1. Optimizing Greening Schools for a Carbon Constrained Future Presented to: The Association of California Construction Managers Presented by: Stephanie R. Williams, President Transportation & Renewable Energy Dialogue May 20, 2009

2. Comments by Barrack Obama November 2, 2008 Let me sort of describe my overall policy. What I've said is that we would put a cap and trade system in place that is as aggressive, if not more aggressive, than anybody else's out there. I was the first to call for a 100% auction on the cap and trade system, which means that every unit of carbon or greenhouse gases emitted would be charged to the polluter. That will create a market in which whatever technologies are out there that are being presented, whatever power plants that are being built, that they would have to meet the rigors of that market and the ratcheted down caps that are being placed, imposed every year. So if somebody wants to build a coal-powered plant, they can; it's just that it will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted. That will also generate billions of dollars that we can invest in solar, wind, biodiesel and other alternative energy approaches.

3. Plain English Federal Program Aggressive Cap & Trade System GHG emissions charged to polluter Technologies would have to meet: Rigors of the market R atcheted down caps imposed annually The amount of allowances (permission/permit to pollute a tonne) issued will decrease every year. 100% auction will generate billions of dollars that we can invest in solar, wind, geothermal and biodiesel Revenue is produced through an auction where there are more polluters than allowances/permits available

4. AB 32 – California Leading September 27, 2006 AB 32 signed by Governor - Global Warming Solutions Act of 2006 Law requires reduction of GHG emissions to 1990 levels by 2020 – a 15% reduction. Required CARB to develop a Scoping Plan – ADOPTED 12/11/08 Measures in the Scoping Plan will be in place by 2012 By 2012 utilities and refineries under pressure to transform their fuel stock from fossil fuels/coal to renewable products. Energy Efficiency cornerstone of program – Buildings and energy efficient technology Renewable energy to replace oil and coal – Solar, wind – Bio-fuels

5. S coping Plan- Key Elements Achieving 1990 level CO2 Emissions by 2020 Expanding and strengthening existing energy efficiency programs as well as building and appliance standards Achieving a statewide 33% renewable fuel mix Develop cap/trade that links with western states Establish regional targets for transportation related GHG emissions and pursue policies and incentives to achieve targets Create targeted fees to fund the program

6. Buildings & Energy Efficiency

7. Opportunity for Schools Avoid significant electricity/natural gas increases – 33% RPS Standard and allowance assessments Zero Net Energy for buildings (2015) Energy Efficiency measures first – Retrofit lighting, HVAC, refrigeration equipment Solar and renewable treatments Establish 2015 load for net metering Feed-in Tariff SB 32 Protect untapped assets – Roof space, multiple meters, carbon credits & REC

8. What is an Energy Performance Contract? An agreement between an energy services company (ESCO) and a building owner. ESCO engineers provide facility improvements and guarantee a lower utility rate. Purchase Power Agreement – No up-front cost to the owner Lease the asset for a period of time – Buy out provisions Retain federal tax credits and utility rebates Bank Renewable Energy Credits and Carbon Credits

9. PPA Contract Period Typically 6-20 years – Retire federal tax credits – Bank RECs and potential carbon credits Contracted reduction in utility bills pay for the equipment, installation of equipment and access to the financing Building owner retains post contract saving – Solar or wind installation provides immediate and very low utility costs – Maintenance falls on building post contract

10. Schools & Energy Efficiency The 80/20 Rule Cost Effective Retrofits or Replacements – Lighting – Refrigeration and chillers – Heating and Cooling Systems – Boilers Less Cost Effective Measures – Energy Management Systems – Back up generators – Motors – On-site generation/co-generation Process to produce steam and electric power simultaneously

11. Are your needs their needs? Appetite for a 30% tax credit Industrial facilities under a declining “Cap” – Need carbon credits and offsets Utilities and refineries Utilities facing 33% renewable standard portfolio – Need Renewable Energy Credits Feed in Tariff (FIT) moving through the legislature – SB 32 (McLeod) – Paid Fair Market Value for renewable energy going into the state electrical grid Electricity demand of school - net metering – Appetite for RECs and carbon credits

12. Power Purchase Agreement Effective mechanism for funding Contract language determines opportunity – Environmental attributes Carbon credits Early action for voluntary reductions Energy Efficiency – Length of contract Buy out provisions Who owns the potential revenue from the roof – Does PPA prohibit revenue stream from FIT?

13. Unintended Consequences Environmental measures cause increase in kW usage - increase utility bills Energy Efficiency measures left behind to chase a larger footprint for carbon for PPA Potential revenue stream contractually delegated to a third party Rate reduction guarantee in later years to small and creates revenue stream for 3 rd party – Own or lease? Who owns the environmental attributes?