Fast-Tracking Green Economic Recovery: Some Advice for the New Congress

Fast-Tracking Green Economic Recovery: Some Advice for the New Congress

As the 111th Congress gets under way this week, the key task will be developing a fast-track economic stimulus program — ideally one that emphasizes sustainability.

There are already a number of excellent measures on the books that can be extended or expanded to support a green recovery. Why draw attention to them now? They've already passed Congress and have garnered bipartisan support — and now is the time to implement or expand them in support of economic stimulus. Here are several existing initiatives — all broadly gauged measures that can implemented rapidly through power companies, electrical cooperatives, local or state governments or private business — that can be strengthened to support a green recovery:

Energy Efficiency and Conservation Block Grants. Congress enacted the Energy Efficiency and Conservation Block Grant program under the 2007 Energy Act. The program was created to fund a wide range of local initiatives for energy conservation in transportation, buildings and other sectors. Larger local governments would receive funding based on population. States would distribute funding to smaller communities. Block grants could be used for such activities as equity, loans or public purchases related to green building development or renovation, mass transit, energy audits, green technology development and green job training. The infrastructure to disseminate the grants already exists at the local and state levels, and the block grants could finance new or stalled green projects with almost immediate job creation consequences.

With such a potentially powerful program in place, why haven't you heard about it? It's never been funded. An emergency Congressional appropriation is warranted in an amount sufficient to jumpstart economic stimulus. Rob Cerreta of Franklin, Tennessee, a reader of this blog, advocates block grant appropriations of $1 billion for each major U.S. city — a bold number for Congress to consider.

•    Clean, Renewable Energy Bonds and Qualified Energy Conservation Bonds. The TARP legislation passed in October provides capital for two categories of tax credit bonds, under which bond purchasers receive federal tax credits in lieu of interest: (1) renewable power bonds issued by power companies, state and local governments and electrical cooperatives; and (2) bonds issued by state and large local governments to support reduction of energy consumption in public buildings; green community programs; rural development programs that include renewable energy production; and renewable energy facilities. The funds may also be spent on related research, demonstration projects, mass transit, or public education campaigns. Funding has been authorized at $800 million for each program, for a total of $1.6 billion. In light of the substantial sums being advocated for economic stimulus and energy investment, I'd urge Congress to raise the spending authorization for these powerful and innovative bond programs.

•    Energy Efficient Commercial Buildings Deduction. This incentive, enacted under the 2005 energy bill and extended through 2013 under TARP, provides a tax deduction of up to $1.80 per square foot for commercial buildings that exceed ASHRAE energy efficiency standards by 50 percent. Conversion of the deduction to a tax credit and/or expansion of the deduction's scope would create much-needed construction jobs. A Green Building Tax Credit would be a worthwhile companion to the venerable and well-known Historic Preservation Tax Credit. If a program with a broader job stimulus scope is desired (a point that will no doubt be debated vigorously), tax deductions or credits could be extended for commercial buildings with more moderate levels of energy savings.

•    Tax Credits for Energy Efficiency Investments. Tax credits for investments in biodiesel and renewable diesel, alternative fuels, alternative fuel refueling centers and residential energy efficiency improvements expire at the end of 2009. With economic recovery at stake, it is appropriate to provide taxpayers a longer time horizon. Congress should expand these programs for at least two additional years.

Leanne Tobias is founder and principal of Malachite LLC, an advisory firm that specializes in the development, leasing, management, financing and certification of sustainable or green real estate on a global basis. Write to Leanne about your thoughts on jumpstarting the economy at [email protected]. She'll share the best ideas in future posts.