Innovative financing of home efficiency improvements.

Residential new construction and renovation programs, home energy rating systems programs and energy efficient mortgage instruments are some of the many ways that local energy utilities and other state or federal agencies attempt to increase the supply and demand of energy efficient housing. While recognizing that these programs play an important role in promoting voluntary efforts to upgrade the energy efficiency of our nation's housing stock, this paper discusses the underlying premise behind some of these programs, including issues of market barriers and homebuyer affordability, and explores the limitations of these initiatives and their effectiveness in producing the desired results. The advantage of a market-oriented profit-seeking company that promotes the efficient use of all natural resources is described. The necessary environment for such a company is the elimination of monopoly franchises, the growth of retail competition and the dissemination of communication technologies, all of which are on the near horizon. Several scenarios demonstrate that this company can shift investment risk away from home builders and homebuyers and  deliver private and social resource efficiency benefits that are larger and more certain than those of present programs.