MaineHousing Carbon Project Costs Millions, Experts Question Plan


by Terrilyn Simpson

Maine State Housing Authority Director Dale McCormick is predicting a huge payback on the carbon offset project she’s tied to the MSHA low income home weatherization program, having so far invested an estimated $6 million in just the unfinished carbon tracking computer system.

But experts and officials scrutinizing the McCormick carbon scheme can’t figure out how she intends to pull it off.

Maine Housing, with McCormick in the driver’s seat, seems to have subscribed to a green mindset that “Climate change is not only one of the greatest challenges of our time, it’s also an epic opportunity,” as described in an article entitled “Cap and Trade 101.” Featured in the July 2009 issue of a publication called the Sightline Report, from a think tank institute that promotes green initiatives and shared prosperity, the article continues, “When we rise to the challenge through smart solutions, we will also unleash a wave of new economic development…”

And McCormick seems to be attracting people of like philosophy. The question is whether the gains of a handful of carbon industry entrepreneurs are the losses of a large number of US taxpayers. To name just a few carbon related vendors associated with the agency, in the last several years, Maine Housing under McCormick’s oversight has paid consultants fees of $370,000 to Lee Associates; $142,537 to Climate Focus BV; $3,257,920 to Joseph Associates; $1,640,762 to Kinney Associates; and $122,560 to carbon consultant Lucille Van Hook.

The fees total just over $5.5 million.

Lee Associates, Joseph Associates, Kinney Associates and Lucy Van Hook are located in Maine.

Climate Focus has offices in Amsterdam, Washington DC and Beijing, with representatives in São Paulo, Lisbon, Brussels and Bangkok.

In 2006, carbon consultant Van Hook was working on her honors thesis on the snapping turtle population ecology and status in Merrymeeting Bay and its tributaries, in the Kennebec Estuary of southern midcoast Maine. Just two years later, she was named the carbon market project manager at Maine Housing — she is listed as the person who “has been managing the carbon project since its inception in January 2008.”

According to a MSHA press release,  “She is also part of the technical team that is developing a way to measure, monitor, and sell the carbon dioxide emissions avoided from energy-efficiency measures installed in Maine homes.” By 2009, she was named as one of several individuals in charge of vetting the carbon methodology that McCormick is touting as internationally groundbreaking, claiming that MaineHousing had “developed a process to record and verify the carbon emissions reductions resulting from energy efficiency work.”

Because of McCormick’s murky accounting records, it’s difficult to decipher how much she’s invested in the carbon project. For instance, Jo-Anne Choate is listed as the LIHEAP Coordinator for Maine Housing — LIHEAP is the Low Income Home Energy Assistance Program. But Choate’s name also appears, with Van Hook’s and McCormick’s, as a vetter of the methodology report. It also appears on a report she apparently authored on the carbon program and Choate appears at a conference speaking on the carbon program. Her affiliation raises a question of whether she’s getting paid as a LIHEAP staffer (LIHEAP is federally funded), or as a member of the carbon project.

And in May of 2010, Choate and Van Hook are listed as speakers at a conference in Wiscasset, Maine at the Chewonki Center, discussing “the Green Building Standards developed by MaineHousing, innovative alternative energy technologies implemented under a research grant including cold climate heat pumps, windmills and solar thermal, internal improvements….and the new Carbon Market Project.

The promo notes that under McCormick’s leadership “environmental impact and energy conservation have become part of maintaining decent and affordable housing.”

A preface to one of Van Hook’s speaking engagements regarding the MSHA carbon project indicated that Van Hook had attended the Copenhagen Climate Change conference and that her presentation offers “a look inside the conference from the perspective of a young person working in the climate change field.” It’s not clear whether Maine Housing covered the cost of that attendance.

According to another Maine Housing description, “The larger scope of the Carbon Project includes the development of a project document that will allow housing finance agencies to quantify and sell carbon emission reductions from solar thermal installations and energy efficiency measures in the housing projects they sponsor.”

A developer has indicated that McCormick has mandated that Maine Housing contracted developers sign over all carbon credits to Maine Housing. It’s a requirement that has been challenged, with some discussion regarding the legality of the mandate.

And regarding the solar reference in regard to carbon emission reductions, Maine Housing has come under fire for the prohibitive cost of solar installations along with problems of both setting them up and maintaining them. The solar design at the Elm Terrace apartment complex in Portland was scrapped at the last minute because of cost, compromising the design permit.

And regarding additional consultants, Maine Housing includes on its vendor list a payment of $19,621 on July 22, 2010, to First Environment Inc. of Boonton, NJ for computer software “equipment purchases.” Carbon is not noted with the disbursement. But First Environment was clearly working with Maine Housing on the carbon project, as was indicated in 2009 when the company is referenced as participating in the kick-off of a validation review of McCormick’s carbon methodology. McCormick, Van Hook and Choate were also participants as was Sandra Greiner of Climate Focus and Cathy Lee of Lee International. It’s not clear what First Environment was paid for their 2009 participation.

It’s also not clear what was paid to develop the MSHA carbon methodology much touted by McCormick,  or various carbon reports and presentations or the 2009 20-year plan to “Weatherize all Single and Multifamily Dwellings in Maine.”

The 20-year plan lays out McCormick’s goals for the carbon scheme: “The salable carbon emission reductions can be quantified on an annual basis, and accrue over the twenty year lifetime of the installed measures. The verified emission reductions from all weatherized dwellings can be aggregated and sold into the carbon market. The future price of carbon is unknown.

However, using the current Regional Greenhouse Gas Initiative (RGGI) auction price of a ton of carbon and the projected price of carbon from the EPA’s analysis of the American Clean Energy and Security Act (ACES) low, medium and high price scenarios can project potential carbon revenue. Depending on the price scenario of carbon/metric ton, with a projected 1.8 tons generated annually per dwelling, the potential revenue generated over twenty years could provide 40%-70% of the total subsidy needed to weatherize all dwellings in Maine, or approximately 13% of the upfront costs at $4,200 per dwelling (Appendix B). Not capturing the carbon savings would be a huge missed opportunity to generate real revenue to recycle into the weatherization program. Using an accredited methodology to quantify the carbon savings is the key to accessing additional carbon revenue.”

One longtime energy expert who asked not to be identified, based on concerns of reprisal by Maine Housing against a business with which the individual has involvement, questions Maine Housing energy audit procedures in measuring carbon offsets claimed for the weatherization of low-income homes. After reviewing the methodology, he contends that energy savings are being overestimated. In conducting studies of energy usage before and after winterizing homes, he refers to a phenomenon referred to in the industry, as “snapback” or the “kazoom effect….” He said what was discovered in the auditing project with which he was involved was that there was little, if any reduction in fuel used in the year following the weatherization — that it became a “quality of life” issue and “not energy savings.”

As an example, he described that prior to the weatherization of a home, X amount of dollars was spent on heating — but the house was drafty and so rooms might be shut off in the winter, a blanket might be hung over a doorway and occupants endured low temperatures inside. After the house was tightened up, there was no need to shut off a room or use a blanket over a doorway as additional insulation, and that approximately the same amount was spent on fuel (cost comparisons were considered) — the house was simply warmer. The quality of life was changed, but not the amount of fuel used.

Jim LaBrecque, a technical advisor to Governor Paul LePage, questions the peer review process of the MSHA carbon offset program. LaBrecque is a mechanical and electrical engineer with a number of patents and projects to his credit, including the development of an advanced refrigeration technology that does not use chlorofluorocarbons, “What I would question is the engineering background of the people who have done this study and (conducted) peer review…LaBrecque said he often finds experts with environmental driven agendas. “They’re people all supporting each other in the same manner for the same cause…they shy away from people
that may ask them tough questions…”

To isolate a single example, LaBrecque referenced an item from the MSHA carbon methodology for measuring carbon savings in both weatherizing homes and grading the efficiency of appliances.  “Like refrigerators — they say they use nameplate ratings — nameplate ratings are only carried out on the most extreme days of the year — the hottest day of the year is the only day you draw a nameplate rating on a refrigerator — the rest of the year you’re operating way below the nameplate rating — so how did they factor that in? The formula (in the MSHA methodology) consists of many, many assumptions and approximations…”

In discussing the mandated carbon market in Maine and the Northeast, Carroll Lee, a member of LePage’s energy advisory team and the former president of Bangor Hydro Electric, said he finds the carbon offset initiative that the states of the Northeast have entered into (New Jersey just pulled out) detrimental to the economy…(puts them) basically in isolation…” Carroll’s point is that because only certain states have opted into the carbon program, “you’re just shooting yourself in the foot — making your cost of doing business higher in the region and pushing the jobs out to higher carbon output economies like the midwest or China, that sort of thing…”

The agreement that New England and other northeastern states have entered into is called the Regional Greenhouse Gas Initiative (RGGI) and it caps carbon emissions for power generating plants, for instance, mandating that they purchase offsets. “They measure the emission output of carbon — power generators are mandated to buy carbon credits….the funds are collected by RGGI — it raises the cost of electricity of Maine – then you make it more costly to do business in Maine…. because it increases the prices at which (generators) sell power to recover that cost — “This is going on throughout the northeast — so those costs are incurred by the businesses and citizens throughout each of the states in their electric power bills….” making businesses “less competitive….” throughout the Northeast.

“Those jobs, said Carroll, “are going to have to migrate to other states which don’t have these onerous requirements — or outside the country, to places like China…which obviously doesn’t have any sort of similar regulation. It’s the law of unintended consequences working — you’re trying to do a good thing but you’re ending up making things worse because you’re taking jobs from the state of Maine where carbon output for manufacturing is relatively low, since we’re using natural gas, and you’re sending those jobs to other places which may be burning coal or much higher output carbon energy and the overall effect is you’re increasing carbon output overall by trying to do this. And you shouldn’t be doing it unless you’re doing it through all the major economies in the world. Carbon trading has really gone backwards — too expensive, no support in the population — spinning their wheels — it’s a tax — taxing energy producers for producing energy and that tax is being passed on to consumers — it’s outrageous…”

Said Carroll, “New Jersey has just pulled out of the carbon initiative. Given the uncertainty of the market, Maine could do the same…”

And while Maine Housing is not part of the RGGI market, part of Carroll’s point is that the carbon market is at best uncertain at present, making it a precarious investment for the future.

Maine Housing has entered into a voluntary carbon credit deal with Chevrolet, which is paying almost $750,000 to insulate homes for low-income Maine families, according to McCormick and an article by Ben Elgin in Bloomberg Businessweek. The carbon purchase is part of an incentive in which Chevrolet agreed to purchase carbon offsets for any Chevy sold the last month and a half of 2011.

According to Bloomberg, “The Detroit-based automaker says it will count toward its goal the carbon reductions from a state program in Maine to insulate 5,500 homes. Chevy is buying carbon credits from the program for almost $750,000. That is enough to weatherize 170 houses, according to the Maine State Housing Authority.”

Continues the article, “It is very fishy to claim credit for reductions from over 5,000 homes if 170 homes will be weatherized because of your carbon payments,” says Anja Kollmuss, a Zurich-based scientist associated with the Stockholm Environment Institute and one of five co-authors of a handbook on carbon offset programs, trading and standards.” An environmental organization hired by Chevy recommended the deal and the carbon offsets were verified by a standard-setting group hired by Maine Housing.

And according to Bloomberg, “a $41.9 million grant from the US government’s economic stimulus plan is paying for 80 percent of the 5,500 homes to be weatherized.” Other taxpayer monies, including funds from an Energy Department insulation project, will pay for the rest.

McCormick has refused to divulge to MSHA commissioners the terms of the contract with Chevy, categorizing it confidential.

Critics have expressed skepticism as to how McCormick intends to recoup her hefty investments in the MSHA carbon program once the government funding runs out. Stanford Law School professor and environmental scholar Michael Wara is quoted in the Bloomberg article as referring to the Maine Housing carbon deal as a “deceptive marketing claim” — one in which Chevrolet will get credit for the Maine Housing weatherization carbon reduction but that “the government financed most of it.”