Using Tax Money to Make Old Buildings Green Again

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It’s ClimateWeek in New York City, which overruns with the annual meeting of the UN General Assembly and the yearly summit of the Clinton Global Initiative. In other words, don’t even try to take a taxi in Manhattan this week. We’ll also see plenty of bold policy announcements and generous philanthropic commitments, along with the expected hot air—often in the same place at the same time. The challenge for reporters—other than trying to make all of their meetings on time—is to pick out the deals that can really make a difference from the ones that just look good on paper.

Here’s a meaningful one: today a business consortium that includes Lockheed Martin and Barclays announced plans to invest hundreds of millions of dollars over the next several years to green existing buildings in the Miami and Sacramento areas. The deal—put together by the Carbon War Room, Virgin CEO Richard Branson’s climate change initiative—represents a major step forward for the effort to expand the market for energy-efficiency retrofits for existing buildings. That market could create tens of thousands of needed construction jobs and reduce energy waste and carbon emissions. “Our charge here is to help cities set up these [efficiency] programs,” says Murat Armbruster, a senior advisor at the Carbon War Room. “But ultimately it’s industry that is going to take the lead on this.”

The consortium’s initial investments—led by Ygrene Energy Fund—will focus on commercial property, and will take advantage of tax laws that enable property owners to retrofit their buildings with no upfront costs, allowing them to cut energy use and utility bills. The upgrades are paid for over a number of years through additional charges to their annual property-tax bills—but those charges are still outweighed by the overall savings. “This will create tens of thousands of jobs,” says Dennis Hunter, the chairman of Ygrene, a fund supported by Barclays that helps channel financing for energy efficiency. “We help guide the financing to the best possible place and let the market take over.”

More from TIME: America’s Untapped Energy Resource: Efficiency

Perhaps the most encouraging part of this deal—given the legislative traffic jam that is our nation’s capital—is that is requires no action whatsoever from Washington. If enough commercial building owners sign onto the deal—right now the consortium expects to mobilize some $650 million in financing, at least initially—capital should flow and local business will save money. Oh—and it will be good for the climate. “Cities are fighting these problems, and they don’t have the money or the manpower they need,” says Armbruster. “This can be a cost-free benefit for them.”

Over at the New York Times, Justin Gillis explains how the program—which uses the Property Assessed Clean Energy (PACE) financing approach—will work for the pilot cities Miami and Sacramento:

Ygrene and its partners will gain exclusive rights for five years to offer this type of energy upgrade to businesses in a particular community. They will market the plan aggressively, helping property owners figure out what kinds of upgrades make sense for them.Lockheed Martin is expected to do the engineering work on many larger projects.

The retrofits might include new windows and doors, insulation, and more efficient lights and mechanical systems. In some cases, solar panels or other renewable power might be included. For factories, the retrofits might include new motors or other gear.

Short-term loans provided by Barclays Capital will be used to pay for the upgrades. Contractors will offer a warranty that the utility savings they have promised will actually materialize, and an insurance underwriter, Energi, of Peabody, Mass., will back up that warranty. Those insurance contracts, in turn, will be backed by Hannover Re, one of the world’s largest reinsurance companies.

Photos from TIME: Energy Lab

Energy efficiency can be dreadfully boring—all air blower tests and thicker insulation—but it can make a tremendous difference for business and for the environment. In a world where energy and other commodities are becoming increasingly scarce and expensive, only the efficient will thrive. I had tea yesterday afternoon with Amory Lovins of the Rocky Mountain Institute—the efficiency guru to end all gurus—and he told me about the role his group had played in retrofitting the Empire State Building in Manhattan. RMI’s upgrades helped reduce energy use in New York’s tallest building by nearly 40%—and it was paid for with PACE financing. “Buildings use three-quarters of our electricity, and most of that is wasted,” Lovins told me. “If you’re using energy you should pay attention and save most of it, and you can save money.” The Carbon War Room consortium’s plan is a good place to start.

More from Ecocentric: Why Fighting Energy-Efficient Light Bulbs Is So Stupid

Bryan Walsh is a senior writer at TIME. Find him on Twitter at @bryanrwalsh. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME