By: Phil Crone
HBA of Greater Dallas
Green Vine News Column, May 2009
This month’s column is sort of a carry-over from last month, but the gravity of this issue has led me to pick up where I left off. Thus far, most of the demand for resource-efficient or green homes has been market-driven and a product of consumers wanting to save money. This demand is what spurred the creation of green building programs such as Green Built Texas that came about to find a way to get the maximum amount of home performance for the least practicable cost.
I commonly call free market demand the pulling force that is steadily moving the industry to build more efficient homes at a rate that consumers’ wallets can bear. On the other hand there is also a pushing force behind this movement that comes from regulation. As it should, this second force has trudged steadily behind the pull of a certain segment of the market that is looking for a green home and what green programs are designed to serve. Sometimes we need to be reminded that not everybody wants these things. However, there needs to be, and has been, a reasonable degree of push that has come from the evolution of the energy code, which has progressed to the point where homes built today are twice as efficient as the ones we built 30 years ago.
As we all know, green has been the “in thing” with consumers for several years now and policy makers including President Obama have enjoyed great success in garnering votes by catering to this sentiment. Being the good capitalist that I am, I believe, and I think most of you would agree, that the best way to continue to build more efficient homes is by spurring more demand or increasing the “pulling” force on the market through promotion, advertising, and financial incentives that include tax credits. But, now we are in grave danger of “pushing” force of regulation shoving our industry and market-driven programs like Green Built Texas right over the cliff into an uncertain abyss.
Last month, I left you wondering what Congress would do following the EPA ruling that carbon emissions pose a threat to public safety and welfare. My searching since then has come up all ACES. By that I mean the American Clean Energy and Security Act (ACES). The bill is currently a “discussion draft” lingering in the House Subcommittee on Energy and the Environment, but President Obama has called for significant action on the bill to be taken by December when the international community meets in Copenhagen, Denmark to come up with a successor to the Kyoto Treaty. Kyoto has led to the establishment of a rigorous carbon emissions trading system in Europe, but was not signed by the U.S. Long story short, by the end of the year, the U.S. will likely be signed up for a comprehensive and rigorous emissions trading or cap-and-trade system and its provisions are already germinating in ACES.
So what does this mean for us? Well, buried in the 900+ pages of ACES are provisions that will push the nation’s building energy codes like never before. For example, within a year after the bill is signed by the President, (presumably he will sign it by the end of this year) it would require states to update their energy codes to the 2009 IECC, a level that is 12-15% more efficient than the current code level. Note that this will likely be required by state legislation in January 2012. Three years after that, the energy code must evolve to become 30% more efficient than current levels and then by 2014, it must be 50% above. Are you as concerned as I am yet?
Not only will this bill likely spell the end of market-driven green building and the pulling force that has made this such an incredible movement in the past few years, it will also have a substantial impact on housing affordability and put an already-fragile market in deeper peril. NAHB seems to be aware of this bill and has made the argument that this will derail the regular ICC code making process (which it will) and that the bill is unconstitutional. In my opinion, the constitutionality argument has a steep uphill battle as the precedent of the Massachusetts v. EPA case and subsequent EPA ruling that I talked about last month will likely override any due process claims since greenhouse gas emissions are deemed threats to public welfare.
There is also a state’s rights issue since the bill says if a state’s codes fail to meet the federal performance targets noted above, then the federal targets are then imposed upon that state. Again it’s a tough constitutional argument since Congress could regulate this under its “interstate commerce” powers. Also, as we saw with the building code provisions of the last federal economic stimulus package, Congress could instead dangle more money out there for states to “voluntarily” follow their regulations than elected officials could afford to refuse. Despite the rhetoric among some governors, they almost always take the money.
As Congress deals out its ACES and threatens to trump years worth of environmental progression in the home building industry, some prospective is needed. Remember that buildings are often cited as 40% of the greenhouse gas emissions “problem.” However, new homes, built in the last ten years, only account for 2.5% of this number and half of that is lost in the power grid and never makes it to the home. This leaves an aging housing stock that constitutes that vast majority of the problem. The only way to upgrade them is through market incentives such as tax credits.
However, in Congress’s infinite wisdom, the plan currently is to increase the cost of new homes to the point that will keep most of us (especially poor law school graduates) in these older existing homes instead of the more efficient ones we are currently building. Also, keep in mind that a home’s greenhouse gas emissions are a product of the power plant it is connected to. For example, you could have the least efficient home you could think of connected to a nuclear power plant and that home would use virtually no emissions since nuke plants emit very low amounts of carbon emissions.
I wish I had a better solution, but I think the best course of action is to make our voices heard. Urge NAHB to get all hands on deck for this issue and make your congressmen aware of the impact ACES will have now, while there is still plenty of time to act.
