In this installment of 10 Questions for . . . , Senior Editor Daniel DiClerico speaks with Jack Hidary, chairman of SmartTransportation.org, which brings together various organizations seeking innovative transport solutions. Here, Hidary talks about the inspiration behind last summer's Car Allowance Rebate Program (cash for clunkers), the $300 million State Energy Efficient Appliance Rebate Program, and why he's now focused on making American homes more energy efficient through the PACE (Property Assessed Clean Energy) bond program. As always, the responses below are the opinion of the interviewee.
You're an entrepreneur with a background in finance, technology, and medical research. What turned you on to energy efficiency?I love taking an idea from the back of a napkin to a full-fledged company. In 2001, I built an energy practice that exposed me to the inefficiencies of fossil fuel. Take coal. By the time you go from the coal mine to the processing plant, over the power line and into the home, you're left with around 15 percent of the original energy. That's an enormous waste. Then there are the health and environmental issues related to carbon emissions, not to mention the economic and national-security issues related to our dependence on fossil fuels.
How did that translate into cash for clunkers?In 2005, I spearheaded the effort to change the taxicabs in New York City to hybrid vehicles. Today, 25 percent of the city's fleet are hybrid, and the rest will so be in two to three years. The success in New York got me thinking about the roughly 250 million cars in the rest of the U.S. I realized that there needed to be an incentive to accelerate their turnover, especially since the average age of our vehicles has gone from seven years to 14 or 15 years. When I was growing up in Brooklyn, our local utility had a program that gave rebates for trading in an old air conditioner for a new unit. That to me was a great model for what we needed to do with cars. So I put together some ideas for a cash-for-clunkers program and presented it at the 2008
Clinton Global Initiative.
Do you think cash for clunkers will have a long-term impact on our culture? There's now an entire set of programs based on
clunkernomics, or the notion that efficiency makes good economics. During cash for clunkers, people walked into their dealership with a totally different mind-set. They weren't just looking at the transaction value of the sticker price but also at the cost of gas and maintenance. They understood that if a car is $500 less on the sticker but costs $2,000 more each year to operate, that's a bad deal. In technology, we call this total cost of ownership. The concept has been around for years, but it's entered the consumer lexicon, and moved well beyond cars.
The U.S. Department of Energy recently kicked in
$300 million for cash for clunkers for appliances. And I just had an e-mail from a leader in computer-data centers, which suck up about 2 percent of the country's electricity. She's proposing a cash-for-clunkers program that would help swap out these massive servers for more efficient ones.
Why have you turned your attention to buildings? We're hoping to catalyze the same paradigm shift in how people buy and maintain homes. The built environment—houses, apartments, commercial buildings, warehouses, etc.—is responsible for 40 percent of the nation's energy use. The average American household uses 50 percent more energy than the average Italian household. So there are a lot of things we can do to make buildings more efficient.
We have better
windows and
lighting and ways to harness
solar power. These things all have great payback, but they also cost a lot to buy and install. Enter two guys from Berkeley, California, named Cisco DeVries and Dan Kamen. They came up with the model for a bond-based financing mechanism that would give people loans to pay for their energy retrofits and solar. They approached me and several other folks with the idea. We looked at it and decided to take it to scale through the formation of the
PACE Now coalition. We're predicting that the program will stimulate up to $500 billion in business over the next decade.
How does a PACE bond work? PACE stands for Property Assessed Clean Energy. It's very simple for consumers to access. They apply for a loan from their city or municipality, say $20,000 to replace the windows, lighting, and central air conditioning. The city issues a PACE bond and then lends the money, which the borrower pays back over 20 years via a surcharge on their property taxes. That's plenty of time to break even on the energy retrofit and solar installation, and consumers still qualify for
federal energy tax credits, saving them even more on the project.
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