Will Obama's Ambitious Energy Efficiency Plan Really Save Businesses $40 Billion a Year?

The Better Buildings Initiative, announced today, aims to improve efficiency by 20% in under 10 years.

President Obama

Just as he promised in his State of the Union address, President Obama is getting serious about energy efficiency. Specifically, he is pushing his Better Buildings Initiative, which developed out of his "Better Buildings" program within the Department of Energy, by rolling out three new targets today: improve energy efficiency by 20% by 2020, save businesses $40 billion per year on energy bills, and reform outdated policies and call the private sector to greater involvement in energy saving practices.

Obama is making the announcement at the Energy Innovation Hub of State College, Pennsylvania, a fitting location given his rather intense focus on innovation and American competitiveness lately. The plan specifically involves tax incentives, commercial retrofitting financing opportunities, competitive grants for green practices, and increased training on energy auditing and building operations.

"This initiative has the potential to really unlock a large amount of investment, some of which is sitting on the sidelines right now ... and create jobs at a time when that has to be our central focus," said a senior administration official, according to Reuters.

Critics must be pleased to see Obama acting so quickly after his January address. On Monday, he also announced the Startup America Partnership in collaboration with Facebook, IBM, Intel, and others—an initiative to galvanize investors to increase startup investments in an effort to increase jobs and American innovation.

In terms of specifics so far, there aren't many. "Cost-effective upgrades" is the term used by the White House to describe how the Better Buildings Initiative will help companies save billions of dollars on energy bills—the official White House statement also mentions "retrofitting" extensively, so it seems that the billions saved, if they are in fact to be saved, will come down the road, as opposed to how most businesses would prefer them: immediately.

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  • Peter Combs

    Anybody who has maintained commercial buildings knows 20% energy efficiency savings is a piece of cake. The reason it hasn't happened sooner is there's no incentive for landlords to spend money on a building for which the tenant bears the brunt of inefficiency. Three-quarters of Fortune 500 CEO's haven't signed on to energy efficiency policies for nothing. However, Dan's insight on the LEED program is valuable nevertheless.

  • Dan Brantley

    $40 Billion? Not a chance.
    1. Ignoring political over estimation and fuzzy accounting, every billion "saved" for business is revenue not realized by energy providers, who will inevitably alter the equation.
    2. By what measure is energy saved? Anyone familiar with te LEED certified building program knows it is marketing construct that does little to save energy.
    3. Remember "the government" can only impede or promote real progress, it does nothing on its own. And for every choice it makes, it ignores other, equally viable alternatives. Alternatives that may be better, may be less expensive, but may not see the light of day because they weren't "chosen."