Last December, the U.S. Department of Energy and President Obama created the Better Buildings Challenge. The Better Buildings Challenge is a voluntary leadership initiative that asks chief executive officers, university presidents and state and local leaders to make a commitment to energy efficiency. Through the Better Buildings Challenge, the DOE is casting a spotlight on leaders that have committed to upgrading buildings and providing their energy-saving strategies as models for others.

In other words, the DOE is partnering up businesses with cities, states and schools to make energy efficiency more than just a talking point and an actual goal that benefits all parties. It is also trying to spotlight companies that are making concerted efforts financially or structurally to promote energy efficiency and work toward a more environmentally friendly future.

And perhaps the biggest point of emphasis that the Better Buildings Challenge makes is the idea of transparency. Companies that donate money and the states, cities or school districts that receive it are required to be 100 percent transparent on where the funds come from and where they are allocated and on projects.

The ultimate goal of the Better Buildings Challenge is to have all participants achieve 20 percent reduction in energy intensity by 2020.

Companies Are Chipping In

Steadily, American companies are putting up the funds. Currently, there are approximately 70 different corporations (Starbucks and Staples are newcomers, joining last month), towns and cities and school districts in the Better Buildings Challenge. One of those companies is Greenwood Energy, based in Green Bay, Wisc., which made news recently with a big monetary donation.

In mid-June, Greenwood agreed to put up $50 million for the initiative. It’s a significant amount that could have a major impact on a town or a school district’s energy efficiency and future.

Biomass plants are part Greenwood Energy’s research into clean energy. It recently pledged $50 million to the Department of Energy’s new Better Buildings Challenge.

A few details about Greenwood first. Its main businesses are in renewable fuel and clean power. Besides its work with the Better Buildings Challenge, Greenwood is developing another business which diverts non-recyclable waste from landfills and converts that waste into a renewable fuel that replaces coal.

Joe Sacks, Greenwood’s manager of business development, says the company’s goals are twofold. Its high-quality fuel pellets, produced from non-recyclable industrial paper and plastic waste, are a direct substitute for coal but have lower carbon and overall emissions footprints. Second, he says, through financial backing of projects, Greenwood is “helping institutions like state universities find a cost-effective, greener solution to their power needs.

Why did Greenwood decide that investing in the Better Buildings Challenge was a good idea? “Our initial clean power investment was a 1.4-megawatt fuel cell installed at Central Connecticut State University (in October 2011), providing onsite generation of steam and power,” Sacks says. “That opportunity enabled Greenwood to realize the value and mutual benefits of distributed generation projects for both investors and site owners or hosts. We soon realized how underserved and underdeveloped the distributed generation and energy efficiency spaces were.”

What’s in it for Greenwood? Sacks says that by bringing together financial capital providers from the business sector and large property owners — the Better Business Challenge refers to them as “Partners” — they generate immediate cost savings, more predictable future energy costs, a degree of energy independence and a substantial reduction in their carbon footprints. He adds that Partners realize these benefits without diverting capital away from their core operations.

This last point was a major one emphasized by Maria Tikoff Vargas, director of the Better Buildings Challenge. The idea that with corporate budgets being so tight, getting financial support to make buildings more energy efficient was crucial.

“There has to be a lot of financial creativity with schools and states in the public sector, and that’s where hopefully businesses can help,” Vargas says. “Ideally, we want these schools especially to be able to spend the money they have on education, and have businesses come in and help with some of their other needs.”

Future Depends on Proactive Leaders

Tikoff Vargas says some of her primary obstacles in getting the Better Buildings Challenge off the ground are trying to move the market forward and to understand the barriers that exist for organizations in becoming more energy efficient and then overcome those barriers. “We’re trying to get companies and municipalities to tap into new strategies,” Tikoff Vargas says. “The state of Delaware got some innovative funding from Citibank.”

In talking about the challenges associated with “barrier busting,” Tikoff Vargas notes that it’s been tough to get stakeholders to “be first and lead the charge.”

“Companies don’t want to be the first to do something; they always want there to be a model [from] someone else going first and being successful,” she says. “At the Department of Energy, we’re not deal makers; we just identify partners and who might be a good fit for the program and who will do things transparently.”

Tikoff Vargas says in ideal setups, new financial backers would work with a Partner that’s already in the Better Buildings Challenge; some cities in the program include Atlanta, Chicago, Cleveland and Omaha, Neb. Participating states include North Carolina, Massachusetts and Delaware. For example, Atlanta has committed 16 million square feet of public and private space to substantive upgrades as part of the Better Buildings Challenge; the city has begun a benchmarking initiative for its 400-block downtown area.

Once backers are found, the idea is to make energy-efficient changes “across all the corporate portfolio buildings, not just one or two of them,” Tikoff Vargas says. “You also want to give everyone a model, regardless of their size, that they can follow,” she notes. “We want a big-city school district to be able to follow the model of another big-city school district, and so on.”

Tikoff Vargas points to Green Campus Partners LLC, a portfolio company of Hudson Clean Energy Partners and a clean energy project development and investment firm. Green Campus Partners has committed $200 million to the Better Buildings Challenge since joining last year, and so far it has doled out approximately $90 million, which includes transactions with 13 school districts.

“They’re doing great work with schools and really showing that changes can be made and energy efficiency is something all school districts can [accomplish]” Tikoff Vargas says. “We just want to give everyone the same opportunity.”

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