New coalition of business, finance, and energy leaders implementing projects nationwide

AUSTIN, TEX. _ Companies could save millions of dollars in energy costs under an innovative strategy unveiled by a new coalition of business, finance, and energy-sector leaders.

The plan, which offers the potential to create thousands of jobs and to stimulate local economies across the state using private sector capital, was highlighted in the New York Times on Tuesday, September 20.

The United States Business Council for Sustainable Development (US BCSD), in coordination with Ygrene Energy Fund and Barclays Capital, has developed a two-step approach that identifies commercial energy-efficiency projects and gives companies financial incentives to invest in them.

The solution has two parts. One is the US BCSD’s By-Product Synergy Project process, a proven approach to identify, assess, and valuate efficiency-improvement projects within a regional network of companies and other organizations. The other is Property Assessed Clean Energy (PACE) finance programs, which allow commercial and industrial property owners to finance energy efficiency, renewable energy, water conservation and by-product synergy projects associated with their buildings and processes.

The business council is working closely with Ygrene to integrate PACE financing into regional synergy projects across the country.

The process has also won praise from Sir Richard Branson, the billionaire founder of the Virgin Group and the non-profit Carbon War Room. “The PACE Commercial Consortium is the missing piece in the jigsaw puzzle for cities looking to implement green plans,” he said. “I’m thrilled by the news and believe it will unlock a trillion-dollar market for green retrofits, creating jobs and growth around the world.”

The process, which is being implemented in Florida and California, and is under development in at least six other states, finances energy-efficiency programs using 100 percent private capital, at no cost to local, state, or federal governments. Companies that might have balked at investing in efficiency improvements because of the high upfront costs are able to spread the payments out over as many as 20 years through voluntary tax assessments.

The need for greater efficiency is clear. Buildings worldwide account for 40 percent of global energy consumption, exceeding the amount consumed by all forms of transportation combined. Building retrofits for efficiency and alternative energy usage should allow companies to cut their energy bills on older buildings and manufacturing plants by 30 percent or more. And by reusing materials rather than sending them to landfills or incinerators, companies can achieve the lowest cost energy efficiencies per kilowatt-hour. In terms of commercial and industrial operations, the challenge is to get industries to invest in efficiency improvements rather than approaches with faster returns on investment.

In the most recent application of this two-pronged approach, Ygrene Energy Fund Florida, a subsidiary of nationwide Ygrene Energy Fund, signed an agreement with the town of Cutler Bay, Fla., to administer Florida’s first PACE program as part of an extended Green Corridor district for Miami-Dade County. The US BCSD is working closely with Ygrene to develop synergy projects that qualify for PACE funding.

Besides benefiting property owners through reduced energy and insurance bills, the programs provide local jobs – particularly in the construction and equipment-manufacturing industries – stimulate the local economy and reduce greenhouse-gas emissions.

Ygrene offers a financing arrangement through Barclays Capital that ensures a virtually unlimited flow of private capital to fund demand throughout the country. PACE participants secure the financing with a voluntary property assessment, which is then repaid through their property tax bill over terms of up to 20 years.

“PACE is a win-win: Property owners can save money, increase the value of their homes and help support local job growth,” said Steve Alexander, Cutler Bay’s town manager. “Program guidelines ensure that property owners will save more money on their energy bills than the cost of the project.”

Ygrene Florida projects that every $40 million spent on projects results in 600 permanent local jobs. With a multiplier effect, every $40 million of new financial investment adds approximately $100 million to the local economies and as much as $10 million in tax revenue.
Lockheed Martin, the consortium’s engineering partner, will guarantee the technologies used in select PACE-financed projects.

More About PACE:

The US Business Council has joined forces with Barclays Capital and Ygrene Energy Fund to offer a comprehensive PACE program, at no cost to cities or counties. Under the program, the Business Council works with companies in a metropolitan region to establish a by-product synergy network that identifies PACE- eligible energy efficiency, by-product synergy, and renewable-energy projects. At the same time, the Council works with the local city or county to establish a PACE tax district designed to finance viable projects that are underwritten by Barclays Capital. In the end, companies upgrade their facilities with more efficient equipment and processes, cities stimulate economic development and job creation, and the financial partners receive solid returns on secure investments – all with zero government funding. Repayment is secured by a tax lien on the property, amortized over the life of the improvements. Efficiency improvements lower energy bills and free up money to cover the tax payments. PACE assessments are not approved unless the energy cost savings are greater than the cost of the improvements. As of September 2011, laws authorizing establishment of PACE districts had passed in 27 states.

And the US BCSD’s By-Product Synergy Program:

BPS is the matching of under-utilized resources and waste streams from one facility with potential users at another to create environmental and societal benefits as well as new revenues or savings. Synergies identified during a BPS project lead to significant energy and water efficiency improvements that are eligible for PACE financing. The BPS process, originally defined by US BCSD in 1997, has been implemented in regions across the country including Houston, Seattle, Columbus, Ohio, Mobile, AL, Chicago and Kansas City. The US BCSD is working to expand these regional synergy networks in to a national grid of BPS projects. By 2015, the goal is to have 20 or more robust, ongoing projects around the country, able to deliver 5 million tons of CO2 equivalent reductions, 5 million tons of landfill-bound waste diversion and significant job creation.

For more information, contact Daniel Kietzer at the US BCSD, kietzer@usbcsd.org.