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HOME STAR: Putting Americans Back to Work

By Climate Guest Contributor  

"HOME STAR: Putting Americans Back to Work"

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The HOME STAR program is a new initiative to create jobs in the construction industry and make it easy for every American homeowner to quickly and immediately cut their rising monthly energy bills by improving the energy efficiency of their homes. HOME STAR will empower homeowners to seize control of skyrocketing energy costs, create good living-wage jobs, and drive economic recovery in the United States.

CAP’s Bracken Hendricks and Tom Kenworthy explain HOME STAR in this repost.

As the nation struggles to recover from one of the worst economic recessions in decades, unemployment has recently shown some marginal improvement, falling below 10 percent in January. But for workers in the construction and construction-related manufacturing sectors, there is little relief as jobless rates remain at near-Depression levels.

u.s. unemployment august 2007 to december 2009

Total construction payroll employment has fallen by 2.1 million since 2006, with residential construction jobs down 38 percent and the jobless rate among experienced construction workers stuck at nearly 25 percent. Overall manufacturing employment has dropped 16 percent since the recession began in December 2007, but for manufacturing tied to construction the numbers are far worse: 30 percent in wood products, 22 percent in items such as window glass and fiberglass insulation, and 19 percent in fabricated metals and heating, ventilating, and air conditioning equipment. With credit still tight and the housing industry still in the doldrums, waiting for market forces to spur a recovery in construction could condemn hundreds of thousands of American families to years of continued economic struggle.

Fortunately, help is on the horizon. This week a bill establishing a HOME STAR program of consumer rebates for home energy efficiency retrofits will be introduced in the Senate thanks to the leadership of Sens. Mark Warner (D-VA) and Jeff Bingaman (D-NM), among others. Concerned members of Congress, with the Obama administration’s support, have crafted an incentive program to make millions of U.S. homes more energy efficient, swiftly create 168,000 jobs in construction and manufacturing among other industries, save homeowners nearly $10 billion over a decade through lower energy costs, and make a dent in global warming pollution.

The proposal for a $6 billion HOME STAR program enjoys broad and bipartisan support. It is backed by the President’s Economic Recovery Advisory Board and is part of a jobs agenda endorsed by some Senate Democratic leaders. A large and broad coalition including major corporations, organized labor, and energy nonprofits supports the initiative as well. In President Barack Obama’s State of the Union address he said that rebates for Americans who retrofit their homes should be part of a clean-energy agenda. “We should put more Americans to work building clean-energy facilities, and give rebates to Americans who make their homes more energy efficient, which supports clean-energy jobs,” he said. The Senate will soon consider jobs legislation and HOME STAR should be a key component.

HOME STAR, sometimes called “cash for caulkers,” is a proposal that makes sense. It makes economic sense because it can provide a quick employment stimulus putting 168,000 people to work””the overwhelming majority of them in jobs that can’t be outsourced overseas. It makes sense for homeowners who will be able to afford home improvements that will pay real dollar dividends for many years by reducing their energy bills 20 percent or more forever. It makes sense for businesses who will see demand for their products increase. And it makes sense for a more secure energy future since increasing the number of homes with energy efficient retrofits from 200,000 a year to 3 million a year will cut global warming pollution by the equivalent of taking 615,000 cars off the road or decommissioning four 300-megawatt power plants.

As important as these energy benefits are, however, HOME STAR is clearly a job creator and the right medicine for the economy.

The program will be simple, streamlined, speedy, and effective. It will use the market to build demand for the construction industry by offering homeowners rebates for installing appliances, mechanical systems, and products that cut energy use””everything from simple duct sealing to whole-house retrofits. Administration of the program will involve a minimum of new government bureaucracy and will rely to a great extent on existing state programs. Quality assurance of work performed will be a priority to make sure that the savings promised to homeowners are realized. It will take advantage of skilled labor that is now sitting on the sidelines and eager for work. And it won’t strain manufacturing facilities, many of which are now operating at near half of their capacity because of the economic downturn.

Consumer incentives

The program gives homeowners a choice of incentives: the SILVER STAR and GOLD STAR paths.

The SILVER STAR incentive provides rebates for purchasing and properly installing specific energy-saving equipment such as furnaces and water heaters, or changes to a building’s envelope such as insulation and duct sealing. Rebate amounts are up to $1,500 per qualified installed measure, capped at 50 percent of project costs or $3,000″”whichever is less.

The GOLD STAR incentive goes a step further and rewards whole-home or office building retrofits. This performance”based incentive is based on predicted energy savings determined by a thorough energy audit performed before the work begins. The auditor tests the home’s energy performance using proven building science methods, designs a customized retrofit plan in consultation with the homeowner, and calculates the energy savings that will result from the recommended measures. Homeowners can receive $3,000 for modeled savings of 20 percent, plus $1,500 for each additional 5 percent of modeled energy savings, with total incentives of up to $8,000, not to exceed 50 percent of total project costs. This will encourage homeowners to invest in the most cost-effective technologies, which are often the simplest and most labor-intensive investments.

Economic benefits

HOME STAR will create 168,000 jobs according to independent analysis by Climate Works using respected economic models from REMI and McKinsey & Co. Those jobs will be heavily concentrated in the hard-hit construction and manufacturing sectors of the U.S. economy and will benefit every state and both urban and rural communities.

The program will help create long-term construction industry careers by increasing demand for home energy retrofits roughly 15 times, rising from current rates of 200,000 homes a year to close to 3 million retrofits annually. It will also provide much-needed help to the retail sector where overall jobs have fallen 7.5 percent since December 2007 but 10.4 percent for building materials and garden supply stores. Jobs in the wholesale sector have declined 22.5 percent for construction supplies compared to 8.1 percent overall.

The HOME STAR program dedicates $200 million to increase consumer access to financing, which further boosts job creation by leveraging additional private capital investments, and helps homeowners overcome upfront cost barriers to paying for these energy-saving home improvements.

What’s more, HOME STAR investments are cost effective, creating an additional economic benefit by saving homeowners as much as $9.4 billion over 10 years. HOME STAR will also affordably reduce carbon dioxide emissions by 4 million tons per year, or 40 million tons by 2020. That helps the economy by reducing our vulnerability to energy price shocks and getting a head start on driving down the production of greenhouse gases””changes we know we need to make anyway.

Good jobs here at home

One of the most exciting things about a recovery plan built on home energy retrofits is what it does for American jobs. HOME STAR supports domestic job creation by investing in skilled construction, which results in good American jobs that can’t be outsourced. But it can have tremendous benefits for other hard-hit sectors of the U.S. economy, too, especially manufacturing industries.

The majority of manufactured goods used in HOME STAR retrofits are already made in the United States, averaging well over 90 percent domestic production in most major goods, with all categories included in the Senate HOME STAR bill reporting above the national average for domestic production. A focus on home energy retrofits will therefore by its very nature disproportionately support American industries and target its benefits to help American workers.

  	share of domestic production for products used in retrofits

Table 1 (right) shows data from the International Trade Commission and NAICS on the share of domestic production for products used in energy efficiency retrofits. For many of these products the share is over 90 percent.

Plenty of capacity

American construction and manufacturing companies can rapidly absorb large amounts of new demand because current manufacturing capacity has fallen so low. Capacity utilization””the level at which a factory is operating compared to its potential””for all U.S. manufacturing plants is already low across the board, with the average U.S. plant only working at 66.6 percent. Put differently, fully one-third of all U.S. manufacturing capacity is sitting idle today. But in construction-based industries the situation is even worse, with many building materials manufacturers operating at less than 50 percent of their capacity.

As a result, these firms will rapidly absorb any new demand for their products by putting people back on the job. This means that investments in construction, building materials, and manufactured systems are all well-targeted strategies for rapidly creating domestic jobs in impacted industries.

HOME STAR focuses on an area of tremendous unmet need with over 1.7 million members of the construction trades and supporting industries unemployed since 2007. The current proposal for HOME STAR is an important step toward putting America back to work, and it invests in building a sustained market for energy-related home construction jobs that will keep producing economic benefits well into the future.

Quality work

The installation of energy efficient measures would be backed by a quality assurance program that would guarantee sound work and offer an additional incentive to contractors that invest in a trained and certified workforce. HOME STAR requires appropriate licensing and certification for all participating contractors, and a percentage of all jobs will be inspected by a third party within 30 days of completion to verify proper installation. This safeguards against fraud and improves consumer confidence that a HOME STAR seal is backed by quality work.

The quality assurance program can involve labor unions and other training providers to ensure a well-trained and certified workforce as the foundation of quality work. It will involve the financial industry in making sure high-quality work backs up the consumer financing they offer to further reduce upfront payments for homeowners. And it will create a standards-based industry so when people buy an energy-efficient home retrofit in the future they can be confident they’ll be saving money, saving energy, and cutting pollution for years to come.

Everyone benefits

In addition to all of the real jobs benefits mentioned here, energy efficiency retrofits are a proven and cost-effective way to reduce the household energy use that accounts for one-fifth of U.S. carbon emissions””roughly twice the global warming pollution produced by passenger cars. Basic efficiency improvements can cut energy waste and carbon emissions by 20 percent to 40 percent, while actually saving money instead of costing the economy.

HOME STAR would be effective if all it did was save energy and cut global warming pollution. But the economic case for HOME STAR is just as compelling because it will quickly create tens of thousands of jobs and breathe new life into struggling manufacturing and retail sectors.

“Retrofitting America’s 128 million homes will be the work of private companies, but market forces alone will not move fast enough to avert the crisis at hand,” wrote Matt Golden, founder of a San Francisco home energy retrofitting company, in a recent commentary in Forbes. “The legions of unemployed contractors and factory workers desperately need jobs now to pay their mortgages and feed their families. While the private sector is ready to step up and invest in long-term growth, near-term incentives will generate immediate demand and allow private businesses to start hiring again, right away.”

Below is a repost of HOME STAR 101.

The HOME STAR program is a new initiative to create jobs in the construction industry and make it easy for every American homeowner to quickly and immediately cut their rising monthly energy bills by improving the energy efficiency of their homes. HOME STAR will empower homeowners to seize control of skyrocketing energy costs, create good living-wage jobs, and drive economic recovery in the United States.

The program is designed to jumpstart construction and manufacturing jobs by offering rebates to consumers who invest in home energy improvements and energy efficient products and services. HOME STAR will simplify and lower the cost of home improvements such as fixing drafty windows and leaking ducts, installing insulation and high-efficiency heating and air conditioning equipment, replacing inefficient hot water heaters, or undertaking a whole-home energy efficiency retrofit to cut energy bills by 20 percent or more. HOME STAR delivers a triple dividend to the American economy in the process:

  • American workers in industries hit hard by the economic downturn benefit from new demand for their essential skills and experience.
  • U.S. businesses benefit from increased demand for advanced manufactured products and building materials.
  • Consumers benefit from reduced energy bills and more comfortable homes.

Why we need a HOME STAR program

There is an urgent need in every region of the country to generate high-paying, long-term construction and manufacturing jobs to grow our economy. The recession continues nationwide with unemployment holding steady at just under 10 percent, but fully one in four construction workers remains unemployed. The Bureau of Labor Statistics estimates that construction employment has dropped by 2.1 million jobs since 2006, with residential construction alone down by 1.3 million. That’s a 38 percent job loss for that workforce. Every unemployed and underemployed worker in the construction and manufacturing industries represents a squandered resource that our economy and our nation can ill afford.

The HOME STAR program will work through existing businesses to leverage investment in energy efficiency and create strong market demand for home energy retrofits that will put approximately 168,000 Americans back to work over the next two years and stimulate demand for building materials almost entirely produced and sold in the United States by U.S. workers. These are construction, manufacturing, and retail jobs in the heart of our communities that cannot be outsourced overseas.

HOME STAR has other benefits, as well. It will help over 3 million American families retrofit their homes for energy efficiency and save them as much as $9.5 billion over 10 years. Better use of energy in our homes raises the resale value of property in a recovering real estate market, and offers an opportunity to confront climate change as it continues to threaten our environment and our national security. Household energy use accounts for more than one”fifth of U.S. carbon emissions””roughly twice the emissions produced by passenger cars. HOME STAR will remove the equivalent of 615,000 cars from the road, or four 300-megawatt power plants from operation.

Basic efficiency improvements can reduce energy waste and greenhouse gas emissions in most American homes by 20 percent to 40 percent. Smart investments in energy efficiency made today will pay for themselves through long”term energy bill savings.

How it works

HOME STAR would establish a $6 billion rebate program to encourage immediate investment in cost-effective energy efficient products and services as well as whole-home energy efficiency retrofits. The program is now before Congress and is designed to minimize government involvement by taking advantage of existing institutions and markets. The program will be facilitated and coordinated through existing state programs, using federal standards and incentives as a common platform to keep program costs as low as possible.

HOME STAR gives homeowners a choice of two types of incentives: the SILVER STAR and GOLD STAR incentive paths.

The SILVER STAR incentive provides rebates for the purchase and proper installation of specific energy-saving equipment such as furnaces and water heaters or changes to a building’s structural envelope such as insulation and duct sealing. Rebate amounts range from up to $1,500 per qualified installed measure, capped at 50 percent of project costs, or $3,000″”whichever is less.

The GOLD STAR incentive goes a step further and rewards whole-home or office building retrofits. This performance”based incentive is based on predicted energy savings as determined by a thorough energy audit performed before the work begins. The auditor uses proven building science methods to test the home’s energy performance, design a customized retrofit plan in consultation with the homeowner, and calculate the energy savings that will result from the recommended measures. Homeowners can receive $3,000 for modeled savings of 20 percent, plus $1,500 for each additional 5 percent of modeled energy savings, with incentives up to $8,000, not to exceed 50 percent of total project costs. This will encourage homeowners to invest in the most cost-effective technologies””innovations that are often the simplest and most labor-intensive investments.

HOME STAR will ensure verifiable work and energy savings. The installation of energy efficient measures in homes and commercial properties is backed by a quality assurance program that will guarantee good work and offer an additional incentive to contractors that invest in a trained and certified workforce. HOME STAR requires appropriate licensing and certification for all participating contractors, and a percentage of all jobs will be inspected by a third party within 30 days of completion to verify proper installation. These safeguards will eliminate fraud and raise consumer confidence that a HOME STAR seal is backed by high-quality work.

The quality assurance program will deliver lasting benefits. It will encourage a well-trained workforce by engaging labor unions and other training providers. It will ensure that retrofit financing is backed by the highest home improvement standards. And in the long term HOME STAR will create a standards-based industry that will ensure quality throughout the supply chain so that when people invest in a home energy retrofit, they will know that they are saving money, using less energy, and reducing global warming pollution.

How it would help

HOME STAR will create jobs, cut energy costs, and reduce greenhouse gas emissions today. The program will be simple to join and implement, and will help Americans pay for cost-effective home improvements that will deliver permanent reductions in household energy bills and higher home values.

HOME STAR puts Americans back to work now. Demand will rise for skilled construction labor and for advanced building materials as homeowners make new energy efficient investments in their homes. Manufacturing inventories will be restocked and assembly lines for advanced materials and U.S. technology will begin rolling again. Investment and capital will begin to flow to millions of idled construction and manufacturing workers and create new demand to retrofit homes for energy performance and for the future.

HOME STAR is a timely program that creates good, well-paying jobs immediately in the hardest-hit parts of our economy. The program lowers home energy bills and pays for itself in cost savings. It unites every region in the nation around the common goals of job creation, economic recovery, and a healthier planet. Now is the time for HOME STAR.

Download this memo (pdf)

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4 Responses to HOME STAR: Putting Americans Back to Work

  1. Jay Turner says:

    Home Star is an example of a really great idea that is unlikely to get past the party of NO because it hits on all the ideological hot buttons: expansion of government, interference in markets, adding to the deficit, rewarding individuals and labor unions instead of big business. Home Star is exactly what we need right now, but I can’t see it happening if it needs any action from Congress.

  2. Daniel says:

    Any chance of this program actually making it through Congress?

  3. GFW says:

    While Home Star is a great idea, there are some really annoying features to it and several other related programs – most notably that responsible people who were already taking incremental steps get screwed out of the better benefits. For example, two years ago, we replaced gas heat with a heat pump (air coupled, not ground as there is no real way to do the latter here). We missed a really good rebate that came along a year later. I’m currently in the process of adding a layer of R19 insulation over the R30 in my attic. Apparently I’ll get nothing because I’m not employing a contractor – but if I later wanted to go for “Gold Star”, the baseline efficiency would be calculated including my new insulation, so my improvement (and rebate) would be smaller.

    One thing that is unclear. The initial audit to plan a “Gold Star” refit – can I get one of those audits for free, so I know where to concentrate, even if I do the work incrementally?

  4. Rachel says:

    I think it is about time that every business establishment comply with the changing time. Since our country is facing economic crisis and climate change many people would want to use “green products” which will minimize energy use while caring for the environment. People who pursue HOME STAR ratings or “Green” products typically do so from the motivation to save energy and/or to use renewable resources – rarely is the motivation to brag about the certification itself. This is a good thing for the window tinting industry because no window tinting product is currently ENERGY STAR rated because the complicated approval process only rates the EXACT product and construction being tested and is therefore predisposed to the special interests of the window replacement industry. More information about window tints are available at http://www.TintBuyer.com.