Skip to 0 minutes and 13 seconds The energy transition is also an economic issue. To achieve low-carbon economies, new business models and partnerships are totally necessary. One of the most successful cases is the Property Assessed Clean Energy (PACE).
Skip to 0 minutes and 32 seconds PACE is a financing tool used to pay for energy efficiency, renewable energy, and water conservation upgrades of buildings. PACE financing covers up to 100% of a project’s costs and is repaid as a special tax charge added to a property tax bill over a term of up to 20 years. PACE can pay for specific measures like new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, and more. Nearly all property types can be eligible for PACE financing, ranging from homes, commercial, industrial, non-profit, to agricultural. PACE was pioneered in 2007, in Berkeley, California and it quickly spread across the US and abroad, to Canada and Australia.
Skip to 1 minute and 23 seconds In the past three years, residential PACE has grown exponentially and reached $3.3B in funded projects, which resulted in more than 30,000 local jobs.
Skip to 1 minute and 41 seconds Both institutional and private investors provide the funding for energy efficiency projects. PACE is a public-private partnership, where a local government allows the private sector to use its property tax collection system. PACE is a voluntary financing tool, which means that only interested building owners opt-in to participate in the program. A PACE program does not raise property taxes for the whole community. PACE programs have demonstrated the adoption of some of the most rigorous consumer protection standards to ensure that citizens take advantage of the full benefits of PACE financing while safeguarding themselves against predatory lending behaviours. PACE programs do not impact municipal bond rating or debt viability.
Skip to 2 minutes and 28 seconds In case of default, the municipality is not responsible for paying off the investor, but to issue a delinquent tax certificate as in any standard default procedure.
Skip to 2 minutes and 44 seconds PACE is a type of on-tax financing mechanism that allows project investors to lend money for deep retrofits and then get repaid through a tax bill. On-tax financing is built upon the existing
Skip to 2 minutes and 57 seconds relationship municipalities have with their citizens: the property tax system. On-tax financing overcomes major market barriers for investments in energy efficiency and renewable energy projects. Building owners receive up-front funding for the building upgrade and the money is repaid through property tax bills for up to 20 years. Plus, in most on-tax financing schemes, the PACE charge is linked directly to the property, not to the individual, so it is automatically transferred to the next owner upon sale. On-tax financing is very attractive for investors because it offers a secure repayment stream and uses a familiar property tax structure.
Skip to 3 minutes and 45 seconds PACE is a solution for aging buildings stock as it enables deep energy retrofits. PACE programs create virtuous circles in the local economy by deploying local capital, employing local labour, and improving comfort for the residents. PACE programs benefit local communities in a number of ways. Creating Local Jobs. PACE-funded projects result in local job creation; every $1M spent on a PACE project creates up to 15 local jobs. PACE projects increase the demand for skilled building professionals and impact job creation in engineering, architecture, and renewable fields. Fighting Energy Poverty. PACE programs help fight “energy poverty” in European communities. PACE-funded home retrofits result in substantially lower energy bills. This means more comfortable and affordable living conditions for Europeans.
Skip to 4 minutes and 40 seconds Achieving Cop21 Targets and Local Climate Goals. PACE will enable local and national governments to achieve the 2050 policy targets and COP 21 Paris Agreement goals of reducing energy consumption and greenhouse gas emissions. Improving Building Stock. Well-maintained buildings with low energy costs are more attractive to buyers and renters. By improving its building stock, cities reduce air pollution and boost resilience through decreased energy demand. Improved buildings can result in increased connectivity, safety, and an improved standard of living. Creating Smart Connected Communities. Stand-alone buildings, apartments, and communities participating in PACE programs can be equipped with smart sub-metering systems to measure and communicate data about energy demand, energy savings, and usage.
Skip to 5 minutes and 34 seconds The aggregated data will provide invaluable information about patterns, uses, and consumption that will help the local administration to have a better understanding of their citizens’ habits and needs, and thus provide more effective services.
Skip to 5 minutes and 56 seconds PACE is a flexible financing tool that can be adapted to a variety of political, legal and economic landscapes. While PACE financing was pioneered in the US, it was successfully implemented in Canada and Australia. The key aspect of PACE financing is the repayment of the EE investment through property tax bills. While there are a variety of property tax systems throughout the world, the majority of countries have established some form of property tax on the use or occupation of land and/or property, frequently managed and collected at the municipal level and paid by the owners.
Skip to 6 minutes and 40 seconds PACE has already demonstrated its capacity to mobilize private funds for energy efficiency investments at an unprecedented scale in the U.S., and Europe could lead the development of PACE financing, by making it a key instrument to promote large scale building retrofits.
PACE: A Public-Private-People Partnership
The energy transition is also an economic issue. To achieve low-carbon economies, new business models and partnerships are totally necessary. One of the most successful cases is the Property Assessed Clean Energy (PACE).