OfficeofSustainableDevelopment Fall2012|USP540|Memo#3

MEMORANDUM

DATE:November27,2007

TO: CityCouncil

FROM:LisaHarrison,Director,PortlandOfficeofSustainableDevelopment

RE: AlternativeBuildingandEnergyImplementationStrategies

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Theleadingworldscientistscalculatethattoavoidcataclysmicclimatechangeonagloballevel,

greenhousegasesmustcutto50to85percentbelow2000levelsby2050.TheUnitedStatesisresponsible

formoregreenhousegases,onapercapitabasis,thananyothercountry,sowemuststriveforthehigher

endoftherange.Accountingforover40percentofcarbonemissions,buildingsinMultnomahCountyare

thesinglelargestcontributortototalgreenhousegases.Toremainontrackforachievingthe80-percent

carbonreductiongoalinourClimateActionPlan,thefirstobjectiveinBuildingsandEnergysectionisto

“Reducethetotalenergyuseofallbuildingsbuiltbefore2010by25percent.”Wearealreadyseeingtheearly

positiveimpactsof“greenbuildings,”butintruth,overtwo-thirdsofbuildingsthatwillbestandingin2030

willhavebeenbuiltbefore2010.Retrofittingexistingbuildingswithenergyefficiencymeasuresis

necessarytoachievetheaggregatebuildingefficiencyimprovementsweneedtohitourcarbon-reduction

target.Outlinedinthismemorandumarefourimplementationalternativesthatwehavefilteredthrough

thecritical“AAA”componentsofmitigationandadaptation:awareness,analysisandaction.

Loans

AkeypieceoftheexistingbuildingssolutionisconnectingsupplyanddemandastheCityscales

upcleanenergyjobs.Withafocusoncleanenergyandsupportingbusinessestoscaleandgrowinthis

neweconomy,theresourcesandmanpowerwillbeinplacetorolloutaloanprogram.Thegoalisto

establishapublic-privateinvestmentfundthatwillallowcitizenstoimplementenergyefficiency

upgradestotheirhomeswithnoupfrontcosts.On-billrepaymentwouldallowustostretchtheloan

termreallyfarsotheenergysavingscanhelpcovertheirloanamountwhilecitizenspayitbackviatheir

utilitybill.Thetargetaudienceforthisprogramwouldbetheresidentialsector,withspecificbenefitsfor

low-incomehouseholdsthatcouldnotaffordtheretrofitsotherwise.Byprovidingzerodownfinancing,

low-interestloanstohomeownersforenergyefficiencyimprovementstoreducetheirannualhousehold

energyusebyat10%,weenvisionthisprogramasanimportantsteptoachievingourlong-termcarbon-

reductiongoals.Atthistime,financinghasbeensecuredforapilotprogramincollaborationwithEnergy

TrustofOregonandMultnomahCounty,butweintendtoapplyforfederalgrantsfromtheAmerican

RecoveryandReinvestmentAct(ARRA)tobroadenthescopeoftheprogram.

TaxExpenditures

Thesecondimplementationstrategywearerecommendingistaxbreaks.Ourtargetaudiencesfor

theimplementationstrategyarethebusinessandresidentialsectors.Energyefficiencyimprovementsin

anybuildingtypewillgenerallysavemoremoneythantheirupfrontcosts.Unfortunately,alotofthese

improvementshavenotbeenadoptedduetothe“stickershock”ofupfrontcosts.Offeringtaxbreaksand

rebatesreducesthosehighupfrontcostsandprovidesincentivesandresourcestobusinessesand

residentstoimplementcarbon-reductionmeasuresinexistingbuildings.Taxbreakscanalsoserveasa

marketsignal.Asothercities,countiesandstatesthathaveutilizedtaxexpenditurestrategieshave

shown,thereisahighlevelofinterestandactioninboththepublicandprivatesector.

PublicInformation

Ourthirdrecommendedimplementationstrategyispublicinformationintheformof

benchmarkinganddisclosureofenergyperformanceratings.Webelievepublicinformationisthedriver

forlastingchangeandmarketsneedinformationtofunctionproperly.Requiringenergyperformance

benchmarkingforallcommercialandindustrialbuildingswillcreateamarkettransformation.Thiswill

beagiantleapforgreatertransparency.Ourtargetaudienceisthebusinessandindustrialsectors,

wherebenchmarkingisacommonpractice.Bycomparingafacility’slevelofenergyefficiencywiththat

ofasimilarfacilitywillhelpprioritizeenergy-efficiencyimprovementsovertime.Benefitsincludehigher

netoperatingincomes(NOI),greaterassetvalues,andbettertenantretentionandacquisition.Inspiteof

documentedsuccessesinothercities(SeattleandAustin),mandatoryratingshavetriedandfailedatthe

countyandstatelevelinOregon.ThePortlandchapterofBuildingOwners&ManagersAssociation

(BOMA),apowerfulinterestgroupinthecommunity,hasleveledtremendousoppositiontowards

mandatoryratings.Wearetherefore,recommendingthisstrategyasavoluntaryprogram,building

partnershipsandsuccessfullocalcasestudiesthatcaneventuallyleadtoamandatoryprogram.

RightsCreation

Thefourthimplementationstrategytobediscussedistargetedfortheresidentialsector

(renters/purchasersandhomeowners)andaddressestheconsumer’srighttoknow.Weare

recommendingmandatoryenergyauditsanddisclosureofperformanceratingsonhomesand

apartments.Webelievethiswillcorrectamarketfailure.Inotherconsumergoodcategoriesthereare

ratingsystemsinplace,suchaswhenbuyingmajorappliancesthatbeenratedbytheEnergyStar

program.Whenapersonisshoppingforamotorvehicle,theycertainlywanttomakeaninformed

decision,whichincludesfuelmileageefficiency.Weseethehousingmarketasanaturalfitforarating

system.TheU.S.DepartmentofEnergyhasahomeenergyscorewithaneasytoreadscalethatgives

consumersinformationaboutthathome’senergyefficiency.AlthoughprogramsintheUnitedStatesare

stillfairlynew,studiesdoneinAustraliaandDenmark,wherethesehomeenergyscorecardshavebeen

inplaceforoveradecadeshowgreatsuccessinguidingconsumerstorent/purchasehomesthatare

moreenergyefficient.Twokeychallengesthatwillneedtobeaddressedareenforcementandclarityof

information.Inthecasestudiesmentionedabove,themarketdidnotshiftuntilthepenaltieswerehigh

enoughtopromotecompliance.

Webelievethesefourarethemosteffectiveimplementationstrategiestoactivatetheenergy-

savingmeasurestomeetourgoalofreducingtotalenergyuseinallexistingbuildingsbuiltbefore2010

by25percentby2030.