INTRODUCTION

Lafayette’s Climate Action Plan

Climate change is global concern that requires immediate and aggressive action to address the increasing atmospheric temperature, as the catastrophic effects of climate change have implications for communities worldwide. Education institutions throughout the United States, aimed at preparing students to become thoughtful and inquisitive leaders in today’s world, are creating initiatives to contribute to the global fight against climate change . In 2011, former President Dan Weiss signed the Lafayette College Climate Action Plan, which outlined the goals and strategies to be employed by the college in order to reduce Lafayette’s carbon emissions by 20% by 2021. However, when the 2011 Climate Action Plan was established, Lafayette did not have an Office of Sustainability or a full-time position dedicated to tracking the school’s progress in reducing their emissions. These responsibilities were simply encompassed by other positions at the school and were overseen by a sustainability committee. The lack of data-driven oversight has played a large role in the motivation for revisiting the Climate Action Plan in 2018. In a student newspaper article entitled “Climate action progress foggy after five years,” VP of Finance Roger Demareski expresses frustration over the fact that the data concerning the college’s greenhouse gas emissions had not been gathered and maintained in a “centralized location” since 2013, and this is most likely because it was not the responsibility of a full-time position (Gordon, 2017). Since hiring Marie Fechik-Kirk, Director of the Office of Sustainability and Nick DeSalvo, Energy Manager, in 2016 the Office of Sustainability was established and is now responsible for compiling and interpreting the college’s greenhouse gas emission data. After two year of analysis, the college is prepared to propose an updated Climate Action Plan in December of 2018.

The new plan will set the goal of achieving carbon neutrality, as many of Lafayette’s peer institutions have done. While this goal will require enormous capital investment and the engagement of student, faculty, alumni and Lehigh Valley groups, the plan will reduce the college’s greenhouse gas emissions and provide opportunities for student learning and leadership. One element of the proposed 2018 Climate Action Plan is further reduction in emissions by the power plant on campus by switching over from natural gas to a biogenic fuel source. This is an attractive initiative because the change could drastically reduce the school’s emissions. Peer institution Bates College was able to reduce their emissions by roughly one third only two years after switching to Renewable Fuel Oil as their fuel source (Schmidt et. al, 2014). However, like most higher education institutions, Lafayette is constrained by their budget and the financial risks entailed in major capital investment projects, thus requiring an analysis of the economic implications of the implementation of biogenic fuels on campus. Our goal is to provide the Office of Sustainability and the Stone House Group consulting firm with an economic assessment of specific biofuel alternatives, providing them with accurate net present value of each project and additional implications for carrying out each initiative.

Assessing the Economic Implications of Bringing Biogenic Fuels to Campus

The primary goal of this report is to assess the economic implications of switching from the current natural gas and fuel oil No. 2 steam plant to either a biomass gasification plant, operating with wood chips, or the current steam plant operating using Ensyn’s Renewable Fuel Oil. However, the comparison of these alternatives is challenging because they encompass different types of costs. In this analysis, the market value of the fuel and infrastructure changes will be included. The market value of the fuel will include the cost of the product itself and the delivery from the production facility to Lafayette’s campus. These market values were collected through rigorous interviews and scholarly research. The cost of infrastructure changes was estimated based on the past experiences of our peer institutions and scholarly research. Additionally, in order to encompass the college’s goal of reducing carbon emissions, it is important to include some measure of emissions as a cost.

While this report is fundamentally an economic analysis, other factors should play an important role in decision making by stakeholders. This report will consider the political context in which biofuels exist, namely the Renewable Identification Number market and a changing policy landscape. Through a social lens, this report will assess how changing fuel sources could help the college reach their goal of reducing of greenhouse gas emissions to remain competitive with peer institutions who have or are close to achieving carbon neutrality. The technical analysis will discuss quantify the carbon emissions of each alternative, the process of which the fuel is made and used, any infrastructure changes required on campus, and any additional environmental concerns associated with implementing that alternative at Lafayette.  Ultimately, this report will recommend actively pursuing further research in the fuel which not only provides a relatively low net cost and high greenhouse gas emission reduction compared to the other alternatives, but aligns with the colleges goals from social and political standpoints as well.

Proposed Alternatives

Three various alternatives could bring biogenic fuels to Lafayette. We assess each alternative based on the contexts mentioned above and provide a recommendation on which alternative the College should pursue, referencing its technical feasibility, social and economic implications and its political context. In order to gauge the possibilities that the College would consider implementing, we have been working closely with Larry Eighmy of Stone House Group Consulting and Lafayette’s Office of Sustainability who have given productive input on what current fuels and processes that are being considered and would prove efficient in helping Lafayette reach its emission goals.

The first alternative is Renewable Fuel Oil (RFO), which is often referred to as Biocrude, Wood Oil or Liquid Trees. Biocrude is a renewable fuel that is often converted from “woody” biomass feedstock such as hardwood and softwoods, mill forest residue or agricultural residue (Gosselin, 2018). There are many benefits in pursuing the RFO alternative other than its high production capacity of 70,000 BTU/gallon: it requires minor infrastructural changes required to the other alternatives being considered, it helps to reduce the wildfire risk to forests by providing an economic incentive for the sale of low value forest residuals and is drastically improving the economic well being of the forest industry (Gosselin, 2018). However, there is a substantial drawbacks to RFOs; the only supplier of this bio-oil is Ensyn Fuels, a company based in Ottawa, Canada, and the future of the Renewable Identification Numbers program is uncertain. We take all of these factors into consideration, perform a present net value analysis and ultimately decide whether the environmental benefits of Biocrude is worth the cost as well as the risk of only having one supplier in the whole industry (Kryzanowski, 2015).

Another alternative that is being heavily considered is the implementation of a biomass gasification plant. This process entails feeding wood chips into a gasifier and superheating them in a low oxygen chamber, which emits a wood gas that is ignited and results in steam used for energy (Bridgwater, 1995). The plant has been successful at Middlebury College, an institution of merely the same population and geographic size as Lafayette. The introduction of the plant in 2009 has helped the College reach carbon neutrality in 2016 (Biomass at Middlebury, 2009). Factors to be considered for this alternative are the necessary infrastructural changes needed, such as purchasing a gasification system, new boilers and control systems as well as storage and operation and maintenance. In the addition, net present value analysis is crucial to determine the up-front capital investment that had estimated to be around $12 Million in the Middlebury Case Study. The gasification plant has a 25-30 year life, and based on Middlebury’s assessment, the payback period is 12 years with a rate of return of 8.75%. The choice of this alternative heavily depends on the the willingness and ability of the College to invest in it and the technical capacity of the College to implement a brand new biomass plant on campus.

Our last alternative is our baseline alternative of natural gas, which Lafayette’s current steam plant uses along with No. 2 (and previously No. 6 Oil) as back-up. In this process, boilers burn natural gas to produce steam, which is distributed to campus for heating buildings and generating hot water. Natural gas is best extracted through fracking, a practice that has been known to release toxins into local drinking water supplies. However, it is considered environmentally friendly in comparison to coal and oil. The College already seen a 10% reduction in emissions by switching to a central steam plant to consume natural gas instead of No. 6 fuel oil (Fechik-Kirk, personal communication, 2018). Factors to be considered are the yearly cost of Lafayette’s natural gas consumption, and the social cost of the corresponding carbon equivalent emissions. This total cost will be compared to the estimated net present value of the total costs of Biocrude and the Biomass Gasification Plant. It is important to consider that sticking to natural gas avoids the need for a large overhaul campaign that allows the College to focus efforts on other capital projects because it will not require any additional infrastructure or transportation costs.

In this report, we use contextual analysis to compare the three alternatives explained above, and based on our results, we provide a well-evidenced recommendation to Stone House Consulting Group to further explore the possibilities of bringing Ensyn’s Renewable Fuel Oil to Lafayette. Through this analysis we acquire a thorough understanding of the technical processes entailed in each alternative and the infrastructural changes needed, which transfer over to an economic analysis, gaining a sense of the financial risk associated with each project. With a net present dollar value assigned to each project, we will be able to compare each alternative and come to an informed decision on what economic implications are associated with bringing particular biogenic fuel options to Lafayette’s Ord Steam Plant.