President’s Energy Efficiency Incentive Proposal Faces Skepticism among Industry Professionals

January 25th, 2012 by DWM Magazine

In his State of the Union speech last night, President Obama proposed  to increase the energy efficiency of the industrial sector by providing new incentives for manufacturers to upgrade equipment to lower energy use in their facilities. The incentives would lower their energy bills by $100 billion over the next decade, the president said.

Seemingly, such incentives would be useful to the fenestration industry, given the energy-intensive nature of glass manufacturing. However, industry professionals remain doubtful.

“I’m skeptical that these energy-efficiency incentives will be made in a meaningful way,” says Arlene Z. Stewart, president of AZS Consulting Inc. in Gainesville, Fla. “The devil is always in the details. … Competitive companies have already made the ‘low-hanging’ energy upgrades because that’s what makes economic sense – not wasting their profits is one of the things that keep them competitive. What they really need is a boost to make comprehensive deep energy upgrades that have longer payback periods. Remember, the glazing industry uses facilities that stay on for 15 years at a time – that’s an eternity compared to a Wall Street quarter.”

However, unfortunately, Congress has not traditionally funded those because of their bigger price tag, Stewart says. “Instead they fund small ‘Band-Aid’ amounts that go to companies that arguably should have made the same changes their competitors did – so we reward companies for being slow and backward, something completely antithetical to a free and fair market,” she says. “Alternatively, the economy has already weeded out a lot of marginal companies, so Congress could allocate funds that can’t be spent because the companies already bought the Band-Aid, but they can tell their voters they did something for business.”

Earnest Thompson, director of corporate marketing and brand management at Guardian Industries in Auburn Hills, Mich., also is on the skepticism bandwagon. “This new proposal for incentives and breaking down regulatory barriers is certainly welcome,” he says. “The devil is in the details — at least, that’s how the old adage goes — so we need to hear a lot more about what this really means … It is also worth noting that glass products are more and more energy efficient in performance every year. That’s a nontrivial element to this discussion that shouldn’t be overlooked.”

Michael P. O’Brien, president and CEO of the Window and Door Manufacturers Association (WDMA) in Washington, D.C., says WDMA welcomes incentives for manufacturers to make energy upgrades in the their facilities, “but, more importantly, we hope that there is a recognition that creating ‘clean energy jobs’ includes the production of energy-efficient doors, windows, and skylights, which can make a huge impact on reducing energy consumption in the U.S. and our dependence on foreign sources of oil.”

Likewise, the National Association of Home Builders (NAHB) also commended President Obama for his proposals to help families stay in their homes and stanch foreclosures. The group is urging policymakers to take additional actions to mend the housing market and boost the economy.

“President Obama’s refinancing plan offers an opportunity for continued exploration of ways to aid struggling home owners and tackle the foreclosure crisis,” said NAHB chairman Bob Nielsen, a home builder from Reno, Nev. “We look forward to working with the White House and Congress to tackle this issue and continue to make progress on foreclosures that are hampering the housing market.”

In order to create jobs and further stabilize housing and the economy, Nielsen added that the Administration, Congress and federal regulators need to reopen the lines of credit for builders ready to embark upon viable projects in markets where new housing stock is needed and to ease overly restrictive mortgage lending requirements for qualified homebuyers.

“President Obama was absolutely right when he said that ‘there has never been a better time to build,’ and the nation’s home builders are eager to do their part to contribute to economic growth and job creation,” said Nielsen.

He added, “In this election year, voters will be looking closely at President Obama, the GOP presidential contenders and congressional candidates from both political parties to determine how they plan to put housing and the economy back on track. How the candidates respond will decide not only their political fate but the economic prospects of most Americans.”

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