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AB 811 Program Adopted - But Will it Work?

On May 25, 2010, the LA County Board of Supervisors voted unanimously to approve the creation of the LA County Energy Program (LACEP) which provides for AB 811 financing for energy efficiency and renewable energy projects. Four people spoke in favor of the Program including: Tammy Schwolsky (Founder & CEO of REAS which provides energy audits and green building consulting), Holly Schroeder (CEO of the Building Industry Association of Southern California), Kara Seward (Field Representative for State Senator Fran Pavley), and Run on Sun Founder & CEO, Jim Jenal. (Read Run on Sun's prepared remarks.)

No one spoke in opposition.

Supervisor Zev Yaroslavsky offered a friendly amendment calling on staff to work with the contractor community to address the concerns that we have been raising these past few months. Noted Yaroslavsky's amendment:

We have heard from local contractors and business owners on a range of topics that include licensing requirements for participating contractors; the mechanism and timing of disbursing loans to homeowners (for example, should payments be made as one lump sum or in multiple installments, and should the payments be disbursed to homeowners before or after work is completed); and, concern over the interest rate that will be charged to participating property owners.

Yaroslavsky's amendment requires the Director of Internal Services (the folks designing the Program) to meet with interested local contractors and other appropriate business owners within the next three weeks to work on these issues. To recap, some of the design elements of the program that have raised concerns include:

• Eligibility criteria - the criteria for qualifying for AB 811 funding (or PACE funding [for Property-Assessed Clean Energy] as it is more generally known) include the following:
  • Funding applicant must be the owner on the title; if multiple owners, all must join the application;
  • Single family or multi-family housing (up to 4 units) only at this time;
  • Property must not be subject to any involuntary liens;
  • No delinquency on property taxes in the past five years;
  • Must be current on mortgage payments;
  • Loan to property value must not exceed 10%;
  • Debt to property value must not exceed 80%.

It is that last criteria that we anticipate excluding the most potential participants. Given the steep drop in property values since the LA County peak in 2006 and the time it takes to build equity in a home through mortgage payments, our calculations indicate that anyone who purchased their home after 2002 will be excluded on this basis.

• Interest rates - at present, they are anticipating 8-9% at the outset of the program. Although SB 77, recently signed by the Governor, could help, it is still too early to assess what impact, if any, that bill would have on program interest rates.

Thus, the LA County Energy Program remains very much a work in progress, with really nothing more than a framework approved by the Board.

Will high interest rates and overly restrictive participation criteria doom the program to failure? Will a lack of proper solar installer credentialing allow for shoddy work and unhappy consumers? Will a failure to provide timely progress payments on solar jobs exclude small business owners? Or will the Program achieve its potential to usher in a new wave of green jobs and greener homes?

National Academy of Sciences Calls for Urgent Action on Climate Change

On May 19, the National Academy of Sciences - the premier scientific body in the United States - issued a series of reports on climate change. They are compelling reading, arguing that action needs to be taken now to restrict carbon emissions and to adapt to climate changes that cannot be avoided.

Here are some relevant quotes from the NAS press release announcing the publication of these studies:

• "Climate change is occurring, is caused largely by human activities, and poses significant risks for – and in many cases is already affecting – a broad range of human and natural systems," [one] report concludes. It calls for a new era of climate change science where an emphasis is placed on "fundamental, use-inspired" research, which not only improves understanding of the causes and consequences of climate change but also is useful to decision makers at the local, regional, national, and international levels acting to limit and adapt to climate change.
• An inclusive national policy framework is needed to ensure that all levels of government, the private sector, and millions of households and individuals are contributing to shared national goals. Toward that end, the U.S. should establish a greenhouse gas emissions "budget" that sets a limit on total domestic emissions over a set period of time and provides a clear, directly measurable goal. However, the report warns, the longer the nation waits to begin reducing emissions, the harder and more expensive it will likely be to reach any given emissions target.
• A carbon-pricing system is the most cost-effective way to reduce emissions. Either cap-and-trade, a system of taxing emissions, or a combination of the two could provide the needed incentives. While the report does not specifically recommend a cap-and-trade system, it notes that cap-and-trade is generally more compatible with the concept of an emissions budget.
• Some impacts [of climate change] – such as rising sea levels, disappearing sea ice, and the frequency and intensity of some extreme weather events like heavy precipitation and heat waves – are already being observed across the country. The report notes that policymakers need to anticipate a range of possible climate conditions and that uncertainty about the exact timing and magnitude of impacts is not a reason to wait to act. In fact, it says boosting U.S. adaptive capacity now can be viewed as "an insurance policy against an uncertain future," while inaction could increase risks, especially if the rate of climate change is particularly large.
• Adaptation to climate change should not be seen as an alternative to attempts to limit it, the report emphasizes. Rather, the two approaches should be seen as partners, given that society's ability to cope with the impacts of climate change decreases as the severity of climate change increases.

Time to Change our Fuelish Ways

We have all seen the horrific images coming from the Gulf of Mexico as an oil rig disaster morphs into an environmental catastrophe far exceeding the Exxon Valdez nightmare of 20 years ago. Millions and millions of gallons of crude oil are spilling into the Gulf, defying the best efforts of the oil company, BP, to stop it or the federal government to contain it.

News reports indicate that there will be more than enough blame to go around, but what is the root cause of this disaster?

Certainly the major driver is our own nearly insatiable demand for more and more oil to fuel our daily lives. Whether gasoline at the pump or petroleum-derived products like those plastic water bottles we use in ever increasing amounts, oil plays a big part in many facets of our lives. But make no mistake, oil consumption in the form of the gasoline or diesel that we burn in our cars and trucks is the reason that oil drilling continues to expand, and to expand into more dangerous and environmentally fragile settings. In fact, oil accounts for more than 95 percent of all the energy used for transportation in the United States, according to the US Energy Information Administration.

It doesn't have to be this way. A new generation of Electric Vehicles - whether pure EV's like the Nissan Leaf, or Plug-in Hybrids, like the Chevy Volt - is coming online and will begin to show up in dealers' showrooms all across this country over the next 12 months. These EVs will be practical, and with proper incentives in place, affordable for regular consumers who could not afford already existing EVs like the Tesla Roadster.

But we need to go one step farther. The majority of electricity in this country - more than 50% here in Southern California - comes from burning coal. We can, and we must, do better. Fortunately, there is a solution for the "fuel" problem for EVs - and that is locally generated solar power.

Solar-powered charging stations - whether at home or in public spaces such as parking lots - could allow these EVs to be re-charged by clean electricity making them truly Zero Emission Vehicles from the "well-to-wheels."

At Run on Sun we are working with a number of clients to design and install solar power systems to fuel this next generation of EVs. If you are thinking about getting an EV for your personal or fleet use, we encourage you to contact us.