A few weeks ago I wrote about the possible impact that the Waxman-Market climate and energy bill (the bill would institute a cost for carbon emissions via a cap-and-trade system and provides incentives and mandates for improved efficiency) could have on old house renovation. In that post, I alluded to incentives included in the bill for homeowners who inprove the efficiency of their homes without actually describing what those incentives are. (Full disclosure: I hadn’t actually read that part yet: Waxman-Markey is a really long bill). The conclusion I reached in that post was that more expensive energy, which is a likely consequence of the bill, and a provision of the bill that will require new homes to be significantly more efficient (50 percent more efficient by 2016), will put a lot of pressure on owners of older homes to make efficiency improvements or risk seeing their homes devalued. If that indeed is what the future holds, then it’s obviously worth looking into the details of those incentives. Before you spend, it’s worth knowing what you’ll get back.
Unlike incentives for green upgrades and renovation included in the stimulus bill, which are primarily tax credits, Waxman-Markey instead uses awards–grants and/or reimbursement–for efficiency improvements. One surprisingly sensible (this is the government, after all) award proposed in the bill would provide up to $200 for a building energy audit. This would be an obvious starting point for most homeowners, enabling them to figure out what types of improvements will give them the most bang for their buck. It would also seem to be a necessary first step because it would establish your home’s baseline efficiency, the importance of which will become obvious soon.
The larger awards Waxman-Markey establishes for home improvements would be based on just how much more efficient you make your home, and could not exceed 50 percent of the cost of the improvements. So this isn’t a free lunch. Still, if you make your house 20 percent more efficient, the award would be up to $3,000. For each additional 5 percent gain in efficiency, you would be eligible for another $1,000 in awards. So if you’re able to cut your energy consumption in half, you would be eligible for up to $9,000 in awards, plus the $200 for the audit. Homes that have already achieved at least a 20 percent improvement in efficiency could also receive a grant of up to $600 for “measures projected…to achieve at least 35 percent potable water savings.”
And while I admit that I still haven’t read the entire bill, there appears to be nothing that would prevent homeowners from using both the awards in Waxman-Markey and the tax credits in the stimulus bill to offset the cost of green renovations and improvements. Assuming nothing changes that would mean that, for example, if you spent $8,000 to install photovoltaic (solar) roof shingles on your house, and this cut your energy consumption by 30 percent, then you would be eligible for a $4,000 award, and a 30 percent tax credit on the $4,000 of your own money that you spent.
So while Waxman-Markey may well create pressure for owners of older, inefficient homes to make improvements, it also goes a long way towards making those improvements affordable.