When President Obama announced his plan to institute a carbon cap-and-trade system last month, Enterprise Community Partners stood up and took notice.
The Columbia, Md.-based firm Enterprise has been quietly working on its own small carbon offset program for the past year—a way of both proving out the concept and also promoting green building in affordable housing developments.
The company’s Green Communities Offset Fund, which was initially launched in late 2007, raises and pools charitable contributions from organizations, individuals, and institutions to purchase “Green Communities Credits,” or verified carbon emissions reductions, from green affordable housing developments.
“Our offset program could be seen as a very small-scale pilot and shows the potential of what can be done in that bill,” says Dvora Lovinger, Enterprise’s senior director of government affairs.
As lawmakers get set to debate climate change legislation that would enact a federal cap-and trade system, Enterprise said it will actively lobby for the inclusion of provisions that would benefit the multifamily industry. “Our argument is that affordable housing and multifamily in general has to also be there,” Lovinger says. “We would argue that some of those proceeds should be invested in community-based programs or residential building.”
Carbon cap-and-trade systems are already in place in many countries that follow the protocols of the Kyoto Treaty. Basically, such systems give “emission credits” or permits to large industrial companies such as coal power plants. The credits put a ceiling on how much the utility can emit in a given year. If the company needs to emit more than it is allotted, it has to buy additional credits from companies that have reduced their carbon emissions.
Under the Obama plan, the government would auction off the permits, which could net around $650 billion over the next decade, according to the administration.
One major concern for Enterprise is that a cap-and-trade system would unfairly impact low-income individuals. The cost of utilities would undoubtedly increase under a cap-and-trade system, making it more difficult for low-income families to pay their bills. The Obama administration has proposed using the proceeds from the auctions to give a tax credit to all citizens to help offset the cost increases.
While offsetting the higher utility costs is important, the proceeds may also be useful by helping to drive energy efficiency in existing multifamily properties. “We need to make sure that there’s financing available to do retrofits, to really drive deeper energy efficiency in the building,” says Dana Bourland, a senior director at Enterprise Green Communities. “If we can make buildings more energy-efficient, that’s a much more sustainable approach than just covering the higher costs associated with our energy consumption.”
Last November, Enterprise’s offset fund made its first funding commitment to a multifamily property, called Silver Gardens, a 66-unit green development in Albuquerque, N.M. The developers received $6,600 to upgrade a wind turbine system on the property.
And more funding commitments are on the horizon: Enterprise was in the process of purchasing offsets from about a dozen projects in Massachusetts in early March.