Some Environmental Compliance Rulings of Feb. 2015

FTC issues warning to manufacturers of “biodegradable” dog waste bags.

The FTC recently sent letters to 20 dog waste bags manufacturers warning that their environmental claims that their products are “biodegradable” may be deceptive. (http://www.ftc.gov/news-events/press-releases/2015/02/ftc-staff-warns-marketers-sellers-dog-waste-bags-their). This is part of the FTC’s enforcement of the revised “Green Guides” of 2012 with changes to what is considered acceptable environmental claims for consumer products. Under the revised Green Guides “[i]t is deceptive to make an unqualified biodegradable claim for items entering the solid waste stream if the items do not completely decompose within one year after customary disposal.” The FTC is concerned and issued the letters requesting clarification of the claim because most waste bags end up in landfills where plastics biodegrade in much longer than one year.

The FTC also raised concerns about the manufacturers’ compostability claims. The revised Green Guides specify the degree that a product is compostable if the item cannot be composted safely in a home compost device and if the necessary municipal composting facility is unavailable to a “substantial majority of consumers or communities where the item is sold.” Dog waste is generally not safe to compost at home, and very few facilities accept this waste, according to the FTC.

These letters are merely warnings. The recipients – to continue to make their claims – will need to show professional, reproducible scientific evidence that their products will completely biodegrade within a reasonably short time period after customary disposal and, for compostable claims, show competent scientific evidence that the entire item will become usable compost in a safe, timely manner after being placed in an appropriate compost facility or home compost pile. Otherwise, they need to alter their claims.

This should be a warning to all marketers and product manufacturers to be careful about environmental claims and that the FTC is enforcing the Green Guides.

 

Federal court finds no violation of ESA or Eagle Protection Act for wind farm.

A federal court in Maine rejected a challenge to a permit issued by the U.S. Army Corps of Engineers for the Oakfield wind power project. The court determined that the Army Corps did not violate the Endangered Species Act (ESA) or the Bald and Golden Eagle Protection Act (Eagle Protection Act) in issuing the permit. A number of recent court decisions has allowed agencies to permit projects and not be limited by these rules.

A lawsuit was filed against the Army Corps over the issuance of a Clean Water Act Section 404 permit that allowed the Oakfield wind project developer to fill in certain wetlands during project construction. In short, the permit was challenged the permit on the grounds of ESA and EPA, arguing that the Army Corps improperly relied upon incomplete data to analyze the impact of the project’s construction on Atlantic salmon. The court denied the claims, stating that ESA requires use of best data available, which can include incomplete data. EPA was cited as the Army Corps issued the permit without first requiring the project developer to secure an incidental take permit given the project’s potential for taking a bald eagle. The court rejected this argument. The Eagle Protection Act imposes penalties on those who illegally take protected species. A take is defined as a purposeful action against a protected species; but the court ruled that issuing such a permit was not purposeful harm.

A number of recent court decisions state that federal agencies are not obligated to obtain permits under EPA or the Migratory Bird Treaty Act when issuing permits for private projects. This trend is a positive development for developers of both renewable and conventional energy projects, allowing them to proceed more smoothly and reducing the litigation risk faced by developers.

CCES can help your firm or entity determine the viability of future projects and products with technical analyses of potentially applicable rules and regulations. Any firm or entity should get competent legal counsel. However, CCES can assist in performing technical assessments of rules and how to most cost-effectively comply. Contact us today at karell@ccesworld.com or at 914-584-6720.

Energy Efficiency is Part of Any Strong Business

In recent weeks, major articles in the New York Times (http://opinionator.blogs.nytimes.com/2015/02/06/investing-in-energy-efficiency-pays-off/) and the Wall St. Journal (http://deloitte.wsj.com/riskandcompliance/2015/01/22/energy-management-becoming-a-core-business-competency-survey/?KEYWORDS=energy+efficiency) have stated what you have been reading here for several years: that energy efficiency pays off big time, better than most other investments, and that major companies now recognize energy management as an essential part of any business functioning and growing. Any business that ignores energy is at risk for major problems.

David Goldstein, the Energy Director of the National Resources Defense Council, recently wrote an interesting blog article (see NRDC’s Switchboard), stating that the lack of energy efficiency legislation for a number of decades contributed to the recession that hit the US starting in 2008 and that recent energy efficiency policies had a major influence in us getting out of the recession. For example, the Department of Energy recently issued stronger appliance efficiency standards than any previous administration. These standards have been conservatively estimated to save consumers over $425 billion over the next 30 years. That savings in the hands of consumers and businesses allow them to spend that money in other ways or save it, benefitting other businesses, banks, and investment houses.

Similarly, the USEPA issued updated fuel economy standard for automobiles and for trucks for the first time in decades, saving consumers and businesses an estimated $2.7 trillion, and generated almost an additional million new jobs for parts manufacturers and the businesses that the savings support.
States and localities are realizing this, too, and have implemented a wide array of rebates, tax credits, and low-interest loan programs. These programs help local businesses stay competitive and put more money in the hands of families and businesses to spend and benefit other businesses. In addition, being more energy efficient and reducing peak demand enables utilities to put off or reduce the amount of new or updated infrastructure it needs to install, saving billions of dollars which, of course, would be collected from consumers in higher energy (electricity and gas) rates.

Energy efficiency also influences markets. As we are all aware, crude oil prices have dropped (as of this writing) by over 50% compared to a year ago. Of course, many reasons contributed to this (greater natural gas and oil exploration). But one definite factor is energy efficiency, such as the greater purchasing of fuel efficient cars (not only in the US due to the recession, but in China and Europe) and that the average number of miles driven annually by Americans has dropped in recent years due to millennials staying home more and land use law changes reducing urban sprawl.

And finally, we come to everyday businesses and municipalities. In these tough monetary times, there is great economic benefit in improving energy efficiency, reducing energy used and, therefore, costs that go to someone else, while not impacting service at all. Here are three examples.

The recent NY Times article spotlights several universities that have set up “green funds” to pay for energy efficiency upgrades. The direct cost savings goes back into the green fund to implement other energy efficiency projects. The University of New Hampshire is an example. They started such a green fund with $600,000 of university money, and within 5 years saved $1.3 million, which went back into the fund and invested in other energy efficiency projects. They believe that in another 5 years, the university will have saved over $3 million dollars all coming from the original one-time $600,000 investment. Once all major projects have been completed, the university can reap the full benefits of the cost savings to their budget.

I recently did an analysis for a municipality for one energy efficiency project only, replacing street lights with LED lamps. This municipality had a cocophony of different types of lights and lamps. Many of them shone a yellowish tint and times were tough for it, being in a state that limits property tax increases. My analysis showed that switching all of their street lights to LEDs would likely save them $250,000 per year, which they were quite happy about. It would be a 3.5 year payback, but more important, the cost savings would likely increase every year as the utility’s rates would likely increase. Therefore, the rate of return of investing nearly one million dollars in LED street lights would be 14% per year for 7 years. What bank pays that rate of return? What Wall St. investment is as good with no risk (lower wattage means lower wattage)? With such a rate of return, it would be quite easy to borrow the money or float a bond. In addition, I pointed out that these LED street lights would likely be warranteed for 10 years before any need to be replaced; their current lights need to be replaced every 1-2 years. In fact, the town has two workers who nearly full time replace street lights that burn out. They were thrilled to free up those workers for other tasks. In addition, this means fewer trips up the cherry picker and reduced risk of an accident and tying up traffic.

And finally, how does energy efficiency help business? I worked for a small warehouse / light industrial facility who was not only being hurt by high energy costs, but the workers were not comfortable in the office and warehouse. The building was over 60 years old, and still had its original windows and some of its HVAC equipment. The owner, to his credit, did not just put “band-aids” to fix the problems, but instead went first-class, with 21st century energy upgrades. He saw this as an investment. He upgraded the windows, installed improved insulation on the exterior walls and roof, upgraded the lights, installed solar PV and hot water, and installed a new boiler with thermostats to control heat distribution. The building has reduced its energy bills by over 50% due to these changes. We also helped them obtain applicable incentives from the utility and state and a federal tax deduction for the upgrades. But two other things resulted from the energy upgrade. First, a section of their warehouse that was hardly used was now, given the upgrades, attractive for alternative use. The company fixed up the area and now rents it out to a supplier, not only resulting in additional (rental) income, but better assuring that supplies will arrive quicker! Finally, workers were much more comfortable in all seasons and noticeably more motivated and efficient.

CCES has the experts to help you design the right energy upgrades to maximize the myriad of financial benefits possible. We can manage the implementation of the upgrades you choose and ensure it confers the benefits projected. We can help you get the maximum incentives, low-interest loans, and deductions that the project qualifies for. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Changes To Reporting GHG Emissions From Renewable Energy, Low-Carbon Power Purchases

The World Resources Institute recently published new guidlines for entities to measure greenhouse gas (GHG) emissions from purchased electricity, Scope 2 emissions. This is the first major update to the GHG Protocol in many years, and responds to changes in the electricity market. The new GHG Protocol Scope 2 Guidance (http://ghgprotocol.org/scope_2_guidance) provides the methodology for entities to compute and report revised Scope 2 based on different types of electricity purchases.

The guidance offers methodology for companies producing their own electricity from renewable sources, such as solar and wind. This electricity may be used in-house or sent into the grid. It allows estimation of GHG emissions for a building who may be a net developer of electricity for certain periods of a year and a net user of electricity from the grid during other periods. This report also allows calculation of GHG emission credits from companies that invest in renewable power, such as purchasing renewable emission certificates (RECs). The report also offers case studies of 12 companies that have already used the new guidance. The USEPA and The Climate Registry support the new guidance.

Scope 2 GHG emissions derive from activities even though the emissions physically occur outside the facility due to purchasing of electricity, steam, or cooling water. (Scope 1 is GHG emissions at the facility, such as combusting a fuel by a piece of equipment or vehicle.) Normally, companies purchase electricity for their facilities from the grid, and report these Scope 2 GHG emissions based on the emission factors of the main power plants that supply the electricity the facility is purchasing electricity from in the area. However, as more and more facilities either are purchasing “green” credits (such as RECs) and power purchase agreements and are investing in renewable means to produce their own energy, this accounting has now grown more complex. These contracts and agreements vary and are accounted differently from nation to nation, and this has been determined to be a problem to more accurately estimate GHG emissions.

The Scope 2 Guidance now allow companies to better compare and make decisions on purchase or renewable options based on GHG emission reduction targets.

CCES has the experts to perform a GHG emissions inventory (“carbon footprint”) for your company’s diverse facilities and operations using WRI and The Climate Registry procedures, including these revised procedures. Contact us today at 914-584-6720 or at karell@CCESworld.com.

President Obama Submits Budget for Energy

On Feb. 2, President Obama released his fiscal year 2016 budget, including money for his climate change agenda, both in reducing greenhouse gas emissions and preparing to adapt to climate change effects. Items include offering incentives for states to reduce their reliance on coal-fired power; $1.29 billion for the Global Climate Change Initiative; $400 million to map flood risks; $200 million for a Dept of Agriculture to plan for extreme weather events; and funding for coastal, drought, and wildfire resilience programs. There will likely be a budget fight with Congressional Republicans, who mainly campaigned against spending on climate initiatives. The Senate has already passed a rule ordering approval of the Keystone Pipeline project (with some Democrats joining Republicans), but not by enough votes to overturn a likely veto. Congress will likely work to defeat other proposed rules, such as the USEPA’s Clean Power Plan.

The fiscal year 2016 budget request is $29.9 billion for the Dept of Energy (10% increase). The DOE would have about $5 billion to spend on clean energy technology programs. The USEPA’s fiscal year 2016 budget request is $8.6 billion (6% increase). This includes large increases for the administration’s latest climate change initiatives. This will come at the expense of some traditional environmental programs.

For energy upgrade planning, the budget request seeks to make permanent the renewable energy production tax credit and investment tax credit and reduce many oil and gas tax incentives. The budget would permanently extend the deduction for energy efficient commercial building property, provide a CO2 investment and sequestration tax credit; extend the current tax credit for 2nd generation biofuel production; provide a tax credit for the production of advanced technology vehicles; provide a tax credit for medium and heavy-duty alternative-fuel commercial vehicles; extend the tax credit for the construction of energy-efficient new homes; and reduce excise taxes on liquefied natural gas to bring it into parity with diesel fuel. The House Ways & Means Committee and the Senate Finance Committee have not indicated how or when it will move on extending the large number of tax incentives for energy that expired in 2014.

CCES has the experts to help you qualify for all applicable incentives on the federal, state, and local levels so you can gain the maximum financial benefits from your energy upgrade. Contact us today at 914-584-6720 or karell@CCESworld.com.

Ways To Inspire People To Reduce Energy Usage

A recent study conducted at UCLA showed that reducing pollution may be a more powerful motivator for people to reduce their energy usage than monetary gains. http://www.pnas.org/content/early/2015/01/07/1401880112.abstract
Traditionally, businesses make financial arguments when they sell customers some sort of energy reducing technology (“You will save $__ /year; the payback is only ___ years). However, this study indicates that many people will show more interest in such a product if it is shown that it will reduce air toxic emissions into the local air.

This study was conducted on apartment dwellers of UCLA-owned residences. Subject families completed surveys to determine their baseline energy use, including costs. A website was set up to allow residents to compare energy usage among dwellers. Over the next 4 months, one group received weekly emails telling them how much less energy certain neighbors were using and as a result, how much more the target families were spending on energy costs each month. Another group was told that certain neighbors were emitting less air toxics into the local air and was told of the positive health effects if they can reduce their emissions further, too, by reducing certain energy use practices, such as reduced number of asthma attacks and cancer.

People who were regularly told how much money they could save were unmoved to take steps to reduce their energy use. On the other hand, those that received the repeated messages focusing on the environmental benefits cut their energy use an average of 8%. This trend was strongest for people with children living in the home; they reduced their energy use by 19%.

The researchers believe that appealing to people’s beliefs in public good (improving the local environment and reducing health problems) can be as effective as appealing to their private good (saving money). Of course, the study may have been influenced by demographics (the subjects were UCLA students or employees) and the fact that energy costs in the complex are partially subsidized by the university and, therefore, cost savings were not necessarily great.

However, one positive of this study is that families can see their energy use data for individual appliances and systems (apartment heating and cooling) and track changes in energy use to specific actions, such as being away on vacation or staying up late to work on their computers. A good cross-section of residents checked their usage quite often, and became energy savvy. Seeing the immediate effect of changes in energy use may have led many to decide to reduce energy usage.

CCES has the experts to help your company or building develop cost-effective ways to reduce energy use and help you implement such programs to maximize success. Contact us today at 914-584-6720 or karell@CCESworld.com.

6 Steps to Manage Your Company’s Physical Climate Change Risks

President Obama has recently stated that climate change must become a high priority. He wants the US to be a world leader in addressing climate change, such as reducing greenhouse gas (GHG) emissions significantly. Many polls show that a solid majority of Americans support this movement. A growing number of companies, cognizant of this fact, have tasked their Environmental Groups to address climate change.

A number of articles in CCES have discussed the many financial benefits to a company that reduces its GHG emissions. That aside, another climate change issue that companies must address is the impact of the physical and financial effects of climate change on their business; in other words, to assess climate change risk. Nearly all businesses have assets, operations, and a supply chain vulnerable to the effects of climate change, not to mention its effects on markets. How does one develop the ways to assess the degree of and for developing strategies to minimize climate change risk?

This is not meant to be an exhaustive analysis of climate change risk. Software and other options exist to be more exact. This is meant to be a guide for those starting out. Here are 6 steps to effectively begin to assess and address your climate change risk.

1. Determine your current climate change risk factors. Develop an analysis of your company’s assets, operations, supply chain, and customers and which ones are most at risk to the likely adverse effects of climate change (i.e., extreme storms, rising sea levels, shortages of water or other natural resources, etc.). List these specific areas in writing, including their location, and determine which hazards are likely to increase in particular geographic areas. For example, if you have a manufacturing plant or a key supplier has one in, say Florida or the Caribbean, then you need to be concerned about the probability of a growing frequency of extreme storms. Begin by assessing risk qualitatively, but eventually attempt to quantify or at least rank the business areas of greatest adverse risk. Rankings should be made in business terms: such as risks that are existential, those that may affect worker lives, those that may cost your business market share or reputation, as well as those resulting in direct costs (asset damage).

2. Assess where you stand now. Part of this ranking of your key areas of climate change risk is to determine if impacts are already occurring or may come soon. For each critical risk area identified, research recent and historic events to determine if the impacts are already occurring. For example, research the historical extreme weather events of a potentially vulnerable plant over the last 50 to 100 years (if data is available) to determine whether extreme weather events are already occurring more frequently.

3. Now look forward to assess future risk of climate change impacts. Assess those assets, operations, etc. identified for potential climate change risk for projected changes caused by climate change in the future. How far into the future is up to your firm. For example, computer models exist to predict temperature rise in many areas of the world caused by climate change and can be used to predict future yields of necessary supplies provided by agriculture. Projections have been estimated for sea level rise. Determine if your assets or supply chain may be even more vulnerable in the future to flooding or damage if sea level rises by the amount projected.

4. Go back, re-rank and plan for your riskiest vulnerabilities. Given the historical and potential future adverse impacts of climate change that have been determined, now re-rank these at-risk assets, operations, supply chain, etc. using your criteria above (existential, reputational, asset damage). Estimate which of these are of potentially greatest risk to loss or damage in the future.

5. Determine reasonable steps to effectively reduce risk. There are likely multiple options that can be implemented to reduce your risk. Each may reduce risk differently or by a different amount and each has a cost (although there may be side benefits, too). Remember, it is essentially impossible to reduce risk to zero (“Mother Nature”). And of course, you will be limited by budgetary factors. Therefore, determine what level of risk may be acceptable to your company. For example, what are the costs involved and risk reduced of building a sea wall to protect an asset in a coastal, hurricane zone? What may the costs be to “raise” that facility or its key assets a number of feet to avoid flooding? What may the costs be to relocate some of its operations to a different facility in a much lower risk zone? What may the costs be to shut down the plant altogether and move all operations elsewhere? This information and good what-if scenarios will enable your company to better direct resources for more effective risk reduction.

6. Climate change risk should be a part of your total business risk determination. One thing that is certain is that as businesses and the Earth change, climate change risk will also change. As a company changes its customer base, supply chains, acquires other companies or sheds products, this will affect their climate change risk. Of course, the science of climate change and knowledge of risk will change, too. Therefore, this risk analysis should not be “stored away.” This must be re-examined and re-calculated every few years or if the company undergoes major changes. Climate change risk should be part of overall corporate business risk assessments.

For example, when determining whether to buy a company, its climate change risk should be assessed. Does that company have many assets or suppliers in vulnerable areas? Do they use coal, for example, to produce power for its operations? Might your company need to spend a large quantity of resources to address the risks it is taking on or comply with potential future climate change or energy regulations? A robust climate change risk assessment may affect your offer price. I managed a project where a company wanted us to assess the climate change risk of one it was considering to acquire that operated a number of coal-fired power plants. Their greatest concern was what might its future costs be due to potential future climate change or environmental rules that would require expensive controls on emissions? These costs, we showed, could be quite significant, and were presented to the client. Understanding the need to spend many of millions of additional dollars per year in the future, they reduced their bid price. They lost the bid, but afterwards contacted our firm and thanked us. Given the huge potential future cost and risk, this was the best “loss” of a bid they ever had.

CCES can help your firm assess climate change risk and determine and implement common-sense strategies to reduce the risks and get other financial benefits at the same time. Contact us at karell@CCESworld.com or at 914-584-6720.

Energy Efficiency It’s For Business, Not Being Cool

Energy efficiency is being recognized in many quarters as more than just a “feel good”, environmentally-beneficial business activity, but as a positive financial investment goal itself. After all, what is an investment; any kind of an investment? It is spending money so that you get that money back and a lot more. Investing in energy efficiency is an effective way of making money invested in saved costs and other financial benefits.

How do we define a good investment? Making the most money within a risk – reward paradigm. If you are risk averse, you invest money in T-bills are similar instruments. You make a great yield, but it is understood that the US government is behind the investment, and at worst, you are unlikely to lose the money you invested. Or if you wish to entertain risk, there are many investments that could pay a high yield, but there is a risk that business conditions will change, you don’t make that yield, and, in fact, you could lose all or some of the principal; a high risk.

Smartly investing money in energy efficiency projects is the best of all worlds. The risk is low. The technologies are known; if implemented correctly, they will work in lowering your energy use. And if a particular technology fails, the vendor should replace or repair it. They are simple; a lower wattage light bulb uses less electricity than a higher one. Period. And if designed right, provide you with the same (or better) light.

And the savings are potentially great. LED lights in many cases produce the same light using less than half the electricity of many current conventional lamps. In addition, these new technologies often last longer than those replaced, saving the user much in O&M risks, costs and improving worker flexibility (reassign workers to other tasks and fewer trips up the ladder to replace lights). I recently performed an evaluation of a large light replacement project. The client’s investment would conservatively (overestimating costs and underestimating savings) have a rate of return of 14%/year for at least 7 years. And the likely rate would be higher, with no risk (the lights work). What investment on Wall St. results in such a return?! Really! Tell me one. Many other strategies – if planned well for your particular building – will result in similar yields and benefits.

Some say: “This is great, but where do I get the upfront capital to buy the technologies I need to be more energy efficient?” Given the high rate of return and low risk, many financial institutions would be happy to lend money at low interest knowing their risk of default is low. Several government agencies have set up low-interest loan programs geared to cost savings, enabling companies to have only positive cash flow in these projects. Principal / interest are paid back only when energy cost savings are achieved.

The organization The American Council for an Energy Efficient Economy (www.aceee.org) has compiled many financial studies and case studies on energy efficiency upgrades. See the following graph comparing the risk-reward of a typical energy upgrade with that for other monetary investments. If the graph does not appear, then note that typical energy efficiency projects have a risk index of about 5% (comparable to US T bills), yet a typical rate of return of over 20% (comparable to small company stocks).

 

 

See how energy efficiency projects – again, if designed and implemented professionally – has a low risk index, yet high annual rate of return.

CCES can perform an energy evaluation and manage the implementation of energy efficiency projects you select for your buildings and operations to maximize your financial benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Short Primer on Effective Energy Upgrades For You Part 4: Variable Speed Fans and HVAC

Here is another simple, effective energy upgrade that will not only save you significant energy costs (if done right), but will also result in other benefits. As discussed last month, one of your biggest users of energy is cooling. Moving heat from a relatively cool place, such as an office or a data center, to a hotter place (the outside) goes against the norms of physics, and, therefore, requires energy. A study from Lawrence Berkeley National Laboratory (https://publications.lbl.gov/islandora/object/ir%3A158674) found that upgrading fans and adding fan speed controls significantly reduces a facility’s electrical energy usage and reduces average and peak electric demand. In this day and age of many utilities around the country encouraging users to reduce their peak electricity demand, any way to do this will result in major cost savings. Many utilities now require large users to pay for peak demand, as well as usage, making reducing demand on weekdays during the 2 to 6 pm period a major cost savings.

The study focused on the cooling of a data center, which often needs cooling performed 24/7. What ways can energy efficiency be improved? The facility used for this initiative was a 135,000 square foot data center in El Segundo, Calif. The project focused on replacing constant speed scroll fans with electronically commutated motor (ECM) variable speed fans of a more efficient design and deploying an energy management system to control fan speeds and air handler output.

Deployment of the control’s software system resulted in a 66% drop in cooling energy usage, freeing stranded capacity while simultaneously expanding reserve cooling capacity. Varying the fan speed based on actual space needs in time and utilizing software to control it fairly accurately is a large energy saver compared to old style fans set at the same speed at all times.

In addition, the software saved the facility 2.9 million kWh annually and provided a pictorial view of the heat profile in the room, identifying and addressing “warm spots”. Not only is this a significant energy saver (identifying “warm spots” and addressing them), but it leads to better worker comfort and productivity.

Potentially overcooling a data center or other location to reduce cooling during the peak period in the summertime by adjusting fan speed (but still utilizing cooling if needed) can save a facility much costs.

CCES has the experts to help you evaluate new technologies and approaches to maximize savings not only in energy usage, but in peak demand shaving, as well, to maximize your financial gains. Contact us today at 914-584-6720 or karell@CCESworld.com.

8 Ways to Protect Your Operations From Severe Weather Impacts

Well, we made it through another hurricane season without one damaging a major US populated area, the 2nd consecutive such season. Superstorm Sandy is becoming a distant memory for some. But, severe weather impacts are still a threat to your business all year round. This is the time to implement common-sense strategies to safeguard your property from the physical and financial effects of severe weather. Here are 8 easy-to-implement ideas that will have direct financial benefits for you.

1. Create a Severe Storm Culture. Don’t think your building or business is immune from the devastating effects of a severe storm. Even if it is not a headline-making hurricane, blizzard, or earthquake, severe weather literally impacts property in all 50 states. Don’t assume a severe storm will not come; be prepared for the worst case.

2. Damage is Beyond the Physical. A large number of businesses fail to re-open after severe weather events. Many, of course, sustained physical damage to the building or to its inventory. But many also went out of business because of a profound loss of computer data (sales lists, business data, codes, etc.). Realize that it is important to not just secure physical property, but your business systems, too.

3. Therefore, Identify Vulnerable Business Entities. What items are critical to your business that may be compromised by severe weather? First, should be your people, followed by buildings, computer systems, heavy equipment, inventory, etc.

4. Anticipate Worst-Case Scenarios. Actually record in writing potential worst case scenarios based on your location, such as hurricanes, tornadoes, floods, blizzards, earthquakes, thunderstorms, etc. Record all severe incidents of the last 25 years.

5. Go back and Identify Vulnerable Business Entities. For each potential severe weather type, which areas are most vulnerable and how bad may losses be? Look at people, property, inventory, computer systems, equipment, etc. Estimate potential losses and the time and cost for full business recovery for each scenario.

6. What Reasonable Protections Can You Install? Of course, budgets are limiting. You can’t do everything. And besides, there is no such thing as zero risk against the fury of Mother Nature. But what effective, affordable measures can you install – both physical and cultural – to reduce risk of loss? From physical safeguards to your buildings (i.e., construct escape paths, send water away from buildings and paths, raise critical equipment above basement/ground floor) to conducting drills.

7. Back Up Data. As discussed earlier, your data very much defines your business. Make sure you have back up to all of your data in a secure location, such as the ”cloud” or secure location safe from floods, fire, etc.

8. Create Living Emergency Response / Business Continuity Plans. Put all of this in writing: plans to determine how you will respond to severe weather to protect your people, assets, and data plus procedures to bring your business back up again as soon as possible after a disaster. Make sure these documents are reviewed and updated regularly and the right leaders are aware of what needs to be done.

CCES has the experts to help your business and buildings develop a disaster preparedness program to help minimize impacts of severe weather and to enable you to bounce back. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Use PACE for Successful Energy Upgrades

As we are getting out of a recession, the overwhelming building stock in the US is existing buildings, built well before recent energy efficient technologies were made practical. How can such building owners afford upgrades of old energy systems? Ironically, the older the building, the more need there is for upgrades and the more money is needed for such upgrades. But, older buildings are likely “poorer” (attract fewer premium tenants), and may have less money “in the bank” or access to fund needed to invest in upgrades. To address this conundrum, a number of states are subsidizing a program called Property Assessed Clean Energy or PACE to simplify access to finance specific energy efficiency upgrades.

In PACE, the building owner has access affordably to low-cost capital needed to begin energy efficiency projects. The building is the collateral, not the person or business. Unique PACE conditions make this attractive to lending institutions to participate.

PACE financing is typically used for entire facility upgrades, not individual projects. A PACE loan enables the building owner to perform pre-approved energy upgrades with little or no up-front payments. Before financing is approved, proposed projects are vetted technically and financially for success and will provide a given return based on estimated cost savings. The degree of the loan and a schedule is determined to allow repayment primarily from cost savings, to attain positive cash flow for the owner at all times. The owner is less likely to skip payments because it comes from savings.

In most communities, PACE repayment is tied to the building’s property tax payments; it is a line item in their municipal or state property tax bill. The government entity collects payments and transfers it to the PACE agency or directly to the bank. Payment tied to its tax bill also allows the owner, if desired, to spread the cost among tenants.

PACE does have a number of requirements for it to work, such as the local municipality or state formally signing on to participate and willing to add it as a line item and collect and manage payments. The building owner must not be in bankruptcy, and must not have failed to pay property taxes and mortgage, generally, for the previous 3 years. PACE loans are also often limited to 10 to 20% of the total assessed property value.

Might a PACE long-term loan be an anchor around an owner’s neck, complicating a desired sale of the building along the way? While the loan and the potential lien is tied to the building and the buyer must agree to continue to make payments, the new owner should understand that future PACE payments are for upgrades that reduce other costs (energy) in an overall positive cash flow, and raise the building’s value.

Most important, PACE can remove the strong obstacle many owners have to performing an energy upgrade, and allow access to needed upfront capital in an affordable way.

CCES is an approved PACE technical provider in New York under the Energize-NY program. We can help you determine which energy efficiency projects can benefit you the most, determine the scope of useful projects, estimate project costs and energy cost savings, and help determine the right financing approach involving PACE or similar vehicle. Contact us today at 914-584-6720 or karell@CCESworld.com.