For low-income Americans, weatherization and residential energy efficiency provides real relief
Though the calendar says it’s spring, here in Colorado it’s anything but. Near RMI’s office in Snowmass, more than two feet of snow has fallen in the last week. Nevertheless, we’re anticipating the coming of spring and warmer weather.
The spring thaw may connote the happy chirp of robins and a metaphorical release from the cold, icy (and lately, stubborn) grip of winter for some, but for extremely low-income Americans, it may mean real relief. By early February, exacerbated by high oil prices, many low-income Americans had burned through their energy allotments under the U.S. Low Income Housing Energy Assistance Program (LIHEAP). Making matters worse, customers needing a heating oil delivery typically must buy at least 100 gallons—a high hurdle at $4.00-per-gallon, especially if you’ve lost your job or are otherwise financially strained.
Every year LIHEAP distributes funds to avert home energy emergencies in the cold winter months for households at 150 percent of poverty level or below. With a frigid winter like we saw early this year, lines form for crisis funding, which usually runs out before the end of the season. This year was no exception. Nonprofits and utility companies also solicit donations to help low-income people pay for heating. But it begs the questions: Are these solutions or Band-Aids (and flimsy Band-Aids at that) in the face of extreme weather, volatile fuel prices, and ever-scarcer Congressional allocations? What if we could do better, abetting immediate misery and long-term worry, all while enhancing dignity and self-sufficiency? What if such a solution were more cost-effective than the current Band-Aid?
For some folks, particularly the elderly, extreme weather can mean tragedy. Leaky houses whose heating systems simply can’t keep up with the home’s extreme heat loss can become frigid, sometimes deadly so. Attempts to stay warm have their own risks—80 percent of house fire deaths attributed to home heating systems were due to space heaters, according to the National Fire Prevention Association. Moreover, freezing water in pipes can cause them to burst and leak, a particular problem in trailer homes where pipes are not likely to be well insulated. In some cases, people attempt to thaw those pipes with torches, also resulting in a percentage of U.S. house fires.
There is a better solution. Building a home superefficient in the first place is best, but for existing inefficient homes, weatherization keeps them warmer with less fuel and lower bills, reduces the risk of severe hardship if utilities are shut off (in a worse-case scenario), and can obviate the need for space heaters or dealing with frozen pipes. Moreover, investing in efficiency upgrades for LIHEAP-qualified households also makes good financial sense. LIHEAP, funded annually by Congress, has provided up to $5.1 billion per year (although recent budgets have been closer to $3.5 billion). An average annual benefit in 2011 was $417, paid to nearly 9 million needy households.
Now consider the relative economics of efficiency upgrades, an investment that could reduce the LIHEAP taxpayer liability. In an analysis of the American Recovery and Reinvestment Act’s (ARRA) Weatherization Assistance Program, Oak Ridge National Lab (ORNL) estimated that cost-effective energy efficiency upgrades totaling $5,704 per household would save $437 in the first year and achieve a total energy savings, over the 20-year expected lifespan of the upgrades, that is 1.8 times the cost, assuming typical annual utility cost increases. Using a discount rate equivalent to the government’s 20-year Treasury rate (because weatherization could reduce annual government LIHEAP spending), it achieves a positive 20-year net present value.
It’s an even better deal when value beyond energy cost savings is factored in. ORNL estimates that the societal benefit of weatherization is 2.5 times the cost, considering non-energy benefits, such as fewer fires, better comfort and air quality, avoided utility shut-offs, weatherization jobs provided, and societal emissions reductions, to name a few. A recent study has even shown that energy efficiency reduces the risk of mortgage default.
Do we as a society want to just keep applying Band-Aids, or do we want to start healing our inefficient homes? Doing the latter would drive significant carbon reductions, empower people to pay their own utility bills, make them more resilient to fuel price volatility, and make the homes more resilient as well—able to “weather the storm” in a severe cold snap without fear of bursting pipes or a heating system that can’t keep up.