By Jim Lynch
October 15, 2009
Few would argue that the economic stimulus and mandate for the “greening” of America has provided a once-in-a-generation chance to remake our buildings and infrastructure and leave a legacy of sustainability and environmental stewardship for future generations. In fact, this undertaking is not just an opportunity, but rather a necessity. However, as America is beginning to turn from fossil fuels to a decarbonized economy, the country faces a capacity crisis that will threaten our energy security. In order to meet its always growing demand for energy, America will need to increase capacity by as much as 30 percent by the year 2030. Yet fewer power plants are being built across the country, increased use of coal is not a viable option and - while important - alternative sources of energy can’t address the magnitude of the problem alone. So what is the answer?
Hybrid cars and wind turbines will help but, though it may sound dull, the greatest opportunity to reduce greenhouse gases and use of fossil fuels is by greening our existing buildings. While not receiving the same level of attention that automobiles garner, it is buildings that consume more than half of the energy in the United States. Thirty-nine percent of all CO2 emissions that affect climate change are produced by buildings as well as about 70 percent of all electricity generated and approximately 40 percent of all raw materials used.
A nation of energy efficient buildings will reduce our immediate demand and buys time for alternative sources of energy - from solar and wind to hybrid and electric cars - to gain a stronger foothold and move toward full implementation. But at what cost to overburdened taxpayers and financially strapped companies? Conventional wisdom seems to suggest that America’s corporations must commit to green initiatives as part of either a philanthropic campaign or to comply with federal standards rather than as a smart business model. This mindset is as outdated as many of the schools, hospitals, government and commercial buildings across the country that are in need of energy efficient retrofitting.
But eyes are beginning to open and light bulbs are going off across corporate America. From Johnson Controls and Honeywell to McKinstry and Chevron, iconic brands are turning their technology and creativity toward providing a better, more secure future for our children - and they stand to make a fortune and create jobs. These companies, and many more, are diversifying into what are called Energy Service Companies (ESCOs).
ESCOs form partnerships with universities, hospitals, public schools, municipal buildings and commercial properties. Using new workflow processes, business models and sophisticated 3D energy efficiency analysis tools they can perform an in-depth analysis of the facility, design an energy efficient solution to reduce its energy costs and carbon imprint, implement the measures proven to provide payback, and ensure on-going monitoring of the building to guarantee energy savings. And what does all of this cost the building owner? In many cases there is essentially no cost to the customer. The ESCO is paid with a percentage of the energy cost savings throughout the life of the contract and they assume the risk if energy savings aren’t generated.
As a result, our national institutions and commercial buildings can then apply the energy savings in ways that improve all of our lives. How many jobs can be saved or created when companies large and small suddenly need to only pay a fraction of their previous total energy bills? Consider the public schools that at no cost to themselves or taxpayers now have vastly more resources to spend on textbooks, digital education and teacher development or the hospital systems that now have the ability to invest in new research and technology to improve their quality of care.
Far from green philanthropy, these innovative companies have identified a unique business model and an industry that is growing exponentially and will skyrocket in years to come. In 2006 the ESCO industry grew by 22 percent to reach an estimated $3.6 billion. One only has to imagine if the full weight of the stimulus’ $5.5 billion for green building projects comes to fruition. In the United States, the near-term total potential market for green retrofits is approximately $400 billion and this figure would likely double if the American Clean Energy and Security Act of 2009 becomes law.
While there is no silver bullet to ensuring our nation’s energy security or one industry pegged to drive us out of the current economic crisis, great progress continues to be made when American business combines its trademark ingenuity and creativity with the moral bearings to leave a legacy of security, sustainability and responsibility for future generations. Doing well and doing good.
Jim Lynch is vice president, BIM Product Group, Autodesk, Inc..