OPINION: Home Star, A Smart Investment in Jobs, Innovation

The Home Star Energy Retrofit Act of 2010 passed by the U.S. House of Representatives earlier this month authorizes the creation of a national incentive program (informally known as “Cash for Caulkers”) that would invest $6 billion over two years in helping homeowners save money on their energy bills, while reducing household carbon emissions and scaling back our dependence on foreign oil. But there’s more to it than that.

For hundreds of thousands of American construction and manufacturing workers who have been sidelined by the recession, the proposed Home Star program – which now awaits Senate approval – represents a lifeline to good jobs with living wages in a growing 21st-century industry.

While much of our economy appears to be on the road to recovery, the outlook for American construction workers is truly grim. According to the Bureau of Labor Statistics, nearly 2 million construction jobs dried up between December 2007 and January 2010, leaving around one in five experienced construction workers unemployed. And with demand for new buildings stalled at historically low levels, there’s little hope that these workers will be rehired in traditional construction jobs any time soon.

The ongoing crisis in the construction industry has hit the manufacturing and retail sectors as well. Statistical analysis produced by the Home Performance Resource Center, a nonprofit industry research group, shows that factories involved in the production of building materials, heating and cooling equipment and household appliances are operating at around 30 to 50 percent below capacity, with a similarly bleak outlook for near-term growth.  In addition, for most categories, more than 90 percent of manufacturing is domestic.

The good news is that by stimulating consumer demand for energy retrofits, Home Star would leverage private investment to create an estimated 168,000 local jobs in construction and related industries within two years – jobs that cannot be outsourced overseas. Furthermore, the replacement windows, sheet metal, HVAC equipment and other materials used in home energy remodeling are overwhelmingly produced by American mills and factories, so the work would provide a shot in the arm for our manufacturing and retail sectors as well.

If enacted, the Home Star program will provide two very different kinds of consumer incentives. If you’ve ever received a rebate for buying an energy-efficient refrigerator or water heater, you’re already familiar with what the legislation called the Silver Star incentive path. This component of the program would reimburse homeowners up to $3,000 for a variety of products and home improvements, including insulation, air sealing, duct sealing, or replacing old furnaces and air conditioners with new high-efficiency models.

The performance-based Gold Star path, on the other hand, represents the future of residential energy management, leveraging state-of-the-art building science methods to identify sources of energy waste and then reward homeowners for implementing the most cost-effective remediation measures available.

Unlike the Silver Star path, Gold Star rebates are based on modeled energy savings as determined by scientific evaluation of a home’s pre-retrofit energy performance and computer simulation of energy use after the retrofit. This approach gives homeowners and their contractors the freedom to select any combination of home improvement measures that will achieve the desired results. Homeowners who opt for the Gold Star path would receive a $3,000 rebate for predicted energy savings of 20 percent, plus an additional $1,000 for each additional 5 percent of energy savings up to a cap of 50 percent of the overall project cost.

The potential impact of the Gold Star model is huge. While the Silver Star path is designed for rapid deployment and job creation in today’s market, Gold Star will enable a different set of market forces and shift our attention away from the prescriptive policies that have been used in the past. Placing a clear economic value on energy saved rather than on specific products or technologies will drive innovation, and lead us towards a market based, and highly economically efficient, model that can continue to scale into the future without the long-term need for government subsidies.

The combination of an industry that is capable of consistently delivering on predicted savings, coupled with a smart grid that will provide real energy pricing and transparency, will allow the energy efficiency industry to directly monetize energy savings on forward capacity markets and through ESCO relationships with our customers. Home Star represents an investment in the foundation of this future market.

Ultimately, we can achieve the greatest gains in energy efficiency and carbon abatement through a combination of technologies that work together – from improved insulation and air sealing to more efficient appliances and HVAC equipment to on-site power generation and smart grid systems that will enable utilities and homeowners to manage energy use and reduce peak demand. Gold Star is good first step toward that goal.

Although Home Star has been authorized by the House of Representatives, the program still needs Senate approval and an appropriations bill to provide funding before the bill can be signed into law. For the legions of unemployed Americans who have lost jobs in construction and related industries, there’s not a moment to lose.

Matt Golden is the founder and president of San Francisco-based Recurve Inc. (Formerly Sustainable Spaces), and policy chair of Efficiency First, a national trade association representing home energy contractors and related businesses. More information about the proposed Home Star program is available at www.homestarcoalition.org.

Image courtesy of Wayne National Forest’s photostream.