“Cash for Caulkers” Could Deliver $23B for Home Energy Efficiency

Step aside “Cash for Clunkers,” and make way for “Cash for Caulkers.” The White House is reportedly considering rolling out a two-year, $23 billion program to encourage homeowners to undertake weatherization projects such as adding air sealing, insulation and energy-saving light bulbs. The program would be called Home Star -– playing off the name Energy Star, the Environmental Protection Agency’s widely recognized energy efficiency program. The New York Times, in a story published last night, reported Rahm Emanuel, President Obama’s chief of staff, as saying that it’s one of the “top things he’s looking at.”

Here’s the gist of the proposed program, as outlined by The New York Times:

  • $6 billion would be set aside for people who undertook at least two weatherization projects, like the air sealing or insulation previously mentioned. There would be a list of some 10 eligible projects, and households that completed at least two of them would be eligible for up to $2,000 in subsidies; four projects would yield up to $3,500. But the government money could not pay for more than half of any project.
  • $12 billion would go to incentivize households that did weatherization projects that reduced energy use by at least 20 percent, which would bring in a $4,000 subsidy. There would be $1,500 more available for each additional 5 percent reduction achieved by an energy retrofit, and government money could pay for no more than half the cost of the project. Matt Golden, president of San Francisco-based energy retrofitter Recurve (formerly Sustainable Spaces), tells us that an energy retrofit costing between $4,000 and $6,000 could typically reduce a home’s energy use by 20 percent, though the price tag is highly dependent on the condition of the house and its location.
  • $2 billion would go toward auditing a portion of the projects to ensure they did what they were supposed to do.
  • $3 billion would pay to incentivize retailers like Home Depot and building contractors. Few details were given about this pot of money, but it sounds like it would be used to encourage these companies to embrace the program. Home Depot, say, might designate a portion of its store for Home Star upgrades with Home Star representatives on hand to help customers.

The home energy retrofit industry is unsurprisingly head-over-heels in love with this program. Efficiency First, a trade association for the industry, says it would support 5.9 million home energy retrofits and create more than 500,000 new jobs. The association didn’t say if this job creation number accounts for those lost as a result of the increased taxes needed to support Home Star, however. Efficiency First estimates that energy improvements covered by Home Star could reduce “energy waste” in most home by 20-40 percent and, if combined with low-interest financing, could be cash-flow positive once the projects were completed.

Word that Home Star appears to be coalescing into a serious policy proposal comes about a month after the White House unveiled its strategy for bolstering a “self-sustaining” home energy retrofit industry. That strategy included developing home energy performance labels, supporting municipal financing of projects and energy-efficient mortgages, and developing workforce certification and training standards. Home Star would provide a financial kick in the pants and would likely gel nicely with the policy-oriented proposals previously outlined by the White House.

Silicon Valley, it should be said, has its hands all over Home Star, and certainly stands to gain from the billions of dollars that could go toward weatherization projects. John Doerr, of venture firm Kleiner Perkins and a member of President Obama’s board of outside economic advisers, has been pushing the program in Washington, D.C., as has Recurve’s Matt Golden, who is also the national chairman of Efficiency First. Doerr told The New York Times that he has no stake in any weatherization company, though Golden certainly does.

Still, the program has merits. Leaky homes are perhaps the lowest-hanging of all low-hanging fruit, so any government program meant to reduce energy use and create jobs should be looking towards home energy retrofits. The real question is if government should be inserting its nose so deeply into this nascent industry.

Image courtesy of Wikimedia Commons.