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1995-2005
A DECADE OF CHANGE IN
HOME BUILDING WITH ENERGY STAR®
Market Transformation
Through Effective Public-Private
Partnerships
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EPA 430-R-05-002 January 2005
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"As consumers become more educated and familiar with all of the
benefits that energy efficiency has to offer, in five years non-ENERGY
STAR rated homes will become functionally obsolete."
—Home Appraiser, Melrose, FL
DID YOU KNOW.
ENERGYSTAR
For the past 10 years, the U.S. Environmental Protection Agency's
(EPA) ENERGY STAR has worked with the housing industry,
utilities, raters, and states, as well as with other government
programs such as DOE's Building America to help the home
building industry view energy efficiency as a value-added benefit rather than a cost. By
working through partnerships with industry leaders and providing them with a proven
marketing platform, EPA has helped bring many in the home building industry into the
forefront of energy efficiency and environmental stewardship.
Introduced in 1992 for energy-efficient computers, ENERGY STAR is a voluntary public-
private partnership program that gives people the power to protect the environment. The
ENERGY STAR label on products makes it easy for consumers to identify energy-efficient
performance in the marketplace and do their part for the environment at the same time.
Today, the ENERGY STAR mark is found on products in more than 40 different categories
including appliances, lighting, home office equipment, consumer electronics, and
heating and cooling equipment.
Recognizing that energy consumed in homes accounts for nearly 17 percent of total
U.S. greenhouse gas emissions and 15 percent of energy consumption nationwide,
EPA expanded ENERGY STAR in 1995 to include new home construction. Since then,
ENERGY STAR'S presence in the home building industry has grown dramatically:
• More than 2,500 builders are committed to building ENERGY STAR qualified homes.
• Over 360,000 ENERGY STAR qualified homes have been built nationwide.
• ENERGY STAR is nearing 10 percent market penetration of annual new homes built
nationwide.
• 20 to 40 percent or more of new housing starts have been achieved in a growing
number of regional markets.
This growth puts ENERGY STAR and its partners on track for meeting EPA's goal of
60 percent market penetration nationwide by 2012, which would have a cumulative effect
of preventing nearly 9 million metric tons of carbon emissions and saving homeowners
over $4 billion on their energy bills. Under the ENERGY STAR banner, businesses,
organizations, and consumers saved about $10 billion in energy costs in 2004,
demonstrating how a broad-based partnership under this government-backed consumer
label can be used as an effective tool for market transformation. EPA looks forward to
another decade of success in partnership with the home building industry, its trade allies,
and the energy efficiency community, continuing ENERGY STAR'S efforts to change our
lives for the better.
Kathleen Hogan
Director
Climate Protection Partnerships Division
U.S. Environmental Protection Agency
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STATES WITH HIGHEST
tSHARE OF ENERGY STAR
QUALIFIED HOMES-2004
ALASKA
ARIZONA
CALIFORNIA
HAWAII
54% IOWA 25% NEVADA
14% LOUISIANA 13% OHIO
15% MASSACHUSETTS 10% OREGON
25% NEW JERSEY 23%
34% RHODE ISLAND
12% TEXAS
11% VERMONT
THRIVING AND EMERGING MARKETS FOR ENERGY STAR QUALIFIED HOMES—2004
SAN
FRANCISCO
MARKET SHARE
STATES WITH INCREASING
ENERGY STAR QUALIFIED HOMES
ACTIVITY
POTENTIAL NEW MARKETS
STATES WITH 10% OR MORE
METRO AREAS WITH AN ESTABLISHED
ENERGY STAR QUALIFIED HOMES PRESENCE
METRO AREAS WITH INCREASING ENERGY STAR
QUALIFIED HOMES ACTIVITY
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IMPACT ON HOME BUILDING
SAMPLE MONTHLY
CASH-FLOW
FOR AN ENERGY STAR
QUALIFIED HOME
UTILITY SAVINGS $35
ADDED MORTGAGE $15
REDUCED COST
$20
ENERGY STAR qualified homes represent 20 to 40 percent or more of the new
housing market in a number of large metropolitan areas and states—the result
of forming key public-private partnerships with the home building industry.
The number of ENERGY STAR qualified homes grew from only 55 in 1995 to more than 360,000 by
the end of 2004. Today, some 2,500 home builders spanning each of the 50 states and the District
of Columbia have committed to building ENERGY STAR qualified homes. These homes use about
30 percent less energy than they otherwise would and are helping prevent a significant amount of
greenhouse gas emissions from entering our air. This shift to more energy-efficient homes has saved
Americans an estimated $200 million in energy costs and eliminated nearly 4 billion pounds of
greenhouse gas emissions. These figures continue to grow.
ENERGY STAR is proving to be an effective force for change as qualified homes approach and exceed
20 percent market penetration in an increasing number of areas. Behind this growth are strong local
champions committed to building and selling more energy-efficient homes, utility programs that
promote better home energy performance, and large production builders who understand the value
proposition and competitive advantage of building energy-efficient homes.
BETTER BUILDING PRACTICES AND TECHNOLOGY
ENERGY STAR qualified homes provide home owners with better energy
performance and other advantages compared with standard homes.
To qualify their homes for the ENERGY STAR
label, builders incorporate strict energy
efficiency guidelines set by EPA. This results in a
whole system of building improvements that make
these homes more energy efficient than those
built to the minimum energy code requirements.
In addition, these homes are independently
verified to meet EPA's energy efficiency
guidelines. Typical elements built into ENERGY
STAR qualified homes include:
• EFFECTIVE INSULATION
• HIGH-PERFORMANCE WINDOWS
• TIGHT CONSTRUCTION
• TIGHT DUCTS
• ENERGY-EFFICIENT HEATING AND
COOLING EQUIPMENT
These energy efficiency improvements deliver
impressive performance advantages, such as:
• Improved comfort with even temperatures
from room to room
• More durability with longer lived equipment
and better moisture control
• Improved indoor air quality from tighter
construction that limits penetration of
moisture and other pollutants
AN ENERGY STAR
All qualified homes
receive the ENERGY
STAR label. These
homes are at least
30% more energy
efficient than those
built to the national
model energy code,
or 15% more efficient
than state energy
code, whichever is
more rigorous.
• Greater environmental protection by reducing
the need for energy and the associated
combustion of fossil fuels, thereby preventing
greenhouse gas emissions
ENERGY STAR qualified homes can also offer
an impressive cost advantage to homeowners,
where money saved on utility bills easily offsets
any increase in mortgage for energy-saving
improvements. In addition, these homes serve
to lower the nation's dependence on volatile
energy sources, increase net disposable family
income, and improve air quality.
Homes that earn the ENERGY STAR must be
at least 30 percent more efficient for heating,
cooling, and water heating than homes built to
the Model Energy Code, or 15 percent more
efficient than the state energy code, whichever
is more rigorous.
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ENVIRONMENTAL PROTECTION CREATES
BUSINESS OPPORTUNITIES
"The expense of heating and cooling a home is a major
part of the cost of home ownership. By participating in the ENERGY
STAR Program, we've drastically lowered this expense and been
able to deliver what homebuyers really want—affordable value."
—ENERGY STAR Builder Partner, Indianapolis, IN
Building energy-efficient homes
that cost less to own and help
protect the environment is
good business.
ENERGY STAR QUALIFIED HOMES GROWTH
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
I CUMULATIVE ACHIEVED
I ANNUAL ACHIEVED
1996 1997 1998 1999 2000 2001 2002 2003 2004
The number of ENERGY STAR qualified
homes built annually has nearly doubled in
each of the past 5 years. Such impressive
growth indicates that home builders
correlate building energy-efficient homes
with higher profit margins.
Constructing ENERGY STAR qualified
homes allows builders to:
INCREASE REVENUE—Built-in energy-
saving features enhance a home's value and
can raise builders' revenues; energy savings
may make additional upgrades affordable to
buyers, further increasing revenue.
EARN RECOGNITION—Builders gain
distinction as leaders in energy-efficient
construction and environmental stewardship
while increasing consumer awareness
and preference for ENERGY STAR
qualified homes.
ENHANCE CUSTOMER SATISFACTION—
Energy-efficient features give added value
and comfort to customers.
REDUCE LIABILITY—Better built, energy-
efficient homes can reduce customer call
backs and complaints.
IMPLEMENT A PROVEN MARKETING
PLATFORM—Builders gain access to
proven marketing tools and information
from experts in the building and selling of
ENERGY STAR qualified homes.
Evidence that ENERGY STAR adds value
for home builders in the form of enhanced
customer satisfaction is found in a J.D.
Power home builder study released in
2004.'The study shows that, on average,
builders who are ENERGY STAR partners
receive higher homebuyer satisfaction
ratings than those who are not. Another
study shows that corporate social
responsibility is a concern among
80 percent of the general population.
Most consumers will either avoid or
patronize a business on the basis of its
commitment to socially responsible
business practices' Builders, therefore,
can use their status as ENERGY STAR
partners to their marketing advantage.
In short, environmental stewardship is
good business.
' J.D. Power and Associates, New-Home Builder
Customer Satisfaction Study™2003
2 The Natural Marketing Institute, LOHAS Consumer
Report, June 2003
SPOTLIGHT ON LAS VEGAS, NEVADA
As one of the nation's fastest growing cities,
and a city with extensive energy requirements
for air-conditioning powered by coal-fired
power plants. Las Vegas presented a great
opportunity for reducing greenhouse gas
emissions through the construction of ENERGY
STAR qualified homes. This proved to be
correct, as Las Vegas offered a good mix of
large production builders looking for additional
market recognition and a competitive
advantage, along with an infrastructure
capable of meeting the demand for third-party
verification of ENERGY STAR qualified homes.
More importantly. Las Vegas had great local
champions committed to helping the
environment, including the local gas utility,
housing industry marketing consultants, and
builders themselves who were extremely
effective at working together to implement
large-scale consumer marketing initiatives.
As a result of this group effort, consumer
awareness of ENERGY STAR qualified homes
reached 81 percent in 2004, and 58 percent of
all homes built in Las Vegas thatyear were
ENERGY STAR qualified. Today, eight of the top
ten Las Vegas-based home builders are
ENERGY STAR partners.
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SUCCESS THROUGH EFFECTIVE PARTNERSHIPS
I "Our subcontractors send their best crews because
they know their work will be inspected."
—ENERGY STAR Builder Partner, Las Vegas, NV
Each of the top 10 home builders
in the nation partner with EPA.
When ENERGY STAR qualified homes became
available in 1995, the nation's 100 largest builders
accounted for 17 percent of all housing starts.
Today, they account for 56 percent. Much of the
growth of ENERGY STAR qualified homes can be
attributed to successful partnering with these
large builders. In fact, among the nation's largest
builders, ENERGY STAR qualified homes are
offered by one or more divisions of each of the
top 10 builders, 23 of the top 25 builders, and
nearly 50 percent of the top 100.3
3 Builder Magazine, "Builder 100," May 2003
MANUFACTURED HOMES EMBRACE ENERGY STAR
Manufactured homes built to the HUD-code
represent the largest segment of affordable
homes built in the nation. Today, approximately
70 percent of all manufactured housing plants
have been qualified to produce homes earning
the ENERGY STAR. Manufacturers have
voluntarily transformed existing production
lines to improve the energy performance of
manufactured homes, knowing that ENERGY
STAR qualified manufactured homes represent
business opportunities among lower income
home owners looking to save on their energy bills.
HOME ENERGY RATER VERIFYING EFFICIENCY
OF NEW HOME
ENERGYSTAR
BUILDING AMERICA
AND ENERGY STAR:
AN EFFECTIVE
PUBLIC-PUBLIC
PARTNERSHIP
When EPA first introduced the ENERGY STAR label for
homes, the Home Energy Rating System (HERS)
industry was positioned to become the primary source
of third-party verification for ENERGY STAR qualified
homes and recruitment of ENERGY STAR builder
partners. However, the HERS industry was not yet fully
equipped to support a national program. The U.S.
Department of Energy's Building America Program
stepped in and lent much needed technical support.
Building America deployed a set of cooperative
research teams working directly with the nation's
leading builders to develop energy efficiency
innovations. These teams have successfully engaged
many builders in using ENERGY STAR as a marketing
platform for bringing innovations to market. This early
support fueled ENERGY STAR'S initial momentum while
allowing the HERS industry time to mature. Today the
HERS industry is widely developed across the country,
offering building industry design and field support
services as a value-added private sector service
provider. Thus, Building America and ENERGY STAR
dovetailed perfectly to help transform the building
industry to energy-efficient building practices.
U.S. Department of Energy
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STRATEGY FOR SUSTAINED GROWTH
ENERGY STAR LONG-TERM GOALS AND BENEFITS
NUMBER OF QUALIFIED HOMES TO BE BUILT IN 2012
ANNUAL CARBON EMISSIONS PREVENTED IN 2012 EQUIVALENT TO THO
CUMULATIVE NUMBER OF QUALIFIED HOMES BUILT. 1995-2012
CUMULATIVE UTILITY BILL SAVINGS, 1995-2012
CUMULATIVE CARBON EMISSIONS PREVENTED, 1995-2012
EQUIVALENT TO THOSE FROM 1.5 MILLION VEHICLES
995-2012 4 MILLION
S4 BILLION
2012 9 MILLION METRIC TONS
EPA will build on its success by focusing on new offerings that bring value
to builders and consumers.
ENERGY STAR QUALIFIED HOMES PROJECTED GROWTH
To ensure that ENERGY STAR remains the symbol
of truly energy-efficient homes, EPA will continue
applying proven strategies to expand into new
areas and form new partnerships. EPA intends to
bring ENERGY STAR into new regional housing
markets and continue its growth in specialized
housing sectors such as military housing and
affordable housing. EPA will strengthen its ties to
other federal housing programs such as DOE's
Building America and HDD's PATH. EPA will seek
new opportunities to support local program
*
champions and improve value for builders by
strengthening energy efficiency guidelines,
exploring new marketing tools, promoting
ENERGY STAR qualified lighting and appliance
packages, and offering an added specification
for indoor air quality features. This growth strategy
will build on EPA's strong ENERGY STAR partnerships
within the home building industry to further
reduce greenhouse gas emissions resulting from
home energy use and offer homeowners more
energy-efficient, healthier homes.
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
CUMULATIVE PROJECTED
ANNUAL PROJECTED
.. Ill
2004 2005 2006 2007 2008 2009 2010 2011 2012
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OPENING DOORS AND
MAKING A DIFFERENCE TOGETHER
www.energystar.gov
We wish to thank all of our ENERGY STAR partners and
supporters for their contributions to building and marketing
homes that protect the environment, educating the public on
the benefits of energy efficiency, and improving air quality.
• More than 2,500 ENERGY STAR Builder Partners
• 65 HERS Provider/Rater Partners
• 64 Utility/State Energy Efficiency Partners
• Residential Energy Services Network
• U.S. DOE Building America Program
• U.S. Department of Housing and Urban Development
• National Association of State Energy Offices
* Building Science Community/Associations
• Energy and Environmental Building Association
• National Association of Home Builders
• Manufactured Housing Institute
• Manufactured Housing Research Alliance
ENERGY STAR
U.S. Environmental Protection Agency
1200 Pennsylvania Ave., NW (MC 6202J)
Washington, DC 20460
homesinfo@epa.gov
www.energystar.gov
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