ITHACA, N.Y.—The City of Ithaca has approved a sweeping initiative to decarbonize its building stock through an innovative relationship between business, local government and private equity. Common Council gave the program their unanimous support at its Wednesday meeting, positioning Ithaca to be a global leader in the fight against climate change, and drawing the attention of White House officials and world leaders gathered in Glasgow for the COP26 summit.
In a nutshell, the plan is to turn the massive undertaking of decarbonizing Ithaca’s 6,000 buildings into a low-risk investment opportunity. Money from private investors is going to back low-interest opt-in loan and lease programs that city residents will be able to tap into in order to install heat pumps, convert to electric induction stoves, and improve their building’s energy efficiency, among other things. The loan and lease programs will be eligible for whatever work it takes to get a particular home or building to go green.
Luis Aguirre-Torres, the City’s Director of Sustainability, is the architect of Ithaca’s plan. Its full name is the Energy Efficiency Retrofitting and Thermal Load Electrification Program.
The City has already attracted $100M from investors for the proof-of-concept phase of the program, and an additional $250M in soft commitments from investors of the first phase goes according to plan. The initial $100M is estimated to decarbonize anywhere from 1,000 to 1,500 buildings and homes.
Ithaca will be working with a consortium of companies and organizations to establish the loan and leasing program and oversee the work of retrofitting and electrifying its building stock. The group will be led by BlocPower, a Brooklyn based startup specialized in decarbonizing old buildings. They have so far made 1,000 buildings green across the country.
Donnel Baird, CEO and a founder of BlocPower, called into Ithaca’s Common Council meeting from Portugal, enroute to COP26. He thanked the City for being willing to take the leap of faith needed to radically address climate change. Baird said that he has talked about Ithaca’s program with Vice President Kamala Harris, Secretary of Energy Jennifer Granholm, and former President Barack Obama and that the White House will be watching Ithaca as a testbed.
“There are people who are excited about what you’re doing in Ithaca who are going to be following on a daily basis what’s happening,” said Baird. “Because you are injecting hope into an entire world that needs hope and leadership on how we are going to address climate change”
“This is one of those things that could literally change the world.”
“It’s completely thrilling. I mean, this is one of those things that could literally change the world,” said Robert Watson, who has been called “one of America’s best environmental minds.”
Watson is a professor at Columbia University’s School of International and Public Affairs (SIPA). He developed the LEED green building system, and has focused on the issue of greening buildings in a career spent trying to figure out how to get the world to kick its fossil fuel dependency.
The carbon emissions from buildings are no small potatoes. They account for approximately 40 percent of America’s greenhouse gas emissions, and about the same percentage of Ithaca’s. Aguirre-Torres estimated that Ithaca is accountable for putting an annual 400,000 metric tons of CO2 equivalent into the atmosphere.
The technology to decarbonize buildings and homes is already on the shelf, and is usually advertised as paying for itself in the long run, but steep upfront costs are prohibitive for most consumers.
“I mean, is it cost effective to save the human species? I don’t know,” said Watson.
Watson stressed that for homeowners and building owners to decarbonize their assets, regulatory pressure alone is inadequate. It’s a necessary component, said Watson, but consumers need to be given channels to meet the initial investment through, which is what Ithaca’s loan and lease program is attempting to be.
“Do the words “existential crisis” when used together mean anything?” said Watson. “It means that we have to be radical and aggressive about coming up with solutions.”
Adam Zurofsky is a senior policy advisor to Rewiring America, a non-profit focused on the mission to “electrify everything” in order to get America on track to achieving emission goals. Zurofsky was the Director of State Policy and Agency Management for the State of New York until 2019, and is also a professor at SIPA.
Zurofsky said bringing the process of retrofitting and electrification to scale means coalescing “disparate elements and disparate dynamics” in the market. Basically, the process for a household to get retrofitted isn’t streamlined.
Included in the BlocPower consortium are a range of companies and organizations: Guidehouse, Taitem Engineering, Alturus, and Energetic Insurance, with additional support from Cornell Cooperative Extension, NYSERDA, and the US Department of Energy. These groups all bring different expertises to the table: engineering, finance, risk management, community connections, etc. Essentially, each of these companies and organizations are tasked with synchronizing the different elements of the Efficiency and Electrification Program they are individually handling. This is in the name of finding efficiencies and improving overall operations.
Zurofsky made it clear that this partnership between the public and private sector is necessary to shift the market away from fossil fuels. For example, federal and state incentives—like NYSERDA’s loan loss reserve credit enhancement—are being tied into the program to reduce interest rates for low to moderate income households. This puts loan and leasing options in reach for low to moderate income people that they wouldn’t otherwise have. In addition, Zurofsky explained that this cross-sector cooperation goes a long way to help communities and individuals unlock savings and economic opportunities.
Rewiring America highlighted findings for where this market shift would begin to quickly benefit American households in a policy framework called, Rewiring Communities. Rewiring America found the potential of the program, as they outlined, could electrify nearly 12 million American households. Rewiring America found that if all those households were able to go all-in on decarbonizing, they would see on average up to $750 dollars a year in energy savings.
The organization also estimated that if 12 million American households decarbonized, it would create over 750,000 direct and indirect jobs. Aguirre-Torres is estimating Ithaca’s plan could generate over 400 jobs, a labor demand which the BlocPower consortium has committed to meet through local workforce development.
“There are tens of millions of households in this country that could save money today on their energy bill right now if they switched over to heat pump technology backed by electricity,” said Zurofsky. But the national market isn’t there yet.
Doing something like decarbonizing a city’s building stock require clear signals from the government that its committed to the endeavour. thaca’s Green New Deal—which aims to totally decarbonize the city’s economy by 2030—does just that. Once all the pieces are in place, Zurofsky said the demand and the development of businesses to meet that market will follow.
That’s the case Rewiring America is making in their policy framework Rewiring Communities Report. Baird of BlocPower is also an advisor to Rewiring America.
The City of Ithaca is taking these plans from theory to reality, and since it’s moving faster than the state and the country on decarbonizing building stock, Aguirre-Torres said that private equity is the only source of capital large enough to execute decarbonizing Ithaca’s building stock at scale.
If Ithaca is to serve as a model for other cities, the most salient lesson Aguirre-Torres might offer is to stop thinking of climate change as an environmental issue.
“If there is anything I have learned in my career as an environmentalist,” said Aguirre Torres, “It is that the environment helps convince a very small part of the population to act.”
“But if you move away from the environmental perspective, and you think of it from an economic point of view, then you deploy an economic incentive. And that’s what this program is.”