Back to Work - Bill Clinton [58]
This is an area of enormous opportunity for us.3 However, besides the need for a renewable-energy standard and other changes that the current antigovernment majority in the House of Representatives opposes, there are real challenges to creating more jobs and starting new businesses providing clean energy and increasing efficiency, rooted in the lack of longer-term financing readily available for the construction of traditional power plants and the relative complexity of more decentralized green-tech operations compared with big coal-fired generators.
Almost all the costs of solar and wind power, for example, are front-loaded, while the economic benefits in lower annual costs take time to realize. And building a new coal-fired power plant is simple. A utility gets approval from one regulatory body, hires one contractor to build the plant, secures a supplier of the coal, and gets to bill the customers over a twenty-year period, merging the cost of the plant with the annual cost of the coal. The annual costs of solar and wind are almost nothing, but the up-front costs are high (though dropping steadily as production goes up and technology improves), without a coal-like payback option of twenty years.
To a lesser extent, the same thing is true of energy efficiency. To achieve this on a large scale, building owners should be able to offset for the cost of retrofits with savings they will realize from lower utility bills, eliminating large out-of-pocket expenses in a down economy. Savings of 30 or 40 percent typically take six to seven years to pay off, with interest, after which the utility bill is reduced forever. The problem is that most Americans don’t have access to this kind of “Just Say Yes” financing.
Why is this so important? Because, on average, every billion dollars invested in a new coal-fired plant yields 870 jobs. The same amount invested in solar creates 1,900; in wind, 3,300, if the turbines and blades are made in the country where they’re put up; in big building retrofits, 7,000; in home retrofits, up to 8,000 jobs.
To maximize job creation and other benefits, we have to do a number of things. Let’s start with conservation, the biggest bang for the buck, and a real opportunity. McKinsey & Company estimates that with an investment of $520 billion in efficiency improvements, we could save $1.2 trillion by 2020 and cut consumption 23 percent. That’s a return on investment of more than two to one, plus a large number of new jobs.
9. Launch an aggressive, fifty-state building retrofit initiative. Recently, the Empire State Building in New York City completed a comprehensive energy overhaul, becoming the world’s largest building to get a high LEED (Leadership in Energy and Environmental Design) rating from the U.S. Green Building Council. The project put 275 people to work, doing things like changing the heating and air-conditioning system; putting new, more efficient glass in the windows; and installing new lighting. The work was overseen by Johnson Controls, the energy service company whose technology was used to maximize energy savings with temperature and lighting controls and devices that track energy use. As part of the contract, Johnson guaranteed that usage, and reduced utility bills, would be 38 percent. That means if the savings don’t materialize, Johnson has to make up the difference. Since, like all businesses, it likes to get paid for its work, the actual savings will probably be 40 percent or more. At 38 percent savings, the project will pay for itself in four and a half years, after which the Empire State’s utility bills will drop dramatically.
If this is such a good deal, why isn’t everyone doing it? Because all the costs are up front and few building owners, public or private, have enough cash on hand to afford them. What’s the