By Caroline Dobuzinskis
With the job market crashing and a reported one in five mortgages underwater, the need for complex solutions to fix the US economy grows increasingly urgent. Ed Mazria, founder of the non-profit research and education organization Architecture 2030, has put forward a proposal to combat two urgent economic crises with one plan that will not only relieve financially strapped homeowners and generate job opportunities, but also leave us with a more resilient, more efficient built environment when this crisis is over.
Mazria believes the government should invest in the private building sector by giving developers and homeowners financial incentives to build (and retrofit) greener buildings – thus boosting jobs around construction and renovation. To outline his plan, Mazria and Architecture 2030 have developed the 2030 Challenge Stimulus Plan, a proposal that Mazria calls the “Two-Year, Nine-Million-Jobs Investment Plan. (Download details of the plan here.)
According to Mazria, the next energy bill to come through Congress is already likely to include a plan for making all buildings carbon neutral by the year 2030. President Obama made this promise during his campaign. The Architecture 2030 Challenge lays out a timeline: all new buildings and major renovations should should meet a 60 percent fossil fuel reduction standard by 2010; all buildings should be carbon neutral by 2030, and all state and federal buildings should follow suit. But Mazria and his team are making a case for implementing these goals in the private building sector now. And the way they see it, no start date is too soon.
I spoke with Mazria about his investment plan, and how he expects industry representatives, government officials and homeowners to react.
Caroline Dobuzinskis: When did the idea for the Two-Year, Nine-Million-Jobs Investment Plan come about?
Ed Mazria: We have a unique perspective because, as a research organization, our focus is the building sector, climate change, and the economy. At Architecture 2030 we were able to address the [economic] situation from that perspective, looking at the economy and the building sector that was dragging the whole economy down because of the mortgage prices. And, since we know the building industry really well having been in it for forty years, we know what it takes to bring it back, and we want to bring it back in an environmentally sound way. That was the reason why we investigated the economic crises in the building sector, and then how to create the jobs in the building sector to bring the US economy back.
CD: Tell me how your plan aims to help the private building sector and homeowners.
EM: We think now the federal government should step in and create an incentive for the private building sector to get back on its feet. Probably the largest segment of unemployment driven by the economic downturn is in the private building sector, both in construction and manufacturing of materials that go into the building sector and services that support the building industry. So in order to turn the economy around, you must address the building sector.
For every federal dollar that you put in, you want the private sector to add at least $2 to that, so that you can create at once as many jobs as possible. And the one way to do that is to tie federal money to energy reduction targets, so that the private sector has to then come in and fund energy upgrades in order to get the federal dollars.
Homeowners get greater incentives for the greater reductions that they can accomplish on their buildings. With a mortgage buydown tied to energy reduction, the homeowner saves on his monthly mortgage, and he also saves on his utility bills. He not only saves on mortgage interest, he also recaptures the money that’s [currently being] lost because most housing is leaking energy. [The money generated by creating] more jobs, and by the taxes from the folks paid to do the renovations, can go back to the federal government and the states to fund both infrastructure projects and to pay the government back for the outlay. It’s kind of a full circle proposal.
CD: How can homeowners receive lower mortgage rates to improve the energy efficiency of their homes?
EM: Homeowners can aim for 30, 40, 50 or 75 percent below the energy use target required by the IECC 2006 and ASHRAE 90.1-2004 code standards, or they can aim for carbon neutral, and each target is tied to different incentives. So one of the examples we give is, if you want to get 75 percent below code — basically saving 75 percent on your energy bills — we estimate that [the renovations] would cost about $51,000. So you add that amount into a new mortgage but as an incentive you receive a much, much lower interest rate so that your monthly outlay, even with $51,000 added to the amount of the mortgage, would be much, much less.
You would be investing that $51,000 in upgrades like replacing equipment that was outdated, not working properly or not really efficient. You might be adding insulation; you might be adding skylights and windows to let the sun in; you might be making windows operable so you have natural ventilation so you can look at passive solar heating/cooling strategies. You could take advantage of tax credits, for example, to install a solar voltaic system. There are almost an infinite number of ways you can make your home more efficient if you have an existing home.
CD: The federal government would be setting the mortgage rates?
EM: Right now the federal government is the only one that is buying mortgages. Banks that are lending mortgages are selling them to Fannie Mae and Freddie Mac. We think that number is now 90 to 95 percent of all mortgages so [the federal government] can then set the targets.
CD: Is the average homeowner ready to make these changes?
EM: Absolutely, because everyone wants to save money and have more expendable income on a monthly basis. The reason the first stimulus last year didn’t work was because you gave everybody a check on a one-time basis. In our plan, you are talking about $300 to $500 a month in savings. That’s huge. We think people will be lining up at the doors to take advantage of this.
The one place we think people will invest is in their own house. The other thing we think is, by taking advantage of the lower rates, people would not only make the efficiency upgrades but they would probably spend some more to do some things that they had put off for awhile because the rates are fairly lucrative. Our analysis just took into account the spending on efficiency, but we think there would be a lot more spending as we go along.
CD: Do you see your plan as part of an upcoming bill?
I think that the plan will come up when [legislators] talk about how we get the building sector back on track. Right now what they have been doing is focusing on the foreclosure crisis, not on the building sector as a whole. They haven’t yet focused on the private sector, but I think that is going to be coming up. I am not sure which committee is going to take the lead on that, but it has to be dealt with because it is a sector that is dragging the economy down. I think right now the administration is focused on putting out fires.
CD: At your presentation at the National Building Museum in February, you and John Podesta talked about the US serving as a model for other countries. Do you think that there needs to be international policy to follow?
EM: I certainly do. I think the US must take a leadership role when it comes to the environment, and climate change, and building efficiency. How we turn our economy around is going to influence how other entities and governments turn their economies around. If we just deal with the economic situation without dealing with the energy crisis and the climate change issue, we are not going to get very far, because those are coming right up and will drag us down again. And, we have a great opportunity to deal with all three issues at one time, and that will set the stage in terms of other governments.
Caroline Dobuzinskis is a freelance writer based in Washington, D.C.
Published by WorldChanging Team, April 15, 2009