Cash for "Clunker" Homes? | Green Energy News

July 5, 2009 – Vol.14 No.16

CASH FOR “CLUNKER” HOMES?
by Bruce Mulliken, Green Energy News

There are a multitude of well-built older homes in the U.S. and the world, for that matter. But when it comes to energy efficiency, most of them, it’s safe to say, are clunkers.

The U.S. has just started its Cash for Clunkers program, now officially known as the Car Allowance Rebate System (CARS). The $1 billion program which ends November 1 gives consumers up to $4500 for trading in their 18 miles per gallon (or less) cars or (15 miles per gallon (or less) trucks for something that gets at least 4 miles per gallon better mileage.

However, CARS is a bit of a clunker itself. For a program that’s intended to help out over-inventoried auto dealers and manufacturers (while reducing dependance on foreign oil and cutting greenhouse gas emissions) it is expected to remove only 250,000 vehicles from dealer lots. In the grand scheme of things, that’s not much.

As obsessed with cars and trucks as America is, vehicles aren’t its biggest problem in terms of greenhouse gas emissions. Its houses, particularly older ones. are a bigger problem. (Emissions from cars and trucks are a growing problem globally because of the proliferation of cars in countries such as China and India.)

On average, houses are responsible for 40 percent of U.S. greenhouse gases, but homes built in the past 10 years account for only 2.5 percent. Obviously, the U.S. needs to do something about energy efficiency homes, particularly ones built decades ago.

Deep within the American Clean Energy and Security Act (ACES) just passed by the U.S. House of Representatives (and now in the Senate) are federal mandates requiring each state to make its energy code for new buildings 30 percent more efficient than current levels, perhaps as soon as 2010. By 2014, each new building must be 50 percent more efficient than the current code. But that just covers new homes. Most of the homes in the U.S. are already built.

"Clearly, our older inefficient housing stock is where wise environmental policy should focus. The only way to encourage upgrades on these homes is through market incentives such as tax credits," says Phil Crone, director of government affairs and green building programs for the Home Builders Association of Greater Dallas (HBA).

A tax credit program, like CARS, but for homes, would have to go far beyond what’s now available from the federal government for heating, cooling, water-heating equipment and building envelope improvements. The current law, which runs through 2010, offers owners of existing homes a tax credit worth 30 percent of the cost of upgrading the efficiency of the building's envelope, including windows, doors and insulation, but the credit doesn’t include the cost of labor, often the most expensive portion of upgrades.

For heating, cooling and water heating equipment upgrades, labor is included in the 30 percent tax credit. Good thing. Few people install this equipment themselves.

However, the credits provide little direct financial incentive for homeowners to upgrade the energy efficiency of their homes: The maximum amount of homeowner credit for all improvements combined is $1,500 for equipment purchased during the two-year period of 2009 and 2010.

Fifteen-hundred dollars doesn’t go very far when it comes to home improvements.

Interestingly, a credit that is far bigger, say the same $4500 that buyers of new cars would get in CARS, would probably put more Americans back to work than buying an imported vehicle, which is allowed in that program.

For instance, the labor required for major energy upgrades to homes can’t be exported. You can’t ship your home across the Pacific for renovation work, thus the labor, and the tax credit that would help pay for it, goes to American workers. Further, for the most part insulation materials, windows, doors, high efficiency heating and cooling equipment all are manufactured in U.S. plants and, of course are installed by U.S. tradesmen.

And what about adding renewable energy to older homes to cut their carbon footprint? Energy efficiency and renewable energy go hand in hand. Houses have to be energy efficient to make the best use renewable resources available.

With unemployment growing and a mission to cut greenhouse gases, the Administration and Congress should rethink the portion of the American Clean Energy and Security Act (ACES) that mandates dramatic energy reductions for new homes. Rocket science isn’t needed to construct new buildings that use dramatically less energy than they do now. However, existing buildings need some clever ideas combined with time-tested technologies and building methods to remove them from the energy-clunker list. A sizable tax incentive would help.

Links:

Database of State Incentives for Renewable Energy (includes Federal)
http://www.dsireusa.org

Car Allowance Rebate System (CARS
http://www.cars.gov

Home Builders Association of Greater Dallas (HBA)
http://www.dallasbuilders.com