Two unanswered questions on energy and climate bills

As energy, climate and jobs bills (with Home Star attached) make their way through the halls of Congress, there are some assumptions being made and questions that haven’t yet been answered.  At least, I haven’t seen the concrete answers – if any of you out there have, please comment below or send me an email:

Assumption One:  If the government pays for half the cost of a home’s energy efficiency upgrades, consumers will flock to local contractors to make their homes more efficient.

It’s logical, certainly.  And our Energy Pulse studies in the last two years have revealed that concern over costs is a very real stumbling block to EE home improvements.  But we don’t actually know that we’ll significantly increase the size of the market with the passage of Home Star legislation.

Assume for a moment that the necessary efficiency upgrades to an average 1960’s or ‘70s bungalow will cost $3,000.  Under Home Star the homeowner could likely get the government to put $1,500 towards the upgrades.  Yet the homeowner will still have to come up with the other $1,500.  That might not be such a big deal – half off is pretty sweet, after all – except that between January 2005-April 2008, the personal saving rate in America averaged 1.8%.* Based on a median HHI of a little more than $50,000**, that means the average household put less than $1,000 in savings annually.  And that means the $1,500 investment would require a significant dip into a pretty paltry savings account – something many Americans may simply not be willing to do given the fear and concern around the future of the economy, home values, jobs etc.

I’m a supporter of the legislation, by the way.  But as a marketer I’m concerned that (as is often the case) our government is seeing this as a silver bullet and the proper homework hasn’t been done to quantify the actual market opportunity and manage all of our expectations.

Assumption Two:  An energy bill could accomplish some of what a climate bill might achieve, and it will be more palatable.

In the current political (and economic) environment it seems highly unlikely that a climate bill could pass, given that the fees placed on companies for their carbon output could put an undue financial burden on all of us.  I’ve heard some conversation that it’s OK – a well-crafted energy bill could entice all of us to be more energy and fuel efficient, and that will go a long way to addressing climate issues.

We do see reasons to believe this.  For instance, 97% of the population doesn’t actually link electricity production and climate change together, and we’ve seen belief in global warming caused by man take a nose dive in recent months (only 48% of the population currently believes). Yet, interest in green and energy efficient products is up.  So consumers don’t have to believe in climate problems in order to be greener and more energy efficient, and a bill to motivate these behaviors may, in fact, create an end run to addressing climate change.

The unanswered question is simply:  is that OK with all of us?  Is it OK to make the national conversation be about energy efficiency and not about climate change?  Are we OK with that as a nation, as citizens, as parents?  Maybe so.  I’d be curious to hear your thoughts.

* The Fall and Rise of Household Saving, Brian W. Cashell, Specialist in Macroeconomic Policy, September 1, 2009

**  2008 US Census data