What a news day! Yesterday, the Supreme Court issued a pivotal decision on health insurance, Italy beat Germany (on the soccer field), while Germany worries about Spanish and Italian banks at the European Summit. With all that as competition, it would be easy to miss the news of a hearing in the U.S. Senate Energy and Natural Resources Committee on energy efficiency finance. But this hearing was actually important and merits attention -- a few key take-aways below show why.
The Committee heard testimony on new developments for financing building energy efficiency -- developments that do not depend on ongoing federal involvement. It was narrow glimpse into a large, dynamic, growing industry.
First, one point of background. Building owners have many reasons to invest in energy efficiency -- it reduces expenses, makes for a more comfortable and productive space, improves property values, and reduces toxic pollution -- all at once.
Increasingly, building owners are making investments in efficiency that are "gateway" measures - by taking a few steps, they realize postive returns that cause them to look for more opportunities. Still many sensible investments are not made for various reasons, such as the fact that building tenants often pay the utility bills but the owner must make most of the efficiency investments, and becasue many building owners may not have information on possible savings, and tenants on a tight move-in schedule might not explore simple lighting controls that can pay for themselves and more in short order. Even with appetite to invest, barriers inhibit investment.
The testimony of Jeffrey DeBoer -- CEO of the Real Estate Roundtable (RER) -- is extremely interesting on this point, as much for who he is as what he said. The RER is a group of highly sophisticated property owners -- its members include the owners, managers, and developers of some of the largest and most valuable buildings in the country. These are property owners who understand investments, markets, and buildings, and their testimony today essentially said that energy efficiency is important to them, important to their businesses, and better policies are needed. The testimony is here.
Second, the testimony of Susan Leeds points to the importance of state and local activity. Susan is the CEO of the New York City Energy Efficiency Corporation, or NYCEEC (pronounced by the cognescienti as "Nigh - Seek"). NYCEEC is an innovative institution established with the help of New York City to participate as an investor in efficiency projects and to facilitate building owners obtaining financing by using its capital as credit enhancement. It's new, and still getting it's sea legs, but it appears to be making great progress under Susan's leadership, whose comments can be read here (and my colleague Greg Hale sits on the NYCEEC board). In time New York will realize deep and lasting benefits from investments in efficiency. Other cities and states should explore whether establishing a similar institution would make sense.
Third, the energy efficiency industry is at the intersection of several crucial sectors, all important to our economic health. Investments in efficiency can propel the economy with job creation, manufacturing devices and equipment, cementing energy savings for owners and tenants, and helping utilities to operate better. This was one of the messages of William Rodgers, CEO of GoodCents Holdings, Inc., of Atlanta, who testified about how his company performs efficiency projects.
So, the big take away is this: For policymakers seeking to invest in our future and boost economic growth in a fundamental way, helping building owners -- commercial and residential and institutional -- to invest in efficiency might be the most promising place to look.