While the focus of Climate Change rules has been the reduction of carbon dioxide emissions by being more energy efficient or promoting the use of cleaner fuels, it is also important to remember that greenhouse gas (GHG) emissions are more than CO2. Other GHGs, in fact, have much larger effects on heat retention in the atmosphere than CO2 and regulators are beginning to focus on them. Last month, this newsletter had an article on the Biden Administration attempt to reduce methane emissions.

The American Innovation and Manufacturing (AIM) Act was enacted by Congress in December 2020 to provide authority to the US EPA to address emissions of hydrofluorocarbon emissions (HFCs). In October 2021, the US EPA published standards to phase down production and consumption of HFCs to 15% of their baseline levels in a stepwise manner by 2036 through an allowance allocation and trading program. Reducing HFC production and usage are effective in addressing Climate Change, as HFCs are tens and hundreds of thousands of times more potent as a heat-trapping gas in the atmosphere than CO2. AIM also reversed the HFC deregulation implemented by the Trump Administration that canceled requirements to fix HFC leaks. According to the US EPA phasing out of HFCs could save the economy about $280 billion over the next three decades. At the same time, consumers will likely see little or no change in home appliances as newer appliances will use safer refrigerants, which are readily available and perform as well as HFCs. One estimate stated that this rule will result in the equivalent of a decrease in CO2 emissions of 2 billion metric tons. A global phaseout of HFCs would avoid adding 1⁰F to the world.

The proposed standard for HFC phaseout determines allowance allocation by the US EPA, which will issue allowances on a calendar year basis. Such an allowance cannot be carried over to a subsequent year. There would be three types of allowances: production, consumption, and “application-specific allowances” for six specified uses.

To determine the total number of allowances needed, producers and importers must multiply the quantity of the HFC they seek to produce or import by its exchange value. HFCs that are destroyed in an approved manner within 120 days of production do not count toward its production total.

The US EPA has proposed to issue allowances to companies that produced or imported HFCs in 2017, 2018, and/or 2019 and that the company remain active in 2020 to be eligible to receive an allowance allocation. A mechanism is planned to be created under which new market entrants can apply for consumption allowances to allow a smooth market transition while not creating barriers for potential new participants. The US EPA proposed that the amount of allowances issued to each producer and importer be based on its highest year of production or consumption in 2017-2019. Under the proposal, the US EPA would sum together every company’s highest year amount(s), determine a percentage share for each company, and multiply each company’s percentage by the total amount of available calendar-year allowances.

The proposed rule is out for public comment and changes may be made before finalized. The US EPA hopes to finalize and implement the program in the fall of 2022 to begin in calendar year 2023.

CCES has the experts to help you keep up with the HFC Phase Out Rule, along with all other climate change, air quality, and energy regulations. Contact us today at karell@CCESworld.com or at 914-584-6720.

…to do it all alone. But then I realized: It is not a sign of weakness to ask for help.

It hurts to see people struggling, fending for themselves, especially in these COVID times. Life and business are harsh enough.

Yes, life – and even business – can be beautiful when you’re focused on your purpose and have the right team with you, the right mentors, the right partners. You are now confident in your work, someone’s got your back, you can rely on support.

We are all experts on what we do (engineer, attorney, salesperson, etc.). But so much of business is the “other things” that must go smoothly (different expertise, like marketing, IT, fixing the copier!). There is not enough time in the day to figure them all out alone; plus, life is too short.

Understand one thing:

You are excellent and have passion for what you do. You can serve your company or clients with quality work and be unstoppable with the right help. You need the right team to help put together your product and enable you to help the people you help!

So here’s to opportunities, to mentors, to your team around you. The way to reach your goals. I have sought help. I hope I am the right person to help you with your needs.

And one more thing: always show gratitude. So much of your success is due to you, of course, but so much is also due not only to that team around you but also to the people who made you the expert in your area. So take time this holiday season and beyond to say a sincere thank you to your team, whether they be employees, mentors, friends, subs, consultants. And also say thank you to your teachers, professors, earlier mentors and bosses, old buddies, religious leaders, and family who shaped you into the force you are.  

Remember in these tough times that you have value. You are good. People have made you this way and you have had and can have a good influence on many people and companies, positive for dozens or hundreds of lives, as well.

CCES has the experts to help you do good things with your business, reducing your energy usage and air emissions, saving costs and being better to the planet. Contact us today at 914-584-6720 or at karell@CCESworld.com.

By Deirdre Lord, The Megawatt Hour

Let’s just start by saying that energy markets have gotten more interesting over the past 4 to 6 months. After approximately 7 years of relatively low prices and low volatility, energy prices have spiked and markets have grown increasingly volatile. How volatile, you ask? According to the NY Independent System Operator, as of late September, natural gas prices in New York were up over 241% from the prior year. Year-to-date index power prices were up 84% compared to the prior year.

These are significant increases. Keep in mind that the starting points for these increases was extremely low. For example, the year-to-date index power price in NY State was $24.69/MWh as of September 2020. Demand destruction from the economic shutdown during the pandemic drove demand and, consequently, prices, down. Natural gas prices were so low that it wasn’t even worthwhile for some gas companies to produce. So, what do you need to know and how should you respond?

Volatility and higher prices have returned to energy markets (Source: MWh software)

First, make sure you have good information.

In order to communicate properly, you need to get information that is useful and actionable. In this market environment, historical information is useless. We’re just emerging from a period of significant usage changes (mostly declines due to pandemic shutdowns). We’ve also landed in an entirely unfamiliar market environment in which gas and power prices are higher than they’ve been in many years. Get as much intelligence and insight as you can about both your projected costs and your usage. Don’t rely on last year’s numbers. 

Second, communicate.

No one really likes surprises. Since energy markets have been low and uninteresting for so long, finance and accounting have grown accustomed to getting good news from energy managers. The result is that energy managers and purchasers have not felt compelled to communicate with finance about what to expect from energy markets. The news was always good, energy markets were consistently in decline, budgets were low. Financial decision makers came to expect and anticipate lower costs year-over-year. All market signals indicate a return to higher energy costs and volatility. So, make sure that you are communicating regularly with finance and accounting. Help them set realistic expectations for energy budgets. It will only help you in the end.

Detailed cost data can provide valuable insights.

Third, process, process, process.

Energy buyers who plan ahead benefit the most. Think of it this way. You, the business energy consumer, will always be buying power and gas for as long as you are in business. That means that you should always be planning–not a few weeks or months in advance, but quarters and even years in advance. Understand the current and future market prices and how they move. Volatility can work for you if you have access to good information. If you need information, ask your supplier, your consultant, a trusted advisor or ask us for forecasts and information. No matter where you get information, make sure it is current and updated at least quarterly. Make this forecasting exercise part of your work process. 

Bottom line for energy buyers and financial decision makers. Don’t panic. Use data and analytics to navigate complexity. Communicate well and frequently. Use volatility to your advantage. 

Deirdre Lord is a Partner with The Megawatt Hour, which assists finance professionals, energy and facilities managers, and consultants obtain better energy outcomes. Deirdre can be reached at 917-750-3771 or at dlord@themwh.com