March 3, 2008

U.S. Department of Energy Challenges U.S. Homebuilding Industry
Government calls on private sector to build 220,000 energy-efficient homes by 2012

The U.S. Department of Energy (DOE) has launched the Builders Challenge, a voluntary national energy savings program calling for the U.S. homebuilding industry to build 220,000 high-performance, energy efficient homes by 2012. A high-performance home would use at least 30 percent less energy than a typical new home built to meet criteria of the 2006 International Energy Conservation Code. As part of DOE’s Builders Challenge, 38 homebuilders have already pledged to build an estimated total of 6,000 high-performance homes. Ultimately, DOE aims to see 1.3 million homes of this high standard constructed by 2030, allowing Americans to save $1.7 billion in energy costs, or the carbon equivalent of taking 606,000 cars off the road annually.

In order to meet Builders Challenge requirements, a high-performance home must score a 70 or lower on DOE’s EnergySmart Home Scale (E-Scale), which rates a home’s energy performance, enabling home buyers to make smart energy decisions when purchasing a home. An E-Scale label would be placed on a home’s electrical panel to identify it as a DOE Builders Challenge home and to provide an understanding of the home’s energy efficiency. Typical homes built today average a score of 100 on this scale. The Builders Challenge aims for a rating of 70 or lower, making them approximately 30 percent more energy efficient than a typical new home. The ultimate goal is to have all new homes rate a zero on this scale, also referred to as a zero-energy home - meaning a home produces at least as much energy as it consumes.

In addition to the Department’s Builders Challenge making available “builder option packages,” which provide guidance for building high-performance homes specific to different climate zones, meeting particular criteria outlined in theses packages can also allow homeowners to qualify for a $2,000 federal tax credit enacted in section 1332 of the Energy Policy Act of 2005. In order to qualify for this credit, each home must have a level of annual heating and cooling energy consumption at least 50 percent below the annual level of heating and cooling energy consumption of a comparable home. Learn more about the tax credits available for the construction of new energy efficient homes.

International Code Council Committee Sets Stage for Boost in Energy Efficiency of New U.S. Homes
Model energy building efficiency codes under the 2009 International Energy Conservation Code (IECC) could be strengthened substantially if action taken at the just-completed 2008 Codes Forum of the International Code Council (ICC) is upheld at the ICC annual meeting in September. The IECC, which is amended every three years, is the model energy efficient building code recognized by federal law.

“The IECC Development Committee has elevated energy efficiency to the importance today’s international energy crisis warrants,” said William Fay, coordinator of the broad-based Energy Efficient Codes Coalition (EECC). “By recommending the first substantial boost in model energy codes for residential buildings in over a decade, the committee vote has confronted one of the last frontiers of wasted energy, a sector accounting for 40 percent of our nation’s energy and carbon emissions and 75 percent of its electricity.”

Soon after the hearings began, the committee turned to the EECC’s “30% Solution,” a comprehensive package of achievable and affordable model code improvements that, if fully implemented, would boost new home energy efficiency by 30 percent. Calls for a stronger energy code – on the order of 30 percent or beyond – are coming from a growing number of governmental and other bodies, including members of Congress and the EPA/DOE National Action Plan for Energy Efficiency, ASHRAE, Western Governors Association, US Department of Energy, National Petroleum Council, American Institute of Architects and Mayors for Climate Protection.

“The benefits of a 30 percent boost in US energy efficiency,” Fay noted, “are impressive:

• “Energy savings of 14.6 quadrillion Btu over the next 20 years (equal to the annual energy output of 132 base load power plants) and 790 million less metric tons of CO2.
• “Annual homeowner savings of $112 billion from reducing wasted energy.”

Fay added that a powerful national case for “The 30% Solution” was presented by an influential line-up of advocates that included:

• The US Department of Energy,
• A letter signed by over 30 mayors, led by Mayors Will Wynn (Austin), Michael Bloomberg (NYC), Manny Diaz (Miami), Adrian Fenty (Washington, DC), Bob Foster (Long Beach), Greg Nickels (Seattle) and Doug Palmer (Trenton),
• The National Association of State Energy Officials,
• Utilities (represented by the Edison Electric Institute)
• Northeast, Southeast, Midwest, Southwest and Northwest regional energy efficiency alliances,
• Environmental, energy consumer and low-income homeowner groups,
• The Alliance to Save Energy, American Council for an Energy Efficient Economy, New Buildings Institute and the United Nations Foundation.
• The Business Council for Sustainable Energy and other business trade associations.

Although the Development Committee did not recommend all elements of EECC’s proposed “The 30% Solution” for adoption, other significant energy-saving code improvements by the Department of Energy, the Northwest Energy Codes Group and others, which were supported by EECC, were recommended for approval along with many of EECC’s proposals. With these and other proposals on the docket in September, the EECC believes the final 2009 IECC package will mean a substantial boost in energy efficiency for new home construction.

The IECC Development Committee’s recommendations will be submitted for approval at the Final Action Hearings this Fall where they will be voted on by the ICC’s membership, comprised of government officials that administer, adopt or enforce US building codes.

CIBC World Markets Report - Efficiency Paradox
Energy-efficiency initiatives and regulations do little to cut energy use and often end up increasing consumption, finds a new report from Canada's CIBC World Markets.

"While seemingly perverse, improvements in energy efficiency result in more of the good being consumed - not less," says Jeff Rubin, the Chief Economist and Chief Strategist at CIBC World Markets. He finds an efficiency paradox where consumers have taken the cost-savings gained through greater efficiency and turned around and spent those savings on more and bigger energy-guzzling products.

Mr. Rubin notes that with the depletion of conventional oil supply becoming more and more evident and concerns growing over greenhouse gas emissions, energy-efficiency regulations have been widely viewed as the answer. Efficiency gains play a prominent role in most government plans to manage energy consumption, including the latest U.S. Energy Act. But his work finds that these programs are compounding rather than solving the problem.

"The problem is that energy efficiency is not the final objective—reducing energy consumption must be the final objective to both the challenges of conventional oil depletion and to greenhouse gas emissions," he adds. "Despite the huge gains in energy efficiency, that is simply not happening. Instead, energy consumption is growing by ever increasing amounts."

The report finds that while energy use per unit of U.S. GDP has fallen by almost 50 percent since 1975, total energy usage in the U.S. economy has risen by more than 40 percent in the same period. Most government efforts to promote greater energy efficiency have been targeted at the transportation and residential sectors which together account for half of total energy consumption in the American economy.

"While these initiatives have largely been successful at promoting large increases in energy efficiency - almost double the pace in the rest of the economy - overall energy usage in the transportation and residential sectors has risen faster than in the rest of the economy," says Mr. Rubin. "In short, energy usage has risen fastest where energy efficiency gains have been the greatest."

The situation is the same for carbon emissions where emissions from the transportation and residential sectors have risen by 40 percent, double the pace of emission growth in the rest of the economy over the last decade.

The report notes that the transportation sector is one of the best examples of the efficiency paradox. The sector accounts for almost 30 percent of end-use energy consumption and accounts for 70 percent of oil consumption in the form of gasoline, diesel and jet fuel. The sector has seen steady and substantial improvements in energy efficiency since the OPEC oil shocks.

Since 1980, average mileage per gallon has improved by nearly 30 percent but these gains have not translated into actual savings in the amount of oil consumed. American drivers consumed all of the gains in fuel efficiency by driving more and by driving larger vehicles. In 1970, the average American car was driven 9,500 miles a year, today it is driven over 12,000 miles a year.

"While initially the pursuit of fuel economy in North America led to the replacement of gas-guzzling eight cylinder full size cars with four cylinder sub-compacts, over time steady improvements in fuel economy encouraged Americans to drive larger and larger vehicles," notes Mr. Rubin.

"The number of light trucks, which include SUVs, vans and pick-ups, has risen 45 percent between 1995-2005 - nine times faster than passenger cars. In fact, light trucks accounted for more than 80 percent of total new vehicle registrations since the early 1980s, making itself without question, the vehicle of choice for your standard American family. On average, light trucks have 25 percent worse fuel economy than the standard car."

But Mr. Rubin found the story does not end there. Improvements in fuel economy have allowed more people to drive cars. Today there are 130 million more vehicles on the road in America than there was in 1970. Over the past decade, the number of cars on American roads grew at twice the pace of household formation. Improved fuel efficiency that has brought down the operating cost of running a vehicle has encouraged more and more American households to own more than one.

The same patterns between improved efficiency and growing usage found in the transportation sector are also amply in evidence in the residential sector, which accounts for roughly 20 percent of all energy usage in the American economy. Improvements in thermal insulation and in the energy efficiency of major appliances including furnaces and air conditioners have all contributed to major gains in energy efficiency over the last three decades. Virtually every major household appliance in the U.S. must now meet some minimum energy efficiency standard.

But these efficiency gains have also been swallowed up by large increases in usage - most noticeably by air conditioning and heating systems. The energy efficiency of air conditioning systems has risen 17 percent since 1990 but during the same time the number of air conditioning units has risen by 36 percent. The key reason why usage has grown so much faster than efficiency is the never ending trend toward larger and larger American homes with larger and larger heating and cooling requirements. Since 1950, the average American home has grown from 1000 square feet to almost 2500 square feet. And the trend to ever larger houses continues. Today, almost one third of all new homes in the U.S. are over 2500 square feet.

Over the last 15 years the energy efficiency of refrigerators has improved by just under 10 percent but the number of refrigerators is up 20 percent, due largely to the increased frequency of a second refrigerator in the home. Add to that, the ever increasing number of power consuming appliances like computers found in today's standard American home and the trend toward rising, not falling, energy usage per household is very clear.

Mr. Rubin believes that a world facing the twin challenges of oil depletion and global climate change has never had a greater need for energy efficiency but feels that the scope of current initiatives will not see this achieved.

"In order for efficiency to actually curb energy usage, as opposed to energy intensity, consumers must be kept from reaping the benefits of those initiatives in ever-greater energy consumption. Otherwise, energy usage will be the beneficiary of our best efforts towards greater energy efficiency."

CIBC World Markets is the wholesale and corporate banking arm of CIBC (based in Canada), providing integrated credit and capital markets products, investment banking and merchant banking to clients in financial markets in North America and around the world. They provide capital solutions and advisory expertise across a wide range of industries as well as research for corporate, government and institutional clients.

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Gulf Coast Green - Apr. 3-4
The theme of the 2008 conference is “Innovations in Building for Hot and Humid Climates." The specific focus of the conference is green or sustainable building along the Gulf Coast region, but the content includes broader issues of sustainability such as sustainable land use and global warming.

Kitchen/Bath Industry Show & Conference - Apr. 10-13
This year's trade show and conference takes place in Chicago. Celebrity-studded expert panels, trend-focused workshops and innovative educational sessions - including a workshop for "What constitutes a sustainable approach to kitchen and bath design?"

16th National Conference on Building Commissioning - Apr. 22-24
The National Conference on Building Commissioning will be in Newport Beach, CA this year. Experts and newcomers meet to expand their knowledge of commissioning and to contribute to a more sustainable future.