CURWOOD: And that barrier is what folks working on the Property Assessed Clean Energy, or PACE concept, hope to break down. It's a new financing program using tax-free bonds that helps homeowners make energy efficiency improvements without having to write a big check upfront. Cisco DeVries says this approach has the potential to reduce the amount of carbon dioxide released into the atmosphere by up to four to five percent. Mr. DeVries is president of the company Renewable Funding, which created the concept of property-assessed clean energy, and he joins us now. Cisco DeVries, welcome to Living on Earth.
DEVRIES: Hello Steve, it's great to be with you!
CURWOOD: So, how does this new financing program work?
DEVRIES: This new program, which started in Berkeley, is designed to take a type of municipal financing that cities have been using for over a century and apply it to allowing property owners to make these energy efficiency and solar improvements. What it allows a property owner to do is install an energy efficiency retrofit, or a solar system, and then pay for the cost over ten or 20 years as an individual voluntary surcharge on their property tax bill. So, you know, we get rid of that big upfront cost, and allow property owners to pay for the improvement much like a utility bill over months and years.
CURWOOD: So, an important point to make is that the cost stays with the property, and not with the individual, correct?
DEVRIES: That's one of the real pieces of magic here. An average homeowner in the Unites States moves every five to seven years these days, and that's simply not long enough to recoup the benefits of making one of these deep improvements to your home. So, under this new program, a property owner who makes the improvement, and then moves, the new owner just comes in and picks up paying for the improvement, where the other property owner left off. The property tax surcharge just transfers automatically between owners, much like your utility just transfers to the next owner when the new owner moves in.
CURWOOD: Now, not everyone who wants to be more energy efficient owns a home, so what can this program do for renovating buildings like, you know, multi-family rental units?
DEVRIES: This has been a tricky wicket for a long time. In most cases, a renter of an apartment is paying the utility bill, but it's the property owner that would have to put out the money in order to makes these improvements and reduce the bills ? it's called a split incentive. The first way that this program really helps is it allows property owners who have things like central heating, or central water heating, to use this Property Assessed Clean Energy model to make these improvements, reduce their energy costs for the parts of the bills that they're paying. So, that's a direct benefit to the property owner. But in addition, what we're finding is that property owners in some cases are talking to the renters and saying, hey, let's do this together. We'll increase the rent a little bit, and you will be able to reduce your utility bill a little bit, and we'll share in these savings.
CURWOOD: Now, where do the municipalities, the cities and towns, get the money to do this?
DEVRIES: Well, Steve, that's a great question. One of the most important components of this program is that it is not a cost to a city. All the city does is enable the property owners to have a surcharge on their property tax bill, and then issues a bond, and that bond is then repaid through the property taxes. If there's ever a problem in the repayment of property taxes, it's just the bond owners who are affected. The city itself isn't responsible. The only security then, for that bond, for the repayment, is the property tax. And that means that cities can go ahead and help this program get started, can make it a service to their communities, but their not taking on the risk, and not having to put the money up themselves. And that's a real benefit right now, because there's not a lot of governments out there that have extra money running around.
CURWOOD: What's the catch here? You know, selling bonds at this time of the economy will be kind of difficult, for one thing.
DEVRIES: What we're seeing today, the bond markets are getting better for bonds that are well received, that look very secure. So, our job in this program as it gets started is to make these bonds are secure, that the programs work well, that the property owners who are choosing to participate are doing so with a great deal of information and making good choices to receive real energy savings. If we do those things, then these bonds should be very secure, and they should be well received on the markets.
CURWOOD: So, Cisco, what gets you excited about this?
DEVRIES: We've known for decades that you can save money, that most property owners can save money on energy efficiency in their homes, but we haven't been able to unlock that door. And here today we have this confluence of events: we have the priority around climate change; we have the fact that families are looking for way to save money, especially in this difficult economic time; and we're trying to put people back to work. And that's led to a real focus on solving this energy efficiency financing issue. The thing that really gets me excited is we have the opportunity with this program and some of the leadership in other programs we see coming down the pipe, to help transform the built environment, to really transform the way that people use energy, that they think of energy, and to reduce the amount of energy and greenhouse gas emissions coming from our homes and businesses.
CURWOOD: How big could this be, Cisco?
DEVRIES: The University of California Berkeley did a study looking at these programs and they said, boy, if this really starts to catch on nationwide, it could be a $280 billion financing program in not too long. And then we would be talking about reducing greenhouse gas emissions to the tune of 1.1 or more gigatons.
CURWOOD: And, at net not cost really to anybody?
DEVRIES: Property owners really want to do the right thing, but they also need to save money. This is not a time to be putting a lot of extra money out the door if you can avoid it. And I think what we've got here is an opportunity for people to make the retrofits to reduce their energy costs and to put some extra money in their pocket books at the end of the month. And that certainly is a win-win.
CURWOOD: Cisco DeVries is president of the company Renewable Funding, the creators of the PACE concept, the Property Assessed Clean Energy program. Thank you so much for taking this time.
DEVRIES: It was really my pleasure to be part of this, thank you, Steve.