Listening To Retail: ICSC's Take On Energy Efficiency

In an earlier post, I criticized the International Council of Shopping Centers (ICSC) for a letter sent to their members critical of the National Energy Efficiency Code provisions (Section 201) of the Waxman-Markey Bill (a summary of those provisions is available here). 

Yesterday,  I had the opportunity to speak to Kent Jeffreys, Staff Vice President in the Office of Global Public Policy of ICSC about their position on Waxman-Markey and the future of retail energy efficiency. Here are selections from our conversation:

GBLB: You were critical of the Waxman-Markey National Energy Efficiency Code proposal.  Why? 

KJ: One of the problems with the overall bill is that it is one size fits all when it comes to energy efficiency. For example, how do you measure the energy efficiency of a mixed use facility? Different code standards apply, and energy consumption is determined by tenant mix—a Best Buy and grocery store are different from a yoga studio and a shoe store. Waxman-Markey's adherence to the measuring stick being the building creates problems for shopping centers.

The bottom line is that the commercial building sector would like to see the same consideration that the utilities had—their deadlines were pushed off until 2020. There are a few facts that stand in the way of rapid adoption of a stringent new code. For example, many states don’t have energy codes at all. Other states have adopted different levels of ASHRAE. Waxman Markey refers to 2004 as the baseline. Then it says exceed 30% by 2010—which is tomorrow when it comes to new building construction. It is aggressive. We think it will be be problematic.

There are ways to achieve it. Talking to the technical folks, some are already exceeding ASHRAE by 20% or more. This requires certain design changes. If you start taking out windows, you can add more insulation. Most folks can move forward at 30%, we just don’t think they can do it by 2010. It is a bit unrealistic.

That is why we encouraged our members to talk to their members of congress about how they are increasing the energy efficiency. In the real world, we cannot make them all adopt cutting edge technology. The real world problems that we run into—if they have not been totally focused on energy efficiency, they are going to get a rude awakening if the bill passes in its current form.

The second step in the Waxmna-Markey Section 201, 50% by 2015, we actually don’t know how to do. You would have to change what ASHRAE addresses in order to calculate 50%, including operations, for example. 2015 is actually not that far away. At the very end, the coal burning utilities pushed their deadlines back by arguing technologically and economically that they couldn’t meet it.

These goals were picked in terms of political effectiveness, not technological. In the House, they were unwilling to even talk to us. Therefore, we couldn’t support the overall bill.

GBLB: What efforts did you make to try to work out these issues?

KJ: I went and met with people with folks from Wal-Mart, Target, developers, and let the staffers ask questions. The letter we sent out to our members was intended to inform about the fact that this will change the way they do business. Member of congress don’t know how this will impact their local communities. If you make it impossible for retailers to keep up with the times, in some communities it means jobs are not created, new projects and major renovations will not happen. I don’t really know the ramifications for the nation, but right now, no one is building anything because you can’t borrow money. We did not conduct a study to figure out how much 30-50% energy efficiency would cost—NAIOP figured out it would take 20 year payback. Then you have to figure out how you are financing it. We want members of congress to consider this. Right or wrong, the members of congress did take into consideration the cost for utilities.

There are things we support in the bill, like the REEP program. We tried to make this program more comprehensive.

GBLB: How would you suggest regulating your industry to create more energy efficiency?

KJ: The 40% “responsible” for GHG emissions by buildings—there is an underlying assumption that reduction by buildings lead to a 1 to 1 reduction of emissions. Direct emissions from commercial buildings is more like 4% than 40%. The initial responsibility means that we should be able reduce emissions by that much which is not realistic.

Until we address the generation issue—buildings are not the source of emissions—focusing on buildings is a false hope. If you look at California, the typical shopping center is more energy efficient, because of that experience, developers are adopting those procedures nationwide. But it’s going to take time. If 201 goes into effect, there will be no effect on overall GHG emissions. It will be swamped by other factors.

We would be happy to work with congress on a natioanl net metering standard, there is a patchwork of regulations right now. This would have very direct impact on reducing energy use—if there were economic incentives.

GBLB: What about the part of your letter which criticizes Waxman-Markey on the basis of creating additional code bureaucracy--"there is no trained inspection force to oversee a national building code, so it will require the federal government to retrain state employees and, no doubt, hire a huge number of new inspectors"? 

KJ: I think it is a critical flaw that congress passes a law and leave it to the states to implement. The states are strangled—they can’t run deficit spending. I don’t think that the federal government’s grant to the states for training and enforcement is sufficient. If the federal government thinks that the states will be able to enforce this code by 2010, with this amount of funding, they are sadly mistaken. Some states are really good and others are incompetent. You can’t say it is an anti-government notion—you have got to provide the resources to the states to get this done. The answer is for Congress to slow down and reconsider what it has done, or if you are going to pass the bill as written, give the states more money.

What if the states think implementing energy efficiency evaluation is too hard? Then they may say everybody passes and you get no increase in energy efficiency.  You need standards which are realistic and can be enforced and implemented by the public.