Home-Grown Energy Efficiency

There's a myth making the rounds in the building community that proposed legislation for energy efficient new homes could boost the cost of building substantially. But congressional action is just the latest in an almost exponential surge in interest in the energy efficiency - or inefficiency - of America's buildings… a surge that portends a dramatic shift in the way we think of homes and commercial buildings.

First things first … let's dispel the myth, or at least tell the complete story about energy efficiency improvements. Virtually any new requirement - whether it's a code for safe stairway construction, an electrical standard or an insulation requirement - will add to the “first cost” of that home or building. Few would disagree with the wisdom of the first two of these requirements, even though their payback can only be measured in the avoidance of a fall down the stairs or an electrical fire. But while better insulation does add to the “first cost” of a new home, it begins paying dividends — in terms of energy savings — from day one and it usually continues paying those dividends until the home is torn down generations from now. Further, if the cost of the insulation is built into the mortgage, it's amortized cost to the homeowner is a fraction of the energy savings.

You may ask how much energy efficiency improvements will add to the cost of a new home. The answer will depend on where you live and which improvements you choose, but the U.S. Dept. of Energy gives a pretty good benchmark with its landmark Greensburg, Kan. analysis, in which it weighs varying percentages of energy efficiency improvements beyond the national 2003 model energy code (known as the International Energy Conservation Code, or IECC). Kansas is a place that meets the norm — it has hot summers and cold winters — and the 2,000-ft² house the DoE selected is pretty average, as well.

The DoE data show that at 30%, 40%, and even 50% beyond code, energy efficiency improvements actually add money to the homeowner's wallet. (The study goes on to show that around 58% beyond code is where the added mortgage costs equal the energy savings.)

In recent years, as industrial facilities, automakers and others have dramatically improved their energy efficiency, the dirty little secret about homes and commercial buildings has leaked out: They are America's largest consumers of energy (42%), our largest consumer of electricity; and our number-one source of manmade greenhouse gases.

These facts make them arguably the last untamed frontier of wasted energy in the U.S. And it also puts homes and commercial buildings at the forefront of clear national public policy imperatives to:

Improve energy security and reduce dependence on energy imports,
Lower energy demand and stabilize energy prices for consumers and manufacturers,
Defer the need to construct new power plants, and
Reduce greenhouse gas emissions.

So now you can begin to see why Congress has taken an interest in the energy efficiency of new and existing homes and commercial buildings. For several reasons, it may not be an exaggeration to say that the success of our nation's energy future really is in the hands of our builders:

Building Longevity: A new house that lasts 80 years will be a factor in energy policy through 2089!
The Numbers: The National Association of Home Builders has testified that half the homes America will need by 2030 haven't been built yet.
Dismal Code Compliance: Compliance with building energy codes is generously estimated at 50%, but is most certainly less than that.
Policy Realism: The growing realization that America can't hope for sound energy and environmental policy without including its largest single source of energy consumption, waste and greenhouse gas emissions.

At the risk of sounding immodest, the Energy Efficient Codes Coalition has helped to change the debate. EECC participates in the International Code Council's (ICC) code adoption process to advocate a better national model energy code (the IECC). In summer 2007, we authored The 30% Solution, a comprehensive package that, if adopted, would have boosted the 2009 IECC by 30% over its predecessor, the 2006 IECC.

When we began our efforts, prospects for success looked pretty bleak:

The 2006 IECC was weaker than the 2003 and, at best, there had been modest improvements in energy efficiency of the IECC for two decades,
There was no interest from Congress,
Mayors and other elected officials were unaware of the potential role codes play in state and local energy and environmental objectives, and
First-cost ruled, as defined by the NAHB, which opposes mandatory energy codes.

Energy was far off the ICC radar screen. But by the time the dust settled and the new 2009 IECC was published, the change was demonstrable:

ICC members achieved historic and unprecedented efficiency gains, adopting 14 of 21 elements of The 30% Solution,
The U.S. Conference of Mayors endorsed The 30% Solution and became actively involved with the ICC,
Legislation setting strong code targets moved through both Houses of Congress,
Billions in stimulus dollars were linked to states' adoption of the 2009 IECC,
The cost debate escalated to redefine life-cycle benefits and positive cash flow that comes from efficiency, and
The ICC regularly began to emphasize energy efficiency in its publications, policies, and activities.

As for Congress, the good news is that leaders don't want to take over the issue of codes - they just want a significant boost in the priority given to more efficient codes and to put our nation on a glide path of dynamic energy efficiency improvements. Their approach is reasonable: Set practical targets of 30% and 50%, then give code-setting bodies and states all the financial and advisory resources necessary to succeed in meeting those targets. Only if they fail - and both are given ample opportunities not to fail - would the DoE be told to step in and establish a national code.

ENERGY EFFICIENCY PAYS DIVIDENDS TO HOMEOWNERS

New home construction % beyond 2003 IECC 30% 40% 50% Estimated incremental first cost relative to standard practice $4,000 $7,000 $13,000 Annual amortized cost 7%, 30-year mortgage $211 $411 $706 Net annual savings (extra money in the homeowner's wallet) $512 $508 $456 Simple payback without amortizing cost (investment + utility savings) 5.5 years 7.6 years 11.2 years

Data developed by DOE's National Renewable Energy Laboratory (NREL) in a representative home in Greensburg, Kan. IECC assumes 2000 ft², two stories, 16% window-to-floor ratio, unconditioned basement. Mortage assumptions are 28% marginal tax bracket and include present value of future replacements of equipment over 30 yr. life of mortgage.