pcba/SENTRY

Green Stimulus — or Morass?

Posted by pcbasentry on February 20, 2009

Posted By: lthayer at 7:03 AM in Remodeling Magazine Online.

If it’s Friday, February 20, the painters should arrive at my 90-year-old home any minute to finish the insulating and air-sealing project that was supposed to take one day but has stretched out over four months.

Why the project took so long to complete – and why my January gas bill was still close to $700, despite all the cellulose and spray foam that has been pumped into some of my home’s countless cracks and crevices – is a topic for another blog or two. Or maybe a book, a tell-all. A cautionary tale about what I’ve found to be the promise and peril of green remodeling, for homeowners and contractors alike.

The morale of this book would be: It isn’t so easy being green.

(It all began with the blower door test. We never got the results, come to think of it.)

Real Money

I didn’t intentionally time it this way — I mean the confluence of my little remodeling wind-down and President Obama’s signing, this week, of the $787 billion economic stimulus bill, formally known as The American Recovery and Reinvestment Act of 2009.

I’ve been studying up on the legislation, to learn what might be in it for remodelers, and I’m torn between thinking it’s the greatest thing ever for the green remodeling movement or the undoing of it.

Here’s a good Wall Street Journal summary chart of what goes where in the stimulus bill: http://online.wsj.com/public/resources/documents/STIMULUS_FINAL_0217.html

More specifically, here’s a section of the legislation that seems likely to impact green remodeling most profoundly (and here’s some cellulose being pumped into my house):

Tax Credits for Energy-Efficient Improvements to Existing Homes.

The bill would extend the tax credits for improvements to energy-efficient existing homes through 2010. Under current law, individuals are allowed a tax credit equal to ten percent (10%) of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during the taxable year. This tax credit is capped at $50 for any advanced main air circulating fan, $150 for any qualified natural gas, propane, oil furnace or hot water boiler, and $300 for any item of energy-efficient building property. For 2009 and 2010, the bill would increase the amount of the tax credit to thirty percent (30%) of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements during the taxable year. The bill would also eliminate the property-by-property dollar caps on this tax credit and provide an aggregate $1,500 cap on all property qualifying for the credit. The bill would update the energy-efficiency standards of the property qualifying for the credit. This proposal is estimated to cost $2.034 billion over 10 years

and:

Removal of Dollar Limitations on Certain Energy Credits.

Under current law, businesses are allowed to claim a thirty percent (30%) tax credit for qualified small wind energy property (capped at $4,000). Individuals are allowed to claim a thirty percent (30%) tax credit for qualified solar water heating property (capped at $2,000), qualified small wind energy property (capped at $500 per kilowatt of capacity, up to $4,000), and qualified geothermal heat pumps (capped at $2,000). The bill would repeal the individual dollar caps. As a result, each of these properties would be eligible for an uncapped thirty percent (30%) credit. This proposal is estimated to cost $872 million over 10 years.

In simplest terms, these changes mean that homeowners get a much bigger tax deduction — 30%, up from 10% in most cases — of the cost of various energy-efficient improvements, from jobs even smaller than my $2,800 air-sealing project to someone else’s $30,000-plus geothermal heating and cooling system.

“Suddenly, the money is relevant,” said Mike Williams, executive director of Minnesota Greenstar, a nonprofit, third-party green training and certification organization with several hundred building industry members. Before, “when you were doing a $200,000 remodel and got a $500 credit, people said yee-haw. Big deal,” he told me yesterday. “Now that the credit is tripled, it gets people’s attention.”

Greenwashing Galore

The downside? While many remodelers will be even more inclined than the recent buildup to get on the “green bandwagon,” a good number of them will not know how to do green remodeling correctly – or profitably.

Things can go wrong in green remodeling. Besides botched communications and dropped balls and incomplete paperwork and distracted tradespeople and poor preparation – the usual downfalls of many well-intentioned remodelers (including, I think, those I last hired) – there are real dangers in trying to go green without thinking things through.

“There are two sides of greenwashing,” said Williams. “Intentional greenwashing is where companies are taking it purely for marketing play only.” They slap the word “green” on their marketing materials to get customers in the door, “and then talk them out of it once they get there.”

The second type of greenwashing, “accidental greenwashing,” happens to “companies who just don’t have enough information yet,” Williams told me. They create “energy audit checklists” but apply them to the house as a series of unrelated parts, rather than as an interconnected system. They “energy seal” homes but don’t test for radon, or for backdrafting of flue gas, and thus create dangerous conditions for the inhabitants. They neglect to adequately screen and properly schedule and price the many specialized trades that are integral to the work, moreso than in conventional remodeling.

In one Midwestern city, an authority on green remodeling expert told me, “We had a remodeler who replaced the building paper, re-sided the home, and replaced the windows to make the house 50% less leaky.” Unfortunately, the work “also caused every appliance to fail the worst-case combustion spillage test.”

Said another longtime green remodeler of the stimulus legislation: “It’s a really good thing. It’s going to push the pendulum pretty far in the right direction.” But, he cautioned, “I guarantee that a lot of remodelers willl go into it assuming there’s a lot of money to be made, and not realizing how complicated it can be. And a lot will be selling bad product,” he added.

Spend some time reading, listening, learning. Educate yourselves and your trade partners first, and your clients second. Go green, but carefully.

Leah Thayer, senior editor

lthayer@hanleywood.com

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