The House recently approved a bill that would allow federal loan guarantees to be applied to energy efficiency projects funded through Property Assessed Clean Energy (PACE) bonds.
The PACE bonds provision, advocated by Rep. Steve Israel (D-NY), is part of the House-passed $75-billion Jobs for Main Street Act (H.R. 2847). PACE bonds allow property owners to finance energy efficiency retrofits through a loan voluntarily attached to the borrower's property tax bill. These long-term loans could be transferred along with the sale of the property in order to accelerate investment in energy efficiency retrofits. Fifteen states have enacted bills that allow this type of municipal financing, while several more are considering such bills or running pilot projects.
The loan guarantee authority contained in the jobs bill is based on an amendment to the Energy Policy Act of 2005 that was included in the February 2009 stimulus law, and it is subject to the stimulus law's sunset date of Sept. 30, 2011.
The advocacy group Alliance to Save Energy (ASE) supports the House's action and pledged to work with Israel and other congressional members to extend the guarantee authority beyond the sunset date.
Alliance to Save Energy 'Delighted' with House's Action
"We are delighted that the House-passed jobs bill includes Department of Energy [DOE] loan guarantees for energy efficiency projects, including retrofits of residential, commercial, and industrial buildings, facilities and equipment," ASE President Kateri Callahan said. "At a time when access to credit is severely limited, this authority will enable many energy efficiency retrofit projects to move forward, create new jobs, and reduce U.S. homeowners' energy bills."
"We are especially pleased that the new loan guarantee authority will encompass projects funded through PACE bonds, thereby facilitating immediate, federally guaranteed municipal financing for important energy efficiency projects. However, we are disappointed that bill does not contain the major residential ‘Home Star' retrofit initiative, but we fully expect both the House and the Senate to take up that initiative [soon]."
The legislation's Innovative Technology Loan Guarantee Program provision would fund an additional $2 billion to DOE for the Innovative Technology Loan Guarantee Program. The provision would amend the American Recovery and Reinvestment Act (stimulus law) to allow DOE to make loan guarantees for the rapid deployment of energy efficiency projects that begin construction prior to October of next year.
The legislation additionally would provide $1.25 billion for training and employment services under the Workforce Investment Act, of which $750 million would be used for a program of competitive grants for worker training and placement in high growth and emerging industry sectors with $275 million to be used for job training projects that prepare workers for careers in energy efficiency and renewable energy.
"Federal legislation supporting PACE financing is only one step in the process," Carol Guest, a policy associate for ASE, told GBI. "States also must pass legislation allowing municipalities to set up lending agencies, and municipalities must follow suit. As such, it would be difficult to estimate how many retrofits a federal loan guarantee program itself produced."