April 14, 2004
235 East 42^nd Street
New York, New York

Summaries of Speakers’ Comments 

Plenary Session 9:00 am – 9:45 am

James Lime Vice President for Corporate Affairs, Pfizer

Mr. Lime welcomed conference guests.  He mentioned that Pfizer has built its first LEED rated building in New Haven, CT and that Pfizer is a member of the USEPA’s Climate Leadership Program and noted that corporate environmental goals include reducing carbon dioxide emissions 35% by 2007 and getting 35% of its energy from clean sources by 2010.

 

William C. Thompson, Jr. New York City Comptroller

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Ashok Gupta, Director Air and Energy Programs, Natural Resources Defense Council

Conference keynote speaker, Mr. Gupta, had a positive story to tell in terms of today’s opportunities.  He said that we must organize to ensure that the City, State and private corporations work together to have an impact on energy and electric policy nationally.  For example, there is a huge opportunity to direct pension fund investments toward an energy efficient, environmental direction.  Mr. Gupta said that we often have the technology, what we need is the policy.

Mr. Gupta discussed what it means to be a high performance city.  He believes that it means doubling our economic output while cutting our energy use and emissions in half.  The challenge is reducing input while getting the outputs we want and decoupling economic growth from emissions growth. The United States and New York have many of the technologies that should be marketed all over the world.  The US should be a leader in the global economy.  We have to think in terms of a “triple bottom line” - economic value, environmental protection and social equity - when thinking about the energy sector, Mr. Gupta observed.

Mr. Gupta observed that energy is consumed in 3 primary sectors: 1. Transportation – mass transit ridership can be increased with additional funding and we need to encourage the use of cleaner fuels and more efficient cars; 2. Electricity generation, and 3. Buildings – demand reduction for electricity and other natural resources is needed in order to have green, high performance buildings; NYC’s density means lower per capita energy consumption than elsewhere.  Also, Con Ed’s power delivery system is very reliable.  Finally, there is real leadership in NYC on building green, according to the keynote speaker.

He asked, what is needed now? Innovations in technology, solving the financing problem and better polices that encourage investment to take place by establishing the rules to “unleash” private investment.  These rules will encourage sustainable development in NYC as part of an urban growth strategy to maximize investments in mass transit, green buildings and the electricity generation and distribution system, the keynote speaker said.

Mr. Gupta noted that the US Green Buildings Council is developing new LEED codes that will include building and building location standards for “how to be green in the right place.” 

Mr. Gupta called for the replacement of old power plants with clean electric power facilities like the new Ravenswood (Queens) natural gas, combined-cycle facility. He also noted that great efficiencies on the supply side are needed.  Today, the average power plant operates at a 30% efficiency level.  Investments in more efficient power plants are required. NYC must also reduce its reliance on imported fuel. A bigger problem is that a number of natural gas powered electric plants are permitted for construction in NYC, but there is no financing to build them, noted Mr. Gupta.

Mr. Gupta said that investing in distributed power, as well as wind, solar, biomass and co-generation is needed.  The new Durst building on 42^nd Street will have a 4.5MW co-generation plant on site.  The next generation of fuel cells is beginning to appear and should be commercially available within 3-5 years.  We must be ready for them, said Mr. Gupta.

He also observed that reducing peak demand for electric power is critical.  Along with encouraging more efficient windows and air conditioning, air conditioning could be powered by steam or natural gas in order to further reduce power needs at peak times.

According to Mr. Gupta, given NYC’s peak demand of nearly 11,000MW and import capability of 5,000MW, NYC needs a minimum of 6,000MW and an additional 2,500MW to make sure we virtually eliminate the likelihood of brownouts and blackouts.

Mr. Gupta noted that electric utilities are rewarded by selling and transmitting more power.  This is the current incentive system and this is bad public policy.  This policy must be changed because regulators have misaligned incentives of utility shareholders from those of the public at large, the keynote speaker told the audience.

We must look at the entire system, builders, tenants and utilities, and understand who pays and who benefits or investments won’t be fostered, Mr. Gupta commented.

He also commented that regarding Article X, a renewal is stalled in Albany, which sends the wrong message to investors and utility owners.

Mr. Gupta noted that long-term electric contracts are needed to attract investment.  Utilities should make long term purchase agreements (10 -15 years) because plant builders and financial backers need guaranteed purchases before they will make the investment.  This can also help to drive investments in energy efficiency.

He went on to comment that part of the electricity portfolio should be renewables.  Regulations should require portfolio diversity beyond hydropower. Natural gas prices fluctuate significantly; having renewable sources in the portfolio act as a hedge against some price volatility.

Mr. Gupta offered the following recommendations:

● Government policy should be based on revenue based regulations.  If the utility collects revenues above those needed to cover its costs, some portion of it must be returned – similarly, under-collection of revenues would require a small true up of the rates.  This is different than a rate-based/price-cap system which only encourages higher sales volumes;

● Increase electric power efficiency to lower both the demand and the price for natural gas.  Big price reductions from modest demand reductions can be achieved.  Lower demand reduces prices for everyone.  Currently, the New York Independent System Operators determines how much power is needed and the last, most expensive generator’s bid sets the market clearing price.  Therefore, energy efficiency investments lead to big wholesale price benefits.  In turn, this lowers retail energy prices;

● Invest in energy efficiency in new construction and at the time of equipment replacements.  The time of initial building commissioning and re-commissioning are critical operational opportunities; and

● Increase the purchase of energy efficient equipment and bring new technologies to market.

According to Mr. Gupta, government must lead by example in its own facilities.  Government investment in energy efficiency will drive the market for new energy efficient technologies and appliances.  A mix of policy and incentives are needed.  More efficient appliances don’t necessarily cost more when regulations and incentives are aligned.  For example, refrigerators, front loaded washing machines and ceiling fans are all much more efficient and prices have come down.  We must figure out what is preventing more energy efficient technologies from entering the marketplace and how to overcome these obstacles, he noted.

Finally, observed Mr. Gupta, remember the reason for doing all these things – to minimize the risk of global warming.