[Our guest blogger is Bob Massie, a former Democratic nominee for lieutenant governor of Massachusetts, who chaired an Energy Empowerment Rally in Boston last month. First posted in WonkRoom.]
As President-elect Barack Obama prepares to tackle the vast problems ahead for America, he has consistently made two bold proposals.
First, he intends to make an immense investment in infrastructure — roads, bridges, railways — to jump-start jobs. Second, he plans to boost clean green technologies to make up for the squandered opportunities of the Lost Decade.
These are both powerful, worthy ideas. But they would be far more powerful if they were directly connected. The incoming administration has a historic opportunity to accomplish five major goals at once through a massive investment in stopping the waste of energy and dollars pouring out of American homes.
Think of this as “infrastructure spending for American families.” To date, our efforts to promote energy efficiency have been locked in a paralyzing cycle. When oil prices are high, we can’t afford efficiency improvements because our wallets are empty. When oil prices are low, we won’t pay for improvements because the payback seems too long.
So how do we fix our roofs — and windows, and heating systems — no matter what is happening to the weather or the price of oil? The solution is both simple and powerful: the government should set up a large bond fund into which institutional, pension, and other private dollars could be invested for a guaranteed rate of return.
The fund would, in turn, channel the dollars through a variety of mechanisms — most likely banks or state agencies — into $5,000-$10,000 residential chunks with zero or very low interest. The funds could only be spent on upgrading the energy performance of a house or apartment — insulating walls, weatherizing windows, swapping out heating systems, installing solar panels, digging geothermal heat pumps.
The loans would be paid back directly from the savings, perhaps through on-bill financing. Depending on heating and electricity costs, the family would begin saving money almost immediately. Renters could split the savings with the owners of their houses or apartments.
What impact would such a program have? It would accomplish five goals at once.
First, it would create local jobs at all levels of expertise — from blowing insulation into walls and training new energy auditors to installing super-efficient boilers whose computer brains would adjust the temperature in response to many factors, like a living body. Estimates of how many jobs this could create vary by region, but $50 billion — again of private money with minimal public rate guarantees — could generate as many as 1,000,000 jobs.
Second, it would improve housing values. States should fix this through mandatory disclosure of the likely energy costs — or savings — of any home on the market. An energy audit would thus become a routine part of the home inspection normally required for a mortgage. Homes with upgraded efficiency would be instantly be worth more.
Third, it would increase disposable income for families. Rather than spending endless cycles of fuel assistance dollars , or passing a blunderbuss stimulus bill that simply feeds our consumer lust for foreign products sold at Wal-Mart, let’s boost lasting, transformative investment in the basic of American structures, the home.
Fourth, it would bring new technologies rapidly to scale. One home-owner in the most densely populated neighborhood in my state dug insulated his house, then dug a 250 foot well in his postage-stamp backyard, and uses the stable temperature of the ground water to heat and cool his house for less than $150 a month. These are just the beginning of the new technologies that will revolutionize American family life. But any person familiar with business knows that to bring the price of a new technology down, you have to push the volume up.
Fifth, it will drive down green house gas emissions and slow our suicidal path towards climate change.
Is this really possible? Yes. But it will only happen if President-elect Obama takes his two good ideas — investment in infrastructure and green technology — and presses them into one. The joint gains would be astonishing.