The Greening of America is here.

Despite the fact that the Clinton and Bush administrations determined that we would not be legally bound by the Kyoto Agreement, President Obama has a more proactive view on the nation’s environmental policy.

The following is a short list of Obama administration initiatives that will be funded for greener solutions to clean, efficient, American energy: Smart grid, advanced battery technology, energy efficiency:

• $30 billion for such initiatives as a new, smart power grid, advanced battery technology, and energy efficiency measures, which will create nearly 500,000 jobs.
• Help state and local governments make investments in innovative best practices to achieve greater energy efficiency and reduce energy usage.

Tax incentives to spur energy savings and green jobs:

• Provides $20 billion in tax incentives for renewable energy and energy efficiency over the next 10 years.
• Provides a tax credit for families that purchase plug-in hybrid vehicles of up to $7,500 to spur the next generation of American cars.
• Includes clean renewable energy bonds for state and local governments.
• Establishes a new manufacturing investment tax credit for investment in advanced energy facilities, such as facilities that manufacture components for the production of renewable energy, advanced battery technology, and other innovative next-generation green technologies.

The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change.

The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. The Kyoto Protocol was adopted in Kyoto, Japan, in December 1997 and entered into force in February 2005; 184 parties have ratified its protocol to date.

Although the United States did not ratify the Kyoto Protocol, voluntary efforts were made to reduce GHG emissions here, even as 132 of the nation’s mayors pledged to meet Kyoto-like emission targets in 2005.

In 2003, some U.S. companies and cities agreed to participate in a legally binding voluntary carbon market – the Carbon Credit Exchange.

The CCX, like other cap-and-trade programs, set limits or caps on allowable emissions.

The CCX issued allowances for trading among the members that correspond to the emission cap. CCX members have agreed to reduce their emissions by 6 percent below their baseline for 2007 to 2010.

The publically traded CCX is about a $70 billion business that previously was somewhat limited to power producers and large industries.

A recent article in the New York Times indicated that within the next four or five years, this market is expected to grow to $500 billion as the country begins to work toward green and a cleaner environment.

Currently, the European Union has the largest and most famous carbon trading system.

The European Trading Scheme is a cap-and-trade system in which the government sets national emission caps based on its Kyoto and national targets.

Allowances, totaling the caps, are then distributed to individual firms for trading throughout the EU. If emissions are capped, for example, at 200 million tons a year, there are 200 million allowances distributed to firms for offsetting emissions.

These firms can then use the allowances to offset their own emissions, reduce their emissions and sell the allowances to other parties, or bank the allowances for future use.

If a firm does not have adequate allowances to offset its emissions, the firm must purchase allowances or pay a significant financial penalty.

The cost of allowances, if available, is generally less than the financial penalty. The buying and selling of allowances, trading, creates a market, thus the cap-and-trade program designation.

Due to the financial challenges companies face on an ongoing basis, recent studies have shown that Sector 3 organizations will have the most difficulty dealing with this metamorphosis.

Consequently, schools, churches, hospitals, and local government will be struggling to find the means to make the green transitions such as retrofitting lights, more efficient use of demand meters, voluntary curtailment, and the installation of efficient energy supplies utilizing renewable fuels, i.e. biomass combined heat and power systems.

E-CCAP is one possible solution to this nonprofit problem, an initiative that is funded through two prominent Pittsburgh Foundations led by the Pittsburgh Gateways Corp. and its partner in this project, World-Class Industrial Network.

They are working together to capture opportunities in the developing financial markets associated with energy and carbon reduction and general sustainable practices such as switching to renewable resources or investing in energy efficiency methods.

E-CCAP is working on a set of developmental and applied activities designed to define and demonstrate that nonprofit organizations, serving industrial, commercial and institutional based stakeholders, can leverage relationships with its constituents to both promote and financially share in the benefits of sustainable business activities.

In so doing, the nonprofit organization can better meet its core mission by exploiting new revenue streams not previously available.

E-CCAP is targeting a pilot project with industrial, commercial, and institutional based stakeholders, to aggregate the financial benefits of energy efficiency and renewable energy projects through the emerging markets for energy efficiency credits.

These green credits will be aggregated and traded to support the partnership and serve the participating third sector organization and their constituents.

They will specialize in the development of credit generating projects, have those green savings validated by an independent third party, and broker the credits.

(This blog post is also published as a feature article in the 2/21/09 edition of The Tribune-Democrat.)