Government Incentives Lead to Private Investment in Green Buildings
In early 2011, President Obama announced a plan to make commercial buildings twenty percent more energy efficient within ten years, known as the Better Buildings Initiative (“BBI”). The BBI proposed a series of initiatives designed to spur energy efficiency, including:
- changing a tax deduction for commercial building upgrades to a tax credit;
- increasing loan size limits for energy efficiency retrofit loans;
- providing competitive grants to states and local municipalities to streamline standards and encourage upgrades; and
- challenging CEOs and university presidents to make their organizations more energy efficient.
Significant progress has been made since the announcement of BBI. In June of 2011, the Obama Administration debuted the Better Buildings Challenge (“BBC”) to provide $500 million in private sector financing in energy efficiency projects, upgrading some 300 million square feet of space. This was later increased to a $4 billion investment from the public and private sectors- $2 billion dedicated to the energy upgrades of federal buildings and $2 billion committed by CEOs, mayors, universities and labor organizations for energy efficiency projects in 1.5 billion square feet of office, industrial, municipal, hospital, university and school building space.
In addition to reducing businesses’ energy costs by nearly $40 billion over the next decade, the increased investment through the BBC is estimated to create tens of thousands of jobs in the construction industry. The energy savings and job creation has won the praise of both business and labor groups, and a number of CEOs, municipalities, universities and labor organizations have committed to the BBC.
With the energy savings so significant and the organizations participating in the BBC so diverse, the next ten years should be prove to be a renaissance in green building development and, hopefully, for many years beyond.