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“Cash For Caulkers” Energy Retrofit Program Needs To Work At The Local Level

Please to allow me a point of personal privilege in a slow news week.

A little while back I interviewed Sen. Jeff Merkley, and when we weren’t talking about Ben Bernanke or the filibuster, we discussed his innovative idea to encourage energy retrofits across the country through low-interest loans. The “cash for caulkers” idea is one cited by President Obama as part of his early 2010 jobs strategy, to pay people to do energy retrofits on their homes, increasing energy efficiency while creating jobs in the construction sector. Merkley thinks it’s a good idea, but he wants to change the way in which that relief gets delivered to the individual homeowner.

“The Administration approach has been to use tax credits or rebates,” Sen. Merkley said. “But people don’t always have the thousands of dollars needed to pay for the work upfront. So you could do it through loans, repaid through your electric bill so you don’t even feel the costs, they’re absorbed by the energy savings. You get a lot more energy savings by expanding the number of people who can do the work, you create more jobs, and in the long term, create an industry for energy retrofits. It’s a win in so many ways.”

David Roberts discussed this at Grist a few weeks back, and Sen. Merkley released more information, estimating that $2 billion in loan guarantees structured in his preferred way could lead to $20-$40 billion in financing.

A variety of financing mechanisms are available, and many are being tested in innovative city and state programs. They include the PACE model, whereby governments offer tax-based financing repaid through a surcharge on property taxes, and on-bill financing, whereby governments or utilities offer financing that’s repaid through a surcharge on electricity bills.

What these efforts have in common is a) they are hassle-free for consumers, which efficiency advocates have learned through hard experience is absolutely necessary, and b) they eliminate the high upfront cost barrier that prevents so many retrofit investments.

This all makes a tremendous amount of sense, and the success of the program in Merkley’s home state of Oregon suggests it could really tip homeowners and commercial property owners to make serious energy efficiency changes to their buildings. But before they finalize the rules, they might want to see how they interface with local regulatory rules.

I am in the middle of a remodel on a house, where we are not adding any square footage or changing the footprint of the unit at all. Nevertheless, to receive a permit for this work, and mainly because of an effort to change the house’s windows and exterior doors, we needed signoff from the Department of Transportation, Coastal Commission, Planning, Bureau of Engineering (including paying over $1,300 for a revocable permit which is another story), and the department responsible for the Venice Specific Plan. We are four months into the process and have still not received the permit. Due to local rules, if a homeowner seeks to make any change to any portion of the exterior, whether visible from the street or not, the authorizing agency (in this case the Venice Specific Plan) can demand a series of requirements. Moreover, the other departments involved in the process seem to have no idea what regulations apply and what do not, leading to a confusing set of signals and demands and needs.

More than anything, the point of changing the windows was for purposes of energy efficiency. But triggering the alphabet soup of agencies and adding burdens to our homeowner’s insurance eventually turned us against making those changes. Therefore, local regulatory requirements nudged us away from making energy improvements to the house and spending money we were willing to spend in materials and installation.

Meanwhile, these regulatory hoops can apparently be removed with what amounts to a payoff. The Venice Specific Plan doesn’t apply the same standard to all homes in the area for the purposes of maintaining the neighborhood’s character: dozens of large box-style duplexes have sprung up of late, bearing no resemblance to the rest of the homes in the area. These homebuilders have brokers who manage to break through the red tape. Either the laws are fairly applied to preserve the neighborhood or not. It otherwise appears to be extortionist.

An energy retrofit program would be a boon to the economy, would reduce greenhouse gas emissions and could reduce barriers to entry for millions of Americans who would otherwise not see upgrades in their homes or places of business. But it has to be done in concert with a process that ensures such retrofits are accessible and allowable without blockage at the local level.

There, rant over.

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David Dayen

David Dayen