Tomorrow Obama will be opening a discussion on his new "Cash for Caulkers" program at Home Depot in DC. I like this "Cash for Caulkers" program. I'm something of a caulker myself. But there's just a bit of a problem with the program. Cash rebates won't help me. I need financing.
My house, built in 1928, is like a sieve with heat. But over the years I've discovered new drafts and cracks and cold spots and I've plugged them up. And over time I've managed to whittle down my heating costs and improve my home's efficiency while reducing my family's carbon footprint.
I'm very proud.
But despite all that, at least 30% of my home's natural gas usage goes to heating water and keeping it hot in a tank in a basement, even though I've insulated the pipes and wrapped my hot water heater in fiberglass insulation.
I could, today, save hundreds of Cubic Feet of Natural gas and hundreds of dollars a year if I could install an on-demand hot water heater.
But those suckers are mad pricey. Around $1500 installed.
The "cash for caulkers" program Obama is rolling out is designed to help people like me find and procure ways to make a home or office more energy efficient. That's going to go a long way toward reducing America's carbon footprint, and it's going to do it FAST. And it's going to have the added benefit of creating jobs, and saving money for the average American.
If I didn't have to shell out $20 to $40 a month on keeping water hot every month, I'd be paying down my credit cards faster or even buying my son that Lego Star Wars set he's been pining after, or taking him to the movies more often. Or at all.
It would make a big difference for us.
So I welcome this program.
But it needs to help finance the up front costs of the home retrofits and upgrades. From the sound of it the program is relying too much on cash rebates.
The attention to retrofits is welcome—making buildings more energy efficient reduces climate pollution, creates jobs, and saves consumers money all at once.—but there’s reason to believe that "cash for caulkers" is limited in ways that will sharply curtail its environmental and job-creating potential.
The details of the program haven’t been revealed, but public statements from the administration have focused almost entirely on cash rebates, which would pay back homeowners up to half the cost of various retrofit investments.
-- Article
Now I don't know about you, but cash rebates aren't going to help me make a $1500 purchase of an on-demand water heater. It's not going to help At All.
First of all, I'd need $1500. Which, funny story, I ain't got. I don't even have $1500 in credit. I don't even have $1500 in assets.
I don't HAVE $1500.
So you can offer me all the rebates you want. That's not going to change the fact that I don't have $1500.
Rather than cash rebates, Senator Merkley has a better idea...
Financing.
Say's Merkley...
"I strongly believe that to achieve these [energy saving and job creating] goals, the program must include financing assistance for residential and commercial building owners who cannot afford the upfront cost of a home renovation but who could pay for it out of the savings they will see on their energy bill. Financing assistance can allow federal dollars to be leveraged substantially farther than a rebate program. For example, appropriating $2 billion for loan guarantees could allow $20-$40 billion in financing."
But not just ANY financing. He's got a pretty brilliant way to finance these changes.
Basically, you're given a loan, and you pay for it through your utility company using, in part, the cash you're saving because of greater energy efficiency.
Pretty slick. And unlike rebates, the government isn't out a dime in the long term.
A variety of financing mechanisms are available, and many are being tested in innovative city and state programs. They include the PACE model, whereby governments offer tax-based financing repaid through a surcharge on property taxes, and on-bill financing, whereby governments or utilities offer financing that’s repaid through a surcharge on electricity bills.
What these efforts have in common is a) they are hassle-free for consumers, which efficiency advocates have learned through hard experience is absolutely necessary, and b) they eliminate the high upfront cost barrier that prevents so many retrofit investments.
So imagine this. I get a loan for my fancypants new hot water heater. It saves me %40 of my hot water heating bill, so my monthly heating costs are $20 to $30 less, and that $20 then goes to paying for the installment for several years, and in several years my heating bills drop permanently.
And I'm not out anything. And neither is the government. And fossil fuel use drops by a massive amount.
It's a great idea.
The argument against it?
The "cash for caulkers" program is designed to create green, energy efficiency promoting jobs RIGHT NOW. NOW! And by NOW we mean before the 2010 elections. There's no time to put this financing plan in place...so goes the argument against this brilliant idea.
Merkley argues that the financing could be rolled out just as fast. And without financing, he suggests, fewer people will use the program and it will create much FEWER jobs than it could. Financing will maximize the job creation, the retrofit adoption, and by 2010 everything will be a bit hukier and dorier that it is now on the job and carbon footprint fronts.
An energy efficiency retrofits program should make sure that building owners have a basic energy review done to help guide their choices. It should also make sure that entities administering the program offer information and guidance to homeowners on what combinations of measures make the most sense. For example, it may often be a savings multiplier to seal ductwork at the same time a new furnace is installed. My concern is that without such support, property owners may opt for quicker and cheaper strategies that have less impact on jobs or energy efficiency and are poorer investments.
I believe he's right.
Without financing there's simply NO WAY I personally could take on the large projects that would make a difference in fossil fuel usage and job creation. Even IF I'm offered a rebate.
I would need financing.
The White House announced on Saturday that President Obama will be hosting a discussion about his new home retrofitting proposal at a Home Depot store in the Washington D.C. area.
The event will be invitation only, and will focus on "the economic impacts of energy saving home retrofits." According to the White House press release, the President intends to "solicit ideas" from members of the labor, manufacturing and small business communities.
Last week, Obama asked Congress to create incentives for homeowners who make their property more energy efficient.