Sunday, December 14, 2008

Energy Efficiency for Buildings

Ted Kulongoski, Governor of Oregon, plans to send the Oregon legislature a bill next month which would require disclosure of the energy use and greenhouse gas emissions of all buildings for sale in the state. Homes would be covered starting in 2010 with businesses following in 2011.

Home builders are predictably sceptical:
Jon Chandler, chief executive of the Oregon Homebuilders Association, called mandatory certificates “silly.” “It’s an educational tool,” Mr. Chandler said. “It doesn’t do anything for energy efficiency one way or another.”
Really? The disclosure of the energy use of furnaces, water heaters, and appliances has certainly had an educational effect, but armed with that education consumers increasingly demanded more efficient models, and manufacturers focused their efforts on meeting that demand. Most consumers no longer even consider an appliance that lacks an Energy Star label. The result has been an overall increase in energy efficiency--40% for refrigerators since 2001--exactly the result intended and the result which Jon Chandler appears to believe won't happen with buildings.

Energy Star was expanded to also include new homes in 1995, but I don't believe that this is widely known. Energy Star ratings on homes certainly aren't widely used--my wife and I bought our home a year ago, and we looked at several new homes. Not one had any hint of Energy Star or other efficiency information, except on the appliances. Like most, we bought with little idea what the monthly energy costs would be.

The reluctance of home builders stems, as ever, from their cost. It costs something to do the energy analysis of a building and get an Energy Star (or other) rating. It likely costs more still to make the design, materials, and other decisions necessary to garner a good rating. Such costs may decrease over time as the building industry gains familiarity with good energy designs and realizes economies of scale in implementing them. Meanwhile, the overall trend of rising energy costs is impelling consumers towards more energy efficient purchases. A higher purchase price can be justified if it entails longer-term operating cost savings. This is clearly happening right now with cars.

Astute businesses don't wait for government mandates before addressing evolving customer preferences. This is true for car companies, and it will soon become true of builders as well. Why wait until your costs are higher and competitors are eating your lunch? Chandler tacitly acknowledges this truth when he admits:
We’re gearing up for the mandate. We’d like to position ourselves to do the contracting work.
Indeed. Why not make money from giving customers what they want? Be a leader! Our future energy economy will require massive investment in renewable energy, smart grid technology, distributed electrical generation and energy efficiency. The trend is clear--voluntary systems like Energy Star, Portland's nonprofit Earth Advantage, and programs in California and Minnesota will likely give way to required disclosures such as those in the UK.

Promoting energy efficiency is a critical part of an overall energy policy, and one of the most cost-effective. Utilities already subsidize everything from refrigerators and furnaces to windows and insulation. Homeowners can get an energy audit, which are generally available for free in most areas, and are offered by energy utilities, local governments and educational institutions, especially those that have related vocational programs. It's time for the building industry to get more proactive in both building and bragging about their energy efficient products.

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1 comment:

Jon Chandler said...

Just to clarify - the "silly" referred to the mandatory aspect of the proposal. The Oregon HBA has endorsed the use of energy performance scores in new homes, we intend to provide the rating service to our members, and generally our intention is to continue to be a leader in energy efficient homes. In the interview from which the quote was pulled, I told the reporter that, but also that I didn't think that a mandate should be the first step that government takes. Hence the 'silly' and hence the misperception.