There's a lot of buzz out there around the idea of reducing energy waste in new construction projects. Hundreds of researchers, architects and construction companies have perfected dozens of highly effective building methods, materials and mechanisms to create efficient new buildings in both the commercial and residential markets.
While promoting the latest and most cost-effective methods in new construction projects is a step in the right direction, less clarity and more challenges exist on the topic(s) of how to promote energy efficiency upgrades in existing homes and office buildings. "Nearly half of America’s energy - and 10 percent of the energy used in the world - goes towards powering our buildings, and much of that energy is wasted. Buildings account for 40 percent of total U.S. carbon dioxide emissions, a major contributor to global warming. " (Source: EnvironmentMinnesota.org, 6/2/09).
In addition to all of the hurdles associated with retrofitting existing structures including the cost of materials and the wide variance in structural design, building owners face the additional pressures of a prolonged recession. How then can we encourage residents, businesses, construction contractors and local governments to take on the additional short-term costs of adding energy efficient components to the property they own?
While I do not pretend that I have a solid answer to this question, I would like to examine programs and incentives with a great deal of potential in these times of economic stress. Virtually all of these incentives are government based and many of them are tied to the economic stimulus legislation that originated in Washington, D.C.
While promoting the latest and most cost-effective methods in new construction projects is a step in the right direction, less clarity and more challenges exist on the topic(s) of how to promote energy efficiency upgrades in existing homes and office buildings. "Nearly half of America’s energy - and 10 percent of the energy used in the world - goes towards powering our buildings, and much of that energy is wasted. Buildings account for 40 percent of total U.S. carbon dioxide emissions, a major contributor to global warming. " (Source: EnvironmentMinnesota.org, 6/2/09).
In addition to all of the hurdles associated with retrofitting existing structures including the cost of materials and the wide variance in structural design, building owners face the additional pressures of a prolonged recession. How then can we encourage residents, businesses, construction contractors and local governments to take on the additional short-term costs of adding energy efficient components to the property they own?
While I do not pretend that I have a solid answer to this question, I would like to examine programs and incentives with a great deal of potential in these times of economic stress. Virtually all of these incentives are government based and many of them are tied to the economic stimulus legislation that originated in Washington, D.C.
One such initiative that caught my eye recently is Boulder County's (Colorado) ClimateSmart program. The 6.6 million dollar program, approved by county voters last November, allows for homeowners to apply for a loan of up to 20% with a limit of $50,000 to make energy efficiency improvements to their homes. The unique part about this program is that it ties any loans granted are attached to the property, rather than the owner. The owner pays a special assessment in property taxes, but will not carry the loan with them should they sell the property (Source: The Denver Post, 6/27/09).In a time where homeowners are struggling with their mortgages, worrying about the safety of their jobs and doing whatever they can to make ends meet, this program may be particularly attractive. For any homeowner who wishes to make such improvements but does not wish to take additional risks with their own credit in case of emergency (through tapping into their home equity line of credit or by taking out standard loans from a bank), this is an incredible opportunity. In addition, the long-term cost-comparison between the standard credit options and this county incentive program stacks favorably for the county's option.
A second, and more traditional, incentive program is the Renewable Energy Finance Act of Colorado, which was signed on April 22nd of this year. This is also a government reimbursement program (on the state level) that's focused primarily on the financing of solar electric systems and the cooperation of local utilities on streamlining access to solar rebate programs to customers of all income levels (Source: Colorado.gov, 4/22/09). "SB51 doesn’t create a pot of money for homeowners or businesses to directly borrow. Instead, the act creates a fund in the Governor’s Energy Office, which provides the backing to banks and other lenders to make clean energy loans." (Source: Todd Hartman, spokesman for the Governor’s Energy Office, The Summit Daily News, 4/23/09). In the same article, author Tillie Fong mentions that the upfront cost of the average residential solar panel system is between $6,000 and $8,000, a significant barrier when loan money systems are in a tight recessionary period as they are today. With this program, the party who installs the equipment will own the equipment until the resident pays it off. In addition, the loan is secured by the Governor's Energy Office, rather than the customer.
Again, this government incentive model shifts the lending burden off of the homeowner and allows them to pursue the improvements so long as they can make the monthly payments (which are likely to be at a lower interest rate than with a privately secured loan).
Another type of energy efficiency program comes from electric cooperatives and providers in a given area. One such example is a program promoted by the Colorado Springs Utility, which provides low interest rate financing for some pre-approved energy and water efficiency home improvement projects. The loans range from $1,000 to $50,000 and are separate from their Renewable Energy Rebate Program, which gives customers a credit on their bills for setting up solar panels and connecting them to the utility's electric grid, a common credit offered by a wide variety of electric utility providers (Source: SolarPowerAuthority.com).
This program follows the same type of model that the Renewable Energy Finance Act does by using the borrowing power and backing of the utility to negotiate loans for in the individual customers, much as a health insurance pool will do. Without the backing of the utility, many of their customers would be unable to finance such improvements in the first place or may not be able to afford the higher loan rate(s) available as individuals.
There are literally thousands of programs out there that try to foster energy efficiency upgrades among residential and commercial developments, but the three above illustrate important options and models that may be more effective than others. The Boulder County ClimateSmart program is, in my opinion, the most compelling of the three at this fragile moment in our economy for the simple fact that the owner of the property is not stuck with the burden of the loan in the long run. Though I believe that we have a long way to go in promoting these improvements in our existing buildings and thus minimizing energy waste, ideas like these give us more opportunity to make the right - and sustainable - improvements despite the instability of our economic circumstances.
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