1. SESSION: ALTERNATIVE USES OF RIGHTS OF WAY Highway Right-of-Way use for carbon sequestration, biomass production, and energy efficient lighting By: David Ponder, Good Company As state DOTs seek solutions to funding issues and enhance environmental outcomes, they have begun to explore opportunities to leverage their assets for sustainability value creation. One potential opportunity is the utilization of highway rights-of-way to for renewable energy development or the cultivation of vegetation for carbon sequestration and biomass feedstock generation. There is also significant opportunity for sustainability value creation from investments in energy efficiency particularly in roadway lighting. This presentation will summarize the finding of two recent research projects that considered these opportunities in detail. The first, NCHRP 25-35, Guidebook for Designing and Managing Rights of Way for Carbon Sequestration and Biomass Generation, evaluated the technical and financial aspects of carbon sequestration and bioenergy feedstock generation projects in the right-of-way. The second, Opportunities On The State Highway System To Generate Revenue Or Offset Expenditures For The State Of Florida evaluates the technical and financial feasibility of a number of sustainability value creation project types including solar photovoltaic energy systems and LED highway lighting. The presentation will include discussion of agency management considerations and policy frameworks affecting implementation, evaluation of cost-effectiveness and market prerequisites, and the potential for public-private partnerships. The presentation will also review the decision support tools for DOT personnel developed for these research projects. David Ponder offers technical and market research and analysis in service of Good Company’s clients in the transportation and energy infrastructure sectors. He recently completed research assesing the opportunity for renewable energy generation, carbon sequestration, and value extraction in highway rights-of-way for Florida DOT and NCHRP. David is the primary author of the Oregon DOT guidebook to developing Solar in the ROW and was instrumental in analysis for the development of Oregon’s Solar Highway Program. David has lead the the firm’s work for a municipal electric and water utility to produce annual sustainability reports and annual greenhouse gas inventories of its operations and power resource portfolio. Prior to joining Good Company, David served as a research analyst at the Appalachian State University Energy Center, and directed the Montana Public Interest Research Group for 5 years.

2. M AKING S USTAINABILITY W ORK www.goodcompany.com S USTAINABLE V ALUE E XTRACTION FROM H IGHWAY R IGHTS OF W AY : A R EVIEW OF C ARBON S EQUESTRATION, B IOENERGY F EEDSTOCK & E NERGY E FFICIENCY O PPORTUNITIES T RANSPORTATION R ESEARCH B OARD C OMMITTEE ADC60 S USTAINABLE AND R ESILIENT I NFRASTRUCTURE W ORKSHOP J UNE 17, 2014 D AVID P ONDER, A SSOCIATE, G OOD C OMPANY

3. www.goodcompany.com  Review findings from two recent research reports  NCHRP 25-35 Designing and Managing Rights-of-Way for Carbon Sequestration and Biomass Generation  Opportunities on the State Highway System to Generate Revenue or Offset Expenditures for the State of Florida Overview 3 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way

4. www.goodcompany.com  Sustainability research and consulting firm  Mission-driven, for-profit  Industries  transportation  civil infrastructure  clean energy and fuels  public agencies Our firm 4 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Good Company

5. www.goodcompany.com  While technically feasible constrained by:  Safety and other considerations  Clear zone and access control  Limited market opportunity for commodities  Carbon offsets (protocols not intended for ROW)  Bioenergy feedstock (commodity value chain)  Poor financial performance  Carbon (carbon prices $5-$10/ tonne)  Bioenergy (higher costs, lower yields in ROW) NCHRP 25-35 5 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Carbon sequestration and bioenergy feedstocks

6. www.goodcompany.com Safety and other considerations 6 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Reduces available ROW and increases costs IssueStandard/PracticeImplications Clear zone No vegetation > 4-in. within ~30-feet of edge of roadway; allowable behind safety barrier Projects involving trees not suitable to clear zone Sight distance Limits on placement and maximum allowable height of vegetation Projects involving tall vegetation should not obstruct sightlines Access control Ingress and egress from roadway discouraged; new access on Interstate requires FHWA approval Projects that require frequent access via roadway not suitable Work zone Work on or off the shoulder requires traffic control; some states also restrict time, manner and place of equipment operation Projects will require traffic control Wildlife collision Vegetation maintained to discourage cover and reduce forage Projects involving highly palatable forage should be disallowed Shading and hazard trees Vegetation should be maintained to minimize risk of drifting snow, roadway shading or limbs and branches falling onto the roadway Projects involving trees should be appropriately sited

7. www.goodcompany.com  Asset management  Need to avoid conflict with existing and future infrastructure  Environmental impact  Need to balance project benefits against potential impacts (e.g. noxious weeds, water quality, GMOs)  Regulatory and policy issues  Business models, FHWA approval Safety and other considerations 7 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way DOTs should consider these as well

8. www.goodcompany.com Carbon offsets 8 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Terrestrial carbon sequestration Courtesy: TERC  Carbon cycle  Above-ground biomass  Below-ground biomass  Enhanced through  Avoiding removals  Increasing number of plants  Boosting soil organic matter  Can mitigate CO 2 levels in atmosphere

9. www.goodcompany.com Carbon Offsets 9 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Markets and quality standards  Voluntary versus compliance market  Compliance: smaller market, higher prices  Voluntary: larger market, lower prices  Offset quality  Real (ongoing monitoring)  Additional (Δ beyond current practice)  Independent (3rd party verification)  Enforceable (contract)  Permanent (min. 100-yr commitment, buffer pool)

10. www.goodcompany.com  Potential projects limited by  Protocol requirements and restrictions  Limited demand and weak pricing for offsets  Safety and long-term asset management concerns  Conditions to monitor  Protocol development and revisions  Carbon policy and offset prices Carbon Offsets 10 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Key takeaways

11. www.goodcompany.com Bioenergy feedstocks 11 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Biomass for heat and power

12. www.goodcompany.com Bioenergy feedstocks 12 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Short rotation woody crops

13. www.goodcompany.com CropAgronomics Bioenergy opportunity / constraints Applicability to ROW Economic Feasibility Shrub Willow Coppiced 20-25 yr. rotation 3-4 yr. harvest cycle 2-6 dry tons ac -1 yr -1 Industrial & electric power sector No active buyers Low maintenance Small diameter > 12’ tall at maturity Potential co- benefits Requires > 20 acre blocks Not currently viable Low yields High production cost Low prices Hybrid Poplar Plantation 8 yr. harvest & rotation cycle 2-6 dry tons ac -1 yr -1 Industrial and electric power sector Bioenergy use is secondary to higher, better uses Limited maintenance > 4” diameter at maturity > 40’ tall at maturity Requires > 20 acre blocks Not currently viable Low yields High costs Low prices Bioenergy feedstocks 13 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Short rotation woody crops

14. www.goodcompany.com Bioenergy feedstocks 14 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Biomass for liquid fuels

15. www.goodcompany.com Bioenergy feedstocks 15 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Oilseeds

16. www.goodcompany.com CropAgronomics Bioenergy opportunity / constraints Applicability to ROW Financial viability Canola Spring/winter cultivars; rotated with wheat; GMO; 1,200-1,800 pounds/acre, 40% oil content Biodiesel / commodity value chain (2% of canola oil serves biodiesel) Technically feasible; little to no large scale market opportunity Not currently viable Low yields High costs Low prices Bioenergy feedstocks 16 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Oilseeds

17. www.goodcompany.com  Potential projects limited by  Supply chain logistics  Geography of the ROW  High production costs relative to feedstock prices  Safety and other management concerns  Conditions to monitor  Emerging technologies  Fossil fuel prices Bioenergy feedstocks 17 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Key takeaways

18. www.goodcompany.com  One of three concepts examined  also looked at solar PV and haying  LED Lighting  Saves energy, reduces GHGs  Cost-effective  Adaptive controls, increase energy savings  Safety co-benefit FDOT 18 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Energy efficiency from LED lighting

19. www.goodcompany.com LED Lighting Potential roadway applications Conventional lighting High mast lighting

20. www.goodcompany.com LED Lighting 20 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Financial analysis Comparison of Scenarios and Simply Payback

21. www.goodcompany.com LED Lighting 21 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Potential business models State DOT Funded Fund through DOT budgets; limited by budget availability Energy Services Performance Contract ESCO provides the up- front financing; payment to ESCO and DOT based on the resulting energy savings Partnerships Partner with municipalities or utilities to effectively install more lights Utility Incentives Utility Incentives

22. www.goodcompany.com  Rapidly evolving technologies  Develop pre-qualified product lists  No national guidance, yet  WSDOT, MNDOT, CalTrans have specifications  Financing a challenge  Innovative business models exist LED Lighting 22 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Key takeaways

23. www.goodcompany.com David Ponder, Associate 65 Centennial Loop, Ste. B Eugene, Oregon 97401 541.341.4663 ext. 214 david.ponder@goodcompany.com Thank you 23 TRB ADC 60: Sustainable Value Extraction from Highway Rights-of-Way Questions and Discussion