Efficiency codes give heartburn to Realtors, builders
Jun 4, 2009 The Hill
Efficiency codes give heartburn to Realtors, builders
By Jim Snyder
Energy efficiency is often described as the low-hanging fruit in the fight against global warming. Conserving energy is cheaper than building a new nuclear power plant and technologically less challenging than storing a coal plant’s carbon dioxide emissions underground — two other emissions-reduction strategies.
But a provision in congressional climate and energy bills designed to reduce the energy sucked up by commercial buildings and residential homes is getting a poor reception from struggling realty and building sectors, which argue new efficiency codes will raise the costs for homes and commercial properties and have the potential to stall a recovery from the recent market collapse.
The National Association of Realtors, National Association of Home Builders and Commercial Real Estate Development Association were among nine building and realty trade groups that wrote House members last month expressing “strong opposition” to energy-efficiency language in the House climate change measure that was recently adopted by the Energy and Commerce Committee. The word “opposition” was written in bold letters.
The bill would require new homes and commercial buildings to be 30 percent more energy-efficient by 2010 and 50 percent by 2014 for homes and 2015 for commercial buildings — although states are given additional time to require compliance. A Senate energy title that is scheduled to be marked up on Thursday by the Energy and Natural Resources Committee sets similar targets.
Supporters say the language is a critical component of the effort to reduce greenhouse gas emissions. But in their letter, the trade groups said the provision in the House bill “makes faulty or unproven economic and technical assumptions about the viability of achieving certain energy-efficiency targets for buildings and homes.”
Moreover, civil penalties also included in the House measure that are applied to developers and owners of buildings who fail to comply with the federal codes “would have a chilling effect on development and property transfer across the spectrum of real properties,” the letter states.
“This is going to deter new construction and could have a negative impact on renovations,” one official from a trade group said. “Anything that gives the perception of additional costs could be detrimental.”
Housing starts have plummeted as the market collapsed under the weight of sub-prime loans to homeowners who couldn’t afford sharp increases in payments. There were more than 2 million starts in the United States in 2005. But in 2008, that number was just over 900,000 new homes.
“This is bad timing,” the official said.
The trade groups say they support efforts to improve the energy efficiency of homes and businesses but that the codes are better left to local and state officials to set and enforce. Those codes have already been updated. One lobbyist involved in the effort said finding additional energy savings will be difficult.
Energy building codes are developed by independent groups for homes and businesses and certified by the Energy Department. States then decide whether to adopt the standards or not. California has adopted its own building codes.
Lowell Ungar, director of the Alliance to Save Energy, said the codes are applied in a haphazard manner and there is often little effort to ensure compliance.
In addition to setting the targets, the House bill includes money from the sale of emissions allocation to improve enforcement of the codes and to help states comply. It also threatens to take federal money to support efficiency programs and renewable energy development from states that fail to adopt the federal standards.
The money would come from the sale of the emissions credits in the market created under the bill. The revenues available to states depend on the price the market sets for carbon, but Ungar said the potential loss of federal dollars to states is likely to be in the hundreds of millions.
That carrot in the House bill effectively establishes a national building code — appropriately so, Ungar said, given the large emissions savings that can be gained by improving insulation, sealing windows or using more climate-friendly building materials.
Ungar said the efficiency provisions in the long run will provide the greatest emissions savings of any provision in the bill outside of the overall emissions cap. By 2030, the codes could reduce emissions by 250 million tons annually.
“This is an essential provision,” he said.
In response to the industry’s claims that the targets are unachievable, Ungar noted that some builders are already receiving tax credits for constructing more homes and businesses that are more than 50 percent more energy-efficient than existing standards, which demonstrates that the targets in both the House and Senate measures are achievable.
The Senate energy bill does not provide for a cap-and-trade system that would generate revenues and so doesn’t include the threat of a loss of federal dollars for failure to comply, though the bill is likely to be linked with a climate change measure in development at the Environment and Public Works Committee.
A similar energy-efficiency provision was included in a House energy bill that eventually became law in 2007, but not until Sen. Pete Domenici (R-N.M.) had the provision removed in conference.
With Domenici retired, Sen. Lisa Murkowski (R-Alaska), the Energy and Natural Resources ranking member, plans to offer the amendment to the Senate bill striking the federal targets. Robert Dillon, a Republican spokesman for the committee, said Murkowski opposed the language on the grounds that it would impose a “federal top-down mandate” on a matter states themselves should decide.
But David Marks, a Democratic spokesman for the Senate panel, said committee Chairman Jeff Bingaman (D-N.M.) believes energy efficiency is such a critical piece in the overall effort to reduce greenhouse gas emissions that writing a national standard is appropriate.