Smart Energy Choices Justify Investment in Energy Efficient Home Building

Strategic Insights -

The rebuilding of homes destroyed by Hurricane Katrina offers a crucial opportunity to incorporate energy efficiency criteria into the reconstruction process, as demonstrated by an analysis released by ICF Consulting. The study compared the impacts of different energy efficiency standards on 310,000 destroyed homes in the Gulf Coast region, highlighting the financial and environmental benefits of investing in energy-efficient building practices. By incorporating energy efficiency criteria, policymakers, builders, and homeowners can make informed decisions that not only save money but also reduce greenhouse gas emissions.

Key Takeaways:

  • A $200 million incremental investment in energy efficiency in 310,000 destroyed homes will pay for itself in less than four years, providing a quick payback scenario.
  • Rebuilding those homes to the 2006 ENERGY STAR scenario will have a payback of just 7.5 years and will save nearly $2.5 billion in the following 20 years if energy prices stay constant.
  • Homeowners will benefit from more comfortable homes and receive a net positive cash flow from energy savings with a 30-year mortgage.
  • The annual electricity savings of the ENERGY STAR scenario would avoid power demands equivalent to the peak output of one nuclear plant serving Hartsville, South Carolina.
  • The reduction in greenhouse gas (GHG) emissions would be equivalent to removing 51,221 cars from the road.
  • The analysis models only the impacts on single-family homes destroyed by Hurricane Katrina, and when including other hurricanes, multi-family homes, and the commercial sector, the financial and resource impacts from choosing energy efficiency will be staggering.
  • The International Code Council (ICC) has upgraded its International Energy Conservation Code (IECC 2006) codes for new homes, and the government-sponsored ENERGY STAR program has amended its guidelines for new homes.

Statistics:

  • $200 million incremental investment in energy efficiency will pay for itself in less than four years.
  • A 40-year mortgage, homeowners immediately receive a net positive cash flow from energy savings.
  • 310,000 destroyed homes will benefit from energy-efficient building practices.
  • 20-year period: $2.5 billion saved if energy prices stay constant.
  • Peak output of one nuclear plant serving Hartsville, South Carolina: 676 MW (source: [1])
  • 51,221 cars removed from the road by reducing greenhouse gas emissions.
  • 7.5-year payback period for the 2006 ENERGY STAR scenario.

Sources:

  • Rebuilding After Katrina: Smart Energy Choices (issue paper), ICF Consulting, [http://www.icfconsulting.com/homerebuild](http://www.icfconsulting.com/homerebuild).
  • ICF Consulting (company information), [http://www.icfconsulting.com/](http://www.icfconsulting.com/).
  • International Code Council (ICC), [http://www.icc.org/](http://www.icc.org/).
  • U.S. Environmental Protection Agency (EPA), ENERGY STAR program, [http://www.energystar.gov/](http://www.energystar.gov/).