How the Stimulus Bill Helps Green Building

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I don’t know if it is Obama or Al Gore but the US government is starting to understand the need for sustainability. The American Recovery and Reinvestment Act of 2009 was signed into law by President Obama in February to stimulate the sagging US economy. By injecting $690 billion to improve infrastructure the authors hoped to create millions of jobs pulling the US out of the worst recession since the Great Depression. Interspersed within this $690 billion is $60 billion for green projects of which $45 billion is going specifically towards energy related programs. Within this $45 billion most will go directly towards the green building industry with some additional monies going towards large scale renewable energy production.

Whether in the form of a tax credit, grant, or subsidy, federal money is becoming more available to offset costs of greening your home or building. The breakdown of the important areas is as follows:

  • $300 million for the Energy Efficient Appliance Rebate program and the ENERGY STAR® program
  • $6.3 billion from the US Department of Energy for energy-efficiency grant programs, including $3.2 billion for the Energy Efficiency and Conservation Block Grants and $3.1 billion for the State Energy Program
  • $4.5 billion for greening federal buildings
  • $5 billion for the Weatherization Assistance Program
  • $4.5 billion for Electricity Delivery and Energy Reliability to modernize and improve the electricity grid

Residential improvements

On the residential side, the stimulus bill has expanded existing tax credits and created new ones that cover a variety of upgrades to make your home more energy efficient. New doors, windows, insulation, boilers, air conditioners, and furnaces all qualify for a 30% tax credit that is capped at $1,500. This means that if you purchase and implement any of these materials or systems that meet energy efficient guidelines you can offset 30% of the cost by applying for a tax credit. In addition, renewable energy production that homeowners employ also qualifies for a 30% tax credit, but with no cap. Geothermal heat pumps, solar water heaters, wind energy production and solar panels are all included in this group. The $300 million for Energy Efficient Appliance Rebate program and ENERGY STAR program will go towards home appliances that have been certified efficient by ENERGY STAR. This money will come in the form of a cash rebate.

Commercial improvements

The commercial building industry will also see a large sum of money coming their way. This includes $3.2 billion for Energy Efficiency and Conservation Block Grants, which can be applied for by counties, cities and even Indian tribes to develop and implement projects to improve energy efficiency and reduce energy use and fossil fuel emissions in their communities. The $3.1 billion for the State Energy Program will be sent directly to State energy offices to be used for similar purposes at the state level. California has already mandated that all its state buildings be LEED Silver Certified so a good chunk of the money that California will receive will likely go directly to that endeavor. The $4.5 billion allocated to greening Federal Government buildings will be focused on improving energy efficiency of all General Service Administration buildings.

Help low-income communities

The Weatherization Assistance Program is a less well known but equally effective and important aspect of the stimulus bill. The Program allocates money to improving building envelopes of low-income housing. This will not only improve the lives of tenants hit hardest by the economic downturn but also greatly improve the energy efficiency of this traditionally terrible building type. The Program seeks to lower energy costs for tenants and reduce energy drawn from the grid from low-income communities.

Improve public transportation

On top of these programs $22 billion has been allocated to the Department of Transportation to improve public transportation. The aim of this money is to not only improve public transportation but also expand it in hopes of increasing its popularity and thus reducing vehicle emissions. $6 billion have also gone to the EPA for cleanup of hazardous sites, revitalization of watersheds and a variety of other projects that are focused on improving destroyed natural features. The EPA is distributing this money to states based on proposals that the states have supplied on projects that are good candidates.

Confused? You are not alone.

If you are confused by all of this you are not alone. Unfortunately, like most federal government acts the stimulus bill is massive and very hard to follow. It takes an expert to figure out where money is going and how to get it. Beyond the confusion there are several negative aspects to the stimulus bill especially concerning how the money is allocated. Most of the grants are being funneled through state governments. While this is the easiest way to go about distributing the money it is definitely not the most accurate or efficient. When the states receive the money they are often spending it how they want and not for its intended purpose. Take for example a large chunk of money supposedly going towards a program to improve and “green” schools. The states are taking this money and then using it to pay teacher’s salaries. Now I am not saying this is a terrible thing but stimulus money slated to improve buildings should not be used to balance state budgets. Additionally another hefty sum from the bill is going towards nuclear and clean coal technology. Both of these industries are not considered renewable because both are riddled with environmental problems, and consequently should not be included in a bill focused on improving the environment. Lastly, the money is slow to come. Little by little dollars are trickling to states and communities and if the desired effect of this bill was to shock the economy back into a more healthy rhythm money is going to have to come faster.

A good start, but a bit lacking

On the positive side, this bill is a leap in the right direction. As the most comprehensive and lucrative sustainability bill in history, it sets a serious standard for the United States government and its people to follow. No longer can we be complacent of wasteful actions that are detrimental to the environment. Although no amount of money is enough to reverse the harm we have already done, $60 billion is a good start. Compared to the oil industry, which receives and estimated $15 to $35 billion a year, it is a bit lacking. This huge sum that supports one of the worst industries, in terms of its detrimental effect on the environment, shows the vast potential of capital which can and hopefully in the future will be steered toward the recently booming green industries. Already the amount of “green collar” jobs is on the rise, and the green building industry has become increasingly popular. When the economy improves and the stimulus money really starts flowing, green building will no longer be a fanciful option but a mandated norm.

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  • http://rejournal.com roland hopkiins

    Great stuff. I want to use some of it in my commercial real estate newspaper. do you want a credit?

    • http://www.ebsconsultants.net Jacob Arlein

      Yeah, that would be great. The more it spreads the better.