H.R. 2454. Waxman-Markey. American Clean Energy and Security Act of 2009. ACES. It’s known by many names, but whatever its moniker, this bill that recently passed in the House and is pending in the Senate could mean a fundamental shift in U.S. policy and an important change for the remodeling industry. While the American Recovery and Reinvestment Act (ARRA) stimulus bill offers tax credits to homeowners for energy-efficient equipment and practices, this bill gives states grant money to encourage and supervise residential and commercial energy retrofits.

The ACES bill calls for a 17% reduction in greenhouse gas emissions in the U.S. by 2020 and 83% by 2050 from 2005 levels. The bill offers several programs to accomplish this reduction. One main element that is currently getting a lot of attention is a section that requires a “cap” on the emission production of industries that contribute significantly to emissions, including electricity producers, oil refineries, gas suppliers, and iron, steel, cement, and paper industries. Large utilities would also have to produce an increasing percentage of their electricity from renewable sources such as geothermal, solar, and biomass.

Building Focus

The other part of the bill has to do with buildings. Constructing  and operating buildings requires a large amount of energy and materials, which contributes to greenhouse gas emissions. To reduce the emissions for residential and multifamily buildings, the bill calls for the Department of Energy to establish a new national building code for new residential and commercial construction that would require a 50% reduction by 2014 in residential building energy consumption over the baseline of the 2006 International Energy Conservation Code. To address existing buildings, the Retrofit for Energy and Environmental Performance (REEP) program is aimed at energy retrofits of residential and commercial buildings. REEP would use existing standards established by groups such as the Building Performance Institute (BPI) and Residential Energy Services (RESNET) program. REEP would provide grant money to state energy offices to oversee the retrofits. States would use the money to provide retrofit incentives to homeowners including:

  • $500 for a free or low-cost energy audit that prescribes energy-reducing measures.

  • $1,000 for measures prescribed in the audits to reduce energy consumption by more than 10%, and $2,000 designed to reduce energy consumption by more than 20%.

  • $3,000 for a demonstrated savings of 20%, plus $150 for each additional percentage point of energy savings.

  • The maximum award cannot exceed 50% of retrofit costs.

  • $600 grants for potable water savings of 35%, with $20 for each additional percentage point of savings up to a maximum of $1,200.

  • Up to $2,000 for cost-effective use of renewable energy for items where federal tax credits are not available.

The reduction in energy use would be measured by before and after retrofit Home Energy Rating System (HERS) index scores and would require verification through inspection of at least 15% of all the retrofit work. States that receive REEP funds must agree to make at least 10% of the allowance available for retrofits of public and assisted housing.

Sticking Point

Currently, the media and experts are focusing on the emissions caps on energy producers. Regulated companies would be allowed to exceed the cap by purchasing carbon offsets from companies that emit fewer greenhouse gases. Thus the section of the bill getting the most attention is this “cap and trade” portion. Some say that this is unfair and provides too many loopholes for utility companies. Experts say that controversy about this section of the bill could result in a defeat of the bill in the Senate or in significant changes to the bill.

Rob Moody, a sustainability consultant with Organic Think, in Asheville, N.C., calls the bill a “game changer” that will bolster green building. Moody acknowledges the controversial “cap and trade” sections. However, he says, a building scientist he works with recently told him that if a utility spends $2 billion to build a coal-fired plant, it will meet the demands of the market for a specific amount of time. However, the scientist told him that if the same money is used to improve the energy efficiency of existing homes, the utility would double its energy savings. Moody says that makes sense to him. “Why put power plants on line when we have energy-hog buildings out there?” And, Moody adds, the REEP portion of the bill provides a big opportunity for renovators: “This goes beyond the tax credits in the stimulus.”

He believes the bill will be changed during the Senate debate. “The real sticking point is cap and trade," he says. "The energy sector is the most affected, and it has a lot of lobbying power.” He encourages builders to review their business and talk to senators. “We are at a new crossroads,” he says.

According to Moody, the ACES bill may have been influenced by the Architecture2030 plan that calls for the building industry to reduce energy use. Moody says the organization contends that if a homeowner reduces energy use by 75%, he or she should qualify for a lower mortgage interest rate of 3%. “By paying $100 less per month on the mortgage, plus the $400 savings on energy bills, the homeowner’s outflow of cash is increased by $500,” Moody says, noting that this would boost the economy.

Keith Canfield, managing partner with Rapport Strategy & Design, in Madison, Tenn., says that he is interested in the portion of the REEP section that requires establishing retrofit standards. “It says the EPA is being charged with establishing standards. It does not specifically call for an energy score, but I can see how that would be the next step,” Canfield says. He cites a recent program in England to establish an energy-performance score for every residence. “A home buyer or renter could examine the score and estimate the energy cost for that home on a yearly basis. It gives them a way to determine operating costs,” he says. Canfield’s sources say that if the ACES bill becomes too controversial to pass in the Senate, the REEP portion could migrate to another bill. --Nina Patel, senior editor, REMODELING.

Additional Information

Cap and trade 101 -- history from 1990 to now.

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