The automobile industry was revolutionized with the invention of the hybrid engine that could capture and store energy that would otherwise go up in smoke. Now, there's a counterpart invention for the housing market that extracts the energy wasted by buildings, and uses it to power economic recovery.
It takes the form of a plan that promises to save consumers $142.33 billion to $200.88 billion in energy costs and mortgage payments over a five-year period, significantly reducing the risk of mortgage failure while increasing disposable income and creating millions of new jobs.
The plan of action is now in the hands of the Obama transition team and could rewrite the book on how the stimulus package gets put together. It's called the 2030 Challenge Stimulus Plan and it was authored by Ed Mazria and his team at Architecture 2030.
He's just back from Washington where he presented the Plan to Congressional staff and industry groups, going to 20 meetings a day, explaining how it works. "My feet were killing me," he said, "going around to all those buildings all day long." The payoff was that listeners across the board were enthusiastic. It also got sent to the Obama transition team, where the Plan is now being reviewed.
Architecture 2030 has figured out a way to direct federal stimulus into the beleaguered building sector so that it succeeds in doing these things:
It sounds to good to be true. You can't get something for nothing. Where's the hitch, I wondered.
The answer is, there is no hitch. There actually is a huge something. It's a very big untapped asset that Mazria has figured out a way to harness: the energy wasted by almost every single building in the nation. Capture the dollar value of that energy and you've created a powerful engine of economic recovery situated at the heart of America's sweet spot: its homes and buildings.
Here's how the plan works.
The federal government creates what's called "a mortgage buy-down program." If you are a homeowner, you can bring your mortgage rate down 2 or 3 or 4 points -- with Uncle Sam picking up the difference -- if you improve the energy efficiency of your home. It's an offer you can't refuse, because it means you can save hundreds of dollars on a typical monthly mortgage, plus hundreds more in reduced energy bills -- in perpetuity.
Those savings immediately go in to family coffers and can get spent, stimulating the economy. At the same time, all the demand for energy efficiency upgrades creates millions of jobs. The government recoups its investment in the mortgage buy-down from the income tax collected from the newly employed. And greenhouse gas emissions go down dramatically.
He walked me through a hypothetical example that highlighted the huge incentives the plan could unleash. Say you're a homeowner with a $272,000 mortgage at 5.55%, paying about $1550 a month. You decide you want your mortgage rate to drop to 3%. In order to qualify for the reduction, you have to improve the energy efficiency of your home 75% below code, and it's going to cost you a pretty penny: about $40,000.
Existing tax credits would take care of about $10,000 of that cost. The rest would get tacked on to your existing mortgage, bringing it up to $302,000. But, at 3%, you'd be paying only about $1280 -- saving almost $300 a month on the mortgage alone, plus another $150 in reduced energy costs. The value of your home rises, you have more disposable income, you've given work to someone to do the upgrades for you -- and s/he's now paying federal taxes, and you've reduced your carbon footprint.
Here's how Mazria described it in his plan summary, which includes a mechanism for leveraging value of lost energy from commercial buildings in a slightly different fashion: