The Sustainable City Podcast: Zero-Carbon, From Buildings to Cities

This month, we explore the ways cities, developers, and property owners can swap out fossil fuels for renewable, zero-carbon energy sources to power their buildings and communities. Our guest is Josh Radoff.
By: William Shutkin & Andy Bush

Welcome to The Sustainable City Podcast. This month, we discuss the ways cities, developers, and property owners can swap out fossil fuels for renewable, zero-carbon energy sources to power their buildings and communities. Our guest is Josh Radoff, former Senior Vice President for Built Environment Sustainability at WSP and faculty lead in Renewable and Sustainable Energy in the Masters of the Environment program at the University of Colorado Boulder.

Below is a stream and full transcript of the episode. You can subscribe to The Sustainable City at Soundcloud, Amazon, Spotify, Apple Podcasts, or wherever you get your podcasts.

Andy Bush: On today’s show we’re going to be exploring ways in which cities, developers, and property owners can eliminate fossil fuels. And we’re going to try and look at how we move to more renewable, zero-carbon energy, looking at powering buildings, but also entire communities. Our guest is Josh Radoff.

William Shutkin: Josh is an old friend of both mine and Andy’s. And he’s a sustainability and decarbonization consultant working across the clean energy and built environment spectrum. Josh was recently the head of WSP’s Built Environment Sustainability Practice, and has worked on a range of horizontal and vertical sustainable buildings and infrastructure projects across the U.S. and internationally, pursuing high level sustainability goals, such as net zero energy and carbon well and LEED certification. Josh was a co-founder of the Sustainability Group, YR&G, and was a co-founder of the advocacy group, Greenhome NYC. He was co-chair of ULI’s Colorado Healthy Places Committee and is a LEED fellow. He teaches at the University of Colorado Boulder and holds a master’s degree in mechanical and electrical engineering from the Royal Institute of Technology in Stockholm, and Columbia University in New York. Josh, welcome.

Josh Radoff: Thanks, William. Thanks for having me.

Andy Bush: I’ll get started right away. For me, I think we’re talking about all kinds of things, whether it’s power generation, grid optimization, new buildings, building conversion, transportation. Josh, in your mind, what’s the high level plan? If you have to start at the big picture?

Josh Radoff: The big picture. Okay. Well, first I’ll say, I think historically, those topics were kind of seen as a sort of disparate challenges. And I think one of the things that’s most interesting about this time is that they’re not anymore, they’re kind of woven together, and we could talk about that. But I would say from a high level, we’re at this interesting moment where I think we had gone, we’d spent most of our lives kind of wondering what kind of technology was going to emerge that was actually going to create a plausible solution for a zero-carbon future, and we’d have to make all kinds of stuff up that we just kind of hoped would be true, like biodiesel would appear at every pump across America. Now, I think we kind of understand what the levers are and what technologies are there. And it’s really not a matter of kind of guessing, but a matter of accelerating and trying to sort of move things from where we are now to a pace that’s going to do what we need it to do.

Andy Bush: Well, and when I look at it, I hear people talk about, we’ve got buildings that we’ve got to convert to all-electric buildings, and we can talk more about that in detail. We’ve got grids, which are pretty messy and dirty. And so, just converting all buildings to electric, I’m not sure that’s the answer. It’s one of the answers, right? But it’s complicated.

Josh Radoff: Yeah, although I would say it’s only complicated in terms of the timing. I don’t think there’s a lot of ambiguity around the idea that if you want to decarbonize, say, a city or the country, but mostly a city, which just looks like the country, except it maybe doesn’t have as much industry — your biggest source of carbon now in the U.S. is transportation. And then you have to deal with the buildings, right? Between the two, those represent the majority of carbon for most cities. And so, I also think the thing that’s shifted in the last year is we used to play kind of defense or protest against the utility, right? The utility was this dirty thing. And we were putting solar on the roof as a way to mitigate that, as a way to avoid it.

Josh Radoff: Now we’re starting to see utilities as our allies. If we’re in a state that has a renewable portfolio standard of 100 percent by 2050, and as we do here in Colorado with a 2035 goal of 85 percent reduction, all of a sudden we’re saying, “Yeah, we don’t have to sort of worry ourselves about whether the conversion to electrification is good for carbon reductions.” I would say the question is just, how do you sort of make the electrification happen in a way that is not painful for the building owner? I was thinking recently about the Nobel prize in 2014. One of the Nobel prizes in 2014 was awarded to the folks who developed the blue LED.

Josh Radoff: There was this period of time where we went through CFLs and no one liked CFLs. Even if you were an environmentalist, you just had to hold your nose at the fact that they had mercury inside and —

William Shutkin: And they delayed light up.

Josh Radoff: Oh, yeah. And then from a quality perspective, just everyone was unhappy about them. And then, but we needed to move in that direction. And it was these sort of classic environmentalists asking people to sort of do something that wasn’t quite as good, some version of an austerity plan for the environment, which, ultimately, you need to do something for the environment — but now we don’t even think about it anymore, right? There was a period, there was a few years where we’re like, “Well, are LEDs at the right level cost-effectively?”

Josh Radoff: And I feel like when it comes to building electrification, we’re really talking about heat pumps. And it’s hard to think that maybe heat pumps aren’t… again, they are the thing that we need to do, right? They are electrification. They’re two to three times more efficient than any kind of gas combustion appliance we have. They’re healthier for people. They’re able to interact with the grid. But I do kind of feel like maybe we’re in this sort of CFL phase of heat pump development, which is good. We could look forward to several things to improve, which we could talk about if we want to. But back to the original point, I think it’s unambiguous that… the whole electrify everything movement I think is the right movement. I feel pretty strong about that.

William Shutkin: Hey Josh, can we talk a bit about the timing issue? Because with your answer, you noted timing, but you didn’t necessarily focus or obsess on it as many do, right? The idea that we’re running out of time, or indeed time has passed for us to achieve the kind of GHG reductions we need to look forward to a habitable planet.

Josh Radoff: Yeah.

William Shutkin: How do you think about sort of the urgency of time, given the complexity of the systems we need to change, not only in this country, but around the world? As a lawyer thinking about utility regulation, it makes my head spin. Do you sort of put time to the side as you think about solutions and strategies, especially as you’re recommending them to clients and to cities and states? Or do you consider it, but don’t let it sort of drive the way you think about things?

Josh Radoff: Yeah. That is a great question. And I definitely think about time, but I also feel like, again, to say, “It’s urgent. We need to do something now.” I feel like that has not been a powerful message, which is odd, because you look around you in the world and it’s literally on fire. I think there’s a clever — again, thinking about the last few years as this real transformative period of time, after the Paris Agreement of, what was it? Whenever it was. I think what they said is like, “What we need to do is limit warming to either one and a half degrees C or two degrees C.” Right? And then what happened after that is corporations started with the science-based target movement, which essentially said, “Take the amount of reductions you need to limit warming to one and a half or two degrees C, and focus on that.” And not just do it by 2050, or 2050 is zero, right, for science-based targets, but have an interim target that’s around 2030 or 2035.

And so, now I think what’s happened, or what is happening, is that corporations first — but now cities and states — are adopting science-based targets with an interim 2030 or 2035 reduction goal. That is very short term. 2030 obviously, is only, whatever, eight, nine years away. And that essentially says, “Okay, we’re talking about heat pumps. And we’re talking about how fast.” To me, you can translate that one and a half degrees and into a science-based target, then into the percentage of square footage that a city needs to renovate or convert to heat pumps over time. But I don’t think I’d apply it that sort of timing uniformly. If you say like, “What should the timing be about decarbonizing the grid?”

The Biden administration, in their Clean Energy Standard, they said 80 percent reduction by 2030 and 100 percent by 2035. And is it irresponsible to take such an aggressive stance on it? I mean, I think the answer is no. They’re essentially saying, “Renewables are the cheapest resource out there. They’re going to win anyway. We’re just going to facilitate the ramping down of fossil and essentially let renewables have their day.” So, I think it’s reasonable to have a faster timeline on things like the grid. And the third big piece… for me, the three big pieces are grid, vehicles or transportation, and buildings, right? So we talked about grid. We’ve talked about buildings. Transportation, again, if your goal is to sell a better vehicle, which electric vehicles are just clearly better.

So when you talk about electric vehicles, again, I think as a policymaker, it’s reasonable to feel confident in taking a pretty accelerated approach around electric vehicles because they are a better solution. You’re asking people to buy vehicles that are superior to internal combustion engine vehicles. And obviously, what we’re sort of dealing with now are things like the charging infrastructure out there. And so obviously, it’s not a total no-brainer. But I think, in terms of who wins the next Nobel prize, equivalent to the LED, maybe it’s the team at Ford that rolled out the electric F-150. That essentially would bring that to a new segment and also be the first vehicle that’s kind of really explicitly tie the grid, and vehicles, and buildings together.

Andy Bush: Yeah. I think what I’ve found in life is I keep goals in 6-month, 18-month, and 5-year increments. And I re-look at them every six months. And what I’ve realized over the last five to 10 years of doing this is that, honestly, I’m not usually doing as well in six months as I hope to be, but I actually do better in five years than I thought I was going to do. And I think that that’s true in building technology and car technology. There are these kind of accelerating curves and we also had these moments of transition. And I think the same way that you said utilities, we used to think of them not as our friends, but our enemies. We used to think of the big three as our enemies. Then all of a sudden, Ford’s probably going to put out the most successful electric vehicle launch ever, that also has the broadest audience for electric field.

Josh Radoff: Yeah. And I think in terms of the rate, you should be able to convert everything in terms of some sort of percent adoption. So for me, we need electric vehicles to be at 10 percent of new vehicle purchases. Right now we’re at about 2 percent. It’s expected to increase on in the U.S. on average by about 3 percent per year. So, we’ll eventually get there, but it’s a matter of just, I think, sort of making it faster. And as soon as you unlock a whole new segment of the market, the way that the F-150 does and the way that I think the Tesla Super Truck or whatever it’s called, will likely do know. So, I think it is possible, William, to the original question about how fast, start with science-based targets and then hopefully convert it to a rate of adoption of these various and important technologies.

William Shutkin: I think, Josh, it’s such an interesting part of the debate about getting to zero-carbon, because on the one hand there really is this sort of doom and gloom side of the argument, which is, “We’re too late. We don’t have enough time. Nothing’s working. It’s worse than ever.” And as you put it, hyperbolically, the world is on fire. The flip side of that is, as I think you suggested, we are naturally moving toward a clean grid and toward better technologies. Not only better technologies, but more comfortable ones, ones that bring us more joy. The electric pickup truck. Indeed, Josh, I’m looking at you with your backdrop, which is one of Andy’s buildings, the east solar wall at Boulder Commons, which I imagine, not so long from now, will kind of look like a CFL. No offense, Andy. We love that building and it’s amazing, right? But the idea that you’ve got to stick panels as cladding on the face of a building like that, versus essentially bricks or clapboards that themselves are made of PV.

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Andy Bush: Well, if you look at the building we’re doing next door, I mean, the same way, kind of the three of us have talked about net zero 1.0 is dead, everything evolves pretty quickly. And what you did four or five years ago looks a little stupid sometimes. And we’re testing windows in the building next door — there’s actually a film in the windows that’s a solar film. And while a solar panel might be 24 percent efficient, these are only 5 or 6 percent efficient, but they’ve just done their first UL rating. So they’re just starting. It’s a very early co product. And they’re thinking that their technology pretty easily gets them to, well, to 16 percent efficiency, so maybe half of a solar panel. But think, if every southwest and east facing window on a high rise building had solar panels that were embedded in the glass, that really the same way we take the film that we use right now to reject heat, it’s doing the exact same thing. It’s actually just absorbing it and producing energy. So, those are the things that are going to make that solar wall look really archaic, even three or four years from now.

William Shutkin: And yet it’s so inspiring, that solar wall, as a symbol, as a visible symbol of where we’re going, a positive direction. And yet, to actually re-engineer and retrofit buildings — and, Josh, you’ve been doing this for over 20 years — is a time-consuming, capital-consuming process, which gets us back to the realities of timing, right? We can talk about the earth burning all we want that. That still doesn’t pay for the retrofit to get that building to nets zero energy when you’ve got investors, developers, tenants, and others who need to use the building as is, at least for a period of time. So, sort of squaring that circle is one of the things we have to do all the time in this field.

Josh Radoff: Yeah. I mean, I just want to… I think on the idea of the sort of facade solar, I mean, my favorite early green building was The Solaire in New York City. And I remember doing tours of that building in 2003 and it’s in Battery Park City. And it has a west facing solar facade array, which I sort of thought like, “I wonder how well that’ll hold up? How do people feel about that in 10 years?” And I don’t think anyone’s jumping up and down saying, “That’s the most important solar array that there is,” but I think people point to buildings like that. And I think the strength of the green building movement has been in its purpose, and I think every building that, early days in LEED, this is kind of what is true, is that were opportunities to help evolve the mold for what we think zero carbon cities or zero carbon buildings should look like. So, again, people might not be building a lot of west facing facade solar, or any facade solar in the future, but it may. It may become a real integral part. And so, I don’t know. I think buildings like that can be monuments to this progression.

Andy Bush: Well, and I think, for example, one of the things we learned on the vertical solar wall is that it actually produces, in some cases, better than the roof solar. And the reason it does that is because, in the case of being in Boulder, it gets the best sun early in the morning through noon or one o’clock. It stays cleaner because of rain, and it doesn’t collect any snow and go down for periods of time in the winter. So, if you think of that in the context of solar film in windows, the vertical solar wall kind of a progression to integrated solar in glass.

Josh Radoff: Yeah. Which will, at some point, be an important and key technology, right? I think it’s just a question if you’re… I think most developers are out there waiting for the point at which there’s something off the shelf that’s not a major sort of cost decision that they can just plug in. But it may be that — I think there’s a number of things that within the kind of net zero energy framework, that kind of drives decisions that, again, may look very different when a net zero energy building isn’t intended to be an active protest against the grid, right? It’s intended to sort of be grid-integrated. So, in that sense, maybe the reason you want to have west facing solar is because, yeah, it produces less energy or maybe it produces less energy, in your case, maybe not, but maybe that’s when the grid needs it more, and maybe that’s when it’s worth more. And the giant windmills in Wyoming are able to sort of send us energy in the middle of the day without any worry, or in the middle of the night without any worry.

So, the idea of tuning buildings to be responsive to grid needs — and again, I don’t really care about grid needs in general. I mean, I guess I do, there’s a lot to that, but I really am interested the needs of grids as they progress towards these higher penetration renewable goals. And then I think you need buildings to participate in that. And that becomes a really interesting new field that we’re just kind of scratching the surface on.

William Shutkin: Hey, Josh, speaking of new technologies, as well as things that are off the shelf, I mean, Paul Hawken has an entire thesis and book — “Drawdown” — arguing that pretty much everything we need to solve the climate crisis we already have. What are some of the technologies, and for that matter policies, because I tend to think of policy, as a lawyer, as a kind of technology, our brain invents them, they happen to be words on paper typically, versus other things, but what are examples of some of the technologies and public policies that most excite you now? 2021? What do you think are going to be those tools that really sort of move us forward? Catapult us forward to, say, 2030?

Josh Radoff: Yeah. That’s a great question. I mean, I think when it comes to technologies, they’re probably obvious. I agree with that statement that Paul Hawken made. I think, as we were saying at the outset, I think we know what the kit of parts looks like. And there will be new things that emerge, right? Green hydrogen will emerge as an important role in the industrial space, probably. I think that we already talked about LEDs, but obviously, I’m not going to put that on my list for, whatever, 2022. And we’ve been talking about electric vehicles. We talked about the E F-150 or whatever, the electric truck-

William Shutkin: Hey, Josh.

Josh Radoff: Yeah?

William Shutkin: Can I just say one thing about LEDs, since you’ve mentioned a couple of times, and it’s kind of funny?

My partner Jenna, whom both of you know, really has a thing with LEDs. As far as Jenna’s concerned, they’re worse than CFLs, because she doesn’t like the light. Those filaments, which are so bright and bold, do tend to produce a very different kind of light. And there are lots of studies out there about sort of the health effects, mental health, productivity effects of LED lighting versus say incandescent, which tends to throw out that much softer, more elegant light, if you will. And it’s interesting, we’ve now swapped out, in our new house, a bunch of lights. And I’m almost afraid to admit it, but we’ve opted for some incandescents in key areas where that light is just that much softer, despite the 90 percent efficiency that we would achieve with an LED. So even there, right? The tradeoffs between, in some cases, quality and efficiency, which can be tough.

Andy Bush: Well, I’m going to jump in on that one. I think that that’s where we are in intermediate LED technology in that even now there’s the ability to control via WiFi or Bluetooth, individual lights to change color temperature, to have it change during the course of the day, to have it mimic daylight or soft light or others. And that’s the part that’s unaffordable for most of us at the moment, kind of like LED was 10 years ago. But I think if we look — these overlapping layers of technology that are early technologies intermediate for the same technologies, some come in and surpass them, some just get better. That’s one of the things I find fascinating, is the complexity and interaction between all these, knowing that there’s not always clear winners and losers and they all evolve.

Josh Radoff: Yeah. I don’t know what to say about that, William. I wish you hadn’t recorded yourself admitting that? I would love to —

William Shutkin: There are other things probably far worse than I could get to, but I won’t.

Josh Radoff: Let’s go shopping for LEDs. We looked for ones that were warm —

William Shutkin: Jenna’s your person.

Josh Radoff: Okay, we’ll go, we’ll do some shopping. But I think there is a vocabulary out there around temperature of lighting and the spectrum that they represent. And yeah, it’s not fire. I mean, incandescents were effectively fire. And I think your point about 5 percent, or sorry, yeah. Incandescants are like 5 percent efficient and LEDs are 85 percent efficient or so. So, my perspective on many of these issues — and again, I’ve become an environmentalist; I don’t know that I started out this way — is that, — and maybe this is where my urgency comes in — I don’t care if it’s not the same. I don’t care if it’s a little bluer. And I get that there are issues with blue light. So, I don’t mean to sound — so, to me, the way you need to frame the question is not whether or not to do something, but in what way to do it, right?

And so I don’t think staying with non-LED lighting is an option, or staying with incandescent lighting is an option. I think the question is, “All right, if we’re not there yet, then what else do we do?” And people bring that same argument up about the lithium in a battery that’s in all the electric vehicles and everything else. Is that a reason? Or Andy, your point about, is the grid not clean enough? In some places that’s still true. In Australia that have a very coal-heavy grid. But I think a lot of these issues, as environmentalists, we make the perfect enemy of the good and it’s we need to sort of move in that direction and then it will evolve.

Andy Bush: Yeah. I think, I mean, for me, as someone who’s trying to create a return for investors and change the world that way, we can’t go for the perfect. And we have to say, “What’s the right technology at this time, that’s fundamentally reliable and leading edge, but cost-effective within the range of providing some returns?” And the buildings I did 10 years ago are very different than the buildings I’m doing today. And I’m assuming the buildings I do today will be very different than the ones that we do a decade from now, but I think that’s just — I’ve kind of given up waiting for the perfect and I want to do a bunch of pretty good that keeps getting better.

William Shutkin: Super thoughtful. In some ways they’re necessary — the rhetoric of the extreme — they push us. But at the end of the day, there’s the center, which moves a little more slowly. But what I’m hearing from you, and I think the three of us share this, is that the vector is pointed decidedly in the right direction. We are making some serious us progress in greening the grid, in improving the technologies, in creating options or choices for consumers, for governments, which I find inspiring. It might not be the end all and be all. And we might not even achieve 1.5 C by 2030 in some cases, but it’s clear that this horse is out of the barn. Would you agree?

Josh Radoff: Oh, yes. Yeah. I mean, I think the thing that’s challenging is that as you were kind of hinting at before, is moving it into the policy realm so that it’s not a voluntary act.

William Shutkin: So we can scale it. We can start to actually scale it and require it or incentivize it.

Josh Radoff: Yeah. Well, I mean, yeah. Ideally, it’s just such a compelling choice that you just do it anyway, right? And I hope that electric vehicles… And I put electric vehicles as my favorite technology, which, again, it’s not a surprise, right? But if you think about what is the thing that — and this is a cities podcast, right? — what makes cities difficult? It’s that they’re loud. It’s that they’re polluted. It’s that there’s no space.

William Shutkin: And they’re full of cars, by the way.

Josh Radoff: So, there is a little bit about like, all right, well —

William Shutkin: Just a little problem there.

Josh Radoff: They’re going to convert to electric vehicles. And we still have the land-use issues, right? But at least cities are quieter, cities are healthier. And of course, we haven’t talked about equity yet, but a lot of the impacts of, especially transportation, whether it’s fuel refining or bus depots or whatever, are disproportionately to under certain —

William Shutkin: Are located in communities of color and affecting them. Absolutely.

Josh Radoff: Yeah.

Andy Bush: The other thing that I love about electric cars is that it’s one of the interesting technologies, in the sense that it can be sized in so many different ways. You can spend more money for longer mileage. You can spend less money for a shorter commute. You can get a smaller car that holds less people and is less tricked out, and you can spend a bunch of money and get a very expensive car. And there aren’t too many technologies… Solar panels don’t quite work that way. There aren’t too many technologies that aren’t all or nothing. And electric cars are going to have a really kind of broad breadth and depth in them that I think it would be interesting to see if we’ll find that in other technologies over time.

Josh Radoff: That’s an interesting point. I think, William, in terms of the progression, and you mentioned innovation and policies: Your first goal is to make something so appealing that it’s just what everyone does, right? No one had to regulate that people bought smartphones, right? They just bought them because they were a better choice. And I think that’ll happen with electric vehicles over time, but again, it’s the acceleration. And so, you want to put policies in place. So, one example of an innovative policy is, who is the best entity, the most well-suited entity to develop electric vehicle infrastructure? Is it a consumer? Is it a city? I would argue it’s the entity that’s going to make money on it, right? The reason that Verizon or AT&T will give you money off of a phone — I held up my phone, you can’t see it — is because you’re going commit to paying them whatever, $100, $200 a month.

In the same way, utilities are just the obvious answer for the entity that should build the electric vehicle charging infrastructure. They should give away free chargers. And some utilities do that. Holy Cross, which is a rural co-op in Colorado, does that. Colorado just passed a bill, and this is where we’re getting into the policy space, that allows Excel, the main investor on utility, to invest in charging infrastructure. They can already incentivize. I think when I bought my electric vehicle, the utility gave me $2,000 off of it. That was in addition to the state giving me $4,000 off of it. In addition to the federal government giving me $8,000 off it. So, it ended up being a really good deal. And yeah, it makes sense for government to incentivize that, but the utility is the only one who’s going to make money off of that. And so that, to me —

Andy Bush: Will the Conocos and BPs of the world ever use their distribution system in gas stations for hydrogen fill or charging? Or is it still, we’ll never get to such a fast charge that it’s not practical for them to be part of the —

Josh Radoff: For hydrogen or for electric?

Andy Bush: Either/or?

Josh Radoff: Well, I don’t know.

Andy Bush: Hydrogen may never really make it into vehicles. It may stay in industry for the most part.

Josh Radoff: Yeah. I mean, I think where hydrogen will make it into vehicles, maybe in terms of some public transit options. Bus fleets, I think could hydrogen route, in some cases.

Andy Bush: Do you think long haul trucking could go hydrogen?

Josh Radoff: Yeah. I’ve heard that too. Yeah. But I think industry — I don’t think it’s going to be like the thing that you have in a storage in your house that replaces your natural gas, for example. But you just sort of brought up something about, oh yeah, about gas stations. I mean, I think one thing we haven’t grappled with is, what’s the right model for charging your electric car? Yesterday I had something blocking my garage. And so I had to drive into University of Colorado where I work and I charged there for the day. So, I had to pay parking at $2 an hour, which was part of the cost. But I also ended up just looking at what I got out of it, and I paid 30 cents a kilowatt hour, which was effectively three times what I would pay at home. So, why would anyone not charge at home unless they were on a very specific kind of trip. They needed to do more mileage, they were driving 100 miles there and back. And so, back to your question about BP, or Exxon, someone who own a gas station. I keep thinking like, “Why haven’t like fast charges popped up everywhere?” And I think maybe that’s part of the reason. It’s for a minority of the uses out there.

Andy Bush: Well, I think we can also see, as you talk about policy and integrating these things, utilities can, and ultimately should, and probably will, give cheaper rates for people who can actually demonstrate that they were charging at night and that aren’t charging during peak demand hours.

Josh Radoff: Yeah. But they can’t do it for other things. I don’t know why every utility doesn’t offer to give you a reduced rate if you convert to a heat pump in your house. You’re essentially saying, “I’m willing to sort of pay for a more expensive fuel. It just shouldn’t be that much more expensive.” I mean, that’s the biggest barrier right now. And I don’t know of any policies yet — and that doesn’t mean they don’t exist — that are essentially using those kind of obvious levers to sort of take down some of these barriers.

Andy Bush: Well, and that kind of makes the transition into… Excel is actually limited from doing that. They’re not allowed to subsidize electric conversion as part of their charter at the moment, or as a part of the Utility Commission. And I think that gets into this question of what should federal government do? What should state government do? What should utilities do? And what are your thoughts on the key bullet points for each entity?

Josh Radoff: Oh, that’s good. Yeah. I mean, I will say Colorado did just pass — they had a very busy legislative session — and I don’t work in policy, I just kind of keep track of it, because it really does impact developers. Energy developers, building developers. One of them was this Beneficial Electrification Bill. Which I think is just trying to sort of address the exact issue that you just brought up, right? That if, from a regulatory perspective, utilities are prohibited from incentivizing fuel switching — fuel switching meaning gas to electric — then let them do that. ACEEE had a great study and there’s a map that sort of shows every state. And it’s not a small number of states that prohibit that.

I mean, I think from federal perspective, energy policy just has not really evolved that much. Most of the energy policy we know of comes out of the oil crisis in the 70s and is about energy independence and has a lot of good foundation fundamentals that the renewables industry has co-opted, I think really well. But there’s some other barriers, like if a city wants to require its taxi fleet to be all electric, I think there are potential legal hurdles for it to do that. Or if a city wants to require that all of its buildings use only electricity there’s a lot of preemptive legislation around that, which —

William Shutkin: And those challenges, Josh, to places like Berkeley and Bellingham and other municipalities wanting to move to an all-electric building infrastructure, right?

Josh Radoff: Right. Yeah.

William Shutkin: And not being able to.

Josh Radoff: And to me, it feels a lot like it falls in the category of kind of limiting democracy. How is it that you would not allow a city to create its own laws that are not just about picking a winner for the environment, but that directly impact your residents’ health? My hope is that, because of that, those two arguments — but I would love to see the federal government just step up and preempt that. Establish legislation that allows for, or even requires that, to go a little step further.

William Shutkin: So again, Josh, aren’t we then talking about this sort of fundamental tension between what is, and what, by most accounts, should be and what we want? And part of what is, as we’re seeing play out right now in Congress… There are some very thoughtful people, but I’m thinking of Senator Manchin from West Virginia, who is from a coal state, who is simply not willing, or it isn’t politically tenable for him to sort of radically reframe the energy system. He’s got to be thinking about how a state like that, an entire economy, transitions to a green grid, to a green energy economy. Again, it’s probably inevitable that they will, but aren’t the interventions then that we’re talking about as much about investing in job training and community college education for coal and oil workers, as it is about investing in new technologies or policies that allow us to scale up existing technology?

Josh Radoff: Yeah. I mean, I think that there’s a couple points in there that are interesting. I mean, I think first of all, there’s always your ideal policy. The obvious right policy is the Biden Clean Energy Standard, which essentially just forces the electric sector to become renewable in short order. What’s going to sort of pass whatever infrastructure bill is passed, I believe, is an upgrade to the transmission system in the country. And I think if you look at some of the research, that if you sort of create more access to transmission, then it’s just going to make renewables win even more, right? You essentially allow California, when they’re tight, to essentially get renewables from the other side of the country, from Florida. And it allows renewables to sort of feed more easily.

You can put way more wind in West Texas or in Oklahoma that can then feed the rest of the country. I think, there’s your sort of first order policies, but that there are others which I think kind of get you moving in the same direction. To your other point, the term that I’ve heard is called just and equitable transition, for what do you do with, essentially people who are going to lose their jobs? And I should sort of say just there are some people that I explain that to who are not in the energy industry and they’re like, “Well, where’s the just and equitable transition for all the restaurant workers that got laid off in the pandemic?” Or “Where’s the adjustable just equitable transition for any sort of group of workers that are kind of lost in shuffle of the economy doing its thing?”

And I totally sympathize. In my mind, if just and equitable transition is a way to sort of acknowledge that turn and provide a safety net, then I think that’s a great thing. I think, again, with looking at the Biden administration’s plans that they’ve put forward — and they’ve put forward in a few different ways — I’ve never seen an administration that’s been so sort of proactive and it seems good at it. I think most people are good at hand-waving around the need for equity and the need for a just transition, but then not really having a lot of substance to back it up. So, I was looking at the U.S. Clean Futures Act and there’s all kinds of elements under environmental justice, both environmental justice and worker and community transition, including creating the White House Office of Energy and Economic Transition to help facilitate that, so.

William Shutkin: Yeah. And wouldn’t that blunt a lot of the political opposition? If Manchin supporters, to say nothing of Ted Cruz’s supporters, knew that part of what a stimulus package and energy transition package of the sort the Biden administration and you were talking about, Josh, was essentially transitioning them with compensation to this new cleaner, better economy, more healthful economy? Wouldn’t that turn a lot of folks who, let’s say the last many years, have been in a very resistant and unhappy place?

Josh Radoff: I don’t know. I mean, it’s hard to imagine knowing what works politically. I do feel a little despondent.

William Shutkin: A job. Right? It’s the economy’s stupid, right? Haven’t we always learned that lesson the hard way?

Andy Bush: Yeah, again.

Josh Radoff: And it’s changed.

Andy Bush: Each time.

Josh Radoff: Yeah. I don’t know. So, I don’t know that those things are going to actually be effective at winning anyone over. I mean, hopefully, there’s some people, political senators and representatives, in the margins that are motivated by that, or feel like it’s a necessary component. I just sort of think about what environmental movements have been successful? And it’s the ones that don’t piss people off as you go through. And a lot of them have. A lot of them have essentially said, like the CFLs are a good example: “Use this. Use this.” And in your heart it’s not quite right. So, I think if you’re proactive about taking these sort of things on, then you just make your road a lot smoother, but do you get another vote in the Senate? I mean, I hope so, but who knows?

Andy Bush: Well, I think there’s also… I mean, to me, there’s more of a ground up, local movement that can be state and federally assisted, in terms of, “How do we convert residential to all electric?” Single family homes are probably… I don’t know what they are as a percentage of energy users, but they’re clearly the easiest thing to convert, in that you can use the same duct work system, you can do it over the course of a weekend, you can pop in a heat pump and an induction range and change your water heating system to an instahot system. And you can do it for a very reasonable cost relative to the value of the home most of the time. You can do it over the course of a weekend. And someone’s living in a home that’s so much healthier than a gas range with a vent that you don’t even use, that makes it kind of the least safe part of your 24 hours every day.

Josh Radoff: Yeah. I think that is a… and in terms of how that applies to the just transition conversation, a lot of the work that’s needed to facilitate electrification homes… I mean, a furnace lasts 10 to 15 years, right? Which means that 8 or 10 percent of furnaces are being replaced every year, so.

Andy Bush: Yeah. Over a decade, we can make that transition easily.

Josh Radoff: Yes, exactly. Right. And so, but also you hear statistics around 90 or 95 percent of furnaces are purchased in an emergency setting, right? They’re never something that’s planned out. And so, how do you insert yourself in that? And I think a big place you do it is just by working with the contractors, right? It’s not like people who are doing your heating and cooling company is not going to be lose their jobs, right? They’re going to just continue to do what they’re doing. They’re just going to do it with different equipment. But there’s a lot of work to be done there, in terms of training and education, providing more opportunities there, and ideally accelerating that, ideally, making that an opportunity for more people who want that kind of job. So, if you accelerate it, if you essentially say, the way they used to buy back old fridges, right, “We’ll buy up your furnace if it’s more than eight years old,” or something like that.

So you know what you’re going to get. You’re not making a decision in an emergency. It’s going to be a heat pump. “And by the way, we’ll throw in your electric system upgrade so your panel can handle it, and we’ll put it in an EV charger for you,” and the utility’s going to pay for all that, because they’re going to make money off of it. There’s a pretty compelling… it’s not hard to imagine how to make that successful, I guess it’s —

Andy Bush: No. And I mean, I look at something like the Homes for Heroes Program, after World War II, that was essentially one of the best ways to jumpstart the economy in the history of federal government, which was, “Let’s subsidize homes,” which really also meant let’s subsidize fridges, stoves, furnaces, all the things that go with it. And we essentially changed out the infrastructure and jump started the economy and —

Josh Radoff: With a whole lot sprawl.

Andy Bush: … in a 10 year period there. Yeah, no.

Josh Radoff: I mean, we didn’t know it.

Andy Bush: I’m using a portion of the example that was a good example.

Josh Radoff: Yeah. Exactly.

Andy Bush: But it just shows that over the course of a decade, you can do a lot if there’s a focus strategy.

William Shutkin: Yeah. Well that this is sort of the Italian American economist who, Andy, I’ve told you about, who I love, Mariana Mazzucato, I believe is her name.

Andy Bush: I listen to her.

William Shutkin: Who writes all about the fact that the U.S. government has always been catalyzing and incentivizing social and economic change. And we can either do it smartly and responsibility, or we can do it sort of recklessly. But the fact is, the government is and should be, an enabler of innovation and positive change. So why not do what we did after World War II, which is essentially what the Biden administration is trying to do with its Clean Energy Plan now with the energy grid. But here’s sort of a practical problem. And again, I’m looking at, at Boulder Commons behind you, Josh, which is — it’s one thing to talk about new construction, new buildings, new infrastructure, right? And in places like Boulder and so many other municipalities now, you have energy codes which are very robust and aggressive and essentially, are getting us that much closer to zero-carbon municipalities. But most of our buildings are already built, or at least the existing infrastructure. We’ll see a lot more construction going forward, but retrofitting, and retroactively applying new technology, right, is really sort of where the rub is here. Josh, what are your thoughts on sort of the most effective or innovative ways to get around the problem of existing infrastructure that sits around for decades, that’s really expensive to renovate?

Josh Radoff: Yeah. I mean, obviously that’s harder and it’s a bigger piece. We focus on new buildings, but existing buildings and existing infrastructure is harder. I’ll first use the example of coal plant securitization, which is something that I had not really understood until recently, where I was going through this sort of thought exercise of saying, “Why are big corporates like Apple and Google spending money on developing renewable energy in, wherever they’re developing it, Texas, when renewable would be the default new thing to develop anyway? Why? How is that helping?” What you really need to do is retire the fossil plants that exist, in starting with coal. And then that sort of led me to say, “Oh, there is a policy and it’s called securitization.” And essentially, it’s a policy that a state can enact that will allow the utility… it’s not in the rate-payers interest for that coal plant to continue to run, right? It’s more expensive than a new solar plant, but they paid for it.

And what they need to do is essentially retire it early, but continue to rate base the infrastructure they have over time, and essentially, just a sort of way to buy it out. And it’s not just that you’re adding the cost of that plus the cost of renewables. You buy it out in such a way over time at a given interest rate that you get a net benefit for the rate-payer, but you don’t have to just be saddled with that plant. So, to me that feels like an extremely innovative policy that would essentially reduce any barrier we have of reducing every coal plant tomorrow.

Andy Bush: Yeah. I think, I mean, essentially what you’re doing is you’re paying them for the stranded asset cost, or value, incrementally, so they don’t have to take it off their books right away as they shut it down, which I think is pure genius. And I mean, I think on the existing building side, we’ve got to figure out the same kind of thing, because what you’re trying to do is induce property owners to take both the risk and work with their tenants to, in a commercial side, incrementally renovate buildings maybe sooner than they would, or at a cost that puts them at a cost disadvantage to their competitors for some period of time, because you’ve essentially taken that portion of their stranded asset and they’ve thrown away that book value as part of it. And I think that’s where we’ve got to get to creative, whether it’s a tax credit strategy or some others, it’s both subsidizing those conversions at some level, and potentially provide a long term tax credit that allows people to write some of that off in a more rapid format and get some actual tax credits as part of it. Especially if we’re taking away some of the capital gains, this might be the right time, as there’s a stick being applied on one side, to put in a really good carrot on the other side.

William Shutkin: Right.

Josh Radoff: Yeah. And I guess just for your listeners who are interested in that, I happen to have on my desk — I’ll read it to you. It’s a paper from the Sierra Club, which I had never previously associated with being super, super savvy in terms of this policy stuff. But I was wrong. And this one’s called Harnessing Financial Tools to Transform the Electric Sector. And there’s a couple installations they have, which talk about a few things, but yeah, I mean, so that was an example on the utility side — Andy, you’re talking about buildings. I think what’s interesting about the utility example, is it fundamentally recognizes that there is a better financial outcome for the commons, the rate base of a given utility that they’re required to sort of look out for.

So, does that same metaphor exist in the building space? I think with the conversion of heat pumps, a lot of people… I had a client I was working with and we were mapping out a path. It was an existing building, it was a church, actually… A cathedral actually… that was doing a conversion to net zero energy. And we talked about heat pumps and how on a first cost basis, it would be the same as a new furnace, but that it would be three times more expensive for the electricity. And they said, “I thought net zero energy was supposed to be more cost effective?” And I was like, “It used to be, but in this case, it’s not quite.” I would love —

Andy Bush: But I think if we can combine kind of reduced demand rates for buildings that have made that decision, if you can have them rapidly depreciate the asset in a year… we’ve done that with solar and other things. And if you can add to that, some tax credit incentivization, I think on the policy side… My biggest fear, honestly, is that we do it wrong, and that’s that we require it to be done as cities are doing right now, based on some percentage threshold of improvement, which essentially says, “If you’re going to redo the tenant spaces, you’ve got to redo everything.” And I think it could really stagnate the existing building market

Josh Radoff: Because it’s so expensive.

Andy Bush: There’s better ways to do this than to take old school landlords and stop them from making change.

Josh Radoff: Yeah. Right. Yeah. I think I’d be remiss if we didn’t mention the… William, you were like, “Where is the innovation in this space?” I think the building performance standards as they’re sort of known, which exists in New York, and DC is developing theirs and St. Louis is developing theirs, but which are essentially this sort of — after you’ve required mandatory benchmarking of cities, then you can progress. New York did mandatory audits every, whatever it was, five years or so, when you had to sort of do the low hanging fruit. But then they moved to Local Law, 97, which was essentially every building’s going to pay a tax on their carbon output. And have they done that well? Andy, to your point, there’s a lot of things missing from it, like being able to pass costs through to tenants.

But I was really surprised that St. Louis had rolled out, or is in the process of rolling out, a similar building performance standard, not based on carbon, based on energy, but essentially getting you to the same end. So, that’s one way to do it, to say, “Look” — and you mentioned carrots and sticks, right? There’s a carrot, there’s a stick coming. I think though, the real opportunity is in the utility space and the partnership. And you were saying the same thing, Andy. But utilities have had stagnant growth, right? Over the last, whatever, decade, couple decades. But there is a huge opportunity for utilities to capture growth again, through electric vehicles and heat pumps, primarily. So, that growth should represent lower overall cost to the system because the new plants will be renewable and they’ll be cheaper. And the thing that’s enabling that are the new heat pumps and electric vehicles. And so, in the same way that it’s better for the system to essentially move in that direction, I think you can direct your incentives that way to make it happen. So, yeah, I think there is a solution out there.

Andy Bush: Yeah. I mean, to me, my fear has been, we have a lot of sticks that aren’t very well thought out, in terms of the actual economics. And we don’t have enough carrots. And we don’t really have a conductor in this space. There’s no one really, except maybe the federal government, trying to bring utilities together with state governments and local governments that — if we want to get here in 50 years, how do we orchestrate this? It’s a lot. It seems to me to be a lot of disparate moves, many of which are in the right direction, but… And maybe that’s just how it has to play out. I’m fearful in some of the outcomes.

Josh Radoff: No, I think we have the first… whatever. The difference at the federal level now is obviously significant, right? So, groups like NARUC. Who has heard of NARUC? They are the, whatever, the utility commission at the federal level. Or FERC, or even Department of Energy now led by Jennifer Granholm One other point I want to add to this conversation is that I think there’s other innovative carrots out there. If heat pumps are better for people’s health, then do people get reduced insurance rates for that? Is there a way? Or are you willing as a city to put more city money into programs, or state money into programs, because they’re for people’s health? And we do all kinds of things, we spend all kind money on people’s health, which I think is appropriate.

Andy Bush: And I think that’s probably the strongest opportunity for kind of social justice moves in buildings. And we’ve kind of gone away from selling sustainability in our buildings. We sell the quality of the air and the quality of the light and the quality of the filtering. And wellness is actually much more of a sale, whether it’s someone living in their home and breathing much better air, or a company. I mean, we did an analysis for CoreLogic as part of one of our pennants that essentially showed that if they got a 3 percent productivity boost in our building, their base rent was almost free. So, it was a pretty simple economic to say, “And the 3 percent doesn’t have to be real. All it has to be is 1 percent reduced absenteeism, 1 percent increased retention, and 1 percent employee attraction. Do you believe you could get those on an annualized basis? Forget actual productivity increases.” And they were like, “Sure, we get it.” Right?

William Shutkin: Yeah. Super practical.

Josh Radoff: Right. But it’s also a matter of faith. And I think the numbers are there when you sort of look for them. But it’s one of these things where I feel like, for those kinds of things, like healthy buildings, I’m personally past — and you’re in a different position than I am, right, as a developer who needs to sort of attract tenants — but I’m personally past asking people to voluntarily do lots of things. If we can prove that one building is healthier than another, then it should become code, right? And I feel the same way about gas-powered leaf blowers and lawn mowers and gas-powered cars and all these sort of things that you could prove make people sick. And yet, we still have this kind of tolerance for them, which, after a while, after the market’s evolved, stopped making as much sense as I think they should.

William Shutkin: Yeah. Well, it’s a semi-rational system, the human system, right? And we know that smoking kills, but we still smoke. And it’s heavily regulated and heavily taxed, but we still do things against our own self-interest all the time. Which adds to the challenge of making the successful case for choosing the right thing versus the unhealthy thing.

Andy Bush: Well, for me, it also gets back to, eventually people have to see a benefit, and as you said, want it. I think regulating new buildings is easy. I think we should regulate those 100 percent based on the science and what we know and technology. And we can look at cost benefit models and make sure that we’re not regulating people out of business, but I don’t think that’s the real problem. I think the real problem is how do we convert the other 90 percent of the building stock that isn’t new in the past decade? Because I do — kind of like you — I believe cars are kind of taken care of. I mean, I may be wrong, but I kind of feel like they’re on a trajectory to be done. I feel like solar and wind, they’re more profitable than traditional energy in more than half the world. It’s on a trajectory as far as that.

Josh Radoff: That’s right.

Andy Bush: New buildings, we can regulate. The existing building stock’s a real problem that I think is much harder to do, other than single family residential homes, which honestly, I think are just a question of money and subsidizing and price points coming down.

Josh Radoff: Well, to put a positive spin on what you just said, you essentially just said we’re doing really well —

Andy Bush: In two thirds of it, or three-quarters of it.

Josh Radoff: Maybe 60 percent of the total greenhouse gas initiatives. The piece you left out is our industry, which is a kind of an existing building, right? And non —

Andy Bush: And agriculture, which we’ve got ways to go.

Josh Radoff: Okay. Okay. But non-single family, existing buildings and I —

Andy Bush: The commercial, industrial buildings probably is the biggest part of the problem that’s a struggle. The rest of it is on a pretty darn good trajectory, that I think will surprise us, because it’ll get even better.

Josh Radoff: To put that in perspective, even if existing buildings don’t do anything, and the average existing building, I think, I looked up in Colorado has an EUI, energy use intensity, of like 75?

William Shutkin: Yep.

Josh Radoff: For an office. And a new office building, if you build it to code, depending on the size of it’s like 25 or 30, right? So it’s going to be four times more efficient, but that new existing office building is going to be an energy hog, but most of it is electricity. I don’t know what, some number well north of 50 percent, maybe 80 percent, is electricity. And again, not that we should just be cool with energy hogs plugging it to the grid, but if the grid is clean, right, then we’re really looking at that small subset of gas. And I think in some ways it allows us to have some focus on what we want to see…

William Shutkin: Hey, Josh, what’s your feeling about New York City’s attempt to aggressively regulate commercial buildings, as of, what, two years ago? Basically requiring, what? I think it was by 2030 cleaning, scrubbing, existing buildings for carbon, moving to all-electric with big carve outs, like affordable housing and churches, but it was perhaps, when rolled out, the most aggressive big city green building regulation in the county. Do you have thoughts or insights?

Josh Radoff: So the law, for people who want to look it up, is Local Law 97, and it sets a ratcheted down, essentially, carbon penalty, which is so you take your building energy use and you multiply it by an emissions factor — which is a little confusing, as an aside, because what should that emissions factor be? Is it something that’s forward looking? Is it something that’s right now? Is it time of use based? I mean, there’s all kinds of interesting nuance there, but in principle, I think it’s doing the right thing. It’s essentially saying if you want to have an energy inefficient building, you already pay a for it, to the tune of an extra dollar a foot or two. I mean, an efficient building probably costs a dollar a foot to run. An inefficient building might cost $3 a foot to run. So you’re already paying that.

And now they’re just going to say you’re going to pay even more on that. But also, there’s something about that. The whole ESCO world exists, the energy service company world exists, because if you have avoided costs, this is, right, like basic finance, then you can use that to finance first cost improvements. If you then create a regulatory, an artificial cost that you could then avoid, then you have even more than you can finance. So, if I’m a third-party company, and that’s what PACE financing is attended to do. But you don’t need PACE financing. You just need any access to capital. You essentially are saying, as soon as it’s worth enough, if there’s $4 a foot, you have a —

William Shutkin: If the penalty’s worth enough, yeah.

Josh Radoff: Yeah. If the penalty’s worth enough. If it’s a penalty of, say, $3 a foot and your building in New York is 500,000 square feet, then that’s what? $1.5 million a year. You could finance a lot by avoiding 1.5 million a year.

William Shutkin: Yeah. Yeah.

Josh Radoff: So I think that has elements of the kind of things that are the right program. And I think cities will be a lab for more of these. And I’d love to see 20 building performance standards pop up in the next —

William Shutkin: Which sort of gets me to the social impact bond side of this. As we were talking earlier about, Josh, you were making the case that, look, when you’re dealing with utilities, you are de facto dealing with some public interest entity. That’s why we call it a public utility, even though most of them are private and investor owned. But the idea is that they’re providing some valuable public service, right?

Josh Radoff: Right.

William Shutkin: And as we see more and more buildings actually become part of the energy-producing grid, in a sense, the fact that they’re privately owned, well, much like the privately-owned utilities, becomes less relevant to the fact that they’re actually providing a public service. They are feeding energy, producing energy, net positive to the grid that we’re all using, that’s cleaner and better. So, there’s an interesting argument to be made going forward, in terms of retrofitting — for good, both financial good and social good — dirtier, older buildings that we could actually be funding them through social impact bonds, which is using the power of public bonding authorities to go to private markets to say, look, there’s a margin of value to be captured here. We’re going to essentially guarantee it, as the state of Colorado or California, Goldman Sachs underwrites it, and people like you can model it, and boom, we could be paying through a bonding mechanism for the retrofitting at scale of all of these older, commercial, privately owned buildings.

Josh Radoff: Yeah. I think there’s — in the commercial real estate world, we’ve been talking about New York and I imagine these gleaming skyscrapers on Vornado, but most buildings out there are going to be affordable, multi-family buildings, or class B or C buildings, where there’s a need. And this is why I think PACE was interesting in the idea of creating access to capital. And I think you mentioned Goldman Sachs. It brings to mind the company BlocPower, right? Which they’ve just gotten a ton of press, and done all —

William Shutkin: Silicon Valley-backed.

Josh Radoff: Right. I thought Goldman backed too, but essentially, create access to finance to essentially go into multi-family and electrify them. And I haven’t seen the business case spelled out, in terms of utility savings, but there’s so much benefit in terms of comfort, in terms of health. And where those returns sort of come about, there’s something there, and obviously, they have it figured out and I don’t. But also, it makes me think of Denver. The city of Denver just rolled out this new… and they almost were trying to sort of hide their tracks. They called it the Renewable Heating Plan, or I don’t know what it was. But essentially meant they were going to spend money to, I think, upgrade existing, or essentially bring air conditioning to a lot of lower income neighborhoods and buildings, because that’s a real health priority for them, and comfort priority, and equity priority. And by the way, while we’re sort of giving people air conditioning, just make it a heat pump so you can run it backwards, and now you essentially achieved a large swath of your goal. So, I think that’s a really nice —

William Shutkin: And it all comes back to heat pumps, right?

Josh Radoff: All about the heat pump and electric vehicles, to bring it together.

William Shutkin: And EVs. Josh, that’s such a good example. I love that.

Andy Bush: I also think there’s examples on the traditional institutional side. I used to think the change was going to come through people like the three of us who tend to work in the leading edge and sometimes it’s more on the edge than the traditional players. But as we talk to traditional lenders and traditional investors, there’s been a real behind-the-scenes move on disinvestment as it relates to resiliency and trying to clean portfolios and de-risk them. I think then there’s the beginnings of an uptick of — we want to lend on a sustainable portfolio because we think it’s good press, number one, and good for our corporate ESG program, number two. But for the first time, I’ve actually talked to lenders who are concerned. Our loans are construction loan, plus perm are generally 10 year, 12 year, sometimes 15 year loans.

And they used to never be worried about what happened at the end of a loan cycle — would that asset have lost value? Because its old systems, fossil fuel-powered, really at the end, it was always a net operating income, that was how people determined value. Lenders, for the first time, in my conversations with them, are starting to think, “Wow, 15 years from now that building might be hard to sell or get rid of or refinance. And I’m not sure I want to be the one who’s on the tail end of that loan.” So, I think there’s going to be more change that comes from big institutional players than I ever thought. And it’s going to happen sooner than I thought.

William Shutkin: Gosh, Andy, we just had that conversation with our Santa Barbara friends, you’ll recall, a couple of months ago, or maybe it was a month ago, where they’re starting to understand, “Gosh at the end of life, at least this phase of a building’s life, depending on what happens with fossil fuels and regulation, maybe this thing will have a negative value.”

Andy Bush: Or, “We have 120 projects and most of them are in hot dry places. Maybe we should look at where the cool places with water are going to be 15 years from now as we adjust our portfolio.”

William Shutkin: So interesting.

Andy Bush: So, you know the change is really beginning to happen when the people that you thought would never change start to change and get interested.

William Shutkin: Yeah. I think that’s such a good point. In the absence of a beneficent dictator, and given the kind of complex political and social system we live in, in this country: pluralistic, captured by all sorts of entrenched political and economic forces, but ultimately dynamic, where public and private are constantly sort of grinding with and at each other. The fact that, Josh, you could bring up the example of Donnel Baird and BlocPower, a social entrepreneur funded by Echoing Green, the same foundation that funded my career at the beginning, and then Andy, in the next breath, can talk about institutional players who are likewise getting it, plus government and Biden and Colorado and California and other states and cities… And Ford. Yeah. I mean, there’s so many things going on. It’s just not necessarily all orchestrated. We don’t have, as Andy, I think you put it, a conductor who’s neatly sequencing and choreographing it all. But —

Josh Radoff: You do have a beneficent dictator, William. And that person’s Larry Fink.

William Shutkin: Right.

Josh Radoff: Who, we just had a conversation about resilience and risk, right, in a portfolio. And the BlackRock required… before they required the science-based target business, they required the Taskforce for Climate Disclosure, or they helped develop that and essentially building that in. And I think those kind of institutional things, maybe they’re flying under the radar at large, but I think they’re really impactful. That idea that you can’t just put everything in Phoenix or wherever your hot, dry climate is, because there’s a risk to that. Yeah, that feels like an important step to take.

William Shutkin: A little dumb moment. Well, hey folks, we’re winding a little bit, but I just wanted to take it back, Josh, to you and how you actually got interested in this business of energy, renewable energy, the built environment, to begin with. Because you and I are both from the same neighborhood. We’re not from that really cool, progressive People’s Republic of Madison like our friend, Andy Bush.

Josh Radoff: There you go.

William Shutkin: You and I are from that Mecca of change agents known as Southwestern, Connecticut, AKA suburban New York. What was in the water in Hamden, New Haven, and the Metro-North Line that got you, early on, sort of on this path? Because you’ve been on it now for what, 25 years, from start to finish in your career right now. What explains that?

Josh Radoff: Well, I think the most important first point is that Hamden and New Haven are South Central Connecticut. So, let’s just be clear about that.

William Shutkin: Yeah, you’re actually real Connecticut, versus where I grew up, which is New York.

Josh Radoff: I like to joke that I was born in 1973, and that’s not really much of a joke, and my mom tell me when she was pregnant, she was in line in the gas line.

William Shutkin: Gas. Yeah. I love that.

Josh Radoff: And I was born in the backseat in a gas line.

William Shutkin: Love that.

Josh Radoff: The latter isn’t true, but we were… I don’t know if that’s in there somewhere. I also like to remind people the EPA was founded in 1970 under Nixon and the Clean Air Act the same year. And the clean water act was 1972, right? So all that is kind of prelude to me — and to other things. But I think I actually took a sustainable development class and was going to be an environment major in college. I took that class my freshman year. And I quickly said, “No way, this is instruction on how to be depressed for your life, but not really equipping you to have much in terms of solutions.” And so I became a physics major and taught high school physics for a little while and then went to grad school. I went to grad school almost randomly. But this is a painful trope, but Amory Lovins came to speak at Columbia, where I was in grad school —

William Shutkin: From the Rocky Mountain Institute.

Josh Radoff: Yeah. And I was like, “Oh yeah, that’s it. Those are solutions. They’re technology-based, they’re business-based.” They represent the nation. It was totally different. And it was like that was there the whole time. And so then I went, and you mentioned at the top, that I went to grad school in Sweden. I just said, “All right, well, I’ll finish this program, but I want to find a program on sustainable energy.” And there was one in Stockholm. And I went out there. And I took a ferry to a nuclear plant in Finland and saw long term waste. And I saw a tri-generation coal plant in downtown Stockholm and I saw massive hydro plants, and giant waste energy plants that they did there. And I said, “We don’t really do those much in the U.S. Why would that be?” And they were like, “I can’t tell you.” Anyway, so I think that all that was really foundational for me. And then when I came back, I just felt so full of the idea of potential, both from Amory and what he was sort of talking about, and then what I saw in Sweden. And then I landed in Washington DC in 2000, two months before Gore lost the election to Bush. And it was the worst time, it turns out, to —

William Shutkin: To being deferred.

Josh Radoff: Yeah, it was. Right. And there’s been a little bit of that painful cycle that’s happened, obviously, since then. And we essentially learned not to look to the federal government. But I moved to New York. And then I fell in love with cities when I was in New York. And I think the idea, for me, personally, of mixing cities with energy and technology, looking at the energy and climate issue from an urban perspective, I think gives a very different lens than looking at it from a pure technologist perspective. And I really value that. And so, I think that all those kind of things kind of shaped my personal outlook on it. And anyways, that’s how I got here.

William Shutkin: That’s a great story. You got to add that waiting in the gas line, in the backseat of your mom’s car to your bio. I think that’s —

Josh Radoff: Okay, yeah. Well, a gas station attendant helped deliver me. It was —

William Shutkin: Yeah, we all tend to embellish a little bit anyway.

Josh Radoff: Because back then pump people worked at gas stations.

William Shutkin: They did. Well, you guys, this was super fun. Josh, I really appreciate you spending time with me and Andy. And we could clearly talk for hours. And I feel like we’ve just scratched the surface, but you’ve got so much insight, Josh, and unique perspective and experience, that we’re really delighted you could spend an hour or so with us today to share it.

Andy Bush: Yeah. Thank you very much.

Josh Radoff: Thank you for having me.

Andy Bush: It was a pleasure. And it’s interesting for me, what started as discussing all of the problems that we had and the ways that each entity is or isn’t participating, I think toward the end of discussion, for me, I was starting to see a confluence under the surface that’s bigger than we thought, or I thought, coming in. So, thank you.

William Shutkin: So true. I feel so hopeful and inspired.

Josh Radoff: Yeah. I really enjoyed this conversation. Thanks for having me.

William Shutkin: Next time, we’ll be joined by the Lord Mayor of Heidelberg, Germany, Dr. Eckart Würzner, and Chris Shears, an urban designer and planner, to discuss creating car-free communities.

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