Let's start with some places where interest in climate change is very high and people are searching for constructive solutions to meet the world's energy needs while lowering CO2 - our colleges and universities. Outlined below is a proposal for The University Carbon Fund - a simple way for universities to reduce CO2 emissions, save energy and money, and spur investments in clean energy. The University Carbon Fund can be implemented now, is designed to be revenue neutral, and can be tailored to each university. The beneficiaries are students, faculty, administration, researchers, clean energy companies and the planet.
How the University Carbon Fund works:
- The University, with student and faculty input, establishes baselines for energy use and CO2 emissions and proposes reduction targets.
- The University saves energy (and importantly) money, while helping achieve the CO2 targets through energy efficiency, conservation measures, and implementation of new technologies, products and services.
- The University implements a staged Carbon Tax and establishes a University Carbon Fund with the revenues received.
- The Fund is retained and managed by the University, with student and faculty input.
- The energy cost savings offset the Carbon Tax.
- The University Carbon Fund is invested in in clean energy companies, services, efficiency measures, products and research and development.
How your University can do it:
Step 1: Determine current CO2 output
Many universities and colleges have some form of a Sustainability Office and can provide an estimate of the institution's energy consumption and CO2 footprint, often broken down to a department or school level, as a baseline. For those universities yet to take this step, a student-led task force might accomplish the task to sufficient accuracy using financial and operations data and a number of available online calculators in a matter of months. It's a great semester class project.
Step 2: Establish and implement a carbon reduction target
Again, many Universities have already taken this important step. For those that haven't, consider cutting your emissions by 25 percent over the next 5 years, and an additional 10 percent before 2025.
Step 3: Establish an energy cost saving target:
Actual energy cost and emissions reduction is the crux of the challenge. It's much easier to set the targets than achieve them. There are many ways for Universities to achieve a reduction in their energy costs and CO2 emissions: conservation and efficiency measures, choosing lower carbon alternatives to travel, renewable energy options for electricitY, innovative building design and retrofitting, choices in diet, recycling and vehicles.
Step 4: Apply a price for carbon to the university CO2 output and determine a carbon tax.
Universities might consider a staged approach to a carbon price as they work out kinks in their program, for example starting at $10 per ton CO2 in 2017 rising by $5 per ton per year to $30 per ton CO2 in 2021 and $40 per ton in 2026. Universities may of course reserve the right to set a more or less aggressive target and to review their carbon price targets annually. For example, a university might consider simply capping the carbon price at a level that produces a tax equal to their projected energy cost savings.
Step 5: Save and invest the carbon tax proceeds in the University Carbon Fund
What can your university do with their University Carbon Fund?
Invest in clean energy companies and deployment of new cleaner energy technologies. Invest in research and development, in efficiency measures and in low carbon products and services. The University Carbon Fund grows in value through time, spurs economic growth and create jobs. Three different investment options are provided below - there are of course others.
- Investment Option 1: Invest in and build a portfolio of companies that develop, produce and deploy technologies and products to reduce CO2 or improve energy efficiency. Be pragmatic - invest in companies making a difference now.
- Investment Option 2: Invest directly in products, services and efficiency measures that reduce the university carbon footprint and can save energy costs. Take advantage of renewable energy options from existing utilities, participate in distributed energy systems, purchase solar panels, insulation and high efficiency appliances and lighting, build a high MPGe vehicle fleet, support local foods, install efficient lighting: there are many options.
- Investment Option 3: invest in basic and applied research in science and engineering directly related to energy. Consider this investment seed money, providing your university and the world with ideas for future investment options. Pursue partnerships with matching funds from industry. Investment helps bridge the gap between innovation and deployment.
Let's put some numbers to all this to illustrate how it can work in practice
A university with 18,000 students emits around 90,000 tons CO2 per year and has all inclusive
(heating, cooling, lighting, lab, physical plant, operations, transportation & commuting, air travel, operations) energy costs of about $18 million dollars per year.
The university targets a 5 percent CO2 reduction each year through the end of 2021.
The university establishes a carbon price of $5 per ton CO2 for 2017 (purposefully low to work the kinks out of the process) rising to $15 per ton in 2018, and then increasing by $5 per ton each year until the goal of $30 per ton CO2 is reached in 2021.
The University targets a 3 percent reduction in energy costs year on year, measured against its 2016 baseline costs.
In this example, the carbon tax, including targeted emissions reductions, would total $7.1 mln for the 2017-2021 time period, rising from $430,000 in 2017 to almost $2.3 mln in 2021. CO2 savings would be over 60,000 tons.
Cumulative total energy cost savings for this same period against the 2016 baseline would be $7.8 mln, creating a surplus (above the carbon tax) of $700,000 for the university to use as it sees fit. In any year that the actual cost savings turn out to be less than the carbon tax, the university could retain the option to cap the tax to retain cost neutrality. Alternatively, some universities have suggested that alumni challenge grants based on beating energy and CO2 targets might provide an additional funding source.
A sample portfolio for the University Carbon Fund might work as follows: 50% invested into a University Clean Energy Investment Fund, 20% into a Products, Services and Efficiency Fund, 25% into University Energy and Climate R&D, and 5% into Administrative Fees to run the program.
With this portfolio, over the 2017-2021 time period, the University Clean Energy Investment Fund would grow to $3.6 million (conservatively, without including any interest, dividends or capital gains). The Product, Services and Efficiency Fund would total $1.4 million, and almost $1.8 million dollars would be available for university energy and climate R&D.
Your university can take a leading role. Take action now and establish a (Your University Name Here) Carbon Fund.