$4B Better Buildings Challenge Unites Government, Private Sector

Saying "we can't wait for Congress to act," President Obama on Friday announced that over the next two years, nearly $4 billion in combined federal and private-sector money will be surging into energy upgrades to buildings.

December 5, 2011
By Scott Baltic, Contributing Editor

Image courtesy Flickr Creative Commons user borman818

Saying “we can’t wait for Congress to act,” President Obama on Friday announced that over the next two years, nearly $4 billion in combined federal and private-sector money will be surging into energy upgrades to buildings. “Upgrading the energy efficiency of America’s buildings,” Obama said, “is one of the fastest, easiest, and cheapest ways to save money, cut down on harmful pollution, and create good jobs right now.”

This new commitment to the Better Buildings Challenge is the largest so far. The public-sector portion comes by way of a Presidential Memorandum that commits the federal government to $2 billion of energy upgrades to federal buildings, using long-term energy savings to pay for upfront costs, reportedly at no cost to taxpayers.

The private side is represented by 60 organizations, a diverse group of commercial real estate and hospitality companies, manufacturers (such as 3M, GE and Nissan), colleges and universities (including Michigan State), retailers (Kohl’s Department Stores, Supervalu and Walgreens), healthcare systems, municipalities (including Denver, Sacramento and the District of Columbia) and other entities, including the AFL-CIO and TIAA-CREF.

The private-sector partners have committed to invest nearly $2 billion of private capital into energy-efficiency projects and to upgrade energy performance by a minimum of 20 percent by 2020 in 1.6 billion square feet of office, industrial, municipal, hospitality, healthcare and education-related space. The White House’s announcement noted that commercial buildings consume roughly 20 percent of all the energy used by the U.S. economy.

CRE/hospitality players include CBRE, Forest City Enterprises, HEI Hotels & Resorts, InterContinental Hotels Group, Jones Lang LaSalle, Prologis, RREEF Real Estate, Shorenstein Properties LLC and Wyndham Worldwide.

Joining Obama in making the announcement was former President Clinton, whose Clinton Global Initiative in June had signed up 14 entities to the initial phase of the BBC. Those participants include Lend Lease, Transwestern and USAA Real Estate.

The BBC is part of the Better Buildings Initiative. Launched in February by President Obama, and spearheaded by former President Clinton and the President’s Council on Jobs and Competitiveness, the larger effort aims to “support job creation by catalyzing private sector investment in commercial and industrial building energy upgrades to make America’s buildings 20 percent more efficient over the next decade, reducing energy costs for American businesses by nearly $40 billion,” according to the announcement.

Jones Lang LaSalle vice president of public relations Craig Bloomfield told Commercial Property Executive that JLL has committed to reduce energy usage by 20 percent by 2020 in 98 million square feet of multitenant space it manages. He noted that JLL was the project manager for the recent energy-efficiency upgrade of the Empire State Building, in partnership with Johnson Controls and the Rocky Mountain Institute.

Despite this newest stride, Bloomfield said, more owners want to retrofit than can afford to do so. “Energy retrofits right now are very problematic” in multitenant buildings, in part because although the owner pays for the upgrade, it’s the tenant who benefits. A better system is needed for financing energy retrofits, he concluded.

Interestingly, Friday also saw the release of a new report from the U.S. Government Accountability Office, titled “Green Building: Federal Initiatives for the Nonfederal Sector Could Benefit from More Interagency Collaboration.” Designated GAO-12-79, Nov. 2, 2011, the report is available at www.gao.gov/products/GAO-12-79, with a one-page summary at www.gao.gov/highlights/d1279high.pdf.

The report noted that 94 federal initiatives, implemented by 11 agencies, “foster green building in the nonfederal sector,” which includes the private sector as well as state and local goverrnments. The most common green building issue, implemented in 83 initiatives, is energy conservation/efficiency.

“Agencies with green building initiatives for the nonfederal sector,” GAO commented, “may be missing opportunities to, among other things, reach agreement on governmentwide goals and measures for assessing the overall progress of their green building efforts.”

GAO recommends that the Departments of Energy and Housing and Urban Development and the Environmental Protection Agency “lead an effort to collaborate with other agencies on assessing the results of federal green building initiatives for the nonfederal sector.”