Climate

Stimulating the economy with green buildings

http://i.treehugger.com/images/2007/10/24/stat-green-building.jpg

[JR: This is a reprint of a post by A Siegel.]

The incoming US Congress will be running full out in January to develop a stimulus package to have ready, potentially, for signature by President Barack Hussein Obama minutes into his Presidency. Organization after organization, business after business, motivated citizen after motivated citizen are knocking on every door conceivable with ideas for funding that range from great through good to indifferent to bad all the way to simply venally corrupt.

Just sent to the Transition team and en route Hill offices is, well, a truly “great” approach, a path that could massively stimulate economic activity throughout the United States while setting us on a path for a stronger tomorrow economically and in terms of global warming. As the 2030 Challenge Stimulus Plan summary concludes:

With a single investment, the U.S. can create jobs, strengthen the US economy, reduce CO2 emissions and energy consumption, and save consumers billions of dollars. Investing in the Building Sector is the only investment that can accomplish all of these objectives.

Coming from Ed Mazria and the Architecture 2030 team, this plan focuses on driving massive commercial and home owner investments in energy efficiency through a program of buying down mortgages and renovation (energy rehab) loans based on achieved level of energy efficiency.

Consider this as the cost of a loan to achieve improved energy efficiency:

  • Energy efficiency 30 percent below code, 4.5% interest rate
  • 50% below code, 4.0%
  • 80% below code, 3.0%
  • Carbon neutral, 2.0%

Would rates like that induce you to seek out a contractor? Insulation? New windows? new energy efficiency heating/cooling system? Energy-star plus appliances (of all types)? A high-efficiency wood stove or fireplace insert? Solar hot water or photovoltaiics? All of the above?

As for me, rates like that would induce me to strive for ‘carbon negative’ (average out sending power back to the grid, not using it) …

But the benefits and value will go far beyond the individual’s satisfaction at zeroing out their home’s carbon footprint.

  • 8.5 million jobs over two years
  • $140 to $200 billion of savings on home energy costs in the first five years
  • Over 6000 TBtu of reduced energy use resulting in about 500 mega-tonnes of reduced CO2 emissions (or about 10% of one year’s US emissions) … in just that first five years.

Yes, this investment would cost a lot, at least upfront. Mazria is calling for $85 billion a year, for two years. Quite a high figure, it seems, but unlike the $700 billion (or is it $7 billion) that has gone into the financial industry, this program would provide a significant boost to Main Street (and every Main Street) across the nation. And, that boost, the economic activity and the millions of jobs would spark signficant economic activity in a multiplying effect. Those 8.5 million jobs mean fewer people seeking financial assistance (unemployment, food stamps and school lunch aid, housing assistance, welfare, etc …) and that many more paying income taxes. A rough, back of the envelope calculation suggests that the social security and federal (not even state) income tax payments from the 8.5 million employed, even without considering the quite significant avoided costs, would total even more than $85 billion per year.

Yesterday at EcoBuild, I had the chance to hear Ed brief the plan’s concepts and how this accelerates Architecture 2030’s overarching vision of achieving massive energy efficiency improvements in the US building infrastructure by 2030 — cost saving improvements that would cut energy use enough to make coal-fired electricity plants simply unnecessary. This is a developed version of the material that Mazria/Architecture 2030 have been working on for years, evolved beyond the material presented at Harry Reid’s National Clean Energy Summit earlier this year to something to match the challenge and opportunity that we face as the nation spirals into greater economic difficulties.

There are many real benefits of Mazria’s approach, not least of which is the creation of massive numbers of real jobs in the near term while also achieving things through the near-term stimulus that will have long term value. Some of the strengths are not readily apparent or necessarily understood.

  • The focus on standards is, by definition, technology neutral. The item of import is not how something is achieved, but that it is achieved.
  • The program will lower foreclosures, even without buy-downs of troubled mortgages as the owners will have lower energy bills and thus be more able to deal with mortgage payments.
  • Acting this directly to spark the economy in a path that will dramatically cut into America’s greenhouse gas emissions will be a sign of global leadership about Global Warming and, in fact, could spark an energy efficiency renaissance far beyond America’s shores.
  • This $171 billion is leveraged money, buying down the cost of loans that could mean an actual boost to economic activity of $1.5 trillion or more.And, …Again, the 2030 Challenge Stimulus Plan is already in Obama Transition Team in boxes and en route the Hill. It should be available publically on the Architecture 2030 website sometime tomorrow. This is a plan to read … and to promote.UPDATE: As David Sasson at Solve Climate put it:

    It sounds to good to be true. You can’t get something for nothing. Where’s the hitch, I wondered.

    The answer is, there is no hitch. There actually is a huge something. It’s a very big untapped asset that Mazria has figured out a way to harness: the energy wasted by almost every single building in the nation. Capture the dollar value of that energy and you’ve created a powerful engine of economic recovery situated at the heart of America’s sweet spot: its homes and buildings.

    Here is a path for desperately required short-term stimulus that also will help in meeting our desperate need to change our course from a reckless charge over the catastrophic climate change cliff. Stimulate the economy. Save money. Help stop Global Warming. Works for me.

Related Stimulus Posts:

Energy efficiency overview:

Green Building Posts:

8 Responses to Stimulating the economy with green buildings

  1. Larry Coleman says:

    Joe, feel free to delete if inappropriate, but I would love some recommendations for efficient wood fireplace inserts.

  2. guido says:

    Larry, back in the day, i bought a house that had four fireplaces…I love wood fires but that was ridiculus…So i converted one to pellets (corn i believe), and installed a wood insert…Interestingly, i found the pellets to be most efficient,,,a few corn pellets could throw on some heat. And i believed, at the time, that corn was truly renewable (just went down to the feed store)

    Joe, another great article…until i watched the UC Berkeley presentationns for Rosenfield,,,i had no clue how much opportunity there was in making building more energy efficient…What was the number, close to 50% of coal plant’s output goes to buildings? Anyway, this plan seems like a win-win-win…I keep thinking how could this be perverted.

  3. hapa says:

    i love this proposal and while maybe there’s no “free lunch” in the chicago vernacular there is a hitch relating to now.

    this isn’t a foreclosure cure!

    1. homes that were over-valued still have more to drop.

    2. insolvent businesses (and governments and individuals) have more not less trouble to come.

    3. this means people’s debts are bigger than their assets’ underlying value or than their ability to pay.

    4. which means, millions of building owners are not credit-worthy.

    5. which means until their loans are refinanced, written down, or forgiven, people near foreclosure are not creditworthy. no sane bank would lend to them.

    energy savings to pay for a loan don’t mean a lick if the house is suddenly empty, cold, and dark.

    so while this is probably a good medium-term stimulus and builds the economy, giving people hope and things to rely on, “more loans to the rescue” is nature’s way of telling you the author doesn’t understand our situation.

  4. red says:

    “Energy efficiency 30 percent below code, 4.5% interest rate”

    The proposal might need to be a bit more nuanced in actual implementation than what the transition brief seems to be saying (I could be misinterpreting it of course; feel free to correct my interpretation).

    It seems like a building that’s, say, 29% below code would get the same interest rate as a building that’s, say, 50% above code if it reaches 30% below code. While I wouldn’t exactly want to reward an owner for starting with a really inefficient house, I’d think the energy efficiency gain from
    -29% to -30% shouldn’t deserve a mortgage bailout. Some sort of scaling might be in order.

    Similarly, it seems like an existing mortgage of, say, 15% interest rate would get the same bailout rate of 4.5% (in the 30% below code scenario) as an existing mortgage interest rate of 4.6%. Maybe the form of bailout should be in % reduction from the existing mortgage rate rather than an absolute rate.

    I’m curious how the auditing of home energy efficiency percentages would work. This seems like it could be a big overhead sort of expense.

    I’d be a lot more interested in some sort of improved rebate for deploying home energy efficiency, simply because I don’t like being in debt so loan help isn’t attractive. I suspect there are a lot of people out there with a similar attitude, and they probably tend to be in a good position to fund energy efficiency upgrades if the incentives are put in place to make them want to do so. I understand the desire to target the at-risk mortgages right now, but I wouldn’t overlook this other route.

    I also wouldn’t overlook the other big elephant in the economic and energy efficiency room besides housing – the automobile sector. Similar to still-expensive houses, with all of the bailout news, I’m surprised how much money the U.S auto dealers are still asking for fuel-efficient cars, if so many are just sitting on lots rusting. Maybe a loan approach similar to the one described here for housing (and/or massive rebates to attract loan-averse people) would work for fuel-efficient cars (perhaps only if built in the U.S. and/or made by U.S. companies)?

  5. hapa says:

    *correction: i wrote “people near foreclosure are not creditworthy” when i meant to write

    PEOPLE NEAR FORECLOSURE ARE NOT CREDITWORTHY

    in giant red block lettering.

  6. Dano says:

    My specialty is everything to the left of the building envelope (green infra). More efficient is showing evergreen trees on the north side of the building, blocking cold north winds that suck heat out of buildings in the winter.

    Nonetheless, nice post.

    Best,

    D

  7. I’d add that the payoffs for building energy measures are quite short. 5–6 years for 30% below code, 10–12 for 50%, maybe 45 for PV systems. (OK, probably a bit longer for renovations.) In other words, the energy savings covers the cost of the loan and then some. So yes, I’d expect lots of people to go in for loans that reduce their monthly cost of housing.

    You wouldn’t think it would be hard to talk people into an investment with 10–20% rate of return, right?