job creation: three things government can do

Elton B. Sherwin Sr. Managing Director Ridgewood Capital Author of The Silicon Valley Way and Addicted to Energy

Governing Sustainability Summit New York City – June 21, 2011

These slides express the opinions of the author and have not been endorsed by any organization or government agency

Three Simple Things Government Can Do to Create Jobs

Agenda

• Connect the dots: Building efficiency = jobs – Improving building efficiency creates jobs

• Policy recommendations – Potential to create millions of jobs

– Permanent, sustainable American jobs • Do not require ongoing subsidies

• Cannot be offshored

– Modeled on New York City and San Francisco programs

525 University Ave. Palo Alto, CA

Imagine Two Identical Towns

• Once a month all building owners go up on their roofs and burn money

– In “Old Town” everyone burns $1,000

– In “Green Town” everyone burns only $100

– Both towns do this every month

• Towns are otherwise identical

• After one year, which town is richer?

• After ten years, which town has more jobs?

Thought experiment Old Town Green Town

Why Does “Green Town” Have More Jobs?

Shift Spending from Utility Bills to Construction and Retail = New Jobs

Improving Building Efficiency

= Jobs

Improved Efficiency Creates Jobs Several Ways

• Initial labor

– Contractors

• Savings

– “Export” fewer energy dollars

– Increased local spending

• Wealthier individuals and businesses

– Spend more

• More competitive infrastructure

Green Town:

Is richer

Has more jobs

Smarter place to buy real-estate

Better place to raise children

Green Town

Upgrading Building Efficiency Creates Jobs

Not happening at scale

Houston Skyline

Really Hard to Motivate Action

Even on projects that save money

How Do We Motivate Private Investment?

I Would Like to:

D+ D-

B A-

D- C+ B-

C+

D-

B- C+ D-

Grades for illustration only, not based on real measurements

Grade every building A+ to D-

Based on their actual energy consumption

Post the grade above the front door

In Some Cities the “D” Buildings Use More Than Half the Electricity

D+ D-

B A-

D- C+ B-

C+

D-

B- C+ D-

Grades for illustration only, not based on real measurements

Just motivating them to upgrade to a C would be a big win

Analyzed 17 Building Rating Systems

Around the World

European Unions Energy Performance Certificates UK Display Energy Certificates

LEED – New Construction LEED – Health Care

ENERGY STAR – Commercial buildings ENERGY STAR homes

PlaNYC (New York City) Australia’s Greenhouse Rating

HERS ASHRE EQ

CALGreen level 2 California AB 1103 California AB 758

DOE home energy scoring pilot Passive Home Certification

City of Seattle San Francisco Details at Slideshare.com

Lets talk about realistically what can be done.

New York, San Francisco, Washington DC, Seattle, and the State of California all use the same rating tool: US EPA Portfolio Manager

Winning Strategy

New York and San Francisco

Required to calculate

ENERGY STAR score

High = 100

Low = 1

After two years:

Public disclosure

Rating + Disclosure = Action

Class A office

• Score of 17

• Hire an auditor, who discovers

– Error in building control software

– Valves set incorrectly

– Wires reversed

– Wrong windows on south side of the building

• And upgrades are made

• Jobs are created

An example

Public Disclosure of ENERGY STAR Scores Will Create Jobs

• Construction trades*

– General contractors

– HVAC mechanics and installers

– Electricians

– Plumbers

• Manufacturing

– Building materials, windows and coatings

• Environmental scientists, specialists, and technicians

• Energy auditors and accountants

• Truck drivers and more… *Renewable Energy and Energy Efficiency: Economic Drivers for the 21st Century, Roger Bezdek.

=

What Can Your City/State Do?

1. Disclose ENERGY STAR ratings – Government buildings

– Schools

– Contests

2. Copy San Francisco or NYC Regulation – Straightforward

– Requires all commercial buildings to calculate Energy Star score

– In year 2: disclose it on the city website

3. Celebrate buildings scoring 90+

Celebrate Success

New York City

• 111 Offices

• Five Banks

• Four K-12

• Two Hotels

• One Hospital

• One Courthouse

Two built in 1800’s

• 49 before WW II

http://www.energystar.gov/index.cfm?fuseaction=labeled_buildings.locator

Celebrate Success

Built in 1966

• Lots of exposed glass in a sunny climate

• Property Manger: CB Richard Ellis 525 University Ave.

Palo Alto, CA

87

2007

94

2008

94

2009

92

2010

Palo Alto, CA

Celebrate Success

• Lighting retrofit of 397 fixtures saves over $5,000 per month. – Breakeven less than two years

• Anticipated savings are $822,460 over 10 years

• Property Manger: Wells Real Estate

University Circle East Palo Alto, CA

85

2007

86

2008

92

2009

90

2011

East Palo Alto, CA

Every City and State Should Be Able to Do This

1. Disclose ENERGY STAR ratings – Government buildings

– Schools

– Contests

2. Copy San Francisco or NYC Regulation – Straightforward

– Requires all commercial buildings to calculate Energy Star score

– In year 2: disclose it on the city website

3. Celebrate buildings scoring 90+

When grades are published,

the rate of improvement accelerates.”

Sherwin’s Law

Phrasing adapted from Thomas S. Monson

A

“When performance is graded performance improves.

National Target

• Above 60: all existing buildings

• Above 80: all new buildings

vs. 2003 average ENERGY STAR score

Three Simple Things You Can Do to Create Jobs

1. Disclose ENERGY STAR ratings – Government buildings

– Schools

– Contests

2. Copy San Francisco or NYC Regulation – Straightforward

– Requires all commercial buildings to calculate Energy Star score

– In year 2: disclose it on the city website

3. Celebrate buildings scoring 90+

Questions and Answers with

Back-up Slides

Question: Take another minute to connect building efficiency

with jobs.

Rating + Disclosure = Action

Class A office

• Score of 17

• Hire an auditor, who discovers

– Error in building control software

– Valves set incorrectly

– Wires reversed

– Wrong windows on south side of the building

• And upgrades are made

• Jobs are created

An example

Over One Million Jobs Just in California

Accelerating the Pace of Energy Efficiency

*Renewable Energy and Energy Efficiency: Economic Drivers for the 21st Century, by Roger Bezdek.

Bezdek’s results are summarized here by Aaron Lehmer, in Renewable Energy Development Creates More Jobs than Fossil Fuels.

Almost all the jobs created in the energy efficiency category relate to buildings and their contents. The actual number of new jobs created by aggressive programs promoting building, appliance and electronics efficiency may be closer to 16 million jobs nationwide (32.18 million minus 14.9 million minus the transportation sector). California’s share of these jobs is at least 10% or 1.5 million. The challenge is to accelerate these jobs from into the current timeframe and to get on the advanced scenario, which could created these 1.5 million additional jobs.

References

Job Creation data

• Energy Pathways for the California Economy, David Roland-Holst and Fredrich Kahrl, UNIVERSITY OF CALIFORNIA

• Renewable Energy and Energy Efficiency: Economic Drivers for the 21st Century, Roger Bezdek.

More Conservative Estimates

• The Center for American Progress, using a more conservative methodology, estimates that doing deep energy upgrades on 50 million buildings would create 625,000 permanent new jobs. http://www.energyfuturecoalition.org/files/webfmuploads/RebuildingAmerica_Vision_Statement_FINAL.pdf

Question: Are buildings required to upgrade if they score

poorly?

Answer: No

And Senior Care Facilities and Data Centers

References

ENERGY STAR Hyperlinks (click on reference)

• ENERGY STAR Program for commercial buildings.

• San Francisco benchmarking legislation

• New York City benchmarking program overview

• Overview of all US disclosure programs (from IMT)

Question: Where can we find a list and map of Energy Star

buildings?

Answer: On the EPA website

EPA Website Available Today

New York City

• 111 Offices

• Five Banks

• Four K-12

• Two Hotels

• One Hospital

• One Courthouse

Two built in 1800’s

• 49 before WW II

http://www.energystar.gov/index.cfm?fuseaction=labeled_buildings.locator

Question: My city won’t force building owners to disclose

anything. What should we do?

Afterwards, a question in the hallway:

Check the EPA Website

http://www.energystar.gov/index.cfm?fuseaction=labeled_buildings.locator

Focus on the Winning Buildings

1. Disclose ENERGY STAR ratings – Government buildings

– Schools

– Contests

2. Copy San Francisco or NYC Regulation – Straightforward

– Requires all commercial buildings to calculate Energy Star score

– In year 2: disclose it on the city website

3. Celebrate buildings scoring 90+

Question: What about residential buildings?

Additional Steps Residential

• Disclose last two years of energy costs* in residential MLS

• Require disclosure with green claims

– No “green” claims without disclosing actual energy consumption.

– Five years of disclosure

• Prior two and next three years

– Use signage laws

* Optionally, home sellers can disclose a HERS score.

Use Signage Laws to Ban Advertising Without Disclosure

Energy Saving Green Home

(Data not disclosed)

Require • Last 2 yrs utility bills • Next 3 yrs

Grade Every Building in the State A+ to D-

Based on Energy Consumption

And publish the grades

1 Main St. D- 2 Main St. A-

A For the Brave

Send Window Stickers to the Top Performing Buildings

Internet disclosure and window stickers will create a lot of jobs

C+

Posting is optional

97

Translating Building Percentiles and ENERGY STAR scores

to Grades

Letter to a fictional governor

• 70 recommendations for state policy

• Job creation

Previous Book

• Creating new products

• Creating new companies

These slides: www.EltonSherwin.com and on slideshare