A report released last week by the American Council for an Energy-Efficient Economy (“ACEEE”) showed that overall spending on industrial energy efficiency (“EE”) projects is on the rise. 

The report tracked 2010 spending by utilities, state and federal agencies, public benefit fund organizations, and nonprofit entities that was used for providing industrial energy users with incentives, rebates, grants, loans, technical assistance, energy audits, and assessments, among other services to encourage EE. 

Total spending topped $1 billion. While 2010 spending received a boost to the tune of approximately $228 million in funds from the American Recovery and Reinvestment Act (“ARRA”), the rest came from other sources. Research shows that the largest programs, by far, were run by utilities and public benefit fund organizations, who accounted for $737 million of the $1.1 billion pot. 

The report, however, does not account for private spending which would undoubtedly increase that figure substantially. Industrial users of energy have been very pro-active in implementing EE programs to lower operating expenses and protect themselves against spikes in energy costs. The study also leaves out the millions of private sector dollars that are raised through leveraging public funds. However, ACEEE’s data clearly shows an uptick in total industrial EE program spending.

Pennsylvania and New Jersey both finished among the top 10 state spenders. Pennsylvania ranked third, behind New York and California, at about $65 million, while New Jersey spent just under $28 million, providing the Garden State with an 8^th place finish. 

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The United States is at a precipice with respect to public motivators for the green economy. Essentially, the carrot of public incentives or investment and the stick of potential mandatory regulation of carbon emissions are slated for elimination at the same time. 

Although we cannot know what this two part challenge to the green economy will do, it will certainly change its trajectory for the foreseeable future. 

First, of course, are the proposed revisions to the 2011 budget.  With respect to green building, slated for cuts are most programs that promote green building or which invest Federal dollars in green buildings directly:

• $3 billion of EPA funding overall
• $1.6 billion (nearly 20%) of the Federal Building Fund at the General Services Administration (GSA)
• $786 million (over 35%) of the Energy Efficiency and Renewable Energy (EERE) office at the Department of Energy (DOE)
• $250 million in funds for the Department of Housing and Urban Development (HUD) HOPE VI program, which leverages private sector dollars to transform existing blighted public housing into vibrant and livable communities.
• $10 million for the Energy Star program at the Environmental Protection Agency (EPA).

With respect to renewable energy, the proposed Republican budget bill slates for reduction or elimination over $900 million in investment. Among the programs slated for cuts or elimination is the Department of Energy Loan Guarantee Program for clean energy start up companies, established during the George W. Bush administration.  According to Forbes, DOE officials have said that eliminating this program would do away with 20,000 jobs, along with the benefits for the environment.

In addition to the direct cuts, at least four different proposals are pending (potentially up for a vote this week) restricting or eliminating EPA's ability to regulate greenhouse gases.  If the EPA is restricted in its ability to regulate greenhouse gases, one of the most potent motivators for investment in reducing carbon emissions through renewable energy, green buildings and other carbon reduction techniques will be eliminated.  

 The question will become not whether renewable energy and green building can compete without government subsidy, but rather whether renewable energy and green buildings can compete in the face of continuing subsidy to competing technologies like coal, oil, etc. 

According to the Center for American Progress, the proposed Republican budget will make few changes with respect to the $40 billion+ Government support of these technologies through tax incentives and other mechanisms. Fox News was unable to get a commitment from House Budget Committee Chairman Paul Ryan (R-WI) that tax breaks for oil and gas companies would be eliminated:

WALLACE: A lot of Democrats that are already saying, even before they’ve seen your budget, that you do all of this balancing of the budget on the spending side, and unlike the President’s debt commission, you don’t do it on the revenue side. Do you eliminate tax breaks? Do you bring in new revenue by eliminating, for instance, tax breaks for oil companies?

RYAN: We don’t have a tax problem. The problem with our deficit is not because Americans are taxed too little. The problem with our deficit is because Washington spends too much money. … So we’re not going to down the path of raising taxes on people. […]

WALLACE: But for instance, you will not eliminate tax breaks for Big Oil and Gas?

RYAN: Those are the kinds of details that we’ll come out later with, that the Ways and Means Committee will work on. We’re not going to go into the little details of which tax expenditure goes and which tax expenditure stays.

 [You can watch this portion of the interview on You Tube]

The next few weeks will be historic ones with respect to America's green future.  For better, worse or otherwise, these are interesting times which will mean changes for everyone in the green sector in the United States. 

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I have been tracking the green stimulus spending since June 2009. In November 2009, actual dollars spent on green projects was $1.5 billion.  Now, in November 2010, dollars actually paid to date on green projects is approximately $11 billion.  It amounts to approximately 7% of contract spending from the Stimulus bill (which does not include tax benefits), and 2.6% of the total stimulus money paid to date. 

By agency, the spending on green breaks out as follows:

	Allocated	Paid Out	Unit	% Paid
DOE	33.29	9.4	Billion	28.24%
Energy Efficiency/Renewable Energy	16.50	4	Billion	26.06%
EPA (9/30)	7.20	4	Billion	62.22%
GSA	6.10	1.42	Billion	23.28%
Green Buildings	5.50	1	Billion	18.18%
DOT	40.40	22.3	Billion	55.20%
High Speed Rail	3.00	1	Billion	33.33%
Total Agency	86.99	38	Billion	43.22%
Total Green	32.20	11	Billion	33.48%
Total Contract Spending	275.00	156.7	Billion	56.98%
Total Stimulus	787.00	403.4	Billion	51.26%
% Green of Contract Spending	11.71%	6.88%
% Green of Total Stimulus	4.09%	2.67%

[I used the same methodology as described in detail here. If you are a data geek like me, you can do your own number crunching at Recovery.gov and the agency recovery sites who do weekly reporting in Excel on the allocation and spending of the Stimulus money.  There is a wealth of information available, and I welcome any input or different statistical or mathematical analyses from the Green Building Law Community.] 

At the initiation of the Stimulus, Obama touted the green components of the stimulus bill.  He has also been very positive on the prospect of green jobs. Opponents of the stimulus bill, and waning support of green initiatives and green jobs in general, has been on the rise.

So the question becomes: what is the value of the 3% of the Stimulus that went to green iniatives, and was the return on investment higher or lower than the other initiatives that were funded by the stimulus? The answer to the ROI question is "yes"-- Agencies tasked with green funding (DOE, EPA, GSA) hold 3 of the top 10 most efficient job creating agencies that were allocated stimulus funding:

 

	Stimulus Funds Paid	Jobs Created	Dollars Per Job
Department of Justice	$2,013,343,173	16330.59	$123,286.62
National Science Foundation	$817,277,981	5503.36	$148,505.27
Department of the Interior	$1,545,986,174	10047.13	$153,873.41
Department of Education	$66,652,472,918	341668.74	$195,079.22
Department of Energy	$9,691,290,357	42262.17	$229,313.60
General Services Administration	$1,493,185,840	5773.82	$258,613.16
Department of Housing and Urban Development	$7,270,460,291	27640.01	$263,041.16
Department of Homeland Security	$598,741,846	2137.91	$280,059.43
Environmental Protection Agency	$4,608,982,170	16233.68	$283,914.81

  By contrast, the two departments which spent the most money, the Department of the Treasury (tax cuts) and the Social Security Administration only created 188 direct jobs.

Department of the Treasury	$8,575,280,379	144.27	$59,439,109.86
Social Security Administration	$13,727,406,290	44.75	$306,757,682.46

It will be argued that the tax cuts, etc. indirectly created jobs by pumping more money into the economy.  But there is a direct way to measure the impact of a single green dollar.  To address this, I looked at the statistics for the GSA.  Unlike other agencies which allocate money through states to programs or disperse it to individual taxpayers, the GSA contracts directly with builders and other direct contract fund recipients to build or renovate federal buildings.

As of September 30, 2010, the GSA had saved or created 5773.82 jobs (how you have .82 of a job I can't say). The stat is here. The GSA was 16th in the agencies recieving funding, and the12th net job creating agency.  But on a job per dollar basis, the GSA the 6th most efficient job creating agency at $258,613.16 per job created.   

Do not fall into this statistical trap "$258k per job? We could have created five $50k jobs for that money!"  Remember, this dollars per job includes materials and costs of the jobs involved (bricks, mortar, etc.), which also have downstream job creating effects (brick makers, concrete haulers, etc.).

Tomorrow, I will post an interview I had at Greenbuild with Kevin Kampschroer, the Director of the Office of Federal High-Performance Green Buildings at GSA in which he gave insight not only into the GSA's experience with the Stimulus spending, but also on the long term impacts the Stimulus spending had on the operation of the GSA itself. 

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A study out of the Government Accountability Office (GAO) reports:

As of 31 December 2009, according to data available to the Department of Energy, about 9,100 homes had been weatherized out of a planned 593,000

The pricetag for weatherizing 9,100 homes? Over $57,000 per home. 

According to the Home Energy Saver website, sponsored in part by the Department of Energy and Environmental Protection Agency, the average cost of the top 10 home energy upgrades is just $3,960, a difference of over $46,000 per home. 

Part of me doesn't care. According to Keynesian thinking, just spending stimulus money and fast, it doesn't matter how, is key to stoking the economy.  But there is part of me which envisions the thousands of additional homes which could have been weatherized had the government been more efficient in its spending. 

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I have written before about the appalling lack of women in the green sector.  Greenerbuildings.com reports that Wal-Mart is attempting to do something about this by sponsoring green job training for women. 

Together the two organizations are launching an initiative called "Moving from Red to Green: Working Women in the Green Economy."

The Walmart Foundation's support will enable the working women's advocacy group to establish a pilot program and provide grants of $60,000 to four organizations to provide the training.

 

Others will **hopefully** follow suit. 

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Yesterday, I posted a piece on the Senate stimulus package, arguing that it failed to provide the green basis for a thriving future economy. 

James Bedell, one of my Twitter buddies (he is @jamesbedell, and you should be following him if you are a tweeter) wrote this thoughtful response on Konstructr. 

Read the rest of James' post on Konstructr

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The Senate is proposing to give the United States a bandaid, when a transplant is required.

 

I was disappointed when the House’s version of the Stimulus Package was released with only $95 billion allocated to green initiatives out of $550 billion in expenditures (and another $275 billion in tax cuts), but the Senate version is far worse. By my reading, only $67.2 billion of the $885 billion Senate stimulus plan is now allocated for green initiatives:

 

Energy Efficiency for DOD Facilities	$3.20
Water Infrastructure	$4.60
Public Transit	$8.40
Energy Investments	$51
TOTAL GREEN STIMULUS	$67.2

 

Instead of a down payment on our future, the Senate bill sprinkles most of the stimulus money throughout the existing economy, with $13.9 billion in Pell Higher Education grants, $13 billion "to help close the achievement gap and enable disadvantaged students to reach their potential," $5.8 billion to "fight preventable diseases and conditions." Some money is clearly not green at all—like $27 billion in highway funding.

 

There are also major bucks for residential real estate proposed. According to CNN, Senate Budget Committee Chairman Kent Conrad, D-N.D., said he would propose an expansion of a temporary $7,500 first-time home buyer credit so that it applies to all purchases of primary residences, and some Republican senators have called for an increase in the credit to $15,000. Senate Republicans are likely to introduce a provision that would encourage lenders to offer a 30-year fixed rate mortgage at 4%.

 

The problem with the stimulus package and the proposed amendments is not the amount of the allocations, or even the worthiness of some of the programs, like higher education and healthcare. Rather, it is the fundamental perspective on the American economy that it represents.

Read the rest of this article at Greenerbuildings.com

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On Wednesday, I was fortunate to attend the forum "Sustainable Energy: From Global Evolution to Local Execution" hosted by the World Trade Center of Greater Philadelphia.  I expected to come away with greater knowledge about local renewable energy initiatives in the Delaware Valley, which I did.  There were great presentations by Pennsylvania and New Jersey officials on the state's energy plans, which I will go into more detail about in a later post.  But what was far more interesting to me was the clever strategies that companies are using to promote green during the economic downturn.

John Gattuso, Senior Vice President of Liberty Property Trust, spoke about what Liberty (one of the leaders in green development on both the office and industrial side) was doing during the downturn:

Right now, we are looking at what the next set of buildings are going to look like.  People have the time to think and plan now.

Smart developers are using this time to plan their next projects.  It takes 12-18 months at least to get projects into the ground through land acquisition, approvals, design, etc.  Now is the time to be engaging urban designers and sustainable architects (not to mention land use attorneys) to create the next great places to live and work. If you wait until the downturn is over, you will be at the back of the pack, not the front.

David Stangis, the Vice President of Corporate and Social Responsibility for Campbell's Soup (headquartered in scenic Camden, NJ) spoke about the importance of honing the green business case. 

Where the business case makes sense in where change will happen.  Businesses are looking for the sweet spot in having sustainability initiatives make business sense.

Smart green companies, regulators and advocates need to use the downturn to hone the business case for sustainability.  Projects which were on the bubble in the boom times will not fly. in what I like to call the "money constrained economy." Energy efficiency, reducing travel, using fewer resources and collaboratively creating new value will. 

 

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