Stimulus proposals take aim at climate change.(IN SESSION)

An issue that has gained traction in Congress and attention from President Obama is climate change. Although this issues was recently put on the back burner due to the current financial crisis, curbing greenhouse gas emissions will still be a priority for the Democratic-controlled Congress and President Obama. Obama and his team are currently laying out the groundwork for a major stimulus plan, with a substantial focus on green energy. The President's plan, along with the election of carbon emissions reduction supporters, Henry Waxman, to the Chairmanship of the House Committee on Energy and Commerce, will likely usher in a groundswell of energy proposals aimed at reducing emissions. Such legislation could affect the cost of constructing new buildings and retrofitting existing buildings, as well as the cost of operating multifamily and commercial structures.

One proposal aimed at fighting climate change, which gained support in late 2008 from President Obama and many prominent members of Congress, is a program called emissions trading or "cap and trade." This type of program provides economic incentives to achieve reductions in emissions. Under this approach, regulated industries can buy and sell what are, in effect, permits to pollute.

This idea is a response to strong science showing that carbon emissions contribute to global warming. However, there is no science that can accurately predict how much economic hardship will be caused as a result of this proposal. Since 2005, the European Union has required various industries (real estate exempt) to cut the amount of carbon emissions they produce or buy pollution credits in the open market. In this type of program, governments set emission caps, and companies emitting less than their quota can sell, at a profit, their unused credits to companies that overshoot their caps.

Although there have been studies by the U.S. Environmental Protection Agency (EPA) and the former Bush Administration showing that a cap and trade program in the United States may not have a significant impact on economic growth, it is unknown how this type of program will affect the commercial real estate industry.

[ILLUSTRATION OMITTED]

IREM supports federal funding of a cost/benefit analysis and research into the feasibility of an emissions trading program, including the participation and input from IREM, for the real estate industry. Recognizing the serious concerns of global warming, IREM supports the development of voluntary standards for reducing greenhouse emissions as well as economic incentives in the form of tax credits that would encourage efficiency improvements and assists in paying for those upgrades.

Print Get the Mag Weekly Updates