ENERGIZE AMERICA: The State of Home Efficiency

Energize America has sent a comprehensive  people-powered message to the Hill that endorsed proven renewable technologies and distribution. What stopped The Efficient American Homes Act (EAHA) was one question.

How much does EAHA overlap other federal and state energy efficiency policies?

The EAHA is committed to establishing national standards of energy efficiency. We've identified shortcomings of federal mechanisms to implement minimum efficiency ratings. We've leveraged the value of financial incentives for household "investments." We've debated payback, though HUD recognizes 4 different valuation methods, and everyone relies on DOE's spurious data to discount residential projects.

Let's look at how the EAHA standards may actually relate to conditions at state level. Politics, utility structure, and development can create either a hostile or constructive environment for energy efficiency enforcement and positive outcomes.

Many thanks for dkos real-life contributions to the EAHA (hat tips to Conchita, emmasnacker, xaxnar, Mataliandy) and constructive criticism (hat tips to alizard, HeyMikey, netguyct, deb9, and dearNRG guy

Chewing up trickle-down energy policy
The next four EAHA posts will concern regional energy efficiency regulation. In a transparent market, we'd have state latitudinal and longitudal data to observe and by which to predict outcomes. But real data isn't always HTML accessible, and EIA data is three years behind the eight ball. None of this is simple to represent in a blog. So we'll content ourselves in the meantime with an introduction to Efficient American Homes Charts (below) and, later, a couple of base case narratives to represent residential energy efficiency "conditions at state level" in each region.

Differences in capacity, rate structure, and fossil fuel consumption affect the EAHA viability. Right now, a few observations are driving EAHA revision.

1. The states leading global climate change (GCC) management practices are leaders -- or outliers. These states appear to share certain structural and legislated characteristics not found elsewhere. And that means any federal energy efficiency standards proposed will surely be accompanied by vociferous, political compromise on energy market restructure.

2. Consumers are not energy market agents in any case. In the wonk literature, the unstated assumption driving policy is that distribution utilities (DUs) are monopolies, regardless of utility type. Household energy efficiency and generation are presumed to be DU assets -- like substations, renewable energy certificates, and carbon offsets. Duke Energy CEO James Rogers has termed energy efficiency our "fifth fuel". (D. Reicher, Senate Committee on Finance, 27 Feb 2007)

3.  Cost avoidance is the antonym of demand in any market. Productivity is unrealized operating cost. Suppliers want to commercialize, sell, these "negawatts." Retail rates do not yet signal the value of high-performance end-use (diminishing marginal cost, fuel consumption, and CO2 emissions). This fact alone makes dynamic price clearing, much less return on individual household capital investment, impossible to obtain quantitatively as PharLap has repeatedly demonstrated in household NPV.

4.  As the Chicago Federal Reserve Board index at right suggests, as aggregate consumption increased consumer migration to fossil fueled electricity supply increased. Coal prices fell on DU volume, yet household expenditure increased in any given state in part because end-use demand exceeds local DU capacity. But note this awkward explanation of wholesale payments among DUs: [Electricity price volatility] may be due to efficiences resulting from increased [price] deregulation and to declines in the price of coal, the primary input in electricity generation, throughout the 1980s and 1990s. The low relative volatility of electricity prices is likely due to the price-regulated environment in which electric utilities continue to operate (CFRB, June 2006pdf)

5. The EAHA objective is to reduce absolute CO2 emissions not to generate profits.

The paradox of reducing CO2 emissions in this sector of our "consumer-driven" economy is manifold. But it is called "price impact" and understood always to project a retail price increase. At one extreme, the Inhoof poster-child cannot afford heating, whether her home is "tight" and her use is "off-peak", because a DU requires customers pay its cost to comply with her state's GHG regulation, if any. Absent GHG regulation, her DU will still apply for rate increases to subsidize its operating margins and inefficiencies. Inhoof fails to explain that the poster-girl is a utility slave.

At the other extreme, a utility customer in a "competitive" market pays continuously for DU tradeable credits, whether his home is "saving" or not, because the DU requires customers pay its cost to comply with state GHG regulation in order to trade the maximum number of credits. Thus, states' energy policies tend to focus households on minimizing inevitable DU "bill impact" achieved through energy efficiency rather than ways to distribute capital gains obtained by DUs fairly. A policy battle over restricting household "investment" tax credits created in the EPAct of 2005 is forming already.

Reicher, again, has the temerity to quote a McKinsey newsletter. "By looking merely in terms of shrinking demand, we are in danger of denying opportunities to consumers ... Rather than seeking to reduce end-user demand -- and thus the level of comfort, convenience and economic welfare demanded by consumers -- we should focus on using the benefits of energy most productively." [op.cit] He goes on to skip the Electric Utility Cap and Trade Act of 2007 (S.317) to chain Renewable Portfolio Standarda (RPS, map) and the EXTEND EPAct of 2005 (2006, S. 3628) to a ACEEE/Google policy proposal, Energy Efficiency Resource Standard (EERS). Increasing household "energy productivity": Now that's what I call a beating.

I Want Energy Independence!
You want performance-based incentives? I'll give you some performance incentives... some NCLB-quality, asset-based performance incentives...

We presume EAHA will be in force 2009-2020. EAHA 1(b) and 2(a) provide for "public-private partnership" in energy efficiency education and incentives. In most cases, states already partner with local utilities and private sector entitities to fulfill rebate programs as well as to rehabilitate or construct "energy efficienct" housing for public authorities and private property development. This error is insidious.

The Public Utilities Holding Act passed in 1935 was repealed in 2006. PUHCA outlawed interstate (international, implied) utility holding companies, and made it illegal for a holding company to claim less than 10%  of a public utility for tax benefits. If a company claimed greater than 10% ownership, it had to register with the SEC and provide detailed accounts of all financial transactions. Between 1938 and 1958 the number of holding companies fell from 216 to 18, forcing divestiture until incremental antitrust deregulation, from Reagan through GWB. knock yourself out. PwC notes

The rise [in global M&A] is all the more astonishing as it comes in a year when deal activity from corporate US utility players plummeted. The sharp downturn in North America came as companies took stock of aggressive regulatory stances from some state regulators during a US midterm election year that coincided with the ending of rate freezes and reaction to the repeal of the Public Utilities Holding Company Act. North American electricity deal values by bidder fell 64% to US$20.7bn, not far above the US$16.7bn level of 2003.
... North American target values rose 15% on 2005 levels, maintaining the headline momentum that began in 2004. But this headline growth was sustained only by two large bids involving players outside the immediate US corporate utility sector – the Kinder Morgan management buy-out financed by a group of investment firms and the move by UK utility company, National Grid, for KeySpan. In contrast, American power utilities declined to make any big deal bids. Were it not for the Kinder Morgan and KeySpan deals, total target values in North America would be 40% down on 2005 levels.

The global, Kyoto-leveraged capital market isn't as stupid as the last session of the Republican-controlled Congress which hoped to profit by unsecured carbon credit trade. Assholes. Privatizing energy efficiency enforcement introduces management conflict in addition to the public burdens of underfunding household switching cost and over-compensating commercial operating "innovations."

EAHA will restore and modernize certain provisions of the PUHCA. To begin with:

Federal EAHA funding and fulfillment for residential incentives will be managed exclusively by state agencies. EAHA funds can add 47 FTEs to energy agency staff size in each state and DOE for $2B. EAHA state subsidy will increase full-time staff for enforcement and/or federal certified "home energy audit" technicians.

EAHA will generate "carbon revenue" to match energy efficiency "tax relief." This old-fashioned measure balances the books of a Renewable Portfolio Standard and housing "asset management" technique currently in vogue at HUD. Utilities, regardless of type (customer-owned, investor-owned, public, or federal), will be required to report certain balance sheet and revenue data quarterly to the state energy agency. If assets of the utility's Renewable Portfolio do not reduce kWh generation or  NG cu.ft consumption by 2% as compared to the prior reporting period, the utility and its property-owning customers will be each penalized by the state for nonperformance through one method.

• 75% premium set by the utility's current retail rate per kWh or cu.ft. added to consumption exceeding monthly base federal "home energy audit" kWh and NG cu.ft, FYE 2015 and FYE 2020 targets. The bases will be reset once during the EAHA period, from 20% to 100% compliance.
• The audit rule will be 50% renewable fuel source, regardless of geographical siting or generator within the contiguous 48 states, Hawaii and Alaska.
• The audit rule will preempt state limits to and disclosure of renewable fuel sources (heh heh heh) and engross state Energy, Universal Service, Environmental, and Generation Procurement surcharges.
• Presentation of a "home energy audit" will NOT indemnify utility customers, UNLESS the audit is federal certified AND (a) the customer is a private property or public housing authority tenant or public housing authority mortgage holder; or (b) the property owner is an "off-grid" generator; or (c) the status of the utility service area is designated "emergency power".

Why a renewable rule? Uh, that's where the money is in real household property (CHP), DU-independent generation, or DU proxy shares -- Renewable Energy Credits, RECs. (cf. S.317, Feinstein, Carper; S.280, Lieberman 9) Limitations on utility renewable source are coupled to Net Meter rules (IRR proxy) ranging from 1% to 24% renewable source by 2025 (to manipulate credit auction price and quantity). And renewable consumption is limited by household energy efficiency investment and barriers to RPS market entry (Net Meter + Disclosure).  

Furthermore, 82% of households' main fuel for HVAC is either gas or electricity. Yet residential "energy efficiency" improvement can be a poor predictor of actual "price impact" mitigation. Take Howard W., a homeowner in Flossmoor, IL, a state that completed its energy market "restructure" as of Jan 2007.

"Over the last few years, Howard used all the knowledge that is readily available to consumers to make what he felt were informed decisions about his house," Lotesto says. "The year before last, he spent quite a bit of money to install a high-efficiency boiler, add insulation in the attic and crawl spaces, re-side the house with rigid foam insulation board, and replace all the windows with energy-efficient ones, only to realize his investments weren't paying off as he had hoped.PATH

Uncertainty about cost-effective attributes of energy saving and the affordability of energy efficiency investment undermine household commitment to reducing energy consumption. Uncertainty is created by the federal governement's inability to set minimum energy efficiciency ratings and Congressional abrogation of enforcement to failed market mechanisms. Where financial metrics are used to justify expenses, short-term payback rewards minimum investment. Where behavioral research is used to explain minimum investment, studies demonstrate that voluntary household measures are strongly correlated to fuel price shocks or retail utility costs. As a nation, our consumer-driven desire for energy efficiency bears no resemblance to "buy-and-hold" wisdom in the equity market, much less real estate appreciation. So long as this condition is acceptable to the market, residential property owners will be unable to recover investment or contest local building codes that drive the value of energy efficient assets on their property.

Spitting in the Wind

This call from businesses to establish uniform rules for emissions of carbon dioxide and other greenhouse gases continues what Ginny Worrest, a senior policy advisor to Senator Olympia Snowe, told LiveScience was a "grassroots" effort to establish caps of greenhouse gas emissions started by many states. Live Science

Actually, this particular article links "many states" to a unilateral agreement between the UK and Gov. Schwartzenegger to establish a carbon credit exchange. The Regional Greenhouse Gas Initiative (RGGI) --7 states in the Northeast plus MD developing a cap 'n' trade exchange-- is not mentioned. Neither is Big 3 vs Vermont emissions caps litigation. Nor does the article refer to grassroots-financed clean energy such as the Green Path Project in CA that Boston-based Citizens Energy helped to package.

Players: Imperial Irrigation District (IID), Los Angeles Department of Water & Power (LADWP), San Diego Gas & Electric (SDG&E), California Independent System Operator (Cal-ISO), and Citizens Energy
The Sun Path Project creates  a new 500-kV bay at the Imperial Valley Substation, a new San Felipe substation, 2 new substations between Indian Hills and LA, and over 150 miles of new 500-kV transmission lines. Interconnection will add at least 1,000 MW from Green Path renewable resources (geothermal  and solar thermal generation). The whole project  is expected to be operational by June 2010 at a cost of $1.26B.

• SDG&E invests about $910M in San Diego County and will recover this investment through the Cal-ISO Transmission Access Charge over 41 years. SDG&E will own the infrastructure within San Diego County.
• IID invests about $150M within Imperial County and will own the  transmission infrastructure within that county.
• Citizens Energy will invest about  $200M in Imperial County and become a Cal-ISO Participating Transmission Owner. Citizens Energy will recover its investment through the Cal-ISO Transmission Access Charge over 30 years.
• Citizens Energy will reinvest 50 percent of the profits from this investment to assist low-income customers of LADWP and IID Energy through electric bill subsidies and other need-based assistance programs.

Thank The Cunctator for spotting a paradigm shift in a recent Senate finance committee hearing. The EXTEND Act (Feinstein, Snowe, Kerry, Santorum) lurks under the radar of other "investment" household tax credit adjustments circulating both chambers and the media. As Dan Reicher summarized above, no energy efficiency plan is complete without "sticks":

"A goal of this bill is to provide a transition from the EPACT 2005 retrofit incentives, which are based partially on cost and partially on performance, to a new system that provides greater financial incentives based on performance." cf. S.3628

Actually, the bill complicates qualification for the credit, while marginally increasing the tax credit caps for various projects. This "performance" bill requires households to document "price impact" savings greater than 20% to obtain tax relief. It outsources efficiency certification to private contractors and differentiates tax credit value per unit relative to performance of the system replaced. More, please.

The Efficient American Homes Charts
Rules that categorically reduce CO2 emissions from fossil fuel make lifestyle choices and household investment decisions easier to make.  The EAHA intends to return tax revenue to households to minimize the cost of complying with minimum energy efficiency standards that reduce fossil fuel consumption. Those standards are certified and enforced by public energy agencies.

The BLS counted 8,000 electricity DUs and 2,700 gas distributors in the US (2004). EIA grossly understates this number. Following BLS, the number of investor-owned utilities (IOUs) represents nearly two thirds of all utilities. "Outsiting" among IOUs was identified over 25 years ago. It was understood even then to signal the divorce of utility operations from demand-side management to achieve utility operating efficiencies. Oak Ridge conference report, osti.gov, 1980. I compiled the charts below. I see a fight. What do you see?



Sources: eere.energy.gov; CS Monitor; Wikipedia; R. Vanderbei 2006; State Policies; RPS map

Efficient American Homes Charts ©2007 EnergizeAmerica2020.org

•  Polite request from dim reader here

  Is there some action (with links) to be taken?

  I'm always wishing for executive summaries and action links, with talking points.

  by LNK on Mon Mar 26, 2007 at 10:07:13 AM PDT

  •  your wish is my command

    next post, live links to key reps in both chambers.

    FYI: the senate list linked to bills in this post is
    feistein
    caper
    durbin
    lieberman
    HRC
    obama
    salazar
    collins
    nelson
    mcCain
    snowe
    lincoln

    i'll update the link to S.280 text.

    by MarketTrustee on Mon Mar 26, 2007 at 11:51:58 AM PDT

    •  Links and talking points

      It helps if they appear next to each other. I'm really dim, tired, and 'busy'.......lazy.

      by LNK on Mon Mar 26, 2007 at 11:56:53 AM PDT

•  Hmmm ... Objective ...

  Is this truly the objective?

  EAHA objective is to reduce absolute CO2 emissions not to generate profits.

  Would not a more appropriate objective be:

  • Improve conditions and prospects for increased home energy efficiency throughout the United States.

  And, this would include:

  • Providing paths for all Americans -- at all income levels and whether renters/owners -- to benefit from reduced energy usage optioms

  And, a tertiary ...

  • Create conditions for a more aware citizenry to make more holistic choices about their energy uses

  Those are off the top of my head.  But, would the EAHA, itself, be focused on carbon?  Or, is the CO2 emissions a secondary result? And, there would be other secondary results -- such as strengthening the grid by reducing power requirement demands on it.

  by A Siegel on Mon Mar 26, 2007 at 10:08:54 AM PDT

  •  I suggest

    the objective should be:

    -Reduce energy consumption by American households.

    This objective will reduce CO2 emissions and help wean the country off its oil barrel bubba.

    This will be accomplished by:
    -Improved energy efficiency of buildings and systems used within.

    A.S: similar to yours, but more direct...

    MT... you've done an awesome job researching the market... and that really highlights the potential ferocity of opposition from those heavily vested in maintaining the status quo...  And your research really highlights the mind-numbing complexity (if you're not into rules and regs as light reading) of the distribution industries and some of the laws pertaining to them.

    That said, I don't agree that generating carbon revenue to fund the tax relief should be a part of the HouseHold Efficiency Act.  I think we should create attractive incentives for homeowners/renters to do what they can, upgrade and replace what they can, and let Congress figure out how to best fund, and then negotiate for, the tax relief.  Simply repealing the tax credit for vehicles with GVW of 6000 lbs might reclaim a lot of tax revenue, for example.  Adding regulations and taxes to the distribution industries could tie up this Act in delays.

    As co-generation and efficiencies become more the norm, the incumbents will have to change their business model, or they will fold.  Sure bet they will continually try to preserve their revenue stream, principles and patriotism be damned.  Those battles are fought on another day, well after this act has had a large impact.  We can deal with them then.

    by netguyct on Mon Mar 26, 2007 at 10:58:14 AM PDT

    •  i'm very concerned about bills circulating

      the trend is to reduce residential tax credits established by EPAct of 2005 -- more "attractive incentives" like S.590 and H.R. 550, H.R. 5206 and S. 2677 -- in favor of commercial and industrial subsidies. that's where the tax revenue is headed. why would incumbents change their business model?

      jess sayin.

      it may be that EAHA is not not the place to introduce rules-based disincentives --to property ownership and utility consumption-- but repealing SUV rebates doesn't fit either. heh. that's another ea2020 act

      Act 1. The Passenger Fuel Efficiency Act features "feebate".

      by MarketTrustee on Mon Mar 26, 2007 at 11:42:00 AM PDT

      •  agreed, precisely my point...

        imho, it's not necessary that the acts are completely self-funding, that there are other places to find the funding for EAHA programs.  I'm not suggesting that repealing the SUV rebate be part of EAHA.  While it's a great goal that the EA2020 acts include provisions for self-funding, funding negotiations are best left to Congresspeople.  they wheel and deal all day long.
        Maybe they'll repeal some Acts that benefit incumbents when they see the EAHA and understand what it will accomplish.   who knows?  

        Again, my opinion, but these acts should clearly outline efficiency measures, approximate costs, estimated decrease in fossil fuel usage, and GHG benefits.  

        Maybe there should be a penalty for excess btu usage per square foot, but only the incumbent utilities will be able to assess that penalty, and who wants them fining their customers?

        by netguyct on Mon Mar 26, 2007 at 12:09:00 PM PDT

        •  it's only fair, the penalty is applied to each

          property owner and utility, given the renewable rule. there's no stipulation as to how to achieve benchmarks. the property owner may be able to obtain what the utility (gas or electric) cannot, and vice versa. in either case, fossil fuel reduction obtains incrementally from each agent's choices. (incidentally, RGGI's preliminary assumption is max 35% participation following enactment. the lit even cruches their savings across the laggards.)

          remember, there ARE households who have nothing to fear  from disincentives. either they already employ renewable energy or their utility employs renewable energy to satisfy the EAHA rule or they're ready to switch.

          the key points of this post is that utilities are unreliable enforcers; conflict is a force in the marketplace; and EAHA's generous financial incentives can tip household preference for renewable power generation. the market for existing, new inventory, new construction will likely follow on ... as will conflict over RECs rights. heh.

          your excellent comment above illustrates how CO2 reduction is staged (as in the CFRB graph and as in real life): from oil to gas to renewable.

          by MarketTrustee on Mon Mar 26, 2007 at 08:38:40 PM PDT

  •  why yes. i assumed the ea2020 objective was

    reduce CO2 emissions by 50% by 2020.

    iirc, residential fossil fuel consumption contributes 22% to current levels, directly and indirectly through utility generation.

    current "conditions" are such that consumers have little incentive or disincentive to switch to lifestyles and investments that save $$ and reduce CO2 emissions.

    this post is intended to add to previous EAHA provisions, enforcement, and budgetary concerns. we're up to $4B over the period.

    by MarketTrustee on Mon Mar 26, 2007 at 11:23:20 AM PDT

    •  There are, obviously, layers ...

      And, to a certain extent, we have to think about / separate 'Energize America 2020' conceptualization of a holistic plan for a more proserous and a sustainable energy future from individualized concepts.

      EAHA, itself, focuses on 'home energy efficiency', right?  

      As such, it should seek to reduce -- writ large -- the system of systems energy cost for the average home owner.

      In part, through trading capital investments in energy efficiency for longer-term energy savings.

      This results in a more economic activity (and better local jobs, generally) but lowered energy use.  That lower energy use then, as a corollary, helps to reduce CO2 emissions.

      And, as well, makes individual homes more ready for distributed power generation (renewables), since there would be less power required to operate the now efficient homes.

      by A Siegel on Mon Mar 26, 2007 at 11:28:29 AM PDT

      •  too true

        as in writing high-level and low-level programming code for a machine, one distinguishes global (persistant) and local variables (temporary).

        close reading of current legislative activity reveals what variables the 110th believe are global and local. also what state legislatures believe are global and local variables.

        global: renewable generation and distribution, i.e. utilities ownership of capital and RECs rights;  fossil fuel production, i.e. CO2 emissions; consumer, commercial and industrial tax credits and subsidies

        local:
        home energy audits and diagnostics; state tax credits and subsidies; RPS, economic growth -- a few reasons why one reasons job estimates accompanying the renewables PR are often so modest.

        i have been wondering why EAHA would be shy about proposing one or more global variables to represent residential capital.

        by MarketTrustee on Mon Mar 26, 2007 at 02:14:17 PM PDT

•  any chance ...

  ... of a brief translation into Dummy-ese?

  i dearly want to know what you're talking about but my head exploded about halfway through.

  by cookiebear on Mon Mar 26, 2007 at 10:23:52 AM PDT

  •  yeah me too

    I have a wonk streak like so many others here, I am the child of generations of wonks and government servants, so usually loads of acronyms don't cause me too much trouble once I know what they stand for, but I'm lost, and this subject and ongoing EA diaries are important to me.

    by NMRed on Mon Mar 26, 2007 at 10:44:18 AM PDT

  •  well ... :)

    do you have a specific question?

    i've been adding to the legislative and market environment, post by post, to understand better .

    i don't quibble with "energy efficiency" engineering specs, by and large, because the equipment ratings are established. yes, i'll eventually post a table of qualified credits and projected savings ($$, CO2). it's a big job, because source data is tough to find. published data is percentages in aggregate.

    what is not established is the minimum efficiency to achieve ea2020 goal (50% CO2 cut) or any other goal proposed by politicians in the media. in the northeast, at least, RGGI establishes the price impact metric to evaluate CO2 emissions reduction by household.

    nationally, a limited set of minimum standards of efficiency for any method (e.g. weatherization) or equipment replacement (e.g. heat pumps) were established by EPAct residential tax incentives. adjustments are now being debated in both chambers of the 110th. what is enacted will "trickle down" to state-based policy.

    a lot of it looks earmarked for producer research and financing, not improving "conditions" for either home energy efficiency enforcement or investment. in previous posts, the EAHA reco'ed more generous credits.

    by MarketTrustee on Mon Mar 26, 2007 at 01:16:17 PM PDT

    •  Keep eyes on prize.

      what is not established is the minimum efficiency to achieve ea2020 goal (50% CO2 cut) or any other goal proposed by politicians in the media.

      No doubt true, but don't let it worry you too much.

      EA should include all the CO2 reducers that are politically palatable. Some of these will be very efficient, some moderately efficient, some inefficient. This is OK.

      Some of our projections re: relative efficiencies will prove wrong. This is OK.

      None will be graven in stone. Laws can be changed later, to reflect learning through experience and technological advances.

      CO2 cap-and-trade would push us faster up the learning curve, more quickly sorting out the efficient from the inefficient. But the sorting will happen even without cap-and-trade.

      Don't let the perfect be the enemy of the good.

      by HeyMikey on Tue Mar 27, 2007 at 11:27:07 AM PDT

      •  hmmm ... perfect?

        "CO2 cap-and-trade would push us faster up the learning curve, more quickly sorting out the efficient from the inefficient."

        i'm not persuaded. i've been reading senate testimony and NRG blah blah. i'm reading each state's energy policy and backstory. i could use help. this is one way i get my numbers for EAHA modeling to verify fed data.  

        i believe i stated a thesis in the introduction of this post. i ask, what quantitative impact EAHA might have on state legislation and household consumption? or why the hell do i bother? knowing someone in congress is reading ... keeping in mind as i do always: (i) all "negotiation" starts high to settle lower; (ii) no negotiation begins until terms are put on the table.

        "But the sorting will happen even without cap-and-trade."

        uh. the max CO2 goal enacted i've read is 30% by 2050. every state and the fed has enacted some form of energy efficiency policy since the 70s oil shock. yet consumption and expenditure rise, despite widely available, engineered "energy efficient" appliances and equipment. it's been said a bizillion times. now conditions (market failure) are such that certain states are radicalizing energy trade as demonstrated in the EAH Charts.

        why set goals? i dunno. one or both of us could diary with poll to determine specifically what is a feel-good -- the ol' "20%-40% savings" -- as if kossack opinion were representative of household interest in, say, KS. then EAHA modeling assumptions will be politically accurate, if not precise or perfect.

        it's tempting to repeat what's already been published. that prospect bores me though. especially if i can wait just like everyone else for pelosi's july 4th announcement.

        as BruceMcF noted today: the exercise is "fantasy." what me worry if the goal is 10% $$ or CO2 savings by 2050? i'm 99% certain i'll be 87 y.o. or dead by then, with or without my sub to Dwell, iCool technology i can't install in my tenement or a dog-eared copy of Home Energy Diet.

        bwah.

        by MarketTrustee on Wed Mar 28, 2007 at 11:17:06 AM PDT

•  Apartment dwellers

  I've got to wonder if some sort of public policy change could encourage the retrofitting of apartment buildings.  Right now, as an apartment dweller, I can't swap out my windows, pump insulation into the walls, or replace my heating system.  Since I (and not my landlord) is the one who pays energy costs, my landlord has no financial incentive to make those kinds of changes.

  Any idea how we could change this so that landlords have an incentive to take at least some measures to improve the energy efficiency of their buildings?

  by silence on Mon Mar 26, 2007 at 10:24:13 AM PDT

  •  rehab, redevelopment, new development

    past provisions of the EAHA have not been abandoned.

    i'm thinking the EAHA incentives have to protect renters by holding property owners responsible for energy efficiency improvements, regardless of metering type of the rental unit.

    HUD, for example, recognizes utility service by type to determine tenant utility allowances: (i) master meter (ii) check meter (iii) individual meter.

    all renters are subject to lease terms by which the owner (corporate, public, private) limit alterations to their property -- the home energy audit exemptions for public housing tenants gets to this point.

    so EAHA could extent its home energy audit exemption to private property renters to apply to their utility for rate discount (?) if the property owner fails to comply with the governing rule -- that puts the utility in conflict with the property owner.

    then there's the EAHA impact on state building code -- this puts the owner in conflict with state inspectors.

    eventually, the owner will either permit specific tenant alterations or make property retrofits itself to take the credits and avoid penalties.

    by MarketTrustee on Mon Mar 26, 2007 at 11:11:07 AM PDT

    •  "Follow the money."

      Our fight is as much political as technical. Thus, we should bear in mind Deep Throat's timeless political advice.

      Make it more profitable for utilities to invest in "negawatts" than in additional generating capacity. Then the utilities will figure out how to deal with the landlords. They speak the same language: moneyease.

      The utilities would then also figure out how to deal with homeowners who, for whatever reason, will not retrofit on their own initiative, and will not even educate themselves about what incentives might be available to do so:

      • People who are already in debt up to their eyeballs and cannot fathom investing $ hundreds, or $ thousands, or $ tens of thousands for any investment, no matter how reasonable the payoff period.
      • People who are more interested in "Desperate Housewives" and "People" magazine than in saving the planet.
      • People who are more interested in their careers and families than saving the planet.

      Etc. Also consider new-home builders, whose customers are likely more focused on purchase price than on energy efficiency.

      All this is not to say I oppose homeowner incentives in EAHA. Not at all. Just saying we shouldn't try to drive nails with a saw or cut boards with a hammer. Owner incentives may not be the right tool to address rental property, or other situations such as those I just noted.

      by HeyMikey on Mon Mar 26, 2007 at 11:43:44 AM PDT

      •  I agree, but disagree...

        I've been a landlord owning single family houses.  Before tenants moved in, I upgraded the heating systems to state-of the art gas from ancient (1955-vintage) oil systems in two properties.  

        There were some tax advantages, but it wasn't a slam dunk and fortunately we were doing well at the time, so spending the extra bucks for fewer headaches down the road didn't meet much resistance.  But, it was 2002, and I believed that one more house in the world running on domestic gas would be way better than the same house running on middle east oil.  

        I have since sold those houses, and spoke to one of the new owners who had a question about the heating system.  She spends a little more for heat in that  small cape than I do in a new colonial that is about three times as large... The importance of an aggressive rebate or credit for insulation projects on the hundreds of thousands, if not millions of 1950's-era and older poorly insulated homes can not be understated.  

        While many, many landlords don't spend on their rental units, those that own single family houses can see that an efficient house could help resale should the need to sell ever arise.  

        So it's not a lost cause, and oil delivery companies probably can't be counted on to incentivize customers to use less oil.  Electricity generators investing in negawatts is far more feasible.

        And yes, there are a lot of people more interested in their careers, because, "'someone' is going to fix this global warming thing anyway."

        by netguyct on Mon Mar 26, 2007 at 02:58:54 PM PDT

•  State level initiatives

  In my opinion, the most effective way to address the issue of home energy efficiency is going to be through the states. It is typically up to each state to adopt and amend model building codes, and building codes are what determine how things get built. Where they don't exist already, states need to adopt an energy code that incorporates the best practices known today. Some states have good energy codes, some have weak ones, some have none at all.

  I think the federal incentives and tax credits that exist today are pretty weak measures. Who cares about a $1000 energy tax credit in the context of building a $300,000 house? The financial incentives would have to be pretty huge relative to how they are now to change the behavior of the construction industry. Change the code and make higher standards mandatory. I don't know what sort of federal solution there is aside from devising some way to prod states to raise the standards in their building codes. Likewise, the state level is probably the best place for mandates to be enforced. Model codes can be adapted to both the climate and local building practices.

  The biggest drawback to working at the state level is that the real estate and builders associations are the 800-pound gorillas of state lobbyists. Anything that would increase the initial cost of housing (they don't have a reason to care about operating costs) they would likely fight tooth and nail.

  by Joe Bob on Mon Mar 26, 2007 at 10:47:38 AM PDT

  •  one of the ideas

    kicked around in discussions on the act is a national building code regarding energy efficiency.  We have a National Electric Code that every building department ensures is followed.  I honestly forget if it made it to the final version.

    That can mitigate the effects of the 800 pound gorillas you so correctly identify.

    by netguyct on Mon Mar 26, 2007 at 11:01:57 AM PDT

  •  But there's also a minimum national...

    ...building code, is there not?  Don't know where it comes from, though.

    by Land of Enchantment on Mon Mar 26, 2007 at 11:16:56 AM PDT

    •  Nope, It goes like this...

      There are what's known as 'model' building codes. The International Building Code and the International Residential code are the most commonly used ones in the US, and they are written by the International Code Council. There's also an International Energy Conservation Code. The model codes are adopted, and enforced, on a state-by-state basis. States are then free to adopt and augment the code as they see fit.

      by Joe Bob on Mon Mar 26, 2007 at 11:55:35 AM PDT

  •  National building code.

    I agree higher standards is the way to go. I tend to view a national code as the only way to deal with recalcitrant states, but maybe I'm wrong.

    The biggest drawback to working at the state level is that the real estate and builders associations are the 800-pound gorillas of state lobbyists. Anything that would increase the initial cost of housing (they don't have a reason to care about operating costs) they would likely fight tooth and nail.

    Higher new-construction standards would not affect competition among sellers of new homes because everybody's costs would go up by the same amount. Higher new-home standards would make new homes more expensive relative to existing homes, though. I don't see why realtors should care, as they sell both new and existing homes. Builders, obviously, would care a lot.

    Is there a lobby for small contractors -- whose business would be stimulated by increased retrofitting of existing homes? Maybe they can be enlisted to counteract the new-home-builder lobby.

    by HeyMikey on Mon Mar 26, 2007 at 11:53:48 AM PDT

    •  codes

      There are a couple of problems with addressing building standards on a national basis. First and foremost, states need flexibility to adapt the code to the local climate and, to a lesser extent, construction practices. It's one of the few issues where 'local control' isn't always a cop-out for implementing lower standards. Secondly, there has to be a method of enforcement. I could foresee the federal government dealing with energy issues in a manner similar to how transportation funding is handled; i.e.: legislate a minimum drinking age of 21 and make .08 BAC the threshold for drunken driving or you don't get federal highway funds. You could do the same with energy policy but you would have to figure out what the stick would be.

      As for the builders' associations, I have never found them to be accommodating towards anything that restricts their prerogative in any way whatsoever. Even if they were all subject to the same rules I think they would argue that higher energy conservation standards raise the entry price of homes and thereby shrinks their pool of potential customers. It might seem like a petty argument but I have seen them go to the mat for less.

      by Joe Bob on Mon Mar 26, 2007 at 12:33:08 PM PDT

      •  Mortgage rates, climate zones, states.

        On MT's previous EAHA diary, there was some discussion about incentivizing mortgages. Buy an Energy Star certified home and get 1/2% off your mortgage rate, or qualify to borrow $20,000 more in principal, or something like that. This could apply equally to new or existing homes and should be welcomed, or at least not opposed, by builders and realtors. Maybe that would be an adequate substitute for a national building code.

        We must beware of unintended consequences. The subprime mortgage implosion shows the danger of allowing people to incur unrealistic levels of debt. The alternative to cutting Energy Star mortgages -- raising other mortgage rates -- would discourage homeownership, driving people back into rental homes. And there's other discussion on this thread of the difficulty in incentivizing energy-efficient rental homes.

        As far as I know, Energy Star certification is only for new homes. Seems like it shouldn't be too difficult to figure out how to apply it to existing homes as well.

        by HeyMikey on Mon Mar 26, 2007 at 01:02:54 PM PDT

        •  subprime, real and imagined

          one reason why i didn't pick up on that suggestion. another, equally significant, is that i've reason to believe FHAs are slowly pulling out of the EEM-lender market. (the freddie mac link in the last post is dead, dead, dead ... heh)

          otherwise, i'd say it's worthwhile considering opening up qualified FHA-insured EEM borrowers to HH income 100% of HUD ceiling, from $49K to $98K.

          tightening up the HERS or EnergyStars audit standards for conformation, of course.

          by MarketTrustee on Mon Mar 26, 2007 at 01:43:30 PM PDT

          •  my only problem with EEMs

            is that there is enough bullshit in the closing process already.  I've originated 8 mortgages and 3 refinances in the last 5 years, and tossing an energy audit in to the process already laden with negotiations over all manner of things would be too much for me.

            If credit were tighter (coming to a market near you soon) discounts for EEMs might work to spur slow business. But the fed has made money pretty cheap, so cheap that liar loans are a considerable percentage of new mortgages over the last year, and the dynamic of the bubble market made for "quick and easy" cash.  (I defer to Bonddad's great series)

            Qualifying a house for an EEM flies in the face of our no-time-to-lose culture.

            by netguyct on Mon Mar 26, 2007 at 03:12:56 PM PDT

            •  i hear that. and i'm a bigger bear than bonddad

              some other "liar loans" to ponder: blowback of HUD-FHA block grants and muni financing over the past 6 years is slightly under wraps. apparently, shrub agency policy to encourage public-private mixed financing -- for "revitalizing" new construction -- has also encouraged some fraud through shell corps created to flip RE or cash out on the contracting fees. as private sector credit dries up, the dogs will get more desperate to pitch FHA projects and "green tag" bond issues. fact is what purports to be an EEM now is not particularly "energy efficient."

              my best offer is as above: recapitalize enforced EEMs with mid-to-high income borrowers. pls, pls reply with specific suggestions, from downpayment to term or whatever. i'm open.

              i've read more than a few local online papers AND muni-HOPE project prospectus resulting in significant tenant dislocation (to Sec.8 properties) and few FHA mortgage options. thus, the bulk of a development is labeled "mixed-income" at market rate and mortgage offerings labelled EEM, per HUD's "Energy Action Plan".

              i planned to touch upon good/bad examples in forthcoming regional posts. but i gotta admit, my hearts not in it.

              by MarketTrustee on Mon Mar 26, 2007 at 06:35:02 PM PDT

      •  by and large, the differences in

        climate tend to be regional.

        If there were different Federal energy efficiency standards fitting different climate zones, those could be provided to states as a basis for using a carrot / stick approach for compliance.

        And if possible, these standards should be as technology-agnostic as possible, prescribing results based on existing best practices appropriate for a climate. (i.e. tell a state to require R-50+ insulation, not tell them to use a specific insulation type, or tell a state to require EERs of x.x or better, not prescribe specific types of HVAC)

        by alizard on Tue Mar 27, 2007 at 04:18:57 AM PDT

        •  good points

          somewhere i've got a ref to HUD rules, differentiating regional/climate efficiency costs.

          i set it aside, because we should indeed develop national standards that are regional/climate neutral, "technology-agnostic". micromanaging is often counter-productive to be sure. doesn't allow for creativity in solving problems. and "energy productivity" is pure supply-side bullshit.

          that said, the 50% renewable audit rule leaves open how to satisfy home and utility "energy efficiency", excluding carbon credit recognition. performance is chained to real property (and consumption metrics).

          you would have to :) pick insulation for an example ... but we don't have to go all down there on standards setting. insulation and possibly windows are prime examples where market is free -- left to minimize variance in estimated "energy savings".

          current "home energy audit" metrics effectively exclude renewable equipment and exhibit variance in other reference equipment/models, i.e. SEER, EF. and that's why no one wants to use "home energy audits" to certify absolute CO2 reduction. they'll use it to qualify rebates. so EAHA will revise audit to all equipment standards based on fossil fuel requirement/kWh.

          is there any variance in estimate of fuel:CO2 per unit? i hadn't thought so. pls correct me if i'm mistaken.

          by MarketTrustee on Wed Mar 28, 2007 at 08:38:37 AM PDT

•  sorry. had to retrieve my child from school...n/t

  by MarketTrustee on Mon Mar 26, 2007 at 12:40:51 PM PDT

•  Interesting charts

  I looked at this briefly before and thought there's got to be something about those charts but they weren't obvious at first.

  Now I understand them - amazing work there MT!

  The "black holes" are where we have our work cut out for us, and it looks like the biggest hole is in the Renewable Portfolio standards. Both "red" and "blue" states seem to have gaps there. On the other hand, from the picture it looks like we're doing pretty well with "net metering"!

  So is it better for federal policy to step in where the states are already pretty much in agreement (net metering), or where the states have dropped the ball so far (RPS)???

  by apsmith on Tue Mar 27, 2007 at 10:35:42 PM PDT

  •  phew. that's good to hear ...

    the back-channel version was incomplete, when i said what i said. this one's not, and i'm about cross-eyed now from parsing the "facts" and "assumptions".

    yes, it appears that black holes represent enforceable policy gaps between optimal energy efficiency and renewables migration at the household/consumer level. that is, here are structural and political barriers to preparing HH/consumers for maxium CO2 reduction (and ea2020 "system")... all voluntary factors notwithstanding.

    so i'd say that the goal is to align states with the most black holes with the ones with the least black holes through federal statute (global rules). states' legislatures will establish or adjust those pivot factors (e.g.RPS, net meter, etc) accordingly to satisfy the law and avoid localized, constituents' penalities.

    thus far, EAHA's principle contributions to fed mechanisms (global rules) are tax carrots and sticks and the "home energy audit". the EAHA reco'd audit components should quantify national 50% reduction for households -- building on competing HERS, EnergyStar (public), LEED (private) models of home energy efficiency.

    thanks for making me say that out loud :)

    by MarketTrustee on Wed Mar 28, 2007 at 07:57:50 AM PDT