Democrats Unveil Blueprint for a Green Economy

Fall 2020 Issue
By: Alex Ford
Democrats in Congress recently rolled out an ambitious plan to combat what they view as the most critical consequences of climate change. Getty Images

The “Solving the Climate Crisis” report is ambitious, and its impacts could be far-reaching.

In late June, Democrats on the House Select Committee on the Climate Crisis unveiled a sweeping plan to combat what they view as the direst consequences of climate change. With the goal of achieving a carbon-neutral economy by the year 2050, the report, entitled “Solving the Climate Crisis,” outlines dozens of recommendations for Congress to act upon, from eliminating all automobile pollution to mandating stricter building codes. 

In its current form, the plan has virtually no chance of passage in the Republican-led Senate. But the GOP’s hold on that chamber — and the White House — is tenuous. If Democrats emerge victorious in the November elections, the issue of climate change is sure to take center stage, and this proposal will serve as a roadmap for future legislative action.

Therefore, it’s important to understand Democratic lawmakers’ vision, and the impact these proposals would have. This column highlights some of the key policies in the more than 500-page report, with a focus on what the possible changes could mean for NAIOP members and their businesses.

Overhauling the Economy

Predictably, reactions to the plan mostly fall along party lines. House Speaker Nancy Pelosi, D-California, described the proposal in terms of “honoring our obligation to address the climate crisis” while creating “millions of good-paying jobs.” President Donald Trump, in response, derided the report and claimed it “would kill our country.”

But lawmakers across the political spectrum agree that the proposal, if enacted, would touch virtually every industry and sector of the economy.

The plan lays out a series of ambitious targets and milestones. Goals include achieving 100% sales of zero-emission cars by 2035 (and trucks by 2040), eliminating emissions from power plants by 2040, and reaching net-zero greenhouse gas emissions by 2050.

It also attempts to address the issue of environmental justice. It's based on the premise that low-income and minority communities tend to be disproportionately impacted by pollution and environmental destruction. This, in turn, exacerbates “systemic racial, regional, social, environmental, and economic injustices.” The report calls for using proceeds from a new tax on carbon emissions to invest in these communities and ensure access to clean air and water for vulnerable populations.

Other proposals include stricter resiliency standards for buildings and infrastructure; protection of at least 30% of all U.S. lands and ocean areas by 2030; a transition to “clean energy” manufacturing technologies; investment in public health supply chains; preservation of farmland from development; reduction of food waste; and many more.

Decarbonizing the Building Sector

The section that covers buildings describes a general goal of “decarbonizing the building sector.”

But unlike the efficiency targets established in the Green New Deal and New York’s climate bill, which are often cost-prohibitive or simply unattainable (particularly when it comes to older buildings), this new plan takes a more pragmatic approach. To be sure, its goal of net-zero building emissions by 2030 is ambitious. But by imposing this requirement only on new buildings — combined with tax incentives to offset the substantially higher upfront costs of efficient technology — the proposal appears to present a far more realistic and workable framework than its predecessors.

Elsewhere, it acknowledges the benefits of adaptive reuse of older buildings and calls for an expansion of the Historic Tax Credit, which provides a 10% tax credit for rehabbing historic, income-producing buildings. Retrofitting would also be incentivized through a new small business energy efficiency grant program. It also calls for the implementation of a national energy benchmarking program and highlights EPA’s Energy Star program as a logical solution.

That said, the plan is short on details when it comes to the value and scope of these incentives. This information will be critical in determining whether the plan is feasible, or yet another unfunded — and unworkable — mandate.

Efficiency in the Wake of COVID-19

In a sign of the times, the proposal ties the need for a clean and sustainable economy to the coronavirus outbreak. Its preface reflects on the tens of millions of Americans who have lost jobs due to business closures, and it argues that solving the climate crisis can “propel the economy forward” and provide a “pathway to millions of good-paying, high-quality jobs that can fortify and expand America’s middle class.”

These are laudable goals, and there is certainly evidence suggesting the positive economic impact that investment in green technology can have. But the report does not mention a key constraint: the fact that coronavirus safety measures and energy efficiency are often at odds.

Take, for example, the guidelines laid out by the Centers for Disease Control and Prevention regarding office buildings. To ensure the safety of occupants, the federal agency recommends increasing the circulation of outdoor air “as much as possible by opening windows and doors, using fans, and other methods.” While certainly feasible in more moderate climates, bringing in outside air on a 100-degree summer day in Miami necessitates additional energy usage, as HVAC systems work harder to keep temperatures at an acceptable level. It’s a similar story when it comes to higher-rated filtration systems, which are more effective at blocking particles but reduce airflow as a result. Both of these precautions would make it harder to comply with stricter efficiency mandates.

As businesses reopen and the “new normal” stage of the pandemic begins, lawmakers must balance efficiency goals with the increased burdens placed on property owners to keep their tenants safe.

Weighing Costs and Benefits

One of the 12 policy “pillars” laid out in the proposal calls for quantifying the benefits of federal climate action. This empirical approach is warranted, given the vast capital expenditures that would be needed to implement the plan as envisioned.

At first glance, it appears the report follows this model. But, as economist (and recent NAIOP webinar speaker) Douglas Holtz-Eakin points out, the devil is in the details. In a blog post for the Aspen Institute, he explains how the proposal, if enacted, could open the door to analyses that overstate the benefits of new regulations and mandates simply by tweaking the assumed “cost to society” of certain actions.

The government should take into account real-world data, as well as payback periods, and return on investment and present-value considerations when enacting new policies. Using these metrics helps ensure investments that target the highest return for taxpayers without exaggerating the expected benefits.

NAIOP’s Position

NAIOP has long championed sensible approaches to incentivizing energy efficiency and reducing emissions. But arbitrary mandates that ignore economic and technological realities can have severe consequences, and ultimately could be counterproductive. However, the “Solving the Climate Crisis” report lacks a number of crucial details that are needed to assess its potential viability.

Climate Crisis Committee Chairman Rep. Kathy Castor, D-Florida, has said that climate action “should not be a partisan issue.” In reality, climate change and the environment are two of the most polarizing topics among Americans. As a result, the fate of the climate action plan largely rests in the hands of voters, who head to the polls on November 3 in this high-stakes election year.

Alex Ford is the director of federal affairs for NAIOP.

Impacts on the Building Sector

The “Solving the Climate Crisis” report released in June by Democrats on the House Select Committee on the Climate Crisis calls on Congress to do the following with regard to the built environment:

  • Eliminate emissions from new buildings by 2030 by requiring federal buildings to follow net-zero-emission building codes and incentivizing states and cities to adopt net-zero codes.
  • Invest in energy-efficient public buildings and communities by increasing funding for the State Energy Program and reauthorizing the Energy Efficiency and Conservation Block Grant program.
  • Increase the availability of energy-efficient, affordable housing by increasing funding for energy-efficient public, federally assisted, and unsubsidized multifamily housing.
  • Drive energy retrofits of commercial buildings and businesses through tax incentives, a small business energy efficiency grant program and commercial building benchmarking requirements.
  • Boost onsite clean energy generation and beneficial electrification by increasing tax incentives and rebates and establishing model standards and codes.
  • Reduce emissions from building materials by incentivizing building reuse, requiring federal use of performance-based construction specifications, and establishing green building material databases and labels.
  • Demonstrate federal leadership in building efficiency by setting ambitious energy and emissions reduction targets, requiring deep energy retrofits, and increasing federal use of energy savings performance contracting.

From "Solving the Climate Crisis," published June 2020 by the House Select Committee on the Climate Crisis