Sustainable Aviation Fuel (SAF) Tax Credits – New Treasury and IRS Guidance Announced –

Last week, the U.S. Department of the Treasury and Internal Revenue Service (IRS) released guidance on the Sustainable Aviation Fuel (SAF) Credit established by the Inflation Reduction Act (IRA).

Per the press release from Treasury, “…Sustainable aviation fuel is a key part of the Biden-Harris Administration’s efforts to transition the American economy to a clean energy future and rebuild the middle class from the bottom up to the middle out in rural America,” said U.S. Secretary of Agriculture Tom Vilsack. “Today’s announcement is an important stepping stone as it acknowledges the important role farmers can play in lowering greenhouse gas emissions and begins to reward them through that contribution in the production of new fuels. This is a great beginning as we develop new markets for sustainable aviation fuel that use home grown agricultural crops produced using climate smart agricultural practices. USDA will continue to work with our federal agency partners to expand opportunities in the future for climate smart agriculture in producing sustainable aviation fuel.”

“The guidance released today reflects the latest data and science needed to help create new economic opportunities for America’s agricultural sector,” said U.S. Secretary of Energy Jennifer M. Granholm. “This interagency effort will help our climate goals take flight with cheaper, cleaner sustainable aviation fuel — ensuring America maintains an innovative edge on the global clean technology stage.”

The Treasury Department’s guidance provides important clarity around eligibility for the SAF Credit. The credit incentivizes the production of SAF that achieves a lifecycle greenhouse gas emissions reduction of at least 50% as compared with petroleum-based jet fuel. Producers of SAF are eligible for a tax credit of $1.25 to $1.75 per gallon. SAF that achieves a GHG emissions reduction of 50% is eligible for the $1.25 credit per gallon amount, and SAF that achieves a GHG emissions reduction of more than 50% is eligible for an additional $0.01 per gallon for each percentage point the reduction exceeds 50%, up to $0.50 per gallon.

As part of the released guidance, the agencies comprising the SAF Interagency Working Group (IWG) jointly announced the “40B SAF-GREET 2024″ model. This model provides another methodology for SAF producers to determine the lifecycle GHG emissions rates of their production for the purposes of the SAF Credit.

The modified version of GREET incorporates new data, including updated modeling of key feedstocks and processes used in aviation fuel and indirect emissions. The modified GREET model also attempts to integrate key greenhouse gas emission reduction strategies such as carbon capture and storage, renewable natural gas, and renewable electricity.

The Notice incorporates a USDA pilot program to encourage the use of certain Climate Smart Agriculture (CSA) practices for SAF feedstocks. Incorporating CSA practices into the production of SAF will likely lower overall GHG emissions associated with SAF production and increase adoption of farming practices that are associated with other environmental benefits, such as improved water quality and soil health.

For corn ethanol-to-jet, the pilot provides a greenhouse gas reduction credit if a “bundle” of certain CSA practices (no-till, cover crop, and enhanced efficiency fertilizer) are used. It similarly would allow a greenhouse gas reduction credit for soybean-to-jet if the soybean feedstock is produced using a “bundle” of applicable CSA practices (no-till and cover crop). Per the announcement, this is a pilot program specific to the 40B credit, which is in effect for 2023 and 2024.

To credit CSA practices in the Clean Fuel Production Credit (45Z), which becomes available in 2025, the agencies have committed to do further work on modeling, data, and assumptions, as well as verification.  Lastly, a new 45Z-GREET will be developed for use with the 45Z tax credit.

Green Spouts: The focus on SAF and aviation fuel by the Administration and relevant agencies continues.  The new rules enable ethanol and soy-based biofuel to be eligible for tax credits under the IRA. Biorefineries can qualify for tax credits if their fuel is sourced from corn and soy farms that use certain “climate-smart” conservation practices. SAF is a large part of the airline industries’ plans to reduce GHG emissions.  Per the EPA, only 24.5 Million gallons of SAF were consumed in the US in 2023, leaving close to 3 Billion gallons a year more of additional production and consumption to meet the Administration’s 2030 domestic goal for SAF.

Aviation emissions (mostly from fuel sources) account for approximately 2% of global energy-related carbon dioxide emissions (or about 800 million metric tons of CO2.  The aviation industry is responsible for approximately 12% of CO2 emissions from all transportation.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

 

Sustainability and Real Estate – Thoughts from the I-Global Conference 3-26-24

We had the pleasure or participating in the I-Global LP and GP Conference yesterday in New York City.  In a fast moving, lots of ground covered panel headlined by Andrea Pinabell – RE Tech, Uma Moriarity – Center Square, John Forester – RMR Group, Hyon Rah – DWS and Randy Hoff – PWC which I had the honor of moderating, the discussion focused on Sustainability, ESG and Real Estate investment.

The panel covered how each of their organizations have set goals and targets for sustainability including some setting net zero 2024 goals (wow), operational efficiency and energy usage reduction goals, water and recycling goals, return on investment goals and how sustainability is used as part of the various lenses to evaluate and determine which assets to purchase and invest in and how resiliency and weather impacts like hurricanes, floods, and wild fires are relevant to decisions being made by investment committees on where to invest and where to divest assets.

We touched on the advent of Energy Star, the free tool from the EPA that has been around for decades and keeps getting better with more in depth features and analysis tools, and how it can be used to measure building performance within a market segment as well as across various market segments given that the data within the tool is normalized for weather and temperature.

The panel defined and discussed Scope 1 (the energy one consumes and the greenhouse gas (“ghg”) impact of it on site), Scope 2 (the energy one brings on site and the ghg impact from a utility) and Scope 3 (the ghg impact from one’s supply chain and one’s own travel) and why it is important to be measuring and monitoring these items, even though the final SEC Rules on Climate Disclosure did not include Scope 3 reporting, noting that the California Climate bills that were passed in 2023, do indeed include Scope 3 measuring and reporting.

We touched on the challenge of data integrity and data management when multiple geographies and product types are owned and operated but that these challenges can be met and how their organizations were indeed including sustainability features within their due diligence processes in purchasing properties and in developing them let alone operating them within their various portfolios.

Building performance on energy, water and waste within the 48 cities, 3 states and 2 counties requiring such monitoring, measuring and reporting was also reviewed as was the new Local Law 97 type mandates requiring greenhouse gas measuring and reporting and a fining regime for non-compliance in various cities like Boston, New York, Washington DC, Denver, San Francisco, etc. were continuing to appear and evolve and how such trends are being tracked by the Institute for Market Transformation (IMT) on line with an easy to see tool and map.

Lastly, we spoke of the various changes to the final rules in the SEC’s Rules on Climate Disclosure which are now the law, but which have been granted a temporary stay by the 5th Circuit, delaying their implementation but not impacting various public companies from complying anyway given the likelihood that the rules will be required at some point in the near future.

We also learned that the panelists were currently enjoying Columbia University’s Energy podcast, Monday Morning Quarterback, All In, How I Built This and the Energy Gang as their guilty pleasure ESG or other podcasts.

Green Spouts: The picture that was painted by the panelists, despite news headlines in certain business publications to the contrary, is that sustainability, weather incidents, resiliency and risk mitigation are topics that are agnostic to politics and political winds and that very large real estate companies are continuing to focus on and expand their ambit of goal setting, measuring, monitoring and acting on various energy, water, waste and social and governance issues where they believe they can obtain an appropriate return or where they are otherwise being required by law to report their results.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

5th National Climate Assessment Released by the White House along with more than $6B to strengthen Resiliency in the US

Earlier today, November 15, 2023, President Biden released the Fifth National Climate Assessment (“NCA5”). The NCA5 assesses changes in the climate, its national and regional impacts, and options for reducing present and future risk.  NCA5 showed that every region of the country is experiencing the impacts of climate change, but that ambitious climate action is underway in every region as well.

The report shows that climate change related extreme weather events still pose a rapidly intensifying threat – one that, according to the White House, costs the U.S. at least $150 billion each year, and that disproportionately affects underserved and overburdened communities.

In coordination with the release of NCA5, President Biden announced more than $6 Billion in investments to make communities more resilient to the impacts of climate change, including by strengthening America’s aging electric grid infrastructure, reducing flood risk to communities, supporting conservation efforts, and advancing environmental justice.

I. BOLSTERING AMERICA’S ELECTRIC GRID. The Department of Energy (DOE) announced over $3.9 billion of funding through the Bipartisan Infrastructure Law, to strengthen and modernize America’s electric grid in the face of more frequent and intense climate impacts. This funding opportunity, the second under the Grid Resilience and Innovation Partnerships program, focuses on projects that will modernize the electric grid to reduce impacts from extreme weather and natural disasters, increase capacity and unlock renewable energy resources, mitigate faults that lead to wildfires or other system disturbances, and deploy advanced technologies such as distributed energy resources and battery systems to provide essential grid services.

II. ADVANCING ENVIRONMENTAL JUSTICE. The Environmental Protection Agency (EPA) will soon make $2 billion of funding available through its Environmental and Climate Justice Community Change Grants program to support community-driven projects that deploy clean energy, strengthen climate resilience, and build community capacity to respond to environmental and climate justice challenges. This program, funded by the Inflation Reduction Act, will invest in multi-year partnerships between community-based organizations, local governments, institutes of higher education, and federally- recognized Tribes. EPA also will provide $200 million in technical assistance and capacity building support for communities and their partners as they work to access these critical federal resources.

III.REDUCING FLOOD RISK TO Federal Emergency Management Agency (FEMA) announced $300 million in a second round of funding through the Swift Current Initiative, funded by the Bipartisan Infrastructure Law, to help communities that have been impacted by catastrophic flooding during the 2022-2023 flood season become more resilient to future flood events. The Swift Current Initiative is focused on making mitigation assistance rapidly available for those who have suffered the effects of flooding disasters.

IV.  BOOSTING CLIMATE RESILIENCE. The Department of the Interior (DOI) will announce $100 million in funding from the Bipartisan Infrastructure Law for water infrastructure upgrades that advance drought resilience in the West. This includes $50 million in project awards to improve the reliability of water resources and support ecosystem health in Western states, along with an additional $50 million funding opportunity for water conservation projects and hydropower upgrades. DOI is also announcing a newly established Kapapahuliau Climate Resilience Program and $20 million in initial funding available through the Inflation Reduction Act to enhance the ability of the Native Hawaiian Community to navigate the effects of climate change in ways that maintain the integrity and identity of the Native Hawaiian people while also maintaining and enhancing their capacity for coping, adaptation and transformation.

    • The Department of Defense is launching a new Climate Resilience Portal at www.climate.mil. The creation of Climate.mil responds to requests from service members for a one-stop focal point for accessing authoritative and actionable climate change information. Phase 1 of Climate.mil will consist of key climate tools, reference documents and resources, and climate terms and definitions, while Phase 2 will be for internal DOD users and provide more detailed information and guidance to consider climate change factors and impacts in all relevant and applicable decisions.
    • In addition, the White House is publishing a synthesis of insights from the 13 roundtable discussions on climate resilience that the Administration hosted earlier this year as part of the White House Summit on Building Climate Resilient Communities.

This resource will help inform federal and non-federal actions, investments, and decisions to help build climate resilient communities from the local level on up.

V.  INVESTING IN CONSERVATION.  The Department of the Interior will announce $166 million from the Inflation Reduction Act to meet critical ecosystem resilience, restoration and environmental planning needs for the National Park Service over the next 9 years. These investments build on an initial $44 million allocated earlier this year for work in fiscal year 2023, and advance the America the Beautiful Initiative, the Administration’s goal to restore and conserve 30% of lands and waters by 2030. The Biden-Harris Administration will join the National Fish and Wildlife Foundation and public- and private-sector partners in announcing over $140 million in grants through the America the Beautiful Challenge. The 74 new grants will support landscape-scale conservation projects across 46 states, three U.S. Territories, and 21 Tribal Nations.

Green Spouts: While the picture that is painted by the NCA5 is far from rosey, GHG emissions continue to fall despite GDP and population gains in the US.  The report details the Administrations Investing in America’s actions to date with over $614 Billion to build manufacturing; over $392 Billion to upgrading the public infrastructure; and $8.8 Billion in home energy rebates to incent efficiency in the home.  The NCA5 detailed continued increases in the number and severity of climate impacts with extreme events costing over $150 Billion each year.  These sums are mind boggling but represent a massive opportunity to invest in our country’s infrastructure in a meaningful and cleaner way than in the past. Out of the new $6 Billion of funding announced today, approximately $3.9 Billion with be directed to strengthening and modernizing the electric grid; $2 Billion will fund Environmental and Climate Justice community grants and technical assistance; over $300 Million will be directed in second round funding through the Swift Current Initiative to focus on catastrophic flooding; another $100 Million to reduce drought impacts in the West together with over $20 Million to Native Hawaiian Community resilience programming. Again, a massive amount of money being directed to climate resiliency and community resiliency.  The time to plan and act is now before funds flow changes or regime changes reprioritizes where funds are being spent.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

New ASHRAE Standard 241 for Indoor Air Quality – increasing exterior fresh air or purifying existing indoor air!

The American Society of Heating, Refrigeration and Air Conditioning (ASHRAE) approved for publication of its highly anticipated airborne infection risk mitigation standard for buildings. For those not overly into HVAC, ASHRAE is the governing society responsible for developing building design as well as energy efficiency standards and guidelines for building

The new standard that was enacted, ASHRAE Standard 241, Control of Infectious Aerosols, establishes minimum requirements to reduce the risk of disease transmission by exposure to infectious aerosols in new buildings, existing buildings, and major renovations.

Infectious aerosols are tiny, exhaled particles that can carry disease-causing pathogens and are so small that they can remain in the air for long periods of time and be inhaled. As a building’s HVAC system is designed to recirculate and recondition air, the circulation of pathogens via the air is what the standard is focusing on. Use of this standard is designed to reduce exposure to SARS-COV-2 virus, which causes COVID-19, influenza viruses and other pathogens that cause major personal and economic damage every year.

According to ASHRAE, Standard 241 provides requirements for many aspects of air system design, installation, operation, and maintenance.

Important aspects of the new standard include:

  • Infection Risk Management Mode – Requirements of Standard 241 apply during an infection risk management mode (IRMM) that applies during identified periods of elevated risk of disease transmission. AHJs (Authorities Having Jurisdiction) can determine when the enhanced protections of Standard 241 will be required, but its use can also be at the discretion of the owner/operator at other times, for example, during influenza season. This aspect of Standard 241 introduces the concept of resilience – ability to respond to extreme circumstances outside normal conditions – into the realm of indoor air quality control design and operation.
  • Requirements for Equivalent Clean Airflow Rate – Other indoor air quality standards, including ASHRAE Standards 62.1, 62.2, specify outdoor airflow rate and filtration requirements to control normal indoor air contaminants. Historically, air flow rates and clean air from the outdoor air was intended to introduce cleaner air from the outside in order to keep the air in the building mixed with outdoor clean air.  Standard 241 breaks new ground by setting requirements for equivalent clean airflow rate, the flow rate of pathogen free air flow into occupied areas of a building that would have the same effect as the total of outdoor air, filtration of indoor air, and air disinfection by technologies such as germicidal ultraviolet light. This approach allows the user of the standard flexibility to select combinations of technologies to comply with the standard that best satisfy their economic constraints and energy use goals.
  • Requirements for Use of Filtration and Air Cleaning Technology – Dilution of indoor air contaminants by ventilation with outdoor air can be an energy intensive and expensive way to control indoor air quality. Standard 241 provides extensive requirements for use of filtration and air cleaning to effectively and safely achieve meet equivalent clean airflow requirements efficiently and cost effectively. These include testing requirements to establish performance and to demonstrate that operation does not degrade indoor air quality in other ways, for example by elevating ozone levels.
  • Planning and Commissioning – Standard 241 provides assessment and planning requirements culminating in the development of a building readiness plan, a concept carried over from the work of the ASHRAE Epidemic Task Force. It also describes procedures for commissioning systems to determine their installed performance.
  • “Standard 241 represents a significant step forward in prioritizing indoor air quality,” said 2022-23 ASHRAE President Farooq Mehboob, Fellow ASHRAE. “By implementing the requirements outlined in this standard, we can improve the health, well-being and productivity of building occupants. This standard empowers building owners, operators and professionals to take proactive measures in safeguarding indoor environments. It’s an essential tool for creating healthier indoor environments and promoting sustainable practices.”

The Standard 241 committee will continue and work on improving sections of the standard adding additional requirements, clarifying requirements and developing tools to help the public use the standard. Industry and consumer-friendly resources such as courses, podcasts, factsheets and information events will be introduced in the future.

Green Sprouts.  The likely impact to existing and new buildings from this new Standard will require more external air to be brought into the building (i.e., more exterior exchanges of air) or better cleaning of the existing air in the building. Purification of existing air in buildings has not been an area where many building owners have historically focused. The ability to use either or both methods (i.e., more outdoor air intake or purification of the indoor air) to help reduce the spread of disease will surely become the topic of conversation amongst property managers and engineers and will result in return on investment decisions at the property level to determine what works better and what costs more – increasing outdoor airflow and the need to condition that air or purifying that which is already in the building.

Given that COVID-19 is not likely to go away any time soon, Standard 241 which is going to drive technological investments in existing and new buildings and which provides alternative paths to address better air quality in our existing and new building stock should significantly help reduce the spread of disease within the built environment. Tenants should be watching carefully to see how their landlords’ intend to address this key issue and who is paying for it and how.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

California Jumps the Line ahead of the SEC and enacts two significant Climate Disclosure Bills

Last week, the California legislature passed and,  over the weekend (on October 9, 2023) Governor Newsom signed, two climate disclosure bills which focus on the financial risk of greenhouse gas emissions. Full text of the bills can be found at SB 261 and SB 253.

The bills will require that companies doing business in California will be required to state and certify their scope 1, 2 and 3 greenhouse gas emissions and to state and certify their climate related financial risks.

Given that many US companies and many EU and UK companies that do business in the US also transact in California, these laws will have a meaningful impact on many public and non-public companies alike irrespective of the pace or lack thereof from the SEC on its own set of federal climate disclosure obligations.

Bill 261 – Under SB 261, companies with annual revenues of more than $500 Million Dollars that do business in California will now be required to compile and issue a biennial climate-related financial risk report, with the first due date being January 1, 2026.

Bill Text – SB-261 Greenhouse gases: climate-related financial risk. (ca.gov)

Climate related financial risk” under SB 261 is defined as a “material risk of harm to immediate and long-term financial outcomes due to physical and transaction risks, including but not limited to, risks to corporate operations, provision of goods and services, supply chain, employee health and safety, capital and financial investments, institutional investments, financial standing of loan receipts and borrowers, shareholder value, consumer demand and financial markets and economic health.” Wow, that is a pretty wide ambit of what risks will fall within the definition of climate related financial risks!

SB 261 requires that the reports required under the Bill must be prepared in accordance with the Task Force on Climate Related Financial Disclosures (also referred to as TCFD) reporting framework. Reports that are prepared under the International Financial Reporting Standards -Sustainability Disclosure Standards (or ISSB) will also be acceptable. Failure to report under the Bill will be subject to an annual fine of up to $50,000 per year.

Bill 253 – SB 253, also known as the Climate Corporate Data Accountability Act, applies to companies that do business in California and have total annual revenues in excess of $1 Billion. The reporting requirements will not be applicable until January 2026, once the California Air Resources Board (CARB) has adopted implementing regulations, which must occur by January 1, 2025.
CARB’s implementing regulations will likely provide the key details of the reporting process, including the following:
Bill Text – SB-253 Climate Corporate Data Accountability Act. (ca.gov)

Scope 1 and Scope 2 Emissions. Beginning in January 2026, reporting entities must annually publicly disclose their scope 1 and scope 2 GHG emissions for the prior fiscal year. The bill defines Scope 1 emissions as “all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.” Scope 2 emissions are defined as “indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.” Most publicly traded companies have begun some level if not a very detailed level of Scope 1 and 2 tracking, with many actually already reporting these metrics.

Scope 3 Emissions. Beginning in 2027, reporting entities will also be required to annually disclose their scope 3 emissions for the prior fiscal year. Scope 3 emissions include “indirect upstream and downstream greenhouse gas emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control,” which may include “purchased goods and services, business travel, employee commutes, and process and use of sold products.” Many in the industry are concerned about how they are going to get their supply chain to measure and report in a meaningful way data that will become the reporting entities’ Scope 3 emissions.

Annual Fees. Reporting entities will be required to pay an annual fee to CARB upon filing their annual disclosures. These fees are supposed to be used to fund CARB’s oversight of the program.

Administrative Penalties. Reporting entities that fail to timely file their annual disclosures will be subject to administrative penalties of up to $500,000 per reporting year. 

Reporting Standards. Reporting entities must measure and report their GHG emissions in conformance with the Greenhouse Gas Protocol, a set of reporting standards developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBC).  Reporting entities must also engage an independent third-party assurance provider to audit their scope 1 and 2 emissions beginning in 2026, and their scope 3 emissions beginning in 2030.

Green Sprouts – SB 253 and SB 261 make California the first state to require GHG emissions and climate risk reporting from large companies. The bills, which are now law, jump the SEC’s proposed climate disclosure rules which have not yet been finalized or released after two publicly disclosed delays in implementation.

Given the number of companies that “do business in California”, irrespective of when and how the SEC makes its climate disclosure rules final and if it does this fall, California has once again cemented its place of relevance in the climate change arena and has mandated movement in this space by larger companies doing business in California. It remains to be seen if other states follow their lead but surely New York, Washington, D.C., Massachusetts and others will take a very hard look at proceeding down this path.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

HUD – over $4B in lending capacity and $840M in grant funds under its Green and Resilient Retrofit Program

The U. S. Department of Housing and Urban Development (HUD) has announced more than $4 Billion in loan capacity and $840 Million in grant funding availability for investments in clean energy at multifamily properties that receive HUD assistance.

The funding is designed to encourage investment in a variety of clean energy projects with a stated goal to improve the quality and the resilience of those properties.

The Green and Resilient Retrofit Program (“GRRP”) was created as a part of the Inflation Reduction Act of 2022 to incentivize investments that reduce energy and utility costs and hope to reduce greenhouse gas emissions at the applicable properties.

HUD put forth 3 key goals for the GRRP:

1. to reduce energy and water use in HUD-assisted multifamily properties;

2. to make HUD-assisted multifamily properties more resilient to extreme weather events and natural disasters, and

3. to reduce greenhouse gas emissions from HUD-assisted multifamily properties.

HUD’s view is that by achieving the stated goals the properties will reduce utility bills and costs of operations, which in turn benefit their tenants. By reducing consumption, a natural outcome will be to also reduce greenhouse gas emissions HUD’s goal is to reduce greenhouse gas emissions by 50% across all participating properties and to reduce modeled energy consumption by at least 25% in each property.

Eligible properties are those receiving HUD assistance through Sections 8, 202, 811 and 236.

Awards are available for the following categories of properties:

Element Awards are for properties that are materially advanced in a recapitalization transaction that includes targeted utility efficiency, carbon emissions, reduction, renewable energy and/or climate resilience measures.

Leading Edge Awards are for properties with a significant capacity to execute a rehabilitation that will achieve an advanced green certification.

Comprehensive Awards are for properties, including those not yet developed, where the property owner is interested in improving the utility efficiency and resilience to climate hazards.

Green Sprouts – The Inflation Reduction Act is a rather amazing cluster of potential benefits and incentive programs for the built environment.  HUD has taken the baton and has proceeded to incentivize energy efficiency investments where they are lending money. $4 Billion in lending capacity and $840M  in grants are now available. Worthy of checking it out.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

Plastic Bag Bans – A New Jersey Update

By way of an update to our April 27, 2023 Blog post regarding plastic bag and straw bans, we thought it a good time to circle back to what is going in New Jersey (other state updates will follow). 

The relevant NJ plastic bag ban bill can be found at https://dep.nj.gov/wp-content/uploads/plastic-ban-law/docs/plastic-bag-law-c117.pdf

Per a press release issued earlier this week, the New Jersey Business Action Center is reminding small restaurants and stores of their need to comply with the recent plastic and paper carryout bag ban before local health departments conduct inspections of their facilities.

Under state law, retail stores, grocery stores and food service businesses may NOT provide or sell single-use plastic carryout bags and polystyrene foam food service products (i.e., styrofoam). Single-use paper carryout bags are allowed to be provided or sold, except by grocery stores equal to or larger than 2,500 SF, which may only provide or sell reusable carryout bags.

The state maintains an online vendor list where businesses affected by the ban can find alternative carryout products.

According to the New Jersey Plastics Council’s annual report, released in May 2023, approximately 5.5 billion single-use plastic bags and 110 million single-use paper bags were eliminated from entering the waste stream and environment by the supermarket sector alone from May 2022, the effective date of the law through the end of 2022.

Parting Shot – While there was the normal outrage at the ban being enacted in the first place, and that the plastic bag ban would cause massive inconvenience and potential loss of jobs, the reality on the ground is that other than minor inconvenience, constituents quickly learned to bring bags with them and that they could and would survive in a non-styrofoam providing environment.  While 5.5 billion single use bags might not seem like much to some, in this author’s view, it is a big step in positive direction where people take greater interest in where their waste is going and whether the waste can be reused for another purpose.  

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

Seattle – Not Just for Starbucks These Days – Mayor Proposes Greenhouse Gas Reduction Legislation

Seattle Mayor Bruce Harrell recently proposed legislation that would require the city’s large commercial and multifamily buildings to reduce greenhouse gas emissions (“GhG”) over the next several decades and achieve net-zero emissions by 2050.

Per the City’s press release, the standards were nearly 2 years in the making, are expected to reduce annual commercial building greenhouse gas emissions by 27% compared with 2008 levels,

According to the EPA and multiple studies, the built environment (i.e., buildings) are a large contributor to GhG emissions nationwide, and in Seattle, contributes more than 33% of the city’s total GhG emissions.

Seattle is one of a growing list of cities (including Boston who announced this policy 2 weeks ago) — and more recently, some states (e.g., Washington) — that require many new buildings to be all-electric. While these policies will likely reduce consumption of fossil fuels in many cases, they do not address existing buildings that use gas, oil and fossil fuels to provide heat, hot water and chiller water.

During 2023, more and more states and municipalities are developing building performance standards that aim to reduce buildings’ carbon footprint by requiring them to meet certain standards. These more recent standards focus on greenhouse gas emissions rather than just energy usage.

Seattle’s proposed new standard is, per Construction Dive, the product of nearly 2 years of meetings, open houses, webinars, advisory group and specialized task force sessions. Not surprisingly, not all constituents were happy with pushback during the development of these standards coming from environmental groups that want more and faster emission reductions and from real estate and business groups that believe that standards are far too reaching.

All told, according to the Seattle Office of Sustainability and Environment, the new standards will cover approximately 4,100 buildings in Seattle, including about 1,885 multifamily buildings and 1,650 nonresidential buildings that are mostly downtown and in dense neighborhoods. Like many of the other cities adopting these type of GhG emissions based standards (see, e.g., New York City with Local Law 97), the proposal offers several pathways for buildings to comply with the standards; owners who do not comply would be fined.

It is believe by the City Administration that the new standard will help Seattle secure federal funding and incentives. Seattle City Council is expected to review and likely implement the legislation in their fall session.

Parting Shot – Seattle is part of a growing list of cities and States that are looking to reduce energy consumption in its building stock by way of focusing on fossil fuel consumption and GhG emissions by requiring monitoring, measuring and reporting by larger buildings, and, if standards set by the applicable governing body have been exceeded, the owner of the building (and thereafter, likely the tenants under their leases) will be subject to a fine until they correct their exceedance.  Carrots have been offered in the past as incentives, these types of ordinances are much more of the stick approach.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

The General Services Administration and the National Deep Energy Retrofit Program – Electrification of over 41 Buildings – $300M of Investment Value!

Last week, the U.S. General Services Administration (GSA) issued its largest ever notice of opportunity under its “National Deep Energy Retrofit” program, announcing their intent to leverage funding from the Inflation Reduction Act for projects in four (4) states and the District of Columbia. The projects are intended to accelerate the agency’s efforts to achieve President Biden’s goal to achieve net-zero emissions in the federal buildings portfolio by 2045, and are part of his “Investing In America” agenda to attempt to rebuild the economy, create good-paying jobs, and accelerate the deployment of clean energy.

Through “Energy Savings Performance Contracts (ESPCs)”, the GSA stated that it intends to use Inflation Reduction Act funding to bring energy and cost-saving improvements to 41 facilities, including 17 in the DC area and 24 across Illinois, Indiana, Minnesota, and Wisconsin. The projects, with an estimated value of more than $300 million, are looking to convert facilities to all-electric, rather than relying on onsite fossil fuels equipment, and promote opportunities to achieve net zero operations.

According to the GSA, “this historic call for proposals is another example of how GSA is making meaningful progress towards decarbonization and net zero buildings – while delivering savings to taxpayers and a healthier future for the next generation,” said GSA Administrator Robin Carnahan. “We’re excited to partner with innovative energy service companies to rapidly accelerate our progress toward achieving a net zero federal footprint – and create good-paying jobs along the way.”

As part of the White House’s Climate Smart Buildings Initiative, GSA’s National Deep Energy Retrofit program in intended to help modernize federal buildings to cut greenhouse gas emissions and reduce site energy consumption by renovating buildings to maximize reductions in onsite energy use. These projects will also help support GSA’s efforts to meet the recently released “Federal Building Performance Standard” and convert buildings to all-electric buildings in which none of the equipment will use onsite fossil fuel combustion.

Per the GSA, GSA provides centralized procurement and shared services for the federal government, managing a nationwide real estate portfolio of nearly 370 million rentable square feet, overseeing approximately $75 billion in annual contracts, and delivering technology services that serve millions of people across dozens of federal agencies. 

Take Aways – it appears pretty clear that the Biden Administration is moving to solidify its positions regarding climate change and action to reduce green house gas emissions by having the GSA push forward with their National Deep Energy Retrofit Program.  This is a furthering of the Administration’s prior climate comments and commitments regarding greenhouse gas reduction and doing what it views as being within its preview without having to obtain Congressional approval or authorization.  Given the GSA’s broad impact on its own portfolio and on landlords where it leases space, this will indeed cause more than a ripple and is likely to significantly affect much of its inventory of hundreds of millions of square feet of space nationally.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information or if you have any questions about this post, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

 

Plastic Bag Bans – Do They Work?

According to an article in the Philadelphia Inquirer per a report issued by the City of Philadelphia (the “City”), the City’s 2019 plastic bag ban has resulted in a significant reduction in the use of plastic bags – i.e., the equivalent of filling Philadelphia City Hall with plastic bags every 8 months which would be approximately 200 Million less plastic bags.  The City’s  report – “Evaluating the Ban: Philadelphia’s Plastic Bag Ban and Changes in Bag Usage in the City” (the “Report”) focused on 2021 to 2022, was conducted by the University of Pittsburgh and Swarthmore College and, concluded that the ban significantly reduced plastic bag use in the City.

Click on this link for a copy of the Report. extension://elhekieabhbkpmcefcoobjddigjcaadp/https://www.phila.gov/media/20230426164234/PlasticBagBanReport-1.pdf#:~:text=We%20used%20a%20difference-in-difference%20approach%20to%20estimate%20the,clear%20boundary%20between%20the%20regulated%20and%20unregulated%20areas.

The City’s ban was passed by City Council in 2019 and took effect on July 1, 2021.  It prohibits retailer from providing single use plastic bags and paper bags not made of at least 40% recycled material.

Per the Inquirer, 16 other municipalities in Pennsylvania have some sort of plastic bag ban, including Cheltenham, Radnor, Haverford, Media and Pittsburgh. Cheltenham’s ordinance was recently adopted earlier this week and regulates single use plastic bags, including restaurants’ use of such bags.

The Report concluded that in each category improvement was shown in both the City and the suburbs by way of reusable bag use and reduction of plastic bag use (i.e., proportion using any plastic bag (down), proportion using any paper bag (up) , proportion using any recycled bag (up), proportion using no bag (up), number of plastic bags used per customer (down), number of paper bags used per customer (up) and number of reusable bags used per customer (up)).

As hoped for, the ban resulted in a 53% reduction in the likelihood of a consumer using a plastic bag.

Across the bridge in New Jersey, the State enacted the Single Use Waste Reduction Act in May, 2022 which banned plastic bags and foam food containers and built off of an earlier plastic straw ban which went into effect in 2021.  Bags in NJ used to wrap uncooked meat, fish or poultry; bags used to package loose items; and bags used to carry live animals are all exempt from the ban. Residents continue to be frustrated, per recent polling, with the inclusion of a ban on paper bags which are not permitted to be handed out or sold at big box stores and grocery stores larger than 2,500 feet in size.  The NJ ban also includes carry out and to go styrofoam cups, plates and to go containers .

Take Aways – it appears pretty clear that behavior can be changed via regulation and that the ban on the use of single use plastic bags and similar products is, in fact, reducing the among of these bags in the waste stream and in common usage without a real negative effect other than some convenience by consumers.  Like many things these days, not all municipalities or States will pursue this avenue as a means to reduce dependence on plastics which tend to find their way into our water ways and waste streams, but those that do pass such bans are seeing a marked decrease in the use of these products.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information or if you have any questions about this post, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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