(10 am. – promoted by ek hornbeck)
Construction and use of buildings account for a major share of global warming emissions. Depending on how one calculates, allocating roughly 40 percent of U.S. greenhouse gas (GHG) emissions to this built infrastructure is roughly correct. Heating … cooling … lighting … building materials … etc, it all adds up (and up … and up). A good share of the building GHGs relates back to energy usage — where, after all, does the lion’s share of coal-generated electricity end up other than illuminating our entertainment systems and over-cooling during summer heat?
A simply reality: tremendous room exists for efficiency measures at not just cost effective but, in fact, profitable financial rates of return. That energy efficiency has remained an under-exploited example of a win-win-win space means that it remains a place for fast and effective action.
Today, President Obama focused on this win-win-win opportunity.
Today, as part of his “Win the Future” campaign introduced during the State of the Union, the President announced a major initiative for improving building efficiency at Penn State University, which is at the center of the Greater Philadelphia Innovation Cluster which was one of the winners of the federal Energy-Regional Innovation Cluster (E-RIC) and which will be focused on energy efficiency.
And right here, right here at Penn State, a university whose motto is “making life better,” you’ve answered the call. (Applause.) So today you’re preparing to lead the way on a hub that will make America home to the most energy-efficient buildings in the world.
Now, that may not sound too sexy until — (laughter) — energy-efficient buildings. (Laughter.) But listen, our homes and our businesses consume 40 percent of the energy we use. Think about that. Everybody focuses on cars and gas prices, and that’s understandable. But our homes and our businesses use 40 percent of the energy. They contribute to 40 percent of the carbon pollution that we produce and that is contributing to climate change. It costs us billions of dollars in energy bills. They waste huge amounts of energy.
So the good news is we can change all that. Making our buildings more energy-efficient is one of the fastest, easiest and cheapest ways to save money, combat pollution and create jobs right here in the United States of America. And that’s what we’re going to do. (Applause.)
The initiative, the Better Buildings Initiative, lays out the following targets:
- A 20 percent improvement in commercial building energy efficiency.
- At least $40 billion per year in reduced energy costs — based on today’s energy prices (not inflated estimates).
Let us be clear: while meaningful to put into place, these are very achievable targets that should be viewed as base minimums rather than stretch goals. (Invisible Energy provides some indication of just how far we could go if we took energy efficiency very seriously.) In other words, we must do at least this much — and we can do so while improving American business competitiveness, putting Americans back to work, and reducing our pollution loads.
That this target is short of what is possible seems to be something President Obama realizes and he wants to push the envelope further. As he said today,
This is where we need you to push the envelope and ask just how efficient can our buildings be. Can they be self-sufficient, producing just as much energy as they consume? What new discoveries can we make? And soon you’ll have a new place to answer these questions, a clean energy campus in the Philadelphia Navy Yard.
What is the President proposing as paths forward to achieve the targets introduced today? What are the proposed tools that will make this happen?
The President’s Budget will propose to make American businesses more energy efficient through a series of new initiatives:
- New tax incentives for building efficiency: The President is calling on Congress to redesign the current tax deduction for commercial building upgrades, transforming the current deduction to a credit that is more generous and that will encourage building owners, commercial real estate investors and even real estate investment trusts (REITs) to retrofit their properties. At the moment, it is uncertain how this will impact real estate investment structures such as Delaware Statutory Trusts. You can learn more about these types of real estate investment structures by checking out this guide to delaware statutory trusts. These changes could result in a ten-fold increase in commercial retrofit take up, leveraging job- creating investments.
- More financing opportunities for commercial retrofits: Access to financing is an important barrier to increased retrofit investment in some market segments. To address these gaps, the Small Business Administration is working to encourage existing lenders to take advantage of recently increased loan size limits to promote new energy efficiency retrofit loans for small businesses. The President’s Budget will also propose a new pilot program through the Department of Energy to guarantee loans for energy efficiency upgrades at hospitals, schools, and other commercial buildings. Developers can then use a commercial building cost estimator to see how much it will be so they can match the financial loan.
- “Race to Green” for state and municipal governments that streamline regulations and attract private investment for retrofit projects: Much of the authority to alter codes, regulations, and performance standards relating to commercial energy efficiency lies in the jurisdiction of states and localities. The President’s Budget will propose new competitive grants to states and/or local governments that streamline standards, encouraging upgrades and attracting private sector investment.
- The Better Buildings Challenge: The President is challenging CEOs and University Presidents to make their organizations leaders in saving energy, which will save them money and improve productivity. Partners will commit to a series of actions to make their facilities more efficient. They will in turn become eligible for benefits including public recognition, technical assistance, and best-practices sharing through a network of peers.
- Training the next generation of commercial building technology workers: Using existing authorities, the Administration is currently working to implement a number of reforms, including improving transparency around energy efficiency performance, launching a Building Construction Technology Extension Partnership modeled on the successful Manufacturing Extension Partnership at Commerce, and providing more workforce training in areas such as energy auditing and building operations.
Chief Financial Officers (CFOs) pay attention to money. Moving energy efficiency investments from tax deduction to investment credits will make it quite clear to them that they can make some serious green by going green. The fact that energy efficiency often offers far faster returns on investment (ROI) than other investments has a hard time translating through to many in the business community due to stove-piping, a focus on investment growth rather than for controlling business costs, and a lack of understanding as to the opportunities. The shift to a tax credit will break through this perceptual — and, well, substantive financial planning — gap to foster more aggressive business planning attention to energy efficiency opportunities.
We all like having the finer things in life, and sometimes that means that we have to take the time to financially plan for what we want. Regardless of whether you want to move into a new building for your business, if you want to save for college, or if you’re thinking about your retirement savings, looking for financial planning companies in your area should never go amiss. With their help and expertise, you can successfully plan for your endeavors so you know what to do and what to expect. This could be particularly important if this is based on the future of your business.
Another challenge is the wide variety of building codes around the country and, what can seem like, snail-like process of adapting advanced building codes with stricter energy efficiency guidelines. Well, state and local administrators are also being offered a carrot: pay more timely attention to updating building codes and you’ll be rewarded.
And, well, truth be told is that there is a shortfall of knowledge in terms of energy efficiency opportunities and prioritization. Expanding the competent workforce will ease business and local government implementation of appropriate energy efficiency measures.
The Better Buildings Initiative can leverage energy efficiency measures that the Administration is already executing based, in no small part, on the ARRA $20 billion in funding for building energy efficiency:
- 600,000 residential homes are being retrofit through Weatherization Assistance Program and the Energy Efficiency and Conservation Block Grant programs.
- The proposed HOMESTAR program would provide incentives to encourage homeowner energy efficiency.
- ARRA provided GSA $5.5 billion to improve the energy performance of existing buildings and to start building a new generation of energy efficient buildings.
- ARRA gave the Department of Defense significant funding for ‘greening’ military facilities.
- The President’s sustainability Executive Order directs federal agencies to achieve zero net energy by 2030 while showing constant improvements, as agencies, in energy (and other resource) efficiency from year-to-year.
Of course, these new initiatives will cost money — even as they help businesses and individuals save money to use for things other than unnecessary energy costs. Considering the budgetary environment, spending new money isn’t easy — unless you have a good idea where it will come from:
tax credits mean lost revenue for Treasury. It costs money. Since we’ve got big deficits, we’ve got to pay for it. So to pay for it, I’ve asked Congress to eliminate the billions in taxpayer dollars that we currently give to oil companies. (Applause.) They are doing just fine on their own. (Laughter.) So it’s time to stop subsidizing yesterday’s energy; it’s time to invest in tomorrow’s. It’s time to win the future. That’s what our project is.
President Obama is right: “It is” well past “time to stop subsidizing yesterday’s energy”.
For good reason, the Better Buildings Initiative is already receiving quite positive reaction from across the knowledgeable community. For some of those reactions, see here