE (242 Tg CO2 Eq.) as reported in the U.S. Third National Communication to the Framework Convention. And investments made to date through EPA’s voluntary programs have locked-in emissions reductions of more than 500 MMTCE (1,800 Tg CO2 Eq.). This is documented in EPA’s Climate Protection Partnerships Divisions’ 2001 Annual Report available at: www.epa.gov/cppd Finally, these programs are spurring technological investment -addressing most major emissions sources -focusing on cost-effective opportunities -delivering multiple benefits, such as reduced air pollution -and have a strong track record over the past decade.

Voluntary Climate Risk Mitigation – Drivers for Action Cost savings Influence policy development Pressure from financial sector Public recognition Brand enhancement Competitive advantage Pressure from environmental groups CEO believes it is the right thing to do

Corporate GHG Management Develop a comprehensive climate change strategy Perform corporate-wide GHG inventory Set corporate-wide GHG emissions reduction goals Identify low-cost mitigation options Ensure credibility Partner with states, federal government, NGOs Develop an Inventory Management Plan that demonstrates a sound process is in place Reevaluate progress periodically and publish results

Corporate Energy Management What - Manage reductions in energy use across all facilities Key Activities Establishing organizational commitment Measuring energy performance Creating and implementing action plans & projects Monitoring responsibility for energy use Evaluation and focus on continuous improvement Ensuring energy efficiency procurement, design, and operations Why – Companies with strong programs can reduce energy use (and GHG emissions) by 10-30% The US EPA has seen a significant difference between organizations that effectively manage energy and those that don’t. Those organizations that are effective, have strong centralized energy programs and take a management systems approach to continuously improving energy performance. Unfortunately, most corporations lack a comprehensive program for addressing energy management. Energy management is decentralized and technology focused, frequently missing significant opportunities to reduce energy through better operational practices. Who should be addressing corporate energy use? EPA has seen that organizations with centralized corporate energy offices are most effective. WHAT these offices do is manage energy use across all organizations…

California Corporate Leaders CalSTERS – GreenWave Program for Real Estate Require all real estate holdings to be benchmarked and tracked using the EPA’s (ENERGY STAR) National Performance Rating System for buildings Holdings scoring a 75% must implement an energy reduction action plan that draws from ENERGY STAR guidance California Portland Cement Established corporate energy program based on the ENERGY STAR approach Participating in ENERGY STAR Cement Industry Focus to create a plant Energy Performance Indicator (EPI) to benchmark cement plant energy efficiency Saved an estimated 138,135,996 kBtu in 2004 Two examples of two approaches towards energy management by two leading California organizations.

Energy Management – Policy Considerations Whole Building Energy Performance Measure efficiency using normalized metrics of total energy intensity Incorporate whole building comparative energy benchmarking Promote a whole building, sequenced approach for facility upgrades to avoid equipment oversizing Tie benchmarking to rebate programs Reward buildings with improved benchmark scores Improved Operational Approaches Support building operator training Orient audit and other programs to address operational and management options – often no cost/low cost Integrate whole building energy performance into new construction

Clean Energy Investment Combined Heat and Power Dramatically more efficient/less polluting Enhanced reliability/control over energy use Reduced gas use Explore ‘waste/opportunity’ fuels Green Power Purchasing Electricity use often largest source of emissions Green power available nationally New products offer gas price hedge Need to negotiate with providers for best deal Mention increase value/reduce cost (bang for env buck) argument for GPP EPRI work just getting started; done next year. Jerome Blackman managing ERG/EPRI to do this work. EPRI document on env aspects of SF6 coming out this winter.

Getting Started With GHG Management EPA’s Climate Leaders Offers Credibility through EPA review of inventory Technical inventorying assistance, including assistance with an Inventory Management Plan Coordination with other climate efforts State (CA CCAR), international, federal Peer exchange Partners demonstrate leadership by developing comprehensive climate change strategies Currently 67 partners; 28 have set GHG targets

Getting Started With Energy Management ENERGY STAR Can Help With: Establishing an Organizational Commitment Measuring Energy Performance benchmarking facilities with Portfolio Manager Demonstrating Financial Value earning/share, asset value, NOI Recognition for Leadership ENERGY STAR label calculation of environmental benefits of energy savings ENERGY STAR offers a unique set of tools to help facilitate energy management. These include: Partnering with Energy Star. This often serves as a good first step in securing high level commitment. EPA has developed energy performance ratings for building including offices, schools, supermarkets, lodging and hospitals to help asses energy use and benchmark. We are also developing performance indicators for plants- with auto assembly first. Tools help quanitfy the value of energy savings beyond payback- and into earnings per share and asset value of properties as a result of energy efficiency investments. And we provide government recognition linked to environmental protection- for both individual buildings and organizations as a whole. This provides tremendous momentum for energy programs.

Getting Started With Clean Energy Investment EPA’s CHP Partnership offers Feasibility assessments Referrals to developers/equipment suppliers Technology and market analyses Recognition for leadership Calculation of environmental benefits EPA’s Green Power Partnership offers Easy-to-use Procurement Guide Referrals to providers

EPA Office of Air & Radiation Contact Information Tom Kerr EPA Office of Air & Radiation tel. 202/343-9003 email kerr.tom@epa.gov www.epa.gov/climateleaders www.energystar.gov www.epa.gov/cleanenergy