Environmental Risk and Compliance in Aftermath of an Emergency

How do we treat environmental compliance in an area hit by an emergency? Do we suspend environmental rules and procedures as people and land recover? Or do we treat it as nothing has happened? The recent tragedies of Harvey and Irma put this question in perspective.

As Hurricane Harvey left destruction throughout southeast Texas, it was natural to allow residents to return to their homes as soon as it became passable to make their way back. However, was it safe to let people return so quickly?
The USEPA reported that over a week after Harvey hit Texas, over 800 wastewater treatment plants were still not fully operational and there were releases of untreated wastewater from sanitary sewers. 13 Superfund sites in the hardest hit areas were not even visited yet by the USEPA, although it was likely that the flood waters carried some toxic material with them. Over 100,000 people had no access to safe drinking water weeks after Harvey hit. Was it safe to allow people to return without a basic assessment of these issues? Did the government put the residents at further risk of health impacts by allowing a premature return? Remember how in the aftermath of the 9/11 tragedy, the affected area was declared “safe”, and many rescue workers came, only to face debilitating health effects in the future because the air still had high concentrations of ash and other toxic compounds.

In addition, in the wake of Hurricane Harvey, Texas Governor Greg Abbott suspended many environmental rules, such as waiving the requirement to operate pollution control equipment and regulating operations at different types of facilities on the theory that these efforts could hamper the recovery from the hurricane. These suspensions include air emission and effluent restrictions, as well as performing certain operations, maintenance, testing, and reporting and spill reporting and response requirements of hazardous waste, of which the heavy rains and winds carried outside of containment areas into areas where people may be exposed. Texas also issued guidance allowing local authorities to perform whatever recovery activities it believes will be most effective, even if there are environmental implications. It should be noted that this applies to state rules only, and does not apply to federal rules.

The scope of the suspension is only applicable where normal operations are unsafe due to the conditions and compliance would prevent or hinder actions needed to recover in coping with this disaster. The suspension is only valid in the areas hit by Harvey and only for the time that the area is considered a disaster area.

However, was this the proper decision? Might suspending rules and procedures increase the environmental impact and the risk of exposure to pollutants in the air, water, and solid areas?

Further study will determine whether these were risky decisions or prudent given the circumstances. Lessons will be learned.

CCES can help your firm assess the technical aspects of compliance with and risk from environmental regulations in your state and locality. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Some Environmental Legal Updates – August 2017

Things change so quickly, but here are a few new items that have gone on this summer. EPA Administrator Scott Pruitt had been very vocal about how he feels EPA regulations have hurt industry and job creation. Since taking office, he has quietly begun an effort to repeal or not to enforce several Obama-era environmental rules.

On July 3, the U.S. Court of Appeals for the District of Columbia Circuit nixed EPA Administrator’s Scott Pruitt’s attempt to delay a rule limiting methane leaks at oil and gas facilities. The rule requires companies digging for natural gas to plug leaks of methane, which would help them recover natural gas they can sell, as well as reduce emissions of a potent greenhouse gas and air pollutant. As part of his effort to ease regulations for industry, Pruitt decided, instead of having the rule repeal, to instead achieve the same end by suspending the rule’s compliance deadlines. The EPA had argued that the Clean Air Act allowed the EPA to do this (temporarily suspend a rule) while considering objections that could not have been raised prior to the rule’s issuance. However, the court found the claim to be false. The objections were clearly shown to have been raised earlier.

Pruitt’s actions to repeal or reduce enforcement of rules have been done very quietly without proper public notice or comment. The Administrative Procedure Act requires EPA to seek and respond to public input before taking major deregulatory steps. But Pruitt has been attempting to bypass that requirement by suspending rules indefinitely without public comment, instead of repealing them. Suspension can only occur for rules before they go into effect. Therefore, he has been successful in only suspending rules that had just been promulgated at the end of the Obama Administration, but had not gone into effect yet.

Once a rule goes into effect, elements of the rule, such as what is compliance and when it goes into effect cannot be suspended or altered without a request for public comment, and serious review of such comment. This has not stopped the EPA from suspending compliance deadlines for several rules after those rules went into effective.

On July 18, 2017, the EPA published in the Federal Register its proposed rule on the Renewable Fuel Standard (RFS) Program: Standards for 2018 and Biomass-Based Diesel Volume for 2019. (https://www.gpo.gov/fdsys/pkg/FR-2017-07-21/pdf/2017-14632.pdf). The proposed volume requirements represent decreases from current standards for cellulosic biofuel, advanced biofuel, and renewable fuel. Only the requirements for renewable fuel is essentially the same in 2018 and 2019 compared to 2017. Comments on the proposed rule must be received by August 31, 2017.

While the proposed reduction in the amount of renewable fuel is relatively small, many in the biofuels industry are concerned that it sends the signal to the market that the U.S. renewable fuel industry will no longer grow. The proposed volume requirements may undercut the Administration’s goal of reducing U.S. reliance on foreign energy and reviving U.S. manufacturing, despite President Trump’s repeated pledge to support the ethanol industry.

Please note that this should not be considered a legal interpretation in any way. For further information, speak to a qualified environmental legal representative to fully understand new or modified rules and how they may affect you and your firm. CCES has the technical experts to help you keep abreast of new rule changes at the federal and state level and how to address them to impact you as little as possible. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Research Finds Proper Lighting Lowers Worker Stress

I recently submitted a great proposal for an upgrade to LED lights for a warehouse. Solid utility rebates, an excellent reduction of energy costs and return on investment (existing lights were very inefficient). Yet, the company’s Board of Directors was split. I presented the facility manager a summary of all the benefits, including that it will likely raise worker productivity. He questioned all of the findings (even as he said he was in favor of the project!), and I only then realized that this company just did not want to deal with change – even if the numbers showed it was beneficial.

After he questioned the ability of proper lighting to improve productivity I decided to look deeper into the notion of lighting influencing workplace stress. A major research study at RPI (found in the journal Sleep Health, June 2017) found that office workers who receive a significant dose of circadian-effective light in the morning, from either electric lighting or daylight, experience better sleep and lower levels of depression and stress, than those who spend their mornings in dim or low light levels. The research team investigated the connection between circadian stimulus (CS), a measure of light’s impact on the circadian system, and sleep, depression, and stress in and better overall sleep quality and mood scores, in both summer and winter seasons.

Further study has pinpointed the likely mechanism. Humans, of course, lived and evolved under the Sun. Natural sunlight contains all wavelengths of visible light and ultraviolet and infrared radiation, as well. Common office or factory fluorescent lights typically emit visible light in a fairly tight range of wavelengths. Many wavelengths our eyes and, therefore, our brains are used to dealing with are absent. This affects our circadian rhythm, as we have not dealt with such a narrow range in evolutionary history, and therefore raises stress and sleeplessness. LED lights more closely mimic the wider range of visible light, reducing the change from our natural system and, thus, reducing circadian disruption and stress.

A 2016 study of the effects on the productivity of garment workers in India working under LED lights vs. fluorescents also showed increased productivity (www.anantnyshadham.com/storage/AKN_LED_may2016.pdf). The authors believe at least some of the effects is due to the reduced heat given off by the LEDs and thus, the more comfortable temperatures in the shop. But the improvement was demonstrated.

CCES has the experts to help you implement a lighting assessment to both save significant energy costs and to raise comfort and productivity of your employees. While saving energy costs are itself great, improving worker productivity (fewer errors, more work done, fewer sick days) can make a business even more money, as well as reputation. We have lighting experts not just to replace existing lights, but to assess if lighting can be made better for your workers or to show off your products or any other reason. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Our Hang-up With Energy Rebates

I can’t tell you the number of times I have approached building owners or managers with great opportunities to upgrade energy systems (lights, HVAC, etc.) saving money right away and paying back the investment in a short time, and the first question I’m asked is “Are there any rebates?”. When I tell a client there are none for that or it is paltry, the building owner/manager actually ignores the many other benefits and is reluctant to do the project. If the payback of an upgrade is under 3 years and the ROI of investment is double digit percent growth per year anyway, why should a rebate “make or break” a project? I guess some people really enjoy “free money”, of part of the cost being paid by a government or utility. While a client and the engineer should look for all available applicable rebates, it is unreasonable to actually squelch a project due to its absence.

So that you understand why rebates may or may not be available in your area, here is some background. It is certainly contrary to business sense for a utility to pay a building to install and utilize technology that will cause it to use less energy (natural gas or electricity). Utilities offer rebates for either of two reasons. One is they are forced to by the state’s government or watchdog agency. These elected officials or people beholden to them know that being able to say that they saved a certain amount of a resource or utilized it more efficiently is what people want and a good thing for a politician to boast. A second reason is that the more energy a region uses, the greater the infrastructure costs are for the utility. In even modest utility districts, utilities are forced to spend billions of dollars in capital costs to upgrade, expand, or replace existing infrastructure (utility lines, gas lines, etc.). And, of course, to ensure they are up-to-date and safe. If infrastructure fails, and a power blackout results or a gas line explodes, the negative headlines, the anger of residents and businesses, and being hauled into legislative hearings over the failure, is something to avoid at nearly all costs. Therefore, the less energy used, the less that infrastructure needs to be upgraded and at a lower cost.

Therefore, it is important to do research on rebates. The availability and amount for different programs vary between utilities. In general, most rebates are universal for a utility. A rebate for LED lights resulting in decreased electric usage is valid throughout a utility’s district. However, some utilities designate some rebates as greater in different areas within the district. For example, in New York City, Con Edison’s Demand Response Program encouraging building owners to use their own generators and be off the grid during peak demand periods, has greater rebate payments for buildings located in a certain area which has seen the greatest growth in electrical demand (gentrification) and weakest infrastructure. And lower incentives everywhere else, including zones where infrastructure is fine. So look carefully at the conditions of a rebate.

Part of your research should also be on timing. Utilities and the commissions that oversee them often decide annually on rebates. They decide if they are effective or not, look at market conditions, and then adjust for the next year. A rebate at a certain level this year may go down (or up) next year or be eliminated altogether. For example, some utilities are reducing or eliminating LED lighting rebates. The price of LEDs has droped recently, plus it is more accepted. Many feel an incentive is no longer needed; savings and payback are sufficient without it. Your engineer (including this one!) should keep up with the latest trends and talk to those managing rebates.

I should add that I have seen the opposite reaction (occasionally) of building owners and managers feeling almost guilty about receiving a rebate for an upgrade. Nobody should feel this way. Most rebates come from charges that are in your monthly utility bill. You pay into a fund used for rebates. Therefore, when you do an upgrade, you are simply taking back the money that you have put in!

In summary, research or have your engineer research and go forward with any energy rebates that an upgrade qualifies for. However, don’t be hung-up on it. If a rebate (or tax deduction or other financial benefit) does not exist or is only worth a small percentage of the upfront cost, let it not stop you from doing the project. The vast majority of energy upgrade projects are very financially beneficial for building owners for a long-period of time even without utility or government rebates.

CCES has the experts and experience to help you get the maximum financial benefits from an energy upgrade, including being up to date on potential rebates and to get you through the application process. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Don’t Overlook Ways To Save Water

This blog and newsletter have historically focused on air and energy. How can you save energy, reduce greenhouse gas emissions, and be environmentally compliant? But another important part of a good sustainability plan is water conservation, which is becoming a bigger issue as we face future shortages of quality water. Water has historically been “cheap” and overlooked as an avenue of study. But rates are rising and even in areas with ample supply, it is needlessly costly to be wasteful. Ways to reduce your water usage will save you cost, as well as put you in a more flexible condition.

Water resources are commonly shared. If you manage a facility that needs clean water to make product, there are likely other facilities nearby sharing water from the same source (reservoir system, wells, etc.), not to mention nearby farmers, and residents. If you use what is perceived to be “more than your fair share” of water, that could be both very expensive and put you in a disadvantageous position vis-à-vis other stakeholders.

Optimize Your Infrastructure

An easy way to reduce water use is to use water-saving fixtures. Let the technology do the savings and the people involved won’t know the difference (or feel inconvenienced).

Leaks: An overlooked avenue of water loss is through leaks of water through the byzantine pipes of a facility. One area that is a common candidate is condensate from steam boiler systems. There will always be losses, but is the amount returning as condensate somewhat equal to the water sent out as steam? If not, investigate and see where water may be lost and do the necessary repairs. Even a “little” leak that seems innocuous, when continued 24/7, can result in a large water loss. Don’t take condensate or water shipped from some other place for granted that it will reach the destination.

Toilets: A typical toilet uses about 1.6 gallons of water per flush (gpf). High-efficiency toilets typically use around 20% less per flush. The USEPA recommends models that are water efficient through its WaterSense program or Maximum Performance (MaP). Dual-flush models, popular in Europe, provide 2 options; for liquid waste (0.8-1.1 gpf), and for solid waste (1.3-1.6 gpf). Pressure-assist toilets push water and waste down the drain with a pressurization system and use 0.8-1 gpf.

Urinals: Low-flow urinals use less water to rinse away the urine. Some models use as little as 1 pint of water per flush (0.125 gpf), saving 87%. Waterless models rely on gravity to drain urine through a lighter liquid that prevents odorous compounds from seeping through into the air.

Sinks: Aerators are a very cheap and effective way to reduce the amount of water coming out of a faucet. The water does “its job” (washing hands, rinsing dishes, filling up pots) with reduced water flow, reducing water use by up to 75%.

Maintenance, It’s Always Maintenance

I have said in a number of articles in this blog and newsletter the hidden gains of energy cost savings, increased productivity and reliability by doing regular maintenance. Yes, it is not exciting and hard to boast about, but savings are achieved with renewed and improved maintenance. Train your staff to read and follow manufacturer’s procedures. You have paid some for the various water-saving features. Make sure equipment is operating properly to get your money’s worth and maximize savings and benefits.

CCES has the experts to help you put together a comprehensive sustainability program to maximize your savings and benefits in water conservation, energy usage, waste, etc. Specific for what you do and specific for your needs and limitations. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Plain Talk: What Is An Energy Audit? Why Do One?

What Is An Energy Audit?

A professional energy audit tells you how much energy you use, its cost, in what functions in your building, and provides multiple recommendations that will result in significant energy usage and cost savings, if implemented.

Some Of The Many Direct Financial Benefits

Real life examples show that properly-performed energy audits can provide a building owner direct financial benefits, such as:

• Significant energy cost savings beginning quickly, that grow in value as rates rise, and continue for a long time; (one upgrade saves costs for many years)

• Tenant attraction/retention, and, therefore, higher rents than less efficient space

• Greater worker productivity/buyer comfort (retail), all adding to tenant satisfaction

• Rise in of asset valuation (which would a buyer prefer, a building demonstrated to be energy efficient or a dark, leaky high oil/gas usage one?)

• Achievement of building certification standards, which will further raise the value

• Potentially obtain utility rebates, state grants and federal tax incentives. More and more entities want buildings to be efficient and will pay for verified achievements.

Simple Example

A simple example of energy efficiency is lights. LEDs can produce the same – even more – light for less than half the wattage of an incandescent or fluorescent. For example, if you replace one 40-watt fluorescent light with a similarly-sized 18-watt LED, then the bulb will use 22 fewer watts to create the same light. If it is used 10 hours/day, 5 days/week, 50 weeks/year, then electricity savings is 55 kWh per year. At $0.20/kWh, the savings is $11 per year. From just one light! If your building uses hundreds of lights, then the savings is so much more. There is no risk of failure; 18 watts means 18 watts.

How To Get Good Ideas For Savings? Have A Professional Energy Audit Done.

The professional group ASHRAE has defined 3 levels of professional energy audits.

Level I

• Brief analysis of the building’s historic energy bills

• Brief on-site building survey to gather basic information about energy use and systems (i.e., very rough count of lights, basic nameplate information about units)

• Listing of potential energy use- and cost-saving strategies, known as Energy Conservation Measures (ECMs). Rough savings and cost analysis for each one.

Level II

• Detailed analysis of the building’s energy bills, preferably previous 24 months.

• Detailed on-site building survey to identify more thoroughly the building’s energy systems and equipment (i.e., more thorough, accurate lighting count, more details about boilers, rooftop units, etc.)

• Identify, describe ECMs and provide a more detailed savings and cost analysis, including estimating payback (time it will take for energy cost savings to equal outlay plus operating costs of ECM) and return-on-investment.

• Discussion of any changes to building operations and maintenance procedures by each listed ECM, including secondary benefits (i.e., reduced maintenance).

Level III

Includes the components of a Level II Energy Audit, plus:

• More extensive data collection, particularly of the physical building, such as leak points, doors, and windows.

• Use of approved, site-specific energy computer models to estimate heat losses and infiltrations throughout year

• More refined energy and financial analysis from multiple vendors, including upfront costs, incentives, savings, and ROI.

• Evaluation of long-term energy savings and operational cost trends.

Smartest Way To Get Started

So now you will look for great long-term energy savings opportunities for your company. Count how have many buildings you wish to audit and their complexity. If your company manages many buildings, it may be useful to perform a Level I energy audit on all of them. While the ECMs may contain rough estimations, at least you can compare energy efficiencies leaving yourself with a group with greater opportunity to focus on. If you have a smaller number of buildings and/or they are complex (involve many functions or have many specific energy systems), then you may want to have Level II audits done to get good estimates at a reasonable cost. Level III audits are very expensive and generally do not justify the extra expense and effort unless such accuracy is necessary.

Hire An Experienced Pro

“You get what you pay for.” Why skimp and save a few thousand dollars on an energy audit if that means hiring someone without a professional engineer’s license or equivalent certification (i.e., CEM). They can provide numbers that are plain wrong or lead to missed opportunities or pursuing projects that are not worthwhile; lost money! This can cost your company much, much more than the savings of a “cheapo” firm. Hire a qualified energy auditor; there is a lot riding on it. Make sure the professional is experienced in buildings similar to yours.

As you can see, there is no magic wand that can be waved to bring instantaneous, substantial energy cost savings. One must invest time and money and bring in smart, experienced professionals to do it right. But once done right, the savings and the direct financial benefits are tremendous. Most good energy projects have ROIs better than what is achieved on Wall St. Good luck!

CCES has the technical expertise to perform all types of energy auditing for diverse building types to maximize your financial benefits. We can get you the applicable incentives you deserve and can project manage ECMs you choose as most relevant to your building. Contact us today at 914-584-6720 or at karell@CCESworld.com.

It Is Not Only Climate Change; Evidence That U.S. Toxic Air Pollution Still Harms Many

Of course, Climate Change is a big news item. How can it not be? The entire scientific community is in agreement that mechanisms are in place that will cause drastic changes to our climate and, therefore, our whole economy and way of life in a relatively short time. And President Trump’s decision to withdraw the U.S. from the Paris Climate Agreement has heightened the concern. Many in the media, when addressing Climate Change, show pictures of people walking around with masks over the faces and or stacks with large quantities of colored smoke escaping into the atmosphere. That has little to do with Climate Change. In fact, what it represents is a different, serious problem, and that is emissions of toxic air pollutants which can affect the health of people downwind of a source. While the U.S. has made great strides in the last 40 years of bringing down the ambient levels of many toxic compounds, a June 2017 study in the New England Journal of Medicine shows that toxic air pollution is still a major problem, and leads to the premature deaths of thousands of Americans each year. See: http://www.nejm.org/doi/full/10.1056/NEJMoa1702747. This is particularly true for the pollutants ozone and PM-10 (fine particulate matter).

The study estimates that about 12,000 lives can be prolonged annually by reducing the ambient level of fine particulate matter by 1 microgram per cubic meter below the current USEPA standards. The Clean Air Act requires the USEPA to revisit emission standards of criteria pollutants every 5 years, and adjust them accordingly based on the latest scientific knowledge. A House Committee recently passed a bill slowing down the oversight to once every 10 years.

A recent article in Scientific American (https://www.scientificamerican.com/article/the-other-reason-to-shift-away-from-coal-air-pollution-that-kills-thousands-every-year/) discusses this in detail, and recommends continuing the movement to shift away from coal-fired power plants to natural gas. This trend has been touted as a way to reduce greenhouse gas emissions, thus, addressing Climate Change. However, the article points out that these benefits are actually minor because increased digging for natural gas and other leaks leads to greater methane emissions, which is a much more potent greenhouse gas than carbon dioxide. The article points out that replacing coal-fired with natural gas-fired power plants would be more effective extending live, reducing hospitalizations, which would save the US economy tens of billions of dollars each year in hospital costs and productivity gains.

Yes, let’s focus on Climate Change because of the extreme, irreversible changes that are likely to occur if not properly addressed. But let’s remember that while the U.S. has made progress, there is still a ways to go to further protect public health in the U.S. and worldwide due to toxic compounds that are emitted from the same sources.

CCES has the experience to assess your emissions inventory and to develop a cost-effective plan to reduce emissions to meet regulatory requirements and improve your impacts. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Proof of Benefits of Going Green: How To Get Started

Last month I wrote an article highlighting the growing proof that making a building more “green” and energy efficient has many financial benefits, beyond just saving utility costs. Scientific research has shown “green” buildings lead to greater asset value, larger revenue, and fewer sick days and greater productivity and attention span of workers.

If this has convinced you to look into “greening” your building, here’s how to get started. Here are crucial items to consider as you move forward, usually overlooked:

1. You know what “green” is, but you need to explain fully what it is to the building owner or corporate manager. Develop realistic expectations for all stakeholders. What does the group want to achieve? Are they achievable? Any limitations? I once performed a preliminary “green” evaluation of a company’s headquarters building, including a complex analysis of potential energy efficiency strategies. A high-level contact was surprised; he literally thought that the project’s goal was to recommend where to plant trees! (He hadn’t read the Scope of Work!) Make sure all involved have unified goals, and understand the project is a complex process.

2. Determine your ultimate “green” goals. There are many types of “green” projects. Determine what is right for your building or company based on needs, budget, etc. You may wish to have your work officially certified under the LEED or WELL program. Or you may wish to bypass any official certification, and perform small, focused upgrades. That’s fine, too. What does management want most to achieve: reduced costs, reduced greenhouse gas emissions, better work environment? Do you want to be a leader in your field or “just a player”? There is nothing wrong with reduced goals if you have budgetary constraints. There is something to be said about watching others and learning from their mistakes. These approaches need to be thought through and decided early on.

3. Make sure the contact understands that there is no formula to become green. No shortcuts. No “magic wand.” It takes an understanding of the specific building, its physical structure, the equipment within, the people and productivity inside. Anyone promising you a quick fix will not produce the fix for you, and it’s likely not quick either. Therefore, hire an experienced pro, preferably an engineer.

4. Be prepared to work a little. After you hire the experienced pro, don’t just sit back and expect him/her to do everything. Work with that person to ensure that the work is done to meet your needs. First, begin by providing the pro with the data needed to perform the analysis. Nearly all “green” projects will require the engineer to evaluate current and historic data: concerning the physical building, its history, size, uses and 24 months of recent energy, water, and sewer bills. You should begin to prepare this information as you are reviewing proposals or performing the administrative work to bring the engineer in. Be prepared to field questions from the engineer because while the building may be second nature to you, it is new to the engineer. Time can be saved by anticipating such questions and providing the engineer with information you think is important.

5. Site visits. It is likely that the engineer will need to make multiple visits to the facility to perform counts of equipment and to assess how equipment is operating in order to determine which items things could improve or be more efficient. Ensure that a person knowledgeable about the building and its equipment and operations is with the engineer at all times to answer questions or fill in on procedures. The site visit may involve testing of all major equipment. For a robust energy evaluation, it is important to test both the heating equipment (boilers) and cooling equipment (AC) for a building. For one energy audit, I was asked by building management to “get it over with”: to test both on the same visit. So on a 95°F day, we tested the building’s boiler! (We did it during lunch hour when many employees were out of the building!). But it is crucial for you to work with your “green” engineer to enable all goals to be met and data to be gathered.

6. Ask for and review interim reports. Sometimes building managers then step back and wait for the “green” professional to perform the analysis and develop the strategies and conclusions. But there is nothing wrong with asking the engineer for an early, interim report to make sure the professional has not strayed from the agreed-upon goals. When reviewing an early draft report, remember there may be gaps in it or certain calculations or conclusions you are interested in that are missing. But do review it and speak up if the direction it is going, you feel, is not what you want. Having such a discussion ultimately saves the engineer time and aggravation to be steered in the right direction early.

OK, OK, A Word About Costs

It is probable that as a “green” evaluation is being implemented, you are thinking about money. Good projects are not free and you may have had to put yourself on the limb to get the upfront cost for this project, not knowing what the exact results will be. Yes, it costs money to study your building before the design, procurement, and installation of smart strategies which, at that point, you have a better idea of the financial benefits. Remember, there is growing evidence that all green projects done right will pay back initial costs in a reasonable timeframe. I have seen numerous such projects pay back initial investment in terms of utility cost savings alone (not including the secondary benefits) by 15, 20, 30, and even more percent per year. Yes, the equivalent of putting that money in the bank and making this much interest. No bank nor Wall Street investment pays like a good energy project, without risk (a 20-watt bulb replacing a 60-watt one will save you two-thirds the energy; nothing magic; it’s the numbers!). So be confident working with your engineer to implement smart upgrades.

Also, a growing number of utilities and governments offer financial incentives or tax breaks to install and operate energy efficiency technology. IRS Section 179D (tax deductions for energy upgrades) has expired, but a new version was recently co-sponsored by 30 US Senators from both parties. 179D should return and be retroactive. Also, lenders see that there is a reduced risk on lending for an energy or green project because the financial benefits will be there and the borrower should be able to pay the loan back. This results in more competition to loan money, and lower interest rates.

CCES has the experience and expertise to help your building become more energy efficient and “green” and will work with you to meet your goals, however humble or extravagant. Work with us to get the maximum financial benefits from going green. Contact us today at karell@CCESworld.com or at 914-584-6720.

It’s Not Just Lower Energy Bills: Proof of Productivity Improvements By Going Green

Buildings account for about 73% of total U.S. electricity consumption, according to the U.S. Green Building Council (USGBC). Therefore, building owners and managers can help improve our energy efficiency and independence. However, the real estate industry has been slower than others in embracing and implementing energy efficiency, even though it stands to benefit greatly from energy efficiency gains.

The Many, Great Financial Benefits of Green Building

A recent report from CoreNet Global, “The Future of Corporate Real Estate”, discusses reasons why building owners will benefit from implementing such strategies:

• reduced utility costs,

• higher selling price for “green” buildings over non-green units,

• greater demand for such buildings, and thus, greater rental income.

Reduced Utility Costs

It goes without saying that if you use less electricity or gas or oil to heat a building, you will decrease your utility costs. Energy rates are among the fastest growing expenses of a building owner (greater than that of labor rates), and a potential drag to profitability. Using less energy gives you control to reduce this cost (you have no control over energy rates).

But utility cost benefits go beyond just this. More utilities – particularly in large cities – are charging not only for electricity usage, but also for peak demand. Whatever your electricity need for your building in (in most cases) one 15-minute period per month will lead to a huge additional charge, even if usage and demand are low for the rest of the month. Thus, ways to reduce peak usage can be very effective in reducing utility costs.

There is also a special value to investing in strategies to reduce energy usage and peak demand. Let’s assume you install technologies that reduce your utility costs by $50,000 per year. The other way to make money is to increase revenue. But it may be difficult to raise rents by $50,000 per year because in most markets rentals are quite competitive. In most cases, it is easier to save money with energy upgrades than to simply raise rents. And the nice thing about energy upgrades is that the savings due to installation of technologies (LED lights, upgraded HVAC equipment and motors, etc.) will continue year after year (one does not yank out insulation the year after it is installed!). So the $50,000 per year savings will occur year after year and in fact, will rise slightly as energy rates only rise. This year’s $50,000 will likely become $52,000 the next year and $55,000 the year after, etc. based on the one-time effort of investing in smart stratagies.

Green Buildings Reduce Operating Costs and Draw Higher Rents

As more properties are becoming certified as “green” over the last decade, comparative studies are beginning to be completed about the overall financial benefits of these upgrades, including their relative operating costs and demand for such properties, which has a large influence on rents. Of course, many factors influence what a building owner can collect in rent. Studies have recently been conducted that compare buildings with similarities in many areas except for their “greenness” to see if there is a difference, which can likely be attributed to energy and water efficiency and related factors.

A recent study indicated that in Los Angeles, owners collected rents that are 35% higher per sq. ft. for LEED-certified space compared to those in non-LEED space in buildings with similar vacancy rates. In addition, this same study compared operating costs of green-certified vs. non-green buildings, as well. Operating costs were shown to be 13.6% lower for new green construction compared to non-green buildings and 8.5% lower for existing buildings upgraded to a green standard compared to a building not upgraded of similar age.

There have been a number of studies showing that certified green buildings also increase worker productivity and satisfaction and reduced sick time, the crux of any business as profits stem from productive workers. A business that understands that a particular building has conditions that will lead to greater comfort and productivity will result in seeking to rent that property and to renew its lease.

In addition, a satisfied work force has concrete benefits for a business in terms of lower turnover, reduced business disruptions, lower risk, and less time training new workers. A relatively new certification program from the International Well Building Institute, called WELL standards, focuses on building conditions that will result in healthier, more satisfied, more productive workers. A number of studies from research institutions that specialize in productivity are showing – now that there are a growing number of upgraded and LEED-certified buildings – that significant improved worker productivity does occur, based on measurement of tests on tasks and memory. As this research is being publicized and accepted in the business world, companies are looking to relocate their business to LEED- or WELL-certified buildings to improve productivity even at the cost of greater demand and rents.

Assets’ Higher Resale Value

As more properties are becoming certified as a “green” building over the last decade, studies are beginning to be completed about the overall financial benefits of these buildings, including their value, based on sales.

A 2015 USGBC publication “The Business Case for Green Building” provides several facts concerning the resale value of and income from green buildings. In Los Angeles, in 2014, ENERGY STAR or LEED-certified buildings had an average selling price of $329/sq.ft., while that for a non-certified building was $244/sq.ft., 35% higher.

According to World Green Building Trends (http://naturalleader.com/wp-content/uploads/2016/04/McGrawHillGBStudy.pdf), building values increased by 10.9% for green new construction compared to non-green (6.8% increase for existing building upgrades) and asset valuation rose 5% for new green building projects vs. non-green (4% for green building retrofits).

CCES has the experts to help you assess how your buildings can be more “green”, whether it be certified in LEED or WELL programs or just more energy efficient. We can help you assess, strategize, design, implement, and test new systems to maximize the many financial benefits, like those listed here, with the least disruptions of your operations. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Future of Renewable Energy Investments

The young Trump Administration and the House of Representatives have published preliminary tax reform plans that will likely have an adverse effect on the future growth of renewable energy in the US. If enacted, these may be a dis-investment for new projects. While exact details are unknown, as this is published, the fear of future dis-incentives to build or finance a project itself has a chilling effect.

One matter that has not been discussed openly is the future of renewable energy tax credits. Currently, investments in solar and wind projects are eligible for an investment tax credit. However, over the next few years the credit, used for many solar projects, is scheduled to decrease to and remain at 10% beginning in 2022. The production tax credit for producing power from wind will phase out entirely in 2020. Might the Trump Administration accelerate the decrease in these incentives or eliminate them sooner? During his confirmation hearings, Secretary of the Treasury Steven Mnuchin said that he does not intend to accelerate the phase-out of the production tax credit.

Note that the current renewable energy credit programs result in tax credits that can only be used to offset taxes (not increase a refund). With the proposed major reduction in corporate and individual income tax rates and accelerated write-offs for business expenses, the value of renewable energy credits would therefore be sharply reduced (lower taxes to offset with credits from a renewable energy project). This could take away the financial incentive to invest in large-scale renewable energy projects.
The Trump Administration’s proposed tax reform also includes a border adjustment tax, raising the cost of imported material and equipment. Since many solar and wind farms components come from China, this could add to the cost of new projects, if adopted.

In another tax-related item concerning energy, 22 US Senators recently introduced a bill containing a proposed extension of EPAct (Section 179D of the IRS Code) until 2019 and beyond. EPAct allows a building owner (or significant contributor for tax-exempt buildings) to earn tax deductions for successful energy efficiency projects. EPAct has expired and is currently not in effect. The proposed bill contains changes to the old language, including new technology-neutral tax incentives for clean energy. If this version of the bill is enacted, the maximum deduction for energy efficiency projects would increase to $4.75/sq.ft., based on achieving a minimum of $1.00/sq.ft. deduction for achieving a 25% reduction against the ASHRAE 90.1-2016 standard, and an additional $0.25/sq.ft. for every additional 5% reduction above that. The proposed bill also contains a new provision, entitling building owners to achieve a tax deduction of up to $9.25/sq.ft. for comprehensive energy upgrades that exceed energy saving targets. While the old 179D allows minor deductions for small upgrades, the proposed version would reward a building owner that exceeds robust energy goals. It is unsure whether this new version of 179D will pass Congress and, if so, when.

In summary, while details are unknown, the proposed new tax reforms of the new Administration may potentially hurt renewable energy projects. At this early stage, it is unknown whether these proposals will be enacted and in what form. Might the changes be enacted and the renewable energy industry in the US be hurt in order to raise revenue to offset the many tax rate reductions the reform plan currently proposes or as a way to discourage renewable energy and encourage growth of fossil fuel plants? The answers are unknown, but the implications should be part of any company’s planning.

This is meant as a general overview based on publicly published material. Discuss specific implications for your business with your accounting or tax professional. CCES is here to help you with technical assessments of your energy usage and systems. We can present sound technical strategies to reduce your energy use and peak demand and save you considerable cost and provide other tangible, financial advantages, as well. Contact us today at karell@CCESworld.com or at 914-584-6720.