New Jersey has long sought to be a leader in energy efficiency. However, the state has had limited success in this intention. Under the Christie Administration, the Clean Energy Fund was raided by half a billion dollars to balance the state’s budget. As Steve Gabel has noted, “A recent ranking by the respected American Council for Energy Efficiency Economy put New Jersey in the middle of the pack at 23rd — despite energy conservation repeatedly being cited as a top priority in the state’s energy master plans as long ago as 1978.”
But with Commercial Property Assessed Clean Energy (PACE) close to being enabled, NJ is finally going to be able take a significant step forward toward reducing energy waste and inefficiency in commercial buildings. C&I properties (which include not only commercial and industrial buildings but also multifamily, agricultural, and institutional/nonprofit buildings) account for approximately 28% of NJ’s overall carbon emissions.
Gabel’s comments were made at an NJSpotlight event on “NJ’s Energy Future: Energy Efficiency,” which featured a panel including Stephanie Brand (the NJ Rate Counsel), Mary Barber (EDF), David Daly (PSE&G), Tom Massaro (NJR), and Adam Procell (Lime Energy), all of whom agreed that, in Procell’s words, “We’ve really [only] scratched the surface in New Jersey.”
In Tom Johnson’s summation, “For years, energy conservation has been a state priority more in theory than in practice. The Murphy administration has set new goals, but there’s disagreement about how to achieve them.”
The main “disagreement” within the group was over the somewhat conflicted role of the utilities, which are seeking to de-couple their revenues from the amounts of power sold, so as to get paid exclusively for “the pipes and wires,” removing the incentive to sell more energy. But there were other problems cited as well, including an unwillingness or inability of many businesses to invest in even relatively short-term payback options.
In the state’s fiscal year 2018, the New Jersey Office of Clean Energy projected 0.36 percent in annual energy savings, according to Mary Barber, New Jersey clean-energy director for the Environmental Defense Fund. The new state law requires electric utilities to cut consumption by 2 percent and gas companies to cut it by 0.75 percent. “Based on the results, we need change,’’ said Barber.
These numbers are abysmal in the face of the accelerating threat of climate change. NJ’s carbon emissions are down by about 10% from 2000 to 2015, compared with 30% for the District of Columbia and nearly 25% for Maine for the same period.
New Jersey PACE (NJPACE), a 501c3 nonprofit that has been championing PACE since 2012, is leading a group of stakeholders who are clear that PACE is a solution to most of the problems raised by the panel. PACE (Property Assessed Clean Energy) provides financing via a private sector competitive marketplace, it provides 100% nonrecourse financing to commercial property owners with no upfront costs, it solves the “split incentive” problem because tenants who pay their own electricity bill can share the costs and benefits of PACE, and when a property is sold, the PACE assessment transfers to the new owner.
PACE requires NO financial contribution from the public or taxpayers, coexists with and complements government subsidies and incentives, and offers an alternative to utility-financed programs. Together, these programs can have an enormous impact on NJ’s aging building stock.
PACE opens up a market that could be worth over $100 billion, just in New Jersey, based on an informal market study done by NJPACE. Imagine if even 5% of NJ’s C&I properties were upgraded to be clean and resilient, with the improvements being financed over their useful life so as to provide immediate savings to the owner. This would be just the beginning of a long-term transformation of our entire built environment. It would provide thousands of jobs and immediate economic benefits to local communities.
This possibility is real. PACE is coming to the Garden State with the anticipated passing of the PACE Amendment (S1611/A1902) in the next few months.
At the NJSpotlight event, most participants agreed that “Any new statewide energy efficiency initiative… ought to focus on low-income populations who have largely not benefitted from state efforts to promote clean energy.”
While most energy efficiency programs have benefitted the wealthier areas, our goal at NJPACE is to build a PACE program structure that supports an open marketplace at the state and local levels, and helps finance the projects that will make the greatest difference to underserved communities as well as luxury commercial properties.
We can do this, with the right education and outreach campaign. Which means that for the foreseeable future there’s an unlimited potential to mobilize capital and labor to remake our world for a more sustainable and regenerative tomorrow.
If you would like to participate in creating an open market PACE program that serves all stakeholders in New Jersey, we welcome your volunteer time, in-kind contributions and tax-deductible donations to New Jersey PACE. Contact Victoria Zelin, Director of Development, vzelin@NewJerseyPACE.org, 908-507-3150.
Beware of Jevons principle – improved efficiency begets increased utilization. The industrial revolution took off in Britain when James Watt introduced his more efficient steam engine. Today’s more efficient airliners have enabled a boom in air travel. Looking from an economics point of view, people spend what they can afford. Improved efficiency will naturally result (in most cases) from a reliably increasing carbon price.
Yes, the Jevons principle (sometimes called the Jevons Paradox) says that increased efficiency will likely result in the increasing utilization of the more efficient resource, thus potentially countering the emissions reductions that would be expected to result from reducing energy use in each individual instance. But consider the alternative: do we really want less efficient buildings? And yes, we will likely get more of them (though probably not because of the energy efficiency improvements).
Eventually, though, we should get to zero-net-energy and positive-net-energy buildings (that take more carbon out of the atmosphere than they discharge). And of course energy efficiency is certainly not the only thing we need to do to reduce emissions; we also need to switch to clean, renewable sources of energy generation (which PACE also provides financing for), and will also almost certainly need to implement “drawdown” solutions which remove carbon from the atmosphere and use it to enhance the soils that we rely on for agriculture, or sequester it in a more or less permanent manner. So Jevons notwithstanding — and the so-called “rebound” effect is likely to be much smaller for buildings than it is for steam engines or airplanes — we still need to do everything we can to reduce the energy that’s being wasted and discharged into the environment.
We’ve also concluded that a carbon tax or penalty is not likely to be enough either; in addition we need a “global carbon reward,” that incentivizes reduced emissions and sequestration — see Global4C.org, another one of our projects, for an extended explanation of this perspective. And thanks for your comment, and the opportunity to discuss these questions further.