Climate legislation: catalyst for energy efficiency
Lauralee Martin is chief operating and financial officer of Jones Lang LaSalle, a global financial and professional services firm specializing in real estate. The company manages 12 million square feet of commercial space throughout Ohio. Mindy Lubber is president of Ceres, a leading coalition of investors and environmental groups that coordinates Business for Innovative Climate and Energy Policy, which includes Jones Lang LaSalle, Starbucks, Nike and other leading consumer and technology companies.
With the flick of a switch, Cleveland's office workers could contribute to reductions in global warming pollution equivalent to taking 35,000 cars off the roads -- permanently.
A 20 percent energy savings from modest acts like turning off lights at night and managing heat and air conditioning systems is an easy goal. Another 10 percent to 20 percent energy reduction is possible with a minimal investment by commercial building owners. These are the kinds of goals that would be encouraged and rewarded by the energy and climate bill pending before Congress.
The bill, called the American Clean Energy and Security Act of 2009, sets out a common-sense strategy for reducing the pollution that is warming our planet, and for weaning our nation off the fossil fuels that are enriching foreign countries. A key part of the strategy is to greatly strengthen energy efficiency, which means cutting energy waste and doing more with less energy.
The bill also sets forth energy efficiency requirements for new buildings, and provides tax and other incentives to existing building owners to invest in energy-conserving features.
Buildings use nearly 40 percent of all energy consumed in the United States, and contribute a similar percentage of total greenhouse gas emissions. In cities, buildings typically produce 70 percent or more of all emissions.
Cleveland's 36.4 million square feet of offices use roughly 1 billion kilowatt hours of electricity annually. Cutting that use by one-quarter would save more than 191,000 metric tons of greenhouse gas emissions every year, equal to the total emissions from 35,000 cars.
The clean-energy bill would reward those efficiencies through the creation of a cap-and-trade system that would put a slowly-declining limit on the greenhouse gas emissions of power companies, utilities and large polluting industries. Companies that support the bill, including many major utilities, believe the establishment of the cap-and-trade market is necessary. Critics say it will cost too much. Overlooked in their argument is the vast potential for energy efficiencies to save companies more money than cap-and-trade will cost them, while also reducing the greenhouse gas emissions that lead to global warming.
If the clean-energy bill makes a kilowatt-hour cost more, it also offers ways for companies to use fewer of them. So, while electricity rates may increase modestly, the actual bills businesses pay will go down. Consumers win, the environment wins.
Buildings can reduce energy cheaply -- up to a point. To go beyond that point requires a capital investment most owners are reluctant to make without knowing how long it will take to get paid back through decreased energy bills. An exception is the Empire State Building in New York, where a team led by Jones Lang LaSalle determined that the 2.5 million-square-foot skyscraper could reduce energy use by 38 percent by undertaking a $20 million energy retrofit with a payback period of about three years. The retrofit of that one building will reduce greenhouse gas emissions by 105,000 metric tons over 15 years.
But many owners can't afford an extensive retrofit, especially in the current economic environment. The clean-energy bill would help in this regard by providing building owners with allowances for public funding, loan guarantees, interest subsidies and credit support.
At the same time, the bill will encourage states to set new building codes requiring new buildings to be increasingly energy efficient -- 25 percent more efficient than current standards by 2030. Existing buildings that don't upgrade their efficiency will be less and less competitive for tenants over time.
Mandating efficiency and providing the means to achieve it represents a balanced approach to reducing greenhouse gas pollution from buildings, and easing the pressure on companies in a cap-and- trade market.
This push for energy efficiency will help our economy. It creates jobs in energy service industries and makes businesses operate more cost-efficiently, a key driver of profits.
Ultimately, though, the best reason for energy conservation is that we simply cannot keep going the way we are: accelerating global warming and eventually running out of fossil fuels.
Turning a blind eye to growing problems only makes dealing with them later much more painful. The need for energy action is apparent. An effective, sensible action plan is on the table. We should seize this opportunity.