green legislation, regulation, and mandates

Green Legislation, Regulation, and Mandates

Where do we stand? Where are we headed?

AH&LA E&E CommitteeApril 13, 2010

Presenters:Joel Bluestein, Sr. Vice PresidentJean Hand, ManagerMax Jamieson, AssociateErin Richmond, Senior Associate

© 2008 ICF International. All rights reserved.icfi.com/greenbusiness 2

A little about ICF…

About ICF

Founded in 1969 Headquarters in D.C. area Global presence with 50 offices

throughout the world More than 3,500 employees Offering energy, environment,

and sustainability strategy, policy, program design, and management support

Highlights of Climate Experience

Over 230 professionals with climate-related expertise

Provided climate policy advice to > 60 governments

Providing climate strategy advice to > 65 companies in the FT Global 500

Tracking global green legislation via local offices, client engagements, and direct participation


Our Team

Joel Bluestein, Senior Vice President Over 30 years experience in energy & sustainability regulation Directly involved in emission trading program development Participates in national debate on new environmental policies Has testified before Senate Environment and Public Works Comm.

Max Jamieson, Associate Supports public and private sector clients with climate change

strategy and policy development. Provides CRC support to organizations in the UK. Advises clients regarding EU legislation and potential impacts


And last but not least…

Erin Richmond, Senior Associate Supports government and private sector clients with environmental

performance improvement Contributes to utility program design and implementation Coordinates legislative tracking Environmental Policy educational background


Climate Change is Increasingly on the Public’s Mind


Green Meeting & Lodging Trends

Florida state agencies and departments can only do business with Florida Green Lodging Program Participants

California encourages state employees to consider green lodging

Nearly half of the U.S. states have their own green lodging programs

EPA is attempting to "green" all meetings planned or funded by the Agency.

Similar mandate for federal travelers could be comingGreen Meetings promoted in Federal Green Challenge


Agenda

GHG Reporting, Legislation, and RegulationGHG Emissions ReportingGHG Emissions Cap and Trade LegislationDirect Regulation of GHGs

Energy Performance Reporting Building Codes & Standards Incentive and Rebate Programs


What happened in Copenhagen?


9

COP-15 – Success or Failure?

Copenhagen had been set as a milestone to establish the post-2012 framework for international GHG reductions.

Broader international commitment has been identified as a milestone for U.S. legislation.

The UN process is also the framework for creation and use of international offsets, which are very important to U.S. compliance.

Having U.S. legislation prior to Copenhagen was a goal and possibly a barrier to Senate action.


10

Key Issues for Copenhagen

A post-2012 structure was required to continue the program and support the international trading system.

The U.S. and BRIC countries needed to be brought into the program. The U.S. and BRIC countries would contemplate reductions, but not on

the KP basis – tonnage reductions from 1990. Agreement on adaptation and mitigation funds:

Would they go to transitional economies? Would there be appropriate recipients? How much?

Is the KP structure appropriate and workable going forward – Process and substance?

Can there be an enforceable agreement? Needed to address many, many other issues, including

improvement of CDM program.


11

The Outcome Met Expectations

No enforceable treaty A “political agreement” A structure for moving forward in the next year or so Indications of commitment from many countries Basic agreement on adaptation and mitigation funds


12

But There Was More…

China and the U.S. taking a lead role in negotiating the outcome Acknowledgement that the U.S. and economies in transition will enter

under a different structure An indication that the process may change Some agreement on the magnitude of funding An inkling that the future structure may be very different There are many, many other issues to address but they could not be

addressed until these larger issues were faced and they could not be resolved by negotiators. Heads of State needed to resolve these issues, and they did.

There is much more to be done, but now a much stronger basis for progress to be made.

GHG Emissions Regulation & Legislation


GHG Emissions Reporting & Regulatory Schemes

GHG Emissions Reporting only requires entities to report their emissions and does not impose any caps Could be the first step in developing regulatory scheme Examples: US, UK, Australia, Canada

GHG Emissions Cap requires reporting and imposes emissions cap Examples: EU, Canada, Australia, US, India (energy efficiency)

Direct regulation takes place through air regulatory or other programs

All of the above primarily apply to major emitters, such as electric utilities, industrial sites, and manufacturers


Current U.S. Legislative Proposals

Waxman/Markey Bill – HR 2454 passed June 26, 2009. Kerry/Boxer Senate bill passed out of committee in November.

National, economy-wide cap and trade program starting in 2012. Reductions from 2005 levels: 17% by 2020 (20% in Senate bill) 42% by 2030 83% by 2050

Large emitting facilities covered directly: Electric generators (2012) and industrial facilities that emit >25,000 tons GHG/year (2014)

CO2 emitted from petroleum and small natural gas users (residential, commercial) regulated at point of production or import (upstream). Petroleum refiners and importers (2012) Natural gas liquid producers (2012) Gas LDCs (for deliveries to non-capped entities) (2016)

Extensive use of domestic and international emission offsets.


U.S. Legislative Outlook

With the Senate bill out of committee, the Senate is now free to pursue active discussion on a modified bill. Targets and timetables not changing.

Cantwell/Collins bill proposed with regulation at point of production, 100% auction, limited trading and offsets, most revenue allocated to consumers.

Kerry, Graham, Lieberman developing an integrated, revised proposal. Could include some Cantwell provisions as well as: Fuel tax instead of cap for transportation emissions. Support for nuclear and oil and gas development.

Progress this Spring could allow passage in the Fall or early 2011. Most likely driver is industry desire for an alternative to direct regulation.


Regional Carbon Market Initiatives

States with stripes have state-specific GHG reduction goals or mandates.

Regional Greenhouse Gas Initiative (RGGI)

Signed: 2005 Launch: Jan 2009

Western Climate Initiative (WCI)Signed: Feb 2007

Scheduled launch: 2012

Midwest Greenhouse Gas Reduction Accord (MGA)

Signed: Nov 2007Scheduled launch: 2012


How Does This Affect Your Company?

Direct applicability varies widely by program and locationSome programs only affect large facilities with significant direct

emissions (U.S. proposals)Some, like UK CRC, affect all properties including indirect

emissions (electricity)

Even if not directly affected, there may be secondary effectsEnergy prices may be higherPossible incentives for energy efficiency

Companies must track regulatory developments to determine specific applicability


U.S. Applicability Considerations

Many regulations/legislative proposals target facilities with direct emissions >25,000 metric tonnes CO2e per year.

For example, for fuel combustion, this is approximately:460 million cubic feet of natural gas2.5 million gallons of heating oil

Most hotel properties will not trigger but large resorts could.


Meanwhile, in the United Kingdom…


The UK CRC Energy Efficiency Scheme

Mandatory participation

>6000MWh half-hourly electricity use in 2008 (qualification)

Responsibility falls on highest parent

April 1st 2010 start

Cap and trade program

Covers all electricity and fuel use (except transport)

Participants purchase allowances on an annual basis to cover the emissions of the coming year

The money raised through allowance purchase is recycled back to participants with a bonus/penalty depending on how well they performed

Participants are ranked in a league table that will be made publicly available

The position in the league table determines the recycled payments


CRC Timetable

2008 20102009 2011 2012 2013

January

December

April September April October April October April

1st Sale of Allowances

1st League Table Publication and

Recycling Payment

2nd Sale of Allowances

Qualification Period

Registration Period

Periods over which CRC Emissions must be recorded:

Apr 2010 – Mar 2011

Apr 2011 – Mar 2012

Apr 2012 – Mar 2013

2nd League Table Publication and

Recycling Payment



The highest UK parent is held responsible and liable for all properties, including franchises

Administrative fees Penalties for reporting delays and errors Allowance purchases

Cash flow requirements (>$60,000)

League table performance rankingsReputational impacts Recycle payments

…and finally, the cost of not being energy efficient

Energy Performance Reporting


Energy Performance Reporting

Require disclosure of a building’s energy performanceEnergy Rating System (e.g., ENERGY STAR Portfolio Manager)Energy assessment by auditor (e.g., Ireland, Denmark)

Applicable to commercial buildings (residential in some countries)

Some require public disclosure of performance on public database (e.g., Washington, D.C.)

Some only require disclosure at time of sale or lease (e.g., California)


Who Requires Energy Performance Reporting?

U.S. States and Localities require ENERGY STAR4 cities, 2 states require private buildings to report2 cities, 2 states require public sector buildings onlyExamples: California, DC, Washington State, New York City

EU’s Energy Performance of Building Directives (EPBD)Member States set minimum performance standards on energy

performance of new and existing buildings under major renovationSets systems for energy certification of these buildingsCurrently considering a “recast”

Australia (pending legislation)National Australian Building Energy Rating System (NABERS)



For owned/managed properties, gather energy data.Collecting and assessing performance across a portfolio today

ensures compliance and prepares for future.

For space you plan to buy or lease:You will be able to know how it performs in terms of energy

efficiencyUse as a strategy to reduce your footprint

Educate your franchisees

Building Codes & Standards


Green Building Codes and Standards

U.S. GBC’s LEED LEED mandates are primarily on public sector buildingsPrivate sector mandates are on the rise for those with or without

public funding. E.g., Boston, Connecticut, Portland, Washington, D.C.

CALGREEN International Green Construction Code


California’s Green Building Standards Code (CALGREEN)

First mandatory green building standards code As of January 1, 2011, new buildings must:

Reduce water consumption by 20%Divert 50% of construction waste from landfills Install low pollutant-emitting materialsSeparate indoor and outdoor water metersMoisture-sensing irrigation systems for large landscapesMandatory inspections of energy systems of buildings > 10,000 SF

CALGREEN compliance granted upon passing state building inspection


International Green Construction Code

International Code Council (ICC), et al. ICC reaches all 50 states and more than

22,000 local jurisdictions Expected to “accelerate the

proliferation of green building codes and standards across the US and around the globe.”

Provides regulatory framework for constructing high performance commercial buildings that are safe, sustainable, and by the book.



Green requirements are spreading quickly across the U.S. (e.g., LEED and CALGREEN)

Financial incentive opportunities may be available Without national requirements, it’s a great deal of

information to track Adopting prototype design or process to incorporate green

requirements into all new construction or conversions may save time and money.Where it is not required, it will create a positive PR opportunity and

demonstrate leadership.

Incentive and Rebate Programs


Building Star (Pending US Legislation)

Introduced in Senate - March 2010 Provides $6 billion in rebates and incentives for EE in

existing buildings Would cover 30% of costs for energy audits, building

envelope insulation, mechanical equipment upgrades, lighting and energy management and monitoring equipment.

Estimated savings of $3 billion annually for building owners


Other Incentive Programs

Local, State & Federal Tax Incentives American Recovery and Reinvestment Act

Utility Energy Efficiency ProgramsOften arise from legislation and/or public utility commissionsNew construction and existing buildingsCustom and prescriptive measuresEx: New York, California, Maryland, Michigan, Pennsylvania


Conclusions

A variety of laws and regulations are now established or pending, both domestically and internationally creating reporting and compliance obligations as well as potential costs and incentives.

More regulation, legislation, and mandates are expected. There is a wide range of current and potential impacts for

the hospitality and lodging sector. These regulations will affect every aspect of business and

require a unified approach to planning and compliance.


Next Steps

Learn about current and pending legislation and regulation Know how you will be impacted Prepare accordingly and proactively Understand the provisions in order to prepare strategically Put a plan in place to reduce energy and GHG emissions Educate your franchisees Know what is coming and get involved to influence it. Leverage your success for PR


Thank you for your time.

Jean Hand

703.218.2658

[email protected]

Joel Bluestein

703.934.3381

[email protected]

Max Jamieson

+44 20 7092 3034

[email protected]

Erin Richmond

703.934.3206

[email protected]

green legislation, regulation, and mandates

Documents

icf international

international offsets

international ghg reductions

green lodging programsepa

climate change strategy

federal green challenge

green lodgingnearly

eu legislation