With precious limited funding to subsidize alternative energy initiatives, the State of Connecticut is looking to the business community to "step up to the sustainability challenge," said Dan Esty, commissioner of the State Department of Energy and Environmental Protection, during the first installment of the Sunset Lecture Series held at in Westport on Thursday.
Esty said despite the state's current fiscal dilemma, it is nevertheless taking the lead in developing a "new model of environmental sustainability" designed to foster economic growth.
"In Connecticut we're building a new model of environmental protection and sustainable energy — what I like to call the Connecticut model or the [Gov. Dannel] Malloy model," Esty told the crowd of about 20 people who gathered at the Sherwood Island Nature Center on a scorching, 95-degree day. "It really is an integration of energy and environment, with the idea that sustainability has to be viewed in the context of the economy."
Esty explained that under the state's Energy Act of 2011 it has scrapped its previous system of providing renewable energy credits for specific technologies — thus "picking the winners and the losers" — and instead has established a "green bank" that funds renewable energy and energy efficiency technologies as well as a unique "reverse auction" system which utility customers will use to "bid" on alternative power.
The auction system will allow customers of the state's utilities to bid for millions of dollars in long-term contracts for the electricity they produce through the installation of technologies (such as solar and wind power) which are eligible for the state's Low- and Zero-Emissions Renewable Energy Credit (LREC/ZREC) Program. It is the state's hope that this "free market" approach to alternative energy will create jobs, as workers will be needed to install and operate alternative energy systems that feed into the grid.
"The success of environmental protection and sustainable energy only will happen when we are promoting economic success, jobs, economic growth, and a sense of prosperity," Esty added. "When people are feeling confident about their economic future, it gives them the freedom to commit to investments in environmental protection and a cleaner cheaper energy future."
Esty said the state is pushing ahead with this unique (and somewhat controversial) "technology-agnostic" model while many other states are curtailing their existing sustainability programs, simply due to a lack of funding.
Not only have many states slowed or stopped investment in alternative energy initiatives, he said, the drive for solutions via innovation has also lost some momentum on the federal level.
"Here in Connecticut we have gotten a huge amount of work done, over the last two sessions, with regard to sustainability initiatives," Esty said. "However there is a serious question as to whether Congress is going to be able to step up and address these challenges. The partisan gridlock is overwhelming... and I would say truly disappointing."
He added that the lack of dialogue about environmental issues, particularly in the past two Presidential debates, "has been distressing."
"It is not all good... we are facing a watershed moment in our country, and in fact the world, in terms of stepping up to the sustainability challenge," he said. "Unfortunately we are still relying a 20th century model of protecting the environment which is no longer really serving the purposes and needs of the 21st century."
"I'm discouraged to hear people say that the way forward is to 'drill baby drill,'" Esty said, as his new Chevy Volt was charging up just outside the nature center. "It's just not possible — even though we have made some advances in terms of oil production and some substantial advances in gas production — the real key is a broader investment in a sustainable energy future."
Esty said in the state's view, "the key to almost all our environmental challenges, all our sustainability challenges, is innovation."
"We have to drive creative spirits to do breakthrough thinking, not only with regard to technologies, but with regard to policy and the financing of investments in clean energy," he said adding Malloy "is committed to this."
"For 40 years business has been seen as the enemy of environmental progress," Esty said. "I think we can turn that around and harness business creativity and entrepreneurial spirit to reach the societal goals for clean energy and sustainability."
Esty said in order to accomplish this the state DEEP will "need to move from a 'command and control' approach to environmental regulation, where the government tells everyone exactly what to do — including what technology to buy — to an economic incentive approach."
This move away from the "venture capital approach," he said, should also set the stage for private enterprises to adopt new approaches to sustainability which will catch on in a "free market" manner.
The challenge for the DEEP, however, lies in modifying its policy framework "to support this unleashing of creativity," Esty said.
"The regulatory burden cannot stop people from engaging in the creative process," he said. "So we do need to lighten the regulatory burden... without lowering our standards... and we're doing that in a number of ways."
For example the State Assembly recently approved legislation that lifts many of the regulatory obstacles for the private development of brown field sites. He says the more streamlined, less-burdonsome process has led to an "unleashing of development projects across the state."
In addition the DEEP has launched a process to streamline its regulatory framework "to make it more efficient," Esty said.
"We're working to make our systems more efficient, particularly our permitting process," he said. "For example there might be 129 steps in a [permitting] process, but by mapping that out, what we found was that many of the steps aren't really needed."
As a result, permitting approvals "that used to take months or even years now take a matter of days," he said.
"For example it used to take 14 months to get a permit to replace a dock... whereas today it takes one day," he said.
In order to spur innovation in alternative energy and sustainability, the state last year established the Clean Energy Finance and Investment Authority, the nation's first "Green Bank." Formed when the state Department of Energy was melded with the state Department of Environmental Protection, the CEFIA is charged with promoting, developing and investing in "clean energy and energy efficient projects in order to grow jobs, strengthen Connecticut's economy, protect community health, improve the environment and promote a secure energy supply for the state." It operates with a $30 million annual budget with funding coming from a range of public and private sources.
In addition the state recently launched the aformentioned "Clean Energy" fund, a program administered by the CEFIA to provide households and businesses with renewable energy credits.
When asked how much of the electricity in the state's power grid currently comes from alternative energy sources (i.e. wind/solar), Esty quickly answered "7 percent," however he added that the amount of alternative energy in the system varies depending on availability. He said the DEEP has set an ambitious goal of increasing that to 20 percent by 2020.
Esty said the state's push toward adoption of renewable energy is also having the effect of attracting innovative businesses to the state. Meanwhile the government is trying to lead by example by investing in alternative energy sources for its own operations whereever possible.
Providing the state's new model for increasing sustainability works, businesses will be the ultimate beneficiaries, Esty said.
"Ultimately they will be the winners, because they will drive down their energy costs," he said, adding that the cost of alternative energy keeps dropping and is, in some cases, already competitive with traditional sources. "And when they drive down their costs, they improve their profitability and improve their market competitiveness, while at the same time improving the environment." This, he said, should in turn lead to more job growth.
Similarly the state is pushing to get homeowners to take advantage of clean energy incentives as well. Esty said by switching out lighting and installing weather stripping, "most homeowners can cut their annual energy costs by 10 to 15 percent. However what the DEEP is pushing for is, if you'll excuse the pun, 'DEEP' energy efficiency, which looks at heating, lighting, air conditioning, ventilation, insulation, appliances — the whole package. With this you can get up to 40 percent savings," he said.
Bringing a selection of alternative forms of energy into the state from different providers will also have the effect of creating a more competive energy landscape, Esty said, which in turn will help drive down prices. He said by adopting alternate sources of energy, business and homeowners will help break the state's dependence "on the dirty, costly and inefficient" ancillary power plants, such as the coal burning UI plant in Bridgeport that is used to supplement the grid to meet Fairfield County's energy needs.
"I do think we can build out a better natural gas infrastructure," Esty said, adding that advances in natural gas production — such as fracking and horizontal drilling — have driven down the cost significantly in recent years.
He said currently only 31 percent of homes and 35 percent of businesses in the state are on gas, "whereas Rhode Island is at 50 percent; New Jersey is at 65 percent; and Massachusetts is at about 51 percent." He said there are about 165,000 homes in the state "which are in proximity to a gas main which could be hooked up today." The rest, he said, will have to be hooked up through gas line expansion projects.
"Connecticut has a chance over the next few years to show that these alternative approaches to advancing environmental protection and advancing cheaper cleaner energy in a way that integrates with our economic agenda, with our jobs agenda, can happen," Esty said. "And with the state's lead, I think we can change the dialogue in Washington too."