Sustainability Elements of the ARRA, and Getting the Most out of Stimulus Funding

Jeannie Renne-Malone, LEED APNational Director – Climate Change & GHG Management

The American Recovery and Reinvestment Act: Dispatches from the Front Lines

Congress for the New Urbanism

Overview

• Sustainable Elements of the ARRA• The Energy Efficiency and

Conservation Block (EECBG) Program• Getting the Most of Your EECBG

Funds• Using Sustainable Return on Investment

(SROI) to Make a Green Business Case for Competitive Funds

3

ARRA: Stimulus InvestmentsWith Sustainability Goals

• Aid to States and Local Governments– Health care– Energy– Infrastructure– Education– Public safety

• Emphasis on Sustainability – Clean Energy Projects – EECBG Funding– Sustainable Transportation Solutions– Environmental Protection– Support for Climate & Sustainability

Initiatives– Green Job Creation 3

4

• $3.2 Billion from DOE to Cities, Counties, States and Tribes throughout US

• $400 Million Competitive Grants – to be released soon

Energy Efficiency and Conservation Block Grant (EECBG) ProgramOverview

4

5

• Reduce fossil fuel emissions

• Decrease overall energy consumption

• Improve energy efficiency in the transportation, building, and other energy consuming sectors

EECBG ProgramPurpose

5

6

EECBG Evaluation Criteria

• Jobs created and/or retained • Energy savings on a per dollar invested basis • Renewable energy capacity installed • Greenhouse gas emissions reduced • Funds leveraged

• Web-based reporting system• Individual output metrics based on activity type

*Framed through Sustainable Return on Investment

Keys to Getting the Most Out of EECBG

1. Don’t Use All the Money Doing Easy Things (Make Wise Choices)

2. Be Sure to Establish Energy and GHG Baselines

3. Anticipate More Competitive Funding Initiatives

4. Make a “Green” Business Case

5. Measure Your Sustainable Return on Investment (SROI)

7

Don’t Use All the Money Doing Easy Things

• Be Mindful of DOE’s Priorities– Leverage– Legacy– Jobs– Energy Efficiency and GHG Reduction– Resilience – Return on Investment

• Strategic Planning and Detailed Analysis• P3 Development verses Capital Investments

Think of EECBG Funds as Venture Capital8

Be Sure to Establish Energy and GHG Baselines

• Reporting Expectations• Track Record for Future

Energy Funding

• Emerging GHG Regulations

Avoid the Need for General Fund Expenditures9

Anticipate More Competitive Funding Programs

• Supply (of Federal Funds) verses Demand

• Funding Directed Toward Federal Priorities

• Anticipate Transparency Measures

• Aim for the “Hot” Buttons

Make the Most Convincing Case10

Make a “Green” Business Case

Your Funding Proposals Should Include: • A Baseline Forecast for Achieving Outcomes• Facts Supporting a Case for Incremental Benefits• Detailed Jobs Projections• Energy Efficiency and Sustainability Summary (with

backup)• Projections for Enhancements to Energy Resiliency

and Business Continuity

Present a Detailed Cost Benefit Summary(including NPV/ROI/SROI) 11

Measure Your Sustainable Return on Investment (SROI)

• Assess the Financial Return on Investment• Assign Monetary Values to the Non-Cash Risks,

Benefits, and Externalities including:– Changes in GHG and

Air Contaminant Emissions– Health and Safety– Water Saved– Productivity– Mobility/Congestion– Waste Avoided– Other Factors

12

SROI Flow Diagram

13

Operating Cost

Increases ($)

Capital Costs ($) Associated Maintenance

Costs ($)

Disposal Costs ($)

Costs

Cash• Reduced Electricity Costs• Reduced Heating/Cooling Costs• Reduced Water Costs• Reduced Sewage Costs• Reduced Waste Disposal Costs• Other Reduced Operational

Costs

Non-Cash• Reduced Green House Gas

Emissions• Reduced Air Contaminant

Emissions• Fresh Water Conserved• Improved Health• Improved Productivity• Improved Resiliency• Improved Safety

Example of Benefits

Discounting (%)

Total Benefits ($)

Total Costs ($)

Reveals a project’s Full Value

Output Metrics

($)

SROI – Considers All Benefits

Project’sCash

Impacts

CapitalOperations

& Maintenance

LCCA or FROI

FROI + Internal

SROI

InternalNon-CashBenefits

ProductivityHealth & Safety

Mobility

External Costs & Benefits

Green House Gases

Criteria Air Contaminant

Water & Solid Waste

14

Build Your Business CaseAround the Sustainability “S” Curve

RISK ANALYSIS OF SUSTAINABLE INITIATIVES - JHU NET PRESENT VALUE

$16.4$27.0

$30.4$31.6

$32.5$33.5

$34.3$35.1

$35.8

$37.5$38.2

$39.1$39.9

$40.9$41.9

$43.2

$47.0$59.5

$0.6

$2.6

$3.3$3.9

$4.4$4.9

$5.4$5.9

$6.9

$7.4$7.9

$8.4$9.0

$9.6

$10.4

$12.5

$19.8

$36.6

$29.0

$44.7MEAN: $36.7

$30.5

$1.8

$11.3

$6.4

MEAN: $6.5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0

Total NPV ($Millions)

Pro

bab

ility

of

Not

Exc

eed

ing

SROI FROI

Health & Productivity

Externalities

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SROI can Lead to Wiser Use of EECBG Resources

• Optimized Choices among Broad Categories and Competing Initiatives– City Departments (e.g., Fleet vs. Public Works)– Non-profit and Private Sector (building retrofits vs. new

generation)– Balancing Direct Investments (City-owned vs. non-

governmental facilities)

• Identify Preferred Options within Specific Areas– Recycling and Waste Management– Signals and Street Lighting– Waste-to-Energy– Wastewater Treatment

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Targeted Applications of SROI for Maximum Sustainable Outcomes

• Screen and Prioritize Your Capital Improvement Program – Saves Money and Maximizes Important Benefits– Forces Lower Rank Projects to be Reevaluated to Improve

SROI

• Can Help Find Best Solutions in Individual Sectors– Buildings and Operations– Transportation Improvement Programs– Stormwater– Waste Management– Water Supply and Treatment– Wastewater Treatment– Greenhouse Gas Management

17

SummaryMeasuring “Green” Will Help You Make the Most of Your EECBG Funds

• Leverage Your EECBG Funds Like Venture Capital• Avoid the Need for a General Fund Expenditure• Make the Most Convincing Case• Your Funding Proposals Should Present Cost Benefit

Details in NPV/ROI/SROI• Use the Sustainability “S” Curve to Explain the

Benefits to Your Stakeholders• Apply SROI to Make Wiser Use of EECBG

Resources

For more information: www.HDRGreen.com | SROI@hdrinc.com 18

Sustainability Elements of the ARRA, and Getting the Most out of Stimulus Funding

Jeannie Renne-Malone, LEED APNational Director – Climate Change & GHG Management

The American Recovery and Reinvestment Act: Dispatches from the Front Lines

Congress for the New Urbanism