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Strategies to Fund Decarbonization Roadmaps

December 7, 2023/in From the Blog /by renew

This article explores methods to fund and implement net zero roadmaps while considering both environmental objectives and financial limitations. By understanding these strategies, stakeholders can effectively drive the transition to a low-carbon economy.

What is the status of the decarbonization roadmaps in today’s landscape?

More than a third of the world’s largest 2,000 publicly listed companies have established net zero goals to some extent according to the Net Zero Tracker. Sixty-five percent of these companies, however, are not meeting the minimum reporting standards that are currently in place.

Additionally, just over 1% of these companies have a thorough decarbonization plan in place to achieve their net zero goals. The existing disparity between objectives and implementation poses a significant threat to achieving a sustainable future.

Before exploring funding options for your decarbonization plans, we recommend reviewing our comprehensive guide on achieving decarbonization targets. This manual provides a comprehensive approach for reducing carbon emissions in your company’s buildings.

Defining Decarbonization Targets

To succeed in a decarbonized future, companies must carefully assess their current position and define their desired outcomes. By recognizing the gap between these two, organizations can develop strategies that align with their goals and accommodate various scenarios.

Implementing these roadmaps enhances competitiveness and sustainability. In contrast to short-term factors, roadmaps focus on long-term advantages. It is important to recognize that there is no one-size-fits-all approach for every company. To thrive in a rapidly changing landscape for decarbonization, organizations must adopt comprehensive strategies tailored to their specific objectives and requirements.

RENEW Energy Partners works closely with companies at any stage of their decarbonization process. If your company requires an energy audit, RENEW can provide a thorough evaluation of your energy needs without any risk or cost to you.

Effective Collaboration Drives Successful Implementation of Decarbonization Roadmaps

To achieve a successful implementation of decarbonization roadmap, close collaboration among key teams is imperative. The following three teams must work in concert:

Executive Leadership Team: A company’s leadership team is focused on strategic direction and managing what can be competing priorities. The leadership team leads and sets the tone for the organization’s commitment to sustainability.
Sustainability and ESG Team: This team shoulders the responsibility of formulating, managing, and executing the decarbonization roadmap. Collaboration with various departments, including operations, finance, and supply chain, is fundamental to effectively implementing sustainable practices.
Finance Team: We know the CFO and colleagues manage budget allocation and a limited capital budget. The finance team assesses the feasibility of decarbonization projects, as well as funding options.

Renew’s approach fosters collaboration between these three teams to synchronize the company’s financial resources, strategic vision, and sustainability objectives. Implementing a decarbonization strategy in an organization is difficult without committed leaders, a skilled sustainability team, and a knowledgeable finance team.

Exploring funding options for decarbonization initiatives

Decarbonization funding demands a well-thought-out strategy harmonizing environmental objectives with available financial resources. The approach to securing funds can vary based on the specific nature of the project in need of financing.

Consider building retrofit ventures that often require substantial investments reaching into the millions of dollars. Fortunately, a variety of funding avenues exist for such initiatives, widely embraced across industries. These include Energy Service Agreements (ESA), Energy Performance Contracting (EPC), and Commercial Property Assessed Clean Energy (CPACE).

Understanding different financial mechanisms and identifying decarbonization technologies needing funding is crucial for decision-makers, policymakers, and businesses. In the following sections, we will explore how to effectively fund the journey to the Net Zero future.

Internal Reallocation of Resources

Begin by examining your organization’s existing budget and operational expenses. Identify areas where we can reallocate funds to support decarbonization efforts. This could mean using money from less important projects, departments with extra funds, or cutting unnecessary expenses without affecting important tasks.

Green Bonds and Sustainability-Linked Financing

Green bonds are fixed-income financial instruments specifically designed to fund environmentally friendly projects. They enable organizations to raise capital from investors interested in supporting sustainable initiatives. Sustainability-linked financing, on the other hand, ties interest rates or terms to the achievement of sustainability goals, aligning financial incentives with environmental targets.

Government Grants and Subsidies

Many governments offer grants, subsidies, and incentives for projects that contribute to emissions reductions and sustainability. Research available options and apply for relevant funding programs that align with your decarbonization roadmap. These programs often vary by region and sector, so thorough research is key.

Utility Rebates

Many utility companies offer rebates for energy-efficiency upgrade projects. These rebates can be used to offset the cost of purchasing and installing energy-efficient systems, such as high-efficiency HVAC systems, lighting upgrades, and insulation improvements. These projects help reduce both energy consumption as well as carbon emissions.

Carbon Offsetting and Emission Reduction Credits

Participate in carbon offset programs or trading schemes where you can earn emission reduction credits for your sustainability efforts. These credits can be sold to other organizations seeking to offset their own carbon emissions, providing an additional revenue stream.

Funding decarbonization roadmaps requires a creative and multi-faceted approach. Organizations must explore a combination of strategies that align with their specific goals, resources, and market conditions.

Funding Net Zero Roadmaps with RENEW’s Master Service Agreement

Renew Energy Partner’s Master Service Agreement (MSA) is a fully funded service agreement for improving and decarbonizing the built environment.

The MSA is a comprehensive contract that covers the legal aspects of the agreement between RENEW and the customer. It also includes specific Project Addenda that allow for scalability in energy efficiency and sustainability initiatives. This contract is much more flexible and modular compared to traditional funding options, making it an ideal solution for decarbonization plans.

The MSA might have an Energy Service Agreement (ESA) for energy-efficient upgrades such as lighting, HVAC, or smart energy controls. It could also have a Power Purchase Agreement (PPA) for on-site clean power like solar + storage or combined heat and power (CHP).
It is a funding solution that enables owners to decarbonize their buildings today, without making an investment.
Just like a utility expense, an MSA can achieve off-balance sheet treatment and be treated like any other operating expense, tax deductible. Please consult your tax advisor in order to determine if this is an aspect of the MSA that you can take advantage of.
An MSA takes the financial and project implementation burden from the building owner. Building owners pay a monthly amount that is less than the total saved, so from day one there are savings applied to the bottom line.

Overall, the MSA provides a sustainable funding solution that streamlines decarbonization efforts while providing immediate cost savings for building owners. By treating the MSA as off-balance sheet, companies can decarbonize while simultaneously freeing up capital for non-energy related projects.

Conclusion

By understanding these funding strategies, building stakeholders can lower energy bills, avoid impending tariffs, improve their company’s image, and fund the transition to a Net Zero future. If you are looking to find the best way to fund decarbonization initiatives, consider contacting RENEW Energy Partners today.

A Brief History of HVAC: An Important Energy Saving Retrofit

December 9, 2022/in From the Blog /by renew

RENEW Energy partners specializes in helping fund your energy saving retrofits for your commercial, industrial, and institutional buildings. There are many different technologies we can install to make your buildings more efficient and reduce your energy bill. One place to deliver significant savings is by heating and cooling your building more efficiently, with upgrades to your Heating, Ventilation, and Air Conditioning “HVAC”.

A Brief History of HVAC (Heating, Ventilation, and Air Conditioning):

In terms of heating, Benjamin Franklin invented the cast iron Franklin stove in 1742, which was a predecessor of the furnace. Until 1885, most homes were heated by wood-burning fireplaces, but a riveted-steel coal furnace transported heat by natural convection via ducts from the basement furnace to upper rooms. Cast iron radiators were invented around the same time and enabled homeowners to heat their homes with a coal-fired boiler that could deliver hot water or steam heat to radiators in every room. In 1935, the first forced-air furnace was introduced and used an electric fan to distribute coal-heated air through the home’s ducts; gas and oil-fired versions followed.

Where cooling is concerned, Willis Carrier is generally credited with the invention of Air Conditioning in 1902, motivated to solve a humidity problem for a Brooklyn publishing company. He designed and patented his “Apparatus for Treating Air” that used cooling coils to either humidify the air by heating water or dehumidify by cooling water using an additionally patented control system. When he realized other businesses could benefit from temperature and humidity regulation he formed his own company, the Carrier Engineering Corporation.

Carrier’s company installed the first well-designed cooling system for theaters in Los Angeles in 1922. Air was pumped through higher vents, which resulted in more equally distributed cooling. On Memorial Day in 1925, Carrier introduced a centrifugal chilling system at New York’s Rivoli Theater: a breakthrough in HVAC inventions. Although it was more reliable and less costly than previous cooling systems, it was still too big and expensive to use wide scale.

Frigidaire and General Electric both appeared on the HVAC scene within a decade of Carrier’s big achievement. In 1929, Frigidaire debuted a split-system room cooler that was shaped like a radio cabinet. Although it was small enough for homes, it was heavy and required its own condenser. A year later, General Electric patented 32 prototypes for improved self-contained room coolers. In 1931, H.H. Schultz and J.Q. Sherman invented the first room air conditioner; it sat on a window ledge, similar to portable units today.

Since 1947, AC units became more compact and cheaper. In that year, 43,000 systems were in use. By the 1960s, most new homes in the United States were built with central air conditioning. By then, electric air conditioner window units were affordable and had come down in price from the early days; a 1938 Chrysler unit cost $416 ($8,730.49 today). By 2009, the Energy Information Administration reported that 87 percent of all American households used AC units.

Today, heating, cooling, and ventilation systems are installed together as HVAC systems that work to distribute regulated temperatures throughout modern buildings. In upcoming blog posts, we will learn more about the future of HVAC and the energy efficiency measures that commercial, industrial, and institutional facilities can make to improve their facilities. Updating your (sometimes historic) HVAC system is a key part of most energy saving retrofits. Our experts at RENEW are in tune with the most innovative HVAC technologies on the market and we can install, run, and maintain these systems in your buildings, lowering your carbon emissions and reducing your energy bills without affecting your bottom line.

No matter how you decide to improve your HVAC system, energy savings retrofits projects require funding. In order to fund an energy efficiency retrofit for your building(s), RENEW Energy Partners offers our own energy service agreement (ESA). The Energy Service Agreement:

Is an off-balance sheet transaction. You do not own the asset or carry it on your balance sheet.
RENEW provides preventive and corrective maintenance in the service agreement
Your payment to RENEW will be based on the energy savings confirmed once the system is operational.

Unlike a lease or a loan, which are on balance sheet, do not include maintenance, and may or may not deliver energy savings, the service agreement provides all of the above and then some:

Executing a service agreement is fast – once the project is scoped by an energy professional (and we can recommend one), you execute a simple service agreement contract and RENEW will fund the project.
Executing a service agreement frees up your capital budget for your other priorities, allowing you to focus on growing your core business.
Executing a service agreement now means your net cash flows are higher than waiting and doing it yourself in a year.
And finally – executing a service agreement means flexibility. Perhaps you buy another building or look at additional efficiency measures–with a one-page addendum to your existing ESA you can have those new lights, HVAC, and controls at your new building, and you simultaneously reduce your operating expense!

The RENEW Energy Service Agreement allows businesses to focus on what they do best, while ensuring that their facilities are performing at their peak with brand new, and high-efficiency equipment. In this current climate of cost control and resource allocation, the energy service agreement is the perfect solution to help businesses meet sustainability goals and keep facilities in top condition. Reach out to RENEW and talk to us about funding your energy saving retrofits today.

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