Obama's Efforts to Green Jump Start the Economy

By Michael W. McNatt, Esq., LEED AP

Michael W. McNatt, Esq., LEED AP Courtesy of Roetzel & Andress

In an environment with climbing unemployment, a skyrocketing foreclosure rate and falling housing values, President Barack Obama has won a historic legislative victory in the passing of the economic stimulus package–not just in the size and scope of the bill but also on the basis on which the bill is attempting to revitalize the faltering U.S. economy. Whether for right or wrong, for the past century or so, America’s economy has been largely based upon petroleum and consumption. The revolutionary aspect of the stimulus package is that sustainability undergirds many of its proposals, which is the antithesis of petroleum and consumption. Nearly 10 percent of the entire stimulus bill provides either funding or tax credits for sustainable projects–from alternative, clean and sustainable forms of energy to manufacturing clean technologies and increasing energy-efficiency in homes. Obama is clearly pinning a lot of America’s economic future on conservation and sustainability.

Claire Woolley, LEED AP, Vice President, Howard Ecker + Company Courtesy of Howard Ecker + Company

Long before his election as president, Obama set forth an ambitious vision presented as a comprehensive and integrated plan. He wants to create five million new jobs over the next 10 years to promote private efforts in building alternative energy sources and the technology that drives it. He wants to put a million American-made hybrid cars on the roads by 2015, which will have mileage of up to 150 miles per gallon. He also wants to promote development of renewable energy, together with the next generation of biofuels and its related infrastructure. As a result of all these efforts, the country will need an updated energy grid in order to use smart metering, distributed storage and other advanced technologies. With the goal of a highly skilled manufacturing workforce and manufacturing centers, Obama calls for America to pioneer green technologies that will be needed by the rest of the world such as developing battery technology. With America’s auto industry in trouble and much of its manufacturing in economic decline, the prospect of modernizing manufacturing centers and helping American workers learn skills to create clean technologies offers more than simply trying to do things the way they have always been done.  

The housing market has also been a major component of the economic expansion of the last decade. With foreclosures hitting new records, promoting sustainable housing will not revive credit markets or keep families in their homes. There is definitely a credit component to the problem that Obama will need to address through means other than the bailout package. However, his efforts to build a smart energy grid are a part of the integrated approach to his proposals. This allows homes to utilize alternative energy sources such as wind, solar or geothermal. The smart grid allows homes with residential solar systems to provide energy back to the grid (through net metering) and contributes to energy-efficient, green housing. Green houses save energy in two ways: by using less energy and doing more with the energy it does use. Obama is proposing tax credits to encourage consumers to utilize energy-efficient, Energy Star qualified appliances, windows and doors. He also wants to provide green, low-income housing and to help weatherize existing housing. He wants a federal standard that would require 10 percent of all electricity consumed in the U.S. to be derived from sustainable energy sources by 2012 and 25 percent by 2025.

Bob Horner, Co-Owner/Founder and Principal, Winthrop Properties Courtesy of Winthrop Properties

So with such an ambitious sustainable agenda, is it realistic that Obama can succeed where others have not? Former President George W. Bush tried for eight years to have Congress pass his energy plan and it was never adapted. One preliminary indication that it might not be “business as usual” in Washington under an Obama administration is the replacement of John Dingell by Henry Waxman as the chair of the House Energy and Commerce Committee, which has sweeping jurisdiction over energy and the environment. Dingell had chaired the committee for 28 years and represented a constituency in Michigan, the base of the automakers. Because of his ties to Detroit, Dingell was often perceived as being an “old-school” supporter of the auto industry and resisting changes to the status quo of an oil-based economy and alternative fuel sources. Waxman, on the other hand, is a strong proponent of regulating greenhouse gas emissions and protecting air quality.

The passage of the economic stimulus program is a strong catalyst of change for the American economy in the sustainable direction. It contains $5 billion for weatherization assistance programs for low-income families. Billions more go toward advanced battery manufacturing, energy-efficiency and renewal energy research, and public transit projects, which will create jobs and save oil. Grants can cover up to 30 percent of the cost of building renewal energy facilities for the production of solar cells, wind turbine blades and advanced batteries. Hundreds of millions of dollars go to states for matching grants to provide rebates to consumers buying higher-tier, energy-efficient appliances or hybrid vehicles.

Before the impact of the current economic downturn was fully felt, the transition to a renewable energy economy already showed promise in America. Clean energy was the fastest growing American industrial sector. Growth in the renewable energy sector grew 150 percent from 2004 until 2008, ending with $25 billion. While the recession has slowed the clean energy sector, it has not derailed it. Combined with the policies of the Obama administration promoting its virtues both environmentally and economically, an economic recovery will most likely reignite its explosive growth.

While money alone will not transform the American economy overnight, it definitely creates incentives to change the behavior of consumers and manufacturers. The momentum created by such incentives may shift the expectations, and ultimately the desires, of the American consumer wherein living in a green house and driving a vehicle that consumes an alternative biofuel may become the norm.

Michael W. McNatt is a real estate attorney and partner with Roetzel & Andress in Orlando, Fla. He was the first attorney in Central Florida to become a U.S. Green Building Council LEED Accredited Professional. Michael can be reached at MMcNatt@ralaw.com.