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Editorial: Mandatory Retrofits Prior to Sale - Nationwide

November 01, 2009
November/December 2009
This article originally appeared in the November/December 2009 issue of Home Energy Magazine.
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If we accept the national—and local—goals of large reductions in energy use in order to mitigate climate change, how will these be accomplished?  One approach is to include the costs of climate change in the price of energy and let the market do the heavy lifting.  In the long run, I think this strategy is essential because there’s nothing like a high price of energy to promote new, energy-saving ideas and to sustain vigilant energy-saving behavior.  But will the market work quickly enough?  Probably not, and the response is likely to be uneven, too, meaning that some groups—probably the ones least able to afford it—will be destined to live in inefficient homes for many decades longer than others. 

Europe has addressed one market barrier: lack of information for prospective home buyers.  European homes are now—or will be soon—labeled according to their energy efficiency.  In theory, a more informed consumer will demand more efficient homes and pay more for them which will, again in theory, stimulate greater investments in energy efficiency. I agree that these programs address a vital missing link in the market; however, I am skeptical that they will offset the influence of other features, such as location (and location and location).  Early results and anecdotal evidence suggest the European home energy labels are not shifting the market as much as hoped.   

Another significant market barrier is that residential retrofits to save energy are awkward and costly.  There is no ideal time to undertake comprehensive retrofits, but the time of sale remains the best alternative. Many financing options are available then.  I favor paying for these costs with a property assessment, which is paid off over 15 to 20 years as a line item on the property tax bill.  Property Assessed Clean Energy (PACE) programs allow the repayment obligation to transfer with ownership so that the person receiving the energy savings is also paying off the financing of the improvements over time.

To significantly reduce energy consumption in homes—reliably—we also need a corps of retrofit specialists.  That corps will consist of many specialties able to address the diverse needs of existing buildings.  But a corps isn’t going to appear unless there is a stable source of employment or, put simply, a career.  This can only happen if a steady flow of homes requires retrofits and upgrading, with regularly updated specifications and standards.

Of course, the types of retrofits would vary with location but the goal should be that all American homebuyers can expect an efficient home and contribute to the attainment of the country’s climate goals. That’s why I favor a national mandatory retrofit scheme at time of sale as I’ve addressed above. It knocks down all the barriers I’ve just come up with and avoids the market inefficiencies and inequities.

Do you disagree with my conclusions?  Then I challenge you to find another path towards dramatically lower energy use in our nation’s homes that will also put our nation back on a fast track to economic and environmental health.

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