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January 15, 2009

A W4 Solution: Insulate US from economic and climate devastation

Posted in: Economy,Environment,Global warming

President Obama and Congress must act to stimulate the US economy with a package of win-win-win-win (W4) elements that will:

  • Create and protect jobs throughout the nation
  • Foster economic activity that will help, through tax revenue, pay for the stimulus
  • Strengthen the nation’s economic prospects for the long-term, and
  • Help address other critical challenges: notably energy security and climate change.

Good news: such W4 options exist in abundance.

Not so good news: W4 elements are not dominating the discussions nor the money in the draft stimulus package.

Below is a W4 option that should be part of the discussion and, even better, the economic stimulus package’s financing.

Insulate the US from Economic and Climate Devastation

As discussed here, Architecture 2030 developed1570734305_37c0c1274d_m.jpgThe 2030 Challenge Stimulus Plan to create roughly nine million (yes, 9,000,000) jobs and several trillion dollars of building activity through a two-year, $192.47 billion program focused on using financial instruments to spark investment in energy efficiency in private buildings throughout the nation.

The financial instrument to stimulate action

The vast majority of the money would be spent on a housing mortgage interest rate buy-down and commercial building accelerated depreciation based on meeting energy efficiency targets. Very simply, the more efficient construction, renovation, or rehabilitation can make a building, the lower the mortgage cost for the homeowner and the depreciation for the building owner. As for a home, hit a target of carbon neutrality and the program would buy-down the 2758239198_79e037c26c_m.jpgmortgage/mortgage refinancing (with funding of the project) to just two percent. Would a two-percent (fixed, 30-year) mortgage interest you in making your home carbon neutral? A three-percent loan to make it far more energy efficient? FYI — the cost savings from the energy savings would likely pay for the costs, even without considering the lowered cost for the entire mortgage (and not just the energy efficiency upgrade costs).

In addition, while the money would spark about $1 trillion in private building energy efficiency investments, there is likely to be a much broader stimulus. How many homeowners would package the deal with needed major repairs (new roof, painting the house) or renovation (new kitchen)?

Not just mortgage financing

The plan includes elements beyond these fiscal incentives. For example, $2 billion in additional funding for training local officials and energy auditors, educational outreach programs, permitting assistance, and incentives for locally built products.

Some idea of the benefits

This truly looks to be a W4 option meriting attention:

  • Job creation: nine million new jobs (mainly in sectors hit hard in the recession, such as residential (down 37% in 2008) and commercial building construction (down 17%))
  • Tax implications: In addition to that minor little item of nine million new jobs, 2758219978_78553ec615_m.jpgthe program might just ‘pay for itself’ due to the tax base of increased economic activity.
  • Long-term impacts: The financial savings are quite strong, about $132-208 billion in energy and mortgage payment savings for consumers: in the first five years. Of course, these are savings that continue indefinitely into the future. And, this activity would spark the American building industry down a path toward far more efficient building and could spark American industry to develop energy efficient systems that could capture a global market space. Both the direct improvement in the efficiency of American use of energy and creatinga a market pull for 21st century options will improve American competitiveness for decades to come.
  • Improved Energy and Climate Security: The plan’s impact would cut US green-house gas emissions by 500+ million metric tons (about ten percent of one year’s US emissions) through five years. Energy consumption would fall by 6.5 Quadrillion Btu (US annual use is about 100 Quads), with a savings of about 2 trillion cubic feet of natural gas and 90 million barrels of oil (4.5 days of US oil use).

My reaction at first glance a month ago: Wow!

And, as Architecture 2030 has strengthened and developed the concept my enthusiasm has simply grown. Thus, WOW!!!!

In Architecture 2030′s words

This type of stimulus investment benefits all Americans, no matter what income level or location in the country because, due to the vast number of products and services involved, the investment would be spread across the entire U.S. and across all industries. It provides an economically efficient and powerful way to simultaneously address the three major crises facing the America today: the economy, energy independence and climate change.

This sort of systems thinking and systems-of-systems’ solutions should be centerpieced in the stimulus package.

NOTE: Again, there are other W4 options to be discussed.

ACTION ITEM: This plan merits discussion at the highest levels of government. It is worth contacting your Congressman about and Stimulate the Economy through Energy Efficient Buildings is in the "Citizen’s Briefing Book" at Change.GOV. If interested, go there and vote it up/make comments for attention within the Obama Transition Team.


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