Energy Efficient Mortgages 

Residential energy consumption accounts for over twenty percent of global energy use.[i]  In 2001, American homeowners spent approximately 160 billion dollars per year on energy costs, averaging almost 1,500 dollars per residence.[ii]  In order to moderate domestic energy use and defray these costs, the 102nd Congress established the Energy Efficient Mortgage (EEM) Pilot Program in 1992.  Despite its potential to address these issues, this program has effected virtually no change in national home energy consumption.  On May 15th, 2008, Representative Ed Perlmutter (D-CO) introduced the GREEN Act of 2008 to correct some of the deficiencies in the EEM program.  This article discusses the shortcomings of the EEM program, first addressing the confusing statistical record on past participation and then identifying barriers that have affected its performance since inception.  It also reviews the relevant sections of the GREEN Act of 2008 and proposes additional steps necessary to advance the EEM program in order to impact domestic energy use significantly.

Findings and Recommendations

The EEM program has not gained market share in the residential housing market.  Despite misleading participation statistics suggesting otherwise, the number of mortgages issued under this program pales in comparison to the number of total annual mortgages.  Many barriers to successful implementation exist; these include a lack of public awareness, initial costs, financial risk, and a lack of incentives for industry representatives.  In order to overcome these barriers, this article recommends the following steps, to be discussed in more detail later:

Recommendations for Program Promotion and Improvement

  •   The apparent fact that the EEM program has never gained a substantial market share should be addressed by a formal study.

  • National, state, and local governments should use appropriate media to disseminate information about and market EEMs.

  • Explicit goals or requirements for ‘green banking’ centers should be set before these centers are established (pursuant to Rep. Perlmutter’s bill).

  • The government should cooperate with private enterprise (beyond the media) to publicize and market this product.

  • The standard for Energy Efficient Homes should be updated to the most recent and ambitious building energy code.

Recommendations for Program Expansion

  • The government should adopt a mandatory national home energy rating system devised by industry experts.

  • The federal government should also require energy audits concurrent with home sales.


[i] Parker, P., Rowlands, I. H., & Scott, D. (2003). Innovations to reduce residential energy use and carbon emissions: an integrated approach. The Canadian Geographer, 47(2), 169. Retrieved February 17, 2008, from

[ii] Energy Information Administration. (2001). Residential Energy Consumption Surveys: 2001 Consumption and Expenditure Tables. Retrieved June 11, 2008, from