- The Washington Times - Saturday, June 28, 2008

A “green” bill proposed on June 9 by Rep. Anthony Weiner, now under consideration by the Committee on Energy and Commerce on Science and Technology, needs reconsideration. It would provide up to $100 million in loan guarantees to retrofit buildings to high-performance green efficiency standards and comes as cities, towns and businesses across the nation work to balance budgetary woes.

Certification standards for these green buildings may also end up putting a strain on the budgets of governments and businesses, including:

  • The installation of low-flow faucets, shower heads and toilets could be particularly burdensome for small businesses, (especially home-based), restaurants, laundromats and small retailers.
  • The call for 75 percent to 90 percent of school classrooms to have a significant amount of windows to produce natural light. (School districts have spent and are spending exorbitant sums to upgrade their schoolhouses. With states and localities struggling to keep their budgets balanced without raising taxes, such mandates could wreak political and fiscal havoc.)
  • The reduction of outdoor lighting, and the level of wattage used in outdoor lights, may be difficult for college campuses focusing on safety and security as a major priority.

  • The green building trend entails a complete redesign of the building’s structure and orientation to monopolize natural sunlight, advance lighting controls and low-flow water mechanisms to decrease water waste. Under the Weiner legislation, guarantees can be made for up to 80 percent of the project cost.

    Although long-term benefits of energy and water conservation are undeniable, legislators must heed the ambiguity of return on a costly investment during economic uncertainty. “There is a consistent concern, both within and outside the green building community, over the lack of accurate and thorough financial and economic information,” reports the Clean Energy States Alliance. Uncertainty regarding cost cannot be ignored as many companies are cutting short-term costs to remain afloat. Yes, long-term overhead costs would decrease due to efficiency. However, some businesses have no choice but to consider the short term, which explains the appeal of the loan-guarantee program: security of loans backed by the government.

    A key point that is missed, however, is that these loans must still be paid off by the borrower. Furthermore, despite the comfort of having federal funds as a security blanket, if the business defaults, it loses significant operational power to the government. The government, in turn, could hold the property, and the Energy Department would have to shell out the principal and interest on the loan. The bill is essentially a pre-planned bailout in which the private sector and government will inevitably clash.

    The guarantee also stipulates that the Energy Department must approve interest rates and terms of repayment. “Mandating any green building standard limits the flexibility of builders to make choices appropriate to each particular structure,” argues a July 2005 article in the National Center for Policy Analysis Digest. If companies cut corners to follow guarantee requirements, energy efficiency will not be fully maximized.

    The Bush administration has already threatened to veto similar retrofit bills such as the $6.4 billion 21st Century Green High-Performing Public School Facilities Act. “The Federal Government’s responsibility for elementary and secondary education is properly focused on raising the academic achievement of all students and improving accountability for results. The federal role should not be expanded to fund school modernization and repair projects at thousands of school districts across the nation,” said a White House policy statement. The administration itself asserts the need for increased focus on education, over building efficiency. So, why should the government hypocritically guarantee and potentially have to bail out borrowers retrofitting other buildings?

    Businesses would save money and average costs would be less. According to Randal O’Toole of the Cato Institute, “for Congress to prescribe this so companies would eventually save or make money is wrong. There are other ways government spending could help the environment.”

    Now is not the time to guarantee debt taken on by the private sector for new buildings, when millions of Americans are losing their homes and businesses. The focus should be on research and development, and cleaner-burning and alternative fuel sources.

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