Underperforming On $180 Billion Market For Energy Retrofits

California has an aggressive goal to double the energy efficiency of existing buildings by 2030. The problem though is that building owners don’t seem very interested in having energy retrofit work done on their house or commercial property. We covered this subject in a recent Berkeley/UCLA Law report Powering the Savings, as well as in a September panel event at Berkeley Law.

A reporter from E&E News attended that event and interviewed a few of us afterwards. Her article (paywalled) described some of the challenges:

The price tag for California’s goal is extremely high. Retrofitting all owner-occupied housing units in California — half of all housing — would cost $180 billion, DeVries estimated. There have been about $4.5 billion worth of retrofits under PACE programs nationwide, mostly in California. “I don’t think we’re going to find the money here,” he said. “We’re going to have to find it elsewhere, which means Wall Street, which means securitizations.”

Wall Street has the appetite, according to DeVries. His company’s latest offering of $220 million in project-backed bonds saw four times more demand than the available supply. The problem is consumer demand. “You can have all the investor interest in the world, and it doesn’t matter one bit,” he said. “The chicken and the egg here — the demand has to come first.”

Figuring out easy, capital market-type financing could help drive this demand, as we’ve seen with rooftop solar. And finding ways to reach building owners during key moments is also important, like when they’re between tenants or when remodeling or appliance replacements are in the works. But at some point, the state may need to move toward mandatory retrofit requirements during times of change in ownership or tenancy, as other jurisdictions have done.

Without these steps, what should be one of the most cost-effective ways to fight climate change may continue to under-perform and under-deliver.

California Finally Dumps Outdated Auto-Boosting Transportation Metric For New Transit & Infill Projects

It’s taken a long time, but California finally is ready to make a significant change to speed environmental review for new transit and infill projects. The Governor’s Office of Planning & Research (OPR) announced on Monday that a compromise has been reached to implement SB 743 (Steinberg, 2013), a law that made major amendments to the California Environmental Quality Act (CEQA), the state’s law governing environmental review of new projects.

Back in 2013, the legislature passed SB 743 to change how infill projects undergo environmental review. Under the traditional regime, project proponents had to measure transportation impacts by how much the project slowed car traffic in the immediate area. The perverse result was mitigation measures to privilege automobile traffic, like street widening or stoplights for rail transit in urban environments or new roadways over bike lanes in sprawl areas.

But the true transportation impacts are on overall regional driving miles. An urban infill project may create more traffic locally but can greatly reduce regional traffic overall by locating people within walking or biking distance of jobs and services. Meanwhile, a sprawl project may have no immediate traffic impacts, but it typically dumps a huge amount of cars on regional highways, leading to more traffic and air pollution. As a result, the switch from the “level of service” (auto delay) metric to “vehicle miles traveled (VMT)” made the most sense. Most infill projects are exempted entirely under this metric, while sprawl projects would have to mitigate their impacts on regional traffic.

But OPR’s implementing guidelines with this change were held up by highway interests and their government allies, who don’t want the law to apply to highways. You can probably see why: highways are designed to do one thing only — induce more driving. And that would score poorly under this change to CEQA.

State leaders finally reached a compromise this month: the new guidelines could apply statewide to all projects (something only suggested by the statute), but new highway projects can still use the old “level of service” metric, at the discretion of the lead agency (see the PDF of the guidelines for more details at p. 77).

It’s an unfortunate but probably necessary concession to powerful highway interests. Even though freeways have consistently failed to live up to their promise of fast travel at all times, and instead brought more traffic, sprawl and air pollution to the state, many California leaders are still wedded to this infrastructure investment.

My hope is that the compromise won’t actually mean that much new highway expansion in the state. First, California isn’t planning to build a lot of new highways, outside of the ill-advised “high desert corridor” project in northern Los Angeles County. Second, even for new highway projects, CEQA’s required air quality review may necessitate an analysis of (and mitigation for) increased driving miles.

Either way, smart growth advocates can at least celebrate the good news that CEQA will finally be in harmony with the state’s other climate goals on infill development, transit, and other active transportation modes.

The guidelines though still need to be finalized by the state’s Natural Resources Agency, which will take additional months. I’ll stay tuned in case anything changes with the proposal during this time.

California’s Big Climate Challenge Will Be Reducing Transportation Emissions

California is on track to meet its 2020 climate change goals, to reduce emissions by that year back to 1990 levels. Much of that success is due to the economic recession back in 2008 and significant progress reducing emissions from the electricity sector, due to the growth in renewables.

But the state is lagging in one key respect: transportation emissions. Bloomberg reported on the emissions data compiled by the nonpartisan research institute Next 10:

In 2015, the most recent year for which data are available, the state’s greenhouse gas emissions dropped at less than half the rate of the previous year, according to an August report from the San Francisco-based nonprofit Next 10. Low gas prices and a lack of affordable housing prompted more driving and contributed to a 3.1 percent increase in exhaust from cars, buses, and trucks, the report says. Census data show that more than 635,000 California workers had commutes of 90 minutes or more in 2015, a 40 percent jump from 2010.

The solutions are urgent: we need to reduce driving miles by building all of our new housing (an estimated 180,000 units needed per year) near transit, and we need to electrify our existing vehicle fleet and add in biofuels and hydrogen where appropriate. Otherwise, the state will not be as successful in meeting its much more aggressive climate goals for 2030, with a 40% reduction below 1990 levels called for that year.

The Expo Line Bait-And-Switch

First, advocate for a multi-billion transit line that will serve your home neighborhood. Then once it’s built, make sure nobody else can move to your neighborhood to take advantage of the taxpayer-funded transit line. It’s a classic bait-and-switch, and it’s happening now along the Expo Line in West L.A.

What’s at stake is an already-watered down city plan for rezoning Expo Line stations areas. The city’s “Exposition Corridor Transit Neighborhood Plan,” while rezoning some station-adjacent areas for higher density, still leaves a whopping 87% of the area, including most single-family neighborhoods, unchanged, and with too-high parking requirements to boot.

But this weak plan is still too much for Los Angeles City Councilmember Paul Koretz and his homeowner allies, including an exclusionary group of wealthy homeowners assembled under the name “Fix The City.” They oppose even these modest changes to land use in the transit-rich area. Essentially, they’ll get the financial and quality-of-life benefit of the Expo Line, while working to ensure no one else does.

As Laura Nelson details in the Los Angeles Times:

Koretz told the Planning Commission this month that the areas surrounding three Expo Line stations in his district “simply cannot support” more density without improvements to streets and other public infrastructure.

It’s a view shared by advocates from Fix the City, a group that has previously sued Los Angeles over development in Hollywood and has challenged the city’s sweeping transportation plan that calls for hundreds of bicycle- and bus-only lanes by 2035.

“It’s like when you buy a new appliance, you’d better read the fine print,” said Laura Lake, a Westwood resident and Fix the City board member. “This is not addressing the problems that it claims to be addressing.”

If Koretz and his allies have their way, their homeowner property values will go up with the transit access, but taxpayers around the region have to continue subsidizing the line even more because neighbors are not allowing more people to ride it. And to boot, they will keep regional traffic a mess by not allowing more people to live within an easy walk or bike ride of all the jobs near their neighborhood. Essentially, they force everyone else into long commutes while keeping housing prices high — an ongoing environmental and economic nightmare.

Thankfully there are others mobilizing against these homeowner interest groups, such as Abundant Housing L.A. But two things need to happen now: first, the Expo neighborhood plan needs serious strengthening, including elimination of parking requirements and an end to single-family home zoning near transit stops. Second, L.A. Metro needs to hold the hammer over these homeowners by threatening to curtail transit service to the area. I see no reason why taxpayers should continue to support service to an area that won’t do its part to boost ridership on the line.

Single-family zoning near transit is an idea that should have died long ago. It has no place in a bustling, modern, transit-rich environment like West L.A. The Expo Line bait-and-switch must end.

Interview With California State Senator Scott Wiener On City Visions, Tonight At 7pm

undefinedScott Wiener, San Francisco’s state senator elected in 2016, has already authored some landmark legislation on housing (SB 35), and he’s co-authored other measures related to transportation and leading the state resistance to the Trump administration.

I’ll be interviewing him tonight on City Visions at 7pm to discuss these issues and what Sen. Wiener sees on tap legislatively and politically for the state in 2018. Tune in on KALW 91.7 FM in the San Francisco Bay Area or stream it live. We welcome your questions and comments!

Environmental Thanksgiving

Dan Farber at Legal Planet posts his Top 10 things to be thankful for when it comes to the environment:

10. Nicaragua and Syria have joined the Paris Agreement, leaving the U.S. as the only outlier.

9. Some countries and car companies have announced plans to phase out gasoline vehicles.

8.  The new governors of New Jersey and Virginia are committed to fighting climate change.

7.  Tens of thousands of Americans have lined up to support environmental groups opposing You Know Who’s Administration.

6.  States from California to New York have strengthened their own climate change policies in direct response to the Administration.

5. China and the EU have remained firm in their support for the Paris Agreement.

4. The courts seem determined to rigorously review Administration actions.

3. China is about to announce its cap-and-trade plan, and may already have reached peak coal use.

2. Solar and wind prices are continuing to fall, making coal less and less competitive.

1.  There’s another presidential election in three years.

It’s a solid list. I would add two more: the price of electric vehicle batteries is falling rapidly, with two mass-market affordable EVs on the market (Chevy Bolt and the Tesla Model 3). And the congressional election is in less than a year.

Happy Thanksgiving!

Apple Cleans Up Its Battery Supply Chain, But Not Microsoft, Per Amnesty International

Last week I blogged about how electric vehicles (and consumer electronics) run on batteries with cobalt, too-often mined with child labor in the Democratic Republic of Congo. Congo is the world’s biggest producer of cobalt, with more than half of global supplies. And cobalt prices have skyrocketed recently with the growth of EVs.

But reports by Amnesty International point to the human rights risks. The group says that approximately one-fifth of Congo’s cobalt production is mined by hand by “informal miners,” including children, in dangerous conditions. Amnesty recently ranked 29 companies on how well they were tracking their cobalt sources since a January 2016 report spotlighted the issue. Reuters covered the results:

“Apple became the first company to publish the names of its cobalt suppliers … but other electronics brands have made alarmingly little progress,” the statement said.

Most cobalt is produced as a by-product of copper or nickel mining, but artisanal miners in southern Congo exploit deposits near the surface that are rich in cobalt.

The biggest buyer of ore from small-scale miners was Congo Dongfang Mining International, a wholly owned subsidiary of Chinese mineral giant Zhejiang Huayou Cobalt Ltd, Amnesty found in its report last year.

Since then, Huayou Cobalt “has taken a number of steps” in line with international standards but “gaps in information remain”, Amnesty said.

The group was particularly critical of Microsoft, which was among 26 companies that does not disclose their suppliers’ records on this issue, as well as Renault and Daimler among the automakers (BMW had made the most improvements).  Microsoft responded to the criticism, arguing that it’s doing more than the report indicates to clean up and disclose its supply chain.

The Amnesty report shows the value of public pressure on this issue. While a global governance framework to ensure a stable and just supply of battery materials will likely be needed, it’s encouraging to know that old fashioned public pressure can help bring progress, too.

The Need For Spock On Transit

Riding transit can be a great way to be a part of your community, as you get a chance to mingle with people from all walks of life instead of traveling in an isolated vehicle. But humanity isn’t always grand, and sometimes transit can expose you to some obnoxious behavior.

When that happens, just imagine you’re traveling with your own Spock, from this classic scene of Spock and Captain Kirk time traveling to 1980s California in Star Trek 4:

Super Cheap Wyoming Wind Vs. Coal Industry

Wyoming is pretty much the Saudi Arabia of wind. In fact, Wyoming wind farms are starting to get so cheap that they can out-compete solar, gas and coal, even without subsidies.

The financial firm Lazard released its most recent Levelized Cost of Energy Analysis, an annual report of different energy sources and their costs, which shows this progress in hard numbers. It documents that new wind power costs between $30 and $60 dollars per megawatt hour in levelized costs. And with the federal tax subsidy included, the cost of new wind falls to between $14 and $52 (Wyoming does even better than most places on cost because the state is just so windy next to the Rocky Mountains).

By comparison, coal had a higher cost of between $60 and $143 per megawatt hour, while a combined cycle natural gas plant’s cost was between $42 and $78 per megawatt hour, cheaper than coal but not as cheap as wind. Nuclear was way high, between $112 and $183.

The result of these numbers is a booming wind industry in the Cowboy State, as Heather Richards of the Casper Star-Tribune reports:

Developers Power Company of Wyoming and Viridis Eolia both have significant wind projects proposed in the state. Power Company’s Chokecherry Sierra Madre wind farm is under construction for the first phase of a 1,000 turbine farm near Rawlins. And Rocky Mountain Power, the state’s largest utility, would like to repower their entire wind fleet in the state, as well as bring 1,100 new megawatts online.

But the coal industry is not happy about it. The state’s coal sector is still the largest in the country, despite this new competition, and it’s facing considerable pressure from cheaper fuel sources both traditional and renewable. The industry hates the federal tax credit for wind and even got the state to levy a separate tax on wind production.

But with costs continuing to fall, plus the prospect of Wyoming serving out-of-state renewables market in places like California (should California successfully regionalize its grid), the coal industry’s fate will be unavoidable. In the long term, that’s not only good for air quality and stabilizing the Earth’s climate, it will also diminish the political power of the industry to try to hurt clean energy through bad tax policy, whether at the state or federal level.

The Uphill Battle To Limit Sprawl In California’s Central Valley

California’s Central Valley is the state’s defining geographical feature. It’s the country’s breadbasket, with over 400 commodity crops, including all the almonds grown in the country. At the same time, it’s poverty-stricken, with Fresno the second poorest city in the U.S., and yet oil rich down by the deeply Republican Bakersfield.

It’s also one of the most environmentally vulnerable region in the state, with one of the most polluted air basins in the country. And as the Los Angeles and San Francisco Bay Area regions say no to new housing, sprawl is spreading into the Valley from these areas, as workers choose cheap housing and super commutes. Sprawl is also the norm around the Valley’s large cities along Route 99 on the eastern side. Like Los Angeles before it, the flat terrain means the region has no real geographical impediments to sprawl.

High speed rail could make the sprawl even worse, as the train will spur growth in places like Fresno, which will be just an hour or so from the booming coastal job centers (Berkeley and UCLA Law released a report on the subject in 2013, along with recommendations to combat the problem).

People in the Valley are well aware of the risk. Former Fresno mayor Ashley Swearengin, a rare Republican high speed rail supporter, tried to do the right thing to encourage more downtown-focused growth in Fresno and not allow the urban core to get hollowed out by competition from nearby cheap sprawl.

But Mayor Swearengin and other downtown booster’s efforts are threatened by Fresno’s neighbor Madera County next door, whose leaders prefer the model of continued sprawl over productive farmland and open space. The result will be the usual negatives we see elsewhere in the state: more traffic, worse air quality, and lost natural resources.

Marc Benjamin and BoNhia Lee detailed the new sprawl projects in the Fresno Bee last year:

Madera County is on the verge of a building boom that creates the potential for a Clovis-sized city north and west of the San Joaquin River, with construction starting this spring.

Riverstone is the largest of the approved subdivisions in the Rio Mesa Area Plan. It’s underway on 2,100 acres previously owned by Castle & Cooke on the west side of Highway 41 and north and south of Avenue 12. Castle & Cooke had plans to build there for about 25 years.

It’s the first of several subdivisions in the county’s area plan to be built. Over the past 20 years, Riverstone and other projects were targeted in lawsuits, many of which have been settled, but some still linger. But some critics contend that the new developments will worsen the region’s urban sprawl.

Principal owner Tim Jones’ vision for his nearly 6,600-home development a few miles north of Woodward Park is a subdivision with six separate themed districts. Riverstone will compete for home buyers with southeast Fresno, northwest Fresno, southeast Clovis and a new community planned south and east of Clovis North High School.

The Rio Mesa Area Plan will result in more than 30,000 homes when built out over 30 years. About 18,000 homes have county approval. The contiguous communities could incorporate to create a new Madera County city that could dwarf the city of Madera and have a population greater than Madera County’s current population of 150,000.

In the coming years, an additional 16,000 homes are proposed in Madera County. On the east side of the San Joaquin River, in Fresno County, about 6,800 homes are approved in the area around Friant and Millerton Lake.

Defenders of these sprawl projects claim that some are mixed-use developments located close to distributed job centers, minimizing the chances that they will become merely bedroom communities of Fresno. But as the development continues outward, it undercuts the market for infill housing, leading to a vicious downward spiral that we saw hit downtowns throughout the country in the middle of last century.

The best way to solve these growth issues is better regional cooperation, particularly around some type of urban growth boundaries. The growth boundaries can be de facto through mandatory farmbelts, rings of solar facilities, and possibly better pricing on sprawl projects to account for their externalities. Or they can be actual limits on growth and urban expansion outside of already-built areas.

Without concerted action, and with the high speed rail coming from Fresno to San Francisco soon, we may soon find that it’s too late to undo the damage in the Central Valley.

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