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Stimulus Bill Funds New Energy Grant Programs

By Brandon Lorenz, Senior Editor - April 2009 - Energy Efficiency


Economists, bankers, traders and the broader public will judge the success of President Barack Obama’s $787 billion stimulus bill by how fast it pushes the nation out of recession.

Facility executives will naturally judge the bill by what it does for real estate and buildings.

Though federal agencies have not finished the administrative rulemaking necessary to spend stimulus dollars, the picture is already starting to take shape. Those hoping for a massive spending program to finally clear away the nation’s backlog of deferred maintenance and green the existing building stock will be disappointed.

“We were hoping for other things,” says Karen Penafiel, vice president of advocacy for Building Owners and Managers Association (BOMA) International. “It became very clear early on that it was going to be very hard to get the things we’ve been pushing for the last couple of years.”

Still, with billions up for grabs, not all is lost. But because federal agencies are under pressure to spend stimulus dollars quickly, facility executives should start prioritizing their wish lists now.

“I think the Recovery and Reinvestment Act is a down payment,” says Roger Limoges, manager of state and local advocacy for the U.S. Green Building Council (USGBC). “There are plenty of options for us to move incrementally forward.”

Provisions in the bill meant to aid real estate and buildings include $6 billion in energy grants given to the states, billions more in state aid that could fund school modernization, and $6 billion to renovate federal buildings. Finally, tax changes are intended to help the beleaguered commercial real estate sector.

Energy Grants

The stimulus bill funds two Department of Energy (DOE) programs to boost energy efficiency.

States will get $3.2 billion in the form of energy efficiency block grants. Of that, DOE will give $1.9 billion to cities of at least 35,000 people. Another $770 million will go to the states. Money given to cities and states can be used for projects such as building energy audits, energy efficiency retrofits, building code inspections and cogeneration systems.

DOE released its block grant funding formula, which is based on population and energy use, on March 26. California, which gets $351 million, is the biggest winner, followed by Texas, which gets $208 million. For a complete list of funding by state, see energy.gov/recovery/.

That money isn’t guaranteed — states have until May 26 to apply to DOE documenting how they plan to use the grant money. The deadline for cities and tribal governments is June 25.

Because the program has a broad goal of reducing energy use, the money can be used in ways beyond buildings — from mass transit to more efficient streetlights and traffic signals. For facility executives, that means competition.

“It’s important to be proactive in this area,” says Kyle Pitsor, vice president of government relations for the National Electrical Manufacturers Association (NEMA). “You should be meeting with state energy officials and making them aware of what you have that can be done. It’s absolutely critical.”

Though the state deadline isn’t until May 26, facility executives should start making the case to state energy officials now. How much California will spend on energy audits versus mass transit, for example, will be decided well before then.

Facility executives can improve their chances by explaining to local energy officials how energy efficiency projects will create or save jobs, save energy and reduce greenhouse gas emissions — all information states are required to include in their application to DOE.

Once submitted, DOE has 120 days to review applications from cities or states. Cities and states have 18 months to decide how to spend their grants once the application is approved.

A second DOE energy program will dedicate $3.1 billion to improving the energy efficiency of buildings but contains a number of strings. States also have to apply to receive their share of the $3.1 billion under the second program. Those that accept the money also have to agree to adopt ASHRAE 90.1-2007.

Previous efforts to get the states to adopt tighter energy codes in the 1992 and 2001 versions of EPAct failed. Will the states actually modernize their energy codes if they have an incentive?

“That’s never going to happen,” says Lindsay Audin, president of consulting firm EnergyWiz, Inc. “The ones that don’t want to, just won’t do it.”

Adoption of ASHRAE’s 90.1 across the states is varied — 19 states either have a version that dates to 2001 or older, or don’t have any energy code at all, according to DOE. Florida and California are the only states to have adopted the 2007 version of ASHRAE 90.1 so far.

“The states are going to look at this and see how they can take the money and not do anything for it,” says Audin.

Another problem is that few people know how much more energy efficient a model building would be under ASHRAE 90.1-2007 than the 2004 version. And those who do know aren’t saying. DOE has not yet made a determination on the issue, says Mick Schwedler, chairman of the ANSI/ASHRAE/IESNA 90.1 committee. The draft determination is still confidential, he says.

Not having that information could be a problem because it leaves an incomplete picture on the cost and benefits of building a facility under a tighter energy code. That means that the money in the bill simply may not be a big enough carrot for states to adopt 90.1-2007.

A final provision requires states accepting the money to adopt a plan to achieve compliance with ASHRAE 90.1-2007 with 90 percent of new and renovated buildings within eight years. It’s an ambitious goal written with porous language, Audin says.

RENEWING INCENTIVES
Clean Renewable Energy Bonds

Municipalities and other organizations that can borrow with tax-exempt debt have more access to renewable energy now through a provision known as clean renewable energy bonds (CREBS).

The stimulus dedicates $1.6 billion in funding for CREBS, which is double what was offered when they were created in 2005 as part of the Energy Tax Incentive Act. That’s on top of $800 million added last fall in the Energy Improvement and Extension Act of 2008.

CREBS act like a zero-interest mortgage to finance renewable energy projects for municipalities because the federal government gives the bondholder a tax credit equal to the interest.

Learn more

— Brandon Lorenz





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