How will Cash for Caulkers work? Currently, we only know what has been proposed, and we need to caveat our answers by pointing out that the actual legislation that may emerge from Congress may lead to a number of changes. However, based on the proposed plan unveiled in December 2009 and some other information that has emerged since then, here is what we do know.
The HOME STAR Program (the formal name proposed for what is more commonly known as “Cash for Caulkers”) will be modeled somewhat after the “Cash for Clunkers” program that paid vehicle owners to trade in older, less-fuel efficient cars and trucks for new, more fuel-efficient vehicles. The plan’s authors hope to jumpstart the severely ailing construction and home improvement sectors as well as retail sales at home improvement stores. Here are the details that are being considered as part of the 2010 program:
How Much Will HOME STAR Cost?
The plan has a current budget of $23 billion, to be parceled out over a two-year period.Where Will Funding for the Program Come From?
The funding for the Cash for Caulkers program may come from unused portions of the funds provided by Congress as part of the ARRA stimulus package as well as from funds repaid by financial institutions as part of the TARP program.
How Will the Money Be Spent?
Six billion dollars would be set aside for homeowners who completed at least two approved weatherization programs on their homes. Twelve billion dollars allocated to homeowners who completed home weatherization projects that qualified as major projects, meaning they reduced energy consumption by at least 20%. Two billion dollars would allocate to auditing of funded projects (one of the big objections some have raised to the program is concern over fraud). Finally, $3-billion would be directed to home improvement retailers to provide assistance to homeowners trying to complete these projects.
How Much Money Will Be Available to Individual Households?
The amount of money available for homeowners will depend on the costs of the projects undertaken. As currently proposed, HOME STAR would be based on a list of acceptable weatherization projects eligible for the incentives. As the proposal currently stands, any homeowner who completed two of the projects would be eligible for up to $2,000 in stimulus money, and any homeowner who completed four of the listed projects would be eligible for up to $3,500. Any homeowner who undertook significant projects that reduced home energy consumption by at least 20% would be eligible for up to $4,000.
How Much Money Can Homeowners Expect to Save by Retrofitting Under the Program?Depending on the location, age, size of the house, and level of investment, retrofitting an average home can cut energy bills by 10 percent to 40 percent.
Are the Limitations on Program Incentives?
The projects undertaken would have to meet specific government requirements and have proven benefits. The Program will not pay for more than 50% of the total cost of any given project, leaving at least half of the cost to be paid by the homeowner.
How Will These Incentives Stimulate the Economy?
The Program’s sponsors hope that the Cash for Caulkers program will create lots of American jobs, save homeowners money, drive retail sales, reduce carbon emissions and reduce US dependence on foreign energy supplies. In addition, by saving money on energy, homeowners should have more money left over to spend on other things. Thus, program sponsors envision not only stimulating the economy but making a longer-term investment in our environment and national security.
What Other Benefits Will the Proposed Program Have?
According to the report of the Vice President’s Middle Class Task Force report, Recovery through Retrofit, existing techniques and technologies in energy efficiency retrofitting can reduce home energy use by up to 40 percent per home and lower associated greenhouse gas emissions by up to 160 million metric tons annually by the year 2020. Furthermore, home energy efficiency retrofits have the potential to reduce home energy bills by $21 billion annually, paying for themselves over time.