Updated 9-8-2017 Rebuilding America

REBUILDING AMERICA, Clean and Green

3 Million new jobs, 100 billion+ in additional tax revenue, 1st year 12.5 GDP growth, with an average of 6% over 5 years, and 30  % cut to GHG (with more after testing begins), unemployment down below 3%, better, long lasting products, more money in consumer’s pockets

Year 1 (Building envelope and housing focused)

Inputs

 

(in B$$)

0      National building code, with penalties, and hold on sale/rental based on energy efficiency   levels, minimum energy efficiency of windows (R-6?), doors and building envelopes (R-20?),  as well as energy usage meters on cords of devices, phase in 2022, which is also the payout year on the lend loss insurance. National recycling standards bill, requiring 2 weekly pick up in most  towns , and 70% material reusability for electronics, and a 5 year life span

 

-25      Training program –

{Treasury} Turn out 2 million qualified energy experts,  priority for recent  fossil fuel employees

 

Land grant colleges

20,000 teachers @65k (includes overhead) @ to teach Energy audit HVAC and                                               insulation

Stipends for 1 million low income/ hardship grants for 6 months @12,500

1 million no tuition scholarships

 

+100    Green bond issues-

{Public sales}  Lend loss fund for 1 Trillion(assuming a very conservative 10% fail rate)  in gov backed                           conservation bonds for efficiency(up to 50% deal size), generation (20%), cosmetic(max 30%)

Outputs

Savings increase, nationally as the bonds become savings currency at high yield 4%

(in B$$)

1000   Retrofits and upgrades–

10 Million buildings being upgraded, building material sales, labor

+100    Revenue increase

Assumes a very low Income tax collection of 10% on the trillion spent

 

 

Overall synopsis:

 

A GREEN NEW DEAL FOR THE USA

 

Darrell Prince, Jon Rynn, Ph.D. and Brian D’Agostino, Ph.D.

copyright 2014

 

More than four years after the U.S. economy entered a nominal recovery, unemployment and underemployment in 2014 in much of the country remains at recession levels. During these years, Hurricane Sandy and an epidemic of droughts, floods, and tornados have devastated much of the country, reminding everyone about the rising sea levels and extreme weather events being caused by climate change.  Both of these crises—economic and environmental—have a common solution that is politically and financially feasible.  In this paper, we outline a policy that can achieve this solution.  It offers the single best program for any political leader wanting to deliver on campaign promises of providing economic relief to the middle class and poor, while investing in a sustainable future.

The Green New Deal we discuss involves a unique partnership between the public and private sectors and features a bold program of investment in energy efficiency.  The main form of this investment would be refurbishing single family homes, for state of the art energy efficiency and energy generation.  Such housing stock is currently the most energy inefficient of all housing, and thus “low hanging fruit” for any effort to reduce private energy costs and the nation’s carbon footprint while simultaneously creating millions of new jobs.

What currently prevents such investment from occurring on a large scale?  According to the American Council for an Energy Efficient Economy (2013), financial institutions have ample funds to loan for such purposes and the economies that can be realized from such investment are indisputable.  “By far the greatest obstacle identified by [lenders],” they write, “is a lack of customers actively seeking financing for energy efficiency investments.” This sounds like lack of a good old-fashioned, Madison Avenue demand generation marketing and advertising campaign, as well as a “tin men” style of door to door sales.  The remainder of this paper discusses a public policy innovation that can greatly increase consumer demand for energy efficiency investment and open a vast flow of private capital, earmarked for such improvements to homeowners, creating millions of productive jobs and revitalizing American manufacturing.

The Green New Deal we envision involves two parts: 1. A national energy efficiency building code standard, set in place for seven years hence, and 2. the issuing of a $100 billion in high yield (4%) US backed bonds that would absorb private capital and make it available for a fixed total publicly administered lend loss fund.  Making a conservative estimate of twice the current fail rate of such deals of 5%, a 10% coverage means such a program covers a trillion dollars in investment deals of this type.  Assuming the US is able to capture 10% of this revenue back as taxes, interest rates on the bonds are easily covered by $100 billion in extra tax reciepts.   Moreover, the number of buildings (100 million) in the US, means that conversion market will need 4-5 trillion before all is said and done, which will have a 10-12 year payback on energy savings—a lot of financing, on simple deals.

With this much money flowing that way; large scale demand generation, and product companies will develop quickly to take advantage of such a large emerging market; and big capital will move from plodding antagonist bent on protecting existing cash flows on fossil fuels to enthusiasts seeking to move into low-risk high volume plays, that will also yield several high risk, high reward new technology plays.

Rather than traditional bond markets; the bonds themselves would be targeted towards traditional commerical banks, with these bonds being eligible as “reserve capital”, thus ensuring buy-in from large institutions, though a disproportionate number would be earmarked for smaller banks. The bond sale would serve as “buzz” for the deals themselves. It’s also a huge PR boost to banks, headlines that read ”Wall Street saves the World,” is a little different than their current pariah status for most Americans.

The private financing would make ultralow interest home improvement loans intended to retrofit housing for energy efficiency, energy generation and remodeling.  The program should be designed to require a bare minimum of paperwork from homeowners and no net increase in monthly costs.  Once the improvements are made, the loan can be repaid entirely out of the savings resulting from lower costs for fuel and electricity.

This funding system uses public policy to create incentives for private lending by increasing consumer demand for investments in energy efficiency.  The citizens earn interest on bonds, the lenders get larger, more stable reserves from customers, as well as high volume of low risk deals, the homeowners undertake the investment and realize long term cost savings as well as measurable status upgrades to their homes, and the US  reaps the positive externalities of large scale job creation and a greatly reduced carbon footprint.

The job creation would occur through a multiplier effect—homeowners would employ contractors and their workers, who would purchase materials from local businesses, which in turn will need to be manufactured, spurring job growth in manufacturing as discussed by Rynn (2010).  The program embodies the principle of “subsidiarity,” namely the use of government in a way that empowers, rather than pre-empts, action in the private sector (D’Agostino 2012).

 

 

REFERENCES

 

American Council for an Energy Efficient Economy. 2013. Engaging Small to Mid-Sized Lenders, Executive Summary.

 

D’Agostino, Brian. 2012.  The Middle Class Fights Back: How Progressive Movements Can Restore Democracy in America. (Santa Barbara, CA: Praeger).

 

Rynn, Jon. 2010. Manufacturing Green Prosperity: the Power to Rebuild the American Middle Class. (Santa Barbara, CA: Praeger).

 

 

Steps, by department                      

 

President

Public address to the nation:

Aim for 10% reduction in energy usage by simply asking

Ask the country to shut off extra lights, people and businesses(downtown DC is a good example as is the earth at night)

 

D of Ed

Audit national high schools- make sure there is funding for, and widespread shop classes in high schools, add energy generation and conservation unit to  curricula, preferably on a Knewton type system, which will expose teachers to advanced teaching tools.

(also helps to address a mechanical skills deficit in our youth)

Coordinate the stipend/ scholarship agreements with land grant colleges, and together with DOEnergy and energy accrediting agencies, develop curriculum for energy efficiency/HVAC/alternative energy generation

 

 

EPA

Establish at tap water testing as a right for renters/residents, and require that fracking chemicals be publicly disclosed, and begin studies of wastewater sites, develop test criteria for agrobusiness sites for GHG emissions, regulate trash as a pollutant, and require composting and twice weekly recycling pickup. Look to regulate methane as a pollutant.

 

Agriculture

Test agrobusiness for GHG emissions and look for longer-term emissions cuts

 

HUD

Financing for multifamily unit efficiency upgrades does not count towards debt maximums, energy audits mandatory, as is environmental testing (air and at tap water testing), once a year for failing standard every 5 for passing it.

 

Fannie Mae

require efficiency audit, and minimum 50% alternative energy purchase for funding (local or from provider) On all new deals, require an upgrade to new standard within 2 years.

 

Federal Reserve/Treasury

mechanism for distributing green bond sales, and allow bond sales to count as reserves up to ? % of total value

 

Additionally, while the green bond program is excellent for providing people with investment alternatives, and provides Wall Street with impetus to push these programs, in truth, the easiest way to fund this would be a “temporary monetary expansion” meaning the Federal Reserve makes all of those loans (through proxies) and as they are paid back the money is taken out of circulation.

 

Opinions from the Fed regarding this should probably be issued

 

ACEEE+ DOE+ Energy Star??

Create energy standards for national building code, (min r-20 for walls and r-8 for windows)

and audit type – projections for cost savings over 10 year span. Recyclability standard research for consumer electronics and lifetime measurement.

 

DOE

Focus funding on retrofit research for buildings, vehicles and gas stations(start with military base?), equity funding on for municipal bio gas systems, on cord energy metrics system for new appliances, recyclables sorters, build large accelerators, and plan on loan portfolio being a 50% loss- progress is risk

3 year delay on DOE developed technologies going overseas

Sketch out national recycling program(Commerce?)

Create template national building code and costing estimates for min  50% reduction GHG emissions per capita

 

Congress

 

Pass recyclability 90% standard, and minimum average life for consumer electronics sold in the US 70% or so and 3 year minimum average lifetime, and a national building code.

 

Pass Bond issue.

 

 

 

 

 

 

 

 

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