Elton Sherwin: Put building energy ratings on the Internet, and watch them improve

We have entered a new era of constrained spending, pervasive unemployment and complex political turmoil, yet the question on everyone's mind is simple: How do we create jobs?

The answer is right in front of us. New laws in New York, San Francisco and other large cities requiring energy performance disclosure for buildings have the potential to become a 21st century engine for job creation and significantly improve the course of America's energy future.

As a Silicon Valley venture capitalist, I should believe that technology will rescue our economy. I spend my days searching for the next big thing: hybrid vehicles, smart technologies, new sources of energy and the like. Sometimes called "clean tech," these are the breakthroughs that could reduce our addiction to foreign oil and create jobs.

But will technology alone really create jobs? I worry that many existing technologies are languishing, unused. For example, in commercial and industrial buildings, smart lights and smart motors can reduce electricity consumption by more than 50 percent. Yet, even in California, these money-saving technologies are rarely used. My enthusiasm as an investor is muted when last year's big innovation is collecting dust on the shelf.

This is troubling. Why invest in new technologies when no one is using the existing money-saving technologies?

Economics 101 says when a technology saves money, it will be used. Not so, in my experience. Amid the excitement about clean technology, the bigger problem is how to motivate the use of existing energy-saving products.

If innovations sit on the shelf, the unemployed sit at home.

Some American cities are solving this problem with a novel idea: Grade buildings based on how much energy they use and publish the scores on the Internet. Brilliant in its simplicity, public disclosure of a building's energy consumption will start a stampede to upgrade buildings -- motivating the good buildings to achieve higher levels of efficiency and prompting the laggards into action.

There is a nationally accepted Energy Star performance scoring system that grades buildings from 1 to 100 based on actual utility bills. An anemic score of 17 in a "class A" Manhattan office tower will generate action: An energy auditor will be hired, meters installed, lighting ungraded, fans and motors tuned, and old refrigerators replaced. The Energy Star score of 17 becomes 77. Jobs will be created, and the building owners and tenants will spend less on their utility bills.

Under Mayor Michael Bloomberg's direction, New York is now implementing the nation's first public disclosure law for its largest commercial and multifamily buildings. San Francisco is close behind, and cities including San Jose are considering similar approaches. San Francisco's ordinance was spearheaded by large property owners who had grown weary of green-rating schemes that sometimes give top honors to wasteful buildings and fail to recognize the most efficient buildings.

In each of these cities, building owners will no longer ask what is the least expensive air conditioner or light fixture, but rather: "How can I get my building to an 80 or 90?" Excellence will become the goal. And as building owners install smart thermostats, smart lights and smart fans, jobs will be created. If a policy like this were adopted nationwide, the Institute for Market Transformation projects we would create 59,000 net new jobs in 2020.

Public disclosure of commercial building energy consumption will unleash the magic hand of capitalism. More cities should follow the leadership of New York, San Francisco and Washington. Public disclosure will motivate millions of energy makeovers and employ many thousands of skilled American workers. With no subsidies, these cities are helping secure America's energy future.

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Elton Sherwin is senior managing director at Ridgewood Capital and the author of two books, "Addicted to Energy" and "The Silicon Valley Way." He serves on the boards of five companies, including NRG-Dynamix, which develops nonelectric hybrids. He wrote this for the San Jose Mercury-News newspaper.