Greening the U.S. Building Stock: Cities Lead the Way, But Much More Is Needed!

The Empire State Building is undergoing a 20 mio. USD retrofit to reduce its energy usage by 40%. – Wikipedia Commons

It’s the beginning of November and the Worldwatch office building’s central A/C is still blowing full blast. I’m writing this blog in a wool sweater. Can there be any better inspiration for discussing the issue of energy efficiency? Let’s explore this time some of the strategies available for greening the building stock, taking examples from both sides of the Atlantic.

In the United States and Europe alike, many existing buildings are old, energy inefficient, and often poorly managed. Yet half of all the buildings around today will still be standing 30 years from now. Enhancing the energy efficiency of these structures and adapting them to a changing climate is therefore essential. So is educating citizens to increase their energy savings.

On October 27, at the invitation of Ulrich Braess, Director of the Goethe Institute in Washington D.C., guest speakers Monika Griefahn (former Green Party Member of the Federal German Parliament), Kurt Shickman (Director of Research for the Energy Future Coalition), and Brooks Rainwater (Director of Local Relations at the American Institute of Architects) discussed the challenges of retrofitting buildings in the United States and Germany.

When it comes to greenhouse gas emissions, three main sectors—energy utilities, manufacturing, and transportation—are the usual suspects. Yet residential and commercial buildings together account for 40 percent of U.S. emissions, more than either the transportation (34 percent) or industry (26 percent) sectors. The share is slightly lower in Europe, averaging 36 percent, but still represents more than one-third of regional emissions. In both the U.S. and Europe, buildings also account for some 40 percent of total primary energy use. Hence, they represent a key challenge for future energy and climate policies.

Germany has spurred greater efficiency in its building sector through the use of nationwide financial incentives. A “carbon dioxide building modernization” program (CO2-Gebäudesanierungsprogramm) established in 2001 provides favorable credits to reduce the carbon emissions of existing buildings. Meanwhile, both the Renewable Energy Sources Act and the Renewable Energy Heat Act include feed-in tariffs to encourage the wider transition to renewable energy. This indirectly promotes energy efficiency: as households earn new sources of revenue by feeding their renewably generated electricity  into the grid, they are more likely to consider retrofitting their homes—as well as boosting household energy efficiency.

By contrast, the United States still lacks comprehensive federal energy efficiency legislation. The American Recovery and Reinvestment Act (ARRA) of 2009 promoted building efficiency by allocating $120 million to Office of Energy Efficiency programs focused on building technologies. But this is only a short-term initiative. With the Senate stalling on federal climate and energy legislation earlier this year, coherent national efforts to bolster energy savings and energy efficiency over the long term have been put on hold for the foreseeable future.

In May, the U.S. House of Representatives adopted a $6 billion rebate program—the Home Star program—aimed at encourage households to undertake energy-efficient home refurbishments and to buy energy-efficient appliances. Yet the Senate bill that contains this program—the Clean Energy Jobs and Oil Company Accountability Act of 2010—is still pending and has little chance to pass during Congress’s current lame-duck session.

For several years now, the good news in the U.S. has come from local governments that are choosing not to wait for federal legislation to take the necessary action. In a three-year nationwide survey, the American Institute of Architects found that 138 cities that are home to more than 50,000 inhabitants had developed green building programs. This represents more than 53 million Americans in total, or about 17 percent of the country! The West coast leads the trend, with 56 cities that have implemented green building programs, but the East coast is rapidly catching up, with a 76 percent increase in the number of such cities since 2007.

Tax incentives remain the country’s silver bullet for promoting energy savings, and are included in 41 green building programs at the state and local levels. In addition, some 1,200 rebate, loan, grant, and bond programs are spurring private investment in energy efficiency across the country, at both the residential and business levels.

Even better news is that local governments have continued to establish green building incentives despite the economic downturn. Forty-six cities have initiated new programs since 2007, an increase of about 50 percent from the previous annual rate. One reason for the rising interest is that implementing retrofits and related measures not only saves money but is also a jobs engine. Green housing jobs—ranging from the manufacture of energy-efficient materials to installing insulation—are often local as well as being labor intensive.

Of course, challenges remain. The U.S. private sector is still cautious about investing in energy-efficient technologies, and citizens often are not aware of the potentials of energy savings. A key issue is household investment. As job flexibility and mobility increase, individuals may be less willing to invest in home retrofits if they are likely to move out again in a couple of years. Supportive policies that provide flexibility therefore need to be developed.

One policy option involves sharing the costs of retrofitting between tenants and landlords. In both the U.S. and Europe, green leases are increasingly popular in the real estate sector. They help tenants and landlords define how best to achieve sustainability standards while sharing the costs incurred transparently.

Another option involves so-called on-bill tariffs. The utility or a third party bears the initial refurbishment costs, which the customer pays back through a charge on a monthly bill. The costs are attached to the bill, so that when one tenant moves out, the next tenant assumes the payments as well as the benefits of the retrofit. This approach is already being implemented by Midwest Energy Inc., via its How$mart program.

Retrofitting the existing U.S. building stock is worth the investment. Households can not only improve their living standards while sparing the environment; they can also save money. The Energy Future Coalition and Center for American Progress estimate in a joint report that consumers could save $32–64 billion in energy costs if 50 million buildings, or 40 percent of the U.S. building stock, were retrofitted by 2020.

Some of my colleagues at Worldwatch bring space heaters to the office during the height of summer, hoping to avoid a deep freeze. (Don’t blame Worldwatch for it—our landlord says there is nothing we can do about it, since thermostats cannot be regulated individually.) Yet as I continue to shiver, I am increasingly frustrated by my own ongoing experience with building inefficiency!

For readers interested in energy efficiency issues, check my former blog on European Energy Savings target!

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