1st Rochdale and Fannie Mae ink memo of understanding.

1st Rochdale Cooperative Group, Ltd., an energy service company, and Fannie Mae, one of the nation's largest sources of financing for home mortgages, are pleased to announce the signing of a memo of understanding establishing a residential emission credit program for New Yorkers. Under the plan, a residential building that reduces its energy consumption would receive emission credits, which, pooled together, would be sold as investment packages.

The plan is the first of its kind in the United States.

"When you pair two customer-driven companies like 1st Rochdale and Fannie Mae, great innovation -- and great savings -- are the result for consumers," said Allen L. Thurgood, the chairman and chief executive officer of 1st Rochdale Cooperative Group. "Energy is the second- largest household 'expenditure after paying the mortgage, and as electric restructuring takes shape, consumers are looking to spend their energy dollar wisely."

Residential emission credits help the consumer save not only money, but energy itself. "The investment capital will go into a revolving loan fund to help other residential dwellings upgrade their energy efficiency," said Thurgood. "It's all part of 1st Rochdale's effort to help our customers use less juice from the power grid without ever having to sit in the dark."

The program is a residential version of the federally-sponsored Cap and Trade Emissions Reduction programs for industry, which grant tradable emission credits to companies that keep their pollutant levels below the maximum levels (or cap) allowed by the U .S. Environmental Protection Agency.

Since the passage of the Clean Air Act in 1990, followed by the Energy Policy Act of 1992, and the subsequent efforts such as the Kyoto Accords, Congress has used these programs to encourage clean air practices. The Clean Air Act targeted sulfur and nitrous oxide emissions. Recently, greenhouse gases such as carbon dioxide have been added to the Cap and Trade framework. The initiative in which 1st Rochdale is participating will focus on homes that are able to reduce carbon dioxide emissions by increasing their energy efficiency.

Not unlike the single household mortgages that Fannie Mae combines as investments, one home's energy savings would be too small to generate either a significant level of emission or a significant monetary value. However, according to the plan, if the. individual energy savings are aggregated at sufficient levels, they can be turned into a tradable commodity in existing and future emissions trading markets.

Fannie Mae will manage the credit pool and the loan fund, while Cantor Fitzgerald, one of the world's largest wholesale electronic brokers, will administer the trading procedures. Cantor Fitzgerald invited 1st Rochdale to be the participating energy services company in New York, one of the two cities that will participate in the pilot.

"You don't always see an immediate economic benefit from helping the earth, so the program presents a powerful incentive," said Thomas Thompson, 1st Rochdale's vice president for sustainable energy. "At the same time, we'll help our customers reduce their emissions with a comprehensive energy management plan designed to lower their energy costs over time."

1st Rochdale will initially implement the residential emissions credit program in two multifamily buildings: East Midtown Plaza in Manhattan and Amalgamated Housing in the Bronx. Over the next five to ten years, 1st Rochdale will continually monitor the energy saved and emissions reduced. Initial analysis shows that a New York apartment building with 500 residential units could generate up to 3,000 tons of carbon dioxide or more per year. At the current, depressed price of $1 for a ton of carbon emissions in the marketplace, this building could generate $30,000 or more over a ten-year period.