American Clean Energy & Security Act (ACES) Press Release from Verisae, Inc.

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For Immediate Release

Waxman Markey-American Clean Energy & Security Act (ACES)

U.S. House of Representatives Passes Draft Documents on June 26th, 2009.

Minneapolis, Minnesota - July, 10^th 2009: Verisae, a supplier of clean-tech software solutions, publishes a summary of the American Clean Energy and Security Act (ACES) and the impact these environmental regulations will have on an enterprise's refrigerant gas management initiatives.

The ACES Act is a big step forward in establishing energy security, the reduction of harmful fugitive emissions, and getting a handle on high global warming potential (GWP) refrigerant gases.

Although, the draft legislation passed in the U.S. House it will still need to pass the Senate before becoming law.  The Obama administration has made climate change one of their key issues to be addressed. This administration is looking to synchronize with the rest of the world regarding initiatives and tactics to address climate change.

When the U.S. engages in talks at the UN Climate Change Conference in Copenhagen in December, they will bring with them a number of initiates well underway. The new administration has been quite effective at getting their agenda passed. There is a good chance that these efforts will succeed in 2009 or 2010 with new environmental-related legislation becoming law within the United States very soon.

Q - What are the key points of ACES Act worth understanding and internalizing?
The overall emissions caps are set to the following within the draft legislation.

• 3 percent below 2005 levels by 2012
• 17 percent below 2005 levels by 2020
• 33 percent below 2005 levels by 2030
• 83 percent below 2005 levels by 2050

Q - How is the draft legislation planning to set up a carbon Cap & Trade Scheme as method for reducing overall Greenhouse Gas (GHG) output?

The following items are detailed within the draft legislation.

• Covers CO2, CH4, N2O, Hydrofluorocarbons (HFC refrigerants), PFCs, SF6 & NF3

The HFCs are subject to a separate cap to be further defined.

• Covers large emitters greater than 25K MT of emissions. This is representative of only the largest Green House Gas (GHGs) emitters across the entire United States economy.

• Initially 15 percent of the pollution rites were to be auctioned. The originally documents included a 100 percent auctioning rate. The lower rate was a major concession to help with passage.

• 2 billion MT of CO2e offsets of which 1 billion must be from national origins

The inclusion of this detail will create a huge carbon offset marketplace.

• The new draft also includes a chlorofluorocarbons (CFC) destruction item. This means the destruction of CFC refrigerants can be used as a carbon offset project that will generate carbon credits.

• Possible preemption of state and regional carbon cap and trade programs after 2017

• Sets renewable energy standard ramping up to 20% in 2020 (can use energy efficiency measures for up to 5% of the target)

Comments from Verisae's Ted Gartland -
Using EPA projections, the U.S. per capita emission will fall from their current level of ~24.5t-CO2, to 17.8t-CO2 in 2020 and 3.07t-CO2 in 2050.

Strong regulation will significantly reorder the economy in a way that the carbon cost of doing business will be real and tangible.  Business decisions will have to be made based on higher energy costs (carbon offsets at electrical producer), higher refrigerant costs (production rights purchases) and the prospect of participating in the "offset marketplace".

The data and historical records shows - retail grocers as well as many other industries use large amounts of energy and high GWP refrigerants so they will have opportunities to participate in energy efficiency and carbon offset projects.  

Q - How will the ACES Act impact the management of hydrofluorocarbons (HFC)?

HFCs will be subject to a separate carbon emission cap. 

As stated in the act, "Effective Jan 1st, 2012, it shall be unlawful to produce or import any product containing (HFCs) without holding one consumption allowance or one destruction offset credit for each (MT CO2e of HFC)." 

The HFC emissions cap will be based on a 2004 - 2006 average numbers. The enforcement of the HFC cap will begin in 2012. The first year minimum bid for carbon will equal $1 / MT CO2e.

Comments from Verisae's Ted Gartland -
Ted has boiled 50 pages of information into a few bullet points, although it is highly recommended that your organization read through the details contained in these draft documents in detail. Basically, there will be a separate HFC cap whereby HFC producers will have the rights to purchase credits first.  

Q - What does the HFC emission cap mean to organizations using, producing, or managing refrigerant gases?

There will be direct cost increase related to the use of refrigerant gases. For example, the following ADDITIONAL costs can be expected to be added to the cost per pound to offset carbon burden ($1/MT).

R-407A = $.97
R-422D = $1.24
R-404A = $1.78

Q - What should an organization do to compensate for the HFC emissions cap?

Essentially, there are three simple rules to be followed.

First, an organization should use the most energy efficient refrigeration equipment with the lowest possible Global Warming Potential (GWP) refrigerants for the application.

Second, one should strive to utilize newer technology that allows for smaller refrigerant charges without losing any efficiency of cooling or operation. The less refrigerant needed to cool the less risk an organization faces due to the management of the refrigerant.

Third, organizations, through effective maintenance and accurate tracking, should keep the refrigerant gas in the systems, i.e. don't allow refrigerant containing systems to leak.

Q - Who else is talking about the importance of HFC management?

According to a report published in the Proceedings of the National Academy of Sciences if unchanged HFCs will equate to 45% of the total carbon emissions in 2050.  This statement assumes a reducing CO2 cap and unchecked HFC growth. The New York Times has also recently commented on the importance of HFCs in their article entitled, "Ozone Solution Poses a Growing Climate Threat".

Q - What can organizations learn from this legislation? What pro-active steps can be taken now?

Ultimately, most organizations do not have the necessary tools in place to manage refrigerant usage appropriately. Regardless of whether or not this legislation passes, it is a good bet that HFC regulations will come.

"Our typical clients have significantly lower leak rates than numbers put forth by the U.S. EPA.  Most can document 5% savings in total refrigerant usage within the first year" said Ted Gartland, Director of Refrigerants and Regulatory Compliance.

Many organizations lack the visibility to make data-driven business decisions. As a result, the EPA's Office of Enforcement could issue monetary fines of up to $32,500 per day for each system that exceeds refrigerant leak thresholds.

Verisae estimates a 5% savings in total refrigerant usage within the first year through accurate refrigerant data collection and prompt refrigerant leak detection and correction.

Verisae's client footprint has grown to over 20,000 locations, 100's of thousands of systems, and over 38,000,000 pounds of environmentally harmful refrigerant gas under management. The key to Enterprise Refrigerant Management's rapid growth and installed base is due to ease of use and scalability. All that's required is an internet connection and a browser. ERM is currently in use throughout North America, Europe, and Asia.

Q - Where to learn more about the importance of effective refrigerant management?

Ted Gartland
Director Refrigerants and Regulatory Compliance
(612) 455-2300 (w)
tgartland@verisae.com
www.Verisae.com