Green Building Law Update

Could Solyndra Happen To Green Building Policy?

Of course it could -- it already has.  But first lets recap the Solyndra saga. 

Solyndra is the solar panel manufacturer in California that qualified for a $535 million federally-backed loan.  Since receiving the loan, the price of solar panels has plummeted - good news - which has squeezed the margins of manufacturers like Solyndra.  The result:  two weeks ago, Solyndra announced bankruptcy.  And taxpayers are now responsible for repaying a half billion dollars. 

As I started thinking about the broader implications of the Solyndra collapse, I could not help but draw parallels to a similar federally-funded green project that has not panned out as expected:  Destiny USA.

Destiny USA was a proposed $20 billion mega-mall that was supposed "to be not only the biggest man-made structure on the planet but also the most environmentally friendly."  To support the project, the developer applied for a $2 billion Green Bonds program that Congress passed in 2004.  In 2007, the Destiny USA project qualified for $238 million in tax-free financing through the Green Bonds program.  In exchange, Destiny USA promised to redevelop a brownfield site, use massive amounts of renewable energy, and get LEED certification for 75 percent of the project. 

However, from the outset, there were groups questioning whether Destiny USA could satisfy the Green Bond requirements: 

[Ashok Gupta, senior energy economist at National Resources Defense Council] said he was impressed by the DestiNY team's enthusiasm for the strict guidelines, but wasn't sure the mall builders knew what they were in for. "I have a hard time believing that the DestiNY executives can deliver on their green promise," he said. "These are not developers who have ever attempted a green project, and it's not clear to me that they understand the extent of their commitment, financially and practically." Even developers who have worked on multiple green buildings would find a project of this scale to be extraordinarily challenging, he said.

It appears Gupta was right.  In February 2011, Rick Moriarty reported that the Destiny USA project would not deliver on its renewable energy promises.  Furthermore, it appears that the building itself will not be obtaining LEED certification.  Instead, the USGBC and Destiny USA developers announced that all retail units inside the mega-mall would seek LEED certification: 

“It’s never been done before,” said [USGBC CEO Rick] Fedrizzi as [Destiny USA developers] sat nearby. “When a major, major mall puts together a program creating leases requiring —requiring —tenants to be LEED-certified, it’s a major, monumental event.”

Coming back to our original question, the answer is yes, a Solyndra-type failure could happen to green building policy.  It already has.  And if the Green Bonds that funded the Destiny USA project were part of the American Recovery and Reinvestment Act, I can promise you it would be splashed on the front page of many newspapers.  

What do you think?

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Comments (3) Read through and enter the discussion with the form at the end
Aaron Krieger - September 21, 2011 10:39 AM

Of course failures like this can happen in the green building industry as in any industry. That said, while Destiny was just an unmitigated business mistake that unfortunately involved government-backed green bonds, Solyndra was a casualty of the incredibly fast-growing green tech market that is driving down prices of soon-to-be necessary goods like solar panels. The increasing affordability of green technology will actually support the growth of the green building industry, not sink it. Sad for the owners and employees of Solyndra, but a bellwether of strong future green building growth.

Aaron Krieger - September 21, 2011 10:58 AM

Certainly, something like this could happen to any industry. That said, Destiny USA was just an unmitigated business failure that unfortunately involved a great deal of government money in the form of green bonds. Solyndra, however, is a casualty of the incredible speed with which the green tech sector is growing. This speed is driving down the cost of soon-to-be necessary green building goods like solar panels, which stands to strengthen the larger green building industry even as it injures some of the older green tech providers who are less able to adjust their business models to compete with the newer, cheaper providers. This is a sad turn of events for Solyndra's owners and employees (and taxpayers who stand to be on the hook for a nice chunk of change), but in the larger scheme of things, this bankruptcy is a bellwether for the future growth potential of the green building industry.

David Eisenberg - September 26, 2011 10:52 AM

Would that there was such a mainstream media focus on the billions and billions of dollars of federal subsidies we're all on the hook for related to the nuclear power industry- which along with it's incredibly high costs and enormous resource impacts creates real risks for all living systems extending unimaginably far into the future. Or similar investments of public funds into development of failed military technology from tanks to aircraft to weapons systems.

As Steven Strong noted many years ago, we seem to reserve our greatest scrutiny and criticism for the good things - while ignoring far worse from the worst things - I think because they violate our expectations. We expect bad things to come from the systems we are already very familiar with but have much higher expectations for systems that are supposed to offer improvements. So we demand to know, to the day, what the payback or ROI is going to be for something like building integrated pv on the facade of new high-rise office buildings while not questioning for a moment the cost of the marble, or the purely decorative three story glass entry atrium with its huge energy penalty.

The most scandalous things about Solyndra is the way it's being treated in the media and by those who oppose anything green, environmental or not beneficial to the existing energy and corporate power (in both senses) structure, and the attempts to blame the Obama administration for any of this, given it was in process long before Obama was elected.


Stuart Kaplow
Sustainability & Green Real Estate Attorneys
15 East Chesapeake Avenue
Baltimore, Maryland 21286-5306 USA
Tel 410-339-3910
Fax 410-339-3912
Email skaplow@stuartkaplow.com