Retrofitting Buildings will Create Green Jobs

From: The Green Economy Post August 18, 2009

Retrofitting 50 million buildings in the US, about 40 percent of the building stock, by 2020 to make them energy efficient would create 625,000 jobs Read more at The Green Economy Post http://greeneconomypost.com/retrofitting-buildings-create-green-jobs-3820.htm

After reading the article noted above, I posted a response, the body of which is printed below. I feel that the article (and the response) are both worth reading, primarily because they speak to a much larger issue: what we can, and should be doing about the environment and our place in it. Please follow the link above and then read my response. As always, your comments are welcome.

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Let's do it! It sounds like a terrific idea to me, but before we get started, we need to take a little bit closer look at the figures. According to Mr. Podesta, it will cost an average of $10K to do a "deep retrofit" on these 50 million existing buildings for a total of a $500 billion (with a "B") price tag. As one who has been in the sustainable building industry for almost 40 years, I think he may be a little light in his figuring, at the very least by a factor of 5.

If we were to anticipate an average cost of $50K per retrofit (a number I think is extremely conservative considering permit fees, architectural and engineering fees, the continually increasing cost of labor and material, etc.), the price tag jumps to $2.5 trillion (with a "T"). While the state of our economy has us using the "T" word more often, it should be fully understood that this is still a staggering sum. The only reason our government can use it so freely is that they are able to borrow great sums of money and when that's not enough, they can print more.

Don't get me wrong: nothing would please me more than to see 50 million old and outdated buildings get the 'deep retrofit' Mr. Podesta envisions. But the pragmatic side of me doesn't see this happening, at least not in the 11-year time frame Mr. Podesta suggests. Here's why:

First, financial institutions aren't lending. To anyone. For any reason. While Mr. Podesta thinks that some sort of government intervention might do the trick, he's missing the point. Lending institutions are now following new federal guidelines regarding the amount of money they need to have on hand compared to the amount of money they can lend. They are under greater federal scrutiny due to the recent loss of confidence we have with banking institutions and their most recent exhibition of common sense being overruled by an inordinate amount of greed. As a result, unless those banking rules change, lending will probably remain as it is for the foreseeable future. No money, no building. Ask any of the owners of the dozens of abandoned projects across the country.

Second, even though it makes sound financial sense for a company to invest in retrofits to their buildings, one needs to remember that the majority of these 50 million buildings are owned by holding companies and REIT's, not the companies that occupy them. No matter what their cash position, most of these holding companies do not have enough money to rehabilitate their portfolios without some sort of financing (see #1 above) or government aid. Tax credits and incentives, as they are now, won’t be enough motivation. Nor will ROI. It’s a simple matter of cash flow, and cash reserves in a down economy. It’s also a matter of keeping investors and stockholders happy.

Finally, renovating 50 million buildings in 11 years requires a completion rate of about 4.5 million buildings a year. Considering that reasonably large occupied buildings generally take a minimum of 9 months to rehab, one can begin to appreciate how Herculean an undertaking like this would be, especially since skilled labor in the construction trades is at an all-time low. This endeavor would be exponentially more ambitious than John Kennedy’s commitment to put a man on the Moon before the end of the decade.

If Mr. Podesta has an Ace up his sleeve, I’d love to see it. I would also give my eyeteeth to be a part of an undertaking as monumental as this, no matter how small a part I would play. Unfortunately, what we don’t see in this article are any practical measures whereby we could even begin to reasonably discuss the logistics of such a venture. It’s a wonderful and extremely necessary dream, but a dream nonetheless. I would much rather see the time and money spent on this research put into a realistic effort that has a chance to bear much needed fruit.

Respectfully submitted,

Tom Coalson