President’s
Message
Usually at this time of year, when the
frost is on the pumpkins, my attention turns to baseball’s second season
and the World Series (especially if the Boston
Red Sox are still playing). Every fourth year,
a presidential campaign intercedes and the
race for the White House takes precedence,
commanding more attention. But this year,
even with a highly engaging presidential
contest, the overwhelming issue is the
tumultuous global financial crisis.
vanized many for more urgent action to cut
dependency on fossil fuels and improve the
negative trade balance for the U.S. economy. Coupled with a growing global resolve
to reduce greenhouse gas emissions and
activate a real market for emissions trading,
it seems that investments in infrastructure,
fuel flexibility and greener technologies will
be the first tack upwind. In the second presidential debate, Sen. Barack Obama (D-Ill.)
cited investment in clean energy as his top
priority to spur the economy. We have to
ready our sails for this right now, no matter
the winner of the contest.
…many economists and policy
leaders in the U.S. are looking to
the clean energy industry to help
drive new job growth and lead
the economic turnaround.
Energy and the Economy
As economic problems cascade from
housing issues to corporate bankruptcies to
federal bailouts to credit constriction to
plummeting stock markets around the globe,
a disquieting anxiety and fear has seemed to
grip markets and investors everywhere. The
24-hour news cycle and ready fingertip access
to every media morsel has helped fan the
flames, but this financial crisis is indeed serious
and precarious. Amidst all this, I must admit,
it has been difficult to look up from the screen
and focus on the horizon for our industry to
conclude this quarterly column. Lately, when
it seems the economic storm cannot get any
worse, it does.
In the midst of this economic turbulence,
there are some navigation points to set our
course corrections as we move through the
crisis. For one thing, many economists and
policy leaders in the U.S. are looking to the
clean energy industry to help drive new job
growth and lead the economic turnaround.
While global oil prices have substantially
softened in the short run, the volatility and
price spike in crude oil this past year has gal-
In his new best seller, Hot, Flat and
Crowded, noted author and New York Times
columnist Thomas Friedman emphasizes the
economic and environmental imperative of
increasing fuel efficiency and reducing greenhouse gas emissions. He specifically recognizes Denmark’s actions 30 years ago to take
control of its own economic destiny and
reshape its trade balance by investing in
efficient, fuel-flexible district energy infrastructure rather than larger and riskier nuclear
power stations. Friedman makes a compelling
case that a powerful public/private response
is needed immediately – a Manhattan Project
mentality – to shift from depleting global oil
to investing in robust district energy networks
supplied by diverse fuel sources, including
waste-to-energy and combined heat and
power facilities.
like district energy and CHP would accelerate
with support from a sensibly structured cap-and-trade market for CO2 emissions. Energy
efficiency and environmental stewardship can
be valuable economic engines when properly
coupled with policy drivers. The challenge
remains for IDEA members to convince
Congress to fully fund the $3.5 billion authorization for Title 471 in the 2007 Energy Bill
(EISA). But if real growth in ’green collar jobs‘
is a government priority, then funding development of district energy assets in the institutional and municipal sector will be an
effective, immediate strategy – and IDEA
members have the talent and experience to
lead this effort.
Likewise, the 2008 McKinsey Global
Institute report on energy productivity argues
that global annual investments in energy
productivity of $170 billion through 2020
could cut global energy demand growth by
at least half while generating average internal
rates of return of 17 percent. The MGI report
cites district energy/combined heat and power
as one proven investment strategy that could
produce energy savings as well as cuts in
greenhouse gas emissions. While the study
preceded this summer’s run-up to $147 per
barrel and did not anticipate a massive development slowdown, the McKinsey report makes
the case that energy productivity investments,
even without full price signals for carbon
emissions credits, are highly competitive
objectives.
In uncertain economic times, bottom-line
energy savings will continue to gain favor and
will emerge as top-level executive initiatives.
As carbon values strengthen, it is possible that
additional economic drivers will attract even
more capital for district energy/CHP solutions.
As carbon values strengthen, it is
possible that additional economic
drivers will attract even more
capital for district energy/CHP
solutions.
Investing in Energy
At our annual conference in Orlando,
Fred Krupp, president of the Environmental
Defense Fund and author of Earth: The Sequel,
made the case that cleaner energy technologies
The highly contentious $700 billion
bailout bill was signed into law Oct. 3 after
a series of revisions. Known officially as the
Emergency Economic Stabilization Act of
2008, it includes production and investment
tax credits for renewables and an investment
tax credit for CHP. According to a study
