By Jhoanna Frances S. Valdez
United States President Barack Obama announced a presidential memorandum to create a public-private fund of nearly $4 billion to facilitate energy upgrades in federal and private buildings through the Department of Energy's Better Buildings Initiative crafted last February.
The initiative had an initial goal to make all commercial buildings at least 20 percent more energy efficient by 2020. Last Friday's memorandum now directs all federal buildings to join the cause by also installing energy saving technologies without up-front capital costs and at no cost to taxpayers.
The commercial sector effort is led by former President Bill Clinton under the Better Buildings Initiative. From an initial purse of around $500 million and goal of upgrading 300 million square feet of space, it now has $2 billion in financial commitments matched with a sweeping goal to upgrade approximately 1.6 Billion square feet of commercial and industrial property.
Meanwhile, the government will now fully implement the Energy Savings Performance Contracts to support retrofits in federal buildings. All federal agencies are required to commit $2 billion in performance-based contracts over the next 2 years.
Made permanent in 2007, government agencies will partner with a company that will assess and design an energy saving project for them. The firm, also termed as a Energy Service Company, will also guarantee that the improvements will save money- savings that will pay for the project following contracts up to 25 years.
"Upgrading the energy efficiency of America's buildings is one of the fastest, easiest, and cheapest ways to save money, cut down on harmful pollution, and create good jobs right now. But we can't wait for Congress to act," Mr. Obama said.
"So today, I'm directing all federal agencies to make at least $2 billion worth of energy efficiency upgrades over the next 2 years - at no up-front cost to the taxpayer. Coupled with today's extraordinary private sector commitments of $2 billion to upgrade businesses, factories, and military housing, America is taking another big step towards the competitive, clean energy economy it will take to win the future," he added.
Last year, commercial buildings consumed roughly 40 percent of the energy in the country's economy at a cost of over $400 billion. Achieving the 2020 goal will reduce energy bills for American businesses by approximately $40 billion per year, and, according to the Political Economy Research Institute at the University of Massachusetts Amherst, create 114,000 jobs.
The Better Buildings Challenge obtained commitments from global financial services company Citi ($500 million); Massachusetts-based industrial reinsurance company Energi and partner Hanover RE ($50 million); financial services company Abundant Power ($100 million); clean energy financing company for local governments Ygrene Energy Fund ($100 million); the American Federation of Labor and Congress of Industrial Organizations ($150 million); aluminum manufacturer Alcoa ($21 million); green sector investment firm Blue Hill Partners LLC ($50 million); the District of Columbia ($4 million); General Electric ($50 million); energy efficiency products maker Serious Energy, Inc. ($100 million); clean energy private equity firm Green Campus Partners LLC ($90 million); energy efficiency building model pioneer Metrus Energy ($75 million); financial services, technology, and program management firm Renewable Funding ($150 million); and Transcend Equity ($100 million), among others.
Other companies and institutions have committed to reduce their energy consumption by as much as 20 percent by five years or more, including the universities of Delaware, Michigan, California, Hawaii, and Utah; the cities and states of Denver, Minnesota, Atlanta, Los Angeles, Seattle, and Utah; Ascension Health; real estate services firms CBRE, RREEF Real Estate, Transwestern, Prologis; and Jones Lang LaSalle; Kohl's Department Stores; Nissan North America, Inc.; Sacramento, California; Southern California Edison; drugstore chain Walgreens; SuperValu; and Best Buy.
"The insurance market has historically failed to offer unique insurance covers to building owners, contractors, and financial institutions involved in energy efficiency. "We are honored to become a financial ally of the Better Building Challenge and join the effort to piece together the energy efficiency investment puzzle," Energi chief executive Brian McCarthy said.
Ygrene chief executive Dennis Hunter said he expects their contributions to result in retrofit projects that would spur at least $250 million in economic activity and create more than 1,500 jobs.
"The Better Buildings Challenge brings together a community of decision makers with the power to finance and implement deep energy savings in the near-term. Together, we'll make investing in energy efficiency simple and affordable for all sizes of businesses," he said.
Ygrene partners with cities and counties to deploy its no-cost Property Assessed Clean Energy programs. The Ygrene model is currently in development with the City of Sacramento as well as member communities of the Green Corridor District in Southern Florida.
"Sacramento is committed to reducing energy use by 20 percent by 2020 in more than 12 million square feet of building space, and Ygrene's streamlined approach plays a critical role in achieving this vision," said Sacramento Mayor Kevin Johnson.
For her part Abundant Power chief executive Shannon Smith said: "Abundant Power was created to help our nation transform into a clean energy economy to enhance our nation's economic competitiveness, national security, and preservation of natural resources.
"We are extremely pleased with President Obama's recognition of the importance of energy efficiency and we are honored to be a part of the Better Buildings Challenge. This commitment comes at a time when America more than ever needs job creation, to save scarce financial resources, and to increase our own energy security, and enables us to be part of creating a better world," she added.
Since 2002, Serious Energy's solutions have helped make 70,000 buildings - including the Empire State Building and the New York Stock Exchange - energy efficient.
Aside from its commitments on energy efficiency projects, G.E. has set more aggressive clean energy targets for 2015: a 50 percent energy intensity improvement and a 25 percent greenhouse gas emissions reduction.
Walgreens will reduce its energy consumption and carbon footprint through investment in energy-efficient technologies, installation of energy management systems in thousands of locations and solar power installations at more than 130 locations.
The American Federation of Labor and Congress of Industrial Organizations, which represents 57 unions, will undertake an energy-efficiency retrofit of its own Washington, DC headquarters to serve as a signature component of the Better Buildings Challenge.
"The Better Buildings Initiative has all the components to make a real difference. It will create profitable investment opportunities for worker pension funds, create badly needed good jobs, increase America's competitiveness around energy savings, and address the dangers of climate change," A.F.L.-C.I.O. president Richard Trumka said.
Global diversified technology company Johnson Controls, Inc. commended the White House for its plan to invest $4 billion in energy efficiency retrofits.
"Performance-based contracting allows the federal government to make infrastructure investments today that are guaranteed to reduce their long-term energy and operating expenses without using taxpayer dollars. We are encouraged that more private-sector building owners will now be able to take advantage of this opportunity," Johnson Controls president of building efficiency Dave Myers said.
The 162,000-employed Johnson Controls has developed and installed savings for more than 2,500 energy efficiency projects globally in more than 125 years. Since the beginning of the federal E.S.P.C. program, Johnson Controls has implemented more than 75 projects for various federal agencies, including the Army, Department of Energy, Air Force, Navy, General Services Administration, Department of Veterans Affairs, Justice Department and Department of the Interior.
Operating from 500 branch offices in more than 150 countries, Johnson Controls has been involved in more than 500 renewable energy projects including solar, wind and geothermal technologies, and its solutions have reduced carbon dioxide emissions by 16 million metric tons and generated savings of $19 billion since 2000.
The Political Economy Research Institute, supported by the Real Estate Roundtable and the U.S. Green Buildings Council, projected in June that the Better Buildings Challenge could create up to 114,000 jobs, reduce oil consumption by 1.2 billion barrels, and lessen energy bills for American businesses by approximately $40 billion every year if implemented in full.