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Correction to This Article
This article incorrectly said that a project to weatherize 11 homes on a block in Baltimore using federal stimulus funds has created no jobs. The contractor doing the work has not hired any new people, but the city has used stimulus funds to hire 11 people to oversee weatherization work throughout the city.
Painting a street green hasn't stimulated one new job
Energy-efficiency investments Tangible gains still ahead for $25 billion initiative

By Alec MacGillis
Saturday, November 7, 2009

In Baltimore, the 300 block of East 23 1/2 Street is getting patched up in time for winter. One economic stimulus program is paying to insulate 11 rental rowhouses, another is paying for furnaces and a third is covering the cost for reflective roofs to be installed by prison inmates in a job-training program.

The block is part of one of the biggest initiatives ever undertaken by the federal government, a nationwide push to improve the energy efficiency of buildings. But as the national unemployment rate crosses into the double digits and Republicans question the stimulus program's impact, the work on East 23 1/2 -- even with all of its activity -- has so far not produced a single job.

Nine months after Congress passed the $787 billion stimulus package, there is little tangible to show for one of its biggest single areas of investment, the $25 billion energy-efficiency effort. That points to one of the central tensions of President Obama's landmark stimulus package: His goal was to inject money quickly into the economy while at the same time laying the groundwork for his broader, transformational agenda on energy, education and health care.

Officials overseeing the energy-efficiency effort want to fundamentally alter the way the country uses energy. They are trying to craft initiatives that will produce real savings to build the case for continued private or public investment. And they are putting safeguards in place to avoid any spending scandals that could tarnish the effort.

All this deliberation comes with a tradeoff: The full force of the spending will likely not be felt until well into next year, potentially undermining the job-creating aim of the stimulus.

"We do have to do this in the right way," said Matt Rogers, who is overseeing stimulus spending for the Department of Energy. "And working through all of that takes time."

If the New Deal was focused on building new things -- schools, courthouses, libraries -- then the stimulus is to a great degree focused on retrofitting what's already there. The $25 billion for energy efficiency, which is the same amount as is being spent on roads and bridges, is split roughly equally among programs for homes for low-income workers, federal buildings, public housing, military facilities and initiatives by local and state governments.

Buildings account for 40 percent of the country's energy usage and are responsible for 40 percent of its carbon emissions, more than industry or transportation. Reducing buildings' energy demands, Energy Secretary Steven Chu says, is not just low-hanging fruit -- it is "fruit on the ground." Homeowners can cut their energy bills by a third. And the work cannot be outsourced, making "green jobs" the centerpiece of Obama's job-growth strategy.

But hurdles have sprung up left and right, resulting in little insulating work getting done before the onset of cold weather. Officials in charge of the spending have become entangled in bureaucratic disputes over federal wage requirements, historic preservation rules and environmental regulations.

"There have been a lot of bumps in the road . . . and that's slowed things down substantially," said Jeff Genzer, counsel to the National Association of State Energy Officials.

The tension between job creation and careful oversight is most evident in the low-income weatherization program. Skeptics warn that the program is vulnerable to fraud, since it will get five times more money than usual and the work is typically overseen by 900 local community action groups scattered around the country, some of which are better managed than others.

David Bradley, director of the National Community Action Foundation, says the extra scrutiny has slowed things down. While the program seemed to hold great promise for a rapid boost in hiring, most states are only just getting it underway, according to reports released Friday. The program is sending $394 million to New York, but it had produced only 43 jobs there by early October; Michigan had spent $3 million of the $243 million it received.

"The capacity is there, the readiness is there," Bradley said. "We should have been ramped up going full bore, but we're just now starting to receive the federal stimulus dollars."

In Indiana, the funding stalled when Gov. Mitch Daniels (R) touched off controversy by giving nearly half of his state's initial $53 million weatherization funding to the state builders' association, a big campaign contributor with no experience overseeing the work. Watchdog groups complained, and the Department of Energy delayed the funding for much of the summer.

As of early this month, Indiana had weatherized 82 homes out of its three-year goal of 25,000, and reported zero new jobs from the spending.

Even where the weatherization work is proceeding more smoothly, its immediate impact is unclear. Virginia has allocated $33 million of its $94 million from the program, but the work has ramped up so gradually that crews doing the work have mostly made do with existing employees. The state has yet to finalize an agreement with community colleges to train new workers.

Virginia, like most other states, did not announce until last month the allocations for the $70 million it has in other energy-efficiency programs -- funds for solar and wind power at public buildings, rebates for homeowners' energy-efficiency upgrades, grants for biomass production. No jobs were produced from this money, as of early October. "It does make sense to make sure we're spending the money in the most effective way and that requires planning," said Stephen Walz, the state energy director.

Maryland is much further along with training new workers for weatherization. It has set up courses at 16 community colleges and trained more than 200 people. It weatherized 150 homes in September, double its previous norm but short of the 280-per-month pace that is its goal. State officials estimate that about 100 jobs have been created so far. Many of the other training slots have been filled by already-employed construction workers whose firms are seeking weatherization work.

In Baltimore, Hawkeye Construction, the firm doing the work on 23 1/2 Street of sealing air leaks, adding insulation, installing CFL light bulbs and low-flow shower heads, hopes to hire a half-dozen people soon, but so far has made do with its 20 workers. One of them, bricklayer Michael Whaley, 39, said he is grateful for the work because he might otherwise be getting few hours in the winter, when little bricklaying is done. "It's going to be a plus this year. No matter what else comes along, they'll have work for us," he said.

To speed the energy-efficiency grants for local governments, the Energy Department assigned 70 employees in a basement room the task of reviewing its 2,200 applications. Some cities and counties have been able to move more quickly with specific projects, such as replacing lighting in parking garages or buying new air-conditioning systems.

But many are using a big slice of their grants to commission audits of their energy usage and develop plans for how to proceed, which the federal government encourages. Loudoun County is waiting for the results of a $250,000 study before deciding how to use the rest of its $2.3 million grant. "It's long-range visioning that's done to help the board envision where it'll go with energy efficiency," said John Sandy, deputy county administrator.

The General Services Administration, meanwhile, has awarded big contracts for its federal building projects. But much of the work has yet to start as the agency and contractors review their plans, said Bob Peck, the commissioner of public buildings.

"Is it possible or reasonable to think that the stimulus package could have moved faster moving into winter? I don't know," he said. "But if you step back a couple feet and say, 'where do we need to be in five years,' then the steps we're taking now are exactly right."

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