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Contractors Wanted

By: Wendy Fleischer

February 01, 2008

Knowing what we now know about our planet's peril, there is no excuse for building a new building that does not take advantage of best practices to achieve energy efficiency and to otherwise minimize its environmental impact. But what about New York City's approximately one million existing buildings? These properties are responsible for seventy-nine percent of its carbon emissions. And, by the City's estimates, in 2030, the target date of the PlaNYC 2030, they will comprise 85% percent of the total building stock. So, even if every single new building that comes on line in the next 22 years is carbon neutral (unlikely), we will not near our goals for reducing carbon emissions without sharply reducing emissions from the existing building stock.

Energy consumption is the source of virtually all carbon emissions from existing buildings. CO2 NYC BuildingsFortunately, substantial knowledge exists and continues to grow about how to make buildings more energy efficient. For one-to-four-family homes, energy retrofits using an integrated-system approach (also called a whole-house or building-as-system approach) are widely recognized and employed in weatherization and energy retrofit initiatives across the country. The whole-house approach starts with an energy audit which determines where energy is used and wasted, accounts for the interaction of various systems and considers comfort and safety in addition to energy use. Using the integrated system approach, insulation, heating systems, ventilation, windows, appliances and fixtures are all considered and recommendations are made 'holistically' for prioritizing measures that will save the most energy. Numerous studies have documented 20% to 50% and even greater reductions in energy use, through the process of residential building retrofits, using this approach. (For example, download Michael Rogers, et al, Home Performance with Energy Star®: Delivering Savings with a Whole-House Approach at Energy Star; and Jennifer Thorne, Residential Retrofits: Directions in Market Transformation, at the American Council for an Energy Efficient Economy)

This Snapshot focuses on the contracting industry for New York City's 808,509 one-to-four-family homes, eighty-four percent of New York City's buildings. It discusses the challenges ahead, offers some recommendations and gives examples of steps that the New York State Energy and Research Development Authority is taking to meet the task.

The Home Improvement Market

Across the country, even after a dip in spending, American homeowners spent $174 billion on home improvements in 2007. In New York, homeowners and multi-family building owners spend hundreds of millions of dollars on building improvement every year. Much of the expenditures in this market make up the livelihood of 10,000 contractors that are licensed to work here — either general contractors or specialty contractors. A general contractor will oversee all aspects of a medium- to large-scale renovation. Specialty contractors, either working under subcontract to a general contractor or independently under the owner/manager's supervision, more typical in smaller jobs, implement the specific tasks of their trade, for example, heating, plumbing, electrical work. The contracting industry is not yet prepared for the massive task of retrofitting the over 800,000 one to four family homes in New York City.

Industry fragmentation

While there are many contractors who will properly install all of the individual components that may impact on a building's energy use — windows, heating and ventilation, plumbing, insulation — no one trade is responsible for the interaction of the systems on energy use. For example, the insulation may be installed without knowing if the heating system is back drafting in the house; the heating system may be sized and installed without knowing whether the roof is insulated. In larger projects, where an architect or engineer is involved, s/he can (should) play the role of ensuring maximum efficiency, though, often, it is not done well, even then.

Limited number of skilled contractors

There is a clear opportunity for the contracting industry to meet the emerging demand for energy retrofits. At this time, there are only a few dozen contractors in the City who are trained and experienced in implementing energy retrofits. These are the contractors who currently participate in the New York State Division of Housing and Community Renewal's Weatherization Assistance Program (for low-income homeowners only) and New York State Energy Research and Development Authority's (NYSERDA) Home Performance with ENERGY STAR (R) program (for both low-income and market-rate housing). Home Performance with Energy Star offers homeowners and contractors incentives to undertake a whole house approach to retrofitting one- to four-family homes and is now aggressively marketing the program and recruiting new contractors here.

Insufficient benefit for reducing energy use

Another hurdle to wide scale retrofitting is that, for jobs conducted independently of the State's programs, there is no incentive for contractors to recommend work outside of their trade. For example, even if the heating contractor recognizes that the heat is being wasted due to a lack of insulation, that contractor gets little or no reward for recommending that the homeowner consider insulation. That is, the heating contractor will get paid for installing or repairing or replacing the heating system, not for suggesting insulation. What's more, s/he will size the system to adequately heat the leaky building. As discussed below, NYSERDA's programs address this by paying incentives to contractors for making referrals to other trades that impact on energy efficiency.

Typically, in the absence of NYSERDA or other incentive programs, homeowners call contractors because:

  1. there is an emergency (i.e., the hot water heater breaks down)
  2. they wish to solve a particular problem (i.e. their back rooms are cold and drafty or their heating bills are too high); or
  3. they want to remodel all or part of their house. While all of these situations present an opportunity to reduce energy use, the opportunity is, most often, squandered. The homeowners' first step is to go through a difficult process of
  4. trying to figure out the type of contractor they need
  5. finding a trustworthy contractor, and
  6. negotiating the scope of work that contractor will perform, and the price the homeowner will pay.

Energy audits are almost never requested, or, therefore, conducted. Sometimes the presenting contractor(s) will promise energy use reductions that are unsupportable. This is an issue that is addressed by the quality assurance and testing out that the whole house approach used in the Weatherization and Home Performance with Energy Star program but is rarely used outside these programs.

If our goal is to realize every opportunity to increase energy efficiency, how can we make this happen? Following are some ideas:

Build sector of the contracting industry specializing in energy auditing for existing buildings

Energy auditing requires specific expertise, but not the breadth and depth of knowledge needed to become a licensed architect or engineer. To develop this new sector, New York City and State should work together to build on existing efforts to:

Increase education for contractors to learn how to conduct energy audits

To conduct the home energy audit that is critical to the whole house approach, contractors must understand the basics of building science and learn how to effectively assess the energy uses of a building. They must learn how to use diagnostic equipment such as a blower door, manometer and infrared cameras. Facility with computer software programs that can generate energy audits and the ability to manage documentation increase the likelihood for positive results. Likely candidates to target for such education includes contractors that install heating systems, insulation, ventilation, windows, roofs, electrical lighting and other appliances. Other candidates may be individuals who work on the margins of the contracting industry, for example handymen. Developing this new sector is an opportunity to benefit disadvantaged workers and businesses.

NYSERDA offers education opportunities and is currently reimbursing 100% of the costs for City-based contractors to attend classes that lead to Certification by the Building Performance Institute, (BPI) a national credentialing organization for building performance (for class information visit: Contractors that receive accreditation can participate in NYSERDA's Home Performance with Energy Star program. NYSERDA also contracts with Hudson Valley Community College to develop programs to train high school and college students in this emerging field and classes are being offered in New York City, for example at Bronx Community College.

Develop and disseminate profitable business models for building auditors

As almost anyone in the industry will report, contracting isn't an easy way to make a living. Insurance requirements, licensing, finding and retaining good workers, dealing with the clients and getting the jobs done keep contractors busy from early in the morning to late at night. There is an opportunity for workforce and business development organizations to develop business models for making energy audits profitable. The successful contractors that are working under the Home Performance Program upstate would provide examples for developing business plans.

Create incentives for contractors to change the way they do business

In the absence of regulation, incentives to both contractors and consumers are warranted. As an example of incentives to contractors: NYSERDA offers subsidies to contractors to take classes and test for certification (100% reimbursement), shares in the cost for equipment purchase and helps pay for advertising. NYSERDA also provides additional incentives to contractors to conduct audits and retrofits and addresses industry fragmentation by providing incentives to bring in contractors from other trades.

Modernize the rules on energy use by existing buildings

Contractors would start to pay more attention to offering energy audits efficiency audits if they were required. In addition to providing incentives, City government might consider requiring an energy audit when an alteration permit is approved by the Department of Buildings or a building is sold. In addition, building codes should be revised to require high-efficiency heating systems, appliances and lighting fixtures. There are no regulations on energy use or carbon emissions for existing buildings; the only penalties to property owners for running energy-inefficient buildings are their high fuel bills.

Increase the market for energy audits

Although many owners want to save energy, owners are not often able or willing to pay the up-front costs of energy retrofits or aware of the incentives available to them. Increased funding is needed to promote and expand existing programs and to increase consumers' understanding of the long-term benefits of retrofits. The more homeowners and consumers are aware of the advantages of retrofits, the more likely they will try to take advantage of existing and new resources.

Mayor Bloomberg has put out a progressive and ambitious plan to save energy and reduce carbon emissions in PlaNYC 2030 but we have a long way to go to get there. Contractors are an important "hands on" part of the solution for reducing the City's energy use. With that recognition, there is an opportunity to grow a new building audit trade that can benefit New York's air quality, shrink its climate footprint, reduce utility costs of hundreds of thousands of New Yorkers and expand economic equality at the same time. Let's seize it.

Wonkster Readers Weigh In

Existing Homes: the Frontline of Global Warming

Sallan | Snapshot | Wendy Fleischer | Comments

February 5, 2008

Building on the consensus that existing homes present the biggest hurdle in reducing carbon emissions in the city, the Sallan Foundation, an environmental organization, looks to contractors' role in addressing the issue. It notes that the majority of home improvement contractors do not communicate with one another when addressing individual issues such as heating. So, for example, a contractor who installs a new heating system often does not look to see whether the home could be better weatherized. Further, there are a limited number of contractors specialized in reducing energy use in existing homes.

To address these issues, the Sallan Foundation recommends training contractors to conduct energy audits and giving incentives to contractors and consumers to conduct such audits and retrofit the homes to be more energy efficient. The organization also suggests requiring an energy audit when an alteration permit is approved by the Department of Buildings or when a building is sold.

By Mike Muller on February 5, 2008, 3:24 pm | Reply on The Wonkster

The most critical thing is to get homeowners to consider rooftop solar when it is time to replace the roof. That is the time to do it.

By Larry Littlefield on February 6, 2008, 12:58 pm | Reply on The Wonkster

Getting an audit to identify energy leaks and implementing cost-effective measures such as insulation and heating system adjustments are not only more accessible to homeowners but are more critical in the immediate-term.

Colin Cathcart, whose architectural firm, Kiss + Cathcart, has probably done more high-profile solar installations than anybody else in NYC recommends that homeowners 'spend your first dollar on conservation'.

NYSERDA's incentives through the Home Performance with Energy Star program make getting a home energy assessment and implementing conservation measures inexpensive for the homeowner and financially lucrative for the contractor.

By Wendy Fleischer on February 7, 2008, 1:40 pm | Reply on The Wonkster

Wendy Fleischer is Sustainability Project Manager at the Pratt Center for Community Development

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