Markets and the environment - how to align incentives?

Attended a law school event, hosted by Echoing Green, on whether markets can deliver energy efficiency.

The discussion was NYC centric. Who knew that in NYC, buildings are responsible for 2/3 of green house gas emissions? In most other cities usually transportation is the main culprit.

The NYC real estate market is an interesting one. Since it is mainly rental, the incentives to reduce energy costs lie with the tenant (who pays the energy bill) but the person responsible for making the efficiency improvements is the owner of the building. Sort of a catch 22 here. Neither one has any stake of improving energy efficiency. Specially the low hanging fruit, that can bring down energy costs by around 30%.

The other challenge is financing. With most commercial buildings having pre existing debt already (and battered credit ratings), how can you enable them to take on additional expenses in retro fitting a building? Even though you know that there will be future savings, most banks won't lend to such an undertaking since it's 1) it's not considered safe and 2) there is no collateral (you can't take away the insulation that's put in if the owner defaults).

Lastly, there is really very little data on the impact of efficiency improvements. And this makes undertaking any retro fitting a bigger risk. On this front, the Clinton Foundation is doing some pioneering work on the empire state building, retrofitting it and making all the energy savings data publicly available. Great example of public private partnership.

So given these issues - how do you structure a market solution to address this issue? Clearly there is money to be saved (made?). Or maybe non-profits are better suited to address this.

Worth further investigation...