The unlikely alliance for the future of clean energy jobs

In this month's column from the Pivotal Leaders business network, Jules Bailey, Oregon State Representative from Inner Eastside Portland and a Principal at Pareto Global, discusses the role policymakers on both sides of the aisle can play in retrofit and clean energy financing and job creation.

In politics, the month before Election Day is the peak of the “silly season.” Candidates jockey for position and campaign rhetoric flies. This season, however, there is a consistent and unifying theme around jobs in the clean economy, and it’s coming from unlikely places. It will be necessary to move forward the innovations we need to unlock the potential of clean energy (PDF).

Oregon has a history of working together to marry jobs and the environment. In 1973, Governor Tom McCall, and Senator Hector McPherson, both Republicans, teamed up with Democrats to pass SB 100 and create Oregon’s land use planning system. When it passed, SB 100 was in part a bill to support rural communities and protect jobs in the agricultural and timber industries.

Last session, a bi-partisan group of legislators came together to pass HB 2626, the Energy Efficiency and Sustainable Technology Act (EEAST). EEAST, which helps homeowners pay for energy efficiency upgrades, passed unanimously in House, supported by climate warriors and climate skeptics alike. EEAST, through Clean Energy Works Oregon, has won national attention and is creating jobs not only in Portland, but in Klamath Falls, Hood River, and Astoria as well.

The partnership on clean energy we’ve seen in Oregon is now taking root nationwide. In Turkey Foot, Kentucky, the school district just finished building the most efficient, greenest, high-performance school in the nation. Rep. Jim DeCesare, a Republican in one of America’s redder states, has been a champion for healthy, high performance schools because they reduce costs, improve learning, and create jobs.

In Jackson, Wyoming, the local utility is working with the town and county to create a pioneering privately financed, publicly facilitated, utility partnership for clean energy and retrofits. Rep. Keith Gingrey, Jackson’s representative in the legislature, has sponsored several bills to save energy, create jobs, and promote economic development through the clean economy. 

If these stories sound familiar, it’s because there are similar examples across the country in communities that are rural and urban, Democratic and Republican. That’s why the recent decision by Fannie Mae and Freddie Mac to put a freeze on Property Assessed Clean Energy (PACE) programs has created such a bi-partisan storm in Congress. Members of Congress from coast to coast are hearing from their constituents and local leaders that PACE and similar programs are critical to the economic recovery. The Coalition of Legislators for Energy Action Now (CLEAN) sent a letter to Congress with over one thousand signatures demanding Federal leadership on clean energy jobs.

We would do well, for our economy and our climate, to build on this momentum. We can start with a job-creation program to renovate our schools. A high-performance schools program would save money, allow us to stretch budget dollars further, and give our kids and teachers a healthier place to spend their days. I recently met Addie, a fourth-grader at Stoddert Elementary School in Washington, D.C. Addie’s school was just retrofitted to meet LEED standards, saving almost 30 percent of energy costs annually. It is Washington, D.C.’s first geothermal school. Addie showed me with pride the efficient lighting, the recycled floor, and the big windows that let in daylight. I asked Addie if she liked her school better now.  She looked at me and without hesitation stated, “It’s a great place to learn.”

What might future policies for clean energy financing look like? While PACE has been an effective rallying cry, it is also the symptom of the search for a “silver bullet” financing option when none exists. PACE is a security mechanism and a collection mechanism for a model based on consumer loans. There are other loan options that exist. Models based on on-bill financing, even with unsecured loans as in Clean Energy Works Oregon, are still operating well. Yet as we innovate, we need to move risk off the individual and evolve the next generation of utility investment.

In Oregon, the Energy Trust has done a remarkable job of identifying and investing in cost-effective energy efficiency. Now it’s time to link that expertise to the private market to treat efficiency more like a generation source.  By unlocking the value stream inherent in energy efficiency, we can drive private investment into retrofitting buildings, and couple that investment with renewable energy and local manufacturing.

Efficiency is not generation, and faces different challenges. The value is measured against a theoretical baseline. The value depends on human behavior. Efficiency is a diffuse benefit across many buildings with many owners. It is difficult for a utility to own and optimize an efficiency investment.

These are difficult challenges to scaling energy efficiency and clean energy, but they are not insurmountable. However, now that Congress and moved clean energy off its agenda, innovation will have to come from states and localities.  What might such policies look like?  I offer a few:

• Create the infrastructure to support distributed clean energy investments by deploying smart meters that not only deliver the metrics investors need to track performance, but also allow for future programs where the utility can optimize home energy performance. Utilities should be incented to deploy this infrastructure.
• Prioritize a portfolio approach that creates a larger package of retrofits and projects in which to invest. A portfolio approach reduces risk, allows for better planning, and creates leverage opportunities between institutional/commercial and residential structures.
• Enable states to blend bonding dollars, patient capital, and one-time funds to create low-cost financing options for clean energy investment. Such policies might include loan-loss reserves and on-bill repayment that take the place of property liens.
• Allow utilities to enter into energy efficiency power purchase agreements with third party entities who identify and invest in energy efficiency on a portfolio basis, and who manage it over time.

States have the ability to directly influence utility policies and regulatory environments. These policies are the first step in a process that will ultimately require correct pricing of energy and carbon to give the most accurate information to the market.  But in order to get there, policymakers will have to put aside their ideological differences and focus on the enormous opportunity clean energy investments provide. We have made progress, but we must remember that there are many more fourth-graders like Addie who are waiting for us to do more.

Jules Bailey is a State Representative from Inner Eastside Portland and a Principal at Pareto Global. He co-chief sponsored the Energy Efficiency and Sustainable Technology Act. 

The Pivotal Leaders business network aims to grow the Northwest cleantech industry by cultivating leadership in Oregon, Washington, Idaho and British Columbia. Through this twice-monthly column, members of the Pivotal Leaders network take turns discussing some of the most pressing issues and trends facing cleantech entrepreneurs in the Northwest and beyond.