The Sustainable Home Blog

Home water heating in American represents a significant portion of our national energy consumption and is split about 50/50 between electric and natural gas. Electric water heating represents about 9.1% of residential electrical consumption, 23.7% of residential natural gas consumption and about 5% of total U.S. gas consumption.

Even with renewed and frenetic drilling, domestic production of natural gas in the lower 48 has plateaued and we now rely on Canada to supply nearly 20% of our needs.  However, Canada is nearing their own peak in natural gas production and as they reduce exports to meet Canadian demand, we are in race to delay the inevitable depletion and decline of our natural gas supply.  Our hopes now rest on building the Alaskan pipeline to tap into arctic reserves and building several more liquid natural gas [LNG] terminals to allow us to compete for Middle Eastern and Russia gas exports.  Whether either of these efforts will come in time to avoid near term shortages is unknown.  In any case, as a nation we will soon be in “supply hot water.”  Since we rely on natural gas to provide hot water indirectly via electricity from gas fired power plants and directly via gas water heaters, one way to help us out of the looming national gas shortage is with solar heated hot water.

Solar water heaters are one of the most commercialized renewable energy technologies in the world and yet on a per capita basis, U.S. implementation ranks 28th in the world behind relatively undeveloped countries like Albania and Slovenia.  China leads the world with an installed base equivalent to 52,500 megawatts of energy, more than 30 times the installed base of the U.S.,  and other developed countries like Germany, Japan, Switzerland, France, Austria, and Australia all rank far ahead of the U.S. in per capita solar hot water implementation.

Why does the U.S. lag so far behind the rest of world in solar hot water implementation?  The answers are many and include consumer concerns about ascetics and cost, a fragmented supplier base of relatively small companies, competing technologies that make make buying decisions confusing and difficult, and the resistance of vested interests.  Perhaps the biggest reason for the U.S. lag in implementation are national and state energy policies that are both incoherent and inconsistent.

Since president Nixon signed the Project Independence bill in 1974, followed by Carter’s signing of the Energy Security Act in 1980, there have been dozens of energy bills passed with the intent of leading us toward the goal of energy independence.  However, from 1974 to 2006 our oil imports have risen 191% from 1.27 billion barrels per year to 3.69 billion barrels and imports now amount to 65% of our total oil consumption.  In addition, we have gone from being self sufficient in natural gas production to importing 19.5%1 of our needs.  The 2005 Energy Bill was the latest attempt to cure our addiction to oil, but the bill was more a homage to “business as usual” and was packed with over $27 Billion dollars of subsidies to the oil, gas, coal, electrical generation, and nuclear industries.

The 2005 Energy Bill signed by President Bush includes over $6 Billion in Oil & Gas subsidies and $9 billion in coal subsidies, and $12 Billion in nuclear subsidies including:

• geological and geophysical costs associated with oil exploration can be written off faster than present law, costing taxpayers over $1.266 billion from 2007 to 2015.

• owners of oil refineries can now expense 50% of the costs of equipment used to increase a refinery’s capacity by at least 5%, this will cost taxpayers $842 million from 2006 to 2011

• natural gas companies will save $1.035 billion by being able to depreciate capital expenditures at a faster rate that currently allowed by law

• some royalty payments for drilling for natural gas in the Gulf of Mexico will be waived

• exempts the gas industry from the Safe Drinking Water Act for a coalbed methane gas drilling technique called “hydraulic fracturing,” a likely source of pollution in our underground acquifers

• increases the ability to exclude a broad range of oil and gas exploration and drilling activities from public involvement and impact analysis under the National Environmental Policy Actprovides $1.612 billion in tax credits to invest in new coal power plants,  $1.147 billion in tax breaks for owners of coal power plants to install pollution control equipment, and authorizes the appropriation of $4.8 billion of taxpayer money to help build a new fleet of coal power plants.

• provides a production tax credit of 1.8-cent for each kilowatt-hour of nuclear-generated electricity from new reactors during the first eight years of operation, costing $5.7 billion in revenue losses to the U.S. Treasury through 2025

In contrast the 2005 Energy Bill provides 30% tax credit for commercial and residential solar hot water or PV(photovoltaic) installations.  Unfortunately, for residential applications that credit is capped at $2,000 per homeowner and expires Dec 31, 2007.

Whether you consider the issues of climate change, looming natural gas shortages, or energy security, promoting solar water heating implementation in American homes should be a matter of national strategic importance.  Considered from the perspective of dwelling in a post fossil fuel world, solar hot water will soon become a critical alternative energy technology for every homeowner.

“In 1946, when the American post war housing boom started, the average house was 1100 square feet and housed 5 people. Fifty years latter, in 1996 the average house would grow to 2200 square feet and house 2.6 people and by 2007, fueled by easy credit, the average American home would would become the equivalent of a Hummer, “weighing in” at super-sized 2,400 square feet.”

In 1934, during the depths of the Depression, Congress passed the National Housing Act to strengthen a deeply troubled housing market. This act created the Federal Housing Administration (FHA) which was amended in 1938 to create the Federal National Mortgage Association (Ginnie Mae) – an entity designed to help mortgage lenders gain access to capital for mortgage loans. An important element of this legislation was to make mortgage funds available to more Americans by protecting lenders from the risk of default. In its earliest days, Fannie Mae nationalized the mortgage industry by creating the first mechanism in America for selling individual mortgages (backed the U.S. government) into a secondary market.

When the FHA and Fannie Mae were created, the housing industry was flat on its back:

• Two million construction workers had lost their jobs.
• Housing finance was a fragmented, inefficient and illiquid. Mortgage rates varied considerably from region to region. In some economically distressed regions there were simply no funds available.
• Terms were very difficult to meet for homebuyers seeking mortgages.
• Lending institutions would issue a mortgage, collect payments, and file the mortgage away until the principal was paid off. A lack of available, consistently priced capital put a hard ceiling on the number of new mortgages that could be issued.
• Mortgage loan terms were limited to 50 percent of the property’s market value. Borrower’s were faced with a 50% down payment and a repayment schedule spread over three to five years and ending with a large balloon payment.
• America was primarily a nation of renters. Only four in 10 households owned homes.
• Homes were NOT considered as investments and refi’s and equity withdrawals were extremely rare.

In the 1940’s after WWII, the FHA and the GI Bill helped finance millions of homes for returning veterans and their families. This post war period would mark the peak of American economic dominance. We were still the world’s major oil producer AND exporter and due to the devastation of the European manufacturing base, we dominated the world in virtually every industrial and manufacturing sector.

Fueled by cheap and abundant fossil fuel energy, this period would also mark the beginning of an American landscape built around the automobile and the “American (suburban) Dream”. These were “heady” times and the freedom of movement afforded by the automobile combined with affordable housing for millions of returning GI’s would prove seductive. We would build cars and homes as if the gasoline, natural gas, fuel oil, and electricity that made driving and comfortable home dwelling possible would be cheap and abundant forever. The big lumbering gas guzzling V8’s of the forties and fifties would be driven home to the energy guzzling, thinly insulated, drafty homes of a new suburbia. The cars would last about 5 five years. The homes however would last an average of 75 years.

In 1946, when the American post war housing boom started, the average house was 1100 square feet and housed 5 people. Fifty years latter, in 1996 the average house would grow to 2200 square feet and house 2.6 people and by 2007, fueled by easy credit, the average American home would would become the equivalent of a Hummer, “weighing in” at super-sized 2,400 square feet. The peaking of U.S. oil production in 1971, the formation of OPEC in 1973 and the associated energy crisis’ of the 1970’s would force much needed improvements in our building codes. However, today’s homes are still grossly under-insulated and 1/3 of their energy losses are still the result of air leaks through poorly constructed exterior walls! Our home energy standards are possibly worse than our car and truck CAFE standards (federal mileage requirements).  Look underneath the hood of our homes and you’ll 500 HP, super charged forced air furnaces lumbering away in our basements and holding the cold at bay with the brute force of natural gas and oil. We are still behaving as if cheap energy sources are forever.

Adding to the problem is the current culture of “homes as investments” and average ownership cycles of only 5 years. We are a culture with a myopic time horizon where granite countertops, super-sized floorplans, and home-equity financed SUV’s trump energy efficiency and solar hot water systems. This “housing bubble” culture may soon be going the way of the dinosaur with the fall of the sub-prime loan market, the collapse of Wall Street’s sleazy and toxic secondary market for home mortgages, and the first serious decline in home values since the great depression. However, the final death blow will come with the peaking of fossil fuel production, fuel shortages, blackouts, and the obvious and urgent need to transform our housing stock into some semblance of energy efficiency.