Reenergizing Local Economies by Energy Retrofitting

If you could do just one thing to save 20 percent of the energy our country uses, cut at least 10 percent from city budgets, and create more than 150,000 new jobs, would you do it? If you learned that your efforts could essentially pay for themselves within a few years, would you start to do it right now? This is the promise that comes with energy efficiency retrofits for our aging buildings in the United States, and many cities are already taking advantage of this opportunity to realize both sustainability and employment goals.

Ongoing economic sluggishness may be holding back new construction projects in most cities, but commercial real estate owners have learned that doing efficiency retrofits not only save them costs on their monthly operating costs but can also help them attract higher-paying tenants. In 2010, the amount of space certified by U.S. Green Building Council for meeting efficiency standards in the operations and maintenance of existing buildings was greater than their certification for new construction by more than 15 million-square feet. Policy makers are developing a number of innovative financing tools to help building owners fund the up-front costs of building retrofits today by leveraging long-term energy savings in the future, making these projects that can pay for themselves over time.

In many cities, lawmakers are leading the way by calling for retrofits of their own buildings. By improving energy consumption in schools, libraries and government office buildings cities from Los Angeles, Calif., to Louisville, Ken. have achieved cost savings and job creation by greening their own buildings. Chicago's new plan to retrofit 100 city buildings is predicted to save the city's taxpayers more than $4 million a year while creating 375 direct jobs and 1,100 indirect ones in manufacturing and other industries. In San Francisco, retrofits of 10 municipal buildings created more than 12,000 job hours for area construction firms and are predicted to save almost $200,000 in utility costs per year.

Following up on a 2009 Executive Order to decrease greenhouse gas emissions across the federal government, President Obama announced in December of 2011 his Better Buildings Initiative, providing nearly $4 billion in public and private funds to spur retrofit projects across the country. Private efforts led by groups like Ygrene are seeking to bring private investment into the commercial retrofit industry, and Living City Block works with small businesses to help them achieve economies of scale in purchasing retrofit equipment and services. Other cities, including New York, Austin and Seattle, have gone another step by requiring private building owners to perform energy audits on their buildings and make the results available to potential buyers or tenants. Researchers calculate that federal policies to expand tax credits, strengthen state building code requirements, and provide loan guarantees for commercial energy efficiency upgrades alone could create upwards of 160,000 new jobs, with state and local policies and private investment potentially contributing exponentially more.

Because retrofits must be done locally -- the buildings can't be moved overseas or be wooed by tax incentives from neighboring states -- these jobs have the potential to trigger economic recovery for local residents. But there is some evidence , that there is work to do to make the jobs created quality jobs: Pay can be lower than in other kinds of construction, many workers perform hard physical labor without access to health care benefits, and new efficiency technologies can come with new dangers for workers. If these retrofit projects are to fulfill their full promise, policy makers must take purposeful steps from the outset to make sure the jobs that come with them are high-quality ones.

In Milwaukee and Seattle, city officials have worked with broad groups of stakeholders to set just these kinds of priorities. In both cities, community workforce agreements establish high worker standards as a priority and contractors who want to bid on publicly-funded retrofit work make up-front commitments to meet those standards. Similarly, in launching its program to reduce Los Angeles' greenhouse gas emissions, the City Council passed an ordinance specifying that project labor agreements would "minimize the possibilities for labor misunderstandings, grievances, and conflicts thereby promoting project cost containment, and timely and economical project completion." And these efforts work. By the spring of 2012, the Seattle program had performed upgrades on more than 700 multi-family units and 250 single-family homes, but also on 300,000 square feet of commercial property, 26 city buildings, and four major hospitals, all contributing to more than 57,000 hours of work performed by more than 500 workers.

These models demonstrate that with some thoughtful planning, energy retrofits can be winning projects on multiple fronts: they can lower emissions and utility bills, they can offset their own costs over time, and they can lead to quality jobs in our communities. It's time to replicate these models in more of our cities; this is a program that works.