Analysis of the Net Zero Energy Home Industry Ccrreeaattiinngg Tthhee Cclleeaann Eenneerrggyy Eeccoonnoommyy Analysis of the Net-Zero Energy Home Industry
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CREATING THE CLEAN ENERGY ECONOMY Analysis of the Net Zero Energy Home Industry CCrreeaattiinngg tthhee CClleeaann EEnneerrggyy EEccoonnoommyy Analysis of the Net-Zero Energy Home Industry Primary Authors Jennifer Todd is an Economic Development Associate at IEDC. Jess Chen is a Research Fellow and a PhD candidate at American University. Frankie Clogston is an IEDC Consultant and a PhD candidate at Johns Hopkins University. Primary Editors Liz Thorstensen, Vice President of Knowledge Management & Economic Development Practice Tye Libby, Associate, Knowledge Management and Development Acknowledgements IEDC is grateful to the Rockefeller Brothers Fund for its generous support of this research project. Special thanks Lauren Avioli, Emily Brown, and Patrick McHugh for research support, and Mishka Parkins, who provided technical assistance for the creative design of the report. © Copyright 2013 International Economic Development Council This report was made possible by a grant from the Rockefeller Brothers Fund. International Economic Development Council IEDC is the world's largest membership organization serving the economic development profession, with over 4,500 members, and a network of over 25,000 economic development professionals and allies. From public to private, rural to urban, and local to international, our members represent the entire range of economic development experience. IEDC is dedicated to helping economic developers do their job more effectively and raising the profile of the profession. When we succeed, our members create more high-quality jobs, develop more vibrant communities, and generally improve the quality of life in their regions. The issue of sustainability has been designated a strategic priority by the IEDC Board of Directors. Further, sustainability and policy responses to climate change are growing issues for our members. Through a range of services, including: conferences, training courses, webinars, publications, research and technical assistance efforts, we are striving to be on the cutting edge of understanding the opportunities and challenges stemming from sustainability, climate change and economic transformation. For more information about IEDC visit www.iedconline.org Paul Krutko, FM President and Chief Executive Officer, Ann Arbor SPARK Chairman of the IEDC Board Jay C. Moon, CEcD, FM President and CEO, Mississippi Manufacturers Association Immediate Past Chairman of the IEDC Board Jeffrey A. Finkle, CEcD President & CEO International Economic Development Council International Economic Development Council 734 15th Street NW / Suite 900 Washington, DC 20005 www.iedconline.org | Phone: (202) 223-7800 | Fax: (202) 223-4745 TABLE OF CONTENTS Introduction to Net-Zero Energy Homes .................................................................................... 4 Hurdles and Solutions: Net-Zero Energy Home Market ........................................................... 47 LEED Building: Applying Lessons Learned to the NZEH Home Industry .................................. 76 Appendix ........................................................................................................................... 86 NZEH Components .................................................................................................................. 94 INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL 3 INTRODUCTION TO NET-ZERO ENERGY HOMES In 2008, the most recent year for which data is available, the United States was the highest consumer of energy in the world. Buildings are a major consumer of energy in the U.S., and their share of consumption is growing. In 2008, building energy consumption was 50 percent higher than in 1980. Taken together, industrial and residential buildings currently account for approximately 40 percent of primary energy use in the U.S. The residential sector alone accounts for approximately 20 percent of total energy consumption in the U.S.1 Interestingly, while absolute levels of consumption have risen in recent years, residential buildings have actually become more energy efficient over time. For example, homes built between 2000 and 2005 used 14 percent less energy per square foot than homes built in the 1980s. They also utilized 40 percent less energy per square foot than homes built before 1950.2 While current energy efficiency techniques such as weatherization, high-efficiency appliances, and HVAC systems—and widespread adoption of compact fluorescent lighting (CFL)—is helping to reduce energy use in homes, these measures are not keeping up with increases in total U.S. energy consumption. This disparity creates an opportunity for further implementation of energy efficiency and energy generation systems in U.S. homes as well as the further development of associated energy efficiency and generation industries. These development opportunities can maximized by encouraging development of highly efficient homes known as net-zero energy homes (NZEH). Net-zero energy homes (NZEH) produce as much or more energy than they consume over the course of a year. This type of housing represents a growing segment of the housing construction and retrofit market in the U.S.; consumer demand for energy efficiency as well as public policy have fueled this growth. For example, a National Association of Home Builders Research Center consumer study of over 400 homeowners in Dallas, Texas found that 88 percent of respondents were interested in a zero-energy home if utility savings were sufficient to offset an increase in 1 U.S. Department of Energy. (2011a, July 29). Building America: Program Goals. Retrieved March 2, 2012, from http://www1.eere.energy.gov/buildings/building_america/program_goals.html 2 Ibid. INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL 4 monthly mortgage payments. In addition, the U.S. Department of Energy’s (DOE) Building Technologies Program, which promotes increased building efficiency in the commercial and residential sectors, has set a target date of 2020 for the availability of marketable net-zero energy homes.3 Achieving the DOE’s goal will require changes and greater levels of efficiency in existing building technology, use, and design. Achieving these changes will require additional investment in research, design, and installation to make NZEH affordable to the general market. Currently, homeowners who install commercially available energy efficiency features in a home can typically expect a 60-70 percent reduction in energy use (sometimes as high as 80 percent) over conventional homes. While this is a significant step toward achieving the net-zero energy (NZE) goal, it still leaves a deficit of energy consumed. Energy efficiency alone, therefore, is not enough to achieve NZE; achieving net-zero requires the deficit in energy consumption to be balanced with clean energy generation. 4 Developing NZEH is often discussed in the context of new construction, and while the retrofit market is not the most cost-effective strategy for achieving NZE, it does present a significant opportunity for job creation and investment in energy efficiency industries related to the net-zero market. More of the current housing stock consists of retrofit opportunities than new construction. In March 2012, there were an estimated 48.4 million units of single-family housing, of which 61% were built before 1980. These units are associated with higher energy use and, therefore, a greater opportunity for retrofitting.5 The potential economic impact of increasing energy efficiency in these homes is significant. Achieving an energy efficiency improvement of just 30% in this pre-1980 housing stock could create an estimated investment opportunity of $144 billion and is associated with an estimated 1,700 job-years (where one job-year is equivalent to one job for one year.)6 Architecture 2030, an independent nonprofit organization, has developed employment and revenue projections for several proposed NZEH and high efficiency incentive 3 U.S. Department of Energy. (2010). Building Technologies Program: Better Buildings, Brighter Future. Retrieved from http://apps1.eere.energy.gov/buildings/publications/pdfs/corporate/btp_fs.pdf. 4 Ed Mazria. (14 August 2012) Phone interview. 5 Rockefeller Foundation and DB Climate Change Advisors (2012, May). United States Building Energy Efficiency Retrofits, p. 18. Retrieved from http://www.rockefellerfoundation.org/news/publications/united-states-building- energy-efficiency 6 Ibid, 14 INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL 5 programs.7 The organization’s 2009 analysis of a proposed nation-wide $30 billion mortgage buy-down for homes that meet specific energy efficiency criteria can create 4.5 million new jobs, $280 billion in direct, non-federal investment spending, and will open a $5.7 billion renovation market that could increase to nearly $1 trillion by 2030.8 The market for new homes is smaller than in the past but still presents a future growth opportunity for NZEH as the market share of energy efficient homes increases. The new green homes market grew to 17 percent in 2011 from eight percent in 2008, and it is expected to comprise 29-38 percent of market share by 2016.9 Although this statistic is in reference to the green home market, which consists of a broader and less energy efficient housing type than NZEH, energy efficiency is one of the most important aspects of a green home and therefore hints at the growth potential of the NZEH market.10 In addition, experts from the housing firm KB Home, as well as nonprofit Architecture 2030, believe that new construction