The Waxman-Markey climate and energy legislation (a.k.a. the American Clean Energy and Security Act, ACES, H.R. 2454) before Congress right now has captured a lot of attention for its cap and trade provisions. But as we noted earlier there is a lot going in the legislation in terms of interesting complimentary policies to reduce emissions through increases energy efficiency—including retrofitting and weatherizing existing homes and buildings.

There is a portion of Waxman-Markey that used to be a separate bill, proposed by Vermont Congressman Peter Welch, that would give states money—$2.5 billion per year until 2013—to spend on incentivizing retrofits to commercial and residential buildings. There are some elements in this part of the larger legislation that stand out.

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  • First, the definition of residential buildings in the legislation is broad.

    The term “residential building” means a building whose primary use is residential. Such buildings shall include single-family homes (both attached and detached), owner-occupied units in larger buildings with their own dedicated space-conditioning systems, and buildings used for both residential and nonresidential purposes in which more than half of building floor space is residential. (Emphasis is mine)

    At last, it looks like we have a chance at retrofit legislation that has an inclusive definition of residential. This is a positive development for the split incentives problem (when owners of multi-unit housing have no interest in energy improvements because they don’t pay the energy bills and tenants don’t have an interest improvements because they don’t own the property). Typically, the focus of retrofitting has been limited to single family homes, but the Welch provisions in Waxman-Markey open the door for more efficiency in more buildings and more benefits for renters.

    The second key element of note along these lines—in section 202—sorts out another aspect of retrofitting programs that has bothered me in the past. It provides a definition and strict requirements for performance: 

    The term ”performance-based building retrofit program” means a program that determines building energy efficiency success based on actual measured savings after a retrofit is complete, as evidenced by energy invoices or evaluation protocols. (Again, emphasis is mine)

    Amen. Granted, Portland’s program does have a performance requirement, as I’ve described, and so does the BC program. But the Welch provisions spell out clearly that the standard of measurement for retrofits is the HERS Index and establishes that as the measure of success. The more savings, the more money available; up to $2.50 per square foot for savings of 50 percent in commercial buildings and up to $3000 for 20 percent reduction in energy use in residential buildings. Residential buildings can qualify for an additional $1000 for each 5 percent savings above that.

    Sound prescriptive? That’s because the Welch provisions are clearly labeled in the bill as “a prescriptive building retrofit energy program.”  The point is to tie funding more closely to performance. 

    It’s hard to say whether these provisions will stay the same through the legislative process or if they will truly spark some major retrofits if and when the bill passes. What I like about the Welch provisions is the clearly stated outcome they intend to achieve: “to facilitate the retrofitting of existing buildings across the United States to achieve maximum cost-effective energy efficiency improvements.”  It also seems to create the basis of measuring success and expanding some incentives into the multi-unit housing sector where efficiencies have been the hardest to motivate.