This is an excerpt from EERE Network News, a weekly electronic newsletter.

May 23, 2007

Sixteen Cities and Five Banks Join Efficiency Effort for Buildings

Sixteen of the world's largest cities—including Chicago, Houston, and New York—have joined in a global effort to reduce energy consumption in existing buildings. The Energy Efficiency Building Retrofit Program, a project of the Clinton Climate Initiative, will draw on $5 billion in financing to be provided in equal amounts by five banks: ABN AMRO, Citi, Deutsche Bank, JPMorgan Chase, and UBS. The banks will finance cities and private building owners to undertake energy efficiency retrofits. Four energy service companies—Honeywell, Johnson Controls, Siemens, and Trane—will conduct energy audits, perform building retrofits, and guarantee the energy savings of the retrofit projects. The companies will be assisted by the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) and the U.S. Green Building Council. See the ASHRAE press release.

The municipal and private building owners will then pay off the loans, including interest, using the money saved by the energy retrofits. As a result, the projects create no net costs for the building owners while reducing their energy use by 20 to 50 percent. According to the Clinton Foundation, the available funding should double the global market for energy retrofits in buildings. The Clinton Foundation is also working with Microsoft Corporation to develop online tools to help cities monitor their greenhouse gas emissions. See the Clinton Foundation press releases on the retrofit program and the Microsoft project.

Such energy-saving agreements are often referred to as "energy saving performance contracts," and are widely used by companies and institutions, as well as all levels of U.S. government. Several recent examples are provided by Honeywell Building Solutions, an energy service company. In April and May, the company signed such contracts with the City of Perris, California; the housing authority in Columbia, Tennessee; Edinboro University in Edinboro, Pennsylvania; and the City of Quincy, Massachusetts. The Edinboro University project is a $9.7 million effort that will yield $1.3 million per year in energy savings. The Quincy project is a $32.8 million effort that will yield $1 million per year in energy savings, while an included water-metering project will add another $1.5 million in new revenue for the city. That contract is the first in Massachusetts since the state passed a law allowing municipalities to enter into long-term energy saving performance contracts. See the recent press releases from Honeywell Building Solutions.