President Obama and Sustainability

During his presidential campaign, Obama set forth a vision that was comprehensive and integrated. He did not want the country simply to use less oil or build more energy-efficient buildings; his proposed policies take an integrated approach that include energy policy, fostering technological development, the electric grid, transportation policies, residential and commercial construction, public and private sector efforts, and new and existing buildings. The need for an integrated approach reflects a process that proponents of green buildings have stated is required in order for them to be most effective: They must be a part of a sustainable community. A building's placement in proximity to a potential workforce, mass transportation, alternative energy sources, retail and dining establishments and pedestrian walkways are all important components to the overall success of the building's sustainability efforts.

Obama's goals are ambitious. Ultimately, he proposes that all new federal government buildings be carbon neutral, or have zero emissions, by 2030. In the near term, he aims for all new federal buildings to be 40% more efficient and existing federal buildings to be retrofitted to improve efficiency by 25%, all within the next five years. Asking for a building to be carbon neutral is more ambitious than achieving a LEED' Platinum certification, currently the most established standard for optimum energy efficiency. The president also wants to establish a national goal of improving new building efficiency by 50% and existing building efficiency by 25% over the next decade.

Carbon Neutral Buildings

The idea of carbon neutral buildings is not new. It was simply thought, even until the last several years, to be too difficult a standard to be practical. Since then, the American economy has faced the stress of skyrocketing energy costs followed by a rollercoaster of pricing that brought some relief. As a result, the idea of carbon neutrality is catching on. The U.S. Green Building Council is introducing its revised rating systems this year, LEED 2009, with a primary objective of reducing greenhouse gases, which will be accomplished by greater energy and water efficiency, along with incentives to use alternative energy sources.

Incentives

With such a lofty green vision cast for the country, Obama is proposing incentives to encourage its achievement. These include a grant program to award states and municipalities that initiate the implementation of new building codes that make energy efficiency a top priority and support energy-efficient retrofits for existing buildings.

However, green buildings are only part of Obama's goal for sustainability. Both candidates for the presidency were proponents of a cap and trade program to reduce greenhouse gas emissions. Obama specifically supports an economy-wide cap and trade system wherein pollution credits would be auctioned. This would ensure that all industries would pay for every ton of emissions they release. The goal is an 80% reduction in greenhouse gas emissions from 1990 levels by 2050. Since the building sector accounts for almost half of the U.S.'s greenhouse gases on an annual basis, a cap and trade system would create a strong economic incentive for developers to build green buildings. This “tax” on greenhouse gases would make a strong economic case for carbon neutral buildings.

President Obama also wants to set a federal standard that would require 10% of all electricity consumed in the U.S. to be derived from sustainable energy sources like solar, wind and geothermal by 2012 and 25% by 2025. In order for the government to lead by example, he wants at least 30% of all electricity utilized by the federal government to come from renewable sources. The use of alternative energy sources is rewarded with a greater percentage of points in LEED 2009, which again aligns Obama's goals with the priorities of the green building standard bearer. With such a requirement, America's energy industry will transform itself in order to produce the amounts of energy required together with a smart grid capable of transmitting such energy from its sources to its end users.

Next, Obama has outlined incentives to invest in green/clean technology in order to have the infrastructure and industrial base needed for such achievements. He proposes that a portion of the funds generated from the cap and trade system support the development and deployment of clean energy, including transitional costs. By investing approximately $150 billion over the next 10 years, the president aims to generate millions of new green jobs, retool and revitalize shuttered plants and manufacturing centers to develop renewable energy, encourage energy efficiency and advance alternative sources of fuel. He also wants to extend the federal Production Tax Credit for five years to incentivize green technology.

Updating the Energy Grid

If such incentives create the increased supply of renewable energy sources that the Obama administration is seeking, an updated energy grid will be needed in order to use smart metering, distributed storage and other advanced technologies to accommodate the country's changing energy needs. The domino effect creating major power outages in large areas of the country demonstrates the fragile state of our existing power grid. The administration would appoint a Grid Modernization Commission, which will help in the development of a national smart grid. While some estimates of a new power grid have been in the hundreds of billions of dollars ' spread out over a decade or so ' the new administration's approach is to work together with states and utilities to provide an update on major efforts such as establishing a matching grant program to reimburse one-fourth of qualified investments, encourage the deployment of advanced techniques to manage peak load reductions, and energy efficiency savings with smart metering, demand response, distributed generation and electricity storage systems.

Chances of Success

Many presidents have come to Washington with lofty goals and, four or eight years later, leave with many goals unrealized. What are President Obama's chances of realizing his? One preliminary indication that it might not be “business as usual” is the replacement of John Dingell by Henry Waxman as the chair of the House Energy and Commerce Committee, which has sweeping jurisdiction over energy and the environment. Dingell had chaired the committee for 28 years and represented a constituency in Michigan, home to many U.S. automakers. Because of his ties to Detroit, Dingell was often perceived as being an “old-school” supporter of the auto industry and resisting changes to the status quo of an oil-based economy and alternative fuel sources. Waxman, on the other hand, is a strong proponent of regulating greenhouse gas emissions and protecting air quality.

Probably the biggest indicator of Obama's ability to achieve his goals is the passage of the economic stimulus package. Nearly 10% of the entire bill provides funding and tax credits for green energy-related projects. Nearly $11 billion in spending or loan guarantees is going toward the smart grid, and while that is below the estimated $200 billion that may eventually be required, this commitment constitutes seed money.

An additional $4.5 billion has been allocated toward improving energy efficiency and “greening” federal buildings. While this is about half of what Obama originally requested, it is still a significant step in achieving his goal of making federal buildings energy-efficient. Further, the Federal Production Tax Credit was only extended three years instead of the five years Obama sought. However, billions of more dollars are going toward greening public schools and investing in renewable energy research and generation. The stimulus package is a powerful first step and a big down payment on Obama's green initiatives. It also shows Congress' willingness to go along with these programs.

While funds have been committed, this is only half of the battle. The implementation of programs by federal, state and municipal agencies will eventually determine their effectiveness. With sources of financing hard to find for any construction projects, the funding to make federal buildings and schools green can make a large, short-term impact in the building industry. The result will be that, until private development recovers, the standards of some of the largest and most numerous construction projects across the country will be green. This will affect and develop the skill sets
of local contractors and create a “norm” of sustainable practices, which will eventually trickle into the private sector.

Sustainable Standards

The question that remains is, “Exactly what sustainable standards will apply?” LEED rating systems continue to dominate the market and have already become a nationally applied standard through the General Service Administration (GSA), which manages federal office buildings. All new GSA construction projects and substantial renovations must be certified through the LEED Green Building Rating System. Projects are encouraged to exceed basic LEED green building certification and to achieve the LEED Silver level. With the introduction of LEED 2009, which impacts all of the non-residential rating systems (including New Construction, Commercial Interiors, Existing Buildings ' Operation and Maintenance, Core, and Shell and Schools), and specifically prioritizes the reduction of greenhouse gases, it makes sense that such standards would be preferred. For the first time, LEED 2009 also addresses regional challenges in energy efficiencies and allocates bonus points for surmounting these challenges.

Although harmonized standards would heighten the impact of energy efficiencies sought under the stimulus package by comparing apples to apples, such projects will probably help transform the building industry. While the Obama presidency will garner a number of historic footnotes because of issues beyond office buildings, his impact on sustainable buildings will most likely be felt for years to come.

Michael W. McNatt is a real estate attorney and partner with Roetzel & Andress in Orlando, FL. He was the first attorney in Central Florida to become a U.S. Green Building Council LEED Accredited Professional. McNatt can be reached at [email protected] or 407-896-2224.

The election of Barack Obama as president of the United States has many historic overtones. However, with an economic recession that is just as historic, a real estate industry in near freefall and a country questioning its energy sources and uses, how will Obama's policies impact commercial construction projects over the next several years?

The new president has been vocal about his support for sustainability and his goals to help change the way America builds buildings. Unlike many of his predecessors, Obama had an opportunity in the first month of his presidency to structure and pass an economic stimulus package that has dwarfed prior packages and gives a clear indication of his priorities and policies. This article first examines these policies that Obama has espoused, and discusses how they played out in the stimulus package.

President Obama's Vision

During his presidential campaign, Obama set forth a vision that was comprehensive and integrated. He did not want the country simply to use less oil or build more energy-efficient buildings; his proposed policies take an integrated approach that include energy policy, fostering technological development, the electric grid, transportation policies, residential and commercial construction, public and private sector efforts, and new and existing buildings. The need for an integrated approach reflects a process that proponents of green buildings have stated is required in order for them to be most effective: They must be a part of a sustainable community. A building's placement in proximity to a potential workforce, mass transportation, alternative energy sources, retail and dining establishments and pedestrian walkways are all important components to the overall success of the building's sustainability efforts.

Obama's goals are ambitious. Ultimately, he proposes that all new federal government buildings be carbon neutral, or have zero emissions, by 2030. In the near term, he aims for all new federal buildings to be 40% more efficient and existing federal buildings to be retrofitted to improve efficiency by 25%, all within the next five years. Asking for a building to be carbon neutral is more ambitious than achieving a LEED' Platinum certification, currently the most established standard for optimum energy efficiency. The president also wants to establish a national goal of improving new building efficiency by 50% and existing building efficiency by 25% over the next decade.

Carbon Neutral Buildings

The idea of carbon neutral buildings is not new. It was simply thought, even until the last several years, to be too difficult a standard to be practical. Since then, the American economy has faced the stress of skyrocketing energy costs followed by a rollercoaster of pricing that brought some relief. As a result, the idea of carbon neutrality is catching on. The U.S. Green Building Council is introducing its revised rating systems this year, LEED 2009, with a primary objective of reducing greenhouse gases, which will be accomplished by greater energy and water efficiency, along with incentives to use alternative energy sources.

Incentives

With such a lofty green vision cast for the country, Obama is proposing incentives to encourage its achievement. These include a grant program to award states and municipalities that initiate the implementation of new building codes that make energy efficiency a top priority and support energy-efficient retrofits for existing buildings.

However, green buildings are only part of Obama's goal for sustainability. Both candidates for the presidency were proponents of a cap and trade program to reduce greenhouse gas emissions. Obama specifically supports an economy-wide cap and trade system wherein pollution credits would be auctioned. This would ensure that all industries would pay for every ton of emissions they release. The goal is an 80% reduction in greenhouse gas emissions from 1990 levels by 2050. Since the building sector accounts for almost half of the U.S.'s greenhouse gases on an annual basis, a cap and trade system would create a strong economic incentive for developers to build green buildings. This “tax” on greenhouse gases would make a strong economic case for carbon neutral buildings.

President Obama also wants to set a federal standard that would require 10% of all electricity consumed in the U.S. to be derived from sustainable energy sources like solar, wind and geothermal by 2012 and 25% by 2025. In order for the government to lead by example, he wants at least 30% of all electricity utilized by the federal government to come from renewable sources. The use of alternative energy sources is rewarded with a greater percentage of points in LEED 2009, which again aligns Obama's goals with the priorities of the green building standard bearer. With such a requirement, America's energy industry will transform itself in order to produce the amounts of energy required together with a smart grid capable of transmitting such energy from its sources to its end users.

Next, Obama has outlined incentives to invest in green/clean technology in order to have the infrastructure and industrial base needed for such achievements. He proposes that a portion of the funds generated from the cap and trade system support the development and deployment of clean energy, including transitional costs. By investing approximately $150 billion over the next 10 years, the president aims to generate millions of new green jobs, retool and revitalize shuttered plants and manufacturing centers to develop renewable energy, encourage energy efficiency and advance alternative sources of fuel. He also wants to extend the federal Production Tax Credit for five years to incentivize green technology.

Updating the Energy Grid

If such incentives create the increased supply of renewable energy sources that the Obama administration is seeking, an updated energy grid will be needed in order to use smart metering, distributed storage and other advanced technologies to accommodate the country's changing energy needs. The domino effect creating major power outages in large areas of the country demonstrates the fragile state of our existing power grid. The administration would appoint a Grid Modernization Commission, which will help in the development of a national smart grid. While some estimates of a new power grid have been in the hundreds of billions of dollars ' spread out over a decade or so ' the new administration's approach is to work together with states and utilities to provide an update on major efforts such as establishing a matching grant program to reimburse one-fourth of qualified investments, encourage the deployment of advanced techniques to manage peak load reductions, and energy efficiency savings with smart metering, demand response, distributed generation and electricity storage systems.

Chances of Success

Many presidents have come to Washington with lofty goals and, four or eight years later, leave with many goals unrealized. What are President Obama's chances of realizing his? One preliminary indication that it might not be “business as usual” is the replacement of John Dingell by Henry Waxman as the chair of the House Energy and Commerce Committee, which has sweeping jurisdiction over energy and the environment. Dingell had chaired the committee for 28 years and represented a constituency in Michigan, home to many U.S. automakers. Because of his ties to Detroit, Dingell was often perceived as being an “old-school” supporter of the auto industry and resisting changes to the status quo of an oil-based economy and alternative fuel sources. Waxman, on the other hand, is a strong proponent of regulating greenhouse gas emissions and protecting air quality.

Probably the biggest indicator of Obama's ability to achieve his goals is the passage of the economic stimulus package. Nearly 10% of the entire bill provides funding and tax credits for green energy-related projects. Nearly $11 billion in spending or loan guarantees is going toward the smart grid, and while that is below the estimated $200 billion that may eventually be required, this commitment constitutes seed money.

An additional $4.5 billion has been allocated toward improving energy efficiency and “greening” federal buildings. While this is about half of what Obama originally requested, it is still a significant step in achieving his goal of making federal buildings energy-efficient. Further, the Federal Production Tax Credit was only extended three years instead of the five years Obama sought. However, billions of more dollars are going toward greening public schools and investing in renewable energy research and generation. The stimulus package is a powerful first step and a big down payment on Obama's green initiatives. It also shows Congress' willingness to go along with these programs.

While funds have been committed, this is only half of the battle. The implementation of programs by federal, state and municipal agencies will eventually determine their effectiveness. With sources of financing hard to find for any construction projects, the funding to make federal buildings and schools green can make a large, short-term impact in the building industry. The result will be that, until private development recovers, the standards of some of the largest and most numerous construction projects across the country will be green. This will affect and develop the skill sets
of local contractors and create a “norm” of sustainable practices, which will eventually trickle into the private sector.

Sustainable Standards

The question that remains is, “Exactly what sustainable standards will apply?” LEED rating systems continue to dominate the market and have already become a nationally applied standard through the General Service Administration (GSA), which manages federal office buildings. All new GSA construction projects and substantial renovations must be certified through the LEED Green Building Rating System. Projects are encouraged to exceed basic LEED green building certification and to achieve the LEED Silver level. With the introduction of LEED 2009, which impacts all of the non-residential rating systems (including New Construction, Commercial Interiors, Existing Buildings ' Operation and Maintenance, Core, and Shell and Schools), and specifically prioritizes the reduction of greenhouse gases, it makes sense that such standards would be preferred. For the first time, LEED 2009 also addresses regional challenges in energy efficiencies and allocates bonus points for surmounting these challenges.

Although harmonized standards would heighten the impact of energy efficiencies sought under the stimulus package by comparing apples to apples, such projects will probably help transform the building industry. While the Obama presidency will garner a number of historic footnotes because of issues beyond office buildings, his impact on sustainable buildings will most likely be felt for years to come.

Michael W. McNatt is a real estate attorney and partner with Roetzel & Andress in Orlando, FL. He was the first attorney in Central Florida to become a U.S. Green Building Council LEED Accredited Professional. McNatt can be reached at [email protected] or 407-896-2224.