Better Buildings Initiative Overview (text version)
Below is a text version of the Webinar titled "Better Buildings Initiative Overview," originally presented on February 16, 2011. In addition to this text version of the audio, you can access the presentation slides and a recording of the Webinar (WMV 9.4 MB).
During today's conference, this call is being recorded. If you have any objections, you may disconnect at this time. And I would now like to turn your call over to Ms. Kathleen Hogan. Ma'am, you may begin.
My name is Kathleen Hogan, Deputy Assistant Secretary of Energy Efficiency at the Department of Energy. In this role, I oversee all the energy efficiency programs at the Department of Energy, including the buildings technology program.
So I'd like to welcome you to our webinar today that will provide an overview of the new better buildings initiative, which is part of the Fiscal Year 12 President's budget.
Before I start, I have some housekeeping items to cover. First, I want to mention that everybody today is on listen-only mode. We will have a Q&A session at the end of the presentation, and then you can participate by submitting your questions electronically during the webinar.
So you can submit a question, click on the Q&A link on the top bar of your screen, type the question in the box, and click ask. And please be sure to click ask and not the symbol of the raised hand. Our speakers will address as many questions as time allows after the presentation.
Also, I want to point out URL on the screen, www.buildings.energy.gov/webinars.html. On that webpage is a link to see today's slides. Today's presentation is being recorded, a video of the presentation will be posted in the near future. You can also see past webinars on the archives page.
So with those details out of the way, we can start the webinar. So we are doing an overview today on the Better Buildings Initiative. We will be providing an overview of the goals for this initiative, going through each of the key elements of the initiative in some detail.
That includes tax incentives, financing, Race to the Green competitive grants, a partnership or Better Buildings Challenge, and then workforce-related work. And then we will talk about our plan for continued stakeholder discussions around this initiative.
So on the next slide you see our goals for this initiative. This initiative is focused on the commercial building marketplace. And our overall broad goal is to put the things in action that can lead us to achieve a twenty-percent improvement in the energy efficiency of commercial buildings by 2020. And to get the economic benefits that would flow from such an improvement, which would be reduced energy bills on the order of $40,000,000,000.00 per year.
So what we want to do with this initiative is really to do the reforming of outdated incentives, as well as the challenging of the private sector to act so we can be well on the way toward these goals. And this is what President Obama announced on February 3rd at his Penn State University talk when he was visiting the Penn State hub, focused on building technology innovation.
This initiative really builds on a tremendous amount of progress to date that I wanted to walk people through a little bit. There's been a lot of investment in and policy around commercial buildings, as well as work in the residential area.
The Recovery Act, in particular, afforded us a lot of investment in the improvement of our existing buildings. There's an EECBG Grant program that is working to improve residential buildings, as well as some small commercial.
And we'll be demonstrated improved approaches for the residential marketplace and as well as leading to the retrofit of about 6,000 homes through the Better Buildings work, as well as weatherization.
Also, in our buildings area, we have our new energy regional innovation cluster, which is providing almost $130,000,000.00 for building efficiency RD&D to a consortium led by Penn State University. We will be doing a lot of systems integration work around buildings.
The Recovery Act also provided GSA with $5.5 billion to improve the efficiency of existing federal buildings and to build to more efficiency new levels for new buildings.
Also, in the commercial building space, we have the executive order that the president has put in place to direct federal agencies to use high-performance and sustainable design principles for buildings, as well as to reach some aggressive reduction goals for greenhouse gas emissions.
And as we also know, the administration continues to be committed to the passage of Home Star so that we can continue to drive investment in the residential marketplace. So this is really the backdrop for the Better Buildings Initiative, really focused on the improvement of the commercial building sector.
So what is entailed in this initiative? It's the five areas that are highlighted on this slide. So first, we want to be working to improve the tax incentives or the tax deductions that are out there to help encourage investment in the commercial marketplace.
And there's two parts of what we want to do in the tax incentive area. One is to streamline the 179D Commercial Building Tax Deduction for the tax year 2011 and beyond while also working to restructure this tax incentive for tax years that would follow.
We are also interested in improving financing. And that has two areas as well. First is to increase and accelerate finance opportunities for commercial and public building energy improvements through the Small Business Administration Loan Program, as well as a new proposed DOE loan guarantee program.
On the grants front, there is a new proposal to give competitive grants to state and local governments to streamline and update codes and regulations and adapt the policies and programs that we believe can really attract private sector investment into commercial building retrofits.
In addition to that, to help drive demand for these retrofits is a proposed challenge program where we, the administration, would be working to challenge CEOs and university presidents to step up and demonstrate that they will systematically upgrade their facilities for energy efficiency.
And then a companion piece on the workforce, we are flushing out a proposal to expand workforce training and pilot a new buildings extension service. So I'm going to talk about each of these in a little bit more detail.
So first, tax incentives. What is currently going on with tax incentives? Well, I think many of us are familiar with the Section 179D Commercial Building Tax Deduction that currently allows owners or leasees of commercial buildings to claim a deduction for installing energy efficient building property and equipment.
And people are probably also familiar that government entities can allocate this deduction to architects, engineers or other that are primarily responsible for designing the retrofit, and that the Department of Energy is providing technical guidance for energy modeling and maintains a list of the qualified software that can be used in calculating and claiming this deduction. This is sort of – this is the current way that the tax deduction is working.
But what we have found is that this tax deduction has limited uptake due to confusion about some of the technical aspects, as well as some of the claim procedures that are based on these models that's being a little bit cumbersome.
And so the bottom line is that there really just has been limited use. So we are working in this fiscal year to help streamline some elements of this tax deduction.
First, we have established a new technical support email line that people can use to get their questions answered. We will also be working with IRS to streamline the requirements for the claims, including establishing an expanded prescriptive claim procedure for some of the partial deductions that are available within this tax deduction.
And as you can see there in our next steps line, we expect to release some updated prescriptive guidance this spring 2011.
At the same time, we will be working to improve the tax incentive proposal more broadly through a legislative proposal.
So DOE and IRS are working to develop a proposal for revising this tax deduction. The proposal would modify the deduction to become a tax credit, would maintain the special rule for government-owned buildings, would allow real estate investment trusts to entitle shareholders to the credit, and would update the baseline to ASHREA Standard 2004, and establish three levels of energy performance and credit value. So clearly, this is something that needs to go to congress, and we will be working to take it to the legislative process.
The next area I want to talk about is financing. Again, what I want to do is talk a little bit about the current programs and then say what some of the improvements may be.
So in the area of current programs, we've been working with a number of grantees through our State Energy Program and our Energy Efficiency Conservation Block Grant Program. They've received guidance regarding loan loss reserves or revolving loan funds, and a variety of financing mechanisms, you know, interest rate buy-downs, utility on bill repayment, qualified energy conservation bonds and other financing mechanisms so that they can leverage public dollars with private capital.
So in addition to that guidance going out to all of our grantees, we've provided additional technical assistance to our Better Buildings Residential Program, which is provided $500,000,000.00 of competitive grants to over 40 state and local governments to implement these community-scale retrofit programs.
So we provide additional technical assistance on financing so that financing solutions can be part of these innovative programs. And there's more information on that available on the web links that are provided there.
We are also working with HUD on their Power Save Pilot Program to provide additional finance tools for home energy retrofits. The next step there is that HUD will be selections to pilot lenders in spring 2011, as well, just around the corner.
So here what DOE is doing is requesting authorization and funding for a sort of new financing mechanism that would be a pilot loan guarantee program to provide loan guarantees, focusing on retrofitting buildings that are in the commercial space with a focus on university schools and hospitals, as well as others.
Our legislative proposal here will be for $100,000,000.00 and providing credit support up to – with the hope of providing credit support up to $2,000,000,000.00 in loan principal. The idea is the idea would provide funds for cost-effective technologies and measures and help catalyze the emerging industry for commercial building retrofits.
Once authorized, DOE would design the program regulations, outlining the terms and conditions for issuing these loan guarantees. And you can see where you can go for more information on this front.
At the same time, we will be working with the Small Business Administration around their existing loan programs, which allow proceeds to be utilized for energy efficiency improvement. SBA is working with select lenders to encourage the use of these products for energy efficiency improvements for small businesses.
And we will be working to help raise awareness and bring the lenders that would be encouraging the use of these products together with organizations that are interesting – interested in availing themselves of these loans. So our next step here is to keep working with SBA, as well as to engage in the legislative process around the loan guarantee effort.
On the competitive grant front, there are a number of programs that have been using competitive grants to advance energy efficiency. I wanted to highlight just a couple so that we can understand why we are sort of targeting this new grant program the way that we are. So we are actively engaged with the Better Buildings Residential Program to design innovative deployment models for residential upgrades.
And this does include some small commercial buildings, as well as a little bit of work going on in the public space as well. Again, and this initiative is employing about $500,000,000.00 in federal grants to leverage with the private sector, as well as to stand up sort of these innovative approaches and sustainable approaches to building retrofit programs.
At the same time, DOE is engaged with a set of innovation pilot programs in the low income area with our weatherization innovation grants. Here we are accelerating innovations in whole house weatherization for low-income families.
These projects include new and nontraditional partners and weatherization service providers and leverage a significant amount of non-federal financial resources, as in addition to our funds.
So in addition to those two grant programs, we are now interested in requesting authorization and funding for a Race to the Green Program of competitive grants to state and local governments. This would be modeled after the success rates of the Race to the Top Program of the Department of Education.
So the proposal here is that the program would be funded at $100,000,000.00 in Fiscal Year 12. We would award competitive grants to state and local governments who develop plans to attract increased private investment in commercial retrofits by adopting suites of improved policies.
There are any number of policies that could be used in the proposals that states and local governments would bring forth. It could include modern building codes, benchmarking and disclosing building energy use, innovative financing, improved utility regulatory policies, establishing public energy savings targets and implementing systematic auditing and retro-commissioning programs.
Again, for more information, you can go to the DOE budget documents, but clearly, the next step here is for us to continue with the legislative process.
So on partnerships, again, I'd just like to highlight a few current programs and then talk about what we want to do with the new Better Buildings Challenge. So there are a number of partnership programs out there that are engaged with the public and private sector to encourage the improved efficiency of commercial buildings.
Energy Star is one great example out there where organizations have partnered to improve their buildings, as well as to have their top efficiency buildings be labeled with the Energy Star.
DOE is also working with a number of organizations through its commercial building energy alliances to work with industry partners to identify technical issues that they have to share best practices and leverage the use of technologies emerging from the national laboratories.
We also have our Save Energy Now Program through with any number of organizations, companies have agreed to reduce their energy intensity by 25% in 10 years.
What we are working now to do with these programs is to support some foundational tools around improved energy management like the new emerging ISO5001 standard, and the – a Superior Energy Performance Program that fosters sort of a new culture of energy management and continuous improvement in energy management.
So on top of and in addition to these efforts, we will be working with the White House on a Better Buildings Challenge. This will be a White House-convened and DOE-supported leadership initiative co-led by former President Bill Clinton and Jeff Immelt, the chair of the President's Council on Jobs and Competitiveness.
The idea with this challenge is to directly engage a number of CEOs and university presidents to recognize these organizations for what they do in making actual commitments to improve the energy efficiency in their facilities and then to support their efforts with technical assistance.
We're very interested in a new set of commitments by CEOs to really showcase sort of the new business approaches and new commitments to improving the efficiency of these facilities so that we can help demonstrate how America's buildings can be more energy efficient, create jobs and save money through very specific examples of leadership.
Here we expect to be rolling out the challenge this spring, really beginning with a set of specific commitments, and then a set of events this spring and thereafter.
On workforce development, there's a set of activities that are under way that DOE has been supporting, and let me just run through some of those pretty quickly.
One, we've been supporting a portfolio of workforce development efforts, including developing curricula and training for commercial building technicians, building operators and energy commissioning agents and auditors.
We've been working with GSA to implement the Federal Buildings Personnel Training Act of 2010 by identifying some core competencies and designating relevant courses and credentials for the federal facilities workforce.
We have workforce activities included in our energy innovation HUD, and there we're working with the regional workforce investment boards. And then we're also working with the NIST Manufacturing Extension Partnership to pilot an extension service for commercial buildings, providing regionally-based training and building re-commissioning services.
This is something we will be piloting this spring, just beginning a pilot, so that we can get some learning accomplished there. And then we will be working to develop that much more broadly in our Fiscal Year 12 budget.
So that sort of gives you, I guess, a bit of a thumbnail sketch of each one of these key initiatives that we will be working on as part of this broad Better Buildings Initiative. To keep people up to date on the initiative, we do plan to hold additional webinars to discuss, you know, the components as they develop.
And we will be providing information on the topics and dates to all of the folks that are participating in today's webinar and then others that will come forth and express their interest in being on this list.
We will also be working with stakeholders in the private sector and the NGO community to develop some actual agendas in locations across the country in support of the Better Buildings Initiative. So that completes that I wanted to share with you today. We would be happy for your questions.
I want to thank you for your participation, but please submit your questions through the Q&A link at the top of the bar on your screen, and we will work to answer as many of those questions as possible. Thank you, again.
First, we've gotten a question on new Workforce Training Initiative and where that would be housed, and potentially what form it will take. So really, the new part of the workforce training that we're doing here is a partnership that we would be doing with NIST. So that would be a proposal for us to receive funding through the appropriation process, to sit down and work with NIST and develop new training components or modules that could be rolled out as part of the NIST extension service.
So really, the funding would work going through the federal government to then work to train up additional folk in the auditing, commissioning, sort of retro-commissioning area that would then go out and provide services in places that are very dense with commercial-building needs.
So that's what we're envisioning. We're envisioning starting with sort of a relatively small pilot this year that would grow into a much larger pilot in Fiscal Year 12.
Another question that we got is on the Loan Guarantee Program for commercial retrofits and whether this would be done using existing Title 17 authority. And the answer to that question is no, this would not be done using existing Title 17 authority.
We, as we mentioned, would be working to develop new legislation that would give us the authority to do a very clean Loan Guarantee Program that would just really make sense to guarantee the loans we would need to fund these commercial building retrofits. So we'd be looking to go down a new path.
Another question we got was on allowing nonprofits to be able to pass on the tax incentive credits to the architect and the engineer, just like state and government buildings are. That's certainly something we can take on – up with Treasury. This is more of a question for the Treasury Department. We're happy to take that on and pursue that. I don't know what really the outcome of that conversation will be, but we're happy to carry that one forward.
And then another question is how will the current legislative environment, calling for significant cuts, suspending, sort of effect these new spending proposals? I think, you know, this is the President's budget. These are the things that we believe are the priority for this country, and this is the budget that we will be going forth and really talking through with everyone why it is the right move to be making now to continue to build on the stimulus and get the right kind of investments in place for the next phase here for energy efficiency.
Here's a question about the Better Buildings Challenge, the partnership and how a company can begin to engage. If a private company is interested, just please get in touch with us here at the Department of Energy, and we can talk you through in where we are in thinking through the challenge.
We're currently in the sort of formative discussion in developing the specific commitments, and we would love to have a conversation with anyone that is interested.
We're also – let's see. Another question. We have a question on how you define commercial buildings for this initiative, whether it includes multi-family, and whether it includes industrial and light industrial manufacturing.
I do believe we're taking a sort of broad view of buildings at this point, and we would be looking to partner with organizations that would have industrial, light industrial and manufacturing facilities as part of their portfolios.
As we know, there's a lot of cost-effective opportunity in those types of facilities as well. Yeah, so let's not just think about sort of the big commercial buildings. We are trying to think holistically. And particularly as we would go and partner with organization as part of this Better Buildings Challenge, to be thinking about organizations and what they can do across their whole portfolio of facilities.
We have a question about I guess the program and how it's going to address university and educational institutions and what is the right positioning for the Loan Guarantee Program. And we're interested in many categories, including some that are this typical market, but additional building types as well.
I think we're interested in using the Loan Guarantee Program in a way that it can spur these investments in commercial building upgrades, as well as continuing to be able to manage the risk that is out there in the marketplace. And we will be continuing to sort of look at all of these building types to figure out the best way to structure this program.
We're also being asked for some more information on the specific scheduled events for what's going to happen this spring. We will be able to put that schedule together and share that over the next few weeks, and hope to put together sort of another webinar as we flush that out in more detail, and be able to tell you exactly what will be happening when – this spring. So sort of stay tuned for that.
As I mentioned that the beginning of this webinar, we have all of your names on our list, and we'll be able to invite you to sort of future updates. And of course, if you know of other interested people, please just forward their names along to us as well.
Okay. Just some answers to the next set of questions that have come in. One of the question is in the area of workforce development competencies, which we spoke to
developing. And the question is will those competencies be used as criteria for issuing loans and grants under the Building – Better Buildings Initiative?
I think right now what we're interested in is building out the workforce competencies so that they can be established and then clearly identifiable in the marketplace so that people can train to these competencies, and people can turn around and find the skilled workforce that can deliver to these competencies.
And that's really sort of our objectives at the current time. We're not talking about requiring them as conditions for grants. Right now, if you look at the grant program that we're asking for, the Race to the Green grants for cities and states to really put in effective building-related policies, a lot of that really is helping the states and local governments put in the right policies that can, again, drive investment and energy-efficiency improvements.
So it's a lot of infrastructure, building, and would be in parallel to the workforce competency work and training. So we see those things really working just in parallel with each other and reinforcing the development of an energy efficiency retrofit marketplace for the commercial sector.
We've also been asked to a talk a little bit more about the NIST MEP pilot, whether it'd be open to new sites or whether it would be limited to the current sites. That's probably a decision that remains to be made. Right now, what we're doing is engaging with NIST around a set of initial pilots.
The initial pilots would be at current sites, but as we would seek to expand that, we can have a broader conversation as to whether we work with existing sites or would open it up to new. So we'll have to sort of stay tuned for the progression on that one.
We also have received very good news from Seattle that Seattle is ready to accept the President's challenge. So we'll be happy to have a conversation with you about what is entailed there. That's very exciting, and thank you very much.
The next is when will the next tax incentive revision go to congress? We don't have a detailed schedule for that sitting here today. We will soon, and we will share that with you as we continue to engage with you about the progression of this initiative.
Yes, we have a couple more questions we would like to answer. First, we're being asked with regard to the competitive grants to states on building energy codes. Will the Department of Energy, as part of these grants solicitation – will we hold states to the commitments they've made to adopt the latest code in order to be eligible for this funding?
And as you know, we are very interested in the states adopting the latest code. And there's – and we would be looking to see what the states and/or local governments would be doing in the area of adopting the local code as part of this grant solicitation.
We're also being asked as far as the technical support line that was mentioned in support of energy modeling and the tax incentive 179D, when is it anticipated it would be available? That technical support line is available now. It's 179D Tax Deduction at EE.DOE.gov. So please give it a try. It is up and running.
We've gotten some other questions here on whether the tax incentives apply not just to hardware, but also to consulting and implementation services? We will roll that into sort of a set of FAQs that we can develop to help assist people with the 179D Tax Deduction. We'll sort of take that as one of our first questions to roll into that FAQ and get that information turned around and back to people.
Oops. So we're going to look at one more round of questions, answer those, and then I think we'll be finished for today, and we'll look forward to future webinars. But let us review this next round.
Okay. Just there's another question or two that we want to answer here. We are getting questions about the Loan Guarantee and the focus on the mush market. And again, let me reemphasize that the Loan Guarantee Program, you know, does have a mush market focus, but it really is focused on all commercial buildings.
And then the Loan Guarantee Program is one element of the broader Better Buildings Initiative. I think the goal across this whole initiative was to try and be able to address improvements in commercial buildings, and as others have brought out, you know, light industrial and manufacturing as well. And to really have tools and resources available across the broad set of buildings that are out there.
So the idea with tax credit and 179D, it's streamlining that, improving it, figuring out what we need to do to go to The Hill to improve it even further. You know, 179D, as an example, is broadly available across a lot of commercial building space, government space, as well as at least when you're looking at the building of a light industrial as well.
So just a great solution for us to be bringing to the marketplace and using to, you know, help incent these improvements. The Better Building Challenge with CEOs and universities will also be a broad program to go out and work broadly and bring tools and technical assistance to bear to help those organizations improve, again, a broad swath of buildings and facilities.
So – and then the workforce is also a way to have, you know, enhanced training and services be brought to the marketplace, again, to help in the improvement of a broad set of market-based buildings.
So there's a pretty comprehensive set of initiatives here that we think are the right set to put us on the path to this twenty-percent savings target by 2020. And, you know, we will be working to do some of our things, as you saw, this spring. We'll get you a schedule on that set of activities.
And then we'll be working on sort of the set of initiatives that need to go to The Hill. And we'll be happy for sort of thoughts from you too as to how to design some of these things.
If you've got suggestions that you want to provide now, you can provide them to Monica Neucomm. That's Monica, M-O-N-I-C-A, dot Neucomm, N-E-U-C-O-M-M. Or I'm sorry. Yeah [Laughter]. N-E-U-K-O-M-M and at EE.DOE.gov. So that's Monica Neukomm, N-E-U-K-O-M-M, at EE.DOE.gov.
So with that, I'll just thank all of you for being with us today. We're very excited about this initiative, the suite of things that it brings together, and we look forward to working with all of you as we go forward. So thank you.
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