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INFLATION REDUCTION ACT | BILLIONS FOR WEATHERIZATION

Report: More than half-million Wisconsin homes could qualify for new weatherization incentives

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For years, Emily Kosmerl knew her East Side home needed insulation.

The house, built in 1915, was drafty and expensive to heat — sometimes as much as $500 a month.

Kosmerl and her husband, Paul, poked around enough to know why.

“There was no insulation,” she said. “It wasn’t insulated when it was built, and it wasn’t insulated later.”

Weatherizing

Ethan Featherstone of Accurate-Airtight Exteriors applies spray foam insulation in the attic of a residence in Sussex. The new Inflation Reduction Act includes billions of dollars worth of incentives for weatherization and other energy-saving measures.

They got an energy audit, but because the siding likely contained asbestos they would need to insulate the walls from the inside, which seemed too daunting.

“We did everything else that was suggested — lightbulbs, low-flow shower heads,” Kosmerl said. “This project was just too big and pricey.”

In January, their boiler gave out after less than 10 years.

The Kosmerls decided to weatherize the house and replace their boiler with a smaller, more efficient model. They had the house air-sealed from the basement sills to the rafters. Their contractor filled the attic with insulation and drilled holes between each stud to pump the walls full of foam.

The cost was more than $18,000, even after a $1,200 state rebate, which they expect to eventually recover through savings on their utility bills.

While they were able to plan and save for the expense, the price tag is out of reach for many families. That could change next year, thanks to incentives in the new Inflation Reduction Act.

While the landmark bill is expected to spur the nation’s fastest-ever buildout of clean energy resources, it also includes billions of dollars to make homes more energy-efficient, which experts say is the single most cost-effective tool for slowing climate change.

Lauren Urbanek

Urbanek

“It’s an unprecedented amount of money going to energy efficiency,” said Lauren Urbanek, senior energy policy analyst for the Natural Resources Defense Council. “It has the potential to be pretty transformative.”

Unlike previous federal clean energy tax credits, which favor those who can afford the up-front cost of things like solar panels, many of the IRA’s programs are aimed at low- and moderate-income households and disadvantaged communities.

Green Homeowners United estimates that more than half a million Wisconsin households — including tens of thousands in Dane County — will qualify for rebates that could cover up to 80% of the costs of weatherization and in some cases the full cost of a new heat pump.

“It’s going to be a huge opportunity for us to upgrade a lot of homes,” said Kevin Kane, co-founder and chief economist for the West Allis-based company that seeks to help people conserve energy. “Almost every home will have access to some amount of incentive.”

Weatherizing

Policy analysts say energy-efficient measures such as weatherization are the most cost-effective tool for reducing greenhouse gas emissions.

Not ‘pie in the sky’

Passed by Congress this summer, the IRA includes nearly $370 billion for clean energy and energy savings, the nation’s largest-ever investment in slowing climate change.

In combination with existing policies, it’s expected to reduce the nation’s greenhouse gas emissions by about 40% by 2030, according to two independent analyses.

Scientists warn emissions need to be cut in half by 2030 and eliminated entirely by 2050 to avoid the most catastrophic impacts of climate change.

Much of the money will go to subsidize wind, solar and other forms of clean energy generation, but the bill includes $25 billion to help make existing homes more energy efficient and tens of billions more for broad greenhouse gas reduction programs that could include home retrofits, according to the American Council for an Energy Efficient Economy.

Energy efficiency is a key piece of the puzzle when it comes to eliminating greenhouse gas emissions: It’s one of the cheapest solutions, improves comfort and health, and saves consumers money on their energy bills.

“There’s not one simple answer, but in general we think energy efficiency is the most cost-effective way of getting savings,” said Lowell Ungar, director of federal policy for the American Council for an Energy Efficient Economy, which found that the nation could cut greenhouse gas emissions in half just by improving efficiency of buildings, industry and transportation.

Lowell Ungar

Ungar

“This is not pie-in-the-sky stuff,” Ungar said. “This is doing what we already know how to do.”

And while conservation alone won’t eliminate all carbon emissions, it will make the transition from fossil fuels easier and cheaper.

“It makes it a heck of a lot easier to actually make the grid cleaner when demand is less,” Urbanek said. “You don’t have to put up as many solar panels.”

Policy analysts say financial incentives are also crucial for getting new technologies into the mainstream, like they did with LED lighting.

“It’s going to really push along and help us get to where we need to go,” Ungar said.

Crunching the numbers

Kane said the law will “supercharge” his company’s mission to “do right by the planet, right by homeowners and right by workers to help people fight climate change from home.”

By crunching data from the Census Bureau and the Department of Housing and Urban Development, Kane estimates there are more than 510,000 low- and moderate-income households that would qualify for an $8,000 rebate on a high-efficiency heat pump, which is essentially an air conditioner that also works as a heater.

Kane said in many cases that would completely offset the cost.

A separate program will provide instant rebates on home improvements like insulation, window replacement or air sealing that reduce energy use by 20% or more.

Homeowners can receive a $2,000 rebate for projects that cut use by 20%, and $4,000 for projects that save at least 35%, or up to half of the total project cost. For households earning less than 80% of the median ($64,700 for a family of three in Wisconsin), the rebates are doubled and can cover up to 80% of the total cost.

The bill also includes incentives for owners of multi-family buildings and other landlords, helping renters who are often left out of such programs.

“It’s going to be a huge opportunity for us to upgrade a lot of homes in the area,” Kane said. “For many people, they’re going to be paying very, very little, especially in terms of heat pumps.”

Weatherizing

Weatherization contractors say they will need to recruit and train more workers to meet the demand stimulated by rebates and tax credits in the Inflation Reduction Act.

Creating jobs

The incentives will also be a boon for weatherization and HVAC contractors.

“We’ve been waiting for something like this for a long time,” said Torrance Kramer, president of Accurate-Airtight Exteriors, an energy-efficiency construction company that does energy audits, insulation and building envelope consulting. “It’ll change the dynamic of how we do business.”

Kramer, whose company insulated Kosmerl’s home, said he expects the incentives will bring in more business from northern Wisconsin, though it might also force him to be more selective in the jobs he takes.

“That will leave opportunities for other folks,” he said.

Kramer said he’s already looking for more workers.

“As every other contractor, it’s a really big challenge for us,” Kramer said. “I’m an insulator. You want to go crawl around in a tight, itchy space?”

Kane is working with labor unions to set up training programs for the industry.

“We’re going to hire people — lots and lots of people,” Kane said. “We’re letting people know this isn’t just a gig. It’s a career path.”

Weatherizing

Workers with Accurate-Airtight Exteriors remove old insulation from the attic of a residence in Sussex. The Inflation Reduction Act includes rebates of up to $4,000 for retrofit projects that reduce energy use.

Guidance sought

It’s unclear exactly when and how the IRA funding will be distributed and administered.

States are waiting on the Department of Energy to issue guidance before they submit plans for approval, which Urbanek said likely won’t happen until sometime in 2023.

While the DOE has yet to announce Wisconsin’s share of the state-administered programs, it’s likely to be at least 10 times what the state’s ratepayer-funded conservation program Focus on Energy currently budgets for residential incentives.

But Urbanek said state- and utility-sponsored conservation programs will still be essential to solving the problem.

“It’s unprecedented ... but it is not enough,” Urbanek said. “Even $9 billion is not going to be enough to reach every single home and building.”

The Wisconsin Local Government Climate Coalition, a group of local governments representing more than a third of the state’s population, called the bill a “once in a lifetime opportunity to supercharge energy efficiency.”

The group has urged the Public Service Commission to adjust Focus on Energy’s goals to “stack” state and federal incentives and leverage the state program to help more people take advantage of the federal funds.

But regulators, who are crafting goals for the next four-year period, say they don’t yet know enough about how the IRA funds will be distributed.

“Making any changes based on that legislation is extremely premature,” PSC Chair Rebecca Valcq said. “It may be another year before we get guidance on some of these programs.”

Weatherizing

Wallace Kennedy of Accurate-Airtight Exteriors seals gaps in the attic of a Sussex home to keep heat from escaping. Air sealing is a crucial element of weatherization, said Dylan Crye, residential program director for Focus on Energy, who likens insulating without sealing to wearing a wool sweater on a windy day.

Welcome comfort

Despite the high cost — and missing out on the coming incentives — Kosmerl said her weatherization investment was worth it.

She’s expecting to see big savings on her utility bills this winter, and she was surprised this summer to discover how much quieter and more comfortable the house was, even without air conditioning.

Emily Kosmerl

Kosmerl

“Our house is staying so much cooler,” she said. “We always thought about the heating bill in winter, but our summer is so much more pleasant too.”

While she missed out on the IRA’s weatherization rebates, Kosmerl is interested in the bill’s incentives for heat pumps, which can heat and cool spaces.

“I’m really keeping an eye on those,” she said. We’d really like to get to a point where we have air conditioning.”

“It’s going to be a huge opportunity for us to upgrade a lot of homes. Almost every home will have access to some amount of incentive.”

Kevin Kane, co-founder and chief economist for West Allis-based Green Homeowners United

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