It's hardly news to say that it has been a grim season for environmentalists and their allies in Washington. Republicans control the debate, and Democrats are on the defensive. That's not necessarily the case in the states, however, where people keep working and organizing. Perhaps the most promising news comes out of New York, where a groundbreaking energy efficiency financing program is on the verge of enactment.
"On-bill recovery," as the legislation is called, would vastly expand the impact of the state's existing energy efficiency programs and make New York the first state in the nation to take the proven gains of building science and energy conservation to scale. The state passed its "Green Jobs/Green NY" program in 2009, but this year's companion legislation is the key to attracting private capital to the program's Residential Retrofit Investment Fund.
"There is capital looking for sound investment opportunities, and there are investors who want to go "green" in a sensible way," says Henry Lanier of Forsyth Street Advisors, a Wall Street firm that marketed a similar fund for affordable housing investments in New York. "In an era of budget deficits, this sort of creative public-private partnership will be more, rather than less, essential." One analysis suggests that over the next five years, the Green Jobs-Green NY program could well result in the retrofitting of a million homes and businesses and create 60,000 "job-years" (so, more like 10-12,000 private-sector jobs per year). On the consumer side, it will lower people's utility bills and raise the value of a homeowner's property.
But it could well be the environmental impact that will be most impressive. New York's residential, commercial and industrial units now account for more than 60 percent of the state's greenhouse gas emissions. Implementing on-bill recovery would have the same carbon reduction impact as removing 4.5 million cars from the road.
How does on-bill recovery work?
Moderate and middle income homeowners -- that is, the majority New York residents -- are currently locked out of existing energy efficiency programs. They lack the cash to access rebate programs yet earn too much for grant-funded weatherization. Most are rightfully wary of high-interest loans and household debt.
On-bill recovery gives these New Yorkers, many of whom live in old, inefficient homes, access to safe capital for retrofits. After receiving a loan from the state, the homeowners repay the loan as a line item on their utility bill over time. The monthly repayment charge is less than the energy savings, so the loan doesn't drive the bill up.
The homeowners also retain the protections afforded to utility consumers, such as safeguards against shut-off and the right to negotiate payment plans. And since utility customers rarely default, the loan would be something rare these days -- namely, reasonably safe.
That's why on-bill recovery would enable the state to leverage billions in third party energy efficiency investments: investors favor being repaid! In the wake of the 2008 economic meltdown, a safe investment is even more attractive than usual. And of course the climate crisis may have fallen off the map in Washington, DC, but it still real and we still need to be serious about energy efficiency. The design of the NY program is ingenious, really, as private investments will fund even more retrofits which would further decrease carbon emissions - all without straining the state's purse strings.
For unemployed New Yorkers, especially in the state's cold-weather regions, on-bill recovery will be a welcome engine for job creation. The state's Contractors Association has come out strongly for the legislation, releasing a letter signed by more than 60 local contractors. From their point of view, it would remove the contractors' largest obstacle: a consumer base that can't afford their product. They wrote:
As energy efficiency contractors and business owners... We stand ready to expand our businesses and hire new workers, but we need On-Bill Recovery to do it. . . . On-Bill Recovery will allow tens of thousands more homeowners to afford energy retrofits, creating more work for contractors, more jobs for New Yorkers, and $1 billion in annual cost savings for homeowners.
In fact, the Home Performance Resource Center -- an organization affiliated with New York's efficiency contractor association -- released a report showing that their own members would directly create 8,500 new jobs if on-bill was passed. That doesn't count jobs in outreach, marketing or other indirect jobs.
The United States is falling even farther behind Europe on energy policy. Washington's failure to meet the challenge is underscored by the recent and unprecedented climate catastrophes on US soil. The fifty states need to re-claim their role as the "laboratories of democracy" that Justice Brandeis wrote about if the federal government is paralyzed.
Fortunately, New York's Governor Cuomo and legislative leaders are doing precisely that, thinking creatively and practically about the intertwined problems of climate and the economy. One hopes that they will succeed in passing the "on-bill" legislation, and that environmentalists across the country will make their own legislators and governors take note.