Guest Blog: Is There a Paradigm Shift on the Horizon for Home Retrofits?

November 20th, 2012 by DWM Magazine

by Arlene Stewart

Running a business would be so much easier if you could buy a crystal ball when you filed your incorporation papers. Then you’d really know what to prepare for in the next quarter, next year and five years out. We all know it’s nowhere near that easy. While past activity is certainly important, current headlines across a number of sectors also provide critical insight into where we should be looking for what’s going to happen when it comes to trends. Usually, those clues develop subtly over time. Seldom do clues and conclusions come blaring in at full speed, like they did in November 2012.

I think there is a paradigm shift brewing in retrofitting, that also has the potential to be the boon window manufacturers have needed for decades.

I do have to qualify my statement in that we have known for a long time that a paradigm shift is badly needed. Windows have long been cursed as being the problem consumers are unwilling to fix. I’m preaching to the choir when I say it’s an uphill battle. For every expert who knows replacing those windows is the right thing to do, there are three others who will talk a consumer out of it, toward another efficiency measure that has a seven-year payback (the average time homeowners used to stay in a house). I wanted to scream at the study from the National Trust for Historic Preservation. Consumers will make decisions based on this drivel that in my opinion is less solid than the data that got five window companies in trouble with the Federal Trade Commission back in April. Consumers will listen because it’s touted by a non-profit, by an expert. How is this fair?

Instead, I always thought Linda Wigington was right when she started talking about the need for holistic, deep retrofits, that windows can’t help but be a part of. Unfortunately, we’re stuck in a seven-year payback rut that fosters the patchwork problem Linda identified. Windows continually lose to cheap energy fixes that only go so far. They certainly don’t add significantly toward making the existing house energy competitive with new housing.

That rut may have gotten worse. Sustainable Brands reported America’s “Learned Helplessness” as identified in the Shelton Group’s Energy Pulse survey. Not only are Americans unwilling to recognize how their lifestyle choices affect their energy bills but they also “have increasingly unrealistic expectations for returns on efficiency-improvement investments.” If America really is in an energy renaissance, even the seven-year payback’s days are limited. This is more bad news for window replacements.

That’s why I think President Obama’s announcement to focus more on climate change is a bright spot, even if you voted for the other guy. This climate change stuff has been gaining a progressively strong regional foothold. Lawsuit be damned, California’s Cap and Trade went live on November 16 . Then there was Business Week’s post Sandy headline – It’s Global Warming, Stupid! Finally McGraw Hill reports the green building sector continues to grow.

People are primed to think carbon. In his address, Obama mentioned car and truck efficiencies, renewables and jobs. Everyone else then jumped to a carbon tax, which no business wants, least of all the fossil fuel companies.

This could be a truly brilliant set-up to resurrect Recovery thru Retrofit. The first two shots at implementing this plan did not do well on the job front. While there was a boatload of money thrown into the Weatherization Assistance Program (WAP), it wasn’t disseminated in a way that put lots of people not currently associated with WAP back to work. The second shot was Home Star, which fell victim to association turf wars, bad timing and debt shock. Given the fiscal cliff we’re on, kiss any kind of rebate program goodbye.

But could this be an alternative to the carbon tax everyone is dreading? As the insightful Chris Mathis reminds me, a good compromise is one where no one is completely happy. Obama can bargain away the tax, get a similar end result and leave everyone feeling reasonably lucky and only mildly miffed.

What portends this compromise? First off, in addition to calling for a modest carbon tax, The Brookings Institution called for Congress to include PACE as part of badly needed housing finance reform. Where the housing market has traditionally led America out of recessions, new housing still languishes. PACE can begin the paradigm shift from “energy-retrofits-have-to-pay-for-themselves” to “better-upgrade-to-be-as-good-as-new-housing-to-keep-the-value.” Those deep, five-digit, holistic retrofits will require more expertise than the average DIYS has, so it creates jobs as the building industry continues to shift to remodeling. Of course, if this approach is going to work, Congress has to also put additional pressure on the appraisal industry to correctly value these improvements. This is a step in toward rebuilding housing values lost in the crash, stabilizing middle class wealth.

These also take a bite out of the carbon pie. Carbon emissions from buildings and homes are slightly less than vehicles. However, if you take a larger slice of a smaller pie, you ultimately have more pie.

Environmentalists may want a tax, but if reduced carbon slows global warming, they shouldn’t complain.

It also breaks up the strong anti-carbon tax coalition. Since there is no tax, Tea Partiers are less engaged. In the absence of a single focal point to fight, more fissures are likely to show up in the Republican party, like the one perpetuated by straight-shooter Chris Christie. The automotive and oil industry may breathe a sigh of relief that they only have to contend with increased fuel efficiencies, which they already know they have to figure out.

For utilities, they have a love-hate relationship with energy efficiency. The most carbon-effective and cost-effective kilowatt is one that isn’t used. This is also antithetical to an industry that makes its money selling power. Think about the choice, though? National Demand Side Management requirements under their own administration vs. a carbon tax? What’s the lesser of the two evils, especially when the former can make the company look like an environmental hero?

I am firmly convinced that this is the kind of big push that manufacturers with products that save energy over a 20 year span really need. Spotty dribs and drabs, a program here, a rebate there, just create headaches. These deep retrofits with longer investment times are critical because everyone wants new windows. The national push creates buzz and gives a focal point.

Even though it’s pure speculation on my part, I really hope I haven’t jinxed anything by saying it out loud (I’m superstitious that way). That’s the thing about speculations – sometimes sheer force of will can make it happen and panic can make it disintegrate. Remember that as manufacturers, you have a huge ability as a collective group to affect the outcome. Not only do you employ people, but you also contribute to the tax base. While some want you to pay more taxes, practically it’s better to keep you and your workers solid than lose both local tax bases completely. Tell your local and state representatives often what you do for your community and why this approach may be better for you and your employees. If you don’t agree with what I’m seeing, I’m all ears for what won’t work or what can/should be done better.

 Besides, what’s the alternative? Bulldoze all the obsolete housing in the country? Tell me how THAT is green or sustainable?

Arlene Zavocki Stewart is the principal for AZS Consulting, Inc., a firm established in 2000 specializing in energy efficient and sustainable building compliance, advocacy, certification, training and promotion. Their Lab to Ad project (www.labtoad.com) helps companies connect the technical information with marketing so customers can leap to intended conclusions. She tweets headlines at @ArleneOnEnergy and may be reached at azstewart@azsconsultinginc.com with questions or constructive alternate approaches.

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