Speakers (l-r): Brian Baird, Neil Brown, Kateri Callahan, and Clayton Traylor
Making Housing More Affordable through Energy Efficiency:
Role of Financing and Building Codes
Tuesday, July 27, 2010
2:00 – 3:30 p.m.
2325 Rayburn House Office Building
On July 27, 2010, the Environmental and Energy Study Institute (EESI) held a briefing on how energy efficiency legislation can make new homes more affordable. Building energy codes can ensure all new homes save money on utility bills. These savings can be valued as part of the mortgage qualification process and make housing more affordable for Americans of all income levels. Utility bills are the second highest cost of home ownership, after the mortgage, and have a huge impact on the ability of families to afford their homes after purchase, but they are not considered in mortgage underwriting. This briefing addressed the financial value of energy efficient homes, the importance of strong building energy codes in improving efficiency across the country, and the effect on homebuilders’ and homeowners’ bottom lines.
Speakers for this event included:
Rep. Brian Baird (D-WA), Chairman, Subcommittee on Energy and Environment, House Committee on Science and Technology Presentation (YouTube video)
Neil Brown, Professional Staff, Senator Richard Lugar (R-IN)
Kateri Callahan, President, Alliance to Save Energy
Clayton Traylor, Senior Vice President, Leading Builders of America – a new association of the largest U.S. home builders
Energy efficiency is important for reducing U.S. reliance on foreign sources of energy, mitigating global climate change, strengthening the U.S. economy, boosting American competitiveness, and addressing our energy and financial crisis. Energy efficiency investments are also an important hedge against rising energy costs.
According to the Department of Energy, a 30 percent improvement in energy efficiency over the 2003 model building codes would save households $500 per year.
Codes are adopted and enforced at the state and local level. But federal leadership is needed to boost compliance and establish a sound national energy efficiency policy.
The code-improvement provisions in the House-passed American Clean Energy and Security Act (H.R. 2454), the American Clean Energy Leadership Act (S. 1462), and the Practical Energy and Climate Plan Act (S. 3464) would save seven percent of the energy used in buildings by 2030 and $25 billion in energy costs. In terms of emissions reductions, it would be the equivalent to taking 40 million cars off the road.
The technology for improving energy efficiency by 30 percent is readily available and cost effective. Pending legislation provides incentives, and the American Recovery and Reinvestment Act of 2009 (ARRA) required better code compliance as a condition for funding for the State Energy Program.
Property listings currently do not provide information about a home’s energy consumption and monthly utility costs. Total utility costs should be included in real estate listings.
A listing price that accounts for monthly energy costs is, in effect, a type of home energy rating.
Energy efficiency can help sell houses. Home energy-performance information can help buyers decide whether (and how much) they need to invest in renovation. Informing potential tenants (who will write a separate check for utilities) about their monthly energy costs can give them an incentive to save energy.
The best time to make a building more energy efficient is at the time of construction or major renovation; the best time to retrofit a property is at the point of sale.
Despite the obvious benefits to more energy efficient homes, many builders have been opposed to energy code improvements because there is no mechanism to mitigate a builder's incremental costs.
The SAVE Act, expected to be introduced soon by Sen. Michael Bennet (D-CO), would direct federal agencies to add energy costs to mortgage underwriting and appraisal criteria.
It is anticipated that legislation will be introduced in the next few days that would allow energy efficiency to be incorporated into the mortgage qualification process. The American Clean Energy Leadership Act (S.1462), reported out by the Senate Energy and Natural Resources Committee last summer, would spur major building efficiency improvements by setting national performance targets of 30 and 50 percent for building energy codes as well as targets to improve code compliance. Senator Richard Lugar’s “Practical Energy & Climate Plan” (S. 3464) includes a similar provision. Section 201 of the House-passed American Clean Energy and Security Act (H.R. 2454) also provides for stronger building codes.
For more information, please contact Ellen Vaughan at evaughan [at] eesi.org or (202) 662-1893.
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