Cut Energy Bills at Home Act

Floor Speech

Mrs. FEINSTEIN. Mr. President, I rise to speak in support of the Cut Energy Bills at Home Act, which Senator Snowe, Senator Bingaman and I have introduced. It has been a pleasure to work again with Senators Snowe and Bingaman on an important piece of energy legislation. We have written this bill in a fully cooperative process, and my colleagues have been especially accommodating of changes requested by California's experts; I thank my colleagues for their efforts.

This legislation would put the construction industry back to work by creating a homeowner tax credit for home renovations that increase the energy efficiency of the home by at least 20 percent. The tax credit would increase in size with every 5 percent in additional energy efficiency improvement achieved. Homeowners who improved the efficiency of their home by more than 50 percent will qualify for a maximum credit of $5,000.

This legislation helps address the continued high unemployment in the construction sector while making a long-term investment in America's building infrastructure. The construction industry has the highest unemployment rate of any sector nationally, according to the Bureau of Labor Statistics.

The current residential building stock exceeds demand, making a rapid recovery in new housing starts unlikely. According to the Census Bureau, 14.3 percent of the housing units in the United States in the second quarter of 2011 were vacant, even as prices continue to drop.

Thus the construction industry needs jobs, but artificially stimulating construction of new homes would exacerbate a situation of oversupply and depress home prices further.

Our Nation's buildings also need the upgrade. Buildings account for about 40 percent of the U.S. energy appetite, as well as 40 percent of its carbon dioxide
emissions, according to the Department of Energy. However, the consulting firm McKinsey and Company has found that improving building energy efficiency is one of the most cost effective ways to reduce greenhouse gas emissions.
Since 1974, California has used mandates, regulations and incentives to hold its per capita energy consumption essentially constant, while energy use per-person for the United States overall has jumped 50 percent.

This legislation provides a solution by stimulating the renovation of existing homes.

This is a jobs bill that provides incentives to reward energy efficient renovations that will create jobs in the construction sector, avoid increasing the supply of housing beyond demand, decrease energy use and reduce pollution, and expand the market for efficient technology and products.

This bill would create the first tax incentive for energy efficiency home renovation based on the energy performance of the home rather than the cost of the equipment.

This concept, which Senator Snowe and I first proposed in 2007 as part of the Extend Act, is recommended by most energy efficiency experts.

Current policy allow homeowners to claim credits for the purchase of energy efficient insulation, windows, doors, heaters, air conditioners and water heaters. This approach is very expensive, largely due to claims filed for windows.

By restructuring the credit to apply to whole-home energy renovations that reward energy efficiency performance instead of the cost of equipment, this proposal has the potential to increase effectiveness while substantially lowering costs.

The legislation also includes provisions to ensure effectiveness and prevent abuse. The work must be done by a contractor who must sign an affidavit certifying the work was done and submit photographs of the work. The contractor must use certified, computer-based energy efficiency measurement tools. The credit would be limited to renovations of primary residences that do not increase the size of the home, and the credit would be capped at no more than 30 percent of the cost of renovation, to prevent homeowners from making large claims for relatively inexpensive renovations. As a tax credit, all claims would also be subject to IRS audits.

The bill is supported by the California Energy Commission, the Alliance to Save Energy, Efficiency First, the American Council for an Energy Efficient Economy and the Natural Resource Defense Council.

By offering incentives for energy efficient renovations, this bill helps create jobs in California's ailing construction sector while at the same time decreasing energy use and pollution.

This sort of investment, putting Americans back to work while leaving behind lasting improvements, is the type of legislation on which Congress should be spending time.

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