Obama’s New Target: Saving $40B Via Energy Retrofits

President Obama has been on the road pushing his clean energy agenda ever since he laid out some ambitious goals in his State of the Union address last week. Now he’s spending Thursday in Pennsylvania touting a new energy-efficiency plan: a “Better Buildings Initiative,” that he says can improve the energy efficiency of commercial, school and city government buildings by 20 percent by 2020 and save building owners $40 billion per year.

The initiative will rely on existing efforts with new requests for funding from Congress. Obama and his Energy Secretary, Steven Chu, have framed the administration’s energy agenda as a race to boost innovations and job creation. While they maintain that Republicans, too, support clean energy, whether Republicans will embrace spending on clean energy remains a big question.

The initiative calls for creating a competitive grant program, called Race to Green, that will give funding to state and local governments that have ideas for how to modify building codes and streamline regulatory processes to promote building retrofits with energy efficiency technologies. The money is intended to help governments with good ideas implement their proposals. Race to Green is modelled after the Race to the Top program that awards states money to carry out education reform.

The plan also calls for:

New tax breaks. Obama wants Congress to change the tax code so building owners can claim a tax credit instead of deduction for efficiency upgrades. The president believes this change will lead to a “ten-fold increase in commercial retrofit take up, leveraging job-creating investments,” but we’re not sure how that’s going to happen.

Loan guarantees. The president also wants money to create a pilot program to provide loan guarantees for retrofits at hospitals, schools and other commercial buildings. Banks might be more willing to loan money to a borrower who can secure a government loan guarantee, which requires the government to pay back the loan if the borrower can’t pay. The White House didn’t say how much money it’s seeking for the pilot program.

Meanwhile, business owners also can apply loans from the Small Business Administration for building upgrades.

Energy audits and workforce training. The administration has been working on several energy efficiency programs to create, among other things, better yardsticks for measuring energy efficiency improvements. It plans to launch a “Building Construction Technology Extension Partnership,” which is similar to the “Manufacturing Extension Partnership” (MEP) program. The manufacturing program, run by the Department of Commerce, offers technical and business advice and pools resources from other federal agencies to help small and mid-size manufacturers.

The Commerce Department makes this bold claim:

“No other program provides as much bang for the buck. For every one dollar of federal investment, the MEP generates $32 in new sales growth. This translates into $3.6 billion in new sales annually. For every $2,000 of federal investment, MEP creates or retains one manufacturing job.”

Obama hopes to use the plan to spur private sector investments in energy efficiencies, but his administration has yet to detail how much the plan will cost. Government officials hope to fund the initiative by using subsidies that would otherwise go to fossil fuels such as oil and natural gas, Reuters reports (s TRI).

In his State of the Union, Obama said Congress should end billions of dollars in subsidies to the oil industry. Lawmakers aren’t likely to side with the President on that one. Sen. Jeff Bingaman(D-N.M.), chairman of the Energy and Natural Resources Committee, said earlier this week the idea won’t likely go far with the current Congress.

For more research on cleantech financing check out GigaOM Pro (subscription required):

Photo courtesy of Clean Wal-Mart via Flickr