With patriotic timing and following in the footsteps of pilot programs in California, Colorado and New York, the City of St. Louis today announced the launch of its very own PACE program. PACE stands for “Property Assessed Clean Energy” and is a novel funding mechanism enabling more folks to participate in the energy retrofit revolution.
Set the PACE St. Louis—the name of the new program—allows St. Louis property owners to engage local contractors and energy auditors to perform analysis and property improvements at very low upfront costs. Additionally, the PACE loan stays with the property upon sale transferring to the new owner, commercial property owners may pass payments through to tenants, and borrowing capacity is preserved through off-balance sheet financing.
Translation? The loan does not show up as traditional debt because it is secured by a special tax assessment. Further, many of these energy projects save more on energy costs than the monthly financing payments which means a positive cash flow. You put extra bucks in your pocket every month.
These groundbreaking characteristics are the reason PACE was named one of Harvard Business Review’s ten breakthrough ideas of 2010 and Scientific American’s top 20 ideas that can “change the world.” It’s a triple-win scenario, good for your wallet, good for the environment, and it creates jobs—a perfectly patriotic narrative for Fourth of July.
Since 2008-09, PACE legislation has been passed in 30 states and District of Columbia covering 80% of the population of the United States. Pilot programs have seen tens of millions of economic activity and thousands of jobs either created or retained.
The Set the PACE St. Louis program helps implement the City’s Sustainability Plan and is part of the Mayor’s Sustainability Action Agenda.
“I have established a target of achieving 25 percent reduction of greenhouse gas emissions by 2020; this financing program will help us meet that environmental target while also saving people money and boosting local employment,” said Mayor Francis Slay. “The City’s PACE financing program is an important tool for achieving energy efficiency, one of the pillars of President Obama’s newly announced Climate Action Plan.”
“By facilitating the installation of energy efficiency measures through this attractive financing option, the City is helping private individuals reduce our carbon footprint,” said Catherine Werner, Director of Sustainability for the City of St. Louis. “Set the PACE St. Louis leverages private capital to spur energy efficiency improvements and is revenue neutral to the City.”
Let’s face it—energy costs aren’t getting any cheaper, and study after study have shown the least expensive form of energy is a slightly counter-intuitive idea—the “negawatt”—the watt of energy that’s never used. Investments in energy efficiency measures regularly return savings of 400%. In a white paper for the Missouri Energy Initiative (MEI) I wrote with Suzanne Watson of ACEEE a few years back, we sought to explain energy efficiency in the context of smart asset management:
“Energy efficiency saves money for consumers and businesses, lowers the stress on the energy grid, promotes home health and comfort, and, in sum, is simply a smarter way to power our communities and economy. In the coming years, as energy costs continue to rise, energy efficiency is a strategic approach toward more fiscal and environmental responsibility in modern resource and asset management.
Energy efficiency is often confused with “energy conservation”, which is ‘doing without’. It is important to note that with new technological innovations, more efficient electrical and electronic components and infrastructure—and smarter ways to transport and fully realize the energy that we use—efficiency is about upgrading and modernizing the systems we employ that utilize energy, not merely ‘doing without’.”
Set the PACE St. Louis will not only spur growth in the proliferation of energy efficiency measures, but it also finances renewable energy projects like solar panels. And we are seeing exponential growth rates in the expansion of renewable energy—solar and wind being keystones in the world’s renewable energy portfolio. Renewables are set to overtake natural gas by 2016 as the second largest energy source.
“At its second annual Medium-Term Renewable Energy Market Report, the International Energy Agency, (IEA) said that by 2016 clean energy will overtake natural gas to become the second largest source of energy in the world behind coal. In 2012 global renewable energy generation grew by 8%, far exceeding expectations. This rate of growth is predicted to continue, leading to an overall increase of 40% over the next five years, and meaning that they will account for 25% of the global energy mix by 2018.”
Buildings account for a sizable percentage of greenhouse gas emissions—achieving double digit percentage increases in energy efficiency in commercial and residential property will work toward bringing the human enterprise into a more sustainable and harmonious relationship with the world’s natural ecosystem—an ecosystem that today, sadly, is under threat from exponential human population growth and increasing environmental degradation.
Programs such as Set the PACE St. Louis that combine market friendly approaches toward reducing pollution while saving folks on energy costs have been tried before—and they work. Triple bottom line initiatives, like Set the PACE St. Louis, are the ones that we as a nation should rally behind—they are transpartisan and bring us together as national family helping to restore our economy and our environment.
For more information on Set the PACE St. Louis please visit: www.setthepacestlouis.com.
For more information on the City of St. Louis Sustainability Plan click here.