By Jim Snyder - 03/14/10 10:30 PM EDT
Hoping to create jobs and reduce carbon emissions, lawmakers used the stimulus package to expand a tax break to encourage homeowners to make energy efficiency improvements.
The change was a potential windfall for window manufacturers, because the larger break would likely spur the installation of new windows, the most popular way of accessing the credit. The break, in place since 2005, had been capped at $200 of the total cost to purchase replacement windows, and $500 for making more expensive efficiency upgrades like replacing an old furnace. The stimulus raised the cap per home to $1,500 for all products.
But a group of window makers has lobbied to change the standard to the measurement the Department of Energy uses, called Energy Star, to rate windows and skylights. AGC Flat Glass North America said the new standard shut out the U.S. market, forcing it to close a facility in Michigan.
Big-business lobbies like the U.S. Chamber of Commerce, the National Association of Home Builders and the National Association of Manufacturers have joined that effort.
The lobbying push met with partial success last week when the Senate passed a tax extenders bill that included the change backed by the industry.
Now environmental groups like the Natural Resources Defense Council (NRDC), along with Anderson Windows, the leading window maker, are trying to stop the lobbying push in the House.
Critics say Energy Star is a weaker efficiency standard, and leads to less energy savings than Congress intended in the stimulus, an act designed to both spur the economy in general and clean energy industries in particular.
Anderson Windows has argued not changing the standard with only eight months left will create unnecessary confusion.
Prior to the stimulus, the windows, doors and skylights homeowners bought had to be certified by the Energy Star program, which is operated by the Energy Department, for them to claim the credit.
Hoping to capture more energy savings, environmental groups and others successfully lobbied for a tougher standard in the stimulus bill.
To be eligible, windows and doors had to have a U factor of 0.3 and a solar heat gain coefficient of 0.3. The U factor is a measurement of a window’s insulation value — that is, how much heat it allows to escape. The solar heat gain coefficient measures the amount of solar radiation lets in.
In each case, the lower the number, usually the better, although in some cases a higher solar heat gain coefficient in windows facing south in northern regions could cut heating costs.
The standard in the stimulus is called the “30/30” requirement.
Energy Star standards vary over four climate regions. According to the NRDC, 61 percent of window models would meet Energy Star standards in the South, 57 percent in the South-Central zone, 48 percent in the North-Central zone and 33 percent in the North.
Lane Burt, the manager of Building Energy Policy for the NRDC, said only 28 percent of models in the fenestration database meet the 30/30 requirement. Given the size of the benefit, Congress was right to raise the bar for eligibility in the stimulus, NRDC said.
Windows that can meet it are generally more expensive.
“You want the tax credit to go to the best products,” Burt said.
“If people are going to be buying Energy Star windows anyway, why are we spending public taxpayer money on it. It’s a waste.”
The National Trust for Historic Preservation, meanwhile, said the move away from 30/30 standard would “decrease energy savings, increase program costs, and confuse the American consumer,” in a February letter to House tax writers.
In a letter sent before the Senate vote, 10 environmental organizations, including NRDC, the Sierra Club, Center for Biological Diversity, Environment America, and the National Wildlife Federation, wrote that the “weaker window efficiency standards would be a step backwards, allowing cheaper, less efficient windows to qualify and increasing program costs by over $145 million.”
But the Chamber of Commerce called the 30/30 standard “unduly restrictive” in a letter it sent to Congress last November.
On Thursday, the Window & Door Manufacturers Association said the government was picking “winners and losers in our industry among manufacturers that had the technology to produce 30/30 products and those that could not.”
The association also disputes the contention that the 30/30 standard will necessarily lead to greater energy savings. Most skylights can’t comply.
But consumers would likely replace older, less efficient ones with those that meet the latest Energy Star standard if they were eligible for the credit, providing energy savings otherwise lost.