The startling climate change report issued Monday by the UN’s Intergovernmental Panel on Climate Change was very clear: The climate crisis, caused by humans, is worsening extreme weather around the globe.
That’s been obvious in recent weeks in New Jersey as we’ve experienced severe flooding and had five tornadoes touch down. The effects of climate change are once again top of mind. The science is clear that these sorts of extreme weather events will only worsen and become more frequent if we don’t take swift action to reduce emissions. The cleanest and cheapest energy is the energy we don’t use; this is the idea behind energy efficiency measures. Gov. Phil Murphy now has the opportunity to sign the new C-PACE bill (A2374/S1953) into law to help businesses and apartment building owners save energy, money by increasing energy efficiency investments.
Commercial Property Assessed Clean Energy (C-PACE) is an innovative financing tool with a simple premise: A property owner can take out a loan to help pay for a new construction project or a rehab that involves clean energy components or upgrades. The difference here is that the loan stays with the building, so if the owner moves away, they aren’t saddled with the burden of paying for a project that they’re not involved in anymore. On the flip side, the new owner also reaps the benefits of the energy upgrades done to the building as they help pay off the project.
The New Jersey Legislature passed the C-PACE bill, sponsored by Assemblymen Raj Mukherji and James Kennedy and Senators Bob Smith and Kip Bateman, to allow commercial property owners to use PACE to pay for these types of projects. This little-known policy could make a big difference in our communities. The program, however, is hardly new; it’s already working in 25 other states, including our neighboring states of New York and Pennsylvania.
In January 2020, New Jersey released an updated Energy Master Plan, setting goals to reach 100% clean energy by 2050. The plan also includes clear meaningful goals to reduce energy use through energy efficiency measures, including C-PACE financing.
However, these are not just goals; they are mandated in the Clean Energy Act of 2018, requiring utilities to reduce electricity usage by 2% and natural gas usage by 0.75%. A study by the New Jersey Board of Public Utilities found that our state has the potential to go even farther, using 21% less electricity by 2029. This would help reduce greenhouse gas emissions, improve water quality, strengthen the electric grid against severe weather disruptions, and save consumers money on their monthly utility bills.
Of course, it will take a lot of coordination between the state, utility companies, the business community, and the average New Jerseyan to reach these goals, but the new C-PACE program could help us get there.
Our neighbors across the river in Pennsylvania launched their program in 2018 and one PACE-funded project there provides a great example of what the program can make possible.
Golaski Labs in the Germantown neighborhood of Philadelphia finalized approval for more than $1 million in C-PACE financing to renovate its multi-use space. The building is attached to apartments and will house a restaurant, offices, a maker space, and a multi-cultural coworking community space. The C-PACE loan will fund the HVAC system, LED lighting, insulation, new windows, and low-flow plumbing to save water. These upgrades are expected to help cut 91,800 pounds of CO2-e every year, reduce the building’s carbon footprint by 1,378 metric tons of CO2-e emissions over the life of the project, and save the owners $10,900 every year.
Across the Hudson, New York City just saw its first C-PACE deal close – a $89 million financing package for a Wall Street firm to retrofit its 1.2 million square foot, 25-story office building for more efficient heating and cooling systems. And there are a multitude of other states that have unlocked energy and cost savings by implementing the program.
C-PACE is good news for business owners in a time when every penny helps. As the Delta variant threatens to extend the COVID-19 pandemic, we know the impacts on businesses will be long lasting. C-PACE can help them save money on their monthly bills and in apartment buildings, those savings can be passed onto tenants depending on how the program is set up.
Our state legislators have set us up for success with strong C-PACE legislation after years of work. Now it’s time for Governor Murphy to get the legislation over the finish line by signing it into law. This would be a win for energy efficiency and would help Gov. Murphy get the state closer to reaching its ambitious energy efficiency mandates. Our climate and consumers’ wallets are depending on bold action with tangible results. C-PACE promises to deliver for both.
Emma Horst-Martz is the advocate for New Jersey Public Interest Research Group, a citizen-based advocacy organization based in New Brunswick, which has advocated for increased energy efficiency measures for more than four decades.
William (Bill) Amann is the President of M&E Engineers, Inc. and the former Chairman and a current Board Member of the New Jersey chapter of the U.S. Green Building Council. As an engineer and LEED Fellow, Bill has over 30 years of experience in energy systems.