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Waxman Markey – Legislating Guaranteed Failure

July 1, 2009 By 5 Comments

In his July 1 editorial, “Just Do It”, Tom Friedman is exactly right when he says regarding the recently passed Waxman Markey climate bill: “It is too weak in key areas and way too complicated in others. A simple, straightforward carbon tax would have made much more sense than this Rube Goldberg contraption. It is pathetic that we couldn’t do better. It is appalling that so much had to be given away to polluters. It stinks. It’s a mess.”

He goes on to describe some of the completely counterproductive compromises made to buy votes for the bill that will in aggregate absolutely guarantee that the bill fails to provide any of its climate related goals.

But he really misleads the American people in describing Republican opposition to this massive pork barrel bill in saying: “What are Republicans thinking? It is not as if they put forward a different strategy, like a carbon tax.?”

In fact, two Republicans Representatives Ingliss and Flake along with their Democratic colleague Daniel Lipinski have proposed H.R. 2380, The Raise Wages, Cut Carbon Act of 2009, which is exactly the solution that Friedman has been advocating for several years. It puts real inescapable prices on carbon emmission starting immediately, that are far greater then the EPA and Congressional Budget Office estimate Waxman Markey will provide ten years from now. And it helps the economy by reducing payroll taxes, the most regressive form of taxation in the country, rather than handing out hundreds of billions in corporate welfare the way Waxman Markey does.

Sadly, instead of providing the real leadership the nation needs and serious solutions like the Ingliss bill, Friedman caves in after years of being a true leader on these matters by calling on the Senate to push forward the wasteful and completely counterproductive corporate pork that the House just passed.

Greenpeace has chosen to take a far more practical and principled stand suggesting: “As it comes to the floor, the Waxman-Markey bill sets emission reduction targets far lower than science demands, then undermines even those targets with massive offsets. The giveaways and preferences in the bill will actually spur a new generation of nuclear and coal-fired power plants to the detriment of real energy solutions. To support such a bill is to abandon the real leadership that is called for at this pivotal moment in history.  We simply no longer have the time for legislation this weak.”

In their Philadelphia Enquirer editorial entitled “Cap-and-Trade Does More Harm Than Good”, public sector environmental attorneys Laurie Williams and Allan Zabel with experience in California’s Cap and Trade law start by stating: “We would support legislation in Congress to address climate change if it were capable of accomplishing that goal. Unfortunately, despite the best intentions of its proponents, the bill known as Waxman-Markey would disable our ability to reduce greenhouse-gas emissions for at least a decade”

After clarifying several of the fundamental reasons this legislation will completely fail to meet its purported goals, they go on to conclude: “The Waxman-Markey approach would not only guarantee a decades-long failure in the United States; it would also undermine U.S. credibility in international negotiations on climate change.”

“Those who favor Waxman-Markey as a political best-case scenario lack faith in the American people. We believe the American people can understand and support a more effective and fair approach.”

“Many observers across the political spectrum agree that carbon fees or taxes, with rebates to consumers, would be a more enforceable and effective alternative. While cap-and-trade-and-offsets will enrich special interests and delay the transition away from fossil fuels, carbon fees with monthly rebates could be the centerpiece of an affordable, equitable, rapid transition to a clean-energy future.”

White House Budget Director Peter Orszag was absolutely clear in his March testimony to Congress said: “If you didn’t auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States”.

By giving away 85% of the credits, offering completely unverifiable offsets for all sorts of sheer nonsense, and removing the EPAs role in regulating greenhouse gasses, Waxman Markey will do more to set back any real solutions than just about any policy imaginable.

In “The Cap and Trade Giveaway” Alan Viard  suggests “under a system of free permit allocation, the stockholders of companies that receive free permits would receive windfall gains. A cap-and-trade system with freely allocated permits is equivalent to a carbon tax in which the tax revenue is given to stockholders.”

Is this corrupt pork barrel corporate welfare really the best Congress can do? Do they really think nobody is paying attention, when after giving trillions of dollars in direct and hidden subsidies to the “too big to fail” banks at the center of the global financial meltdown, they are now handing out hundreds of billions more to the companies most responsible for the environmental problems facing the planet. Do they cynically think we citizens are all just stupid or that nobody is paying attention to what they do? Is empty rhetoric really all that is needed to buy  support of most of the mainstream environmental organizations and cover up such a total failure of Congress?

Friedman is right in his conclusion that “We The People” are the only hope for a real solution with his call to “get out of Facebook and into somebody’s face. Get a million people on the Washington Mall calling for a price on carbon. That will get the Senate’s attention. Play hardball or don’t play at all.”

But he is completely wrong to suggest that we should accept and promote the corrupt politics currently masquerading as a solution to anything at all. The massive fraud being perpetrated in Waxman Markey will do exactly what Williams and Zabel suggest – it will set back any real solution by at least a decade. With its inevitable costs to the economy in the trillions of dollars and its failure to impact carbon emissions in a meaningful way, it will also essentially end all credibility that the environmental movement has to later advocate for real solutions.

Hopefully we can expect more of the Senate than the cynics in the House are apparently capable of.  Let’s hope we can expect them to treat us with the respect of at least trying to be honest and serious about this issue.

Instead of caving on this issue for political expedience, Tom Friedman, President Obama and everyone else seriously concerned about this issue need to stand up and call on the Senate to reject Waxman Markey completely and start over from scratch with a real solution like a straight forward carbon tax that puts a significant and inescapable price on carbon emissions right now.

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Waxman Markey – Greenwashing Corporate Welfare

May 24, 2009 By 8 Comments

As the Waxman Markey Carbon Cap and Trade bill winds its way through Congress, our government is finally about to take action on our unsustainable addiction to fossil fuels …….. Or so it would seem.

But we should be paying attention not to the rhetoric, but rather the realities of the legislation. What matters is not the pretty sound bites or the presumed good intentions of the supporters behind legislation, but rather the actual legislation itself. As always in the legislative sausage making process, “the devil is in the details”.

The current Waxman Markey legislation is another truly audacious handout to the Wall Street traders and speculators, and to the nation’s largest carbon emitters, the two groups who stand to benefit most from this legislation. And unfortunately, the political compromises that evolved to give carbon free offsets to refineries, utilities and other major polluters along with all the other give aways will render the overall cap and trade effort effectively useless in actually reducing carbon emissions, as the European system has already proven to be.

What is being proposed in this legislation is one of the world’s largest derivatives markets, with complex rules being made up in a mad rush and Wall Street lobbyists very heavily engaged in the rule making. US Commodities Future Trading Commissioner Bart Chilton is quoted by the Financial Times as predicting carbon markets would become ” the biggest of any derivatives product in the next four to five years.”

One would have hoped Congress learned something from the fiasco created by the derivatives market for subprime mortgages. Unfortunately it seems they haven’t. There is a very good reason that environmentalist organization Friends of the Earth titled their report on Cap & Trade “Subprime Carbon”. In a CNBC video on “The Carbon Challenge”, former Governor and DNC Chairman Howard Dean declares “I am terrified of a Bernie Madoff in the Cap and Trade business who is selling stuff that doesn’t exist”.

This legislation is evolving to be even worse than the Washington solutions for the economic crisis, a record of terrible public policy that I thought would be impossible to challenge. After looting our children’s future handing trillions of tax-payer dollars to the Wall Street firms most responsible for the worlds worst economic problems since the Great Depression, our leaders in Washington are now about to hand additional hundreds of billions of dollars in direct subsidies to the companies most responsible for carbon emissions.

President Obama’s proposal for Cap and Trade was for all allowances to be auctioned to the highest bidder and proceeds largely used to offset the impacts of higher energy costs to citizens, an inevitable near term reality of effective emissions policy. Though not as effective as a straight carbon tax, that would be decent policy. However instead of following the President’s guidance, Congress is now deciding to hand carbon allowances out for free to the industries that currently emit the most carbon.

The Wall Street Journal quotes the President saying just in March “If you’re giving away carbon permits for free, then basically you’re not really pricing the thing and it doesn’t work — or people can game the system in so many ways that it’s not creating the incentive structures that we’re looking for.” White House Budget Director Peter Orszag was even more clear in his March testimony to Congress: “If you didn’t auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States”.

Under Waxman Markey, eighty five percent of initial carbon allowances would be simply given away. Estimates are that those initial allowances could be worth hundreds of billions of dollars annually. This is a massive handout. Effectively, instead of rewarding utility companies and independent power producers who have led the utility industry in developing wind and other clean energy projects over the last decade, Congress is proposing to hand a large portion of these huge subsidies to their competitors who stuck with the dirtiest possible technology. In a report on Cap and Trade, the Congressional Budget Office has estimated that some of these companies could see their market capitalization double and triple almost instantly on the receipt of these free handouts. That’s not a bad reward for companies that maintained the worst emissions policies absolutely as long as possible.

As a real solution, rather than Cap and Trade, a straightforward carbon tax is favored by the vast majority of economists, as well as Greenpeace, Friends of the Earth, NDN, Tom Friedman, James Hansen, Paul Volker, Joseph Stiglitz, William Ruckelshaus, Al Gore, Ralph Nader and a huge majority of knowledgeable people on all sides of the political spectrum who have actually explored the issue. Energy Secretary Stephen Chu also favored a carbon tax up until his political appointment. A straightforward carbon tax is also favored by almost all business groups other than utilities and other polluters angling for massive free carbon credit handouts.

So the fundamental question is the one the New York Times asked: “How did cap and trade……. become the policy of choice in the debate over how to slow the heating of the planet? And how did it come to eclipse the idea of simply slapping a tax on energy consumption that befouls the public square or leaves the nation hostage to foreign oil producers?”

“The answer is not to be found in the study of economics or environmental science, but in the realm where most policy debates are ultimately settled: politics.”…………….

“[Cap and trade] is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts. That is precisely what is taking place now in the House Energy and Commerce Committee, which has used such concessions to patch together a Democratic majority to pass a far-reaching bill to regulate carbon emissions through a cap-and-trade plan.”

Bottom line, as Greg Mankiw, Harvard economist and author of the economics text book used in the majority of university economics courses points out: “Cap-and-trade = Carbon tax + Corporate welfare.”

We should also recognize that as part of the Waxman Markey deal, Congress will require state and regional emissions programs like the Regional Greenhouse Gas Initiative (RGGI), that were carefully designed and negotiated over years, will be put on hold for at least five years. It is truly unfortunate that just as the RGGI program is getting off the ground, it will be derailed in order to enable corrupt political shenanigans like this.

It is hard to imagine how congress can pretend to justify enriching the worst polluters in the country and entrenching their market positions with the massive handout now working its way through Congress.

As I argued here, it seems to me a far better response is to endorse the alternative bipartisan bill: H.R. 2380 The Raise Wages, Cut Carbon Act of 2009 which was recently introduced by Representatives Inglis, Flake and Lipinski.

The Miami Herald reports that that H.R. 2380 “would initially impose a tax of $15 a ton of carbon dioxide on the producers and distributors of gasoline, natural gas and coal, with the tax rising to $100 a ton over three decades. The tax increases would be offset by equivalent cuts in payroll taxes, with employers and employees sharing the reductions equally.”

Inglis, Flake and Lipinski calculate that under their bill, customers of coal fired utilities would see cost increases of 83.5 percent in the first year. They address that direct impact to consumers with an offset to the regressive payroll taxes that impact people and jobs most directly.

Unlike Waxman Markey, The Raise Wages, Cut Carbon Act is both rational and real market oriented legislation. The fundamental premise of the Inglis, Flake and Lipinski bill is to dependably and significantly reduce carbon emissions and realistically stimulate the economy and job growth – all with no net increase in taxes. Perhaps the details around the specific numbers should be debated more. But unlike Waxman Markey, the fundamental principle is sound environmental policy and sound economic policy. And at the very outset it is far more serious than Waxman Market in actually putting a real and very predictable price on carbon emission.

A meaningful carbon tax at the federal level coupled with encouraging ongoing experiments in Cap and Trade at the state and regional effort, like RGGI, would be a far more rational approach to these issues than the original Waxman Markey bill and certainly far more rational than the cynical counterproductive corruption that it has evolved into.

I find it disheartening when very knowledgeable leaders that I usually respect seem eager to accept an ineffective policy based on political expediency. My own idealism suggests that we should hold out for real solutions, less subject to manipulation and corruption. That idealism is born from very real experience of a project developer trying to build good projects in the face of the morass of unintended consequences coming out of the traditional cynical process of political horse trading.

Over the years, the environmental and clean energy communities have been comprised of very practical idealists. If we are to settle for lousy solutions merely because they are politically expedient when they in fact have no practical value, then we well on our way down the slippery slope and are just another part of the problem rather than part of any solution.

In “Is Cap and Trade a Dead Policy Walking?”, Robert Shapiro of the progressive think tank NDN suggests that “after Wall Street’s meltdown, the proposition for another round of the financial merry-go-round that produced the worst economic crisis in our lifetimes seems either very naive or very cynical”. He also suggests that “for years, many politicians and environmental leaders have believed that any kind of tax to deal with climate change would be dead on arrival. That may be changing, especially if the tax is paired up with rebates to take away much of its political sting. More importantly, the costs and lessons of the financial crisis may effectively swamp the prospects for cap-and-trade. If cap-and-trade has become a dead policy walking, those who care deeply about climate change will find that a carbon tax system has become the last, reasonable policy standing”.

In an article entitled “Coal, Electric Industries Big Winners in Climate Bill Deal” , the Washington Independent points out that organizations who signed on to support Waxman Markey just weeks ago are already pulling away as they see the problems with the emerging legislation: “Janet Keating, executive director of the West Virginia-based Ohio Valley Environmental Coalition, said in a statement Friday. “There are some costs that are too high to pay when it comes to the environment, clean air and clean water. We urge Congress to either fix the Waxman-Markey bill or dump it and start over.”"

In “Subprime Carbon: Environmentalists Warn About the Next Big Bubble” the Wall Street Journal suggests that “one possible side effect of the financial-market fallout and concerns about more toxic assets” is “growing support for a straight carbon tax, rather than a complicated cap-and-trade plan.”

Once we get the “economic externalities” of fossil fuels somewhat accounted for in the marketplace that everyone participates in, we will start making real progress. Rather than supporting Waxman Markey’s politically created markets in which only specialized elites can play, truly effective policy would be simple, understandable and implemented in a manner that is very direct and clear in the normal economy that everyone makes transactions within. A straight forward carbon tax is the most effective and efficient way to do that.

Waxman Markey will massively increase costs of electricity and other major carbon emitting processes, but instead of providing a mechanism for average people to cover those costs, the benefits are all being handed to the worst carbon polluters for free. What single policy could more effectively turn citizens and voters away from trusting anything labeled with an environmental agenda in the future? It is insanity.

Despite the rhetoric, Cap and trade is not market driven policy, won’t reduce carbon emission and will never create what any real alternative solutions to carbon emission actually need to be successful – predictability in the market place.

Unfortunately, it seems that Simon Johnson, the former Chief Economist of the International Monetary Fund may be right in his Atlantic article, “The Quite Coup”, regarding who is really running both political parties of our government these days. But Sen. Dick Durbin (D-Ill is exaggerating when he is widely quoted saying “The banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place”. Clearly the banks don’t own Congress outright. The utilities and oil companies also still have significant ownership and control of our government.

In a recent blog post entitled Then and Now, Harvard’s Greg Mankiw points out very conflicting realities:

“From a Obama-Biden campaign position paper:

Barack Obama and Joe Biden’s cap-and-trade system will require all pollution credits to be auctioned. A 100 percent auction ensures that all large corporate polluters pay for every ton of emissions they release, rather than giving these emission rights away for free to coal and oil companies.

From the Wall Street Journal: “Pollution Politics and the Climate-Bill Giveaway:

Under the House bill, only 15% of the emission permits will be auctioned initially. The rest of the permits will be given away — 2% to oil refiners, 5% to free-standing “merchant” coal plants, 9% to regulated natural-gas distributors, and so on.

Mankiw asks: “So, Mr President, the bill now being considered in Congress is in direct contradiction to your campaign pledge. Will you now please stand up for principle and issue a veto threat?”

Instead of defending their very clear and sensible positions of only a couple months ago, President Obama and Vice President Biden both praised the passage of Waxman Markey by the House Energy and Environment Committee.

If Congress and the President are not willing to stand up for principle and real solutions, then the rest of us have to demand they do.

Perhaps the main reason we should all support solutions that actually make sense is because citizens nationwide are becoming increasingly skeptical and cynical about government as a solution to anything at all. Anyone with doubts about that should just look at the results of the recent ballot initiatives in California. If we allow completely ineffective carbon legislation like the Waxman Markey bill to pass, that is really just another massive handout to Wall Street and other corporate political campaign contributors, it could be decades before voters allow Congress to attempt to do anything useful about all the problems associated with our fossil fuel addiction.

These issues are too important to settle for a feel good, green wash, ineffective pretense of a solution. Now is the time for the environmental and clean energy communities to unite with the general business community around a real solution far less subject to corruption.

Let’s find the courage to regain both our practicality and our idealism. Lets support something that not only makes environmental sense but also makes economic sense. Let’s demand Congress provide a real solution rather than selling out to the oligarchs that Simon Johnson describes. Their lobbyists are being very well served. Its time we all call our congressional representatives and senators and demand our voices be heard.

Lets demand very predictable and dependable higher levels of carbon taxes on those that should be taxed more instead of giving them massive corporate welfare. And lets demand real reductions in employment taxes to help put regular people back to work and help them pay for the increased costs of living that any meaningful carbon solution must inevitably entail.

Anyone actually paying attention knows it is past time to dump Waxman Markey and demand a real solution. Let’s join a very broad politically and economically sensible consensus and unite behind demanding passage of H.R. 2380 “The Raise Wages, Cut Carbon Act of 2009”.

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Getting Serious About Energy In Public Buildings

April 5, 2009 By 9 Comments

Here in Rhode Island, as elsewhere, well-intentioned people are proposing legislation that would mandate that any public building or any building receiving public subsidy be LEED rated. I already addressed my concerns with that proposal in “Legislating Greenness”. The problems include:

1) Empowering a single private out of state organization with essentially unregulated monopoly powers to define, change, certify and charge for greenness certification, which is effectively being mandated as a building code standard.

2) Eliminating market based competition and real market signals for defining, evolving and improving green building standards.

3) In the only study ever done on LEED buildings, when rigorous statistical analysis was applied to the data in an independent review, it ended up that at least to date, LEED buildings actually have used more energy than typical buildings.

Perhaps the biggest problem is that rating systems like LEED add more layers of complexity and more fees for LEED professionals, architects, engineers and construction managers, but they don’t add any meaningful accountability to the system. That’s exactly why LEED buildings can use more energy than conventional buildings and why LEED rated skyscrapers can leave their lights on all night when nobody is in the building. Once the rating is determined based on design, the building can call itself green no matter how poorly it actually performs.

With the economic situation we are in, the goal of green building advocates has to go beyond putting plaques on walls and having nice things to say in the press. We know that real green buildings actually save energy and save significant amounts of money in their operation. We need real accountability and serious incentives to make that happen.

So lets stop counting points and instead focus peoples attention much more clearly with a measurement we all understand very well – dollars.

The way states fund new buildings needs to be changed. Rather than coming in as an allocation or grant of cash, half the funding should be delivered as it is now under current funding mechanisms and the other half should be delivered to the agency or municipality building the building as a short term zero interest loan with a two year balloon payment. That loan would be forgiven if after two years of operation gas, oil and electric bills are 25% lower in energy units used per square foot than on comparable existing buildings in the state. If the building doesn’t meet this goal, the agency, municipality or other recipient of the funds would have have to repay the loan in full.

Such serious incentive would focus attention on what actually matters far more than counting greenness points.

With financial incentives that are clear and serious, the building procurement process for new buildings would quickly evolve to requiring energy performance bonds from architects and general contractors which would focus their attention very clearly. Architects and contractors would quickly become more serious about details. Schools would have to start training architects and engineers on issues that actually matter. Companies that failed to deliver would have a hard time getting energy performance bonds for future projects. The market would start providing real significant rewards for real green building.

Building operations and maintenance staffs would have more prestige and be considered a far more important part of organizational management with serious money on the line for real measured building performance.

Among other benefits, this kind of legislation would require getting baseline data on the existing building stock. The process of collecting and comparing real baseline data would get the state and municipalities comparing their existing buildings to each other on very simple and easy to calculate metrics – annual therms, gallons of oil and kWh per square foot. It would immediately become very obvious which buildings need to be fixed.

Both through improving the worst performing buildings and building new buildings that use 25% less energy than baseline, the goals and minimum performance levels constantly and automatically reset higher toward better performing buildings.

Such a system doesn’t need “Accredited Professionals” using abstract rating systems to count points. All that is needed is the utility bills that get delivered every month anyway.

Henry Gifford deserves credit for inspiring the concept that buildings should be rated on actual performance as measured by utility bills. All that is needed is to add some real accountability to that very clear and simple rating system.

The situation our country is in regarding energy, the environment and the economy is serious. We need serious incentives to drive serious solutions.

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Legislating Greenness

March 14, 2009 By 10 Comments

The public forum at this year’s NESEA conference “What’s Right and What’s Wrong with LEED” was in many ways NESEA at its best. It helped separate truth from hype. It addressed the unfortunate reality that real solutions aren’t always easy and don’t always fit into nice simple answers that marketers and politicians can latch onto in their idealized efforts to solve complex problems. It helped highlight the need to focus on real experience, real science and real measurements.

In the recent Wall Street Journal ECO:nomics conference,  Google CEO Eric Schmidt nailed the essence of the debate on all things green when he said “the way you solve the environment problem is you solve the energy problem.”

Henry Gifford has provided statistical proof, from US Green Building Council’s (USGBC) own data, showing that at least to date, Leadership in Energy and Environmental Design (LEED) buildings have on average proven to actually use more energy in their operation than comparable buildings. The relevant study, USGBC’s initial response and Henry’s rebuttal to that response are available at Henry’s web site. An excellent summary of the issues along with his recommendation for using utility bills for rating buildings appears in Henry’s article in the latest issue of the Northeast Sun Magazine.

I have the utmost respect for all USGBC has done as a marketing effort to promote green building. USGBC’s success has really helped transform the market.

Thanks at least in part to USGBC’s efforts, the markets for all the solutions NESEA has been promoting for thirty-five years have been growing at a blistering pace. In the case of solar photovoltaics, annual worldwide growth has averaged something close to 40% for a decade.

Lately, with increased interest in government as a solution to all problems, there is accelerating pressure to push growth in these spheres even harder through policy mandates. But we have to be careful to not let good intentions get too far ahead of reality.

Pushing growth of these industries further may be possible with relatively straight forward challenges like installing more PV panels or wind generators. The most significant market obstacles in the wind arena are regulatory obstacles, which the government is well suited to address. In the solar PV arena, prices are coming down, production capacity is going up and the majority of the skills needed to get systems built are very straight forward roofing and electrical work. So appropriately designed government incentives can probably help to continue the remarkable growth path for these and other renewable energy solutions.

Unfortunately, in the case of complex issues like improving the performance of buildings, we really don’t have nearly adequate levels of skilled experienced practitioners necessary to implement the idealized goals of well intended people who seem to think that simply mandating simplistic solutions like counting points actually solves problems.

The question of how to best use public policy to encourage environmentally responsible building practice has been going on for a very long time in the professional community and is still very much unresolved. My own sense is that the market demand for these solutions over the last several years has been very successful in spurring remarkable growth.

I am not at all convinced that mandating greenness will actually improve buildings. And like most hastily implemented good intentions, such measures can, and in at least a few cases have had significant unintended consequences on performance, economics and durability of buildings and the health of their occupants.

The concerns Henry Gifford raises are based on deep experience. Henry is the mechanical system designer who has designed the HVAC systems on architect Chris Benedict’s remarkable buildings and who Chris credits with much of the success her firm has had in repeatedly building apartment buildings in New York City which use only fifteen percent of the energy of comparable buildings, at no extra cost and with no subsidies. Along with his practical experience, Henry is one of the most sought after teachers at serious professional building conferences around the country including NESEA conferences and the invitation only Westford Symposium on Building Science.

While some are shocked by Henry’s finding, they are really not at all surprising considering the questionable methodology involved in LEED. Proof like Henry presents confirms what many of the best building experts in the country have been saying for years about LEED. Taking an eight hour course and counting greenness points is really no substitute for real experience with building science; or good design, detailing and construction management; or measuring factors that actually matter.

USGBCs questionable statistical methodology in analyzing that data themselves highlights real questions about whether what is fundamentally a marketing endeavor should really be enshrined as the standards setting agency for the building industry.

Marc Rosenbaum is considered by many of us to be the leading green building consulting engineer in the country. In answering the question on the NESEA web site Member Voices:  “What’s the most irritating example of ‘greenwashing’ you can think of?” Marc answered “That you get your LEED rating without proving the energy performance in real life.”

Joe Lsiburek is the best known building scientist in the nation. You can find his opinion on this subject in his article “Mis-LEED-ing” or his article “Prioritizing Green – It’s the Energy Stupid” which was first published in the ASHREA Journal, the publication of the nation’s professional organization for heating, ventilation, air-conditioning and refrigeration engineers.

You may want to check out the article in Grist Magazine: “LEED is Broken; Let’s Fix It”.

The most thoughtful conversation I have seen on this subject is over at the BuildingGreen Blog entitled “Lies, Damn Lies, and… (Another Look at LEED Energy Efficiency)”. The central point of this whole discussion is highlighted in Henry’s own comment on that Blog. “LEED is based on a compelling idea: that anyone can take an 8 hour class, pass a test to become an accredited professional, and use a checklist or points system to profoundly improve the way buildings are designed, built, and operated. Sorry, life isn’t that simple, and neither are buildings.”

Like many long time NESEA members, I am far more aware today of how much I still have to learn than I was when I started in this work 33 years ago.  Part of really starting to understand any issue is confronting the complexities that novices are completely oblivious to.

In the public forum Tuesday, Maureen Mahle acknowledged that the folks monitoring the results of USGBC’s efforts were surprised to find that the vast majority of LEED buildings have been built by people doing green building and integrated design for the first time. With no meaningful training and so little focus on either building science or energy in the LEED rating system, it’s really not hard to understand why people with no experience with this stuff would deliver the results that they have.

Having watched the evolution of USGBC and LEED along with Energy Star Homes, Energy Crafted Homes, R-2000 and numerous other green rating brands that have come and gone over the decades, I have developed a degree of skepticism toward the whole idea of rating buildings. For those who insist we must attempt to put legislated mandates and certification around this stuff, lets at least make it meaningful.  Rather than counting things like LEED “greenness” points, lets measure the actual performance of buildings with hard scientific metrics like BTU/sq ft/HDD.  Any such ratings should include verified energy use measurements and real scientific and economic metrics. Counting arbitrarily determined points on designs is not remotely appropriate for legislative mandate.

The best solution is the one Henry suggests in his article. “Building energy use is perhaps the largest field of human endeavor in which almost nobody measures anything. But, the situation is actually a bit worse than that: measurements are taken by utility companies every month, and are largely ignored. Utility company records should start to be used to rate our country’s buildings immediately.”

Here in Rhode Island, as elsewhere, legislators are pushing to mandate LEED. I have very serious reservations about mandating that a private out of state organization like USGBC be enshrined with essentially carte blanche authority to design, price and enjoy an exclusive unregulated monopoly on verifying compliance with a significant aspect of state law. Such efforts that cross the appropriate line between public and private spheres in such critical areas of regulation are just bad public policy.

At the national level, USGBC is very clear that LEED should not be enshrined as the equivalent of a code standard and that it was never intended to be used the way some advocates have been inappropriately suggesting in legislation. Brendan Owens, the Vice President of USGBC  indicated that  “LEED is a leadership standard and it’s not built to be building code. That’s why USGBC has been cosponsoring the development of an ANSI green building code, Standard 189.1, with ASHRAE and IESNA, for over two years.  We’ve been doing this because building codes serve a different purpose than rating systems like LEED and we are committed to providing policy makers with the appropriate tools to accomplish the objectives we all share.”

If it is deemed appropriate and necessary for governments to mandate green practices in designing and building, then legislation should require specific professional and scientific standards and perhaps requirements for building commissioning, requirements for building waste reduction and recycling, requirements for low VOC materials, requirements for ventilation standards, requirements for life cycle costing analysis, and other specific pragmatic details. It is a bit harder and requires real professional expertise to craft good legislation in this realm, but the extra effort is worth it. I am eager to see what the coalition working on the ANSI standards comes up with. I hope it is focused on real measurements and real science.

In setting policy, there are a variety of professional stakeholders that should be at the table sorting through the appropriate compromises rather than precluding their participation by enshrining a single private organization  with arbitrary unregulated monopoly power to set public building standards. Overly eager advocates and legislators should slow down a little and allow time for the ANSI process Brendan references to develop. They should also take the time to engage local professional stakeholders in developing and appropriate state version of the code.

We have to be very careful to craft legislation that separates good public intentions from the private interests and benefits of any one private organization. USGBC is a private organization that sets and changes the definitions of the LEED standards at will, sets the pricing for getting LEED certification and has an exclusive national monopoly on granting LEED certification. It would be totally inappropriate to have any standards set and enforced in that manner be enshrined in public policy. I question whether it would even be constitutional if challenged.

My three decades working professionally in the field have convinced me that doing things right in buildings unfortunately is not as easy as many advocates might idealistically wish for. This is very much true in the legislative and regulatory arena as well. Good legislation, like good buildings, takes real care in crafting.

The government should perhaps insist that real measured performance information be provided for buyers and leasers of buildings and then let the market sort out good designers and builders from the others. Perhaps labeling like that done by the Building America program and like Energy Star provides for appliances should be used for selling buildings. Ideally records of actual utility bills for all buildings would be publicly available and realtors would start paying attention to them.

The best thing the government could do is stop subsidizing fossil and nuclear energy and responsibly address the “economic externalities” of incumbent energy sources so that green solutions are fairly priced in the market. (please see Actually Mr. President, There Is A Solution). With realistic energy pricing and good information, the market would sort out winners and losers based on appropriate criteria.

If society insists we must regulate this stuff, there are lots of good ways to encourage environmentally responsible building that don’t require enshrining a single private organization with completely unregulated monopoly powers over vast swaths of the public sphere.

The key issue is not about how or even whether to regulate “greenness” in buildings, but the problem of governments at various levels enshrining a completely unregulated private entity with essentially monopoly powers in defining and charging for “greenness” certification.

While we all share the goal of improving the way buildings are built, there are far more fundamental concerns regarding defending the rule of law in our country from such totally inappropriate encroachments.

USGBC should very publicly lead the way in assuring that LEED retains its real value as a set of voluntary guidelines and is never again suggested or used in any legislation or government mandate.

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Actually Mr. President, There Is A Solution

February 24, 2009 By 6 Comments

On January 26, with competing headlines announcing at least 77,000 job cuts in just one day while jobless claims hit a 26-year high, President Obama made his first major policy address on energy. The president described the our energy challenge in very stark, clear terms:

“At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America’s dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism,” Obama said. “It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete.”

But he did disappoint in one significant way when he said: “I cannot promise a quick fix. No single technology or set of regulations will get the job done.”

Actually Mr. President, there is one major policy solution that would go a very long way to addressing the energy challenge and at the same time stem the staggering loss of jobs that dramatically stole the headlines away from your speech. And this simple policy shift can make major strides in addressing both our energy and economic challenges by encouraging market based solutions without incurring additional government debt.

What we now need Mr. President, is your leadership to not only speak clearly about the energy challenges we face, but to also act boldly in solving them. We need you to lead the effort to promote and pass the Freedom Tax.

The Freedom Tax is a revenue neutral shift in tax policy away from taxing jobs and work and substituting a tax on petroleum. Taxes are very effective in shifting market signals to discourage whatever is being taxed. Currently our high levels of taxes on employment discourages job creation, while our very low level of taxes on petroleum, encourages wasteful use of petroleum products and discourages the development of effective alternatives.

With two thirds of our petroleum imported and world wide petroleum discoveries now forty years past their peak, many of our current and potential future national problems can be traced directly to our excessive use of petroleum. Trade deficits, environmental problems, economic challenges and our most significant national security concerns, can all be traced directly to our unsustainable levels of petroleum use. While well intentioned people may dispute the details of such impacts, nobody credible suggests that our excessive use of petroleum is either good for the nation or sustainable at current levels.

There is an emerging consensus that the place to start a tax shift to the Freedom Tax is in reducing FICA payroll taxes significantly while substituting a tax on petroleum imports and production. Opinion leaders across the political spectrum all suggest and support such a plan. Today what is needed is a concerted effort to push for its passage through Congress.

Ideally the Freedom Tax will be phased in to reduce immediate disruptions to markets and to the expectations and lifestyles of Americans. The easiest mechanism to do this is through a ratcheted increase in the tax on petroleum. When market forces push the price of petroleum higher, prices would be allowed to rise. When market prices decline, the Freedom Tax would ratchet up to maintain then current pricing. Such a mechanism has the added advantage of discouraging volatility and speculation in petroleum markets and providing a more predictable future for companies developing alternative energy supplies.

For the balancing tax reductions, in the current economic environment, the most rational tax based economic stimulus would be a reduction in FICA taxes, ideally in a 50/50 split of employee and employer contributions. Such changes would reduce the impacts of the least progressive aspect of our current tax system, immediately put more money directly in the pay checks of every worker and reduce the cost to businesses of keeping and creating jobs.

Shifting taxes away from discouraging job creation and instead taxing our nations unsustainable addiction to petroleum is a market oriented policy that everyone can support.

Filed Under: Uncategorized

Stimulating Renewable Energy

February 10, 2009 By 11 Comments

Buried in the massive “stimulus bill” working its way through Congress this week are details that could significantly alter the markets for solar and wind energy. And the details matter.

After a decade of remarkable growth, both the solar and wind industries have been significantly impacted by the recession and credit crash in financial markets. So 2009 is starting out as a more challenging year for renewable energy industries. There are fewer parties with appropriate tax appetite to invest equity in large projects under current tax laws. And renewable projects have not been immune to the problems in credit markets.

Whatever your views may be on the stimulus bill, it passed. Energy sections in the bill will have important implications for renewables. The Senate and House versions are very different though.

Probably of most significance, the House version has provisions to monetize the value of renewable energy tax credits through DOE grants in lieu of the current tax advantages. That provision is not included in the Senate version that still relies exclusively on manipulations of the tax code.

It’s past time to have transparency in the way governments intervene in energy markets. Incumbent energy sources benefit from decades of huge and continuing complex subsidies that skew markets in their favor. But the vast majority of citizens favor renewables. So lets encourage renewable energy development in a direct and sensible way as proposed by the House. Reliance on crazy manipulations of the tax code ends up providing hidden subsidies to financial institutions while complicating the development of clean energy projects. If the government is going to intervene in energy markets as much as it does, let’s make those interventions transparent and effective.

This week, the Conference Committee is going to hash out the details of the massive “stimulus package”. For anyone who cares about renewable energy, there has rarely been a better time to call your Senators and Congressional Representatives. Encourage them to support the House provision for a simple direct solution for reviving the remarkable growth and job creation of renewable energy industries. Its clearly better than the Senate alternative.

More information can be found in these announcements from the Solar Energy Industries Association and the American Wind Energy Association.

Filed Under: Renewable Energy Tax Credits, US Legislation Tagged With: ,
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