Obama Announces Better Buildings Initiative

President Obama on Thursday outlined a plan to incentivize  energy efficiency in commercial buildings across the country.

Cutting energy use in buildings, which contribute almost 30% of US carbon emissions, would meet less partisan resistance than mandates for renewable energy or caps on carbon emissions. He proposes to offset the efficiency investments by cutting subsidies for fossil fuels, which is already receiving pushback from those industries. 

Dubbed the "Better Buildings Initiative," it aims to make commercial buildings 20% more energy efficient over the next decade by catalyzing private sector investment through a series of incentives to upgrade offices, stores, schools and other municipal buildings, universities, hospitals, and other commercial buildings.

Obama made the announcement while visiting Pennsylvania State University, which leads the Energy Innovation Hub created last August by the DOE to focus on energy efficient buildings.

"Making our buildings more energy efficient is one of the fastest, easiest and cheapest ways to save money, combat pollution and create jobs right here in the United States of America," Obama said to a packed audience on campus.

In addition to cutting energy use 20% by 2020, the new initiatives also aim to reduce the energy bills of building owners by $40 billion per year.

According to a White House release, the President is calling for an aggressive reform of existing tax and other incentives for commercial building retrofits and proposing a new competitive grant program. In turn, he is asking corporate leaders to commit to making progress toward his energy goals.

The Administration’s Budget will propose the following initiatives:

  • New tax incentives for building efficiency: The President is calling on Congress to redesign the current tax deduction for commercial building upgrades, transforming the current deduction to a credit that is more generous and that will encourage building owners and real estate investment trusts (REITs) to retrofit their properties. These changes could result in a ten-fold increase in commercial retrofit take up, leveraging job- creating investments.
  • More financing opportunities for commercial retrofits: Access to financing is an important barrier to increased retrofit investment in some market segments. To address these gaps, the Small Business Administration is working to encourage existing lenders to take advantage of recently increased loan size limits to promote new energy efficiency retrofit loans for small businesses. The President’s Budget will also propose a new pilot program through the Department of Energy to guarantee loans for energy efficiency upgrades at hospitals, schools and other commercial buildings.
  • “Race to Green” for state and municipal governments that streamline regulations and attract private investment for retrofit projects: Much of the authority to alter codes, regulations, and performance standards relating to commercial energy efficiency lies in the jurisdiction of states and localities. The President’s Budget will propose new competitive grants to states and/or local governments that streamline standards, encouraging upgrades and attracting private sector investment.
  • The Better Buildings Challenge: The President is challenging CEOs and University Presidents to make their organizations leaders in saving energy, which will save them money and improve productivity. Partners will commit to a series of actions to make their facilities more efficient. They will in turn become eligible for benefits including public recognition, technical assistance, and best-practices sharing through a network of peers.
  • Training the next generation of commercial building technology workers: Using existing authorities, the Administration is currently working to implement a number of reforms, including improving transparency around energy efficiency performance, launching a Building Construction Technology Extension Partnership modeled on the successful Manufacturing Extension Partnership at Commerce, and providing more workforce training in areas such as energy auditing and building operations.

The Better Buildings Initiative will complement the initiatives the President has already launched for government and residential buildings, including the $20 billion in funding for building energy efficiency in ARRA.

The White House also said the President remains committed to the passage of the “HOMESTAR” program, which would support home energy retrofits.

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