NYC Clean Heat is regressive with respect to Clean Air Compliance

The NYC Clean Heat program is in effect strongly regressive, for at a time when it is completely viable for multifamily buildings to switch to green energy, the net effect of the way the present NYC Clean Heat program works is with NYC boiler conversions, and shifting buildings from oil to natural gas en mass. Evidently, natural gas burns cleaner than #6 or #4 oil, but nonetheless a more substantive shift to renewable energy is long since feasible, and moreover is economically more attractive for building owners, tenants and the city. NYC Clean Heat should put more emphasis on the shift to renewables. Most importantly, the shift to renewable energy would have far greater impact on the city's Clean Air profile, than practically forcing these buildings to commit to another 30 years of fossil fuel burning, even if the emissions per se are lower. In short, the net result is that this program in the way it is being practiced is strongly regressive from the point of view of achieving the vaunted improvements in Clean Air Act compliance.

The NYC Clean Heat Cookie Cutter Approach

By and large the program now is focused on prolonging the fossil fuel era as long as possible, because it focuses entirely on the adoption of clean fuels, and happily continuing to burn things, which will be for the most part natural gas and in a few cases either #2 oil or even biodiesel. In short, its impact on actually meeting Clean Air Act standards, will be absolutely minimal, and when one considers that it is possible to switch to far more renewable energy today, it is in effect strongly regressive. To be specific, we assume the reference building has an old-fashioned steam boiler, with hot water from a coil in the boiler. Further, natural gas does not have any particulate emissions, and between greater efficiency of a modern boiler and cleaner burning gas, we can expect perhaps a 50% reduction in CO2 emissions:

1. Building burns #6 oil and the base line CO2 emissions are 100, and particulates 100.
2. Building switches to Natural gas, CO2 goes to 50 and particulates to 0.
3. Over thirty years that means cumulative CO2 emissions of 30x50= 1500.

This path adds up to passing off the difference between the Titanic sinking in 10 minutes instead of 5 as an "investment" opportunity. If this option is anything, it is not an investment, but an operational expenditure. The problem gets compounded even further if businesses take on long-term debt for a short-term fix of this sort.

Clean Air and sustainability from renewables

Now the alternative, as proposed in DaBx PlaNYC2020:

1. Replace Domestic Hot Water (DHW) with a renewable solution, which eliminates 30-50% of fuel consumption (these are proven stats, DHW is year-round, heat only half the year) this reduces emissions by 30-50%, so both CO2 and particulates go to 50-70% of former number, I will use 50% for the example here. The choices are geothermal or solar thermal.
2. The economic life of the boiler is now extended, since the boiler gets a summer vacation from now on.
3. When boiler replacement becomes economically necessary, which we'll estimate is in 10 years, replace with either a solar thermal HVAC solution or individual heat pumps, (driven by solar PV or wind energy) or in the worst case a new natural gas boiler. Combine with better insulation, new windows as needed.
4. Results over 30 years now are: years 1-10: CO2 50, particulates 50, and years 10-30 CO2 0, particulates 0. Total CO2 10x50+20x0= 500, particulates 500, and particulate emissions would be limited to the winters, when smog is less of a problem.

Note: These numbers are obviously only schematic, and there are a lot of nuances there which we ignore for the sake of this example, such as the fact that gas may be cleaner burning, but the transportation losses also figure into the emissions, to say nothing of the fracking debate.

Sustainability is the only way to clean air

Sustainability is not just an idle thought, it is also economically very powerful. Properly analyzed, business sustainability follows directly from making the right decisions in this transition. Building preservation is enhanced by switching to renewables. Most importantly, since the sustainable technologies of sun, wind, water, geothermal all eliminate the need of burning things, except in some very limited backup functions, such installations are all enhancements to the asset value of the building.

Energy efficiency is of fossil fuel is mere life extension

Evidently, if no economical entry point can be found for a building to convert to renewable energy, and achieve sustainability, and a measure of independence from the grid, then efficiency measures for the existing plant are the only option. In the vast majority of buildings there are serious steps that can be taken towards sustainability. Whenever a building has any renewable option--free energy, after all--it should take it.

Nowhere on this site do we argue against energy efficiency, we merely point out it should never be the first objective. The first objective should be do we make or buy our energy, and if instead of energy efficiency, we take reducing emissions and achieving Clean Air standards as an objective, the building is then free to pursue that objective with whatever means is the most economically attractive, and that is how it should be. The 90by50 report from the Urban Green Council pointed out the top line feasibility of massive change, but meanwhile we are missing a huge opportunity for shifting to sustainability, and make significant progress towards Clean Air in 2013, 14, 15.

Conclusion

NYC Clean Heat is shifting buildings from #6 and #4 oil towards Natural Gas at the expense of Clean Air, and long-term sustainability of buildings, which goes against an interest in building preservation.

Leveraging NYC Clean Heat for Renewable Energy Retrofits

The NYC Clean Heat program is one of the many examples of good intentions gone wrong, for by and large it misses the opportunity to push the city towards renewable energy. Instead, it is diverting capital to a temporary fix, leading to NYC boiler conversions to natural gas, when far better options might be available, better for the city, for the tenants and for building owners. Large numbers of C- and D-class apartment buildings, particularly in the outer boroughs, such as the Bronx, which typically are burning #6 or #4 oil would have an easy time shifting towards renewable energy instead of to natural gas (or even biodiesel).

It is true enough that natural gas is less polluting than #6 residual oil, or even #4, but from the standpoint of building preservation. However, these buildings would be generally more viable economically in the long-term by switching to renewable solutions.because renewables offer a permanent energy price hedge, and lower maintenance costs. The only way to get buildings out of the economic trap of energy price hikes is renewable energy. Probably 50-75% of buildings in this particular class are capable of making the switch.

The right use of The NYSERDA MPP

To make the transition to gas attractive the NYSERDA MPP program offers a wraparound for overall efficiency upgrades to buildings, and which is in many cases not the best option if it leads to merely making a fossil fuel system more efficient, instead of switching to a renewable alternative. The financial methodology of that program is geared to making the existing infrastructure more efficient, not to evaluating alternative solutions.

The idea should be to make the transition to economic sustainability and increased competitiveness with renewables. Only if a renewable solution is not in the cards, is the marginal reduction of CO2 and particulates emissions helpful, but again, not if it distracts us from the major goal of switching to clean energy and becoming energy independent. If the NYSERDA MPP is used to finance a conversion to natural gas, it misses its potential, as long as an alternative is possible for a particular building. Very simply, 30 years of no energy bills will beat 30% savings any time. Owners sacrifice future value of their buildings if they make the wrong choice.

Obviously, if we can make it to a renewable energy infrastructure, we are going to outperform the mere switch from oil to natural gas. Thirty years of no energy bills will always beat out a 30% energy savings, if you can do it economically. The thing to do would be to pursue an exemption from the Clean Heat conversion, and do a 30 year energy plan for the building, such that the first phase qualifies you for the NYSERDA MPP program.

MAJORING IN A MINOR

Both NYC Clean Heat and the NYSERDA MPP focus on a secondary objective first and thereby falsify capital decisions, and cause capital destruction. Naturally, in some buildings there is no renewable option, so that's bad luck. Anyone who has done any financial modeling or operations research work can tell of how bad it can be if you major in a minor, if you optimize a system for a secondary objective, not the primary one. For a building, the primary function should be the long-term Capital Asset Value of the building. The renewable energy building will be worth some 10-20% more, hands down, in 5 or 10 years, than its fossil fuel (or even biodiesel) burning twin. The exact spread will depend on energy prices, of course.

Energy Efficiency is the secondary variable that can either make a fossil fuel system more efficient (not green!) or make a renewable energy system more economical (very green). The confusion in the public dialog is that energy efficiency is misrepresented as green, which is merely a way of greenwashing fossil fuels. Energy efficiency is only green if it helps you make a renewable system economical, and in that case there is a direct compound return, because e.g. better insulation will reduce the installed capacity needed.

An alternative conversion program

Here is the outline of the renewable energy strategy:

• Make sure that phase one of your plan meets or exceeds the criteria for NYSERDA's MPP.
• Get an exemption from the Clean Heat conversion program because you are going renewable.
• Typically, the first step is to take Domestic Hot Water (DHW) off the boiler, and implement either a geothermal or a solar thermal solution, which will typically achieve a 25-50% reduction of your BTUs for heat and hot water. (Because heat is seasonal, but hot water is year-round).
• With your exemption you should get a clear agreement that for economic reasons your are doing the next step (heat) when you need a boiler replacement.
• By doing this, you have bought another 5 or 10 years of economic life for your boiler, because it'll be off-line in summer.
• At the end of the economic life of the boiler, you then can go to either a renewable or use the best fossil fuel solution available then.
• For details, see www.dabxdemandsidesolutions.com

It should be noted that the City has recently begun studying geothermal energy, which is important for this program and has already provided a powerful solution to many buildings. Also wind energy should move to the top of the agenda as more suitable designs are appearing on the market which are geared for installation on buildings.

 A long term renewable energy plan

The trap of all programs that focus on marginal efficiency improvements, such as the NYSERDA MPP, is that they focus on only ONE point in time, and ignore the long term plan for a building. The truth is that the path of energy efficiency, which is prioritized in the NYSERDA MPP, in most cases shows the quickest returns from some effiiciency gains, but if you did a 30 year CAPM analysis of your building, you would see that subsequent investments in energy efficiency face strongly diminishing returns. By comparison the renewable energy plan is more capital intensive up-front, but usually superior, because you get 30 years of (nearly) no energy bills, not merely a 30% reduction in consumption.

We should also note that if subsidized finance is used to switch buildings to natural gas, that would have otherwise been capable of switching to renewable energy, that is really an indirect subsidy of some energy company, and of the fossil fuel industry in particular.

Conclusion

The need to switch away from #6 and #4 heating oil, should be leveraged for converting to renwable energy, not natural gas, whenever it is feasible. Owners who do will see at least a 10-20% increase in building values over the next 10 years, if they follow through.

If you do a proper 30-year energy plan for your building, with a good understanding of the engineering interdependencies, two things will become clear:

• if your building is suitable, a good renewable energy solution will beat out mere "efficiency" of a fossil fuel solution.
• And, number two, you can use some of the programs that now exist to help secure financing for your conversion.

NYC Clean Heat provides the motivation, and the NYSERDA MPP can be used on behalf of a conversion to renewable energy.