Article By Scott Henderson, Director of finance, Clinton Climate Initiative (CCI)

With Washington stuck in gridlock on so many issues, innovative local government initiatives may offer the best hope for progress on job creation — and energy independence. New programs recently announced by the cities of Los Angeles and San Francisco are both inspiring and instructive in this regard.

Working with the Clinton Climate Initiative (CCI) and the C40 Cities Climate Leadership Group (C40), both cities launched Property Assessed Clean Energy (PACE) programs to help property owners finance energy efficiency retrofits and renewable energy projects in existing commercial buildings. The programs forge public-private partnerships that aim to spur investment in our built environment, leading to significant energy savings and the creation of construction and engineering jobs. Together, Los Angeles and San Francisco Counties have two billion square feet of commercial building space that stand to benefit.

The potential market for energy efficiency retrofits in commercial buildings has been much discussed. The energy services firm Johnson Controls estimates that these buildings, on average, can be made 22 percent more energy efficient using commercially available technologies such as LED lighting. Capturing these savings would require $12 billion in annual project investment over the next decade. Yet, this potential has largely gone unrealized, due to the limited availability of capital for these improvements.

PACE programs address this challenge by allowing building owners to borrow funds from their local government to pay for qualified energy upgrade projects. Owners repay those funds (plus interest) through a tax assessment which is added to the property tax bill and secured by a lien on the property.

To date, local governments have borne the responsibility for arranging the up-front funds. But the Los Angeles and San Francisco programs utilize a different approach — labeled “open-market PACE” — in which the owner secures funds from private investors. Developed in large part by CCI and C40, the open-market model allows an owner to design a project on their own timeline and then negotiate financing of that project with any number of private investors. It is believed that this flexible approach will make PACE more attractive to commercial building owners, particularly those undertaking large, complex projects with long development cycles.

By leveraging the property tax system to secure repayment from owners, PACE investors can provide financing at more attractive rates and over terms up to 20 years, both of which were previously unavailable to owners for energy projects in existing buildings. The result is that owners can now more easily replace major equipment such as chillers and elevators, which have longer “paybacks” but which also lead to deeper savings.

In this era of government austerity, the programs represent a promising model for public-private partnership. They require no public funding beyond modest start-up costs; and once the local government sets up the program, the private sector can provide the investment capital.

To quell concerns about the property liens that result from PACE tax assessments, San Francisco and Los Angeles have taken great care to design programs that protect the interests of existing lien holders such as the first mortgagee. For example, both programs require written consent from existing lien holders before any tax assessment can be levied, further incentivizing owners to develop best-in-class projects that benefit all stakeholders in the property.

During the program development process, CCI and C40 facilitated active sharing of ideas and best practices between both cities, in an effort to quickly standardize the open-market approach. As a result, Los Angeles and San Francisco will utilize very similar transaction documents and eligibility requirements, allowing investors and contractors to work seamlessly across programs.

San Francisco and Los Angeles stand together with a wide range of local governments, entrepreneurs and investors that have already begun helping our nation put innovative financing tools such as PACE to work. The stakes are high: energy efficiency investment in existing commercial buildings could create 240,000 jobs in the U.S. over the next decade, and avoid some 128 million metric tons of annual CO2 emissions. Without question, PACE programs are gaining momentum and with effective implementation, have the potential to achieve these important results for our economy and environment.

AEF Consulting, Engineering & Construction Inc., a company specializing in General Contracting, Green Buildings and Reducing Energy costs for commercial and residential properties, is now able to assist home owners apply for rebates on projects that reduce operating expenses.

For every 10% reduction in energy use, a home owner may receive a $1,000 rebate up to $4,000, and $500 in federal tax credits.  In the Los Angeles Department of Water & Power (LADWP) service area, homes may earn an additional $2,000 in rebate money making the total potential rebate for that region $6,500.  So not only do home owners receive  rebate money, but they also reduce their utility bills from 10% to 40% thus allowing for continued return on investment over time.  What’s more, if done correctly, homes that engage in utility conservation measures also deliver better comfort to its occupants – something that can’t be measured.

Energy Upgrade California also offers a program called Energy Savings Assistance Program, which allows a home owner or renter to be eligible for free weatherization services and energy efficient appliances. The Energy Savings Assistance Program provides income-qualified households with free energy-efficient appliances and equipment, as well as energy education on how to conserve energy and reduce utility bills. Services provided may include attic insulation, energy efficient refrigerators, energy efficient furnaces, weather stripping, caulking, low-flow showerheads, water heater blankets, and door and building envelope repairs, which reduce air infiltration, among other measures.

The Energy Savings Assistance Program is free to eligible customers and is available to both homeowners and renters, here www.cpuc.ca.gov.

Lane Burt
Technical Policy Director
U.S. Green Building Council

Today USGBC, with our partners at the Real Estate Roundtable and the Natural Resources Defense Council, released an analysis conducted by the Political Economy Research Institute that concludes that President Obama’s Better Buildings Initiative (BBI) will create over 114,000 jobs.

As background, the Better Buildings Initiative is a collection of legislative proposals and federal agency actions designed to encourage the efficiency improvement of commercial buildings. The President has recommended tax incentives, grant and challenge programs, and increasing the availability of financing for the improvements. The analysis covers the major components of the initiative: the tax incentives, the financing programs, and the grant programs.

The full report is available at http://www.USGBC.org/advocacy/BBIJobs. Here’s what you need to know:

• The Better Buildings Initiative would create more than 114,000 jobs.
• The greatest jobs-creating impact – over 77,000 new jobs – would derive from a revised tax incentive to encourage building retrofits.
• New job creation would ripple throughout the economy. New jobs would be created directly at construction sites, which in turn would spur more jobs in the manufacturing and service sectors.
• The Better Buildings Initiative’s federal incentives are an investment to trigger private sector spending, which in turn produces widespread benefits. For example, tax incentives would encourage at least three times as much private investment to make buildings more efficient.
• Businesses would save over $1.4 billion in energy bills as a result of retrofit projects spurred by the tax incentive, which would in turn be re-injected into the economy.

The most significant job creator considered is the revision of the existing tax deduction for energy efficient commercial buildings, section 179D. These are the same revisions supported by 86 diverse organizations and the subject of the recent letter to the Senate written about last week. The proposal with its unique structure would create 77,000 jobs while achieving real quantifiable energy efficiency improvements. Actual measured performance is required to take full advantage of the redesigned incentive.

The report also outlines how these jobs would be created in engineering and in performing the retrofits, manufacturing the new efficient equipment and materials, operating, commissioning, and servicing the buildings, and finally in the re-spending of the significant energy savings.

The conclusion that commercial building energy efficiency creates jobs, and a staggering number of new jobs is not new. This report joins and supports the conclusion of a host of others on the topic.

• McKinsey found 600,000 to 900,000 new jobs in energy efficiency over all sectors.
• ACEEE found 333,000 new jobs in proposed energy efficiency legislation last year. Over 150,000 of these jobs were from the bi-partisan yet now politically infeasible HomeStar program for home retrofits.
• UC Berkeley found that California’s energy efficiency policies on the books will create 200,000 jobs by 2020, with more jobs of higher quality possible with some additional measures.

With this new analysis we now know how much of the huge opportunity for job creation through energy efficiency may be achieved through implementation of the Better Buildings Initiative. USGBC and its member companies will continue to support the agencies moving forward with the administrative components of the BBI while working with our many allies to convince Congress to move forward with the changes to the tax code that could potentially unlock a huge number of jobs in commercial energy efficiency. Stay tuned to this blog for opportunities to get involved.

Greenwashing is claiming that a product is environmentally friendly when in reality it is not.   One can argue that copy paper with 10% post-consumer recycled content is not too eco-friendly since 90% of the product is still virgin material.  Is this product “greener” than paper that has no recycled content?  The answer depends on the amount of energy it takes to create virgin products and the amount needed to recycle products. In the interest of labeling green items more accurately, AEF would like to propose the term,“Pretty Much Environmentally Friendly, Almost”(PMEFA).

Another product that can be considered PMEFA is paint containing low volatile organic compounds rated at 50 grams per liter or less of toxic stuff.  So now substance-abusing individuals will have to sniff paint for up to 15 minutes longer before lightheadedness ensues, which may deter them from the practice altogether or force them to experiment with another product.

(Environmentally Friendly, Almost)

Pictured here is a plastic bottle that is not completely claiming to be an environmentally-friendly product; however, it is still alluding to the idea that it is essentially “less bad” because its bottle cap uses less plastic!  The caps are still plastic, and so is the bottle, but that’s beside the point.  The point is that there is a green leaf on the label before the statement, “Smaller Cap = Less Plastic”. Yay!

Now we’ll feel much better when smaller pieces of plastic end up in our streams and oceans.  Not only can nature take thousands of years to break down plastic, it also breaks it down into smaller, toxic pieces that can more readily enter the digestive tracts of wildlife. For instance, the Great Pacific Garbage Patch in the North Pacific Ocean, where trash collects in a manner similar to how bubbles collect in the middle of a Jacuzzi, is a sea of plastic pieces and other materiels, and the Patch’s very existence contributes to the disastrous dietary mistakes of wildlife.

(Thinking they are collecting food, wildlife consume plastics floating in the Ocean)

Perhaps another slogan may read “Smaller Cap = Laxative for Wildlife”.

Although the “less bad” approach towards environmentalism may be a step in the right direction and may save companies money by reducing material costs, it falls short in delivering real benefits for the long- term health and vitality of our planet.

Discounting the energy used to create the products, some examples of eco-friendly products include:

• Stainless steel water bottles (take the time to refill in order to avoid using plastic)
• Hemp or bamboo clothing using soy-based ink (hemp and bamboo are rapidly renewable resources)
• Solar cell phone chargers (hopefully made from recycled plastic)
• Reclaimed wood flooring
• Reusable grocery bags
• Anything that does not contain plastics, petrol chemicals, VOCs, virgin non-renewables, etc. (finding such products is easier said than done)

The green economy is still in its infancy, and finding quality products with no negative environmental impacts is difficult given that many inedible products, unlike processed food, do not have ingredient lists; however, when assessing a product that claims to be eco-friendly, one must ask, is this truly environmentally friendly, or is it “pretty much environmentally-friendly, almost”?