A coalition of 16 of the world’s biggest cities, five banks, one former president and companies and groups that modernize aging buildings on Wednesday pledged investments of billions of dollars to cut urban energy use and releases of heat-trapping gases linked to global warming.This seems like a no brainer. It reduces greenhouse gases and makes money at the same time.
Under a plan developed through the William J. Clinton Foundation, participating banks would provide up to $1 billion each in loans that cities or private landlords would use to upgrade energy-hungry heating, cooling and lighting systems in older buildings.
The loans and interest would be paid back with savings accrued through reduced energy costs, organizers of the initiative said at a news conference in Manhattan. Typically, such upgrades can cut energy use and costs by 20 percent to 50 percent, they said.
The upgrades would be done by four international energy-services companies that are already seeing a booming business in these types of conversions. They would guarantee a certain level of energy and monetary savings for particular projects under the plan.
The influx of capital from the new project could potentially double global business in such energy upgrades, which is several billion dollars a year now, bankers and business representatives said.
“I’ve been involved in a couple billion dollars’ worth of projects in the last several years,” said Bob Dixon, senior vice president of Siemens Building Technologies, one of the energy-services companies. “They’ve all paid for themselves in energy savings.”
You might wonder why companies aren't doing this on their own if it is profitable. I believe the answer is that energy costs are less than 5% of total costs at most companies, so it isn't something that makes a big difference on the bottom line.
If you have a company or a bank that just focuses on this, then it is not 5% of their business but 100%, and the savings that are insignificant to individual companies comes together to be substantial.
via NY Times