Property Assessed Clean Energy: A Green Financing Tool for the average household
Edmonton’s Energy Transition Strategy Annual Report was presented to Executive Committee this week. While we are well on our way on phase 2 of our strategy: “Implementation of 7-Key Energy Transition Actions” there is still work to do.
Thanks to the efforts of the City of Edmonton Administration, the Government of Alberta is now drafting legislation on Property Assessed Clean Energy (PACE) which we expect for this spring. But what exactly is PACE?
PACE is an innovative financing tool which allows building owners to upgrade their buildings with energy and resource retrofits without putting any money down. The fact is the financial barrier is the biggest barrier to energy efficient retrofits. Most investments in energy efficiency in a home, like a solar roof or new energy efficient windows, will end up saving homeowners money in the long run. The upfront costs of these improvements are high and the return on investment period is lengthy which presents a tremendous financial hurdle for the average homeowner in Alberta.
PACE works by financing the upgrade to your home so you can immediately start saving on your energy bill. In turn, the loan is tied to your property and is paid back with an increase to the property tax over many years. Not only does it remove the upfront costs, but it can be structured so that the projected annual saving generated by the retrofits exceeds the cost of the increase in the annual tax assessment. If the home is sold, the loan is tied to the home’s property tax assessment and the increased taxes are paid by the new owner who also gets the new savings on energy costs. As seen in other municipalities, PACE programs have high compliance rates for repayment which present private investors an opportunity to invest in a bond-like opportunity; one that is safe, long-term and low interest.
PACE is not just a tool to help homeowners save money and reduce emissions to help slow climate change - it's a job creator | http://bit.ly/2Iz961q
This is all exciting news in wake of the Cities Intergovernmental Panel on Climate Change meeting where international mayors, government leaders and climate scientists came together to commit to tackling climate change here in Edmonton on March 5th - 7th. Mayor Don Iveson created the Edmonton Declaration to call upon cities from around the world to formally recognize that cities must play a central role in combating climate change.
From this conference, we were reminded of the four things cities can do when it comes to tackling climate change. First, improving urban form by increasing density and improving land use. The new Municipal Development Plan is currently being drafted and Council will shape the direction of development in Edmonton for the next 10 years. (You can read my thoughts on this here) Second, cities can improve their waste diversion efforts and use innovative technologies to reduce waste and greenhouse gas emissions. Third, aspiring to a low emissions electricity grid and promoting renewable and viable sources of electricity. Finally, we must look to improve transit options for Edmontonians. The new Transportation Master Plan is being drafted and will be integrated with the MDP to help coordinate efforts to ensure citizens have many transportation options.
There is a lot of work still to be done to ensure Edmonton, and cities around the globe, continue to achieve their emission reduction targets. I continue to believe in the innovation, spirit and drive of people around the world to help tackle this global problem together – but we must start right here at home.