Cap and Trade – A Disaster For Property Rights And Real Estate Ownership
September 8, 2009
Commentary
By Mario Andrade
It couldn’t have come at a worse time. Today, as the real estate industry in the U.S. is going through a major crisis, the Cap and Trade bill or HR 2454 will only make things even worse. HR 2454 will affect everyone in the real estate sector from builders to property owners. There’s even language in the bill mentioning the creation of a national building code that will eventually override state or city code. The bill will mandate that states adopt the federal building code in order to achieve 30 percent energy efficiency for every new home by 2012. Furthermore, this number will increase to 50 percent by 2016, even though today’s average home builders don’t have the equipment, material and technology to achieve that. Of course, in order to meet these requirements, real estate prices will significantly go up, making it more difficult to buy or sell a home.
According to the bill, the Department of Energy will establish the national energy efficiency ratings that will be used as baseline standards to measure energy efficiency for every home or building in the United States. Everyone in the real estate industry will eventually have to comply with these new standards. Every new home or commercial building will fall under the same rules. The new energy performance standards will be documented by the Energy Star System or the Home Energy Rating System. The new homes or buildings that pass these energy efficiency inspections will have Star Labels.
But these changes won’t apply to just new homes. Existing homes will also be retrofitted in order to comply with these new government standards. HR 2454 or the American Clean Energy and Security Act of 2009 will establish the Retrofit for Energy and Environmental Performance Program or REEP (another government bureaucracy to add to the list). This program will be administered by the Environmental Protection Agency or EPA, which according to HR 2454 will “develop and implement, in consultation with the Secretary of Energy, standards for a national energy and environmental building retrofit policy for single-family and multi-family residences.”
Where will the funding come for this? Answer: From your carbon taxes. The federal government will allow the sale of carbon allowances and this money will be used to fund building retrofit initiatives in order to promote energy efficiency. These funds will be distributed to the states or local governments, so they can later provide loans or financial assistance in order to retrofit homes or buildings. Imagine that! Selling your carbon tax money? Wasn’t that called re-distribution of wealth not too long ago? In fact, it’s re-distribution of wealth for something that is totally absurd and un-necessary.
The EPA may, however, delegate the authority to the states to administer the audits and inspections of retrofitted homes. The bill states that “States and local government entities may administer a REEP program in a manner that authorizes public or regulated investor-owned utilities, building auditors and inspectors, contractors, nonprofit organizations, for-profit companies, and other entities to perform audits and retrofit services.” This auditing program will involve certified auditors and inspectors. Also, it will involve energy efficiency raters that will use devices such as infrared equipment to measure the heat emissions for every building. They will also measure water usage (to see how many gallons of water your toilet uses), as well as door and window air seals. After these audits, Uncle Sam will determine what retrofits will be needed for every home. Those retrofits may only be performed by government-licensed retrofit contractors using government-approved methods, materials and other resources. In other words, you can’t just go to Home Depot and do it yourself.
HR 2454 is currently being debated in the US Senate. It already passed in the House of Representatives. If this bill passes and Obama signs it, it will be a disaster for home owners, commercial building owners, builders, investors, and realtors. The implications of this turning into a new law will mean a much stronger role by the federal government in the regulation of how real estate property is built or remodeled. This will make the sale or purchase of a home or a building far more difficult.
Finally, the enforcement and oversight of these new requirements will cost tax payer money that will come from something as absurd as carbon taxes. It’s just what we needed during a recession, right?
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Thank you Democrats!
