Friday, November 16 , 2018, 2:53 pm | Fair 69º


Lindsey Taggart: A ‘Stimulating’ Solution to our Energy, Economic Concerns

A new challenge plan is all about what's in it for you.

Two years ago, New Mexico-based architect Ed Mazria rocked the world of architecture with “The 2030 Challenge” and forever changed the way we view the future of energy use in buildings. His challenge drove home the drastic impact that buildings have on climate change and called for carbon-neutral buildings by 2030.

Lindsey Taggart
Lindsey Taggart
Well, Ed and his 2030 Challenge cohorts are back at it, this time offering a solution to the current energy, economic and employment crises by promoting — you guessed it — energy-efficient buildings. He has built upon his original challenge and created another detailed and timely solution referred to as “The 2030 Challenge Stimulus Plan.”

This time around, a building’s energy efficiency is tied into the mortgage rate (residential buildings) or depreciation schedule (commercial buildings) as a way to create incentives to save energy and provide a huge boost to the economy. Here’s how it works: Homeowners who want to refinance their mortgage (including those facing potential foreclosure) will receive a reduced mortgage rate based on the efficiency of their home. Owners with homes that exceed the 2006 International Energy Conservation Code (Title 24 in California) by 30 percent will get a mortgage percentage rate of 4.5, while homes that exceed local codes by 100 percent (zero-net energy home) will be able to obtain a 2 percent rate. The cost of the efficiency retrofits will get rolled into the new mortgage but, with the lower rate, the monthly payments will be lower than before.

Here’s a quick example to clarify: Say you’re a homeowner with a $600,000 mortgage at 6 percent with $3,600 monthly payments. You decide to upgrade your home’s energy efficiency to exceed the code by 75 percent with new windows, more insulation and a solar hot-water heater, thus earning a 3 percent interest rate. The upgrades will cost you around $50,000, but you refinance them into your loan and your new monthly payment is only $2,700. You will also save about $100 per month on energy costs. You can expect to save up to $12,000 in the first year — plus the new federal tax credits will ensure even more savings on your retrofit costs!

For new homebuyers, the rate schedule is similar but not quite as good (30 percent better than code yields a 5 percent rate, zero-net energy yields 3 percent) so as to incentivize retrofits of the buildings already constructed and place less emphasis on building more. After all, as Mazria likes to remind us, “We can’t build our way out” of the climate-change problem. Turns out the same goes for our economic and social problems, too.

For commercial buildings and spaces, the idea is to allow for a bigger tax break directly after renovation or purchase through an accelerated depreciation schedule. When renovating an existing building or space, energy efficiency at 30 percent below code yields a four-year accelerated depreciation; while a zero-net energy retrofit yields a one-year depreciation. For commercial purchases or construction, 30 percent below code yields an eight-year depreciation; zero-net energy yields two years. For those who aren’t tax accountants, this basically means that the more efficient a commercial property, the bigger the tax breaks in the short term. For example, a one-year accelerated depreciation on a zero-net energy existing building retrofit may provide enough of a tax break in the first year to cover the cost of retrofitting the building. Accelerated depreciation drastically reduces the return on investment for energy-efficiency improvements, making them much easier to handle in one fiscal year. Makes sense to me, and I’m no accountant!

The 2030 Challenge Stimulus Plan will cost the federal government about $192 billion ($96 billion a year for two years). But, like many building energy-efficiency upgrades, the savings that result will create a return on investment that makes it a no-brainer. Mazria and his team estimate that over the first five years of implementation, the plan will save consumers $142 billion to $800 billion in energy savings and mortgage costs, not to mention reducing the risk of foreclosure. Additionally, the plan is expected to reduce CO2 emissions by 481 million metric tons over those same five years. That’s equivalent to taking 481 typical 500-megawatt, gas-fired power plants offline for one year. Add some renewable energy into those upgrades, and — oh, wait — is that energy independence I see just down the road? Like I said ... a no-brainer.

But it gets better! At this point you might be wondering where the employment benefits come in. Here’s how that works: The 2030 Challenge Stimulus Plan is expected to create more than 9 million jobs. If all existing federally funded buildings increase their efficiency and all new federally funded buildings are constructed to meet the 2030 Challenge targets, the building sector will need to beef up its workforce by almost 4 million workers, with an additional 4 million workers needed in careers related to the building sector (materials manufacturing, sales, etc.). This estimate doesn’t include the increase in compliance inspectors who will be needed to ensure the 2030 goals are actually being achieved.

Icing on the cake — existing building retrofits alone are expected to create a whole new renovation market that could exceed $1.6 trillion by 2030. Looks like Mr. Mazria is a supporter of Van Jones’ plan for The Green Collar Economy, which relies on growth of the energy efficiency and renewable energy career sectors to jump-start the global economy, while also addressing related social injustices.

Considering that the building sector is responsible for almost half of energy consumption and greenhouse gas emissions in the United States, and considering that the cheapest energy is the kind you don’t use, and considering that our current economic and employment crises are only expected to get worse in the next 12 months, the 2030 Challenge Stimulus Plan seems almost too good to be true. But it is in fact true, based on the rigorous analysis Mazria and his team have put together.  We can only wait to see if the Obama administration sees this plan as viable and worth supporting. A good sign is that President Obama recognizes energy efficiency as the first step toward energy independence and climate change, and a solution to the economic crisis. Make sure you reinforce those beliefs by making your voice heard.

Now if only Ed Mazria were in the automotive industry.

Lindsey Taggart is the Community Environmental Council’s building sector energy specialist and Santa Barbara Regional Council chairwoman of the U.S. Green Building Council’s California Central Coast Chapter. She can be contacted at [email protected] or 805.963.0583 x111.

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