A Modest (Green) Proposal - Fine Homebuilding

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The Deans of Green

The Deans of Green

A Modest (Green) Proposal

comments (9) February 16th, 2009 in Blogs
MChandler Michael Chandler, member

Americans can get to work fixing our own home weatherization problems without government handouts if we just give them a chance. We can put Americans to work fixing America’s problems, we already have most of the systems in place, we just need to get started.

According to NAHB there are 75 million homes that are critically in need of weatherization and as much as 80-percent of our light commercial stock falls in the same category. President Obama is promoting a weatherization program to provide free weatherization for low income homes and tax credits for middleclass alternative energy improvements. But it would also be possible to provide a new financing structure to allow a for-profit weatherization industry to flourish that could address the needs of many more than just two million families of all income levels while giving jobs to American workers and saving our tax money for other projects.

We have lots of Americans of all income levels who are too hand-to-mouth to be able to afford the $5,000 or so it would take to make the most critical improvements to their homes. So they just put up with the high energy bills and poor indoor air quality and discomfort of living and working in drafty, underperforming buildings. It doesn’t need to be this way.

I’m proposing a zero-dollar-down weatherization program that will be applicable to rental properties, fully mortgaged properties on the edge of foreclosure, and light commercial as well as all categories of residential, not just low-income. By keeping the loans small enough, in the $5,000 range, and applying the right fixes to the right projects, the energy saved by the weatherization could balance the cost of the loan.

We will reach more people if we simplify the application process by not tying up the equity in the building but instead using the homes’ electrical connection to the grid to secure the loans. The weatherization projects could be selected and designed such that the energy savings would be equal to the loan payment but the payment would be included in the electric bill and if you failed to pay your power would be cut off. Your equity in your home or your rent payment would be unaffected. Any occupied building or mobile home might qualify, even rentals and foreclosures, so long as the electric bill was being paid and the energy saved by the weatherization would balance the cost of the loan.

We need to save the tax money for things we can’t do for ourselves. Let the banks loan the money, not the taxpayers. We’ve already loaned enough to the banks as it is.

While the loan payment would be included in the electric bill, we shouldn’t expect electric companies to be leaders in efforts to reduce demand for their product. Net metering of solar PV and wind power has been plagued by lack of utility acceptance. But electric companies are already set up to deliver a bill, which includes tax, and enforce its payment by cutting off power if necessary. Let them be the collection agent and use their mailing lists to promote neighborhood energy campaigns to fix as many homes in one neighborhood as possible before moving to the next neighborhood rather than just fixing homes scattershot all around the area.

Existing, professionally managed, insulation companies can do the work. We should require that they have workers comp but offer government subsidized general liability insurance to offset the increased risk of all these small jobs in occupied homes. When Jimmy Carter declared the energy crises “the moral equivalent of war” and instituted solar tax credits we saw way too many failed solar panels due to incompetent workmanship. Let’s keep the weatherization industry well managed and professional and not open the field up to any guy with a pickup and an insulation sprayer.

To do this we need independent oversight. Here is where we can leverage taxpayer money through the Department of Energy’s existing Energy Star Home Energy Rater system to train, license, and oversee a legion of energy auditors to seek out the projects that can most benefit from tightening ducts and sealing crawls, floors, windows and attics to the point that the reduced energy usage would offset the loan payment. We can use the existing community college system to train these workers using materials from the DOE.

Trust but verify, keep the energy auditors accountable through a taxpayer subsidized licensing and oversight organization similar to the way we currently regulate termite inspectors and pesticide companies. It is good for the auditors to be employed by the weatherization contractors (for improved communication) but they should be required to provide before and after reports to the licensing agency showing the improvements made and backing up the quality of the work.

Keep the loans small, not more than $5,000, so the payback cost would balance the fuel savings but lets also encourage the auditors to educate the occupants and provide a menu of additional strategies they could take on to further improve their energy efficiency on their own. We are aiming for the low hanging fruit here Americans can stand on their own two feet for the rest.

Let’s put Americans to work fixing America’s problems, we can do it, let's get started.

posted in: Blogs, green building

Comments (9)

ShelterNerd ShelterNerd writes: MFournier
Shelternerd is my Breaktime handle and the way my name shows up when I respond here. This is Michael Chandler responding to your comment about my proposal.

I understand your concerns about uneducated weatherization contractors doing more harm than good and that is why my proposal specifically uses licensed DOE Energy Star or BPI energy auditors to do the evaluations before work is contracted and the energy audits at completion to verify the workmanship and to assure that only homes that can save enough to offset the cost of the loan payment would be brought into the program.

I'm not trying to make homes "very energy efficient" I agree that can't be done for $5,000. I am also aware of the unintended consequences of insulating walls in old houses and don't believe that fits within the budget or scope of this proposal.

But, as you point out, there are many old homes with leaky duct work in drafty attics and these homes both old and newer million dollar plus homes could defiantly save $50 per month with $5,000 worth of ceiling and duct air sealing and a sealed crawl and, in air conditioning climates, some radiant paint or a thin layer of spray foam on the underside of the roof sheathing.

Those who are focused on zero energy homes have the 2030 stimulus package to focus on. At $96 billion dollars a year ($187,000 per minute) I think it's a lot for tax payers to bite off and I'm trying to promote a more modest alternative.

I also think there is a great potential to put many more people to work on the modest project of tightening up crawlspaces and attics and duct work on a lot of houses if we can just pick the high return items and let the occupants pay for the cost through their energy bills (or property taxes as some have suggested). the real benefit is that when the initial work is done they are left with an accurate energy audit and are educated on what steps they may want to take next to continue the work.
Posted: 9:12 pm on February 28th

MFournier MFournier writes: Many people would love to have a more energy efficient home but it is not just the cost. (although it is a huge factor)

Other issues are:
1. That older buildings are not as easy to seal up and seriously improve as many make out. Many unscrupulous or poorly trained contractors take money to install more insulation or poorly installed modern windows or cover the outside with thin foam and vinyl siding and even after the updates the home still has leaks or although better sealed it now has poor moisture control.

The truth is it is not as simple as adding insulation or modern windows or sealing the building envelope these old buildings were not built to be sealed so when you make changes you need to address the whole structure and that is not cheap. So many efforts to improve these structures often lead to problems down the road.

Also Old buildings do not have insulated headers and have voids in the framing that are not easily accessed (without removing exterior and interior finishes.)
To properly bring a old structure to modern high efficiency building envelope often requires a complete whole building remodel (or at least it is much easier to do.)

Yes it is possible to add spray foam insulation (which eliminates the need for other vapor barriers) in walls and ceilings then add ridged foam on the outside under siding to eliminate thermal bridging of framing members but that requires all new siding and and it is much easier to properly insulate if you remove all the interior finishes. On a large house it could cost $10,000 to $20,000 just to remove and reinstall siding (vinyl siding is much cheaper) Never mind the cost of the insulation new windows/doors.

2. Old homes in historic districts face restrictions that hamper efforts to seriously improve their heating/cooling costs (most old homes in my area have no AC so have little cooling costs but I suppose in southern areas they do) many times old windows must be saved siding and finishes must be saved wall cavities may be filled with chinking (old clay brick and mud). making blown in insulation impossible without removing it first.

I am not saying that is is not possible to make old building very energy efficient in fact I know it is entirely possible but It is not not cheap. $5000.00 would not even make a dent to bring most older buildings to 2008 code never mind if your goal is Zero energy standards. It is very difficult to get new homes built to those standards never mind convince owners to update old buildings to that standard.

Thing is even with the worst house with no insulation and old drafty windows to seal even with higher fuel costs it still takes years to recoup the costs of a complete energy remodel. That is why it is usually only only done as part of complete renovation that also plans to update the stuff people like spending money on new interior finishes fancy kitchens/baths and new master suites.

You only need look at most of the luxury homes recently (before the bubble burst) to see that luxury interiors rated much higher then energy efficiency. Code minimum was the standard. And that was actually a joke if you had a 2x6 wall with old style framing (non insulated headers 16 on center framing double jacks full post corners and fill it with R-19 you still do not have a R-19 wall but that was the standard. Same as the R-30 attic insulation if you have air leaks at wall plates and poorly insulated HVAC ducts running though unconditioned attic space you still have energy waste. and this in new buildings even those that were selling for over a million dollars people were willing to spend money on granite counters marble showers and 3000-4000sq feet and huge 2 story great rooms but did they ask their builder if the building had a high efficient building envelope?
Posted: 10:05 am on February 28th

ShelterNerd ShelterNerd writes: I’m new to this blog stuff so I’m just going to assume that it’s okay to have a dialogue here to address some of the many questions I’ve received in response to my post below.

- If the savings are there for the taking why aren’t homeowners already doing it?

There are several factors at play here. First, many are unaware of the magnitude of the opportunity esp. in envelope improvement and are unwilling to spend money for an energy audit and would rather just blindly keep paying too much for energy.

When they do hit the home equity line or savings account for energy upgrades they tend to get sold on 20 SEER heat pumps and tankless water heaters without consideration of envelope opportunities that would have a better payback (like putting a V-8 in a car with four flat tires.) Or they add insulation to their attics without air ceiling the ceiling plane first (adding insulation to a wall with an open window.)

Many of us see our savings and home equity loans as “emergency money” and annual bonus money as “fun money.” Neither of these categories lend themselves to duct sealing, energy audits, and insulation upgrades. They just aren’t sexy enough to attract discretionary spending.

Finally, many of the homes and light commercial properties that need the most help aren’t owner-occupied. They’re rentals, and landlords are singularly un-motivated to spend time and money to reduce their tenant’s energy bills.

So we need a system that gets people into an energy audit and weatherization package that is no money down and no net change in monthly cost to the occupant with no impact on that sacred home equity line. There is a socio-economic component to energy policy here that must be taken into account. The default option is to continue to waste fuel living in a drafty, uncomfortable home with unhealthy indoor air.

- Is it necessary to require the utilities to handle the payments?

We need an alternative way to encourage weatherization projects. Even though these investments can pay for themselves people are resistant to making the investment. But we shouldn’t expect the utilities to do more than advertise to targeted neighborhoods in their monthly statements and forward the monthly payments to the state energy office for processing. They can get some benefit from the good press but the people who really stand to profit are the insulation and weatherization contractors who will do the work.

- Can we design it so the loans provide significantly greater payback than the payments?

In many cases this will be the case. But I don’t think it makes sense to exclude a building from the project due to the fact that the savings are only just equal to the payment. As energy costs go up the savings will increase. I think a case can be made that participation in the program should be extended to buildings where the break even point is at a 15% increase in energy cost. But we need to avoid having unhappy customers if the savings are significantly less than the cost.

- Each building will need an energy audit before and after.

This is an important part of the plan. In many cases though the first energy audit will not include a blower door and duct blaster test. No point in testing a house with open gaps in the ceiling and floor and duct work in an advanced state of decay. The weatherization contracts could also give the State Energy Office access to before and after energy bills for research and monitoring purposes. Every house will get a post-weatherization audit showing what has been accomplished and what other options the owner might take to continue the work beyond the scope of this program.

The post weatherization HERS rating may become valuable if the house is offered for resale as many areas may soon require an energy disclosure when selling a house as they require a termite report now.

- Who’s going to pay for all these energy audits?

The people with the most to gain from this program are the insulation and weatherization companies who will be doing the work. They would hire the licensed HERS raters to go into neighborhoods to line up as many weatherization contracts as possible. The cost of this auditing and sales push would be covered by the companies doing the work but the auditors would be third-party verified for quality assurance and follow-up sample auditing of their work would be performed by the state energy offices on an annual basis similar to the way the pesticide applicators get spot soil samples taken annually to verify proper pesticide application.

- What happens to the monthly payment if the house goes into foreclosure or is sold?

The weatherization payment goes with the electrical connection to the next owner in the same way it does now and similar to arrangements made for buried propane tanks. If a seller wants to convey a house unencumbered by the weatherization contract it would need to be paid off at the closing. If the electric bill goes unpaid the power gets shut off and the payment goes into default until the bill is paid and the power turned back on.

- What do you mean by saying that people of all income levels are too hand-to-mouth to afford a $5,000 weatherization package, doesn’t hand-to-mouth imply low income?

Welcome to America. Many people with $100,000 plus incomes are solidly middle class but chronically live beyond their means due to bloated home equity and credit card debt. Many of the relatively new McMansions they live in were built to the lowest code-legal standard and would benefit greatly from $5,000 worth of weatherization. Our energy problems are not limited to low income homeowners and the solutions won’t be either.

- Where is the money going to come from and what’s in it for the lenders?

This proposal does ask the federal government to send more money for staffing to state energy offices and community colleges. It does not require utilities to loan money to their customers or to make zero-interest loans. However, since the penalty for not making your monthly weatherization payment is that you get your electricity shut off the loans are very low-risk. State energy offices should be able to bundle quantities of these $5,000 micro loans into securities that can be sold to banks and other investors at an attractive interest rate that would be included in the monthly payment. The electricity companies could earn a small processing fee but would gain good press from their participation.

- What’s wrong with just continuing the time-honored practice of offering free weatherization to low income homeowners and tax credits to the rest of us for doing this work?

Beyond the issues of tax farming and the fly-by-night operators who promote shoddy work for tax credits what we need to do is grow an industry here, not just weatherize two million buildings. When we give something away, either through direct subsidies or tax write-offs, we de-value that thing in the marketplace. We create a sense of entitlement in the consumer that makes it difficult to sell that same item on the open market for a price that reflects its true value. This undermines the industry.

The solar industry has been crippled by a feast and famine reality caused by being so dependent on tax subsidies. This alternative financing strategy doesn’t undermine the value of the work. The beneficiaries of this program are paying full price for the work they are getting done, it’s just being financed creatively. By nurturing an industry we can better take advantage of economies of scale and make the service available to rich and poor and renters and small businesses alike without impacting the national debt. Why should taxpayers pay to subsidize something that pays for itself?

- Won’t this create a huge new bureaucracy?

As it stands, state energy offices are chronically underfunded and need more support. They would be asked to partner with the Department of Energy, Energy Star and BPI to implement this project with training help from the existing community college systems. The money to do this would come from our taxes but the money to do the work would be paid for by the beneficiaries. We are not so much creating a new bureaucracy as strengthening what we already have to solve our nation’s problems as economically as possible. Most importantly, since these are not gifts, there is no income, need or credit verification required. It’s just a contract to have work done for a fee on a payment plan. Much less paperwork.

- What about the 2030 Stimulus Plan being promoted by Architecture 2030?

This plan and the 2030 plan can certainly co-exist, but I have 30 years of experience building high performance buildings and the 2030 plan is based on the assumption that it is pretty easy to make a building perform at 30% better than code and that 50% better is also easily attainable. My company just built a house that had a 9” thick ICF foundation, solar water heating and radiant floor with tankless propane backup, passive solar glazing, 6” foam in the walls, 8” foam in the roof and 37” overhangs for summer shading. It was still only 35% better than code. It's harder than it looks. I know that 50% better than code is attainable in new construction but to make it wide-spread in renovations and to spend $96 billion a year in deficit spending in pursuit of this goal seems unrealistic to me. 96 billion seconds is 3,043 years.

- I like this idea and want to help, what can I do?

Obviously, plenty of you are already finding my e-mail address and phone number thanks to the miracle of Google. So I thank you for your enthusiasm and ask that you lose the phone number. E-mail is fine, Michael@ChandlerDesignBuild.com will get to me.

But what I will tell you all is to contact your government representatives, your state energy office, your governor’s office and utility companies. If you are a member of NAHB spread it within your HBA and to your contacts at National. The building industry has benefited greatly from the recent bail-out, we would do well to promote a low-cost initiative for a change. What you can do is spread the word.

- What’s next?

It does come down to dollars and cents on many levels and so long as coal and oil are subsidized such that it is cost effective to burn 100,000 BTU of coal to deliver 35,000 BTU of electricity we will continue to have a problem.
- Let’s put a resource extraction tax on coal, reduce the tax subsidies on oil and divert those resources to support the solar industry instead.

Instead of end user tax subsidies on weatherization and solar let’s put the subsidies at the front end of production.
- Let’s subsidize the production cost of solar and weatherization components and raw materials and let market forces drive innovation and push the price down for all consumers, not just the ones who need a tax break.

Our power grid is at the limit of expansion but instead of replacing the grid we can shift to a distributed model of electric production.
- Let’s put solar PV on all government buildings and build PV shade structures on parking lots to turn them into electricity producers that put the electricity into the grid closer to where it is being taken out.

Let the cost of conventional energy rise gradually through elimination of subsidies to change the payback equation.
- I’m not running for public office so I can say that I think gas should be $3.75 a gallon and coal-fired electricity should be much more expensive than it currently is.

Use government investments to deliberately nurture and build a sustainable alternative energy industry.
- Control the flow of government infrastructure projects (solar office roofs and parking lots, micro-cogeneration projects) to even out the demand in the alternative energy industry to change the boom and bust cycle to a steadily expanding market.
- Invest government money in open-source research to drive innovation. The possibilities in solar, quiet wind, micro-cogeneration, and electric vehicles are unimagined as yet.

Posted: 12:26 am on February 24th

EcoLogicCyd EcoLogicCyd writes: Mike,

What you are proposing is similar to the Home Performance with Energy Star Program in New York State, only with some interesting variations. It would be useful to you to look closely at the New York State model, because you are almost describing it to the T.

Our Energy Auditors are trained at Community Colleges and certified by the Building Performance Institute (www.BPI.org). Once certified, an insulation contractor is held to the BPI standard of work, and can become an Accredited, NYSERDA Home Performance Contractors. All Home Performance jobs are then eligible for New York State Energy Resources Development Authority (NYSERDA) grants and incentives. These projects are then verified by another neutral organization (Conservation Services Group) and tested out for actual energy saving results, as well as a number of health and safety measures.

As a Home Performance Contractor, I can set up a package for a home owner that will reduce their heating bills by half, and cost them nothing out of pocket but the cost of the audit. I can also feel confident that the house I leave behind when I am done actually achieved the results I proposed, and is safe with respect to adequate air flow, and combustion appliance operation.

The downfall? It's a huge Bureaucracy. You have to be able to stomach the paper work. Many contractors I have spoken to don't bother.

I would be interested in working with you to develop your ideas.
Posted: 11:15 am on February 20th

Bob_Kingery Bob_Kingery writes: Michael,

I like your creativity on this topic.

I do not think the utilities would oppose a plan like this because the impact would be less than the positive PR they would receive. Also they would be assisting a group of clients that are most at risk not to pay their bills so the income would probably not decline in a significant way. Many utilities in the USA are also in a position to need to build new power plants and utilities are trying to bank as much positive PR as they can to assist in getting new plants pushed thru the system.

Who would administer this one is a sticky one. A small transaction $ is hard to manage efficiently and utilities are not known for prowess in this area. Someone who could aggregate more at a neighborhood level might be better.

HERS raters are in a good position to assist in the QC process. Characterizing of homes is an important step. Some types are really easy, other complex. Take the easy ones and do them first. Training is less and mistakes/liability is easier to control.

Keep cracking on this rock as it is one worth breaking open!


Bob Kingery
Posted: 8:23 am on February 18th

bertgurg bertgurg writes: I really like the ideas you are proposing, Michael. Multiple benefits, as listed in the comments. Almost instantaneous startup. Great opportunity for builders/remodelers to prosper in a dismal economic climate.

As I mentioned in our emails, the biggest opposition to this will come from the big power producers who will see it as a threat to their profit margins. It'll take some serious clout to overcome their lobby, but if ever there were a time to do it, the time is now.

I'm on board.


Posted: 1:10 pm on February 17th

GreenCountryHomes GreenCountryHomes writes: Michael , as usual for you , a well thought out program ! I think this would help the Resale Market also ! If the houses had a HERS Rating after insulation work is done , homeowner would be able to use this to market the Energy Efficiency of the house in the future ! The HERS Rating before insulation upgrades would become part of the " before & after story " . If you up the ante with Energy Star Appliances the benefit grows even bigger ! Keepin' it Green ! Ed Nikles Jr.
Posted: 10:03 am on February 17th

RSEASE RSEASE writes: To insure that the house was properly insulated,each house needs to have an energy audit before and after the job,done by a certified company. Otherwise, the home owner can not be sure that the job was done correctly and energy saving will be real.
Posted: 6:55 pm on February 16th

RobertPhysicist RobertPhysicist writes: Two comments:
1) It is not absolutely necessary to require the utilities to handle the payments.
2) The loans should be structured so the paybacks are significantly greater than the loan payments. It would provide a much stronger incentive for people to make the commitment. This shouldn't be too difficult for retrofits with a short (5-10 year) payback.

Posted: 3:20 pm on February 16th

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