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John Petro

A New Measure of Regional Competitiveness – Energy Efficiency

Here’s a thought: as energy prices inevitably continue to rise once the current recession ends, will a region’s energy efficiency have an effect on its competitiveness? It seems to me that it must.

On Wednesday, New York City Mayor Bloomberg and Speaker Quinn announced a new initiative to increase the energy efficiency of large buildings. These initiatives, if passed, would be a tremendous victory for New York City. Research shows that NYC is already among the greenest cities in the U.S., with its large public transportation infrastructure, smaller home sizes, and efficient land use patterns.

But of course New Yorkers can do more to reduce their greenhouse gas emissions. Because so few New Yorkers drive, the vast bulk of the city’s greenhouse gas emissions come from buildings – about 80 percent of our emissions, in fact. In addition, New York’s building stock is pretty old. The median age of a building in the city is 75 years and 43 percent of the city’s buildings were completed before 1939. These are buildings that could benefit from the latest energy efficient boilers, windows, and lighting fixtures. This is why making the city’s buildings more energy efficient is so important.

The benefits of the new initiative are plain enough and should be celebrated: greenhouse gas reductions, reducing strain on the electrical grid, consumers saving money, and creating green jobs. (It was disappointing to see this headline from Metro: “A Greener Building May Spell Rent Hike.” Read the story and you’ll find out that rents aren’t likely to go up because of the initiative.)

But Mayor Bloomberg went on to say, “This will significantly improve our economic competitiveness…” Partnership for New York City President Kathryn Wylde added, “By ensuring that all buildings are more energy-efficient, the Mayor’s plan will make New York a more efficient and economical place to do business.”

A metropolitan region’s competitiveness is measured in many ways – workforce skills, school quality, crime rates, taxes, transportation infrastructure, proximity to markets, etc. However, it’s quite possible that as energy costs continue to rise, and as the federal government puts a price on carbon, a region’s energy efficiency will also be an indicator of its relative competitiveness. In this sense, New York will have an advantage in a post-carbon economy, especially if the city is successful in making buildings more energy efficient.

The city’s initiatives, by making energy efficiency audits mandatory in buildings over 50,000 sq. ft., could go a long way towards improving the efficiency of large buildings. However, in order to advance these gains in smaller buildings, especially in the outer boroughs, the city should look at Berkeley, California’s model of municipal financing for energy efficiency improvements. The model works like this: the city raises bonds that will be used to finance solar power or energy efficiency projects. Property owners apply for the program and the city covers the up-front costs. These property owners then pay back the city over a 20 year period through their property tax bills. This model poses little to no liability or exposure to the city's general fund and the city is able to implement the program with almost zero budget impact.

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Posted at 4:45 PM, Apr 24, 2009 in
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