hope ashiabor associate professor macquarie university larry kreiser professor emeritus
Post on 01-Jan-2016
26 Views
Preview:
DESCRIPTION
TRANSCRIPT
1Hope Ashiabor Associate ProfessorDepartment of Business Law
The Role Of Energy Audits And Tax Incentives In Fostering
Energy Efficiency:A Winning Combination
Hope AshiaborAssociate Professor
Macquarie University
Larry Kreiser Professor Emeritus
Cleveland State University
2Hope Ashiabor Associate ProfessorDepartment of Business Law
Energy Efficiency
“We Must Become the Change
We Want to See”
Gandhi
3Hope Ashiabor Associate ProfessorDepartment of Business Law
Clean Energy Resources
• Supply SideWind power
Solar power
Water power
Biomass power
• Demand SideEnergy efficiency
4Hope Ashiabor Associate ProfessorDepartment of Business Law
Energy Efficiency Resource
• Definition – produce more with less energy.
• Energy efficiency is an energy resource
• Energy efficiency is a zero emissions energy resource
5Hope Ashiabor Associate ProfessorDepartment of Business Law
Two Themes of Paper
• Energy Audits – the review of any operation or
activity within a business or personal activity with
the purpose of improving its energy efficiency
• Tax Incentives – tax credits or other economic
incentives to lessen the cost of installing energy
efficiency improvements
6Hope Ashiabor Associate ProfessorDepartment of Business Law
PART 1 - Background Information on Climate Change
• Climate change mitigation versus adaptation
• Carbon 350
• Consumer education
7Hope Ashiabor Associate ProfessorDepartment of Business Law
Climate Change Mitigation versus Adaptation
• Mitigation – slow or stop climate change
• Adaptation – adjust to a changing climate
8Hope Ashiabor Associate ProfessorDepartment of Business Law
• Pre-Industrial Revolution – Carbon 280ppmv
• Current – Carbon 380ppmv
• Tipping Point – Carbon 450ppmv
• 2100 – Carbon 490ppmv to 1,260ppmv
• Goal – Carbon 350ppmv
Carbon 350
9Hope Ashiabor Associate ProfessorDepartment of Business Law
Consumer Education on Energy Efficiency Resource
• Millions of individual units making decisions
• Fragmented market
• Limited government education programs
10Hope Ashiabor Associate ProfessorDepartment of Business Law
• What is an energy audit?
• Value of energy audit
• Example of energy audit
• Investment analysis of energy projects
PART 2 - Energy Audits and Investment Analysis of Energy Projects
11Hope Ashiabor Associate ProfessorDepartment of Business Law
What is an Energy Audit?
• Energy Audit – the review of any operation or activity within a business or personal activity with the purpose of improving its energy efficiency.
• Energy efficiency is measured on a per unit of output basis.
12Hope Ashiabor Associate ProfessorDepartment of Business Law
Three E’s of Operational Consulting
• Energy economy – least cost
• Energy efficiency – best way
• Energy effectiveness – accomplish intended purpose
13Hope Ashiabor Associate ProfessorDepartment of Business Law
Value of Energy Audit• Access to special expertise
• Identify potential energy cost savings
• Benchmarking data available
• Compliance with various environmental regulations
• Compliance with workplace requirements
14Hope Ashiabor Associate ProfessorDepartment of Business Law
Available Sources of Energy Audits• Government Audits (Example: Regional
Energy Efficiency Program-Western Australia)
• On-line Audits (Certification program available for walk-through audits)
• Utility Company Audits
• Self-Assessment Audits (Energy efficiency training courses available)
15Hope Ashiabor Associate ProfessorDepartment of Business Law
• Paid Consultant Audits (Walk-through energy audits)
• Supply-Chain Audits (Wal-Mart)
• Proposed “Cash for Caulkers” Program in U.S. (energy audits/jobs/energy efficiency)
Available Sources of Energy Audits
16Hope Ashiabor Associate ProfessorDepartment of Business Law
Example of Self-Assessment Energy Audit – Subaru of Indiana
• Result – 14% reduction in energy consumption per car produced since 2000
1. Increase efficiency, reduce waste, increase profits
2. Management leadership is vital
3. Engage front line in process
4. Involve supply-chain in process
17Hope Ashiabor Associate ProfessorDepartment of Business Law
5. Waste is a potential product (Henry Ford)
6. Process may create competitive advantage
(Wall Street Journal, 3/23/2009, p. R4)
Example of Self-Assessment Energy Audit – Subaru of Indiana
18Hope Ashiabor Associate ProfessorDepartment of Business Law
Investment Analysis of Energy Efficiency Resource Projects
• Payback Period – Initial investment divided by annual energy savings after tax effect
• Present Value Analysis – inflows and outflows take place in different periods
• Internal Rate of Return – Rate of return on capital investment
19Hope Ashiabor Associate ProfessorDepartment of Business Law
• McKinsey & Co. report on unlocking energy efficiency in U. S. Economy
• Energy efficiency resource and economic growth
PART 3 - Other Information on Energy Efficiency Resource
20Hope Ashiabor Associate ProfessorDepartment of Business Law
McKinsey & Co. Report on Unlocking Energy Efficiency in U. S. Economy (2009)
• Conclusion – A coordinated energy efficiency program in the U.S. can reduce non-transportation energy consumption by 23 percent of 2020 projected demand
• Since 1980, energy usage per unit of measure has been decreasing steadily
• Upfront funding of energy efficiency projects is a significant barrier
21Hope Ashiabor Associate ProfessorDepartment of Business Law
Energy Efficiency Resource and Economic Growth
• U. S. Goal – Cut greenhouse gas emissions by 80% below 2005 levels by 2050
• Can this goal be reached without affecting economic growth?
• 1990-2007 – world emissions rose 38%, world economic growth rose 75%, emissions per unit of economic activity fell by 20%
(WSJ, 12/21/09, p. R3)
22Hope Ashiabor Associate ProfessorDepartment of Business Law
• Homeowner tax credit for energy efficiency improvements
• Contractor tax credit for energy efficient new homes
• Manufacturer tax credit for energy efficient household appliances
• Tax deduction for energy efficiency investments in commercial buildings
PART 4 - Current Tax Incentives for Energy Efficiency Projects in the United States
23Hope Ashiabor Associate ProfessorDepartment of Business Law
Other Cash Grants for Energy Efficiency Projects in the United States
• Energy efficiency improvements for low-income households
• Energy efficiency improvements for public housing
• Appliance rebate program
24Hope Ashiabor Associate ProfessorDepartment of Business Law
Homeowner Tax Credit for Energy Efficiency Improvements
• Residential Units –21% of energy use in U.S.
• Insulation, replacement windows, external doors, heating, cooling, fans, water heaters, biomass stoves
• 30% tax credit, $1,500 cap, must be primary residence
• Criticism – Low cap, higher amounts available for on-site renewable energy investments
25Hope Ashiabor Associate ProfessorDepartment of Business Law
Contractor Tax Credit for New Homes
• $2,000 tax credit for constructing energy efficient new home
• $1,000 tax credit for producing a new energy efficient manufactured home
• Home must be acquired as residence by December 31, 2009
• Criticism – Credit should be given to final consumer to stimulate home sales
26Hope Ashiabor Associate ProfessorDepartment of Business Law
Manufacturer Tax Credit for Energy Efficient Household Appliances
• $45-$200 tax credit to manufacturer for energy efficient clothes washers, dishwashers, and refrigerators for increases in production over two year rolling cycle.
• $75 million limit for each manufacturer
• Criticism – Credit should be given to final consumer to stimulate appliance sales
27Hope Ashiabor Associate ProfessorDepartment of Business Law
Deductions for Energy Efficient Investments in Commercial Buildings
• Tax deduction of up to $1.80 per square foot
• Available to owner or tenant
• New or reconstructed commercial building
• Must save at least 50% of heating, cooling, ventilation, water heater, and interior lighting energy cost
• Comment – No significant tax cost to government
28Hope Ashiabor Associate ProfessorDepartment of Business Law
Energy Efficiency Opportunities Act 2006 (Cth)
• Energy Efficiency Opportunities Act 2006 (Cth)
• Came into effect on 1 July 2006
• Requires large energy users to assess and report opportunities for promoting energy efficiency in their operations
• Applies to “controlling corporations” (similar to reporting legislation)
29Hope Ashiabor Associate ProfessorDepartment of Business Law
Energy Efficiency Opportunities Act 2006 (Cth)
• Must register if energy use in corporate group exceeds 0.5 petajoules for year
• Roughly equal to 139,000 MWh; 13 ML diesel; 9000 tonnes LNG or 10,000 tonnes LPG
• Or energy bill of:$1.5 to $2.5 million for gas$5 to $10 million for electricity$11 million for diesel$13 million for unleaded petrol
30Hope Ashiabor Associate ProfessorDepartment of Business Law
Energy Efficiency Opportunities Act 2006 (Cth)
• Must register within nine months of first financial year the group exceeds threshold (“trigger year”)
• Electricity generators and operators of electricity or gas transmission or distribution networks were exempt until July 2009 (as long as energy use from other activities was below the threshold)
• Can apply for exemption if unlikely to stay above threshold in subsequent years
• Can apply for deregistration if unlikely to meet threshold for next three years
31Hope Ashiabor Associate ProfessorDepartment of Business Law
• Home Insulation Rebate Scheme
• Solar Hot Water Rebate Scheme
• Green Loans Scheme
PART 6 - Current Tax Incentives for Household Energy Efficiency Projects in Australia
32Hope Ashiabor Associate ProfessorDepartment of Business Law
Home Insulation Rebate Scheme
• Installation of ceiling insulation in 420,000 homes
• Program currently suspended
New program starts June 1, 2010
Rebate reduced from $1,200 to $1,000
Household will claim rebate, not the installer
Increased training and compliance for installers
33Hope Ashiabor Associate ProfessorDepartment of Business Law
Solar Hot Water Rebate Scheme
• By end of January 2010 $850m blow out in the
cost of this program
• Old program eliminated on 20 February, 2010
New program starts immediately
Rebate cut from $1,200 to $1,000
Rebate for heat pumps cut from $1,000 to $600
34Hope Ashiabor Associate ProfessorDepartment of Business Law
Green Loans Scheme
• $175m earmarked for the programfree energy audits;
Program increased from 360,000 assessments to 960,000 assessments
Number of assessors limited to 5,000
green loans of up to $10k each to individuals for efficiency upgrades to homes
Subsidised funding for up to 75k interest-free green loans
• Program was eliminated in March 2010
35Hope Ashiabor Associate ProfessorDepartment of Business Law
• Tax Incentives - more meaningful tax incentives for energy efficiency resource
• Energy Efficiency Audits – start program of government subsidized energy efficiency audits
• Industrial/Commercial Tax Incentives – could result in increased tax revenues
• Consumer Education Programs – increase knowledge of potential energy savings
PART 7 – Summary and Conclusions
top related