The in-coming Obama Administration is hearing from just about everyone in our field on variations on the theme of a green infrastructure build-out.
Everyone supports Obama's plan to use the economic crisis to kick-start an energy-efficient, energy-independent infrastructure. Variations include banning new coal plants, creating strong incentives to trade in gas guzzlers for hybrids, and a "Clean Energy Corps," which would provide job training for people to transition into a variety of green industries.
One way to fund this plan would be through the creation of a green National Infrastructure Bank, that would provide direct federal spending, tax credits, and financing to states, municipalities and the private sector. Deutsche Asset Management discusses the concept in its report, Investing in Climate Change 2009: Necessity and Opportunity in Turbulent Times.
Alongside supportive policies, Deutsche sees the Bank as a way to fund commercialization and scaling of green technologies that are past the demonstration stage. The Bank would augment government infrastructure spending with private capital. Through public-private partnerships, it could tap into private capital by offering government-backed loans - in effect, provide preferential financing rates.
Architecture 2030 says their 2030 Challenge Stimulus Plan creates at least 8.5 million new jobs and a $1.6 trillion renovation market. Homeowners could reduce their mortgage rates 2-4 points by improving their home's energy efficiency. The feds would pick up the difference, which would quickly increase liquidity in the economy, while lowering energy bills, reducing emissions dramatically, and creating millions of jobs. The government would recoup its investment from income taxes from employed workers. There would also be an accelerated-depreciation program for commercial buildings that meet energy efficiency targets.
David Sassoon, gives an example of how this would work on Solve Climate: Say you're a homeowner with a $272,000 mortgage at 5.55%, paying about $1,550 a month. You decide you want your mortgage rate to drop to 3%. In order to qualify for the reduction, you have to improve the energy efficiency of your home 75% below code, and it's going to cost you a pretty penny: about $40,000.
Existing tax credits would take care of about $10,000 of that cost. The rest would get tacked on to your existing mortgage, bringing it up to $302,000. But, at 3%, you'd be paying only about $1,280 - saving almost $300 a month on the mortgage alone, plus another $150 in reduced energy costs. The value of your home rises, you have more disposable income, you've given work to someone to do the upgrades for you - and s/he's now paying federal taxes, and you've reduced your carbon footprint.
Signal Hill Capital Group urges Obama to adopt a plan modeled on FDR's Tennessee Valley Authority (TVA) and Rural Electrification Acts of 1933 and 1936, which built dams and fed the electricity to agricultural lands and the countryside. Today, the template would be used to accelerate the adoption of solar energy - the government would build, own and operate some centralized solar PV plants and the recharging stations needed for widespread adoption of plug-in vehicles.
This TVA-like structure for solar power, the "Solar Power Authority," would create jobs and businesses throughout the solar supply chain, and it would rapidly bring solar to scale. It would be funded by federal dollars and reduced oil & gas subsidies. Tax payers would benefit from the federal government selling electricity to the grid just as the TVA does now.
Since wind energy is already on its way, Signal Hill's focus would be on solar. It would drive down manufacturing and installation costs, while helping to break down many of the parochial obstructions for siting transmission and distribution assets needed to deliver the power to end users and purchasing utilities.
Investing in Climate Change 2009: Necessity and Opportunity in Turbulent Times
2030 Challenge Stimulus Plan
Signal Hill's Plan: Read "Houston, We've Had a Problem"