From Platts: Inside Energy. Published with permission of Platts, a division of The McGraw-Hill Companies.

January 2010 – When the House approved a $154-billion jobs bill last month before heading home for the holidays, it left out one of President Obama’s top priorities for putting people back to work: a program that would give homeowners government rebates to improve the energy-efficiency of their dwellings.

But experts say the so-called Home Star Initiative is likely to be included in a later jobs bill, as it enjoys support from leaders of both the House and Senate and the president’s external task force on the economic crisis, the President’s Economic Recovery Advisory Board.

The board’s recommendation translated into an Obama endorsement for the program last month, when the president touted the program at a Home Depot store in Virginia.

"We are delighted that something that we have championed for years – namely energy-efficient buildings – is now being championed by the president of the United States and a very influential group of people," said Brad Penney, director of government relations for the Alliance to Save Energy, which has been promoting the program.

"We’ll be working hard in January to see that it is part of the final jobs bill," Penney added.

Home Star, which some have dubbed "cash for caulkers" after the vehicle-rebate program nicknamed "cash for clunkers," would be administered by the Energy Department. It would allow the federal government to share the cost of energy-efficient appliances, weatherization and retrofits with consumers.

Matt Golden and Stephen Cowell, both of whom work in the efficiency-retrofitting business as well as advocate for it, became involved in crafting the latest proposal after they were approached last summer by John Doerr, a venture capitalist who serves on the economic board.

The two men have since met with White House Chief of Staff Rahm Emanuel, congressional aides and other officials to write language that is aggressive enough to create jobs, but that also includes quality-control checks.

Golden noted that the construction sector has been particularly hard hit, with at least one in five workers out of a job. Golden said Home Star would create hundreds of thousands of jobs.

"The economy is in a downward spiral, the construction sector is decimated, and we need to do something that is really aggressive really fast," said Golden, who is president of Recurve, a California-based company which performs energy audits and home retrofits. "So what can we do to address that, but also maintain our long-term goals?"

Golden sees the Home Star rebate program as a bridge between the energy-efficiency training money provided in last February’s economic stimulus bill, and future climate and energy legislation he sees as inevitable. In the year or two before a cap on carbon creates an incentive for people to retrofit their homes, he said, Home Star can provide a reason for them to do so today.

Cowell, who serves as chairman and CEO of the large energy-efficiency company Conservation Services Group, said Obama had asked him complete work on the proposal by January 1 so it would be ready when Congress resumes.

The proposal was left out of the House jobs bill (H.R. 2847), which passed on December 16, because negotiations had not concluded, he said.

A number of issues still needed to be addressed, including whether state or federal government would have primary administration of the program, what quality control standards should be in place and several other technical decisions.

Both Cowell and Golden said legislators wanted to make the bill as specific as possible, so that it could be implemented quickly. Funds provided by the stimulus bill took months to go out because DOE and the states had to craft rules for the programs, drawing public criticism that they were not effective.

The two said negotiators tried to learn from the stimulus bill’s process in other ways. For example, while earlier versions of the rebate program would have allowed businesses to participate, the language now being prepared would apply only to homes.

The provision’s price tag was also a sticking point that kept it out of the December bill. Advocates originally wanted $20 billion for the program, but the latest draft dated December 18 calls for $9 billion to be spent in 2010. Efficiency advocates say that is likely to be the final number.

"There are still many details to be worked out, of course, with regard to how it will be administered, how the incentives will be structured and other technical details," said Paul Heintz, a spokesman for Representative Peter Welch, a Vermont Democrat who sponsored the bill.

Welch, who sits on the House Energy and Commerce Committee, succeeded in attaching Home Star to the committee’s climate-and-energy bill last spring (H.R. 2454). The Senate has been slow to move to climate and energy legislation, though the Senate Energy and Natural Resources Committee approved a version of the rebate program last summer.

Virginia Senator Mark Warner has championed the bill in the Senate, which has yet to introduce its own jobs measure. His office offered few details.

According to the December 18 draft, which may not be final, the bill would establish "Silver" and "Gold"- Star classes for upgrades covered under the program.

Silver Star upgrades are simpler and meant to create jobs quickly, Cowell said. They include the purchase and installation of products like energy-saving furnaces, washing machines, and refrigerators. The measure allows the federal government to offer up to $250 per appliance installed in the home, up to a maximum of $3000.

The Silver category would also promote weatherization activities, including insulation and duct sealing, aimed at reducingthe energy used for heating and cooling.

The Gold Star option encourages households to receive comprehensive audits of their home’s energy efficiency, and to make the proposed investment to cut their energy use by at least 20%.

Households in this category can receive up to $4,000 if they cut their energy use by 20%, and an additional $1,500 for every 5% after that.

The upgrades under both "paths" must be performed by a contractor approved by DOE, and must provide documentation of the improvements made. There is a provision for performance auditing of completed projects. – Jean Chemnick