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The Growing Link Between Energy Efficiency and Economic Development

Cities are learning that aggressively promoting ways for buildings to cut their energy use is an important growth strategy.

It makes abundant sense for any city -- large or small -- to focus a significant part of its economic-development efforts on energy management for the buildings that are home to its businesses and industries. More and more, cities around the globe are using this strategy as they work to attract and retain valued businesses and the jobs and tax revenue they bring.

It's not hard to see why this is happening. According to the Institute For Market Transformation, building owners and their tenants in cities that recognize and practice effective energy management can save as much as seven times the energy costs of those in cities that don't make such an effort.

Increasingly, cities getting into the energy-management game are recognizing that there are two particularly effective ways to embrace this growth strategy: through the carrot of energy competitions or challenges and the stick of disclosure and benchmarking requirements.

Challenges are particularly effective in getting building owners, managers and tenants to recognize and engage in energy-management practices, and organizing one can be a rewarding and visible thought-leadership initiative for a local government. There are seven core steps associated with most challenges: meeting with stakeholders to identify challenge goals; communicating and promoting the contest; registering participants; creating each participant's baseline for a building's energy use; identifying and implementing energy-management initiatives; assessing results; and rewarding and recognizing the winners.

City organizers won't be alone in their endeavors. These efforts are encouraged and supported by various energy-sector utilities and by governmental efforts such as the U.S. Environment Protection Agency's Energy Star Battle of the Buildings. EPA launched its latest Battle in July, and more than 6,500 buildings and 125 teams are competing.

And it's not just larger cities that are stepping up to the plate. In May, Woodville, Ala, with a population of just 741, was recognized by the EPA for achieving the greatest energy reduction of 100 teams from across the nation. And many successful competitions are established on a local basis. Salt Lake City's Mayor's Skyline Challenge, for example, has resulted in tremendous strides in energy efficiency. That project provides building owners with information, support and tools for creating energy plans and tracking progress. Key to its success is partnering with stakeholders including power utilities, state and local government agencies, and the state's Building Owners and Managers Association.

And then there's the stick. More and more local governments are implementing mandatory disclosure and benchmarking policies related to buildings' energy use. Rating and disclosure policies typically require buildings above a specific size (such as 50,000 square feet) to undergo an energy-use audit and then report on the results. Energy-wasting practices are identified, providing targets for substantial energy savings. Owners learn how they can refurbish their buildings to create a competitive advantage in attracting tenants.

Atlanta and Kansas City are among cities that initiated energy benchmarking and audit legislation this year. For its part, Atlanta projects that its ordinance will drive a 20 percent reduction in commercial energy consumption by 2030, spur the creation of more than 1,000 jobs a year in the first few years, and reduce carbon emissions by 50 percent from 2013 levels by 2030.

Whatever approach they take -- the carrot, the stick or both -- it's clear that cities that take an aggressive approach to energy management are the ones that stand to reap some of the biggest benefits in building their economies.

NOTE: This column has been updated to correct the number of jobs that Atlanta projects will be created as a result of its energy-benchmarking and audit ordinance.

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