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, DCcliff@imt.org202-525-2883Twitter: @IMTCliff

www.imt.org