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Proposed EPA Green Guidelines Lend Credibility

The U.S. EPA has proposed five changes to its Green Power Partnership program that will affect how Intel, Cisco, and other large purchasers of renewable energy credits (RECs) are credited. The five changes, proposed to take effect on Feb. 13, 2009, lend credibility and accountability to green efforts.

The proposed changes are as follows:

1) Minimum purchase levels for program participation: minimum purchase requirements will increase for all four usage categories (more than 100,000 megawatt hours; 10,000 to 100,000 mWh; 1,000 to 10,000 mWh, and less than 1,000 mWh)

2) Requirements for new renewable energy purchases: 100% of a power purchases must come from "new facilities," defined as becoming operational on or after January 1, 1997

3) Rules for accounting for future RECs: no longer allows partners to count RECs to be generated in future years toward their current year's purchase

4) Green power claims: the proposal would require that partners with branded franchise facilities which they do not own disclose whether or not the purchase scope includes these facilities

5) Reduction in the "window" of time allowed for members to make their purchase from the time they join the GPP: the window for new partners to consummate their purchase would be reduced from one year to six months from the date they join the partnership.

Of these, I'm keenest on No. 3. While it might reduce the amount of near-term capital flowing into the renewable energy market by not allowing users to pay, and take credit, for renewable energy that doesn't yet exist, it increases the near-term accountability of RECs. The credibility that will bring is priceless.

The current systems is explained by the EPA in its Guide to Purchasing Green Power:

"An alternative way to buy RECs is through a subscription, or 'future RECs,' which involves an up-front purchase of RECs to be generated in the future by a new renewable facility. The advantage of this approach is that it promotes new renewable facilities by providing up-front financial assistance for their development and construction. In return, the purchaser receives the RECs as they are generated over an extended period of years. Compared to annually buying RECS close to the time they are generated, the subscription method emphasizes the up-front payment for a future stream of RECs. The additional risk of this approach is that the plant might not be constructed, and buyers should investigate what remedy the seller proposes in such an event. As with all products, independent product certification and verification of the claims made is an important aspect to consider."

As evidenced by the totality of their efforts, Intel, named EPA Green Power Partner of the Year, and Cisco, ranked ninth on the EPA Top 50 list, will be environmental leaders regardless of the proposed changes.

In June 2008, Cisco announced a corporate global greenhouse gas reduction goal of 25% in absolute terms by 2012. Cisco now purchases 378 million kilowatt-hours of green power in the United States, supplied mainly from biomass, wind, solar, and small hydro sources.

Intelpowers more than 46% of its U.S. facilities through the purchase of more than 1.3 billion kilowatt-hours a year of RECs generated from wind, solar, geothermal, and biomass sources. Intel's venture capital arm, Intel Capital, invests in various green technologies, including solar photovoltaics. Besides promoting greater energy efficiency in its products and facilities, over the last six years Intel has invested over $21 million toward more than 250 energy conservation projects that saved more than 500 million kilowatt-hours.

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