On June 26 the U.S. House of Representatives passed the Waxman-Markey climate and energy bill which, depending on which side you listen to, will either usher in an era of nirvana or drive the economy off a cliff and send all non-government jobs overseas. If enacted, the bill would regulate–and reduce–carbon emissions in this countrty for the first time, with a stated goal of a 17-percent reduction in emissions over the next decade and an 80-percent reduction by 2050.
My own take is that those against the bill are correct that energy prices will go up somewhat as a result, and that those for it are right that a new clean energy industry will result in a lot of new jobs. Also, they need to start filling the coffee urns with decaf on Capitol Hill.
The Congressional hysteria notwithstanding, I think that many effects of Waxman-Markey will, for the most part, be invisible. For one thing, it largely deals with energy production, which is itself invisible to all but those few who live in the shadow of a power plant. Also, while I know we solved the acid rain thing through a cap-and-trade measure, the only difference I ever noticed is that cars no longer run on leaded gas (I wasn’t yet 16 when that battle was fought, so having my car’s emissions tested every other year has been a fact of life since I first began to drive). Then there was the whole ozone thing: I know that, as a result of legislation passed to address that problem, my aerosol cans no longer contain chlorofluorocarbons, but I can’t say it’s really hampered my lifestyle.
All that said, I think that Waxman-Markey does have the potential to profoundly, though indirectly, affect old house renovation, which I mentioned in a Huffington Post blog just before the House vote. As currently written, the bill will create a federal building code which mandates new buildings be 30 percent more efficient by 2012, and 50 percent more efficient by 2016.
What does this have to do with old house renovation? Nothing at all. Yet. But if Waxman-Markey becomes law, it will fundamentally change both the energy and efficiency equations in the U.S. Thomas Friedman of the New York Times noted in a recent column that the bill “will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable.” As ultra-efficient homes become the standard, the premium owners of older homes pay via higher utilities will become greater. As that gap increases, the value of older homes will almost certainly be pushed downwards unless homeowners invest to increase their home’s efficiency. And this isn’t just speculation: an independent study published in 1998 found that for every dollar reduction in annual utility bills via improved home efficiency, the value of the home increases $10 to $25.
The good news is that Waxman-Markey also contains financial support for efficiency improvements on existing homes, adding to existing efficiency incentives that were included in the stimulus bill passed earlier this year. As a result I don’t think the new building standards necessarily add up to a net loss for owners of old homes. I do think that this group of homeowners will have to be proactive to preserve their home’s value. Forewarned is forearmed.