Obama Goal: Energy Efficiency For Millions Of Apartments

They’re calling President Obama’s approach to governance these days “small ball,” and they might be right – but there remains a lot an administration can do beyond grant Kennedyesque moonshot-style initiatives. Take the announcement today by the U.S. Environmental Protection Agency about its new partnership with Freddie Mac, the government-backed outfit that provides liquidity to a huge portion of the home loan market.

What comes of this partnership remains to be seen, but the goal is imminently sensible: to make apartments more energy efficient.

EcoFlats EPA Freddie Mac

EcoFlats is a green-focused apartment building in Portland, Ore. (image © EarthTechling)

According to the EPA, around a third of Americans live in apartments in multifamily buildings, and their energy bills add up to $22 billion a year.  This is a sector that doesn’t get a lot of attention when it comes to improving efficiency – often, there’s little incentive for building owners to make such investments. But the possibilities are great, the EPA says:

“Housing industry studies have projected that multifamily properties can become 30 percent more efficient by 2020, unlocking $9 billion in energy savings and preventing more than 35 million metric tons of greenhouse gas emissions per year.”

EPA says the partnership with Freddie Mac flows from the president’s Climate Action Plan, and the agency pointed to three ways apartment energy efficiency gains might be made:

  • Freddie Mac will explore the collection of energy and water performance data from property owners during the loan underwriting and asset management processes.
  • By demonstrating the financial value of energy and water efficiency to lenders and borrowers, Freddie Mac hopes to be able to influence lending practices in ways that encourage investments in energy efficiency and make multifamily housing units more affordable.
  • EPA will assist Freddie Mac with these, and other, goals, by providing technical and educational support in the use of the Energy Star Portfolio Manager energy management and tracking tool as well as other Energy Star resources.

The EPA said it’s already been working with Fannie Mae and the U.S. Department of Housing and Urban Development on similar efforts and “this latest agreement with Freddie Mac is another critical step forward in meeting the President’s goal” of making multifamily buildings 20 percent more energy efficient by 2020.

4 Comments

  • Reply February 7, 2014

    Dennis Heidner

    Wow, “By demonstrating the financial value of energy and water efficiency to lenders and borrowers, Freddie Mac hopes to be able to influence lending practices in ways that encourage investments in energy efficiency…”

    If Freddie May & Freddie Mac would just stop fighting PACE loans by cities and states on similar residential projects – we would also make progress – in reducing energy use.

    • Reply February 7, 2014

      Pete D

      Fair point, Dennis. But don’t you think that Vermont has demonstrated that states (and localities) can do their PACE programs in ways that work for the FHFA?

      • Reply February 7, 2014

        Dennis Heidner

        I thought California and many of the states backed away – after being told to do so by Freddie Mac. The PACE loans I believe are for commercial properties. The original argument by Freddie Mac was that it didn’t add a measurable value to the property and Freddie Mac did not want to loose their “order” in the recovery of their investment. Since many of the PACE loans stayed with the property until the loan was retired… they felt it would lower the value of the remaining debt…

        http://www.gpo.gov/fdsys/pkg/FR-2012-06-15/pdf/2012-14724.pdf

        http://www.sfgate.com/science/article/Court-upholds-ruling-on-clean-energy-loans-4368223.php

        http://www.icleiusa.org/blog/pace-update-resolution-on-the-horizon

        http://www.icleiusa.org/blog/archive/2010/07/12/town-of-babylon-comes-out-swinging-against-fannie-may-freddie-mac

        https://www.ase.org/resources/commission-recommendations-reflected-federal-legislation

        The battle is still on going… I believe Freddie Mac is trying to solve the problem by encouraging the traditional lenders to offer loads that would then be rolled into the traditional mortage – and not take priority over their loans. But could very well mean higher rates, more restrictive terms, etc…..

        • Reply February 7, 2014

          Pete D

          You’re correct, it hasn’t been fully resolved. But it seems that many entities have decided that rather than fight — or even as the fight continues — to find a way to work within the FHFA dictates. See this story from just a couple of months ago: http://www.pv-magazine.com/news/details/beitrag/california-cities-re-introducing-clean-energy-incentive_100013620/#axzz2sfHxVaaY

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