Saving energy – President Biden could save thousands of American families on energy bills with efficiency rules for US-backed home loans, study finds
Congress has ordered federal agencies to periodically update efficiency criteria for new homes purchased with the support of federally backed mortgages and federal housing programs, but regulators have not updated. the criteria for most homes since 2015. The Department of Housing and Urban Development (HUD) pledged in July 2021 to take a key step toward updating the standards by the end of this year, but he hasn’t done it yet.
The ACEEE study finds that updating the standards could save the average household in a federally supported single-family home nearly $2,800 in reduced energy bills, net of costs. They could also generate more than $5,700 in total net savings per household when including other benefits of improved homes, such as better health outcomes. The calculations were based on 30 years.
“Right now taxpayers’ money is helping people get homes that just aren’t built to modern standards, and that’s leaving residents – often low- and middle-income families – paying energy bills. unnecessarily high,” said ACEEE Executive Director Steven Nadel. “The good news is that Congress actually understood years ago that there needed to be minimum efficiency standards for these homes. But it’s up to the Biden administration to provide the update.
The study finds that updated efficiency criteria would save households more on energy costs than they would increase mortgage payments.
The initial cost is the additional cost of efficiency measures in a new home. Single-family homeowners would recoup the extra down payment (10% of the original cost) after about two years (time to positive cash flow); refunds would be even faster for the average apartment. Non-energy benefits (including health benefits) are assumed to be equal to 50% of energy bill savings and are included in lifetime net benefits, but not in financial-only savings; both are net present present values.
In addition to household savings, the study finds that updating efficiency requirements for federally supported fireplaces could:
Avoid 275 million tonnes of carbon dioxide emissions (cumulative), equivalent to the emissions of 59 million cars and light trucks for one year
Create 838,000 jobs (net job-years added)
Generate $27 billion in total net savings (present value)
These nationwide numbers include the impacts of Fannie Mae and Freddie Mac — federally chartered companies regulated by the Federal Housing Finance Agency — adopting similar criteria for new homes with loans they finance.
Congress authorized efficiency requirements in bipartisan legislation passed in 1992 and revised in 2007 to ensure that federally supported fireplaces do not impose high energy costs on residents. Updating the standards would ensure that new homes are better insulated, less prone to drafts, better lit and potentially have much more efficient water heaters or use heat pumps.
The law requires HUD and the Department of Agriculture (USDA) to update their criteria to match updated model building energy codes if it is determined that doing so would not adversely affect availability or affordability covered accommodation. Currently, HUD and USDA will have to issue a draft decision, solicit comments, and then issue a final decision; they haven’t released the project yet.
Single-family homes at issue in the law include new homes with loan guarantees or loans insured through Federal Housing Administration (FHA) and USDA mortgages, and to a lesser extent through HUD grant programs. A separate law requires Department of Veterans Affairs loan criteria based on the HUD-USDA provision. These homes represent about 19% of all new single-family homes, the ACEEE found.
The law also applies efficiency criteria to homes in multifamily buildings, including those with FHA mortgages and new and rehabilitated units with support from HUD programs such as HOME Investment Partnerships grants for affordable housing, funding for demonstration of rental assistance which is used to convert public housing into private affordable rental properties and public housing. Together, new homes in these categories account for about 13% of all new units in multi-family buildings in recent years.
For more information :
American Council for an Energy Efficient Economy (ACEEE)