Early reports suggest the federal government's stimulus package has sparked renewed interest among some customers to buy energy-efficient windows and doors, install more insulation, and improve their roofs. In this special section, we explore three key dealer-related sections of the American Recovery and Reinvestment Act of 2009 and how they could help give your business an extra jolt.
Dollar for dollar, insulation and weatherization deliver more bang for their energy-efficiency buck than almost any home improvement. Happily for manufacturers, dealers, and installers, the American Recovery and Reinvestment Act's (ARRA) $1,500 tax credit can be applied to a broad array of materials and methods–batts, spray foam, loose-fill, wraps, sealants, tapes, flashing, perhaps even structural insulated panels–that are primarily designed to reduce the heat loss or gain of America's estimated 80 million underinsulated homes.
On its surface, the insulation provision is simple: Homeowners can take a tax credit of 30% of the cost of materials only, to a maximum of $1,500, for insulation work performed this year and next. That's triple the credit available since 2005. The sum of the resulting "insulation material used in layers" must meet the R-values prescribed by the 2009 International Energy Conservation Code (IECC).
"We think the recovery bill is a great opportunity to move forward" toward a more energy-efficient housing stock, says Gary Nieman, vice president of government policy initiatives at Owens Corning.
Guardian Building Products' customer base "has expressed heavy interest in several areas of the ARRA," adds Aaron Hock, national sales manager.
Code of Conduct
Things start to get sticky with the IECC. Published by the International Code Council (ICC) and based on goals set by the Department of Energy (DOE), compliance with the 2009 IECC will produce 15% in energy-efficiency gains over the 2006 version, according to the agency. (To purchase the 2009 IECC, go to www.iccsafe.org.)
The 2009 IECC is considerably tougher on insulation than the previous version, particularly in colder parts of the country, where R-values (thermal resistance) are now as high as 21 for wood frame walls, 38 for floors, and 49 for ceilings and attics. "The new code requirements make it tough for builders to do things as usual and still meet the code," says Bob Burgess, president of Accurate Insulation in Upper Marlboro, Md., whose 65 installers work all over the mid-Atlantic region. This is especially true in remodeling, when insulation is sometimes compressed into small cavities, potentially compromising R-value.
Numerous products meet the specified R-values, including fiberglass and cotton batt insulation with ratings of R-21 or higher that can be installed in a 2x6-framed wall cavity, plus several loose-fill products using fiberglass, cellulose, or other materials that can be installed behind netting in open framing or used to fill cavities in existing walls.
Such products likely won't be as inexpensive as the old mainstays, however, at least based on a few calls to building supply retailers.
In some cases, in fact, meeting the prescribed R-values becomes almost cost-prohibitive. Ironically, it may even deter homeowners from choosing what many green remodeling advocates believe are the best (but most expensive) insulating products: water-based spray foams that expand to fill gaps and holes.
"They're speaking batt language," says Laura Calfayan of Calfayan Construction Associates and AirTight SprayFoam of Southeastern Pennsylvania, in Huntingdon Valley. "If I were to spray R-38, I'm literally forcing people to spend more than they need to," she says, for the same comfort effects achieveable with two inches of AirTight's water-based, closed-cell foam, whose continuous air barrier reduces energy use beyond its stated R-value of 7 per inch.
Even so, business is up for spray foam companies. An Icynene product, for example, has a 3.7-per-inch R-value, allowing walls insulated 6 inches deep with it to meet the 2009 IECC in zones that require R-20.
Downloads of the Icynene manufacturer's certification statement (needed for tax documentation purposes) jumped 68% in March and April from January's levels before subsiding again in May, according to Icynene's Teresa Crosato.
If homeowners must dig a bit deeper at the point of sale, that's the price of progress, says Darren Meyers, technical director of energy programs with the ICC. "[The 2009 IECC] is a paradigm shift because the nation and the home-building community have not understood how far behind our construction practices are. We've never had a call to action [to be very energy efficient]," he says. The DOE's goals, and the resulting code, are the call to action.
There are also concerns about the labor component of the ARRA–more specifically, the absence of a labor component.
Why the tax credit doesn't cover labor costs mystifies some industry sources. "We have to open the IRS's eyes to help them understand that the labor component is key," says Michael Kwart, executive director of the Insulation Contractors Association of America, a trade group. "It's still a wonderful credit," he says, but most insulation materials "don't get to the effective R-value without labor."
Perhaps more important, insulating existing homes is different from insulating new homes, where there are no obstructions or hidden conditions. The wrong product can be selected for the wrong location, or placed too close to recessed lights, or not blown to the specified depth. Gaps, cracks, and openings could be left unsealed. Inadequate ventilation can allow harmful substances to build up.
"You have to be a lot more attentive when you're doing retrofit work," Burgess says. Besides having enough knowledge to be able to specify the right insulation product–and even know about new products–insulating in conjunction with remodeling work "takes more time, and the right kind of person." He has invested considerably in training his workforce in insulation retrofits, including training some through the Maryland Home Performance with Energy Star program to become energy auditors, and requiring a "retrofit checklist" for remodeling jobs.
Burgess' approach is relatively unusual, many say. "Insulation contractors are often not as trained as they should be," says green remodeler Michael Anschel of Otogawa-Anschel, in Minneapolis. "Plumbers, the guys who make sure stuff goes down a tube, they have to carry a license that's pretty hard to get. But the guys who change the physical properties of your house–the way the house functions–they often don't have to take a test or be licensed or anything."
The broader insulation industry is also aware of these concerns and is proactively striving to mitigate them. "It's not good for the industry to have people installing improperly," says Gale Tedhams, Owens Corning's director of sustainability. "Open-mindedness and creativity are at an all-time high, and we absolutely support good building science" and strong training for the company's "preferred" contractors.
In the long run, ARRA could even burnish the image of the insulation industry. Like so many contracting professions, "We've had the black eye already," says ICAA's Kwart. Among other developments aimed at educating installers on the nuances of older homes, his association launched a series of voluntary "retrofit training programs" last year.
More Dollars To Weatherize
In addition to insulation tax credits for homeowners, the ARRA earmarks $5 billion for the U.S. Department of Energy's Weatherization Assistance Program (WAP). It also expands eligibility to families making up to 200% of the federal poverty level–about $44,000 a year for a family of four (income thresholds are higher in Alaska and Hawaii).
This is a huge increase for a program that has existed since 1976 and whose funding, in fiscal 2008, was a relatively small $227.2 million. Under the stimulus act, WAP is intended to weatherize a million homes per year, at a maximum average cost of $6,500 per home. Weatherization reduces the heating bills of low-income families by an average of 32%, as well as providing health and other benefits, according to the DOE.
How WAP Works. The money is distributed to state-level agencies that contract with local agencies to do the weatherization projects, beginning with an energy audit. By doling out the money in installments, it is hoped that the agencies will have time to develop plans and ramp up training, production, and oversight (one insider said that some agencies "are like deer in the headlights" trying to manage more money than most have ever seen).
"Standards for conformance" dictate eligible materials. Manufacturers and installers are excited, though there are concerns that the dollar amounts will attract poorly trained players.
There's also hope, however, that established remodeling companies will be able to lend their talents to WAP. "Absolutely, there's opportunity for small remodelers," says Christina Kielich, a DOE spokesperson. "This is really aimed at small contractors that could hire the five or 10 people to do the work."
For links to state offices and technical information, visit www.waptac.org.
–Leah Thayer is senior editor of Remodeling.