The White House’s Better Buildings Challenge
Posted December 22nd, 2011
The White House hopes to drive $4 billion into building retrofits and create tens of thousands of new jobs—if private partners can deliver on their promises.
Can the Obama administration spur $4 billion in building energy efficiency retrofits without being able to get the money out of a deadlocked Congress? Apparently we’ll have the next two years or so to find out.
After months of working with former president Bill Clinton and a lot of private-sector and government partners, the White House says that more than 60 organizations have pledged to spend $2 billion to retrofit about 1.6 billion square feet of commercial and industrial property in the next 24 months.
The White House simultaneously announced a commitment to move forward with $2 billion in federal building “performance-based contracting” projects over the next 24 months. Because private investors and companies will pay for efficiency upgrades at government buildings, then pay themselves out of the energy savings, those projects can go forward without new federal spending.
Together, that $4 billion in projected commitments could add up to tens of thousands of jobs. Consider it a major new market opportunity for the building energy efficiency sector—and a major new challenge in making private-sector economics work in the absence of direct taxpayer support.
Also consider it a thorn in the side of the Obama administration—because they have been unable to get Congress to act on many of the proposals in its Better Buildings Initiative launched last February. The Department of Energy initiative laid out a laundry list of building energy efficiency initiatives, all aimed at making the nation’s commercial buildings 20 percent more energy efficient by 2020.
Part of that plan was the ‘Better Buildings Challenge,’ launched in late June 2011 at the Clinton Global Initiative. 14 initial private sector and local government partners pledged to spend $500 million to retrofit buildings totaling about 300 million square feet.
That included big public-private partnerships in Seattle, Los Angeles and Atlanta, as well as buy-in by USAA Real Estate Company, Best Buy and other corporate partners. Partners including Citi, Hudson Clean Energy Partners, Metrus Energy, Transcend Equity and Renewable Funding agreed to provide at least $525 million in project funding. San Francisco-based startup Serious Energy promised to execute $100 million in energy efficiency upgrades for customers as part of the initiative.
The $4 billion challenge is the latest move the Obama administration has made as part of its “We Can’t Wait” campaign to bypass a deadlocked Congress and spur job creation, even as the President pushes lawmakers to pass a $447 billion jobs bill.
The Political Economy Research Institute projected in June that the entire Better Buildings Initiative could create up to 114,000 jobs if implemented in full. Much of that would have to come via legislation, which seems increasingly unlikely, at least this year.
The big question is whether the economics of building energy retrofits are developed to the point where they can support a $4 billion boost in business without loan guarantees or other federal supports.
