Although achieving carbon neutrality involves reducing emissions across a variety of areas — including many away from campus — campus energy consumption remains the largest driver of U-M emissions.

And as buildings accounted for 98.5 percent of total Ann Arbor campus energy use during fiscal year 2019, one U-M research team has been exploring ways to better enable energy efficiency projects in existing buildings.

“When it comes to greater energy efficiency in our buildings on campus, we can save ourselves money while we’re making them more efficient, and that’s an opportunity we really ought to take advantage of,” said Tom Lyon, Dow Chair of Sustainable Science, Technology and Commerce at the Stephen M. Ross School of Business and the School for Environment and Sustainability.

Lyon serves as faculty lead for an internal analysis team supporting the President’s Commission on Carbon Neutrality and studying internal energy consumption policies. The team is taking an eye toward universitywide policies that can nudge units toward investing in energy conservation measures.

From left, Nicholas Thornton and Kevin Perkins of the Office of Campus Sustainability energy management department, and former OCS worker Karl Nunoo investigate energy conservation opportunities on campus. (Photo courtesy of Office of Campus Sustainability)

Staffed by undergraduate and graduate students from across campus, it is one of eight teams working for the commission, each exploring different topics crucial to U-M’s climate action push.

Building on insights from U-M’s Office of Campus Sustainability and comparable universities and institutions, the team is recommending two policies:

  • A revolving energy fund that would provide loans to campus units investing in energy-conserving infrastructure improvements, to be paid back with utility savings.
  • An internal carbon price, which would be set at $50 per metric ton of CO2 equivalent, based on an estimated social cost of carbon. This figure is intended to reflect all quantifiable costs and benefits to human health and ecosystems of emitting one additional ton of greenhouse gas equivalent.

The team is not recommending carbon prices for the Flint and Dearborn campuses, although it believes they could benefit from their own REFs.

Although an REF would require initial seed funding, and a carbon price would be a change from the status quo, the proposed recommendations have precedent.

“Many countries, provinces and states have imposed some version of carbon pricing, including Canada, California and China,” Lyon said. “As the effects of climate change become increasingly undeniable, carbon pricing is likely to proliferate. When it finally comes to pass in the U.S., U-M would be well-positioned from leading in adopting an internal carbon price.”

Analysis team members agree that both policies would pay off financially.

“The intuitive challenge is certainly the biggest: Nobody wants to just pay more for the same services they have now,” said Larson Lovdal, a team member and first-year master’s student studying mechanical engineering. “We’ve accustomed ourselves to a world where there’s no social cost of carbon, and changing that mindset is hard.”

Lovdal joined the team seeking to learn more about the critical juncture facing energy production and use today. He contributed prior professional experience in facilities consulting and has taken a significant role in developing the carbon price recommendation.

The team is recommending that 30 percent of each unit’s carbon price payment be returned to the unit, to then be invested in energy conservation measures. The remaining 70 percent would flow to the centralized REF, allowing units to submit proposals for more ambitious and impactful projects.

Lovdal said he believes that although the Ann Arbor campus is often segmented between general fund and auxiliary units, implementing a carbon price should be feasible across the Ann Arbor campus.

“The utilities department actually already bills out all of the utilities consumed by the different buildings to their respective units, and we actually have really good infrastructure set up to be able to add a carbon price, based on a per metric ton of CO2 number,” he said.

Taylor Lind, an undergraduate senior studying economics and sustainability in LSA, joined the team after having been involved with campus environmental groups. She sought to better understand U-M carbon neutrality efforts and noted the team’s two recommended policies strengthen each other.

“The carbon price is really valuable in the sense that it makes the impact of emissions a bit more real because there’s a dollar figure attached to it,” Lind said. “That may come off as a problem that business units on campus are facing. The solution comes from the revolving energy fund. It provides funding to implement energy conservation measures that reduce our energy impact and reduce the energy emissions that each unit contributes.”

“Saving energy can always be pushed off until another day — even though you know you’re wasting money when you do that,” Lyon said. “The REF makes it easier for units on campus to say, ‘Oh, there’s a dedicated pot of money here to help me reduce my energy bill. Why don’t I take advantage of it?’”

Lyon said there is a prevailing expectation that after initial, easy energy conservation measures are undertaken, the cost of further energy use reduction increases. But, he said, “The thing that really surprised me was that on the Ann Arbor campus over the past 13 years, there’s no evidence that the return on investment from energy efficiency is falling over time.”

So, if energy conservation measures pay for themselves, and seemingly in perpetuity, a task from here might be to identify how the university can maximize financial gains from such investments.

“Through this research and working closely with those in the Office of Campus Sustainability and our energy management team here, we learned that even the Ann Arbor campus itself is such a complex energy consumptive system,” Lind said. “Large-scale change is fairly difficult. I hope that the recommendations are thoughtful enough to seamlessly integrate with those complexities.”

The team also includes Jessica Carlin and Katarina Nehrkorn of LSA, and Lyanda Dudley of the College of Engineering. Its work will be highlighted, along with all of the commission analysis areas, in the commission’s second interim progress report, due later this month. Analyses will inform the commission as it develops its recommendations for President Mark Schlissel in the months ahead.

The commission expects to make its draft recommendations available for public comment in October and deliver its final report by the end of the fall semester.

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