When Wisconsin builders looked at the 1999 version of Energy Star, they found it lacking, “We didn’t think it had enough teeth, because we wanted to deal with combustion safety, ventilation, and wanted buildings as tight as possible,” says Joe Nagan, former technical director for the Wisconsin Energy Star Homes program.
Back in 1999, Wisconsin builders were already constructing typical homes that exceeded EPA standards. Today, in a major shift, Wisconsin has abandoned Energy Star entirely, citing requirements in Energy Star Version 3 that Wisconsin builders found cost prohibitive and unrelated to energy efficiency.
“Our builder partners said they would not continue to participate due to increases in mandatory requirements,” explains Nagan, who now directs the new, Focus on Energy New Homes program that replaced Energy Star in Wisconsin. In recent years, Wisconsin Energy Star was certifying nearly 30% of the state’s new homes, but when participating builders reviewed changes going forward in Energy Star Version 3, they did not like the increased prescriptive requirements and lack of program flexibility. “They didn’t like water management, didn’t like Indoor airPLUS, they didn’t like the fact that Energy Star went from half a dozen prescriptive items to over 200,” says Nagan.
Citing specific deal breakers, Nagan says that builders did not want to meet requirements such as the 24-inch on-center framing module required with 2x6 construction, explaining that Wisconsin home buyers would regard this as lower-quality construction, adversely affecting participating builders. “The idea with building under the Energy Star program was to say, ‘We’re building better homes,’ so unless you have an overwhelming argument for benefit, there’s not a lot of appeal to local builders in adopting a building system that’s perceived as lower quality by the consumer.”
Other issues builders objected to include mandatory raised heel trusses and the sealed duct requirement. “The raised heel truss was a deal breaker because adding raised heel trusses increased costs dramatically while lowering energy consumption only marginally. And we didn’t believe there was enough energy benefit in reducing total duct leakage within a supertight building shell. Builders can’t afford to do these things in a brutally competitive environment,” says Nagan.
Wisconsin heating contractors were charging builders an average $400 to seal ducts, while a Lawrence Berkley Labs study commissioned by Wisconsin energy interests showed the impact on improved operating costs remained negligible. “We don’t have a personal issue with EPA and the program, we have to deal with our market, and to get participation, builders and home buyers must find value in the program,” explains Nagan, adding that any marginal energy improvements gained from the limited number of builders willing to participate in the program under Version 3 would not offset the loss of market share.
“I’d rather be involved in 100,000 homes where we’ve improved efficiency 20% than in a dozen homes at net zero. If we don’t offer something reasonable, practical, and cost effective we turn off a large segment of the market. They will build homes anyway, and we have lost the opportunity to influence and improve the Wisconsin building stock,” says Nagan.
In Lincoln, Neb., Robert Ruskamp runs the Energy Star program for the Lincoln Electric System. With the adoption of Version 3, he has seen a significant drop in requests for Energy Star homes. “For this year, it looks like about a 70% decrease versus 2011,” says Ruskamp. He sees several factors influencing this drop in participation, but primarily, “With adoption of the 2009 IECC by the state of Nebraska there is very little energy savings by upgrading to Energy Star V.3, while there is a significant builder cost increase,” says Ruskamp.
The added cost comes in large part with new installation requirements for HVAC systems, primarily in certification requirements, design, duct installation, and commissioning costs. “It costs the HVAC contractor to become Energy Star certified through one of the two, nationally approved certification programs, a cost passed along to the builder. The federal tax credit to the builder is no longer available to offset some of these costs,” says Ruskamp. HVAC and energy raters also charge contractors a significant amount, averaging about $1,000 more to comply with the four new checklists and inspections related to building thermal bypass, water management, HVAC installation quality, and reference design modules.
Meanwhile, some utilities in major markets, such as California’s PG&E, are transitioning away from Energy Star entirely, creating their own programs. PG&E’s Energy Star New Homes Program is changing its name to California Advanced New Homes. The company’s web site states, “We are working with California’s other investor-owned utilities to offer a single, statewide program for builders of energy-efficient new homes.” PG&E will continue to work with builders under the Energy Star program, but no longer promote it.
At the national level, John Passe, director of the Energy Star Residential Branch at the EPA, has also seen a drop in builder participation, although not as dramatic as reported in Wisconsin and Nebraska. “We’ve seen this hand-wringing, sky-is-falling attitude in every version of the program, but we also continue to grow in market share,” says Passe. This year, while the number of participating builders has decreased to 5,600 from 7,500 in 2011, the actual number of homes certified has continued to grow, largely due to stronger participation from national production builders such as KB Home, which has adopted Energy Star V.3 as a basic design feature across all models and price points.
Passe defends the non-energy-related requirements of water management and interior ventilation as necessary adjuncts given the potential problems created by tighter construction. “It’s not about water efficiency; it’s about shell detailing to prevent infiltration, and to make sure interior moisture is vented correctly.” Overall, the new Energy Star V.3 requirements respond to the findings of building science, many of which are not reflected in a simple HERS score. “There are things missing from HERS,” says Passe. “Right now HERS assumes the HVAC system has been installed correctly, according to manufacturer’s specifications, but we have found this is rarely true. We want a homeowner living in a house with our label to get the performance promised. We want our trademark to stand for industry best practices,” explains Passe.
Still, Energy Star requirements are not etched in stone, and the program continues to respond to valid criticism making changes and allowances to ensure cost-effectiveness and builder participation. For example, Passe points out that the raised heel truss required in the original V.3 has been amended to a minimum R-value in the eaves, however achieved. The requirement for 2x6 studs and 24-inch centers has been amended to allow traditional, 16-inch stud spacing.
“During the first year in every new version of Energy Star we have seen some builders drop off and lower overall participation, but as builders get used to the requirements and more HVAC contractors adapt to the improved quality standards, builders begin to embrace the industry direction again and the program continues to grow,” says Passe.
But when asked about the future for Energy Star, Passe admits, “We are by no means eager to bring out Version 4. We think builders wanting more should look to the DOE’s Challenge Homes program for the time being.”
From our perspective at Vision 2020, energy codes have responded to the Obama administration’s energy policy, requiring states receiving Stimulus Act funds to improve energy efficiency by 30% over the 2006 IECC. To provide a means of doing this, codes have ramped up energy efficiency measures. And in reaction, voluntary rating systems like Energy Star have had to revise requirements to stay ahead of code.
All of this puts pressure on the building industry at a time when the economy remains fragile, and cheap natural gas has made monthly energy costs decline in many markets. Pushback from builders and buyers to more demanding and potentially costly requirements seems natural and to be expected. This may change as the economy rebounds and builders continue to compete with a large inventory of existing housing by differentiating the quality and energy-efficiency advantages of a new home.
In this effort, Energy Star remains the most well known voluntary standard in the industry, and in a market drowning in green standards, I would not bet against the brand leader. Progress may slow down, but it will not stop.