Loaning Out the Green

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Here on LGBG we talk, rather frequently, on the intertwined relationship of the green movement and housing development. What we have not mentioned however is how to finance potential green improvements to your home. That is, not until now.

I recently came across an article in the English paper The Telegraph which detailed how some U.K. residents are taking out “Green Loans” to improve energy efficiency and reduce the carbon footprint of their homes. In the United States, homeowners often take out a Home Equity Loan in order to make improvements to their house, which ultimately may increase the value of the house when it comes time to put it on the market. Home Equity Loans are typically used to add an extension to your house, or to create a finished basement. Now however, one has the ability to obtain a Green Loan in order to reduce emissions, and create greater energy efficiency while subsequently adding to the aforementioned value of the homeowner’s residence; so long as the house is inspected by a Green Deal assessor.

These assessors, who work for the government, “…Provide home owners with reports containing a list of possible improvements, and how much these will cost against estimated annual savings on gas and electricity bills.”[1] The rationale is that, despite having to pay for the home improvements (which may cost tens of thousands of dollars) homeowners are better off in the long-run as energy usage will be more efficient, and the resulting green friendly label of the house will aid in boosting the building’s value.

I have no doubt that obtaining a Green Loan to improve the carbon footprint of one’s house is, on the whole, mutually beneficially in the long-run. Yet, banks and lenders also have a responsibility not to take advantage of would-be borrowers by charging exorbitant interest rates, or making the terms and conditions of the loan onerous to pay. Governments can positively influence green behavior by providing subsidies for borrowers who are looking to green-proof their homes directly (which already happens to a certain extent when homeowners purchase solar-panels for example and receive a tax credit) or indirectly to banks by providing them incentives, such as lowering reserve requirements, to lend out money at a low interest rates. Similarly, checks and balances need to be put in place so that borrowers are indeed using the loan to modify their house in green ways and not to pay off other debts or in ways otherwise non-tangential to improving energy efficiency in one’s home. In this way, both banks and borrowers win in the mutual goal of reducing homeowners’ carbon footprints, while also helping to promote a future in which we all live green, and be green.

[1] http://www.telegraph.co.uk/property/greenproperty/9924717/Eco-living-could-you-take-out-a-Green-Deal-loan.html

Deconstructing Traditional Construction

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On numerous occasions, we here at LGBG have gone into detail on the burgeoning relationship between the green movement and architecture. Whether it’s sprucing up your living room or assessing the value green initiatives may have on your home, the worlds of being socially responsible and architecture are now becoming firmly intertwined.

Occurring in sporadic movements throughout the years, deconstruction is coming back with a greater vengeance than Denzel Washington’s character John Creasy in Man on Fire. In its simplest form, deconstruction is where a demolition crew, “Carefully dismantles an older property by hand instead of using bulldozers.”[1] The movement has been around for decades and allows for the reusing of materials from older homes for the construction of newer ones. The end result is hundreds of thousands of tons of potential trash is diverted away from landfills.

With that said, you might be asking yourself: Why has this beneficial movement waxed and waned through history more than Mr. Miyagi and why is it suddenly back? The first question is a bit more puzzling to decipher, but can primarily be explained by the fact that deconstruction, even in today’s generation which focuses on green building and initiatives, is nonetheless five times more expensive in comparison to a traditional obliterate-your-home-with-a-wrecking-ball demolition.[2] In addition, the process of deconstruction takes about twice as long as the more destructive alternative.

Image

You said you needed to replace your windows right?

So why is the movement suddenly back? That question, while also complex, warrants a simple solution: A tax-credit from Uncle Sam. Yet, this same tax credit, which occurs when a homebuilder donates materials to a qualified 510(c)(3) charity, has been around for decades and arose in tandem with deconstruction itself.[3] More recently however, contractors are placing a greater emphasis on the financial benefits of deconstruction to potential home builders. For example, the Weiss family who were featured in the Wall Street Journal Article: The Demolition Discount, “Paid more than $20,000 for the disassembly, roughly double what they would have paid for a wrecking crew.” However, as a result of the tax credit through donations of materials to charities, the family will have saved more than $66,000 in taxes. As a result, despite the higher upfront cost and greater length of time to complete the project, the tax shelter and socially responsible benefits have outweighed these side effects in many homeowners’ eyes.

I believe what has really catapulted the movement forward is our nation’s greater awareness, and emphasis of green initiatives. Our society has begun to recognize that sustainability is a difficult and slow-moving process, yet can be achievable in anything and everything that we do. Whoever you want to credit for the successes of the green movement, the consequences are that as a whole, nations have a top-of-the mind awareness of green initiatives. So couple people’s awareness of sustainability, with the availability of deconstruction, and sprinkle in a nice tax incentive, and the end results are that citizens are more willing to listen to green ideas, and sustainability projects like deconstruction are experiencing greater success rates than ever before.

Obviously deconstruction is not ideal for everyone. You have to initially lay down more capital into a house that is already expensive enough as it is, while also having to wait longer to live in the home you purchased. However, there are some real social and financial benefits to deconstruction for homeowners that may outweigh the negatives. That being said, here are some more tips related to this conversation for homeowners to keep in mind:

  1. Persuade others to use deconstruction if possible.
  2. Donate used goods from your home to charities and shelters. You don’t have to be building a new house to live by the ideals of deconstruction.
  3. If building a new house, try to use eco-friendly materials and alternative energy sources like solar panels for the home’s construction.

Through these actions and the right knowledge, we can all strive to live in a world where we live green, and be green.

[1] http://online.wsj.com/article/SB10001424127887324407504578185762234289162.html?KEYWORDS=landfills

[2] http://portlandpreservation.wordpress.com/2011/04/21/on-old-buildings-demolition-deconstruction-and-reuse/

[3] http://www.epa.state.oh.us/portals/30/Brownfield_Conference/docs/Barry%20Franz.pdf

PTC Stirs Evil Wind Debate

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In a statement released earlier this week, a bipartisan group of legislators from both the Senate and House of Representatives warned that the expiration of the wind protection tax credit (PTC) would result in the loss of a substantial number of manufacturing and construction jobs, thus triggering a great debate on the relevance of this credit and the efficacy of wind energy.  The PTC “subsidizes new wind generation by 2.2 cents per kilowatt-hour of wind electricity produced”.  If this credit is not renewed by Congress, it will expire at the end of the year.  The impact of the threat of expiration of this credit already is being felt as wind companies are pushing back projects and laying off workers because of the looming uncertainty of federal funding.

After reading articles and blogs on this subject, I could not help but notice some of the comments made by other readers, many of which were constructive, but others, concerning.  I use the term “concerning” because I see that in most debates or discussions regarding green initiatives, education and understanding of the issues, or the lack of such, clearly guides the dialogue on these topics.

Living green and understanding the need to effect environmental change requires education.  Research and development and technological advancement enable scientists to find solutions to cleaner and efficient energy.  This definitely comes at a cost, albeit a worthwhile expense.  The push to advance science, technology, engineering and mathematics (STEM) in schools today recognizes the benefits of providing opportunities for students to explore new ideas and new worlds related to science.  Education programs, such as STEM, provide a bridge from the old to the new and are so important because they enhance vision, which is a key ingredient in the success of any scientific venture.

Unfortunately, there are many diehards in this country, who are resistant to change, even if it is for the good of people and the environment.  The green movement should not and cannot be dragged down by resistance to change, and modern technological solutions to energy problems should be welcomed, especially in the face of scientific evidence of looming catastrophes relative to climate change directly attributed to human behavior.  This negative mindset is not new in America as history gives us many instances of innovative ideas that prevailed but were met with great resistance.  An immediate example that comes to mind is the case of Henry Ford, who was successful in mass marketing the gas engine automobile in a time when many Americans would have settled for “faster horses“.  In the same spirit of Henry Ford, the green movement must promote efficient wind energy solutions as the future of our nation rather than “clean oil” solutions as suggested by some people.

Another major issue with detractors of wind power, who would be happy to see the credit expire, surrounds the willingness to destroy the job market.  Job creation is crucial to the recovery of the economy, and the market in wind energy projects presents the opportunity to add jobs.  This is especially good for veterans because “work in wind energy offers vets the opportunity to use a wide variety of skills they learned in the military, such as risk analyses, problem-solving and contract negotiation. . .”  So many of us voice our appreciation for the sacrifices of veterans and their families to protect us, and the promotion of wind energy projects through the PTC presents opportunities to reward returning soldiers with jobs, rather than just handshakes and pats on the back for their service.

Another potential base of support which needs to be tapped for wind energy advancement in this country is couples with young children or who are planning to have children.  Today’s energy solutions will frame your children’s tomorrow.  Living green should be the top priority on your agenda so that you can ensure a safe and healthy environment for your children.  Issues of renewable energy, such as wind power should become routine in articles in parenting magazines and blogs designed to educate families on living healthy.

The time is running short to extend the PTC.  As Congress haggles over the many issues dangling on the fiscal cliff, it is urgent that supporters of the green movement band together and speak up to protect the PTC so as to ensure the advancement of wind power as a viable source of energy in America.  We cannot allow the defeat of innovation technology such as this that enables us to live green, be green.

Sources for this article:

http://www.denverpost.com/business/ci_21990652/four-governors-including-hickenlooper-urge-renewal-wind-power-credit

http://cleantechnica.com/2012/11/30/us-veterans-fight-for-wind-jobs-as-tax-credit-hits-the-cliff/

http://blogs.hbr.org/cs/2011/08/henry_ford_never_said_the_fast.html

http://www.huffingtonpost.com/2012/11/28/wind-tax-credit-fiscal-cliff_n_2207581.html?utm_hp_ref=green&ir=Green

Wind Energy

Wind Energy (Photo credit: janie.hernandez55)

 

Green Initiatives Threatened by Looming Fiscal Cliff

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Tax

Tax (Photo credit: 401(K) 2012)

Any discussion of the looming fiscal cliff must address the impact on green initiatives as any budget cuts or tax increases will adversely impact the efforts of both families and businesses to go green.  With the realization that compromises will have to be made on both sides across the aisle, it remains important that our elected representatives focus on the fact that governmental spending need to include investment in human and physical matters that will pay dividends in the future.  A green economy qualifies for such investment because its tenets lead to a healthier society and an environmentally friendly world.

Several of the tax incentives for living green were derived from the Bush era tax cuts, which are scheduled to expire at the end of this year if not renewed by Congress, thus creating the looming fiscal cliff.  A few notable ones to mention are as follows:

  • The residential energy efficiency credit.  This credit is given to homeowners who purchase high energy-efficient appliances and home improvements.  Many Americans have received reductions in tax liability through the use of these credits while at the same time making their homes more energy-efficient.
  • The American Opportunity Credit.  This credit provides a $2500 tuition tax credit, thereby enabling more people to go to college.  This opportunity directly affects the potential pool of trained people needed in the research and development of green technology and the direct training needed for operation of green industries.
  • The payroll tax credit.  Taxpayers will see a decrease in their take home checks if this credit expires, thus impacting their ability to exercise healthier choices in the purchase of foods and organic products.
  • The production tax credit (PTC).  This credit subsidizes wind power by 2.2 cents a kilowatt hour.  This is important to states and localities working hard to establish wind power as an alternative energy source.

As the discussion and bargaining proceed over the next few weeks, it is important that we advocate our positions on green initiatives which will be affected by budget decisions.  Now is the time to contact your congressmen by phone or email and state your position on these issues.  Today’s investment of time will reap tomorrow’s dividends.  Let’s live green, be green.

Sources:

http://online.wsj.com/article/SB10001424127887324073504578104464153878672.html?mod=rss_economy

http://topics.nytimes.com/top/news/business/energy-environment/wind-power/index.html