Conference Report: The Energy Efficiency Landscape

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A National Housing & Rehabilitation Association town hall last month covered financing and implementation options for energy efficient construction. The event was moderated by Trisha Miller with the Chicago-based environmental services firm Elevate. Among the speakers were Donnel Baird of BlocPower; Crystal Bergemann, Department of Housing and Urban Development’s (HUD) senior advisor on climate change; Alan Mileti with Conifer Realty; and Karyn Sper, director of green housing with Fannie Mae. Another panelist, Ari Matusiak, who is CEO of Rewiring America, had, perhaps, the loftiest goal – maximum possible electrification of household energy sourcing, a measure, which he believes is essential to meet carbon reduction targets.

The panelists stressed urgency in shifting to efficient development.

“One out of every three Americans lives in a county that experienced a climate-related disaster over the summer,” said Bergemann (a definition, which includes hurricanes and extreme heat). According to Miller, homes are responsible for over 40 percent of American greenhouse gas emissions. In opening remarks, NH&RA president Thom Amdur stated that concrete use results in ten percent of global emissions, a higher figure than the aviation industry. For this reason, the federal government is moving aggressively to enhance energy efficiency standards of supported developments.

The panelists spoke of the practical benefits of energy efficient construction and retrofitting. Amdur pointed to “record losses across the real estate industry” from severe weather incidents. (For example, U.S. News and World Report cites a study stating that increased flooding in coastal New England dropped home values by $403.1 million.) Sper, speaking on Fannie Mae’s Green Homes and Green Rewards programs, said that the incentives the GSE offer have brought many more developers towards sustainability. “It makes sense at the bottom line,” Miller said, noting that Elevate has conducted energy efficient rehabilitations of 100,000 affordable units.

Bergemann discussed HUD’s plans and outlook in light of the Biden administration’s goal of halving greenhouse emissions by 2030 and reducing them to net-zero by 2050. The agency has a seat on a federal climate task force and is undergoing an internal assessment of its goals and how they fit with the net zero shift. HUD, which provides loans for a portfolio of 1.4 million multifamily units and 4.5 million public housing units, along with insuring 7.6 million single-family loans, is requesting $800 million in “climate specific funding,” which will go to Rental Assistance Demonstration projects and neighborhood specific financing. It intends to implement utility benchmarking efforts and a green and resilient retrofitting effort for existing multifamily properties. Bergemann also stressed that new construction needed to take emissions goals into account and hoped that policymakers would continue to enhance incentives.

“If we’re going to be hitting these targets, even the ‘non-green’ buildings are going to need to improve in efficiency,” she said.

Sper, who stated that Fannie Mae’s goal is to support decarbonization at all levels, discussed the options her agency provides to encourage efficiency. GSE’s Green Rewards program reimburses developers for the costs of energy and water efficiency audits should they ultimately meet standards. Recipients must commit to both energy and water saving measures and cut emissions by at least 15 percent. The agency also notes that state and local authorities often aid in reimbursing developers who meet the standards. An additional program, the Green Building Certification Pricing Break, gives preferential loan costs to developments that meet energy certifications, such as those from the Green Building Initiative, Passive House Institute and Department of Energy. According to Sper, there are around 40 possible certifications. Fannie Mae’s offerings make it the world’s largest provider of green bonds.

Baird added input on BlocPower’s offerings. The Brooklyn-based firm “greens” buildings by installing and managing electric heating and cooling systems. BlocPower is launching a green bond program, which will finance projects nationwide; Baird anticipates a $100 million outlay.

“We’ll leverage every dollar of that bond five-to-one or seven-to-one with capital from Wall Street,” Baird said.

BlocPower’s options offer flexibility with Low Income Housing Tax Credits and HUD capital stacks. The company also works to provide efficiency-based equipment and services for low-income customers.

Mileti, the director of maintenance and procurement at Conifer Realty, spoke to the opportunities and need for communication around what incentives exist. Finding properties to target often comes down to the results of a benchmarking metric, although the metrics aren’t always practical. Benchmarking is easy with water, for instance, because it can be broken down to gallons per person or unit but is harder with energy. That will depend on the buildings involved (i.e., if one building uses more energy than others in a given portfolio). Firm capacity is also relevant – the more buildings a company has, the harder it is to centralize data collection. But when exploring renovation opportunities, a full accounting is necessary to have a realistic picture of what each property is capable of (for example, ensuring that pipes are able to accommodate high-efficiency transmission).

Matusiak’s presentation on Rewiring America may have been the most interesting part of the conference.

In business for just over a year, Rewiring America’s mission is to electrify as many aspects of the U.S. economy as possible, including for 121 million households, according to the nonprofit’s website. Matusiak, the CEO, said Rewiring America wants to provide “all the American dream, half the energy, none of the emissions.”

Matusiak is convinced that it is possible to make this shift in the near term, asserting that efficiency from electricity can allow for halving of total emissions even with tripling of demand. Ninety percent of emissions are energy-generated, and 42 percent of emissions are based on household “kitchen table” decisions about energy sources.

But supply sources have expanded, said Matusiak, a former Obama administration environmental official. And electrification can help developers meet standards, like Energy Star and Corporate Average Fuel Economy.

“We can’t efficiency our way” into net-zero, he said, but electric machines have greater efficiency than fossil fuels with respect to both source and movement of energy. Getting the cost of those machines down to the equivalent of conventional ones is key to Rewiring America’s goals; Matusiak argues that with more incentives, consumers can see significant savings, up to $2,500 a year per household, from electrification. He told attendees to be on the lookout for potential machine replacement opportunities.

Baird has similar goals; BlocPower has established a $50 million line of credit for electrification projects from Goldman Sachs. “We think there’s a massive opportunity to electrify low- and moderate-income buildings,” he said. He also noted the challenges underlying electrification projects, such as design-build costs. But rebates can alleviate the burden.

This article featured additional reporting from Market Urbanism Report content manager Ethan Finlan.