Rebuilding America

President Obama Sets Commercial Building Energy Efficiency Targets

SOURCE: AP/Carolyn Kaster

President Barack Obama speaks about building energy efficiency at Rec Hall on the Penn State University campus in State College, PA, on February 3, 2011.

By Bracken Hendricks | February 3, 2011

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Download a fact sheet from the White House on the "Better Buildings Initiatve" (pdf)

President Obama’s unveiling today of an array of ambitious and achievable energy efficiency savings incentives and targets for our nation’s commercial-building owners could not be better timed. This new administration program, announced in the president’s speech today at Penn State University will result in thousands of new jobs for construction workers hard hit by the Great Recession and housing market travails, $40 billion a year in energy savings for U.S. commercial-building owners, and substantially less greenhouse gases escaping into the atmosphere to warm our planet.

The president’s overall target is to improve the energy efficiency of our commercial buildings by 20 percent by 2020. To achieve this goal will require a true public-private partnership to overcome the real barriers that exist in current real estate and energy markets, which prevent businesses and investors from realizing the long-term energy and cost savings that are possible using today’s technology to reduce energy demand.

President Obama has set the right priority in his “Better Buildings Initiative,” blending improved tools for project finance with assistance to hard hit small businesses and worker training to help American industries compete in the clean energy race. The “Better Buildings Initiative” will include several new industry-creating energy efficiency incentives, among them:

• Tax incentives to encourage building owners and real estate investment trusts to take on energy retrofit projects
• New loan guarantees from the Small Business Administration to help finance these retrofits alongside a new legislative push to expand a pilot loan guarantee program at the Department of Energy
• A “race to the green” competitive grant program for state and municipal governments to meet his “20 by 20” challenge as well as a “better buildings challenge” to corporate building owners to step up to the plate
• A new “construction technology partnership” to ensure construction companies and workers are prepared to meet the challenge of energy efficiency retrofits

Energy efficiency retrofits in our nation’s existing commercial buildings offer an exceptional opportunity to lay the foundation for sustained economic growth, driving demand in the construction and manufacturing sectors by creating hundreds of thousands of good jobs across the country. Retrofitting our businesses will also slash consumer energy expenditures, increase real estate values, and provide low-cost, near-term reductions in global warming pollution.

Buildings (commercial and residential) account for 70 percent of all U.S. electricity consumption and 40 percent of total U.S. greenhouse gas emissions today. Yet much of our housing and building stock is old, inefficient, and unnecessarily wasteful. While building codes and green building standards offer a tool for achieving deep improvements in energy use for new buildings, half of the buildings that will be standing in 30 years already dot our landscape.

Any strategy to capture the benefits of energy efficiency in our “built environment” must include a program to retrofit our existing stock of residential, commercial, and industrial structures. Deep building retrofits can cut energy use by 20 to 40 percent with proven techniques and off-the-shelf technologies. Best of all, they can pay for themselves from the energy they save. The president’s announcements today begin the first steps to achieve these savings.

In a paper published last year by the Center for American Progress titled “Rebuild America: A Policy Framework for Investment in Energy Efficiency Retrofits,” we demonstrated how our nation can cut energy waste in all of our buildings, which could reduce energy bills economy-wide by hundreds of billions of dollars annually. Energy efficiency retrofits also create good local construction jobs across the country at a time when well over a million construction workers sit idle in a sagging housing market.

Demand for the manufactured products needed to retrofit buildings will also result in jobs by revitalizing the manufacturing sector and contributing to sustainable, long-term economic growth. Although building retrofits can be profitable and offer additional social and economic benefits, the market for energy efficiency faces many information failures and real market barriers.

Smart policy can overcome this problem. President Obama’s new program for commercial buildings is a critical first step. Next up should be our nation’s residential buildings.

Download a fact sheet from the White House on the "Better Buildings Initiatve" (pdf)

Bracken Hendricks is a senior fellow at the Center for American Progress and co-author of the Center’s “Rebuilding America” report.