Billions For Greener Buildings Might Be In An Infrastructure Bill, Just Not Called Green New Deal
Now that the stimulus bill is a done deal, the Biden administration is reportedly focusing on infrastructure, though as yet it hasn't released any specific proposals, and movement on such a bill hasn't formally started in Congress.
Still, when it comes, the push for infrastructure spending will be big with projects that impact commercial real estate both directly and indirectly, infrastructure experts say. The most direct impact would probably come in the form of funds to retrofit millions of structures to be more energy-efficient and for improving smart infrastructure, while indirect impacts might include such traditional infrastructure items as roads and bridges.
"It's become pretty clear that the administration wants to address two priorities right now, climate change and social equity, and in a big way," American Council of Engineering Cos. CEO Linda Darr said. "Infrastructure has a critical part to play in those goals."
Joe Biden, while the presidential candidate, framed the infrastructure issue as one of clean energy, putting the United States on the path to achieving net-zero emissions by 2050, and touting the job creation dynamic involved in spending money on greening the economy. The promises included funding for roads and bridges, but also green spaces, water systems, electricity grids and universal broadband.
"I think the No. 1 priority for the White House and Congress will be to build the climate initiatives we've so much wanted into an infrastructure bill," Virginia Rep. Don Beyer told Insider in February.
In theory, almost any infrastructure spending involves commercial real estate, but some aspects of a spending bill involve CRE more so than others. The campaign proposal, for instance, called for the upgrading of 4 million nonresidential buildings and the weatherization of 2 million residential properties over four years.
The proposal also called for direct cash rebates and low-cost financing to spur building retrofits and upgrades to efficient-appliance manufacturing supply chains. Under that scheme, there would also be funding to electrify home appliances and install more efficient windows, all of which will cut residential energy usage.
The Biden proposal echoed much of what was in an infrastructure bill that passed the House of Representatives last year but which went nowhere in the Senate. That bill provided $1.5 trillion for a variety of infrastructure projects, including $494B for surface transportation programs like roads and bridges, but also $100B for housing and $100B to upgrade schools, all with energy efficiency in mind.
"Mayor Pete [Secretary of Transportation Pete Buttigieg] is already talking about those goals," Darr said. "And it's timely because of the extreme weather we're seeing. People died in Texas because a critical piece of infrastructure had been neglected, and the decisions made by policymakers on infrastructure didn't hold up. Attention is focused on the subject now."
Building retrofits will be an important part of any infrastructure push, according to the University of New Haven Tagliatela School of Engineering Dean Ronald Harichandran, but not the only sustainability goals.
"Buildings consume a very large fraction of energy, so sustainability is a key aspect that the administration is looking at," Harichandran said. "But there will be more to it than that."
Any infrastructure bill would also include upgrades to the usual sorts of infrastructure, such as roads, bridges, waterways and levees, and certainly a focus on the electricity grid, whose efficiency and reliability is now in the spotlight, Harichandran said,
Emerging tech might also be supported in any infrastructure package as well, according to Beep CEO Joe Moye, whose Florida-based company specializes in autonomous vehicle tech for communities and campuses. It has the long-term potential to impact land use and development as people get used to AV tech.
"An important part of the new technology will be developing multimodal trails and smart infrastructure specific to how we deploy autonomous vehicles and make them safer," Moye said.
"They'll be able to interface with things like traffic signals, emergency signals, crossings, and roadside units that ultimately support communication with all types of vehicles," he said.
Several state agencies, such as the Florida Department of Transportation and the Georgia Department of Transportation, have started investing in the roadside units and other infrastructure that is going to be required, Moye said.
Engineers have long been insisting that the nation's infrastructure spending is woefully inadequate. The American Society of Civil Engineers, in its latest quadrennial assessment of U.S. infrastructure, which was released early in March, gave the nation a C- overall, asserting that the country is spending just over half of what it needs to on infrastructure.
The study covered 17 categories of infrastructure, with grades ranging from a high of B for rail to a low of D- for transit, with 11 categories receiving a D grade of some kind: aviation, dams, hazardous waste, inland waterways, levees, public parks, roads, schools, stormwater, transit and wastewater. The D grade means poor condition, with many elements nearing the end of their useful life.
Though infrastructure is in need of work, the political will to pass major bills on the subject has proven to be fairly rare in recent years. The last sizable measure passed in 2015, when Congress approved $305B, mostly for roads, bridges and rail lines. For the decade before that, infrastructure funding measures tended to be small and stopgap, as they have been since then.
"The president got basically what he wanted for the stimulus bill, but in a way that might hamstring him with a few Democrats in the Senate who might not want to take on that much more new debt," said Chris Haynes, University of New Haven associate professor, political science and national security.
Then again, Haynes said, the Democratic caucus in the Senate seems more united than in recent memory, and its 50 members — especially West Virginia Sen. Joe Manchin — might be open to modifying the filibuster in a way that would let a major infrastructure bill pass.
The Republicans will likely be against such a bill, and it is still possible that they will be able to fray Democratic unity just enough to defeat the measure, Haynes said.
"If the Republicans are able to frame this bill as the Green New deal, and they're successful in getting that message to the public, that might turn senators like Joe Manchin," he said. "But if the Democrats are smart, they're going to get out in front of it and stress really popular parts of the measure, such as roads and bridges, and a better electric grid."
At the state and local levels, infrastructure proved reasonably popular during the 2020 elections, with voters approving taxes and other measures to support infrastructure spending in such diverse places as Arkansas, Michigan, Texas and Colorado.
In Arkansas, for instance, voters made permanent a 0.5% sales tax to fund transportation that would have otherwise sunset in 2023. The tax raises about $300M annually, most of which funds state highways. In Denver, voters approved a more cutting-edge measure: a 0.25% sales tax to make buildings and streets more energy efficient — a "climate change" sales tax that will generate $36M a year.
Still, popular approval of infrastructure doesn't guarantee approval by Congress, especially in the Senate, Haynes said. Politics is seldom so straightforward.
"What's going to happen in the Senate is quite nuanced, so it isn't clear whether an infrastructure package of any size will get through," Haynes said. "Still, compared with last year's bill, it has a much better chance."