Construction Reinvented.
Spring Issue: New Tax Credit to Create $6 Billion in Green Remodeling Projects
As the nation’s home builders embrace green building in growing numbers, industry research indicates that even the most aggressive efficiency goals for new homes won’t make a dent in overall energy consumption. Indeed, remodeling and retrofitting the nation’s older homes is by far the more efficient solution, industry experts say. That is why launching a green remodeling business could be a smart move for contractors searching for ways to stay afloat in this new housing economy. This means that if you’re targeting the remodeling market, you should take steps to learn green building strategies.
Homes Take A Big Bite Of Energy
Federal energy officials estimate that Americans consume about 21% of the energy produced each year to operate and maintain their homes—for heating, cooling and electrical appliances that range from stoves and refrigerators to televisions, computers and hair dryers. “By just making thoughtful choices, we can reduce that impact,” says Ray Tonjes, chair of the NAHB Green Building Subcommittee and a green home builder in Austin, TX.
“Energy efficiency is absolutely key to our nation’s continued security and to our economy. Additionally, we know that building with energy conservation in mind is practical and profitable. My industry has stepped up to the plate to prevent the effects of global warming—but we call it responding to market demand,” he says.
The greatest energy savings can be achieved by making changes to existing housing, which is less energy efficient than today’s new homes. “We obviously can’t solve the problem by tearing down all our inefficient housing stock and replacing it with new. We need to make some significant improvements to our existing homes,” Tonjes say.
Target Homes Built Before ’83
Mike Hodgson, president of the California energy consulting company ConSol, revealed the results of a study conducted for the California Homebuilding Foundation last fall. A full 70% of the greenhouse gas emissions related to single-family envelope energy consumption can be attributed to homes built before 1983, the study found.
Further, the study demonstrated that with $10,000 of retrofitting, a 1960s-era home could save 8.5 tons of carbon, a cost of $588 to $1,176 per ton depending on tax credits and incentives. On the other hand, increasing the energy efficiency of a new home 35% over current state requirements would cost about $5,000 and reduce emissions by 1.1 tons at a cost of $4,545 per ton.
“Simple arithmetic demonstrates how retrofitting existing homes with energy-efficient features is four to eight times more carbon- and cost-efficient than adding further energy-efficiency requirements to new housing,” Hodgson says.
Remodeler Devon Hartman of HartmanBaldwin, a Claremont, CA, design/build firm, says his customers are heeding the call. By adding insulation and sealing and tightening the duct system in one recent large home renovation project, Hartman was able to replace four older heating and air conditioning units totaling 16 tons with a new six-ton system. “We’re no longer talking about just putting on sweaters or lowering the thermostat. We’re talking about creating energy through efficiency measures,” he says.
As more people turn to retrofitting and remodeling, the demand is increasing for so-called “green jobs,” skilled employees to either manufacture or install components in the energy-efficient homes of the future. Make sure your company is poised to serve that market. Some systems manufacturers are actively pursuing that market as well.
Getting Started With Green Remodeling
The Department of Energy’s Energy Star program has published comprehensive materials on how the housing industry and consumers can take advantage of the federal tax credits for energy-efficient home improvements in the new economic stimulus package. The credits are expected to significantly increase demand for green renovation projects this year and next, according to federal officials. Congressional economists project that the new provisions will generate an estimated $6 billion in remodeling work by the end of 2010.
The Internal Revenue Code Section 25C for existing homes, which had expired at the end of 2007, was reinstated as part of the economic rescue package passed by the Bush Administration last fall. Installing energy-efficient windows, doors, roofing and insulation as well as furnaces, air conditioners and heat pumps all qualified for the credit.
But remodelers found that the terms of the 25C credit—equal to only 10% of the cost of each product and with a lifetime cap of $500—weren’t quite strong enough to get home owners off the fence and into a contract. Under the stimulus legislation signed by President Obama, the percentage of the cost and lifetime cap have been tripled to 30% and $1,500, respectively, and the deadline for installing them has been extended through the end of 2010.
In addition to expanding the 25C tax credit, the IRS 25D credit for renewable energy products has been expanded and is even more generous for specific improvements—including geothermal heat pumps, solar panels, solar hot water heaters, small wind energy systems and fuel cells. The 30% tax credit applies to these products, but there is no cap on their cost through 2016. These credits apply to new construction as well as to remodeling and renovation projects.
Homes Take A Big Bite Of Energy
Federal energy officials estimate that Americans consume about 21% of the energy produced each year to operate and maintain their homes—for heating, cooling and electrical appliances that range from stoves and refrigerators to televisions, computers and hair dryers. “By just making thoughtful choices, we can reduce that impact,” says Ray Tonjes, chair of the NAHB Green Building Subcommittee and a green home builder in Austin, TX.
“Energy efficiency is absolutely key to our nation’s continued security and to our economy. Additionally, we know that building with energy conservation in mind is practical and profitable. My industry has stepped up to the plate to prevent the effects of global warming—but we call it responding to market demand,” he says.
The greatest energy savings can be achieved by making changes to existing housing, which is less energy efficient than today’s new homes. “We obviously can’t solve the problem by tearing down all our inefficient housing stock and replacing it with new. We need to make some significant improvements to our existing homes,” Tonjes say.
Target Homes Built Before ’83
Mike Hodgson, president of the California energy consulting company ConSol, revealed the results of a study conducted for the California Homebuilding Foundation last fall. A full 70% of the greenhouse gas emissions related to single-family envelope energy consumption can be attributed to homes built before 1983, the study found.
Further, the study demonstrated that with $10,000 of retrofitting, a 1960s-era home could save 8.5 tons of carbon, a cost of $588 to $1,176 per ton depending on tax credits and incentives. On the other hand, increasing the energy efficiency of a new home 35% over current state requirements would cost about $5,000 and reduce emissions by 1.1 tons at a cost of $4,545 per ton.
“Simple arithmetic demonstrates how retrofitting existing homes with energy-efficient features is four to eight times more carbon- and cost-efficient than adding further energy-efficiency requirements to new housing,” Hodgson says.
Remodeler Devon Hartman of HartmanBaldwin, a Claremont, CA, design/build firm, says his customers are heeding the call. By adding insulation and sealing and tightening the duct system in one recent large home renovation project, Hartman was able to replace four older heating and air conditioning units totaling 16 tons with a new six-ton system. “We’re no longer talking about just putting on sweaters or lowering the thermostat. We’re talking about creating energy through efficiency measures,” he says.
As more people turn to retrofitting and remodeling, the demand is increasing for so-called “green jobs,” skilled employees to either manufacture or install components in the energy-efficient homes of the future. Make sure your company is poised to serve that market. Some systems manufacturers are actively pursuing that market as well.
Getting Started With Green Remodeling
The Department of Energy’s Energy Star program has published comprehensive materials on how the housing industry and consumers can take advantage of the federal tax credits for energy-efficient home improvements in the new economic stimulus package. The credits are expected to significantly increase demand for green renovation projects this year and next, according to federal officials. Congressional economists project that the new provisions will generate an estimated $6 billion in remodeling work by the end of 2010.
The Internal Revenue Code Section 25C for existing homes, which had expired at the end of 2007, was reinstated as part of the economic rescue package passed by the Bush Administration last fall. Installing energy-efficient windows, doors, roofing and insulation as well as furnaces, air conditioners and heat pumps all qualified for the credit.
But remodelers found that the terms of the 25C credit—equal to only 10% of the cost of each product and with a lifetime cap of $500—weren’t quite strong enough to get home owners off the fence and into a contract. Under the stimulus legislation signed by President Obama, the percentage of the cost and lifetime cap have been tripled to 30% and $1,500, respectively, and the deadline for installing them has been extended through the end of 2010.
In addition to expanding the 25C tax credit, the IRS 25D credit for renewable energy products has been expanded and is even more generous for specific improvements—including geothermal heat pumps, solar panels, solar hot water heaters, small wind energy systems and fuel cells. The 30% tax credit applies to these products, but there is no cap on their cost through 2016. These credits apply to new construction as well as to remodeling and renovation projects.
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Tags: green, jobs, remodeling, special report
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