Sustainability and Quality Places

Sustainable growth strengthens our existing metropolitan areas, conserves fiscal and natural resources, and advances our nation’s efforts to address climate change and find alternative sources of energy.

President Obama’s budget overview narrative includes several programs that advance sustainability. The budget narrative describes a cap-and-trade program to cut greenhouse gas emissions by 14 percent from 2005 levels over the next 11 years, and by 83 percent by 2050, while generating $150 billion for alternative energy investments over the next decade. An accurate inventory of greenhouse gas emissions is a key underpinning of cap and trade, so EPA has an additional $19 million allocation for a greenhouse gas emissions inventory. Inadequate information has been a significant hurdle to local, regional, and state efforts to map and then reduce their climate-changing emissions.

The administration also targets the generation of cleaner energy, through funds to speed the research, development, demonstration, deployment and, crucially, the commercialization of renewable and efficient energy technology. One promising way to invest those funds would be energy discovery innovation institutes, dedicated to bringing new energy technologies to market quickly and overcoming some of the obstacles to innovation and market readiness embedded in existing Department of Energy programs.

Additionally, the budget indicates a commitment to reducing the demand for energy from buildings, which account for almost half of U.S. energy consumption. There are funds for reducing energy use in federal, state, and local government buildings (the federal government alone is the largest energy consumer in the world) and a new energy innovation fund at HUD that the administration hopes will support energy-efficiency retrofits for older, inefficient homes and spur private sector lending for this purpose.

Energy efficiency is just one aspect of sustainability. More broadly, sustainability turns on linkages between housing, transportation, and energy, as HUD Secretary Shaun Donovan has noted. The HUD budget includes a new Sustainable Communities Initiative, funded through Community Development Block Grants (CDBG is fully funded in the FY 2010 budget, unlike in other fiscal years). HUD also has funding for a new Choice Neighborhoods Initiative that will support transformative investments in concentrated poverty neighborhoods. Transformative investments include tearing down highways to restore access to waterfronts, creating dense transit corridors that spark retail and housing development, and reclaiming industrial lands for new urban parks. If done right, transformative investments expand the housing and economic opportunities for low-income people. The initiative will draw on the resources and expertise of the public, private, and philanthropic sectors.

EPA’s $3.9 billion allocation for Clean Water and Drinking Water State Revolving Funds could have a sustainability aspect as well. EPA is to work with state and local governments to create a sustainability policy to guide the use of revolving loan funds. Focusing on fixing and maintaining existing infrastructure in already-built communities before extending services to far-flung and sparsely populated areas would fulfill the sustainability mandate. And the budget pledges to reinstate $1 billion in excise taxes (after 2011) that fund Superfund cleanups, so that sites that have dragged down neighborhoods and communities can be restored to healthy, productive uses.

Finally, a tax change proposed in the budget may improve incentives to develop our metropolitan areas in more sustainable ways. In order to pay for broader health care reform, the President has proposed to limit the tax rate at which itemized deductions reduce tax liability. For most taxpayers who itemize, interest on a home mortgage is often the largest source of their deductions. In many metropolitan areas, however, the deductibility of home mortgage interest acts as an implicit subsidy to wealthy households in well-off suburbs. Putting modest limitations on this tax preference for housing may encourage homebuyers to consume less housing, and thereby reduce our collective metropolitan carbon footprint.