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Create Jobs, Save Taxpayer Money, and Conserve Resources
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HIGH-PERFORMANCE BUILDING CONGRESSIONAL CAUCUS COALITION
--www.HPBCCC.org--
The Role of Energy in High-Performance BuildingsCreate Jobs, Save Taxpayer Money, and Conserve Resources
Cliff MajersikExecutive Director, Institute for Market
Transformation (IMT)
U.S. Building Industry
Represents more than 50% of the nation’s wealth
New construction and renovation activity
amounts to over $800 billion annually
Responsible for 13% of the GDP Employs over ten million people
(5% of total U.S. employment)
Today’s Realities New construction outlook remains weak
Construction sector unemployment around 20% Buildings responsible for 42% of U.S. energy
consumption; building energy use projected to grow $422 billion annual energy costs 70% of U.S. electricity consumption 39% of U.S. CO2 emissions
To remain competitive and profitable we must reshape the efficiency of our building sector
Promotes job creation and economic growth
Reduces consumer energy bills
Strengthens property values, revitalizes communities
Reduces dependence on fossil fuels
Ensures a stable & reliable electric system
Lowers greenhouse gas (GHG) emissions
“When it comes to saving money and growing our economy, energy efficiency isn't just low hanging fruit; it's fruit laying on the ground.” - Secretary of Energy, Steven Chu
ENERGY EFFICIENCY:
U.S. GDP Expansion as a Function of Energy Efficiency Improvements, 1970-
2008
1.00
1.50
2.00
2.50
3.00
3.50
1970 1980 1990 2000 2008
GDP Index (1970=1)
Expansion of the economy, based growth in labor, capital, and energy
Productivity growth as a
function of energy efficiency improvements
U.S. Gross Domestic Product
Source: Laiter, Skip. ACEEE adapting Ayres and Warr (2009) using BEA and EIA data.
Macroeconomic Impacts
Lowest Cost ENERGY SOURCE
Oil Imports, National Security
Source: Center for American Progress, 2010
Economic Impacts
Jobs GDP
Energy
savings
CO2
Center for American Progress (2010)
Retrofitting 40% of the U.S. building stock could: Create 625,000
new jobs $500 billion $64 billion
McKinsey & Company (2009)
By 2020, capturing the economy’s full efficiency potential will:
Create 500,000-
750,000 new jobs
$685 billion 720 megatons
USGBC (2009)
Total value of the green construction market 2000–2008
Supported 2.4 million jobs $173 billion $1.3 billion
Projected value of the green construction market 2009–2013
Support over 7.9 million
jobs$554 billion $6 billion
High Performance Buildings: Benefits to Owners, Tenants
Lower utility bills, operating expenses
Benefits beyond energy savings:
Increase in building value
Higher rent premiums
Increased occupancy rates
Marketing/PR value Increase worker
productivity Reduced employee
sick days Enhanced ability to
attract and retain employees
Menu Labeling to Go National, Thanks to Health Bill’s
Passage Calorie Data to be Posted at Most Chains
10
A Familiar Concept
Small Businesses and Job Creation
11
Building Energy Rating and Disclosure
Small Businesses and Job Creation
12
A Virtuous CycleWhen performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.
One result:Exceptionally cost-effective peak load reductions
U.S. Policy Map, State and LocalPolicy Map
U.S. Policy Overview
14
Annual Policy Impact Projection on Building Area (in Square Feet) by Jurisdiction
Annual Policy Impact Projection on Number of Buildings by Jurisdiction
Policy Impact Projections
Approximately 4 billion square feet More than 3x the floor area of every Walmart, Target, Home Depot, Barnes &
Noble and Costco store in America
Policy Requirements by Jurisdiction
15
Why ENERGY STAR Benchmark?
• Economies of scale; already widely used among building owners for energy tracking
• Free, readily available online, relatively easy to use
• Delivers energy performance metrics based on utility data
• Supported by the US EPA
Nearly 270,000 buildings ENERGY STAR benchmarked
Small Businesses and Job Creation
16
Jobs
First report documenting job growth from energy benchmarking policies
Profiles of small businesses adding staff and increasing client bases
KEY TAKEAWAY: Financing not the key barrier. Primary issue is demand.
Small Businesses and Job Creation
17
Jobs
“As a Silicon Valley venture capitalist … I tell our green startup companies to focus on San Francisco or New York City. That’s where the action is going to be.”
- Elton Sherwin, venture capitalist, senior managing director, Ridgewood Capital
“The Greener Greater Buildings Plan has spurred the New York Market to interest and activity around energy efficiency. Over the past year, we have begun working with over 75 million square feet of real estate in New York and over 400 new clients.”
- Lindsay Napor McLean, COO, Ecological
“When an owner sees a benchmarking score that is lower than expected, they’re a little more receptive to improvements to bring the score up, which in turn lowers their utility costs.”
- Kevin Dingle, president, Sustaining Structures
Energy and Job Impacts of Benchmarking & Disclosure
Project advisory panel of leading real estate industry experts
Jobs analysis by IMT and the Political Economy Research Institute at the University of Massachusetts
Hypothetical policy:
Annual energy benchmarking and public disclosure Commercial properties 25,000 SF and greater Multifamily residential properties 20 units and greater
2015 2020
Energy Savings (cumulative,in billions)
$3.8 $18.2
Net New Jobs 17,098 59,620
www.imt.org/energy-disclosure-and-job-creation
Energy costs now exceed property taxes and insurance, which are accounted for in mortgage underwriting.
A homeowner who spends less on utilities will have more money to make mortgage payments
For a typical house :o Median home price -
$175,000o Average 30-year
commitment to energy costs - $70,000
Aligning mortgage policy with energy efficiency
Incorporating Energy Efficiency into Mortgage Underwriting
Mortgage Underwriting:
• Borrower capacity is adjusted for energy costs.
• Value of the home reflects the energy cost savings.
The Three C’s of Underwriting
Credit
CapacityBorrower’s ability to pay the
monthly mortgageDebt-to-Income Test
CollateralAppraised value of the
homeLoan to Value Ratio
Energy “blind spot”
Incorporating Energy Efficiency into Mortgage Underwriting
Year Annual Jobs
Annual Energy Bill Savings*
2015 16,000 $95 million
2017 50,000 $380 million
2020 83,000 $1.1 billion
• SAVE Act (S. 1737) introduced by Senators Bennet (D-CO) and Isakson (R-GA)
• SAVE Act would create 83,000 jobs and $1.1 billion in savings to Americans' energy bills in 2020
Source: 2011 study by the American Council for an Energy-Efficient Economy (ACEEE) and the Institute for Market Transformation (IMT). www.imt.org/SAVE_Act
Incorporating Energy Efficiency into Mortgage Underwriting
The SAVE Act: S. 1737
Leading business, industry, and environmental support the proposal.
Incorporating Energy Efficiency into Mortgage Underwriting
Cliff MajersikExecutive DirectorInstitute for Market TransformationWashington, [email protected]: @IMTCliff
www.imt.org