Are the Weatherization Stimulus Funds Heading for Disaster?

For the thousands of contractors and state and local agencies that have received funds under the Department of Energy’s Weatherization Assistance Program in the past, President Obama’s stimulus bill, which calls for a massive $6.2 billion to weatherize low-income homes, was a little like winning the lottery. The DOE last year allocated just $227.2 million for the Weatherization Program, which was founded in 1976 and has so far helped around 6.2 million families’ homes become more energy efficient by upgrading insulation, heating and cooling systems, air filters and windows.

So the first reaction from the contractors and agencies, naturally, has been elation. As Geoff Chapin, CEO of eco-retrofit company Next Step Living, says, “We were heartened to hear that weatherization plays such a critical role in the stimulus package.” But like winning the lottery, that influx in funds — what the Obama administration calls “the largest weatherization program in history” — is so large that federal, state and local agencies are expected to find allocating them and conducting sufficient oversight around them a real challenge. The DOE and the state agencies will have about a month to allocate the funds and local agencies will have around 18 months to spend them. And industry insiders we’ve talked with (who don’t want to go on record criticizing the package) are very doubtful that the new funds will be dispersed in a smart and timely manner — state and local agencies, they say, just can’t ramp up fast enough.

The DOE, however, says it’s confident it can complete the task. Robert DeSoto, Weatherization Project Manager for the agency, said they’re “up to the challenge;” the funds, he said, will still be allocated in a similar manner as before, just with a couple of expected changes aimed at boosting the numbers of homes that would qualify, such as raising both the amount that can be spent per house (to $5,000 from $3,055) and the income level requirement of families. DeSoto said the real test will be getting the 900 local agencies to spend the funds on construction — which is always capital-intensive and slow-moving — within the allotted time frame. Chapin, as well, is concerned about how the agencies will spend the funds in a timely and effective manner.

While the path ahead is still unclear, the motivation behind President Obama’s decision to make weatherization one of the first aspects of his energy plan is not: It’s one of the most cost-effective ways to invest in energy efficiency. According to the DOE Weatherization Program, a $1 invested returns $1.65 in energy-related benefits, and at the same time leverages $1.54 in other resources from private funding, utilities, state funds, and other federal funds. A home that’s “weatherized” at a cost of several thousand dollars can save some $350 per year on energy bills, claims the Obama administration (that’s conservative, as the Weatherization program sites a number closer to $413).

For low-income families, such savings could be crucial. According to an Oak Ridge National Laboratory study, low-income families paid 17 percent of their annual income on energy, compared with the 4 percent spent by higher-income households.

Increasing home energy efficiency is also low-hanging fruit for the fight against climate change — the technology is widely available (insulation, more efficient building materials), unlike many forms of clean power generation that are still too expensive and still in the R&D phase. Residential homes accounted for 21 percent of all U.S. energy consumption in 2007, according to the Energy Information Administration.

So clearly a boost in the weatherization program is savvy, and ramping up the current funds to such a large extent, laudable. But perhaps more of the $6.2 billion should be put towards ensuring that the funds are being spent properly, or maybe the timeline should be relaxed to accommodate a slower ramp-up. At such a critical juncture in the fight against climate change, close attention needs to be paid as to where this money is going and how, exactly, it will be spent.

This article also appeared on Businesweek.com.

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