Mayor proposes new renewable energy financing mechanism to help achieve carbon neutrality by 2050
Mayor Martin J. Walsh today announced he has proposed an order that will allow the City of Boston to participate in the Massachusetts Commercial Property Assessed Clean Energy Program (PACE), a tax-based financing mechanism that enables low-cost, long-term funding for energy improvements in existing commercial, industrial, nonprofit, and multifamily buildings with five or more units. By adopting this program, the City of Boston is building on the strategies identified in the 2019 Climate Action Plan to accelerate decarbonization in the city's largest buildings and achieve carbon neutrality by 2050.
"Boston has set ambitious and necessary climate action and energy efficiency goals to protect our neighborhoods and create a resilient, healthy city," said Mayor Walsh. "PACE will help building owners access critical financing needed to complete energy improvements that will make their buildings healthier and more efficient, supporting the City's progress in reaching its goal of carbon neutrality by 2050."
According to the 2019 Climate Action Plan, buildings in Boston account for approximately 70 percent of citywide emissions. Under the PACE program, MassDevelopment uses an open market, third party direct financing model for qualifying energy projects. Existing buildings in the City of Boston can secure long-term financing for eligible energy improvements through a voluntary better assessment on property tax bills, therefore eliminating certain barriers to traditional financing and possibly alleviating pandemic-related financial impacts.
"As the single greatest source of emissions citywide, buildings in Boston also represent the greatest opportunity for reductions," said Chris Cook, Chief of Environment, Energy, and Open Space. "While we continue to implement actions to reduce Boston's overall carbon emissions and develop a building emissions performance standard, PACE is one in a set of tools that will assist building owners in meeting our goals and building a cleaner, healthier future for Boston."
In order to decarbonize large buildings, the City of Boston is currently developing an emissions performance standard that, when implemented, is projected to decrease citywide emissions nearly 40 percent by 2050. To lead by example, Mayor Walsh last year signed an Executive Order for all new City-owned buildings to target a Zero Net Carbon standard, and recently required that all new affordable housing construction funded by the City must meet Carbon Neutral performance standards.
"Climate action is first and foremost about protecting people - and Boston is helping to show the way. PACE is one tool in the kit that will allow the City to drive down harmful climate pollution, accelerate its clean energy goals, and make communities more resilient. As an American Cities Climate Challenge city, Boston is leading by example and charting a cleaner, healthier future for all," said Jay Orfield, Interim Director of Buildings, Energy & Finance for the American Cities Climate Challenge at NRDC.
PACE offers private building owners access to long-term financing that is paid back through energy savings, similar to the City's Renew Boston Trust program, a performance contract for municipal buildings. There are no savings guarantees involved with PACE, but the Massachusetts Department of Energy Resources (DOER) conducts a technical review of projects to ensure that projected savings will exceed the PACE assessment.
"PACE Massachusetts is a forward-thinking financing tool for energy improvements to commercial and industrial properties," said MassDevelopment President and CEO Lauren Liss. "We are thrilled the City of Boston is pursuing 'opting into' PACE Massachusetts, a key step to enabling local property owners to take advantage of the program, and look forward to supporting projects that create jobs, encourage business growth, and reduce energy consumption."
Legislation signed by Governor Baker in August 2016 and amended in August 2019 directed MassDevelopment, in conjunction with DOER, to create a PACE program. The program officially launched July 28, 2020, with twenty eight municipalities participating to-date. Twenty-three states and the District of Columbia have active commercial PACE programs.About the Environment Department
The City of Boston Environment Department's mission is to enhance the quality of life in Boston by protecting air, water, climate, and land resources, and preserving and improving the integrity of Boston's architectural and historic resources. To learn more, visit the website at boston.gov/environment.