Sir Richard Branson and the Property Assessed Clean Energy Consortium members launch a $650 million retrofit campaign for buildings in Miami, FL and Sacramento, CA. (The Carbon War Room)
Billionaire entrepreneur Richard Branson is harnessing the power of the market and millions of dollars to wage a war on climate change. He’s founded a non-profit called the Climate War Room that is all about helping businesses make a profit while investing in efficient buildings and renewable energy. The War Room’s CEO Jigar Shah tells host Bruce Gellerman how we can fight climate change with capitalism. (Photo: The Carbon War Room)
GELLERMAN: From the Jennifer and Ted Stanley Studios in Somerville, Massachusetts, this is Living on Earth. I'm Bruce Gellerman. Sir Richard Branson knows a few things about business and money. The British billionaire founded Virgin Records, Virgin Atlantic Airlines, Virgin Mobile and Virgin Vodka - ok, that last one wasn’t such a hit - but Sir Richard has had a string of successful start ups, and recently launched Virgin Galactic to develop space tourism.
Back on earth, Branson is also bringing his entrepreneurial talents to fighting global warming. He’s founder of Carbon War Room. The non-profit organization is designed to enlist capitalists to fight climate change. As CEO of Carbon War Room, Jigar Shah is on the financial front lines. Mr. Shah welcome to Living on Earth.
SHAH: Great to be here!
GELLERMAN: So, maybe I should call you General.
SHAH: (Laughs). Well, no, I mean I have an entrepreneurial background, so no military background for me yet…
GELLERMAN: So, Climate War Room. "War," - strong stuff.
SHAH: Well, I think that it’s really the "war room" that we’re focused on, in a Churchillian sense. Where you really need to bring in the change makers and give them the tools and the resources necessary to be able to make the change that they desire.
GELLERMAN: What’s the big strategy - the big plan?
SHAH: Well, for the Carbon War Room, what we’ve seen is that 50 percent of all of the world’s carbon emissions, as well as 50 percent of the problems that lead to water issues, etc. - have technology solutions today that can address them profitably without further policy.
GELLERMAN: So, basically pointing out the market-driven solutions to climate change.
SHAH: That’s exactly right. We’re really promoting gigaton scale, market driven solutions to climate change.
GELLERMAN: Now, Carbon War Room just launched a 650 million dollar campaign to make buildings in, I guess, Miami and Sacramento more energy efficient - do I have that right?
SHAH: Yeah, the thing is that if you look at the solar industry globally, it’s something around 70 billion dollars a year. The energy efficiency retrofit industry is less than 10 billion dollars a year. So, something that makes a whole lot of financial sense doesn’t seem to be moving very fast.
And the reason for that is because it really doesn’t have a financial instrument that makes sense for everyone to use. But there is such a financial instrument now; it was developed by the property assessed clean energy bond folks. And Miami and Sacramento is just the very start of this process. And it will lead to hundreds of billions of dollars going into energy efficiency retrofits.
GELLERMAN: So, this program - I guess you call it "PACE:" Property Assessed Clean Energy - that’s the acronym?
GELLERMAN: This works, how?
SHAH: So, what happens is, is that if you use property taxes to finance the energy efficiency improvements, then it has a senior position to the first mortgage on the building. And so banks are very eager to lend under such a situation because it feels like a very secure investment.
And only technologies that save a lot of money actually are financed, so that there is extra money lying around. When you save money on your energy bills, you then can use that money to pay these slightly higher property taxes to pay off the financing.
GELLERMAN: So let me get this right. So you’ve got a company, that’s got a building it wants to retrofit it with energy efficiency and it needs money. So it goes to a municipality, and it says to the municipality - what?
SHAH: It says, "I need a million dollars to upgrade my building according to this energy audit. And if you lend me the million dollars, I’ll pay it back through higher property taxes over a ten-year period." And so the city is simply playing the role of collecting the money - they’re not on the hook to pay it back.
So, there's a private sector group that's lending the money - in this case Barclay’s - and, the building owner is saving money from all those improvements that they’ve made, so they have more than enough money to go around to actually pay off that payment every month.
GELLERMAN: Well, what if the business goes belly-up? That’s been known to happen.
SHAH: If the business goes belly up, the building itself still has those improvements on it. So the next group to enter the building pays those higher property taxes, but they should be happy to do so because they have much lower electricity bills.
GELLERMAN: How do you hold the company’s feet to the fire to ensure that they're actually doing these energy efficiency things, not just taking the money and running?
SHAH: Well, you have to have a qualified contractor that will provide a warranty for its work. And then there’s also an insurance company involved that is going to insure that that work was done appropriately. And so, if for some reason it wasn’t done that way - they would pay the damages through an insurance policy.
GELLERMAN: And it actually works?
SHAH: It actually works. And, in fact, it works so well that in these two locations alone - Miami and Sacramento - more than 650 million dollars can be deployed. But you can deploy hundreds of billions of dollars across the country if mayors, state legislators and others make their states friendly to this type of legislation like California and Florida have.
GELLERMAN: So what is the next new front for the Carbon War Room?
SHAH: Well, there’s several. We’re getting a huge number of breakthroughs now on renewable fuels - for aviation and diesel fuel. And the Navy and lots of other folks from FedEx to UPS to Virgin Airlines are leading the way to actually sign long-term contracts to switch to renewable fuels.
The reason we’re in this situation is because we have 550 billion dollars a year that go to fossil fuel subsidies. If these subsidies were eliminated - which the Super Committee could absolutely do - you would have a far more level playing field where fossil fuel prices would be set by the market, and not by these unfortunate subsidies in the wrong direction.
GELLERMAN: So, I’ve gotta ask you - Mr. Shah: do you really have a War Room? I picture, you know, kind of a Dr. Strangelove or Failsafe or something.
SHAH: (laughs) Well, we do have a room that has a lot of information on the walls around it that we use to plot our next strategies, and I have to say that it’s pretty exciting. You know, what we’ve been able to do is to attract thousands of entrepreneurs who are really fearlessly trying to make their world a better place, and giving them the tools necessary to operate on a level playing field. Today, we don’t have a level playing field for all these solutions. Once we get one, I think we’ll have solved most of the problem.
GELLERMAN: Jigar Shah is the CEO of the Carbon War Room. Well Mr. Shah, thank you so much, I really appreciate it.
SHAH: My pleasure.
GELLERMAN: And next time I’ll call you General -- you get four stars!
SHAH: (Laughs). Take care.
GELLERMAN: (Laughs) Bye-bye.
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