Full 50-State Green Retrofit Initiative

R1: Acceptance and Definition(s)
R2-R3: Arguments and Rebuttals
R4: Rebuttals and Closing

*No semantics or trolling

----Background----

50-state Green Energy Retrofit Iniative;

is basically a public/private partnership by some aspects. To put it on a more basic level, a retrofit is when a utility company comes to the customer's property and basically makes it more updated, modern, and efficient by installing more green, clean energy systems to the building in areas such as water, insulation, HVAC, etc.

However, to finance this retrofit, which has somewhat large upfront costs but longterm savings, the customer would continue to pay the original energy bill (the rate before the retrofit) or slighty more over time so eventually the cost of the retrofit plus interest comes as a net profit to the utility and the bank. We will assume that utility rates are decoupled for the purpose of this debate.

To pay for the retrofits initially, most utilities would require loans from banks to finance the retrofits,

-----This debate is over whether or not the Federal gov't should set up a loan guarantee program to assure banks that they will be repaid (upfront costs are large). The banks would give loans to utilities so they can perform retrofit(s) on their customer's property. In each retrofit scenario, the ideal result would be long term savings for the customer, a profit for the utility and the bank(s) involved.

We will assume that the customers voluntarily agreed to the retrofits.

Good luck.

This debate is for the Official Environmental Tournament.

I accept the proposed definitions.

-----------Arguments------------


R1: Saves Money

For the average home, an energy retrofit would save about 30% on the average energy bill. If we had a nationwide retrofit loan guarantee program, so that banks are assured that they would be repaid, we could nationally have about $1 trillion in energy savings over 10 years, or about 30% of total electricity spending in the U.S. [1]


R2: Expanding Economic Prosperity

This has crucial implications for the prosperity and health of America. With over $100 billion annually (or $1 trillion over 10 years), this money would could simply be put to use for other economic needs, such as consumption, critical investments in infrastructure, or paying off debts. The figure of $100 billion annually is the result of several careful studies done on the subject relating to energy efficiency and retrofits. [1]

These huge savings cannot be overstated. With over $100 billion annually simply to use, many businesses and public buildings could spend this money on investments to improve their competitive ability in the global economy, either by investing in human capital of their workers, investing it on cutting edge technology to make them have a more competitive edge, or other ways to improve their ability to gain market share. Ultimately, having these huge pivotal savings is a huge opportunity for America, that would greatly improve America's competitiveness globally.


R3: Expands Market

If gov't did set up a loan guarantee program, it would easily guarantee confidence to banks, so they would be willingly to lend. If we did set up a business friendly loan guarantee program, and used a fund of about $30 billion to guarantee banks that they would be repaid, it could easily (the banks collectively) result in over $280 billion in loan guarantees from that initial guarantee fund. [2]

The risk is very low. The huge, vast majority of those engaged in a retrofit would be able to afford about the same rates as before. On average, banks have a reserve rate of 10%. So, thus a loan guarantee of $30 billion (10%) would allow banks to expand loans for retrofits to $300 billion or similar. Same kind of monetary idea here.

*If the savings don't cover the costs, the contractor or utility makes up the difference. This would allow the retrofit market to expand by large amounts to create confidence to consumers.

To pay off the retrofit, which has higher upfront costs, utility rates would slightly go up and consumers continue to pay the slightly elevated rate for a period of time, until the retrofit is fully paid off, and the cost of interest for the bank and the utility ends up as a net profit for the bank, utility, local contractor (who engages to perform the retrofit), and ultimately the consumer. Since the average savings on a modern, efficient, green energy retrofit is about 30% on average [1], the whole retrofit + interest is payed off relatively quickly, and the rest of the savings is reflected on the utility bill, which is about a 30% cut from earlier, and is a windfall gain for the consumer, who continues to enjoy lower utility rates from then on.

Ultimately, a $30 billion loan guarantee fund could expand up to $300 billion in bank loans, which would result in substantial savings for consumers, and the economy as a whole could greatly expand with this opportunity, if it was taken.

R4: Clean Environment

By having likely tens of millions or more green energy retrofits nationwide, it would have large benefits for the environment. By installing green-friendly equipment in buildings in retrofits such as clean insulation and heating systems, planting green gardens on rooftops, installing solar panels, etc., it takes large strides in cleaning our air and water. It would reduce our energy emissions by 10%. [3]

A more green, cleaner energy system for America is an imperative to clean our environment and to protect our natural heritage which includes a more sustainable energy solution for a more clean environment.


R5: Job Creation

In addition to the $100 billion in extra savings annually, which could create an untold amount of jobs through the market, these energy retrofits would spur hiring in the retrofit industry and, especially increase the demand for local, small town contractors to perform these retrofits on their buildings. The studies have shown that a $30 billion loan guarantee fund, after expanding the bank loans to about $300 billion, would create about 3 million jobs to perform these green retrofits. [1] This would massively decrease unemployment, and create a chain reaction to jump start our economy.


Conclusion

A national green energy retrofit initiative with a $30 billion loan guarantee fund would be hugely beneficial.

From the creation of over 3 million jobs would jumpstart our economy, and cause a unique increase in jobs in local contracting businesses in small towns nationwide, resulting in broad prosperity.

Our environment would be generously rewarded. Our emissions would decrease 10% nationwide, helping to clean our air and water, which would then improve the health of millions of Americans. The green energy equipment would jumpstart America's journey to a 21st century energy solution as well.

The savings would be huge. With $100 billion in savings annually, this would be a stimulus that would essentially be free. For the banks, utilities, and consumers, they would all gain, especially the latter.

It would be essentially free. Ultimately all consumers would get savings from the retrofit (or their utility as mentioned above *), and the cost to the fed gov't would be very minimal.

Thus, a nationwide retrofit initiative is a compelling idea to launch America's economy, health, opportunity, and green environment forward.

The resolution is affirmed.


Sources:

[1] http://tinyurl.com...
[2] Clinton, Bill. Back To Work. New York City: 2011. 145-151. Print.
[3] http://tinyurl.com...

I am going to post my arguments against the policies outlined in the Resolution, then I am going to refute my opponent's arguments in the following round.

I would also like to ask my opponent to wait as long as possible before posting the next argument as I will be out of town until Friday morning at college orientation and will not be able to debate until then.

P1. Loan Guarantees Are Bad Financial Policy

Guaranteeing banks get repaid for loans they give out threatens the integrity of the banking system and finances at large. The investment world is based off of the system of risk vs. reward. The reason why these environmental policies need a loan guarantee program to begin with is because there is not enough reward in the venture in order to justify banks taking the risk. This has forced the government to want to implement these loan guarantees so that banks are more inclined to loan to green projects than they normally would be.

Already, we see an unnatural influence on the loan market. In guaranteeing loans are paid back by the government banks will now make loans they normally would not. Sound familiar? These same practices are similar to the ones that caused the housing collapse in 2008. If a bank would not normally loan money to a company looking for a green retrofit, why should they be given a loan guarantee? I don't want to refute my opponent's arguments this round but he claims there will eventually be a payoff. But if a bank is not willing to make the loan without a guarantee then obviously they don't see the integrity of the pay off.

This could lead to a financial mess.

i. Bad Loans

If a bank is guaranteed their money back no matter how the loan ends up, what prevents them from making bad loans? For example, the energy scandal surrounding the company Solyndra where over $500,000,000 was lost came from a loan guarantee program. [1] The bank didn't see the risk involved since their assets were guaranteed by the government. Loan guarantee programs only support risky investment habits, they also undermine the foundation of the financial system by taking the risk out of the equation.

ii. Financial Nonsense

My opponent claims that all parties involved in green retrofits can benefit from the program but I don't see how that's possible. We have the government, the banks and the companies involved. Now, if a company goes bust on a green loan or goes bust before the loan can be paid back (such as the case with Solyndra), the government is forced to pay the loan and is out all the money. They lose. If the company succeeds in the retrofit, they have to pay the bank huge amounts of interest and loses out on money wise. Even at a low interest rate of 5% the payout from green energy retrofits won't be able to turn the company a profit and they will lose out (which is why companies don't retrofit on their own, they have to be enticed).

In this situation, the company takes all the risk along with the governments and the banks get off spot free. This is not a sound way to run a financial system. By taking all responsibility off of the banks you are endangering the entire system. Banks loaning out money they are guaranteed back might even entice them to make loans they don't have or invest in places they know to be unsafe.

These very practices and habits coming out of this proposed loan guarantee program were the same ones that caused the financial meltdown in 2008. [2]

iii. Government Debt

Our government is not in a position to guarantee potential millions or even billions to banks and companies. Our debt is over $15.8 TRILLION and we run trillion dollar deficits every year. [3] Our government is not in a position to risk throwing millions away on projects like this. It only takes one company such as Solyndra to sink the entire program and that is something we can't risk right now. Our government's finances are in the tank and you're suggesting they risk more money on a long term, low reward, high risk environmental ploy. It's not feasible. It's not logical. Not given the country's current financial situation.

This debate is about whether or not the government should guarantee banks their money back for green energy retrofit loans. Why stop there? Why don't we just let the government guarantee every penny ever loaned out? That's because that would cause a financial crisis. Why is green energy special? I'm not guaranteed government money if I loan my friend some money, why do they get special treatment?

Green energy is a high risk, low reward business.
Guaranteeing loans is bad for the financial system.
The government is not in a financial position to take on investment risks, especially one in low demand and high risk situations.

We should not implement a government guarantee loan program for green energy retrofits.

[1] http://www.factcheck.org...
[2] http://online.wsj.com...
[3] http://www.usdebtclock.org...

I ask my opponent to wait until Saturday to post his arguments, as I will not be able to access the internet from Thursday until then.

-----Rebuttals-----


R1: Stability


"Guaranteeing banks get repaid for loans they give out threatens the integrity of the banking system and finances at large."

The FDIC assures bank customers that they will have at least $150,000 of any money in the banks if their bank fails. So, assuring banks that they get repaid (reverse argument) wouldn't be harmful - it would actually make it more secure.

My opponent also says that "there is not enough reward in the venture in order to justify banks taking the risk." This is wrong. There are reasons why the market in bank loans isn't working that well. Banks aren't sure that the customer own the building in 4 years or more. However, with assured loans that would cover a limited amount for the banks, that risk would be successfully hedged.

Many building owners have too much debt to take out new loans, when in reality, they could afford them. As I said earlier, to pay off the loan, the rate is only slightly raised.

Government just has to start up this initiative. A loan guarantee fund, banks would get the confidence to expand loans to many others, because the risk is low. Banks would not be afraid that too many people would sell the building, and the fear of overhanging debt, both of these risks would be hedged by this initial loan fund. The vast majority, if not all, customers involved would be able to afford the slightly higher energy rates, and enjoy the great savings following.

This would lead to an economic and clean energy expansion.


R2: Apples and Oranges


A loan guarantee fund of $30 billion is of minimal size. To compare it, it is only about 0.8% of total federal government spending (my opponent's source). It is like crying that we should not spend $20 on a high yield stock, even though my montly income is $2500 (statistics aligned).

This is not like other Solyndra or the Freddie Mac, subprime loans. This has much less risk. The far majority of people can afford a slightly higher energy bill, at least those who agreed to get a retrofit.

Gov't sets up a $30 billion loan guarantee fund. Not more. However, because banks are now assured they will have guaranteed profits in some areas, they are willing to expand their operations and loan to other trustworthy customers, who will pay about the same rate until the bank profits, then the customer does. It is a matter of jumpstarting this market from the damage of the credit crunch.

Here is another analogy. John pays the community college $220 a month (his parents cover the rest). However, the college offers to extend his simple 1 course and expand it to an Associate's Degree, and all John has to do (including the work and classes) is to pay $240 a month now.

John will likely be able to afford it, because it is only a slight change on the price that he has already been paying, and he will gain much more over time.

To conclude on this point, it is not like subprime loans. A subprime loan usually had someone would couldn't afford the property. A energy retrofit would have very low risk, because the energy rate would barely change, and they were paying a similar rate before the retrofit.


R3: Profit for All

Con misunderstood me. The Consumer takes out the loan from the bank. The consumer then pays the local contractor to perform the retrofit. Then, after the savings are realized, the bank is payed back its loan with interest, and the contractor gets the new wealth from the transaction. And the utility (if involved) gets the additional energy capacity to sell to other customers with lower costs.

Suppose my electric bill is $250 each month. With the retrofit, the bill increases temporarily to $280. The retrofit costs $10,000. So, after the retrofit, if you factor in the average savings of 30-40% (we'll say 35% on average). [1] [2] So my bill's actual cost would be $162.50. So, the net overhang would be $117.5 over what the bill would actually be.

Then, you factor in the net intest of 5% on the loan of $10,000 (500), and crunch the numbers. The end result is that I would fully pay off the bank loan plus interest of 5% in 7.5 years. Then, I benefit from a 35% drop in my electric bill, for the remainder of my days at the residence (or property I owned).

The result is tens of thousands of savings. Using the earlier figures, with the $87.50 cheaper each month, and supposing I owned that property and used the same electric rates for 35 years, I would save over $36,000.

Ultimately, it is a profit for all (those involved), and because many will act rationally, contractors will only perform a retrofit if they are sure the savings will be realized.

Banks would do this. They need some confidence, which the common wealth can assure at a very small upfront cost. Once the banks have confidence, they would expand their lending to other customers as well as they see fit.


Conclusion

Eternal energy is the future. With an upfront fund, banks will have greater confidence to expand their loans to others, as the initial fund would hedge the risk of those who sell the property or cannot afford the small hike in prices. The risk is very low. The new energy rate would be very similar to the one before. Use the analogy I presented as proof of a profit for all, the customer, banker, and the contractor.

Finally, the resolution would result in huge savings for the economy, allowing the economy to grow. Our air and water would be cleaner. And it would set America on a path for a more affordable energy as well as protecting our natural environment. The risk is extremely low remember, most can afford their energy bill. It is more expensive to forgo the $100 billion in savings annually than do nothing.







[1] http://www.rockefellerfoundation.org...
[2] Clinton, Bill. Back To Work. New York City: 2011. 145-151. Print.

I am now going to respond to my opponent's original arguments and proceed to defend my own arguments next round.

R1. Saves Money

To create the savings Pro is alluding to you would have to go through what is known as a "deep-energy retrofit" meaning you retrofit every aspect of your home to be greener. A deep energy retrofit for the standard home would cost $100,000. [1] The average annual electric bill for a US consumer is roughly $1100. [2] If you save 30% a year with this retrofit (about $350 yearly savings) it would take you 285 years to repay the $100,000 initial investment with your energy "savings". Then it would take even longer to begin to acquire actual savings. Most buildings will not last 300+ years to even see the savings.

[Math]

$350 yearly savings
$100,000/350 = 285 years

Green retrofitting does not save money.

R2. Expanding Economic Prosperity

"These huge savings cannot be overstated."

My opponent clearly thinks that energy retrofitting is free. If it were free, his arguments would hold weight. However, this process is not free. It costs money. To retrofit companies and homeowners would have to take out thousands of dollars in loans from banks for the project and then sit and wait for the savings to roll in. I have shown these savings will take decades before they're even in sight. Immediately after a retrofit the parties involved are in debt. Until this debt is paid off there is no savings and therefore no new economic prosperity.

By making "energy savings" the companies and people will be using them to pay off their bank loans. Also, the money in savings is now money not being paid to the energy companies. No new economic capital is being generated here, in fact only debt is being amassed, instead money is only being moved around. Moving money does not create wealth.

R3. Expands Market

"The risk is very low."

On the contrary, in order to even begin such a project a company would have to be able to take on thousands of dollars in new debt. If the company goes ahead with the project but then suffers some kind of economic hitch (common in today's economic world) then these loans are immediately in jeopardy.

"If the savings don't cover the costs..."

The savings will not cover the costs of the initial start up price for over 50 years in most cases. By then the contractors you mentioned are long gone and the project long forgotten. There are no savings in the short term or even the midterm but only in the extreme long term.

"To pay off the retrofit, which has higher upfront costs, utility rates would slightly go up and consumers continue to pay the slightly elevated rate for a period of time,"

Next my opponent proposes we raise utility rates to help ease the cost of the massive start up bill. How does raising the cost of anything ever expand the market? Not only that, but you'd be raising costs for "savings" likely to never be seen by those paying the higher bill. My opponent is naive in the fact that he underestimates the cost of these energy projects, overestimates the ease of loan taking and paying while not understanding the true nature of savings. If I borrow $50 today to save $0.50 a day I don't start actually saving anything until day 101.

Next, I want to talk about the consequences of a different market contracting. If energy bills go down and demand decreases it will cause a contraction in the energy market. If a gas truck is now required 30% less of the time then that truck driver now has 30% less work. There are consequences in everything and green retrofitting is not a perfect solution to anything.

Not only will this not expand the market, it could cause a contraction in the traditional energy market while burdening consumers with higher bills. This is not the outline of a prosperous economic plan.

R4. Clean Environment

First of all my opponent begins with an outrageous number. Even with an easier time acquiring bank loans for such projects many people don't want to take on extra debt right now much less "tens of millions".

Secondly, my opponent forgets that the "green" energy business is actually quite dirty. Things such as solar panels are made from dozens of toxins that are potent and dangerous during manufacturing and during eventual decay. [3] While it might save energy and pollution when in use, increased demand for products such as these will increase the number of plants utilizing toxic chemicals and infusing the environment with "green" equipment that will break down over time releasing these toxins. [3] The environmental benefit is not as cut and dry as it seems.

R5. Job Creation

These retrofit projects might cause some job creation but again as I pointed out it could cause job contraction in other fields. Also, these jobs would be created on bank loans which will not see real investment return for a very long time. Jobs like that are not creating wealth but rather generating a product that will eventually pay the banks back. There is no real money to be had here.

Finally

- Green retrofitting does not actually save money in many cases
- Green retrofitting is extremely expensive and requires huge up front bank loans to start
- Savings don't come in for many many many years
- There are consequences in everything, energy markets, company risk etc

These programs are not worth the effort or the capital. My opponent has generated a large amount of hopeful thinking and naivete while discussing the topic at hand.

The resolution is negated.

[1] http://www.greenbuildingadvisor.com...
[2] http://www.motherearthnews.com...
[3] http://grist.org...

These are my rebuttals.


R1: Saves Money


To point out that an argument may be flawed is to compare it to actual evidence. However, like in other areas in this debate, Con has compared apples and oranges again!

His study is referring to a deep-energy retrofit, which goes far beyond the more basic green energy retrofits we are discussing. Compare it to cars. We are talking about getting a hybrid, which has large returns on average. And it has an upfront cost, but the savings have usually been bigger. In this analogy, Con is talking about fully electric cars, which have much higher upfront costs, and also larger returns. Be we are talking about hybrids, not full electric cars. So, we must debate over the topic and not exaggerating the definitions.

Factual evidence shows that the average costs range from $10,000-$13,000 for a green energy retrofit. [1]

As I said earlier, the rate would be elevated to accelerate the rate of paying off the retrofit. So, assume the rate goes from $110 a month to $130 a month.

It only takes about 7-10 years for the average homeowner to pay off a retrofit loan, then they enjoy the windfall of savings.


R2: Expanding Economic Prosperity


Long term investment and growth are worthy goals to reach for a stronger economic future. It takes a somewhat large upfront cost for the retrofit, as we have discussed, but after a slightly elevated rate is adjusted, it only takes about a decade or less for the savings to fall to the consumer's pockets.

Around 7-10 years later, banks will end up with their money returned with interest, the contractor will have had new service to grow, and the consumer will enjoy the bounty of energy savings. Furthermore, the utility will have greater supply of energy so prices will equally decrease, causing a drop in non-renewable energy prices which will then be more likely to become conserved for future needs.

Ultimately, energy retrofits are economically strong. Over a million jobs would be created, and these jobs are in domestic, higher skill and low skill fields alike. It would increase our domestic manufacturing capabilities, and end up as a profit for banks and local contractors. And the consumer would save large amounts. These long term investments end up as good economic ideas. And the effect on job creation is immediate.


R3: Expands Market


Now, risk is real, but remember, by a gov't loan fund set up, banks would have much less risk and have the confidence to expand their lending to consumers for retrofits. These are not subprime mortgages. Those who agreed to a retrofit would be informed of the new prices, and default would thus be rare.

The risk is overall low and reduced by a green retrofit initiative. It would make Americans more responsible with their energy spending, by having more efficient homes, and it would help make green energy have a more level playing field with the fossil fuel industry, who have assured billions in corporate welfare and subsidies annually. [2]

Either a contractor or utility would guarantee the savings for the consumer. And, naturally businesses have the responsibility to act rationally. They would only offer to perform a retrofit if they knew it would be profitable. Furthermore, the term of the retrofit is a mere 8 years or similar.

So, if a customer was likely to have assured savings because of the retrofit naturally, all parties would benefit in the long run.

To conclude here, the savings would be realized after the loan is fully payed off with interest.

The overall rate of energy costs would increase by a modest degree, until the retrofit costs are recovered. The consumer would know this before. This is what former President Bill Clinton offered when he proposed a similar plan. [3]

The loan guarantee fund would give greater but pragmatic confidence to banks to expand lending for green energy retrofits, by increasing their consumer pool and thus minimizing risk. Energy companies would get the additional capacity to sell energy at lower costs to remain more competitive.

This initiative would cause a boom in local contracting to perform retrofits, expand American manufacturing capability, help banks, and all of this would counteract the modest hikes in consumer energy bills, then later the consumers get large cuts in energy prices.


R4: Clean Environment


Going back to the facts, U.S. emissions would be cut by almost 10%. This would counteract the forces of global warming, and improve public health and make our air and water cleaner.

Con brings up a good point also on the manufacturing of solar panels. But as his article said, solar companies are acting vigourously to improve these aspects of solar panels, and they are responsibily acting to recycle ones that are finished.

Ultimately an initiative as we have discussed would clean the environment. This is unrefuted.


R5: Job Creation


The modest hikes in energy rates would only have minimal harm on job creation, and certainly be outweighed by the millions of jobs [2] created by the spur in hiring within local contractors and domestic manufacturing industries. By keeping workers busy for several years, it would help the U.S. recover from the recession.

Concluding;

- Green energy would spur domestic job growth, creating over 1 million jobs

- Green energy and traditional energy prices would decrease

- Emissions would be cut by 10%

- The Environment would be cleaner, the public health improved

- The U.S. would become more energy independent and on the platform of a 21st century energy policy

- Risk would be managed and very limited

- Consumers would eventually save 30% on their energy bills

- Savings are realized after a few years, job creation is immediate


We need to clean up our energy. Eternal energy is the future. Thus, to have large long term benefits for America;

the resolution is affirmed.




[1] http://tinyurl.com...
[2] http://tinyurl.com...
[3] Clinton, Bill. Back To Work. New York City: 2011. 147. Print.

Sorry, I have to make my conclusion a little short. We're moving out of my house today and I don't have very much time or internet capacity.

In Conclusion

- Green energy is risky.

- My opponent argued for more debt and debt for people already in debt because he thinks it is a "small amount", debt is debt. No energy project with such small yields is worth the extra debt incurred especially in our financial situation.

- Neither the banks nor the federal government are in a secure position to guarantee loans - they can't even pay off the debt/payments they currently have much less ad BILLIONS of dollars in additional risk and spending.

- All of the effects my opponent listed are exaggerated or are presented without the negative consequences.

- Green retrofitting is EXTREMELY expensive in a time when most banks and American families have unstable financial situations this is bad policy.

- My opponent asks for HIGHER energy bills NOW to get EVENTUAL savings. This doesn't sound like a good deal to me nor does it sound good for a struggling government and economy.

While this energy retrofitting idea may be viable in the FUTURE in today's world with today's markets and economy it simply is not. We cannot take on more debt, we cannot afford the large loans in question, we cannot support HIGHER energy costs in the near future. Job creation in this economy is a myth and claiming you'll creat "1 million" jobs is a false claim Democrats have been making since 2009 when no jobs have been created. Guaranteeing loans and jobs in the green energy market has failed miserably up until this point. There is risk involved here.

We cannot make this work in today's world.

The resolution is thereby negated.