This month the United States government announced that it will take part in a new energy savings initiative designed to make government buildings and commercial facilities more energy efficient. This revolutionary, modern program is intended to save energy, which equates to a positive impact on the environment, without really costing anybody any money, at least in the long run. How can that be? Well, the idea is to make environmentally positive changes that will pay for themselves after a period of time.
The Plan The White House has a very simple plan, actually. And, they have an ambitious timeline. Supported by Bill Clinton and President Obama, the federal government is working to encourage small and large businesses to invest a total of $4 billion in building new and upgrading old buildings to a state of energy efficiency. The goal is to make these changes within the next 24 months, concluding the program by the end of 2013. Development of this plan included the White House elite as well as 60 leaders of business, academia, and local government. So, what is this plan? The idea is that these various companies, and the government, will make energy efficient improvements to their buildings. This work will create jobs in the short term, which will, of course, be an economic boost. Then, once the work is done the buildings will be more energy efficient, thus emitting less waste into the environment and costing less to run over the long term. In this way it is anticipated that the money saved in energy costs will, after some time, make up for the costs of retrofitting the buildings and making them more energy efficient and environmentally friendly.
The Financing Of course, any major energy savings upgrades takes money. So, you may wonder how the government will finance this. They say it will not be with taxpayer money. In fact, the plan is as elegant as it is simple. Initial construction will be financed by bank loans. Once the work is complete and the energy savings start to add up, these savings are expected to be sufficient to repay the loans within a few years. The bank will ask the contractor doing the work to suggest how much the upgrades will save in energy bills. Then, the bank makes a loan based on that projection of savings. Once the savings come in and the building owner pays off the loan, future energy savings simply goes to the building owner.
The Outcome The plan seems solid. Of the $4 billion allotted, President Obama wants the federal government to make $2 billion worth of changes to federal buildings. The rest will be used by others involved in the White House meetings. While it appears that this particular energy saving round is already allotted to a variety of larger corporations that are working with the government, it does bring up ideas for SMBs as well. Really, any company can embark on a similar initiative. Most large scale energy saving retrofits, including solar power and geothermal energy, usually take about 10-20 years of continual use to realize a cost savings. If a building is expected to be in use at least this long, then taking out a loan to make energy saving upgrades can be a great business decision. Such green activities can save money, save our planet and help promote a company to greater heights of positive public awareness. By taking a cue from the White House, any business can emulate this model for the betterment of all, creating jobs in the short term and energy savings in the long term.