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Future is bleak for popular stimulus grant program

Solar-powered trash compactors began showing up on the streets of Bridgeport, Conn., last year. The local library got a new roof, light-emitting diodes replaced old streetlights and city officials took the first steps toward implementing a plan to treat sewage locally.

It was all funded through the Energy Efficiency and Conservation Block Grants (EECBG) program, which is nearing its end just as the nation's mayors begin to categorize its successes. The program has been funded only once with more than $3 billion from the American Recovery and Reinvestment Act, and a tight fiscal environment makes its future bleak.

But Republican and Democratic mayors alike say the grants are among the most successful tools in the Energy Department's clean energy arsenal, spurring innovative projects that would languish on paper. The U.S. Conference of Mayors has released three separate reports on the program. One says 162 of 221 cities surveyed planned to undertake new projects with the funds.

In Bridgeport, its $1.2 million grant was mostly spent on tried-and-true renovations to increase energy efficiency, like replacing the main library's heating, ventilation and air conditioning system.

But the money also paved the way for more ambitious plans. For example, less than $50,000 funded a feasibility study on treating sewage sludge with a new plant rather than shipping it away to be burned. Now, the city has issued a request for proposals from interested developers.

Without the grant, "the things we would have funded would have been things like LED lights -- an anaerobic digester, that's a little bit out there," said Ted Grabarz, the city's sustainability director. "Would that have happened without that initial torrent of cash? Yes, I guess there would have been some discussions, but like a lot of discussions in this world, there are a lot of 'I'd like tos.'"

So far, recipients of the grants have spent about $1.8 billion of the $2.5 billion DOE obligated to local governments. The Recovery Act gave DOE until the end of September 2015 to ensure the funds were spent, but most of the funds will probably be gone by the end of this year, and already cash-strapped cities will once again have to find space in their budgets for efficiency projects.

To Jim Brainard, the Republican mayor of Carmen, Ind., that seems foolish.

"There is disappointment that this program that had so much progress was only funded that one time," he said recently at a meeting of the Energy Independence and Jobs Task Force, a panel he chairs as part of the Conference of Mayors. "This committee and those involved have not given up and will not give up."

Proving its worth

There is disagreement over whether the grants have created jobs and helped spur the economy. Though the Conference of Mayors -- which conceived of the program -- has lobbied repeatedly for the funds, it still does not have data on the overall return on investment. Funds took time to trickle out to communities, and it is still too soon to measure the effects.

But on Monday, the Recovery and Accountability Transparency Board ranked the EECBG program as the ninth-strongest jobs producer among programs funded through the stimulus law. In the last quarter of 2011, recipients reported it had created more than 4,700 jobs.

Republicans have criticized such job estimates as inaccurate, saying they are dependent on recipient reporting and a formula that counts jobs that may have existed without the stimulus. Furthermore, five months ago, DOE's inspector general delivered a blow: Recipients, he said, were not spending the money fast enough.

By then, recipients were reporting that they had spent a third of the funds allocated for the program, a slow trickle that IG Gregory Friedman warned could undermine the "basic premise" of the stimulus to quickly pump money into a suffering economy. Many recipients had also not met DOE's self-inflicted 18-month deadline to obligate funds, and the vast majority had not asked for an extension (Greenwire, Sept. 7, 2011).

In a recent interview, Brainard dismissed such criticism, arguing that DOE took more than a year to release funds, meaning he had to repeatedly ask bidders to sit tight. Other problems included determining what programs qualified for the grants. Grabarz said DOE initially denied Bridgeport's request to use some of the money to pay for a white roof on the library.

Today, DOE says recipients have spent 70 percent of obligated funds. The agency is also working on improving the reporting process for the program and plans to submit a proposal this spring to the Office of Management and Budget that would eliminate cumbersome monthly reporting requirements and simplify quarterly reports. Such changes could enable cities to report their progress more quickly.

According to DOE, the EECBG program so far has funded 44,000 building upgrades and 242,000 energy-efficient traffic signals. Those projects are all but guaranteed to save as much money as they cost. By using less energy, cities will have smaller utility bills and will likely save on maintenance costs.

Some cities have gotten more creative. Will County in Illinois, for example, used $1 million to help develop a landfill gas electricity-generation plant that will provide power for 8,000 homes.

Grabarz of Bridgeport said such innovative projects go beyond city budgets by testing out technologies local private sectors may be unwilling to risk. By having the upfront money to experiment -- and then show a return on investment -- cities could leverage EECBG money to spur new industries with new jobs.

"We set through our bully pulpit in our communities something very important," Bridgeport's mayor, Democrat Bill Finch, said at last month's Energy Independence and Jobs Task Force meeting. "We set the conversation."

A 'downpayment' on clean energy

President Obama is unlikely to ask for a funding extension for the program in his upcoming fiscal 2013 budget. Congress says shrinking the federal government's budget is a priority, and agencies have been offering buyouts and early retirements to prepare for bare-bones budgets. Grants will probably be the first to go.

At the task force meeting, Nancy Sutley, chairwoman of the White House Council on Environmental Quality, skirted questions from the mayors about whether the administration would fund the program. Instead, she encouraged mayors to demonstrate how the grants were successful.

DOE declined to comment about whether it has prioritized the program -- or whether it will request funds for next year. But the agency highlighted other programs that help states and local governments deploy clean energy technology.

All those programs leverage far less money to encourage private-sector investments. In the Better Buildings Challenge, for example, Obama has pledged that agencies will spent $2 billion on upgrades, while companies and mayors have pledged to spend the same. To be sure, agencies are already required to make energy efficiency upgrades as part of a 10-year governmentwide sustainability plan.

In an email, DOE spokesman Bill Gibbons characterized the grants as a foundation that can be built upon.

"These investments were designed to be an important downpayment to help thousands of U.S. cities, counties, state, territories and tribal nations to develop and implement energy efficiency and renewable energy programs that will continue to save money and energy for years to come," he said. "The Energy Department is committed to building on this downpayment, working with communities across the country to thrive in America's growing clean energy economy."

But still, the program's long-term future appears to be up in the air. Many lawmakers support it because, like earmarks, the grants help foster local projects that directly benefit constituents. The Conference of Mayors also plans to start a study later this year on the results of grant-funded projects.

"I'm optimistic that it'll continue and get done," Brainard said, adding: "Whether you believe in global warming or not -- regardless of that, look at the economic argument. ... There's a lot of different ways to get philosophically to the same place."

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