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<title>December 2006: Candle Power 2007</title>
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<p align="left"><font face="Arial"><strong><small>About The Author:<br>
<br>
</small></strong><span lang="X-NONE" style="color: black"><font size="2">
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon
Markets Group has practiced law related to the finance of environmental and
energy projects and companies for 40 years. In particular, he has analyzed
and executed a wide variety and substantial value of project financings. He
chairs the American Bar Association’s Committee on Carbon Trading and
Finance, serves on the Board of the American Council for Renewable Energy,
and has been a senior official in the Federal Energy Administration. He is
a graduate of Brown University, Yale Law School and Harvard Business School.</font></span></font></p>
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<img src="../images/feldman.gif" alt="Washington Viewpoint by Roger Feldman" border="0" width="375" height="75"><p align="left"><b><u><br>
December 2006</u></b></p>
<p align="center"><font size="6"><b>Candle Power 2007</b></font></p>
<p><strong>by Roger Feldman -- Bingham, Dana L.L.P.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine
Magazine: 2008/01/05</em>)<br>
</font><span style="font-size: 10.0pt; font-family: Palatino; color: black">
</span></p>
<p ALIGN="LEFT">It was the night before Christmas and all through the
Capitol good cheer was enfolding the darkening halls. Rollicking
choruses could be heard of “There’s No Partisan Like a Bipartisan” and
thought of global warming simply crystallized snowflakes. The sages gathered
to prognosticate as they do each year. </p>
<p ALIGN="LEFT">And yet . . . everyone knew that the energy grinch still
stalked the halls and that the coming new year, one of elections no less,
would stir it to particularly gothic frenzy. “Surely the lame duck president
will want to leave a legacy,” quoth the pundits, “where else than in this
critical field?” “That will be while the oversight hearings on the original
Cheney energy plan of ‘00 are going on,” chortled a sour sage. “But green
house gas is on everyone’s mind,” reminded an earnest elf, “corporations are
voluntarily buying green power and Shell has actually denounced America for
not Kyoto-izing itself.” ‘“Barton’ down the hatches,” replied a skeptic,
“he’ll blow it somehow.”</p>
<p ALIGN="LEFT">As gloom settled over the assembled talking heads, a
platitude was seen to lift it somewhat: “Energy Efficiency, that’s the
ticket.” Everyone’s for it. It makes environmental sense and economic sense
at the same time. “It’s something everyone can get behind,” twinkled a
lightning bug, smug in its phosphorescence.</p>
<p ALIGN="LEFT">And then the assembled sages began to puzzle: how would this
“Energy Efficiency” be different from your grandfather’s conservation — the
fossilized NECPA or slow trudging EPACT Title I? How can capital
become excited over something business does anyway? How do the major energy
delivery systems — the utilities — realize reward for such efforts? Is this
a “back to the future” nod to the very distributed generation the industry
more or less quashed? In short, if you wanted to stuff Santa’s stocking with
new ideas, where would you turn for some efficiency ideas that are not a
lump of coal (clean, of course, so as to be PC) in the stocking over the
fireplace?</p>
<p ALIGN="LEFT">That is the real challenge for progressive thinkers who want
to make a difference. Are they what ACEEE has proposed: energy efficiency
portfolio standards, efficiency tax incentives, oil savings targets
appliance and efficiency standards, and a broader grant and loan program in
the Farm Bill? Are they State Energy Efficiency Indexes and the Patriots’
Energy Pledge and a Sales Tax Holiday for Energy Efficient Products as ASE
proposes? Perhaps in part.</p>
<p ALIGN="LEFT">But then a cowering counsel suggested another line of
thought lies based on the unintended ramifications of the term “Energy
Efficiency” in the Wikipedia — the lawyer’s guide to public policy:</p>
<p ALIGN="LEFT">“Even though the definition includes the notion of
usefulness, efficiency is considered a technical or physical term. Goal or
mission oriented terms include “effectiveness” and “efficacy.” </p>
<p ALIGN="LEFT">Suppose, as a policy matter, the US tried to incentivize the
most “efficacious” uses of efficiency in the economy through specifically
targeted economic rewards:</p>
<ul>
<li>
<p ALIGN="LEFT">Forward looking combinations of energy conservation and
complementary energy renewables such as solar;<br>
</li>
<li>
<p ALIGN="LEFT">Environmental regulation that favored use of efficiency
and renewables in all offset trading settings (and those settings to
come, like carbon);<br>
</li>
<li>
<p ALIGN="LEFT">Incentives that rewarded those large scale energy
distributors that promoted complementary goals, e.g., resource
management and carbon reduction; and;<br>
</li>
<li>
<p ALIGN="LEFT">Tax structures conducive to aggregation of the overall
energy/environment benefits gain, so that third party financing could be
utilized.</li>
</ul>
<p ALIGN="LEFT">In short, efficiency reward not for “giving up” something
under imposed standards, or consumer incentives to make intelligent choices,
but for creating something. Rewards for financing structures that
demonstrably added “efficacy” values. In short, a tuning of the marketplace
so it can do what it does best — allocate resources to where they are best
rewarded (whether voluntarily, or because incentives direct them in to
societally most rewarding channels). </p>
<p ALIGN="LEFT">As the Energy Saving Star glowed in the heavens, the pundits
dispersed, putting callow counsel’s thoughts down to too much eggnog before
the Yule log. Fortunately, one recalcitrant roisterer stuck up a sign which
we can only hope will be a guidepost “Energy Efficiency in 2007.” It runs on
long life batteries.</p>
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<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><font face="Arial" size="2">
<span lang="X-NONE" style="color: black">ROGER FELDMAN, Co-Chair of Andrews
Kurth LLP Climate Change and Carbon Markets Group has practiced law related
to the finance of environmental and energy projects and companies for 40
years. In particular, he has analyzed and executed a wide variety and
substantial value of project financings. He chairs the American Bar
Association’s Committee on Carbon Trading and Finance, serves on the Board
of the American Council for Renewable Energy, and has been a senior official
in the Federal Energy Administration. He is a graduate of Brown University,
Yale Law School and Harvard Business School.</span></font></p>
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