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2020 Changed Everything – Including the Home Performance Industry
2020 is a year that none of us will soon forget. Never in my wildest dreams or nightmares did I think we would experience an event of the scale or consequence of the COVID-19 pandemic. Without question, 2020 took a toll on the energy efficiency industry along with everyone else.
But while no one can deny the pain, suffering, and financial loss so many of us have dealt with over the past year, there were also several developments that, I believe, will have lasting positive impacts, including for the energy efficiency and building performance industry.
The Presidential Election Takes on Climate Change
Let's take the big one first. In case you have been hiding under a rock, you realize there was a presidential election this year. This election was like no other, and I hope there will never be another one like it.
With all its noise and distractions, it is easy to miss the fact that this election was the first presidential campaign in history to address climate change directly. All I have to say is, it’s about time. As the second-largest producer of greenhouse gas emissions on the planet, the U.S. has a special responsibility to minimize its climate impact.
Numerous political polls indicated that Americans are more aware and concerned about climate change than ever. As with any crisis, the first step is to acknowledge the problem. As a society, we have finally added climate change to the conversation.
Of course, we still have a very long way to go. There are many disagreements about the nature of our impact on the climate, and the proposed solutions are often far from what they need to be. Regardless, we should celebrate that our elected officials no longer consider it political suicide to mention climate change. This political change will undoubtedly impact everyone, but especially those who work in clean energy and efficiency.
I, for one, am happy that climate is finally a part of the political conversation. That’s all I have to say about politics this year, at least in writing.
Workforce Challenges Threaten the Efficiency Industry
COVID-19 has forever altered the American workforce and impacted almost every sector of the economy. Unfortunately, some businesses will never fully recover.
The energy efficiency industry has been hit hard by the pandemic. Recovery will take years and lots of dollars. The pandemic effects are devastating, especially for a sector that is counting on rapid, large-scale growth to counter the effects of climate change.
The impact on the energy efficiency workforce has been especially damaging. Multiple studies show massive contractions in the number of available positions. Tens of thousands of jobs have vanished and, along with them, the skilled and well-trained workers.
Replacing these workers isn’t easy. At this point, almost every contractor I talk to is looking for new hires and can't fill positions. The lack of available workers in the industry is real across the country. I suspect some of this has to do with the lack of youth entering the trades in general. Another factor is the few who choose to enter the building trades are often seeking some of the less physically demanding positions. Working in attics and crawlspaces is hard.
Most energy efficiency retrofits include some form of heating and cooling upgrade. From what I have heard from contractors, HVAC technicians are in high demand and are perhaps the most challenging position to fill. Finding good HVAC techs has been a challenge for years.
If millions of people are out of work, why is it hard to find suitable new hires? Whatever the answer, the availability of well-trained and eager individuals continues to be one of the industry’s biggest challenges.
Working From Home Changes Everything
Working from home has forced many people to consider how their home functions. As in previous years, concerns about comfort and health continue to be primary motivators for investing in energy retrofit projects. Having to deal with being hot or cold all day because you're stuck at home in lockdown is a big incentive to think about making an upgrade.
Having folks physically at home is impacting projects too. Some contractors say it's easier to do work now, as the homeowners are around and more available. On the other hand, it's hard to upgrade homes without making some noise, even for basic tasks, such as installing a new heating and cooling system installation. Doing this when parents and children are home and on Zoom can create stress for both the client and the contractor.
In addition, both contractors and homeowners are rightly concerned about social distancing and minimizing unnecessary contact. These factors have inspired some contractors to try virtual solutions, including virtual assessments or audits.
A virtual audit involves having the homeowner walk around the house, using a smartphone video camera to capture critical data while talking to an energy advisor on the other end. New software solutions are coming to market to support the virtual audit process. I think the impact of this trend could be either good or bad. On the positive side, engaging the homeowner in the audit can help close deals. I do wonder, though, how the contractor will deal with things they might have missed during the virtual audit.
Lack of access has also caused contractors to question parts of their business that they have always taken for granted. For example, going over an audit results with a homeowner in person was an essential but time-consuming part of the sales process. One contractor I spoke to said that they have been closing deals by reviewing the reports virtually and will never go back to the in-person process they used to use.
Policy and Regulatory Changes
Legislative efforts in California have been on fire in 2020. In December of 2019, the city of Berkeley enacted a “Reach” code (a code requirement that exceeds the state-required energy code) and became the first city in the nation to ban natural gas in new construction. At the time, many people were shocked at the idea of placing bans on natural gas and considered the Berkeley move a step too far. In the months since Berkeley adopted its gas ban, more than 40 cities and counties in California have adopted similar natural gas bans, proving this is not a one-off event but a trend.
California relies heavily on natural gas and has for decades. Natural gas is the primary energy source for residential applications, including cooking, space heating, and water heating. So why are municipalities suddenly limiting its use? The answer has to do with the shifting metrics related to energy efficiency in California.
For years energy efficiency has been focused on saving as much energy as possible. However, recent legislation has moved the focus away from the total amount of energy saved and toward reducing greenhouse gas (GHG) emissions. When you concentrate on GHGs, burning natural gas in homes becomes a significant liability, especially when more and more electricity comes from clean, renewable sources. Natural gas burns cleaner than coal, but it is still a fossil fuel that requires combustion to do work. Combustion is never 100 percent efficient, which means burning natural gas creates combustion byproducts and pollution. Leaks are a serious problem too. Methane, the main component of natural gas, is a potent greenhouse gas. The short-term impacts of methane leaks are more damaging than carbon dioxide. There are better options.
For home performance contractors, all of this means they need to start offering and promoting gas alternatives to their clients if they haven’t been doing so already. All-electric buildings will be the norm moving forward. Electric heat pump technology will play a significant role. Heat pumps use refrigerants instead of combustion, which makes them safer. They are far more efficient, too. Because they're electric, heat pumps can use electricity generated from various carbon-free sources such as wind, solar, and geothermal.
The Transition to Carbon-Free Energy is Moving at Warp Speed in California
The transition to carbon-free energy is happening today, and it seems like somebody stepped on the accelerator in 2020. People are having conversations about decarbonization and electrification across all sectors of the economy. Transportation gets most of the attention, as it is the largest source of emissions in California. Buildings are not far behind.
The pace of the decarbonization effort is staggering. The legislative process is typically slow and arduous. Major policy shifts often take years to achieve. For example, it took three long years to overturn the dreaded “three-prong test," an antiquated piece of legislation that effectively prohibited fuel substitutions, such as converting from homes natural gas to electricity. The test is no longer a barrier, thanks to the collective efforts of several like-minded organizations.
By contrast, the California Public Utility Commission (CPUC) is now discussing a long-term strategy for phasing-out natural gas in residential applications. In a few short months, we went from having the first ban on natural gas to the CPUC making plans to phase out the residential use of natural gas entirely – that is warp speed for a legislative effort. The state’s ambitious greenhouse gas regulations are a driving force, but this is moving at a pace that is hard to comprehend.
Like many of you, I will be happy to see 2020 go and move on; this has been one hell of a year. That said, I think it’s worth it to consider the positive events and decisions of 2020.
When it comes to the pandemic, many of the things we take for granted are no longer available to us, at least for a while. However, it looks like the worst may soon be behind us. I encourage you to recognize that even though it may have been tough to endure the chaos of 2020, there are some incredible things to celebrate this year. One can only guess what 2021 holds. I am optimistic. I think the country, and the world for that matter, are finally ready to address the impact of fossil fuels and climate change.
Cheers to you, and let's celebrate a brighter and healthier 2021.