March 2, 2020
WASHINGTON, DC – This evening on the Senate floor, U.S. Senator Rob Portman (R-OH) delivered remarks highlighting the need for the amendment he plans to introduce later this week with U.S. Senator Jeanne Shaheen (D-NH). The bipartisan amendment will add the voluntary building codes sections of their legislation, the Energy Savings and Industrial Competitiveness Act (Portman-Shaheen), to the energy bill currently under consideration on the Senate floor. This building codes amendment focuses on incentivizing the construction of new homes and buildings to be more energy efficient. The provisions in this amendment were included in the Portman-Shaheen energy efficiency measure and approved by the Senate Energy and Natural Resources Committee on a bipartisan basis five separate times and passed the full Senate by a vote of 85-12 in 2016 as part of a bipartisan energy package. The legislation was most recently approved by the Senate Energy and Natural Resources Committee with bipartisan support in September. Notably, the building codes sections in this amendment do not include mandates of any kind for new homes. The adoption and updating of building energy codes will remain, just as they are today, up to state, local governments, and tribes. In addition to highlighting the need for model building energy codes amendment, Portman also expressed disappointment that the energy package did not contain the SAVE Act, bipartisan legislation to allow for the energy savings of an energy efficient home to be considering during the mortgage underwriting process.
A transcript of his remarks can be found below and a video can be found here.
“I’m here on the floor to talk about the legislation now before this body. We just passed the motion to proceed to the energy legislation and we just heard from my colleague from Alaska, your colleague from Alaska, Senator Murkowski, who chairs the Energy and Natural Resources Committee about that legislation. It’s a good package. As she said very well, it both helps in terms of the economy and jobs and in terms of the environment. Who wouldn’t be for that? And it’s got a whole series of proposals to do it.
“The one I’m going to talk about tonight are the energy efficiency proposals that she talked about and in particular I’m going to talk about a concern I have that the legislation that was offered tonight took out part of our energy efficiency package which we hope to add later by amendment, but I want to talk about why it’s so important to add it back in. The legislation on energy efficiency is something I introduced with Senator Shaheen, from the great state of New Hampshire, for nine years now, going back to 2011. Some of it has gotten passed over time, but most of it has not. So we are once again bringing it up. The legislation is entitled the Energy Savings and Industrial Competitiveness Act, which is why we commonly call it Portman-Shaheen, because that’s shorter.
“Our legislation has been voted on by this body before. Back in 2016 it passed the United States Senate. It’s also passed out of the Senate Energy and Natural Resources Committee five separate times with bipartisan votes. In 2016, the vote was 85-12, and, again, it was part of a larger package at that time. There’s a reason why this legislation has received such broad bipartisan support over the years. It lowers energy bills, which is a good thing, it reduces emissions, it creates new jobs and it does it all without putting any new mandates on the private sector. It provides incentives but not mandates and that is great news for the working families and the business, large and small, that I represent. It accomplishes all this by improving energy efficiency in three key sectors. One is buildings, commercial buildings, residential buildings. Second is in the manufacturing sector, industrial sector of our economy and third is with regard to our U.S. Government. The residential and commercial buildings, by the way, account for roughly 40 percent of total U.S. energy consumption which is why it so important we have these sections in this legislation with regard to buildings.
“With regard to our industry sector, manufacturers are excited about this legislation because it makes them not just more efficient in terms of energy but makes them more competitive globally. And that’s why the Chamber of Commerce, National Association of Manufacturers, and other groups are strongly supportive of the legislation as well as well over 100 businesses. The federal government part of this bill is also important because guess what entity uses the most energy in this country? The federal government. The number one user of energy, consumer of energy in the United States. We think they are the number one consumer in the world. This may not surprise you but they are not terribly efficient. So our federal government sometimes preaches to the rest of us to be efficient but our own federal government is lacking in that. This legislation focuses on those three areas and makes a real difference, moves the needle as they say. It makes smart improvements to energy efficiency across these sectors.
“A recent analysis of Portman-Shaheen found that over the lifetime of the legislation, the bill will save consumers $51 billion on their energy bills, it will result in energy savings equivalent to the total energy use of all U.S. industry in one year and it will reduce the carbon dioxide emissions, these are CO2 emissions, by the equivalent of taking nearly four million cars off the road every single year until 2050. So as Senator Murkowski said very well earlier today, this is about reducing emissions, and for those who are concerned about climate change and want to reduce emissions, energy efficiency is a great way to do it. And, by the way, by creating jobs, not eliminating jobs. Previous studies have shown that our legislation will also add more jobs to the economy as I say, 100,000 jobs is their estimate. I must tell you I’m supportive of the package. I’m supportive of what Senator Murkowski said tonight. But my disappointment is the underlying legislation we’re debating tonight does not include two provisions in the Portman-Shaheen legislation, and those two provisions are two of the most important ones that result in energy savings that I talked about, the additional jobs I talked about, and the savings to the taxpayers I talked about.
“The first one is what is known as the SAVE Act. Now, the SAVE Act allows the energy savings of an energy efficient home to be considered when determining the loan amount that a home buyer is qualified for when they go to get a mortgage. In other words, it helps to immediately offset the cost of a more energy efficient home by recognizing the reduced energy bills which is often the second biggest expense a homeowner will incur after the mortgage payment. This bipartisan legislation was first authored by our friend and former colleague Johnny Isakson, along with Senator Michael Bennet of Colorado. As a real estate person himself, Johnny championed this legislation for many years. I want to thank him for his efforts. It’s in our Portman-Shaheen bill. I was pleased to work with Senators Isakson and Bennet in including it in Portman-Shaheen so I’m sorry it’s not part of the energy bill tonight.
“It’s not the only important provision that missed the boat on this package. Another important section of my energy efficiency legislation that was left out of the energy bill is what’s known as the building codes section. This section focuses on providing best practices on how to make homes more energy efficient. We know that one of the most effective ways to ensure that a homeowner’s energy bills are affordable is to build a home that is more energy efficient to begin with. It is important to note at the outset that the building codes we’re talking about tonight are and will remain under this legislation voluntary. You’re going to hear that a lot tonight. There are no mandates in this legislation of any kind for new homes. It’s up to states, local governments and tribes to adopt the building codes on their own that they deem fit for their community. In fact, some states have a building energy code, some states don’t. Some states adopt part of what is called the model code that we’ll talk about in a minute, some states have no model code at all that they are going to adopt.
“In my home state of Ohio, for example, we have adopted parts of the 2009 model building energy code and parts of the 2012 model code. So, instead of mandates or heavy handed government approach, this provision we’re talking about is an incentive-based opt-in program that is open, transparent and cost effective. And it’s not that the mandates haven’t been tried before. Mandated building energy codes and mandated energy savings were included as part of the 2009 energy bill that passed the House of Representatives and there’s even legislation introduced today over in the House that would impose mandates. Our legislation does not. It takes a much more commonsense approach, in my view, and leaves it up to states to adopt which, if any, of the model building codes work best for them.
“Some of you might not know that these model codes for commercial and residential buildings are developed and updated, not through our government, but through an independent organization outside of the federal government. For residential building codes it is called the International Code Council, or ICC. Every three years this group, the ICC, conducts a process to update the residential model building energy code. So every three years they do it. During that process many stakeholders, including industry, builders, developers, state code officials, the Department of Energy, they can all weigh in with proposals or amendments and then they vote to approve the inclusion of proposals in the updated code. They all have a vote, including homebuilders.
“Today the Department of Energy plays a role in the code development process just like other stakeholders. It has general authorities to offer and support proposals and to vote on the proposals. It has the authority to set targets to reach a certain percentage of energy savings during a code update. And since 1992, DOE has had the authority to provide technical assistance and funding for states, local governments and tribes who want to update their building codes. So that’s the current practice. It’s not mandatory, they can set targets, they can provide technical assistance. However there have been concerns from some stakeholders that DOE was not being transparent enough or was not adequately considering the costs of proposals and targets. That’s why in this legislation, in addition to codifying much of what DOE was already doing, our legislation establishes a rule-making process that requires for the first time DOE to work with states, tribes, local governments and other interested stakeholders to set these saving energy targets in advance of the model building code update. We require them to do that. The purpose of the target is to set an energy percentage improvement from one model code to the next. It’s intended to be a benchmark for stakeholders to consider when proposing, supporting, and voting on amendments. But it’s not mandatory. And in response to stakeholders’ concerns
, that the target might not be cost-effective, in other words, DOE would establish a target that wasn’t cost effective for homebuilders as an example or it wasn’t transparent, it wasn’t open what they were doing. Our bill also requires DOE to publish its methodology and provide a return on investment analysis. Not previously required. And the estimated cost and savings as a result of the target.
“So we’re forcing DOE to do much more than they do now. To be more transparent. To look at the cost-benefit here and come up with a cost-effective analysis. And then at the end of the day, the target itself is nonbinding on the model code process. DOE makes a determination on whether the target was met and then sends this group, the ICC, their options that they can choose to adopt in order to meet the target. They do not have to accept the changes, nor does this model code have to meet the target. So it is not mandatory even at that stage. They set a target but it’s not mandatory for the ICC to adopt it. It’s also important to again note that the proposed model building code at the end that’s ultimately published by the ICC is not an automatic mandate for new buildings. States are encouraged to take a look at the new proposed code and to let DOE know that they have considered the proposed code and determined whether to adopt it or not. And again, some states adopt it, some states don’t. So as you can see, this whole process is one where there are recommendations made but they are not mandated.
“Just as in the current law today, our bill authorizes DOE to provide funding and technical assistance to states to incentivize them to update their code. But ultimately the updated code, whether the states want to consider the updated model code or not, is completely nonbinding and voluntary. I have heard concerns that our legislation will make new homes unaffordable. However, DOE’s analysis found that, for example, if the 2012 code was fully adopted — so that was the 2012 code we talked about earlier that Ohio has partly adopted — if it was fully adopted, it would result in a 33 percent reduction in energy use for that home, and cost $2,787 per new home compared to the 2006 code. So remember, this is a recent model code, 2015, they do it every three years. If it had been fully adopted, it would result in a 33 percent reduction in energy use for that family, and yet only an additional cost of $2,787 compared to the previous code. We also know that these upfront costs are typically financed entirely by these energy savings through the life of the mortgage which is typically 30 years. Even though there’s a little more upfront cost, the 33 percent reduction in energy use would more than finance that over the time that person owned the home. So ultimately our legislation is going to ensure that energy efficiency features of a home will continue to save homeowners money throughout the life of the building.
“This incentive-based approach to improving energy efficiency in new buildings has the bipartisan support from a broad group of stakeholders. In particular, my colleagues on this side of the aisle support an incentive-based approach rather than a mandated approach. Our legislation has the support of the National Association of Manufacturers, the American Chemistry Council, the U.S. Chamber of Commerce. It has the support of commercial and real estate developers like BOMA and the Real Estate Roundtable. It has the support from efficiency advocates and the environmental community like the Alliance to Save Energy, ACEEE, NRDC, and the BlueGreen Alliance. There is not a lot in Washington, D.C. these days that has that broad group of stakeholders. Strange bedfellows, you might say, but this bill does, because what we do here makes sense. It doesn’t take a heavy-handed government approach but it takes an incentive-based approach, not mandating, but providing the information so states, localities, communities can make their own decision and can help ensure that the best practices out there in energy efficiency are known and where people want to use it, they can use it.
“If my colleagues are serious about both protecting the environment and growing the economy and increasing jobs, I believe that this is the right legislation for them and that the voluntary business code language in the energy bill has to be included. So I urge my colleagues on both sides of the aisle to help us with regard to an amendment we plan to offer later in this process to ensure that we do have the ability to both create jobs, improve the economy, and improve the environment.”
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