District Energy - 2009 3rd Quarter

year includes some $60 billion in clean energy investments, including $11 billion for the development of a national smart grid and billions more for the development of carbon capture and storage, next-gen-eration batteries and advanced biofuels. That was just the first step.

The president aims to transition America to cleaner-burning fuels and more efficient technologies that will create thousands of new clean energy jobs and reduce the carbon emissions responsible for accelerating climate change. Last week the U.S. House of Representatives passed the most ambitious energy reform legislation this nation has ever seen. And I know the president is eagerly awaiting the opportunity to sign legislation once it works its way through the U.S. Senate and eventually the conference committees.

Central to that legislation is the cap-and-trade system, which would create a strong market signal to spur the development and commercialization of cleaner-burning fuels. Stan was telling me that at Seattle Steam they are going to be moving over to producing energy that supplies downtown Seattle heat by burning biomass, especially wood chips and other products. It’s all part of the initiative that the city of Seattle and many governments have for more cleaner-burning and -producing fuels and heat. Cap and trade would also significantly tilt the economic incentives in favor of more energy-efficient power generation of all energy, which will undoubtedly benefit this country’s district heating providers.

Unfortunately, as the president said last week, there’s a lot of ‘misinformation’ that there’s somehow a contradiction between clean energy and economic growth. That’s a false choice. With the right incentives to unleash private innovation, clean energy and efficiency can be one of America’s great growth industries in the early 21st century. And I think IDEA can be a galvanizing force.

At Commerce, we’re proud to be partners with IDEA through our International Trade Administration’s Market Development Cooperator Program, which has helped the district energy industry enhance its global competitiveness and enter key new markets like the Middle East, China and India. In the Middle East, our Commerce Department International

Trade Administration supported IDEA’s efforts to establish a Middle East chapter and issue a best practices guide on district cooling.

The real test of our relationship, however, is sales, and U.S. companies have demonstrated that our technology is world-class, with over $263,000,000 in U.S. exports receiving some support under the Market Development Cooperator Program. The cooperation between Commerce and IDEA has been real and has been fruitful.

But I think we are just getting started, because district energy companies have something the world wants and needs. And Commerce has the tools to bring U.S. district energy companies and world markets together. That something that I’m referring to is energy efficiency technology. Efficiency is the low-hanging fruit of the world’s energy challenge. The United Nations Foundation recently said, “ Governments should exploit energy efficiency as their energy resource of first choice, because it is the least expensive and the most readily scalable energy option.”

“District energy companies have
something the world wants and
needs. And Commerce has the
tools to bring U.S. district energy
companies and world markets
together.”

With efficiency we don’t have to depend on scientific breakthroughs or engineering miracles. We’re not waiting for economies of scale to get large enough so efficiency can compete with other energy alternatives. It’s merely a way of maximizing the amount of energy you get from existing sources. An upfront investment in efficiency is on average five times cheaper than investments in new supply, and it’s immune to the troubling vagaries of the energy market. Efficiency is economical whether oil is $20 or $200 a barrel, because it is not competing with fossil fuels.

According to the McKenzie Global Institute, the growth rate of worldwide energy consumption can be cut by more than half over the next few decades through more energy efficiency efforts, and it could

be achieved with current technology. It’s no wonder that efficiency has lately been referred to as the fifth fuel along with the coal, nuclear, gas and oil – and coming from the Pacific Northwest where hydro is part of the equation, energy efficiency in our minds is the sixth fuel.

Investments in emerging technologies like solar, wind and advanced batteries are vital to the nation’s future, and President Obama and the administration are making unprecedented investments to help them grow. Over the medium to long term they offer the greatest potential to grow our economy and prevent the calamitous effects of climate change. But some alternative energy solutions aren’t quite ready for mass commercialization. Efficiency is ready right now, and IDEA member companies are a testament to that.

As you look around the world, opportunities abound for the efficient and reliable power that district energy can provide – whether it’s a standard district energy system at a university in Beijing or a cogeneration plant at an industrial park in Bangalore. This isn’t just a matter of economic opportunity. This is a matter of the world’s surviving as we know it.

The International Energy Agency predicts that Chinese and Indian energy demand is going to double between now and 2030. In China alone they need to add 1,300 gigawatts in electricity-generating capacity, more than the total installed capacity currently in the United States. It would be daunting enough for China and India to find this energy using any source they could find, but the world can’t afford any old type of energy. The new energy has to be cleaner to avoid catastrophic climate change, and it has to be affordable to keep our economy growing. District energy meets both of these needs.