What Happened to Home Star?

by Shana Fong on March 4, 2011
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Changes in D.C. Halt 2010 Progress, Budget Worries May Doom Bill

Many contractors are asking what happened to Home Star, the proposed legislation that would have extended rebates to homeowners who invested in energy efficiency upgrades for their homes. While the bill was a hot topic for much of 2010, it ultimately failed to pass in the Senate, and has not been reintroduced in Congress so far in 2011.

This article includes a brief history of the legislation and explanations from industry members as to why it did not become law last year. However, the Obama administration has recently begun to tout the Home Star program, and there’s a chance it may return to the Hill. Yet industry leaders are also looking to alternatives to aid the HVAC industry.

HOME STAR HISTORY

While various versions of the Home Star bill were introduced in Congress, the most significant was House Resolution 5019, known as the Home Star Energy Retrofit Act of 2010. H.R. 5019 was introduced in the House in mid-April 2010. It was sponsored by Rep. Peter Welch, D-Vt., and included 44 cosponsors.

This version of the Home Star legislation would have created a program to provide $6 billion in rebates to homeowners who upgraded the energy efficiency of their houses through measures ranging from attic insulation to furnace replacement. It was structured as a two-tiered system with the lower tier providing money for simple replacements and upgrades, and the higher tier providing more money for homeowners who undertook whole-house renovations for energy reductions.

The Silver Star portion of the program, which offered a maximum rebate of $3,000, would have given rebates for smaller-scale projects, such as air sealing and replacing old heating/cooling equipment with new high-efficiency models. The Gold Star rebates, which would have maxed out at $8,000, were intended for whole-house energy reduction and would have required software simulations comparing the energy use of a home before and after retrofits.

The House passed this bill on May 6, 2010, by a 264-161 vote. After the House passed its version of the bill, it was referred to the Senate.

During this phase of the legislative process, many in the industry raised concerns about certain aspects of the bill. Specifically, the Air Conditioning Contractors of America (ACCA) expressed its disapproval of the bill’s accreditation requirements for contractors. In order to perform the whole-home retrofit work under the Gold Star portion of the program, Home Star would have required contractors to be accredited by the Building Performance Institute (BPI) or an equivalent alternative certification. In response, ACCA announced it could not endorse Home Star because of the limited number of contractors eligible nationwide to perform Gold Star work. Others in the industry pointed out that the bill did allow for alternatives to BPI certification, and asserted that the bill would aid the industry overall.

While the Senate did not immediately choose to consider the bill, in late July, Majority Leader Harry Reid, D-Nev., included a version of the Home Star bill in a larger energy package known as the “spill bill.” This Senate bill, S. 3663, was more far-reaching and included a response to the BP oil spill.

However, the Senate version of the bill was also controversial because of the way it proposed to handle the rebate process. While the House version of the bill sent the rebate money directly to the consumer, the Senate version of the bill required contractors to apply for the rebates after performing the work.

Ultimately, although the bill was read in the Senate and vigorously debated in the HVAC and home performance industries, it was referred to committee and never brought to the Senate floor for a vote.

WHY HOME STAR FAILED

Many in the industry have noted that the political dynamics on the Hill led to the bill’s failure. “From a politics standpoint in the Senate, it was very difficult to move any legislation last year, especially standalone bills,” said Matt Golden, president of Recurve (San Francisco) and policy chair for the home performance trade association Efficiency First. “We [Home Star] were in the spill bill, and the spill bill didn’t pass. At the end, we were at the mercy of Senate politics.”

According to Dale Harbour, vice president and general counsel, Residential Solutions, Ingersoll Rand, the biggest roadblocks to Home Star’s passage were money and timing.

“It was really a jobs program, and it was something that had been introduced by a Democratic-controlled Congress prior to the [mid-term] election, and it had some level of bipartisan support,” he explained. But, he said, “Its biggest issue was that there was not a mechanism to pay for it.”

Because the bill was not deficit-neutral and did not include corresponding cuts to allow for the funding of the Home Star rebates, Harbour said, “It never gained any traction in the Senate.” He continued, “It was more of a timing issue than anything else in terms of when that was introduced. It was relatively late in the game, and it was at a point in time where there were questions about the extent of the success of the stimulus package that was passed in the very early tenure of [the Obama] administration.”

WHAT’S NEXT?

Since Home Star failed to pass in the Senate last year, it was never sent to the president’s desk to be signed into law. However, this year President Obama has again called attention to the proposed program. Following his State of the Union address in late January, the White House issued a press release that promoted the Home Star program as a way to protect consumers against rising energy bills. The president then included funding for Home Star in his budget proposal for fiscal year 2012. According to the White House, Home Star is intended to be part of the president’s larger goal to establish a Clean Energy Standard (CES) for the country.

Despite the Obama administration’s promotion of the program, some doubt that Home Star would be well received in Congress this year. The main reason is that the bill carries a $6 billion price tag, and the new focus on the Hill is centered on fiscal responsibility.

“The Home Star program as originally proposed had strong financial incentives to upgrade the energy efficiency of homes. As such, it was also a very expensive program. While it may be an effective job creator, for it to have a good chance of passage, in my opinion it will require mechanisms to pay for the program that are at least deficit neutral,” Harbour said. “Without corresponding spending cuts, I think it faces an uphill battle in a Congress increasingly focused on deficit reduction.”

According to Golden, many in the industry are now moving ahead with other initiatives. “We continue to look at a number of possible options to help this industry in Congress,” he said. As an example, he cited the Department of Housing and Urban Development’s (HUD) PowerSaver loan. The loans made available by this pilot program are backed by the Federal Housing Administration (FHA) and offer credit-worthy borrowers low-cost loans to make energy-saving improvements to their homes. “We are engaged in making it a more contractor-friendly product,” Golden said.

In terms of larger bills to support the industry, Golden said there may be a chance for a jobs bill. “We need to have help for construction,” he said. “We’re still at 20.7 percent unemployment and getting worse, and that’s really why the president is still looking at it.”

He continued, “All I can say at this point is there’s a feeling on the Hill that something needs to done for construction and manufacturing. There are aspects of the construction industry that are economically depressed — working together, with Congress, we can turn around those economics with sound policy and get people back to work building better buildings.”

Whether Home Star is reintroduced in Congress or other alternatives are proposed to aid the industry, there is no doubt that energy efficiency will continue to stay in the limelight. Contractors who prepare by achieving and updating their third-party certifications, and by working with third-party verification providers, will be well equipped to take advantage of any new initiatives in the future.

Source: ACHR News

The Need For Market-Based Clean Energy Solutions

by Shana Fong on January 31, 2011
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In a recent post on Switchboard, staff blog of the Natural Resources Defense Council, the NRDC’s Dr. David Goldstein delivers a realistic assessment of how government policies can fail to promote innovation and job creation in the green technology sector. “Research alone isn’t enough in the real world,” Goldstein writes. “We have plenty of job-creating new technology production opportunities that are going begging because of market failures,” he adds, emphasizing the need for practical, market-based solutions:

Green technologies are languishing because of a vicious circle in the economy: consumers have a hard time identifying products that truly are better for the environment, and find it difficult or unnecessarily expensive to buy them even if they can find what they want. This leads to frustration, and the frustration leads to the mirror image of the problem among manufacturers and retailers: if consumers are not expressing their desire for green purchases in the market (even if it is because they can’t find or identify them), then it makes no sense to produce or stock them.

Goldstein then makes a strong argument in favor of government incentives for home energy retrofit measures:

For home remodels, imagine how competitive home energy retrofit contracting would become if there were financial incentives for the first homes to make savings? (Such incentives passed the House of Representatives with bipartisan support in the form of the Retrofit Energy Efficiency Program (REEP) which was part of the Waxman-Markey climate protection bill last session.) How much easier would it be to retrofit your home for energy savings if your bank allowed you to borrow the money for the retrofit at the same interest rate as your existing mortgage, and to do it even if your loan is underwater?

Performance-based incentives and standards provide the economic motivation for innovation in many areas where it is blocked in the real-world economy. Places that have relied more heavily on environmental protection have seen greater job creation and more economic growth than those that have not.

This is a true win/win: a cleaner environment and the only known way to encourage innovation and growth on a national scale.

Read the full post at www.switchboard.nrdc.org/blogs/dgoldstein/innovation_as_the_basis_for_am.html

Source: Efficiency First

HOME STAR Legislation Idled Until Fall as Energy Bill Stalls in the Senate

by Shana Fong on August 6, 2010
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Senate Majority Leader Harry Reid announced on Tuesday that he will postpone a vote on the Clean Energy Jobs and Oil Company Accountability Act of 2010 until after the August recess. Reid told reporters that the scaled-down energy bill, which includes the proposed HOME STAR retrofit incentive and financing program, lacks enough votes to pass this week. Here’s how Politico summed up the situation:

It initially appeared that the slender offshore drilling package was a “must-pass” bill with political momentum, but it became evident during the past week that Reid lacked the votes within his own caucus to force the issue as the Republicans held firm against it.

Central to the offshore drilling reform bill was a title to eliminate the $75 million liability cap on damages oil companies must pay in the case of spills and other disasters. Sens. Mary Landrieu (D-La.) and Mark Begich (D-Alaska), both close allies of the oil industry, made clear they opposed that provision.

The deeply partisan atmosphere in the Senate ensured that there would be no opportunity to amend the bill with a scaled-down compromise liability title. Reid’s staff had made clear that if the bill were to come to the floor, it would be subject to a only straight up or down vote.

Supporters of the HOME STAR legislation are now focusing their efforts on a renewed push to get the law enacted in the fall when Congress is back in session.

Read the full Politico report here: www.politico.com/news/stories/0810/40597.html.

Policy Updates

by Matt Golden on July 19, 2010
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HOME STAR endorsements continue to grow, now includes U.S. Chamber of Commerce
Support continues to grow for the bipartisan Home Star Energy Retrofit Act of 2010, which passed the House of Representatives in May and now has 25 co-sponsors in the Senate. Meanwhile, the United States Chamber of Commerce has added its highly influential voice to the growing call for swift passage of the HOME STAR legislation; in a letter to Senate leaders on June 22, R. Bruce Josten, the Chamber’s Executive Vice President for Government Affairs, said:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, supports S. 3434, the “Home Star Energy Retrofit Act of 2010,” which would provide a solid framework for a worthwhile, incentive-based program that would create American jobs while saving energy.

The home retrofit industry is a uniquely American industry: the vast majority of windows, doors, and insulation for these retrofits are manufactured in the United States. Since 2006, this industry has been decimated, with more than 650,000 jobs lost. The incentives provided by S. 3434 would create good, living-wage jobs for American workers, while providing homeowners the ability to make a substantial dent in their overall energy costs.

The Chamber supports S. 3434 and hopes this important legislation is considered by the full Senate in the near term.

Visit www.efficiencyfirst.org/home-star to learn more about the proposed HOME STAR incentive program, and about how you can join the trade association Efficiency First and other national organizations in supporting this important legislation.

A free Webinar recording at www.utilityexchange.org/webinar/20100701 will help your shop get ready for HOME STAR’s performance-based GOLD STAR incentive with a road map to BPI accreditation.

PACE programs stalled by federal mortgage regulators
Property Assessed Clean Energy (PACE) financing programs across the country have been suspended following recent actions by Fannie Mae and Freddie Mac, the government-sponsored corporations that back most home mortgages in the United States. The problem is that the Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie, doesn’t like the idea of PACE liens taking precedence over mortgages in foreclosure proceedings—despite the fact that energy improvements typically increase the value of a home, and the potential financial impact on the mortgage industry is comparatively small.

PACE programs, which allow property owners to pay for a wide range of energy improvements with loans attached to their property tax assessments, have been lauded as an innovative, transformative financing model for energy efficiency and renewable energy projects. But in May, Fannie and Freddie started spreading the word among commercial lenders that properties with energy improvement liens that are senior to mortgage debt would not meet FHFA underwriting standards. The FHFA confirmed the new policy on July 6 when it issued guidelines that have effectively made it impossible for homeowners to get approval for mortgages on homes with pace liens attached. (A grandfather cause exempts PACE loans issued before July 6.)
That leaves homeowners and contractors caught in the crossfire as most PACE programs have stopped making loans, projects are being suspended, and $150 million in federal stimulus funding allocated to PACE financing is being diverted to other programs. However, at least one prominent PACE program—the Sonoma County Energy Independence Program (SCEIP) in Northern California—has announced that it will continue to issue energy improvement loans in defiance of federal mortgage regulators, “predicated on the SCEIP providing full and complete disclosure about program participation to any potential applicants and ensuring the public fully understands the consequences of participation.”

PACE advocates around the country are pushing for a judicial or legislative solution to the impasse. California Attorney General Jerry Brown has filed suit in United States District Court seeking reversal of the FHFA ruling, and on July 15, Rep. Mike Thompson and 29 other members of Congress introduced the PACE Assessment Protection Act of 2010, which would force Fannie and Freddie to adopt underwriting guidelines that support PACE lending. But for now at least, most homeowners will have to find other ways to finance energy improvement projects.

Retrofitting 75,000 Houses Would Save As Much Energy As In The Gulf Spill

by Shana Fong on June 29, 2010
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Here’s a visceral way to represent potential energy savings in the built environment:

Home energy waste vs. Gulf oil spill

If only the Senate had some sort of legislative strategy that could put this information to use … oh, wait, it does! Home Star legislation will spur the retrofit of 3.3 million homes, enough to save the energy floating in the Gulf 44 times over, at roughly 1/40 the cost of mopping it up. As we speak, that legislation is languishing in the Senate. If its energy efficiency provisions are improved, the coming Senate energy bill could save even more energy and money. Perhaps senators could spend less time rending garments and encouraging Obama to Act Angry and more time passing the energy solutions sitting in front of them.

——

Here’s Energy Savvy’s explanation of the graphic:

  • The energy contained in the biggest oil spill in U.S. history is equal to the energy that just 75,000 homes waste in a single year.
  • The estimated cost to clean up the oil spill ($40 B) is many times greater than the cost to retrofit 75,000 houses ($1 B) and save the energy equivalent of the gulf oil spill every year.
  • 75,000 houses = mid-sized U.S. city or large suburb of a major city, like Chattanooga, Tenn. or Providence, R.I.
  • The oil spill, since it began in April 2010, has leaked between 25 – 50 million gallons of oil into the Gulf of Mexico. We’re using a conservative estimate of around 30 million gallons for our calculations.
  • A typical house wastes 30 percent more energy than an efficient one does. On average, that means that 51 MMBtu’s are being wasted by a typical home every year.
  • A typical home energy retrofit costs around $10,000 per house — before any utility or governments energy rebates are applied. A home energy retrofit doesn’t just save energy for a single year — it prevents waste year after year on an ongoing basis once it’s done.

Source: Energy Savvy and Grist

Congress To Focus on Energy Efficiency Programs This Week

by Shana Fong on March 8, 2010
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Later this week, the House and Senate will hold hearings to discuss energy efficiency programs such as Home Star (which will provide rebates for upgrades to homes), Building Star (a similar program for commercial buildings), and manufactured housing rebates. This comes shortly after Obama’s visit to Savannah, GA, during which the President touted the benefits that these energy efficiency programs would have on job creation, carbon reduction, and energy savings.

Read the full article in the New York Times here.

Gov. Schwarzenegger Endorses Home Star

by Shana Fong on March 4, 2010
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As I hope you all know, CA is launching shortly the largest home retrofit program in the country. It is funded to do deep retrofits (overall average of 20% savings) of 130,000 homes by end of 2012 (1% of CA homes), and produce at least 15,000 jobs. Not only is the CA program compatible with Home Star but it would benefit greatly by the demand that Home Star would create.

Governor Arnold Schwarzenegger issued a statement after President Barack Obama outlined more details of a new Home Star program that encourages American families to invest in energy saving home improvements which will also help create jobs. Said Governor Schwarzenegger:

“I am excited about the Home Star program that the President detailed today. Offering incentives to Americans who make their homes more energy efficient will help create jobs and save homeowners money while also helping to reduce greenhouse gas emissions. This is a promising idea, and Democrats and Republicans should work together to enact it into law.”

Obama Spells Out Rebates for Energy Efficiency

by Shana Fong on March 2, 2010
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Today, President Obama is traveling to Savannah, GA to outline some of the details of the Home Star program (aka Cash for Caulkers) that Recurve founder Matt Golden has been instrumental in composing.

Obama has previously said that shifting the U.S. toward cleaner, renewable sources of energy and making homes — particularly older houses — more energy-efficient will help accomplish three goals: reducing America’s dependence on foreign energy sources, creating much-needed jobs and saving consumers money on their utility bills.

Under the first level of energy rebates, Silver Star, consumers would be eligible for rebates between $1,000-$1,500 for a variety of home upgrades, including adding insulation, sealing leaky ducts and replacing water heaters, HVAC units, windows, roofing and doors. There would be a maximum rebate of $3,000 per home.

Under the second level, Gold Star, consumers who get home energy audits and then make changes designed to reduce energy costs by at least 20 percent would be eligible for a $3,000 rebate. Additional rebates would be available for savings above 20 percent.

The administration expects household demand for energy upgrades to be boosted once the program is underway, similar to how Cash for Clunkers boosted demand for fuel-efficient vehicles.

Read the full article from Associated Press here.

First Jobs Bill Advances in Senate

by Matt Golden on February 23, 2010
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Employment stimulus legislation moves forward with bipartisan support, paving the way for further job-related measures

Following yesterday’s test vote on a $15 billion job-creation package proposed by Senate Majority Leader Harry Reid, the first in a series of bills aimed at lowering the nation’s unemployment rate is poised to pass the Senate later this week. Congressional leaders have indicated that three to five more job bills are in the works, including legislation authorizing the proposed HOME STAR retrofit incentive program.

The current bill creates or extends tax breaks designed to encourage hiring of unemployed workers and retention of existing employees, and allocates funds for various labor-intensive infrastructure projects. Five Republican Senators voted in favor of the legislation, including newly elected Massachusetts Sen. Scott Brown. The 62-30 vote blocked a GOP filibuster and virtually assures passage of the bill when a final vote is taken.

Efficiency First continues to be actively engaged in the legislative process, and is working closely with members of the House and Senate to assure inclusion of the HOME STAR language in subsequent legislation.

Venture Funders Take Aim at Energy Waste

by Shana Fong on January 28, 2010
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‘Energy efficiency to shine in 2010’ reports the San Jose Mercury News

A pair of articles in yesterday’s edition of the San Jose Mercury News shed light on the growing national interest in energy efficiency and on the proposed HOME STAR retrofit incentive program. “Solar and wind power may get the headlines and attention,” the newspaper reported, “but green-tech experts say 2010 will be dominated by energy efficiency, the mundane but critical process of cutting the amount of gas and electricity that homes and offices use.”

Of particular interest to business leaders in the construction and related manufacturing sectors is the fact that investors are increasingly betting on the profitability of reducing energy waste:

Venture capital investment in energy efficiency hit a record in 2009: at least 115 deals worth nearly $1 billion, according to a preliminary tally by the Cleantech Group and Deloitte. That’s up 39 percent from 2008. Meanwhile, solar, which had 84 deals worth about $1.2 billion, was down 64 percent from 2008, and there’s increasing talk about solar being “overfunded.”

“In 2009, there was a pullback and realization by investors that because of the capital intensity of solar, there may be safer places to put their money,” said Scott Smith, U.S. cleantech leader for Deloitte.”

Mercury News staff writer Dana Hull also emphasized the wider economic and environmental benefits of energy efficiency: “It’s increasingly seen as an effective way to create desperately needed jobs, save struggling consumers money, wean America from its dependence on foreign oil and reduce carbon emissions – all at the same time.”

A second article provides an overview of the HOME STAR incentive program:

Silicon Valley venture capitalist John Doerr, who serves on President Barack Obama’s board of outside economic advisers, is a leading champion for Home Star, which he describes as “Cash for Caulkers.” The idea has widespread support from big-box retailers, labor unions, environmental groups and the construction and contracting industries, which have been devastated by the collapse of the housing market. Although national unemployment remains at about 10 percent, almost a quarter of the nation’s construction workers are unemployed, according to the U.S. Bureau of Labor Statistics.

We are in an urgent moment where we desperately need jobs,” said Bracken Hendricks, a senior fellow at the Center for American Progress and an architect of the Home Star legislation. “You have business and environmental interests aligned around making this happen, and happen now. I have never seen a coalition this broad and this committed.”

Here are links to the full articles:

“Energy Efficiency to Shine in 2010”
www.mercurynews.com/breaking-news/ci_14241691

“Government working on ‘Home Star’ Plan for Energy-Efficiency Rebates”
www.mercurynews.com/breaking-news/ci_14261182?nclick_check=1

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