The Senate Has an Easy Decision on Energy Efficiency to Improve Its Energy Bill
Let’s say you’re in the market for a new cell phone.
One store is offering a great price of $50, but it comes with a bill of $100 per month. The store next door is charging $100 upfront, but the monthly fees are just $50 per month. Most people would choose option two. You’d break even in the first month and save $550 over the course of the first year.
Consumers face a similar dynamic when buying a house. The biggest expense after the mortgage payment is usually the energy bill. Drafty, leaky and poorly insulated homes cost a lot of money to heat and cool – the average monthly utility bill is about $225. An upfront investment of a couple of thousand dollars in insulation and other energy efficiency upgrades during construction can deliver huge savings over time.
The Senate missed an opportunity to address this challenge in an energy bill rolled out last week that omitted bipartisan provisions written by Sens. Rob Portman (R-Ohio) and Jeanne Shaheen (D-N.H.) that would provide more federal support for developing and implementing voluntary model building energy codes. The good news is a broadly supported amendment to restore the codes provisions is under consideration, and the Senate can create decades of improved affordability and sustainability in the housing sector by adopting it.
Not only are modern building energy codes good for consumers, they are also among the easiest, most cost-effective strategies we have for addressing climate change. Homes and buildings are energy hogs: They represent roughly 40 percent of U.S. energy use and a similar share of greenhouse gas emissions. The potential to cut energy waste in this sector is enormous.
Model building energy codes do that by providing a flexible roadmap for more efficient construction. The model code, customized by climate region, is voluntary – local and state governments can choose to adopt it or not. It’s updated every three years in a public process and with input from stakeholders including home builders, efficiency experts, local government officials and others, and it’s vetted by the Department of Energy and national labs.
Many communities are excited to have it as a resource for setting minimum efficiency standards for new homes and to protect consumers, who often don’t know what their energy bills will be when buying a home. The Portman Shaheen codes provisions simply enable the Energy Department to provide additional technical assistance, funding and other resources for cities and states who want to participate.
That’s why it’s surprising to see some home builders and their trade association in Washington opposing the codes provisions. The National Association of Home Builders is claiming that codes make homes less affordable. But the facts clearly show the opposite.
Yes, there is an upfront cost. But like that second phone plan, efficiency pays off quickly, particularly when you consider that it’s almost always baked into a long-term mortgage. Let’s say efficiency improvements add $3,000 to the cost of a home. At a 4 percent interest rate over a 30-year mortgage, that amounts to an additional $14 on the monthly payment. But whether they live in a mild, cold or hot climate, the homeowners get a net gain from the lower monthly energy bill, either immediately or in a matter of months. Those savings continue for the life of the structure, yielding tens of thousands of dollars in savings.
The Department of Energy determined that recent energy code updates reduced energy consumption by some 30 percent. Buying a home built under the 2012 code, for example, compared with the 2006 version will result in net household savings of between $218 and $1,588 per year, or about $500 on average per home. That amounts to putting $4,763 to $33,105 more in the homeowner’s wallet over a typical 30-year mortgage.
Numbers like these explain why the Portman-Shaheen proposal on energy codes has won broad support from Republican and Democrats alike. In fact, it was part of an energy bill that passed the Senate 85-12 a few years ago. We shouldn’t let the opposition of a narrow interest group change that now. The Senate has an easy decision to make.
Ben Evans is vice president of government affairs and communications at the Alliance to Save Energy.