Energy Efficiency: Important Challenges Must Be Overcome to	 
Realize Significant Opportunities for Energy Efficiency 	 
Improvements in Gulf Coast Reconstruction (26-JUN-07,		 
GAO-07-654).							 
                                                                 
Following several hurricanes in 2005, the need to rebuild and	 
repair destroyed and damaged homes and buildings in the Gulf	 
Coast region may create opportunities for making energy 	 
efficiency improvements and realizing energy cost savings. While 
numerous federal agencies are involved in the recovery process,  
the Department of Housing and Urban Development (HUD) and the	 
Department of Energy (DOE) interact with the states on a regular 
basis regarding matters of energy efficiency. This report,	 
initiated under the authority of the Comptroller General of the  
United States, examines (1) the extent of opportunities for	 
incorporating energy efficiency improvements in the Gulf Coast	 
reconstruction, (2) potential challenges to realizing the energy 
cost savings during the reconstruction, and (3) the role of HUD  
and DOE in promoting energy efficiency in the rebuilding of the  
Gulf Coast. GAO limited the scope of its work to Louisiana and	 
Mississippi since these states experienced the majority of the	 
hurricane damage. GAO assessed opportunities for incorporating	 
energy efficiency measures by conducting site visits and	 
interviewing federal, state government officials; home builders; 
and energy efficiency experts. GAO also worked with a DOE	 
national laboratory to develop energy cost savings estimates. GAO
is making no recommendations.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-654 					        
    ACCNO:   A71446						        
  TITLE:     Energy Efficiency: Important Challenges Must Be Overcome 
to Realize Significant Opportunities for Energy Efficiency	 
Improvements in Gulf Coast Reconstruction			 
     DATE:   06/26/2007 
  SUBJECT:   Building codes					 
	     Construction industry				 
	     Construction workers				 
	     Cost analysis					 
	     Disaster recovery					 
	     Education						 
	     Energy costs					 
	     Energy efficiency					 
	     Facility construction				 
	     Federal/state relations				 
	     Skilled labor					 
	     Standards						 
	     Gulf Coast 					 
	     Louisiana						 
	     Mississippi					 

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GAO-07-654

   

     * [1]Results in Brief
     * [2]Significant Opportunities Exist for Incorporating Energy Eff

          * [3]The Scope and Status of the Reconstruction Efforts Create Si
          * [4]Making Energy Efficient Improvements to Residential and Comm

     * [5]Home Builder, State, and Consumer Challenges Are Substantial

          * [6]Availability of a Skilled Construction Workforce Trained to
          * [7]States Will Be Challenged to Ensure That New Construction Me
          * [8]Energy Efficiency May Be a Low Priority When Consumers Consi

     * [9]HUD and DOE Are Providing Funding and Educational Resources

          * [10]HUD Is Making Funding Available to Gulf Coast States for Reb
          * [11]DOE Is Providing Energy Efficiency Training and Education to

     * [12]Concluding Observations
     * [13]Agency Comments
     * [14]GAO Contact
     * [15]Staff Acknowledgments
     * [16]GAO's Mission
     * [17]Obtaining Copies of GAO Reports and Testimony

          * [18]Order by Mail or Phone

     * [19]To Report Fraud, Waste, and Abuse in Federal Programs
     * [20]Congressional Relations
     * [21]Public Affairs

Report to Congressional Addressees

United States Government Accountability Office

GAO

June 2007

ENERGY EFFICIENCY

Important Challenges Must Be Overcome to Realize Significant Opportunities
for Energy Efficiency Improvements in Gulf Coast Reconstruction

GAO-07-654

Contents

Letter 1

Results in Brief 5
Significant Opportunities Exist for Incorporating Energy Efficiency
Measures into Gulf Coast Reconstruction Efforts, Which Could Reduce Energy
Expenditures 8
Home Builder, State, and Consumer Challenges Are Substantial and May Limit
Energy Cost Savings Opportunities from Being Realized 14
HUD and DOE Are Providing Funding and Educational Resources to Encourage
Gulf Coast States to Incorporate Energy Efficiency in Rebuilding 20
Concluding Observations 25
Agency Comments 25
Appendix I Objectives, Scope, and Methodology 28
Appendix II Energy Cost Savings Estimates for Residential Buildings 30
Appendix III Energy Cost Savings Estimates for Commercial Buildings 33
Appendix IV GAO Contact and Staff Acknowledgments 36

Tables

Table 1: Annual Energy Cost Savings for Heating and Cooling Homes Built in
Accordance with Various Energy Efficiency Codes and Standards with
Slab-on-Grade and Elevated Foundations 30
Table 2: Estimated Construction Cost Increases and Cost Recovery Periods
for Building Homes in Accordance with Various Energy Efficiency Codes and
Standards 31
Table 3: Annual Energy Cost Savings for Selected Home Energy Efficiency
Improvements 31
Table 4: Annual Energy Cost Savings for Home Lighting and Appliance
Upgrades 32
Table 5: Annual Incremental Energy Cost Savings per Building for Various
Commercial Buildings Constructed in Accordance with a Newer ASHRAE
Standard 33
Table 6: Estimated Energy Cost Savings from Commerical Buildings in
Accordance with Selected "Above Code" Levels 34
Table 7: Annual Lighting Cost Savings for Commercial Buildings in
Louisiana and Mississippi 35

Abbreviations

ASHRAE American Society of Heating, Refrigerating and Air- Conditioning
  Engineers
CDBG Community Development Block Grant
CFL Compact Fluorescent Lighting
DOE Department of Energy
EPACT Energy Policy Act
FEMA Federal Emergency Management Agency
GREAT Gulf Rebuild, Education, Advancement, and Training Campaign
HUD Department of Housing and Urban Development
ICC International Codes Council
IECC International Energy Conservation Code
IRC International Residential Code
LEED Leadership in Energy and Environmental Design
PATH Partnership for Advanced Technologies in Housing
PD&R Office of Policy Development and Research
PNNL Pacific Northwest National Laboratory
SEP State Energy Program

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separately.

United States Government Accountability Office

Washington, DC 20548
June 26, 2007

Congressional Addressees

Each year in the United States, consumers spend more than $160 billion to
light, cool, heat and operate homes, and about $110 billion is spent
annually in energy costs for commercial buildings, making improving the
energy efficiency of homes and buildings an important aspect of any effort
to reduce energy consumption and lower energy costs. Improving building
efficiency to reduce energy consumption is normally a very incremental
process. However, after the destruction caused by the 2005 Gulf Coast
hurricanes^1 the need to rebuild and repair hundreds of thousands of
destroyed and damaged buildings in the Gulf Coast region creates unique
opportunities to address energy efficiency issues on a large scale.^2

The Gulf Coast hurricanes battered the Gulf Coast region causing over $150
billion in estimated damage.^3 Louisiana and Mississippi were the states
hit the hardest by the hurricanes, sustaining extensive destruction and
damage to residential and commercial buildings. For example, the
hurricanes are estimated to have destroyed or caused severe or major
damage to nearly 270,000 single-family homes in Louisiana and Mississippi.
In all, the Gulf Coast hurricanes caused more than 1,500 deaths; left
hundreds of thousands of people displaced without shelter or employment
and had a disproportionate impact on certain populations, especially the
poor, elderly, and minorities. In response to the Gulf Coast devastation
the federal government has committed a historically high level of
resources--over $110 billion--through an array of grants, loan subsidies,
and tax relief and incentives. A substantial portion of this assistance
was directed toward providing emergency assistance and meeting short-term
needs arising from the hurricanes. A relatively small portion of federal
assistance is available for longer-term rebuilding activities, such as the
restoration of the regions housing and infrastructure.

^1In this report, we refer to Hurricanes Katrina, Rita, and Wilma
collectively as the "Gulf Coast hurricanes."

^2For purposes of this report, the term "building codes" refers to state
and local government requirements for design and construction of
residential and commercial buildings that are based on industry standards
including those related to energy efficiency.

^3Cost estimates for damages due to these storms have varied and a
definitive cost estimate may never be known. See Gulf Coast Rebuilding:
Preliminary Observations on Progress to Date and Challenges for the Future
[22]GAO-07-574T (Washington, D.C., April 12, 2007).

In Louisiana and Mississippi, housing and infrastructure restoration is
taking place in the context of broader regional planning and coordination
activities. The Louisiana Recovery Authority is the planning and
coordinating body created by the governor to assist in implementing the
state's vision for the recovery of Louisiana. Working in collaboration
with local, state, and federal agencies, the authority serves to address
short-term recovery needs and guide the long-term planning process. In
Mississippi, the Governor's Commission on Recovery, Rebuilding, and
Renewal was formed to develop a strategy for rebuilding the affected areas
of Mississippi. In early January 2006, the commission released a report
with numerous recommendations intended to guide Mississippi's
post-hurricane rebuilding. Current Gulf Coast rebuilding activities,
including the bulk of the federal rebuilding assistance, are directed
primarily toward restoring the region's stock of livable housing and
essential infrastructure.

States and their subdivisions, such as counties and cities, adopt codes
and standards that establish minimum requirements for energy-efficient
design and the construction of residential and commercial buildings.
Building codes and standards regulate components that affect the amount of
energy that a building will use, such as the building envelope,^4
electrical power, and lighting. These codes and standards vary from one
state to another and sometimes within a state. States and local
jurisdictions may choose to adopt model codes developed and published by
nonprofit organizations, such as the International Code Council (ICC) and
the American Society of Heating, Refrigerating and Air-Conditioning
Engineers (ASHRAE).

Louisiana and Mississippi adopted statewide residential building codes
created by the ICC to guide the reconstruction of housing after the
hurricanes. Louisiana adopted the 2006 version of the ICC's code as its
mandatory statewide residential building code, while Mississippi adopted
the 2003 version of this code as its voluntary statewide residential
building code--except for five coastal counties where it is mandatory.^5
In addition, both of these states were already using ASHRAE's commercial
energy standards prior to the Gulf Coast hurricanes. Louisiana used
ASHRAE's 2001 standard and Mississippi employed ASHRAE's 1975 standard.^6

4The building envelope is the structural elements (walls, roof, floor, and
foundation) of a building that encloses conditioned space--the building
shell.

While numerous federal agencies, including the Department of Housing and
Urban Development (HUD) and Department of Energy (DOE), are involved in
providing emergency assistance as part of the recovery process, HUD and
DOE have also been working with states regarding matters of energy
efficiency. HUD works to increase homeownership, support community
development, and increase access to affordable housing. DOE is the
nation's lead agency on energy use and energy efficiency issues. DOE
provides education and training through a diverse set of national, state,
and local programs that promote energy efficiency, such as its Building
America, Building Energy Codes, and High Performance Building Programs.
DOE sponsors research in partnership with industry and academia to advance
building science and improve technologies and practices that make both
residential and commercial buildings more energy efficient.

In light of the widespread congressional and public interest in rebuilding
the Gulf Coast, we have prepared this report under the authority of the
Comptroller General of the United States as part of an effort to assist
the Congress in reviewing opportunities and challenges related to
incorporating improved energy efficiency practices into the reconstruction
of residential and commercial buildings in the affected Gulf Coast states.
This report (1) analyzes the extent of opportunities for incorporating
energy efficiency improvements and realizing energy cost savings in the
Gulf Coast reconstruction, (2) discusses potential challenges to realizing
energy cost savings during the reconstruction, and (3) describes the roles
of HUD and DOE in promoting energy efficiency in the rebuilding of the
Gulf Coast. We limited the scope of our work to Louisiana and Mississippi
because these states experienced the majority of the damage from the Gulf
Coast hurricanes and their building stock is generally similar to the
residential and commercial buildings found in the other Gulf Coast states,
according to the data we that analyzed.

^5Mississippi requires the counties of Jackson, Harrison, Hancock, Stone
and Pearl River to enforce, on an emergency basis, all the wind and flood
mitigation requirements of the code. According to state officials,
although the energy provisions are optional, some counties are considering
making the provisions mandatory.

^6ASHRAE's 1975 standard and ASHRAE's 2001 standard refer to ASHRAE
standards 90-75 and 90.1-2001, respectively.

We assessed the opportunities for incorporating improved energy efficiency
measures in the reconstruction efforts in Louisiana and Mississippi by
soliciting the views of federal and state government officials, home
builders, and energy efficiency practitioners and by conducting site
visits to these states. In addition, we worked with DOE's Pacific
Northwest National Laboratory (PNNL) to develop energy cost savings
estimates for residential and commercial buildings in the Gulf Coast. PNNL
used energy simulation programs to develop these estimates under several
scenarios. PNNL calculated energy consumption and energy expenditures for
these building types assuming they were constructed to meet newer building
codes and standards and compared these data with a baseline that
approximately reflected the energy consumption and expenditures of
buildings prior to the hurricanes. To aggregate potential residential
energy cost savings to the Gulf Coast region, we made estimates of annual
savings that could occur as the result of reconstruction efforts. A more
in-depth description of the methodology that DOE's PNNL used to develop
energy cost savings for residential and commercial buildings can be
obtained from their January 2007 and December 2006 reports.^7 These
reports can be found at http://www.energycodes.gov/impacts.stm.

To understand the potential challenges that may limit energy cost savings
from being realized, we relied on site visits to Louisiana and
Mississippi, interviews with state and local government officials, and
attendance at local building conferences and housing summits. Furthermore,
we interviewed energy efficiency practitioners, building industry
representatives, and non-profit organizations as well as HUD and DOE
officials to solicit their views on the challenges of incorporating energy
efficiency measures in the rebuilding and repairing of destroyed and
damaged buildings.

To describe the roles of HUD and DOE in promoting energy efficiency in the
rebuilding of the Gulf Coast, we interviewed agency officials and obtained
and reviewed documentation describing the actions that these agencies have
taken to assist Louisiana and Mississippi. We also conducted site visits
to these states to obtain firsthand knowledge from state government
officials, non-profit organizations, home builders, and energy efficiency
practitioners about their views on HUD's and DOE's efforts to promote or
work with various stakeholders to consider energy efficiency in the
rebuilding process. A more detailed discussion of our methodology is
provided in appendix I. We conducted our work from March 2006 through May
2007 in accordance with generally accepted government auditing standards,
which included an assessment of data reliability.

^7R.G. Lucas, Analysis of Energy Savings Impacts of New Residential Energy
Codes for the Gulf Coast, PNNL-16265, (January 2007); and M.A. Halverson,
K. Gowri, E.E. Richman, Analysis of Energy Savings Impacts of New
Commercial Energy Codes for the Gulf Coast, PNNL-16282, (December 2006).

Results in Brief

The anticipated reconstruction in the Gulf Coast creates a significant
opportunity for incorporating energy efficiency improvements that could
produce long-term energy cost savings. First, the sheer magnitude of the
reconstruction effort creates a tremendous opportunity for incorporating
energy efficiency improvements during the rebuilding and repairing of
residential and commercial buildings. Second, state and local governments
in Louisiana and Mississippi are still engaged in short and long term
planning efforts to recover from the hurricanes. Since these planning
efforts are evolving, now is an opportune time to consider fully
incorporating energy efficiency improvements in the reconstruction. Third,
Louisiana's and Mississippi's recent adoption of newer and more energy
efficient building codes and standards creates a unique opportunity for
energy efficient rebuilding. In partnership with DOE's PNNL, we analyzed
energy cost savings opportunities and estimated that these newer building
codes could reduce energy expenditures for residential buildings in
Louisiana and Mississippi by at least $20 to $28 million per year,
depending on the scale of rebuilding in these states. For example, the
annual energy expenditures for heating and cooling a typical home in
Louisiana and Mississippi built to newer codes could be reduced by $167 to
$233, a range of savings of 24 to 28 percent, depending on the type of
foundation upon which the home is built and the specific code to which it
is built. Furthermore, our results showed that annual energy expenditures
for commercial buildings--hospitals, schools, offices, and retail--built
to newer commercial energy standards could be about 7 to 34 percent lower
than buildings built to older standards, depending on the building type.
Fourth, our analysis showed that even greater energy cost savings could be
obtained for both residential and commercial buildings if consumers and
builders voluntarily embrace energy efficiency measures that exceed
minimum building code and standard requirements. Finally, in addition to
rebuilding homes and commercial buildings, there are opportunities for
consumers to make energy efficiency improvements as they replace damaged
equipment with more energy efficient air conditioners, appliances,
lighting, and windows.

There are three primary challenges to realizing energy cost savings
opportunities presented by the Gulf Coast reconstruction. First, home
builders, state officials, and energy efficiency practitioners told us
that there is a shortage of construction workers and more specifically a
shortage of skilled labor trained to meet the newer building codes and
standards--including wind, flood, and energy provisions. These shortages
are of particular concern given the number of homes and buildings that may
need to be rebuilt or repaired in accordance with newer building codes and
standards. Second, states will confront substantial challenges to ensuring
compliance with new building codes and standards because of a lack of
trained building code inspectors. State compliance and enforcement
programs are essential for ensuring that buildings are constructed to the
mandatory building codes and standards. Despite states' efforts to improve
their compliance and enforcement programs, state and local officials as
well as building industry representatives repeatedly told us that they do
not have enough trained staff and will have to create building inspection
offices, hire additional code officials, and train them in the application
of the new codes. Third, consumers considering rebuilding and repairing
their homes are faced with making other decisions that may make energy
efficiency a low priority. Because of the catastrophic losses caused by
the hurricanes, many residents must determine whether they have the
financial resources to rebuild or repair their homes at all and whether
existing employment opportunities make returning to their homes feasible.
Once consumers address these issues, they will have to decide whether it
is in their best financial interest to pay the additional costs to make
their homes more energy efficient through purchases, such as energy
efficient appliances, or to use their money for other purposes. For
consumers, especially poor and low-income consumers, this decision will be
further compounded by their loss of income, assets, and other financial
needs that must be met. Indeed, for some, these short-term financial needs
may be so pressing that they preclude long-term thinking about the future
financial savings that might be gained by making energy efficiency
improvements.

Because the rebuilding of the Gulf Coast is largely a state and local
matter, HUD and DOE have played a supportive role in promoting energy
efficient rebuilding. More specifically, HUD and DOE have provided
financial and educational resources that can encourage the incorporation
of energy efficiency in the reconstruction of the Gulf Coast. In addition,
both agencies have broader national programs that may assist Louisiana and
Mississippi in incorporating energy efficiency improvements during their
rebuilding efforts. HUD has made $16.7 billion in funding available for
general rebuilding purposes, such as damaged housing and infrastructure,
and allows states to determine how to spend these funds, including using
them for energy efficient improvements. In addition, HUD had several
national initiatives that were either planned or under way prior to the
hurricanes, and that may directly improve the energy efficiency of the
public housing stock in Gulf Coast states. For example, HUD developed an
energy strategy for public and assisted housing that includes actions to,
among other things, provide incentives for energy efficiency in housing
financed through HUD's competitive grant programs and to promote the use
of energy efficient appliances and equipment through a HUD partnership
with DOE. In its capacity as the nation's lead agency on energy use and
energy efficiency issues, DOE's primary role in the Gulf Coast
reconstruction has been to provide education and training to state and
local officials, private industry, and consumers. In direct response to
the Gulf Coast hurricanes, DOE partnered with several entities, including
state energy offices, to conduct training workshops for home builders,
contractors, and consumers on rebuilding with energy efficiency and storm
resistance practices. The department also developed a Disaster Recovery
and Building Reconstruction Web site to provide information to state and
local officials, builders and contractors, and consumers to promote
cost-effective and energy-efficient reconstruction. As part of its ongoing
nationwide effort to encourage state energy efficiency initiatives, DOE
provides grants to state energy offices to design and carry out their own
energy efficiency programs. For example, DOE recently awarded $6 million
to fund 22 federal-state partnerships, 4 of which involve Gulf Coast
states, with the aim of creating initiatives to increase energy and cost
savings in residential and commercial buildings.

Significant Opportunities Exist for Incorporating Energy Efficiency Measures
into Gulf Coast Reconstruction Efforts, Which Could Reduce Energy Expenditures

The anticipated rebuilding and repairing of residential and commercial
structures in the Gulf Coast creates an important opportunity for
incorporating energy efficiency improvements that could produce long-term
energy cost savings. We estimated that newer building codes and standards
could significantly reduce energy expenditures for residential and
commercial buildings in Louisiana and Mississippi, depending on the
rebuilding efforts in these states.

The Scope and Status of the Reconstruction Efforts Create Significant
Opportunities to Reduce Energy Expenditures through New Building Codes and
Standards

The sheer magnitude of the reconstruction effort creates a tremendous
opportunity for incorporating energy efficiency improvements into rebuilt
homes and buildings. Many Gulf Coast neighborhoods and communities need to
be rebuilt--some from the ground up--especially since an estimated 122,261
homes in Louisiana and Mississippi were destroyed or severely damaged.
This rebuilding creates an opportunity for these states to make wide-scale
improvements to their building stock, especially the older vintage housing
in the areas.^8 In addition, state and local governments in Louisiana and
Mississippi are still engaged in short-and long-term planning efforts to
recover from the hurricanes. Since these planning efforts are evolving,
now is an opportune time to consider fully incorporating energy efficiency
improvements in the reconstruction efforts. Furthermore, Louisiana's and
Mississippi's recent adoption of newer and more energy efficient building
codes creates a unique opportunity for rebuilding all of the destroyed and
severely damaged homes in a manner that could result in significant energy
cost savings for these two states.

In partnership with DOE's PNNL, we analyzed a range of energy efficiency
levels to determine the potential energy cost savings that could be
achieved if single-family homes and commercial buildings in Louisiana and
Mississippi were constructed in accordance with various residential
building codes and commercial energy standards. For residential buildings,
we examined four energy efficiency levels associated with building in
accordance with various codes--a "baseline" level,^9 a "code" level, and
two "above- code" levels. The baseline level we used represents the
estimated energy efficiency associated with construction practices in
areas of the Gulf Coast that do not have building codes or where the codes
may not be enforced. The code level represents the energy efficiency
associated with building in accordance with the energy provisions of the
ICC's 2006 residential code.^10 The third level represents the energy
efficiency associated with building to meet the Energy Star New Homes
Guidelines, which requires a 15 percent improvement over the ICC's code
for all energy used in a house. The fourth level represents the energy
efficiency necessary to qualify for the $2000 home builders' federal tax
credit for energy efficient new homes, which requires a 50 percent
reduction in space heating and air conditioning energy use compared with
the ICC's code.^11

8The Energy Information Administration estimates that 38 percent of
housing in the South Census Region was built prior to 1970; 58 percent was
built before 1980; and 81 percent was built before 1989.

We estimated that homes built to meet the ICC's 2006 residential code
could reduce energy costs between 24 to 28 percent, resulting in an
aggregate annual savings ranging from $20 to $28 million, depending on the
type of foundation used, the energy efficiency measures to which the homes
are built, and the number of homes being rebuilt.^12 More specifically,
our analysis showed that, depending on the parameters of individual homes,
an estimated annual per house energy cost savings ranging from $167 to
$233 could be achieved if new homes were built in accordance with the
ICC's 2006 residential code, rather than current construction practices in
the Gulf Coast region where there are no building codes or where codes are
not enforced. Furthermore, greater home energy cost savings could be
obtained if consumers rebuild their homes to meet Energy Star New Home
Guidelines or if home builders take advantage of the energy efficient home
tax credit provisions of the Energy Policy Act of 2005 (EPACT) by building
homes that use 50 percent less energy for heating and cooling than those
built to meet the ICC's code. For example, annual per house energy cost
savings of $310 to $364 over baseline levels could be achieved by meeting
Energy Star Home specifications, while $371 to $447 in savings can be
realized by building to meet the tax credit criteria in EPACT. The
potential for Louisiana and Mississippi to achieve significant energy cost
savings if the estimated 122,261 homes that were destroyed or severely
damaged are rebuilt in accordance with various energy efficiency measures
is shown in more detail in appendix II, table 1.^13

^9PNNL modeled two baselines. The first baseline is an approximation of
measures in typical existing housing in the rebuilding region. The second
baseline represents the estimated energy efficiency associated with
construction practices in areas of the Gulf Coast that do not have
building codes or where the codes may not be enforced.

^10We use the term "ICC's residential code" in this report to refer to the
ICC's International Residential Code (IRC), which is a comprehensive,
stand-alone residential code that creates minimum regulations for one- and
two-family dwellings of three stories or fewer and brings together all
building, plumbing, mechanical, fuel gas, energy, and electrical
provisions for one- and two-family residences. In terms of energy
efficiency, the energy provisions of the IRC references the International
Energy Conservation Code (IECC), which requires energy conservation
through efficiency in areas, such as, envelope design and mechanical
systems. We technically analyzed the energy efficiency requirements of the
IECC 2006, which is similar in stringency to the energy provisions of the
2003 and 2006 versions of the IRC.

^11This tax credit is provided by section 1332 of the Energy Policy Act of
2005, Pub. L. No. 109-58 (Aug. 8, 2005).

^12The amount of rebuilding can vary. The aggregated and individual ranges
of energy cost savings depend on the type of foundation used, the energy
efficiency measure to which the houses are built, and the number of homes
being rebuilt. Our aggregate range of energy cost savings is based on the
assumption that an estimated 122,261 severely damaged/destroyed homes are
rebuilt with either a slab-on-grade or elevated foundation. See appendix
II of this report for more information.

In general, the improved energy efficiency features that are part of the
ICC's 2006 residential code, Energy Star New Home Guidelines, and the
EPACT tax credit include more efficient windows and heating and cooling
equipment, improved building envelope and duct sealing, and increased
insulation. While building homes in accordance with the newer building
codes and above code measures will improve a home's energy efficiency, it
will also increase home construction costs because more expensive and
efficient energy features are required. However, these additional costs
can generally be recovered within several years. Details on the cost
recovery period for several key energy efficiency features can be found in
appendix II, table 2.

For commercial buildings--offices, hospitals, schools, and retail--we used
the current commercial energy standards for Louisiana and Mississippi as
baselines: the ASHRAE 2001 standard for Louisiana and the ASHRAE 1975
standard for Mississippi. We then estimated the potential energy cost
savings associated with rebuilding commercial structures in Louisiana in
accordance with the ASHRAE 2004 standard^14 and in Mississippi in
accordance with ASHRAE's 2001 standard. We also estimated the potential
savings that could be achieved by constructing buildings to meet "above
code" levels, such as the requirements of the Leadership in Energy and
Environmental Design (LEED) green building program and the EPACT
commercial tax credit level, requiring 50 percent less energy use than the
ASHRAE 2001 standard.^15

^13On the basis of our review of HUD's report entitled Promoting Energy
Efficiency at HUD in a Time of Change: Report to Congress (Washington DC:
August 8, 2006), it appears that the department could similarly reduce its
utility-related energy expenditures for its public and assisted housing
programs in the Gulf Coast region by implementing energy efficiency
practices similar to those that we identified for single-family homes.

The results of our commercial building analysis showed that an estimated
annual energy cost savings for commercial buildings between 7 and 34
percent could be achieved in Mississippi if commercial structures were
rebuilt in accordance with the ASHRAE 2001 standard and a savings of
between 7 and 13 percent could be achieved in Louisiana if commercial
structures were rebuilt in accordance with the ASHRAE 2004 standard. More
detailed information on these potential savings is presented in appendix
III, table 5. The primary reason for this significant savings is that the
newer energy standards call for the use of less lighting power, which
directly saves energy and indirectly reduces cooling needs because less
heat is given off from lighting fixtures. Overall, adopting newer and more
efficient commercial energy standards in the Gulf Coast would reduce
energy operating costs as well as construction costs because the newer
standards can be met with fewer, more efficient lighting fixtures
resulting in immediate cost recovery.

Our analysis also shows that greater energy cost savings could be obtained
for commercial buildings if they were constructed in accordance with even
higher energy efficiency measures. These efficiency measures include the
LEED rating system,^16 which awards points for buildings that use less
energy than required by the ASHRAE 2004 standard and the federal tax
credit level for commercial buildings.^17 The energy cost savings
associated with these two "above code" energy efficiency approaches could
range from $17,263 to $286,285 per building, depending on the building
type and size. Additional information about these potential savings are
presented in appendix III, table 6.

^14Technically, the ASHRAE standards referred to in this report are the
ANSI/ASHRAE/IESNA Standard 90-75, ANSI/ASHRAE/IESNA Standard 90.1-2001,
and the ANSI/ASHRAE/IESNA Standard 90.1-2004.

^15The LEED Green Building Rating System is the nationally accepted
benchmark for the design, construction, and operation of high performance
green buildings and is operated by the U.S. Green Building Council. EPACT
created certain requirement and incentives to help improve energy
efficiency, including residential and commercial buildings.

^16The U.S. Green Building Council has developed a national rating
system--LEED--for constructing high-performance, sustainable buildings.
The LEED system awards points for various building parameters, including
energy. For example, the LEED system awards 1 point for a building that
uses 10.5 percent less energy than required using the ASHRAE 2004 standard
and 10 points for a building that uses 42 percent less energy than
required using the ASHRAE 2004 standard.

Making Energy Efficient Improvements to Residential and Commercial Buildings by
Replacing Damaged Equipment and Appliances Could Further Decrease Future Energy
Expenditures

Some residential and commercial buildings damaged by the Gulf Coast
hurricanes will not need to be replaced completely, but they will require
repairs. Consumers who decide to repair homes or commercial structures can
reduce their energy expenditures by replacing older and less efficient
energy consuming equipment that may have been destroyed or damaged with
more energy efficient products. We identified several common energy
efficiency improvements that can be made to both residential and
commercial buildings. For some items, such as cooling systems, minimum
federal standards set by DOE require the manufacture of more efficient
units than would have been used prior to the Gulf Coast hurricanes.
Therefore, energy cost savings from these kinds of equipment could be
achieved by simply replacing older equipment with a standard newer model.
Some of the more common energy efficiency improvements include more
efficient air conditioning systems, better insulating windows,^18 and
improved duct sealing.^19 Although these systems are generally more costly
than older, less efficient units, with the exception of window
replacements, the additional costs can usually be recovered in a few
years. Additional information on the estimated energy cost savings that
these improvements could bring to both Louisiana and Mississippi is
presented in appendix II, table 3.

^17A tax deduction of up to $1.80 per square foot is available to owners
or designers of new or existing commercial buildings that save at least 50
percent of the heating and cooling energy of a building that meets ASHRAE
standard 90.1-2001. Partial deductions of up to $0.60 per square foot can
be taken for measures affecting any one of three building systems: the
building envelope, lighting, or heating and cooling systems.

^18The cost recovery period for the windows that we previously mentioned
may not appear attractive. However, if the existing building has
single-pane windows, these windows can have substantial disadvantages that
are not accounted for in an energy cost analysis. For example, the inner
surface temperature of a single-pane aluminum window will become quite low
during the coldest winter conditions. This low temperature can result in
an unpleasant drafty feeling for occupants in the vicinity of the windows.
Also, the cold surface can lead to possible water condensation, which
could eventually result in water damage to the windows or walls over an
extended period of time.

^19Tax credits are available for many types of home improvements including
adding insulation, replacing windows, and purchasing certain high
efficiency heating and cooling equipment. The maximum amount of homeowner
credit for all improvements combined is $500 during the 2-year period of
the tax credit.

Residential consumers can also reduce their energy costs by replacing
damaged incandescent lighting and appliances with compact fluorescent
lighting (CFL) and Energy Star appliances. On a per house basis, switching
to CFLs can save consumers an estimated $48 a year in electricity costs
for lighting.^20 Installing Energy Star appliances can produce modest
annual dollar savings compared with appliances that simply meet the
current minimum federal manufacturing standards. However, according to
PNNL, if these appliances are used to replace older appliances that may be
much less efficient, the costs savings can be considerable. According to
Energy Star data, an Energy Star refrigerator is at least 15 percent more
efficient than federal minimum manufacturing standards, meaning that it
would save an estimated $9 a year over a new conventional refrigerator.
Savings from replacing an older refrigerator could be much higher, for
example $65 a year over a pre-1993 refrigerator. The additional costs and
the energy cost savings that may be achieved if these lighting and
appliance upgrades are made in the estimated 143,862 homes that received
major damage is outlined in appendix II, table 4.

Our analysis demonstrated that lighting upgrades are the primary area
where energy cost savings can be achieved from renovating damaged
commercial buildings in the Gulf Coast region. For example, if commercial
buildings--offices, schools, hospitals, and retail--in Mississippi were
renovated to meet the ASHRAE 2004 standard, rather than the state's
current standard ( the ASHRAE 1975 standard), the cumulative savings per
building would be $18,689 to $150,538 per year depending on the building
type. In contrast, renovating these same building types in Louisiana so
that they go beyond the state's current ASHRAE 2001 standard to meet the
ASHRAE 2004 standard would result in $5,704 to $30,537 in annual savings
per building. According to PNNL officials, all other building renovations
pale in comparison to the impact that lighting changes would have in terms
of producing energy cost savings for commercial buildings. Additional
information about the potential energy cost savings associated with
lighting in commercial buildings is presented in appendix III, table 7.

^20On the basis of a house with 20 light fixtures, the Energy Star Advance
Lighting Package's minimum requirements would save $48 a year in
electricity costs for lighting.

Home Builder, State, and Consumer Challenges Are Substantial and May Limit
Energy Cost Savings Opportunities from Being Realized

Three substantial challenges may limit the energy cost savings
opportunities presented by the Gulf Coast reconstruction from being
realized. First, a general shortage of a skilled construction workforce
and, specifically, the shortage of construction workers trained to meet
newer building codes may limit energy cost savings. Second, states will
face serious challenges ensuring compliance with newer building codes,
thereby potentially limiting energy cost savings opportunities from being
realized. Third, consumers who consider rebuilding and repairing their
homes are faced with making other decisions that may make energy
efficiency a low priority.

Availability of a Skilled Construction Workforce Trained to Meet Newer Building
Codes and Standards May Limit Energy Cost Savings

The shortage of a skilled construction workforce capable of sustaining the
rebuilding and repairing of destroyed and damaged homes in Louisiana and
Mississippi may limit the energy cost savings that can be achieved by
rebuilding to the newly adopted building codes. The construction workforce
shortage is twofold--that is, there is a general shortage of construction
workers and, more specifically, a shortage of skilled construction workers
trained in the application of the newer building codes.

A 2004 Department of Labor report cited an industry study that said in the
year prior to the Gulf Coast hurricanes, nearly 75 percent of contractors
nationwide reported experiencing skilled construction labor shortages.^21
Louisiana and Mississippi builders told us that the labor shortage
worsened when the hurricanes displaced some of their construction
workforce to other states and caused an overwhelming demand for rebuilding
and repairing destroyed and damaged residential and commercial buildings.
Consequently, the demand for construction in the Gulf Coast region far
exceeds the capacity of the local construction workforce. For example, a
study conducted by the RAND Corporation reported that to sustain the
rebuilding efforts in New Orleans, the city would have to expand its
number of construction firms, labor force, and building supply
networks.^22

^21U.S. Department of Labor, Americas Construction Industry: Identifying
and Addressing Workforce Challenges (December 2004).

^22Kevin McCarthy, D.J. Peterson, Narayan Sastry, and Michael Pollard, The
Repopulation of New Orleans After Hurricane Katrina, a technical report
prepared by the RAND Gulf States Policy Institute (January 2006).

In addition, there is currently a lack of skilled construction workers
trained to meet the states' new building codes and standards. According to
many different stakeholders with whom we spoke, building code training is
an important part of ensuring that buildings are properly constructed to
meet the newer building codes, including the energy provisions. Training
the construction workforce will require time and involve a learning curve,
which may delay or even limit the energy cost savings achieved during the
Gulf Coast reconstruction. According to state officials and home builders
that we spoke to, prior to the Gulf Coast hurricanes the general
construction workforce in Louisiana and Mississippi did not have to comply
with any particular statewide building codes, and some parishes and
counties had no residential building codes to guide home construction. As
a result, there was not an overwhelming need for the general construction
workforce to be familiar with the building codes developed by the ICC.
However, the construction workforce in Louisiana and the five coastal
counties in Mississippi will now need training on the application of the
newer building codes that include wind, flood, and energy provisions. This
is especially true for Louisiana, since it adopted mandatory statewide
building codes. Home builders, energy efficiency practitioners, state
officials, and non-profit organizations with whom we spoke acknowledged
that fully implementing newer building codes will take time and will
involve a learning curve before construction workers understand and are
able to comply with the requirements. State officials and home builders
told us that it will be difficult for local home builders--consisting of
small volume builders---to make the transition from not building according
to a building code to now constructing buildings to meet the requirements
of the most recent residential codes. In addition, according to the
National Association of Home Builders, the ICC's energy code has caused
problems for home builders because they have trouble finding the lowest
cost solution that also complies with the code. All of these challenges
may delay or even limit the energy cost savings.

In an effort to address the skilled construction workforce shortage, the
Business Roundtable--an association of chief executive officers of leading
U.S. companies with $4.5 trillion in annual revenues and more than 10
million employees--in partnership with federal, state, and local
government agencies, construction trade groups, businesses, and non-profit
organizations, created the Gulf Coast Workforce Development Initiative as
an effort to recruit and train up to 20,000 skilled construction laborers
for the Gulf Coast region by the end of 2009. Recruitment efforts for this
initiative are under way through the Gulf Rebuild, Education, Advancement,
and Training (GREAT) Campaign. Under this campaign, participants enroll in
a 4-week course to gain entry-level skills in preparation for jobs in the
construction industry. In addition to the GREAT Campaign, there are other
efforts under way to build a skilled construction workforce in the Gulf
Coast states, including courses and related workshops at local colleges
and universities and construction and building summits/expos being offered
throughout the Gulf Coast states.

States Will Be Challenged to Ensure That New Construction Meets the Recently
Adopted Building Codes and Standards

Having an adequate number of trained code officials to inspect buildings
is vital to ensuring that rebuilding the hundreds of thousands of
destroyed and damaged structures is done in accordance with the newly
adopted building codes so that energy cost saving opportunities are
actualized. However, building industry representatives and state officials
told us that Louisiana and Mississippi lack code offices, lack an adequate
number of code officials,^23 and may find it difficult to secure the
resources to hire a sufficient number of adequately trained staff. Despite
these challenges, however, efforts to enforce the new codes and standards
in Louisiana and Mississippi are currently under way.

Louisiana and Mississippi may not have adequate resources to open
additional code offices and may not currently have adequate numbers of
trained staff. For example, only a few Louisiana parishes and Mississippi
counties have code compliance and enforcement programs, and implementing
the new building codes will require more building code offices to be
established. According to one Louisiana code official, because 57 of the
state's 64 parishes did not have to comply with any mandatory statewide
building codes before the Gulf Coast hurricanes, there was no need for
building code offices in those particular parishes. In Mississippi, only
those five coastal counties affected by the hurricanes are required to
meet the new statewide building codes. According to Mississippi officials,
despite the fact that three of the five counties had building codes and
offices in place prior to the hurricanes, these counties will still need
to hire and train additional code officials because of the overwhelming
amount of rebuilding that remains and the new building codes. In addition,
there was a consensus among the groups we interviewed that building code
offices are currently overburdened, because there are too few officials
and too many inspections.

^23The terms "code officials" or "inspectors", in this report, refer to
building officials, inspectors, plans examiners, and others in the
position of regulating building codes and standards.

Furthermore, Louisiana and Mississippi will face serious challenges in
securing the adequate staff and resources to support code enforcement.
Both states reported that the local governments in the most severely
affected parishes and counties have limited financial resources to provide
staff to implement the newer building codes. State officials, home
builders, and non-profit organizations pointed out that code officials are
taking other jobs in the private sector, which means code offices will
have to fill those vacated positions as well as hire and train additional
code officials. According to 1 state official in Louisiana, there were
only 35 code inspectors statewide, only 7 of whom were certified to
enforce the ICC building code recently adopted by the state that includes
energy provisions.

Furthermore, local governments will face challenges in training code
officials and code users^24 in the application of the new building codes.
Building codes are inherently complex and technical, thereby potentially
affecting compliance and enforcement, especially for larger commercial
buildings. One study on compliance and enforcement methods reported that
enforcing energy codes may require a higher level of expertise, and found
that some local governments hire multiple code officials with specialized
areas of expertise.^25 Another study suggests that the complexities of
energy codes make them impossible to enforce without a labor-intensive
review of energy plans and documentation supported by extensive
investments in hardware, software, training, and other resources. Energy
efficiency practitioners suggest that education and training are critical
during implementation, and that adopting jurisdictions must prepare code
officials to enforce the energy code and prepare the building industry to
comply with the code. According to one study, the inability to ensure
compliance with energy codes will risk failing to capture the energy
efficiency and cost savings they are designed to achieve.^26

^24The term "code users," as used in this report, refers to builders and
contractors, architects, designers, and others in the position of
compliance with building codes and standards.

^25Maine Public Utilities Commission, "Building Code Compliance and
Enforcement Methods Investigation" (presented to the Utilities and Energy
Commission, December 2004).

^26D.L. Smith and J.J. McCullough, Alternative Code Implementation
Strategies for States, A report prepared for the U.S. Department of Energy
(May 2001).

Despite the challenges, efforts to implement the new codes and standards
in Louisiana and Mississippi are currently under way. For example,
according to Louisiana Code Council officials, to some extent parishes
have been enforcing the new building code since February 2006. The 11 most
affected parishes have collaborated with surrounding governmental bodies
to expand their existing offices or hired third-party service providers.
One official estimated that the number of code officials in the state has
increased from about 35 to 100, mainly because the Louisiana Code Council
is giving existing code officials, who are not certified to enforce the
new code, up to 3 years to acquire their certification as they continue to
conduct building inspections. Moreover, as of December 2006, the state had
allocated $8 million for those parishes that did not previously have
building code offices. Furthermore, Louisiana has a $14 million program,
funded by Federal Emergency Management Agency (FEMA) funds,^27 to provide
assistance to local governments as they implement the new statewide
building codes. The Mississippi Development Authority is using HUD funding
to administer a $5 million grant program to coastal county governments to
hire additional building code officials and inspectors to ensure
compliance with the new building codes. The program also intends to help
to fund salaries, fringe benefits, travel, and training for building code
enforcement officials for 1 year.

Finally, Louisiana and Mississippi state energy office officials are
providing education and training to code users to encourage the
incorporation of energy efficiency and sustainable practices into the
rebuilding of the state. According to Louisiana officials, they will
continue to provide training on energy codes and compliance methods,
sponsor energy efficiency projects, and work with experts and universities
to host forums to provide hands-on, project-specific, one-on-one
assistance to those rebuilding and repairing destroyed and damaged
structures. Officials from the Mississippi state energy office said that
they are conducting similar efforts in their state.

^27FEMA is tasked with responding to, planning for, recovering from, and
mitigating against disasters. Its Hazard Mitigation Grant Program provides
grants to states, to implement long-term hazard mitigation measures after
a major disaster declaration.

Energy Efficiency May Be a Low Priority When Consumers Consider Rebuilding or
Repairing Destroyed and Damaged Homes

According to state officials, home builders, and non-profit organizations
in Louisiana and Mississippi, consumers who desire to return to their
homes face difficult financial questions regarding compensation payments,
the higher costs of construction and insurance, and the availability of
employment, which may make decisions about energy efficiency a low
priority. Some state officials and non-profit organizations believe that
compensation payments awarded to homeowners may not be enough to cover
their mortgage balances or rebuilding costs. Qualified Louisiana and
Mississippi homeowners may receive up to $150,000 in financial assistance
from their state's homeowner's assistance program, which is funded by the
federal government. However, the most recent available data show that the
average amount received by residents in Louisiana and Mississippi is about
$75,177 and $70,045, respectively. Representatives from non-profit
organizations with whom we spoke told us that in some cases, homeowner
mortgage balances and rebuilding costs exceed the payment amounts, leaving
a funding gap that homeowners will have to fill. In addition, state
officials whom we spoke with told us that the housing program does not
provide additional funds to use for energy efficiency, thus homeowners
will have to pay any additional costs associated with making their homes
more energy efficient.

According to home builders, non-profit organizations, and energy
efficiency practitioners, homeowners may also have to consider the
additional construction costs associated with new elevation requirements.
That is, some consumers will have to consider the additional costs to
elevate their homes. Although FEMA provides $30,000 to cover the costs for
building to higher elevations, it may cost more than that to build in some
neighborhoods, based on FEMA's advisory base flood elevations and local
parish and county community decisions to implement higher elevation
requirements, according to some home builders. Representatives of a state
home builders association told us that it can cost as much as $40,000 to
more than $100,000 depending upon the house.

According to state officials, home builders, and non-profit organizations,
homeowners continue to deal with insurance claims and face difficult
decisions about future coverage in light of higher insurance costs, if any
coverage is available at all. By some news reports, insurance premiums
have doubled or tripled in some areas. Increasing insurance costs may
affect consumers purchasing decisions regarding energy efficiency, thus
limiting energy cost savings opportunities presented by the Gulf Coast
reconstruction from being realized.

State officials and non-profit organizations told us that homeowners also
will have to decide whether existing employment opportunities make
returning to their homes feasible. Many residents lost their jobs when
infrastructure was destroyed and employees and customers were displaced.
The employment level statewide in Mississippi returned to their
pre-hurricane levels, while levels in the hardest hit area remained down,
as did the rate in Louisiana. In the absence of employment opportunities,
many residents will likely not return to their homes. Without adequate
employment opportunities, even those residents who do return are likely to
face financial hardships that will make decisions about repairing or
rebuilding their homes in an energy efficient manner a low priority.

Even after addressing these issues, homeowners will have to decide whether
it is in their best financial interest to pay the additional costs to make
their homes more energy efficient through purchases, such as energy
efficient appliances, or to use their money for other purposes. For
consumers, especially poor and low-income consumers, this decision may be
compounded by their loss of income, assets, and other financial needs that
will have to be met. One study we reviewed suggest that among the most
important barriers generally affecting consumers and their purchasing
decisions are limited information, limited awareness and interest in
energy costs and reducing energy expenses; and limited capital and rapid
payback requirements. Consumers are less likely to voluntarily adopt
energy efficiency measures without financial incentives and education on
the costs and benefits.

HUD and DOE Are Providing Funding and Educational Resources to Encourage Gulf
Coast States to Incorporate Energy Efficiency in Rebuilding

Because the rebuilding of the Gulf Coast is largely a state and local
matter, HUD and DOE have played a supportive role in promoting energy
efficient rebuilding. More specifically, HUD and DOE have provided
financial and educational resources that can encourage the incorporation
of energy efficiency in the reconstruction of the Gulf Coast. In addition
both agencies have broader national programs that may assist Louisiana and
Mississippi in incorporating energy efficiency improvements during their
rebuilding.

HUD Is Making Funding Available to Gulf Coast States for Rebuilding and
Repairing Residential Buildings

HUD officials told us that they provided the affected Gulf Coast states
with funding that can be used for, among other things, rebuilding in an
energy efficient manner. Congress has appropriated a total of $16.7
billion in Community Development Block Grants (CDBG) supplemental funding
that has been allocated for use in the five affected Gulf Coast states for
general rebuilding. These grants afford states a great deal of discretion
in designing, rebuilding, and repairing housing; in neighborhood
revitalization; and in economic development activities. The federal
coordinator for Gulf Coast rebuilding has said that the CDBG program
allows state leaders "who are closest to the issues" to make decisions
regarding how the money should be spent.^28 In Louisiana and Mississippi,
these funds are mostly being used for restoring housing infrastructure. To
receive CDBG funding, Louisiana and Mississippi as well as the other
affected Gulf Coast states were required to submit a Disaster Action
Plan--an overall plan for short-and long-term disaster recovery--to HUD
for review and approval. States were required to describe, among other
things, how their Disaster Action Plan would encourage construction
methods that emphasize energy efficiency and promote the enactment and
enforcement of modern building codes as part of their rebuilding process.
HUD officials said they also have been working with Louisiana and
Mississippi homeowner assistance programs to target CDBG funds to better
assist states and consumers in rebuilding homes that are more energy
efficient, safer, and storm resistant. In addition, HUD officials told us
that they encourage public housing authorities to use energy efficient
construction practices, appliances, and equipment. According to HUD, this
was the case when the department approved and funded a $22 million grant
to the Housing Authority of New Orleans and $7 million in grants to the
Biloxi Mississippi Housing Authority from its Capital Fund Reserve for
Emergencies and Natural Disasters to rebuild, repair, modernize, and
improve the energy efficiency of damaged public housing units.

HUD officials told us that they also have disseminated information on
energy efficiency to public housing authorities and participated in
educational and training activities to assist state and local offices,
consumers, and builders with considering energy efficient rebuilding. For
example, the department distributed a special disaster recovery edition of
its Public Housing Energy Conservation Clearinghouse e-newsletter,
outlining energy efficiency measures that public housing authorities and
residents can take to save energy and reduce utility costs. In addition,
HUD was involved in several reconstruction activities that while focused
on hurricane preparedness and reconstruction, also provided information on
energy efficiency. These activities included the Mississippi Governors
Reconstruction "Expo" where HUD disseminated extensive materials on its
Partnership for Advanced Technologies in Housing (PATH) program, and the
release of HUD "Tech Sets" on storm-resistant roofing and wind resistant
openings for use by homeowners, builders, and community officials in the
affected Gulf Coast states.

^28Statement made by Donald Powell, the Federal Coordinator for Gulf Coast
Rebuilding; on January 25, 2006, when he announced the distribution of
CDBG funds to the five Gulf Coast states impacted by hurricanes.

HUD also has actions that were planned or under way prior to the Gulf
Coast hurricanes that are designed to improve the energy efficiency of the
nation's public housing stock and that could potentially benefit the Gulf
Coast states.^29 These actions included the following:

           o HUD's Energy Task Force developing standard training program
           modules to promote energy efficiency in both new and existing
           HUD-assisted and financed housing. HUD also will develop materials
           on ways to improve household energy efficiency for housing
           authorities to disseminate to public housing residents.
           o HUD, through its new Partnership for Home Energy Efficiency with
           DOE and the Environmental Protection Agency, working to ensure
           that information on Energy Star products and appliances, Energy
           Star Qualified New Homes, and Home Performance with Energy Star
           for existing homes is available for distribution to public housing
           authorities, grant recipients, property managers, and new Federal
           Housing Administration (FHA) homebuyers.^30 
           o HUD improving its tracking and monitoring of energy efficiency
           in pubic housing with an automated system to provide public
           housing authorities with data that serves as an indicator of the
           relative efficiency of individual properties and their potential
           for energy savings.
			  
^29Section 154 of EPACT requires HUD to develop and implement an
integrated strategy to reduce utility expenses through cost-effective
energy conservation and efficiency measures and energy-efficient design
and construction of public and assisted housing. HUD also is required to
monitor the energy use of public housing agencies and submit a report
update every 2 years on its progress in implementing the strategy.

^30Home Performance with Energy Star is a whole-house Energy Star retrofit
initiative aimed at existing homes.

           DOE Is Providing Energy Efficiency Training and Education to
			  Consumers and State and Local Officials

           In its capacity as the nation's lead agency on energy efficiency
           issues, DOE's primary role in the Gulf Coast reconstruction has
           been to support states by provide training and education to state
           and local officials, private industry, and consumers. In direct
           response to the Gulf Coast hurricanes, DOE partnered with several
           entities, including state energy offices, to conduct training
           workshops on rebuilding with energy efficiency and
           storm-resistance practices for home builders, contractors, and
           consumers. For example, DOE, in partnership with HUD's PATH
           program, Home Depot, and Entergy Corporation, sponsored free home
           repair workshops in Louisiana and Mississippi that highlighted
           energy efficiency.^31 Attendees had the opportunity to receive
           hands-on instructions on repairing storm damaged roofs, ceilings,
           walls, and floors; installing windows, doors, and hurricane
           shutters; and improving a home's energy efficiency and durability.
           DOE also responded to a request from the Louisiana State Energy
           Office to provide Web-based code training sessions to architects,
           engineers, and code officials to train them on how to comply with
           the 2005 Louisiana ASHRAE Commercial Energy Building Code as they
           renovate and replace commercial buildings.

           DOE also made educational resources available to all parties
           involved in the rebuilding efforts by developing a Disaster
           Recovery and Building Reconstruction Web site
           (www.eere.energy.gov/buildings) to (1) provide various educational
           resources to state and local officials, builders and contractors,
           and consumers and (2) promote cost-effective and energy-efficient
           reconstruction. This Web site includes information on energy
           efficiency and rebuilding training opportunities and a wide range
           of guidelines, fact sheets, and case studies developed by DOE,
           HUD, FEMA, the National Association of Home Builders, and other
           organizations.

           DOE has taken other actions to encourage parties involved in the
           rebuilding process to consider energy efficiency. For example, it
           awarded a $100,000 grant to Louisiana, Mississippi, and other
           affected Gulf Coast states to incorporate energy efficiency and
           sustainable design practices into their rebuilding strategy. DOE
           also partnered with state energy offices to encourage the regional
           exchange of information and best practices. As part of its
           partnership with states, DOE hosted the Katrina Green Informal
           Working Group, a biweekly conference call with various federal and
           state officials, industry associations, builders, nonprofit
           organizations, and energy efficiency and housing experts, aimed at
           networking and sharing information about the rebuilding efforts in
           Gulf Coast states. DOE officials said that the agency plans to
           continue its efforts to encourage Louisiana and Mississippi and
           other affected states to rebuild more energy efficiently.
			  
^31PATH is a voluntary partnership between leaders of the homebuilding,
product manufacturing, insurance, and financial industries and
representatives of [23]federal agencies concerned with housing . HUD's
[24]Office of Policy Development and Research (PD&R) coordinates all PATH
activities. PD&R manages PATH's budget, strategy, and daily operations.

           Finally, DOE also has ongoing nationwide energy efficiency
           initiatives to assist all states with their own energy efficiency
           initiatives through several national programs and projects
           including the following:

           o Federal-State Partnership Projects:  DOE recently awarded $6
           million to fund 22 federal-state partnerships that will help
           implement training programs and provide technical assistance and
           education that is intended to ultimately result in the
           construction of more energy efficient buildings. Louisiana and
           Mississippi were among the states that were awarded partnership
           grants. Louisiana's project proposal, entitled Gulf Region High
           Performance Homes Program, is intended to spur market
           transformation in Louisiana and the Gulf Coast region through
           educational outreach, demonstration, technical assistance, and
           training on locally appropriate, hazard-resistant,
           energy-efficient, and healthy-building science and technologies.
           The goal of Mississippi's proposal, entitled Promoting Energy
           Codes and "Beyond Code" Programs through EPACT Tax Incentives, is
           to integrate building energy codes and "better than code" programs
           using the tax incentives of EPACT as a coordinating framework, and
           to promote building energy codes, DOE Building America approaches,
           and Energy Star Home procedures as avenues for qualifying for the
           buildings-related tax incentives in EPACT.

           o State Energy Program (SEP): DOE's SEP provides grants to the
           states to design and carry out their own renewable energy and
           energy efficiency programs. Funding from SEP goes to state energy
           offices in all states and U.S. territories. States use these
           grants to address their energy priorities and to adopt emerging
           renewable energy and energy efficiency technologies. SEP projects
           are managed by state energy offices, not by DOE directly. In 2006,
           DOE provided over $650,000 in SEP grants to Louisiana and about
           $400,000 to Mississippi.
           o Weatherization Assistance Program: This program enables
           low-income families to permanently reduce their energy bills by
           making their homes more energy efficient. According to DOE, it is
           this country's longest running and perhaps most successful energy
           efficiency program. During the last 30 years, DOE's Weatherization
           Assistance Program has provided weatherization services to more
           than 5.5 million low-income families. DOE reported that, on
           average, weatherization reduces overall energy bills by $358 per
           year at current prices. In 2006, about $2 million in
           weatherization funds were provided to Louisiana and about $1.9
           million went to Mississippi.
			  
           Concluding Observations

           While the current level of reconstruction and the difficulties
           surrounding the return of residents is unsettling for both
           individuals and communities, the nature and status of rebuilding
           actually creates significant opportunities for incorporating
           energy efficiency measures into reconstruction and rebuilding
           efforts. Nonetheless, as great as the potential opportunities are,
           the challenges that must be overcome to capitalize on these
           opportunities and actually achieve energy cost savings are equally
           significant. Since most of the reconstruction in Louisiana and
           Mississippi is still in the planning phase, there is still time to
           address the challenges of incorporating energy efficiency in the
           rebuilding of the Gulf Coast. Meeting these challenges will
           undoubtedly benefit consumers, the Gulf Coast region, and the
           nation.

           While the rebuilding of the Gulf Coast is largely a state and
           local matter, HUD and DOE have provided states and consumers with
           funding and educational resources to assist in the largest
           reconstruction effort in the nation's history. Going forward,
           there will be a growing opportunity to incorporate energy
           efficiency measures during the rebuilding process--as states and
           local governments decide on how and to what extent to implement
           and enforce new building codes, and consumers begin to make
           decisions about whether making energy efficient choices is in
           their best financial interest. Given that improved energy
           efficiency measures, such as updated building codes and energy
           efficient building materials are new to the Gulf Coast region,
           states and consumers can greatly benefit from DOE expertise in
           these areas. DOE expertise as well as HUD and DOE resources may
           prove invaluable to states and consumers as they make decisions
           about building code training and enforcement, energy efficiency
           construction practices, and purchasing energy efficient appliances
           and equipment.
			  
			  Agency Comments

           We provided a draft of this report to DOE and HUD for their review
           and comment. DOE provided technical and clarifying comments, which
           we incorporated as appropriate. HUD had no comments on the report.

           We are sending copies of this report to interested congressional
           committees, the Secretary of Energy, the Secretary of Housing and
           Urban Development, and other interested parties. We will also make
           copies available to others on request. In addition, the report
           will be available at no charge on GAO's Web site at
           http://www.gao.gov.

           If you or your staffs have any questions regarding this report,
           please contact me at (202) 512-3841 or [email protected]. Contact
           points for our Offices of Congressional Relations and Public
           Affairs may be found on the last page of this report. GAO staff
           who made major contributions to this report are listed in appendix
           IV.

           Mark E. Gaffigan
			  Acting Director, Natural Resources and
           Environment

           List of Congressional Addressees

           The Honorable Jeff Bingaman
			  Chairman
			  The Honorable Pete V. Domenici
			  Ranking Member
			  Committee on Energy and Natural Resources
           United States Senate

           The Honorable Susan M. Collins
			  Ranking Member
			  Committee on Homeland Security and Governmental Affairs
			  United States Senate

           The Honorable Mary L. Landrieu
			  Chairwoman
			  Ad hoc Subcommittee on Disaster Recovery
			  Committee on Homeland Security and Governmental Affairs
			  United States Senate

           The Honorable John D. Dingell
			  Chairman
			  Committee on Energy and Commerce
			  House of Representatives

           The Honorable Peter J. Visclosky
			  Chairman
			  Subcommittee on Energy and Water Development
			  Committee on Appropriations
			  House of Representatives

           The Honorable John W. Olver
			  Chairman
			  Subcommittee on Transportation, Housing and Urban Development,
			    and Related Agencies
			  Committee on Appropriations
			  House of Representatives
			  
			  Appendix I: Objectives, Scope, and Methodology

           During our review, our objectives were to (1) analyze the extent
           of opportunities for incorporating energy efficiency improvements
           and realizing energy cost savings in the Gulf Coast
           reconstruction, (2) discuss potential challenges to realizing
           energy cost savings during the reconstruction, and (3) describe
           the role of Department of Housing and Urban Development (HUD) and
           the Department of Energy (DOE) in promoting energy efficiency in
           the rebuilding of the Gulf Coast.

           To estimate potential energy cost savings from rebuilding and
           repairing residential and commercial structures on the Gulf Coast,
           we worked with DOE's Pacific Northwest National Laboratory (PNNL).
           PNNL modeled the levels of energy efficiency that could be
           achieved if the buildings were rebuilt or repaired to meet newer
           building codes and standards or "above code" levels, and compared
           these measures with a baseline that approximately reflected the
           energy efficiency of these buildings prior to the Gulf Coast
           hurricanes. Separate analyses were conducted for representative
           residential and commercial building types. We worked with PNNL in
           developing the model assumptions, including the size and
           characteristics of representative residential and commercial
           buildings, the building codes and standards that were used, the
           future costs of fuels, the heating and cooling climate of the
           area, the discount rate used for consumers' valuation of future
           fuel cost savings from more energy efficient equipment and
           materials. We found PNNL's models and assumptions reasonable and
           sufficiently reliable for the purposes of this report.

           For a representative residential Gulf Coast home, PNNL modeled
           several energy efficiency scenarios--two baseline measures,^1 an
           energy code level, and two "above code" levels. PNNL used an
           energy simulation tool developed at the Florida Solar Energy
           Center and DOE's Energy Information Administration forecasts of
           natural gas and electricity prices. PNNL also modeled the
           efficiency gains that could be achieved by bringing Gulf Coast
           commercial buildings into compliance with current, more efficient,
           energy standards for four prototypical buildings--offices,
           schools, hospitals and retail. PNNL estimated the annual energy
           cost savings associated with three levels of energy
           standards--baseline efficiency, the current code's
           higher-efficiency, and "above code" building standards.
			  
^1PNNL modeled two baselines. The first baseline is an approximation of
measures in typical existing housing in the rebuilding region. The second
baseline represents the estimated energy efficiency associated with
construction practices in areas of the Gulf Coast that do not have
building codes or where the codes may not be enforced.

           To aggregate potential residential energy cost savings from
           rebuilding or repairing destroyed and damaged homes in the Gulf
           Coast region, we used PNNL's estimates of annual energy cost
           savings for a representative home built to different levels of
           energy efficiency and federal estimates of the aggregate number of
           these homes to estimate the scope for savings. We reviewed the
           methodology used to estimate the damaged and destroyed homes,
           including the steps that were taken to ensure the reliability of
           these data and were satisfied that the estimates were satisfactory
           for our purposes.

           To understand the potential challenges that may limit energy cost
           savings from being realized, we relied on site visits to Louisiana
           and Mississippi, interviews with state government officials, and
           attendance at local building conferences and housing summits.
           Furthermore, we interviewed energy efficiency practitioners,
           building industry representatives, and non-profit organizations as
           well as HUD and DOE officials to solicit their views on the
           challenges of incorporating energy efficiency measures in the
           rebuilding and repairing of destroyed and damaged buildings.

           To describe the role of HUD and DOE in promoting energy efficiency
           in the rebuilding of the Gulf Coast, we interviewed agency
           officials and obtained and reviewed documentation describing the
           actions that these agencies have taken to assist Louisiana and
           Mississippi. We also conducted site visits to these states to
           obtain firsthand knowledge from state government officials,
           non-profit organizations, home builders, and energy efficiency
           practitioners about their views on HUD's and DOE's efforts to
           promote or work with various stakeholders to consider energy
           efficiency in the rebuilding process. We conducted our work from
           March 2006 through May 2007 in accordance with generally accepted
           government auditing standards, which included an assessment of
           data reliability.
			  
			  Appendix II: Energy Cost Savings Estimates for Residential Buildings

           Tables 1 through 4 contain energy cost savings estimates for homes
           built in accordance with various energy efficiency standards and
           for homes repaired with selected energy efficiency-related
           improvements.

Table 1: Annual Energy Cost Savings for Heating and Cooling Homes Built in
Accordance with Various Energy Efficiency Codes and Standards with
Slab-on-Grade and Elevated Foundations

                                                                Aggregate     
                                                               savings over   
                                                               new housing    
                                                               baseline for   
                  Per house dollar Percentage savings         122,261 homes   
                  savings over new  over new housing           (dollars in    
                  housing baseline      baseline                millions)     
Energy                                                                     
efficiency     Slab-on           Slab-on           Slab-on                 
alternative      grade Elevated    grade  Elevated   grade      Elevated   
International                                                              
Residential                                                                
Code (IRC)                                                                 
2006              $167     $233      24%       28%     $20           $28   
Energy Star       $310     $364      45%       44%     $38           $45   
Tax credit        $371     $447      54%       54%     $45           $55   

Source: GAO analysis of Pacific Northwest National Laboratory data.

Notes:

New housing baseline: estimated current practice for new construction in
areas of the Gulf Coast region that does not have building codes. There
will be a variation of energy efficiency in both new and existing
buildings. Some buildings may be more energy efficient than the baseline
assumed here, some will be less.

IRC 2006: For this analysis, we analyzed the energy efficiency
requirements of the International Energy Conservation Code (IECC) 2006,
which is similar in stringency to the energy provisions of the IRC 2006 as
well as the IECC 2003.

Energy Star Homes Guideline: Energy Star requires a 15 percent improvement
over the IECC for all energy used in a house.

Tax Credit: Qualification for the $2,000 tax credit requires a 50 percent
reduction in space heating and air conditioning energy use compared with
the IECC 2003, including supplements.

Table 2: Estimated Construction Cost Increases and Cost Recovery Periods
for Building Homes in Accordance with Various Energy Efficiency Codes and
Standards

                           Cost recovery                                      
                                  period                                      
                 Per house                                                    
               dollar cost                                     Aggregate cost 
                  increase    House with House with an     increase above new 
Energy        above new slab-on-grade      elevated   housing baseline for 
efficiency      housing    foundation    foundation 122,261 homes (dollars 
alternative    baseline       (years)       (years)           in millions) 
IRC 2006           $618           3.7           2.7                    $76 
Energy Star      $2,198           7.1           6.0                   $269 
Tax Credit       $1,354           3.6           3.0                   $166 

Source: GAO analysis of Pacific Northwest National Laboratory data.

Note: For this analysis, we analyzed the energy efficiency requirements of
the IECC 2006, which is similar in stringency to the energy provisions of
the IRC 2006.

Table 3: Annual Energy Cost Savings for Selected Home Energy Efficiency
Improvements

                                              Annual           Aggregate      
                                              per              energy cost    
From: estimated To: more                   house   Cost     savings for    
existing home   energy         Incremental energy  recovery 143,862 homes  
energy features efficient home cost(per    cost    period   (dollars in    
(prehurricane)  features       house)      savings (years)  millions)      
SEER-10 Cooling SEER-13        $335        $127    2.6      $18            
equipment       cooling                                                    
                   equipment                                                  
Manual          Programmable   $65         Unknown Unknown  Unknown        
thermostat      thermostat                                                 
Standard duct   Improved duct  $235        $63     3.7      $9             
sealing         sealing                                                    
Single pane,    Double pane    $3,506.00   $202    17.4     $29            
aluminum window vinyl low-E    ($10.56 sq.                                 
                   window         ft.)                                        

Source: GAO analysis of Pacific Northwest National Laboratory data.

Note: Studies have been unable to verify any energy savings from
programmable thermostats. In addition, EPA recently decided to cease
crediting any thermostats as Energy Star. Inherently, these thermostats
save no energy but allow the consumers to set a temperature schedule that
could reduce energy.

Table 4: Annual Energy Cost Savings for Home Lighting and Appliance
Upgrades

                To: more                         Annual              Aggregate 
                energy                              per            energy cost 
From:        efficient                         house     Cost   savings for 
standard     lighting                         energy recovery       143,862 
lighting and and         Incrementalcost(per    cost   period homes(dollars 
appliances   appliances               house) savings  (years)  in millions) 
Incandescent Compact                     $99     $48        2            $7 
lighting     fluorescent                                                    
                lighting                                                       
New          Energy Star                 $65      $9        7            $1 
conventional labeled                                                        
refrigerator                                                                
New          Energy Star                $440     $59      7.5            $8 
conventional labeled                                                        
clothes                                                                     
washer                                                                      
New          Energy Star                 $45     $13      3.5            $2 
conventional labeled                                                        
dish washer                                                                 

Source: GAO analysis of Pacific Northwest National Laboratory data.

Appendix III: Energy Cost Savings Estimates for Commercial Buildings

Tables 5 through 7 contain energy cost savings estimates for commercial
buildings-- office, school, hospital, and retail buildings--constructed in
accordance with various commercial building energy standards, to "above
code" levels, and with more efficient lighting requirements.

Table 5: Annual Incremental Energy Cost Savings per Building for Various
Commercial Buildings Constructed in Accordance with a Newer ASHRAE
Standard

Incremental savings                                                        
from moving to a newer                                                     
ASHRAE standard               Office   School      Hospital         Retail 
1975 standard          $13,311($0.18  $28,060 $37,822($0.16 $145,404($0.61 
(Mississippi's current sq. ft.)(12%)   ($0.23  sq. ft.)(7%)  sq. ft.)(34%) 
standard) to 2001                    sq. ft.)                              
standard                                (18%)                              
2001 standard           $7,608($0.10  $10,524 $32,567($0.14  $37,649($0.16 
(Louisiana's current    sq. ft.)(8%)   ($0.09  sq. ft.)(7%)  sq. ft.)(13%) 
standard) to 2004                    sq. ft.)                              
standard                                 (8%)                              

Source: GAO analysis of Pacific Northwest National Laboratory data.

On a per building basis, we estimated the energy cost savings that could
be achieved in Mississippi and Louisiana by moving from their current
energy standards to the LEED 1- point and 10-point levels as well as the
federal tax credit level, as shown in tables 6 and 7.^1

1We did not evaluate the total cost-effectiveness of these options because
the methods that designers might use to achieve these savings are highly
variable.

Table 6: Estimated Energy Cost Savings from Commercial Buildings in
Accordance with Selected "Above Code" Levels

                 Estimated annual energy cost savings, per building type, by
                                 amount total and square feet
Location              Office         School        Hospital         Retail 
Louisiana - Current standard (ASHRAE 2001 standard)
LEED 1-point         $17,263        $22,093         $77,259        $62,028 
level                                                                      
                        ($0.23)        ($0.18)         ($0.32)        ($0.26) 
LEED 10-point        $45,785        $60,139        $219,706       $140,757 
level                                                                      
                        ($0.61)        ($0.49)         ($0.91)        ($0.59) 
Tax credit           $49,538        $63,821        $239,021       $140,757 
level                                                                      
                        ($0.66)        ($0.52)         ($0.99)        ($0.59) 
Mississippi - Current standard (ASHRAE 1975 standard)
LEED 1-point         $30,773        $50,320        $115,889       $207,557 
level                                                                      
                        ($0.41)        ($0.41)         ($0.48)        ($0.87) 
LEED 10-point        $59,295        $88,367        $258,335       $286,285 
level                                                                      
                        ($0.79)        ($0.72)         ($1.07)        ($1.20) 
Tax credit           $63,048        $92,049        $277,650       $286,285 
level                                                                      
                        ($0.84)        ($0.75)         ($1.15)        ($1.20) 

Source: GAO analysis of Pacific Northwest National Laboratory data.

Table 7: Annual Lighting Cost Savings for Commercial Buildings in
Louisiana and Mississippi

                                            ASHRAE standard
                            1975 standard   2001 standard  Cumulative savings 
                                  to 2001         to 2004   (1975 standard to 
Location/Building type        standard        standard      2004 standard) 
Louisiana                                                                  
Office                         $11,334          $5,704             $17,038 
                                                                              
                          ($0.15 sq. ft.) ($0.08 sq. ft.)     ($0.23 sq. ft.) 
School                         $13,746          $8,223             $21,969 
                                                                              
                          ($0.11 sq. ft.) ($0.07 sq. ft.)     ($0.18 sq. ft.) 
Hospital                       $26,075         $26,075             $52,150 
                                                                              
                          ($0.11 sq. ft.) ($0.11 sq. ft.)     ($0.22 sq. ft.) 
Retail                        $107,118         $30,537            $137,655 
                                                                              
                          ($0.45 sq. ft.) ($0.13 sq. ft.)     ($0.58 sq. ft.) 
Mississippi                                                                
Office                         $12,459          $6,230             $18,689 
                                                                              
                          ($0.17 sq. ft.) ($0.08 sq. ft.)     ($0.25 sq. ft.) 
School                         $14,973          $8,959             $23,932 
                                                                              
                          ($0.12 sq. ft.) ($0.07 sq. ft.)     ($0.19 sq. ft.) 
Hospital                       $28,489         $28,489             $56,978 
                                                                              
                          ($0.12 sq. ft.) ($0.12 sq. ft.)     ($0.24 sq. ft.) 
Retail                        $117,138         $33,400            $150,538 
                                                                              
                          ($0.49 sq. ft.) ($0.14 sq. ft.)     ($0.63 sq. ft.) 

Source: GAO analysis of Pacific Northwest National Laboratory data.

Note: The lighting cost saving reflect the typical building sizes used in
our analysis, as well as the electricity prices used for Louisiana and
Mississippi, which were 8.81 cents per kilowatt hour (kWh) and 9.64 cents
per kWh respectively.

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Mark E. Gaffigan, (202) 512-3841, [25][email protected]

Staff Acknowledgments

In addition to the contact person named above, Dan Haas, Assistant
Director; Mark Braza; Jacqueline Cook; John Delicath; Yvette
Gutierrez-Thomas; Raun Lazier; Paul Pansini; Anne Stevens; and Barbara
Timmerman made key contributions to this report.

(360679)

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Highlights of [33]GAO-07-654 , a report to congressional addressees

June 2007

ENERGY EFFICIENCY

Important Challenges Must Be Overcome to Realize Significant Opportunities
for Energy Efficiency Improvements in Gulf Coast Reconstruction

Following several hurricanes in 2005, the need to rebuild and repair
destroyed and damaged homes and buildings in the Gulf Coast region may
create opportunities for making energy efficiency improvements and
realizing energy cost savings. While numerous federal agencies are
involved in the recovery process, the Department of Housing and Urban
Development (HUD) and the Department of Energy (DOE) interact with the
states on a regular basis regarding matters of energy efficiency. This
report, initiated under the authority of the Comptroller General of the
United States, examines (1) the extent of opportunities for incorporating
energy efficiency improvements in the Gulf Coast reconstruction, (2)
potential challenges to realizing the energy cost savings during the
reconstruction, and (3) the role of HUD and DOE in promoting energy
efficiency in the rebuilding of the Gulf Coast.

GAO limited the scope of its work to Louisiana and Mississippi since these
states experienced the majority of the hurricane damage. GAO assessed
opportunities for incorporating energy efficiency measures by conducting
site visits and interviewing federal, state government officials; home
builders; and energy efficiency experts. GAO also worked with a DOE
national laboratory to develop energy cost savings estimates. GAO is
making no recommendations.

Reconstruction in the Gulf Coast creates a significant opportunity for
incorporating energy efficiency improvements that could produce long-term
energy costs savings in residential and commercial buildings. The sheer
magnitude of the reconstruction effort and Louisiana's and Mississippi's
recent adoption of more energy-efficient building codes makes this an
opportune time for incorporating energy efficiency improvements in the
rebuilding efforts. In partnership with a DOE national laboratory, GAO
analyzed energy cost savings opportunities and estimated that adopting
these newer building codes could reduce residential energy costs in these
two states by at least $20 to $28 million per year, depending on the
extent of the rebuilding efforts in these states. Furthermore, the
analysis also showed that annual energy expenditures for commercial
buildings--hospitals, schools, offices, and retail buildings--built to
newer energy standards could be about 7 to 34 percent lower than buildings
built to older standards. There also are opportunities for consumers to
make additional energy efficiency improvements to both building types by
replacing old, damaged equipment.

There are three substantial challenges to realizing the energy cost
savings opportunities presented by the Gulf Coast reconstruction: (1) the
shortage of a skilled construction workforce, and specifically, the
shortage of workers trained to meet the newer building codes; (2) the lack
of trained building code inspectors to ensure compliance with newer
building codes in Louisiana and Mississippi; and (3) the difficult
financial issues facing consumers, such as the sufficiency of insurance
and other compensation payments, that may make decisions about energy
efficiency a low priority. States have efforts under way to address many
of these challenges and it will take time and sustained commitment for
them to be successful.

The rebuilding of the Gulf Coast is largely a state and local matter, but
HUD and DOE have played a supportive role in promoting energy efficient
rebuilding. HUD and DOE have provided financial and educational resources
that can encourage energy efficient rebuilding, and both agencies have
broader national programs that may support energy efficiency improvements
in the rebuilding of the Gulf Coast. HUD has made $16.7 billion in funding
available for general rebuilding purposes, such as restoring damaged
housing, and allows states to determine how to spend these funds,
including using them for energy efficient improvements. HUD also has
several national initiatives that may directly improve the energy
efficiency of the public housing stock in Gulf Coast states. DOE has
sponsored education and training on energy efficiency issues to state and
local officials, private industry, and consumers in Louisiana and
Mississippi. As part of its nationwide effort to assist all states with
energy efficiency initiatives, DOE provides grants to states to design and
carry out their own energy efficiency programs. DOE's energy expertise as
well as HUD and DOE resources may prove valuable to the states and
consumers as they make decisions about energy efficient rebuilding in the
Gulf Coast.

References

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  22. http://www.gao.gov/cgi-bin/getrpt?GAO-07-574T
  23. http://www.pathnet.org/sp.asp?id=1683
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  25. mailto:[email protected]
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  29. mailto:[email protected]
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  31. mailto:[email protected]
  32. http://www.gao.gov/cgi-bin/getrpt?GAO-07-654
  33. http://www.gao.gov/cgi-bin/getrpt?GAO-07-654
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