Alliance, Homebuilders Join Forces to Advocate for Better Efficiency Codes

July 29, 2010 – The Alliance to Save Energy helped bridge the chasm between energy efficiency advocates and homebuilders in a July 27 Capitol Hill briefing for congressional staff. The briefing was notable, also, for bringing members of Congress from both parties together around the common cause of making new homes more energy-efficient.

“It’s very rare these days to have representatives from both chambers and both sides of the aisle in serious agreement on public policy that the country needs,” said Alliance President Kateri Callahan.

At the briefing sponsored by the Environmental and Energy Study Institute (EESI), the Alliance partnered with the Leading Builders of America (LBA) to garner congressional support for strengthening national building energy codes. LBA represents the 16 largest U.S. homebuilders, who make up about 40 percent of the new homes market.

The Alliance-LBA partnership, according to LBA Senior Vice President Clayton Traylor, will help narrow the long-standing divide between some efficiency advocates and the builder community, because the Alliance and LBA have a mutual understanding that the standard system of purchasing and financing houses is the main obstacle to making new homes more energy efficient.

Incorporating Efficiency Into the Mortgage Qualification Process

Traylor noted that the appraisal and underwriting process does not have a mechanism to take into account cost savings for homeowners due to energy-efficient features. This, in turn, puts homebuilders at risk for “eating the cost” of building energy-efficient houses, which are somewhat more expensive than their less efficient counterparts. “So, we’ve really rolled up our sleeves to come up with some specifics about how to address that,” he declared.

Traylor explained that within the next two weeks, Sen. Michael Bennet (D-Colo.) will introduce the SAVE Act, which would require recognition of monetary savings from energy-efficient features in the underwriting process that determines mortgage affordability. SAVE would require a consistent method for rating the annual operating costs of homes – again, taking energy costs into account, along with principal, interest, taxes and insurance.

A Bipartisan Effort

The briefing attracted bipartisan support, including that of Rep. Brian Baird (D-Wash.) and staff from the office of Sen. Richard Lugar (R-Ind.), who both crossed party lines to support improved energy building codes.

“Why would the most senior Republican in the U.S. Senate put out a plan with building codes? ” asked Neil Brown, professional staff of Sen. Lugar. His answer: Energy efficiency is good for our nation’s economy and security, as well as the world’s climate.

In his opening remarks, Rep. Baird — who chairs the House Science and Technology Subcommittee on Energy and Environment — advocated for mandatory reporting of homes’ energy efficiency ratings and average utility costs, similar to fuel efficiency labels for cars. Such a change “would have a profound impact” on the housing market, Rep. Baird said.

“A hallmark of our organization is building alliances across ideological divides and economic sectors to accomplish our goal of advancing energy efficiency around the world,” Callahan noted.

Driving Federal Building Energy Policy

Across the board, panelists advocated for legislation that would set national energy-saving targets and state adoption and compliance of building codes:

• The American Clean Energy Leadership Act (ACELA or S.1462), which passed the Senate Committee on Energy and Natural Resources in June 2009, would require the Department of Energy to revise national model codes to achieve 30 percent savings beyond baseline code in the first years after enactment, 50 percent by 2016, and continual improvements to achieve net zero energy use in new buildings. The bill also would require states to adopt and comply with equivalent codes.
• The Practical Energy and Climate Plan Act (S. 3464), introduced by Sen. Lugar in June 2010, would require national model building energy codes to achieve 30 percent reductions beyond baseline code by 2014, and 50 percent reductions by 2015 and 2017, for commercial and residential buildings, respectively. The bill would require states to adopt and comply with equivalent codes.
• The American Clean Energy and Security Act (ACES or H.R. 2454), which passed the U.S. House of Representatives in June 2009, is similar to ACELA, with slightly more aggressive reduction targets: a 30 percent reduction in baseline code within one year of enactment, 50 percent reduction by 2014 for homes and 2015 for commercial buildings, and an additional 5 percent reduction every three years thereafter. ACES would provide an additional federal backstop for states failing to adopt equivalent codes by requiring them to automatically adopt the national model codes. The bill also would provide 0.5 percent of climate auction revenues to support state code compliance, adoption, and implementation.