President Obama announced today a $4 billion initiative to increase the energy efficiency of buildngs over the next two 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," says Obama in a statement.
"We can't wait for Congress to act, so I'm directing all federal agencies to make at least $2 billion worth of energy efficiency upgrades over the next two years," he adds.
The goal of the program is to raise energy efficiency by a minimum of 20% by 2020, across 1.6 billion square feet of office, industrial, municipal, hospital, university, community college and school buildings.
The program is estimated to save $40 billion a year in energy costs, and create 50,000 jobs in the hard-hit construction industry, a figure that could be increased by 114,000 through other components of the Better Buildings Initiative, according to a recent analysis released by The Real Estate Roundtable, the U.S. Green Building Council and the Natural Resources Defense Council.
The program is a public-private partnership - the feds will pay $2 billion, ordered through a Presidential Memorandum, for federal building upgrades, and 60 CEOs, mayors, university presidents and labor leaders committed to invest $2 billion of private capital for federal and private-sector buildings.
There are no up-front costs to taxpayers - energy service firms will bid on the work and make the upgrades with no upfront cost - they will get paid over time through energy savings on utility bills. After the energy service companies are paid back, building owners, be they public or private, keep future savings.
It's part of the Better Buildings Challenge announced early this year, which former president Clinton is spearheading along with and the President's Council on Jobs and Competitiveness.
The initiative builds on a commitment made by 14 partners at the Clinton Global Initiative America meeting in June to make energy upgrades across 300 million square feet, and to invest $500 million in private sector financing in energy efficiency projects.
Those that have signed onto raising efficiency 20% by 2020 include retailers like Best Buy, Kohl's Walgreens, major property owners such as Prologis and Transwestern, health care institutions like the Cleveland Clinic, and universities like Michigan State.
More than 300 manufacturing plants, which are some of the largest energy consumers, will upgrade industrial processes - lowering their costs and cleaning the air and water. Firms such as Alcoa and Nissan North America have signed on.
One of the most cited barriers for private companies to undertake building energy upgrades is a lack or limited access to affordable financing. Citi and other banks, and emerging financial service providers such as Green Campus Partners and Transcend Equity are making direct investments and structuring innovative financial products that meet the specific needs of private real estate owners.
Citi completed a first of a kind financing earlier this fall with the state of Delaware for which all of proceeds will be used for energy efficiency projects at state and local government buildings. The $70.2 million financing is expected to cut energy use 30%, save $26 million in energy costs, and create more than 1,000 green building jobs.
o Lend Lease is upgrading the energy performance of 40,000 military homes around the country. The project kicked off this fall, and will put contractors to work in 13 states.
o The City of Atlanta has begun an upgrade of its Civic Center, and launched Phase One of their local Better Buildings Challenge with more than 16 million square feet of downtown buildings signed up.
Read "A New Retrofit Industry: An analysis of the job creation potential of tax incentives for energy efficiency in commercial buildings and other components of the Better Buildings Initiative, by the US Green Building Council: