Posted by Joseph Y. Calhoun, III

President Obama held a press conference yesterday and declared that insulation was sexy:

NEW YORK (CNNMoney.com) – President Obama proposed a new program Tuesday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy.

The administration didn’t provide immediate details, but said it would work with Congress on crafting legislation. Steve Nadel, director at the American Council for an Energy-Efficient Economy, who’s advising on the bill, said a homeowner could receive up to $12,000 in rebates.

The proposal is part of the President’s larger spending plan, which also includes money for small businesses, renewable energy manufacturing, and infrastructure.

We know energy efficiency “creates jobs, saves money for families, and reduces the pollution that threatens our environment,” Obama said. “With additional resources, in areas like advanced manufacturing of wind turbines and solar panels, for instance, we can help turn good ideas into good private-sector jobs.”

The program contains two parts: money for homeowners for efficiency projects, and money for companies in the renewable energy and efficiency space.

The plan will likely create a new program where private contractors conduct home energy audits, buy the necessary gear and install it, according to a staffer on the Senate Energy Committee and Nadel at the American Council for an Energy-Efficient Economy.

Big-ticket items like air conditioners, heating systems, washing machines, refrigerators, windows and insulation would likely be covered, Nadel said.

This makes little or no economic sense. Any boost to GDP from this program would merely be stealing from the future by getting people to do today what they would have had to do tomorrow. If you have an A/C unit that is old and inefficient, you would have to replace it at some point in the future because it would fail. This program will pay you to do it today. Obama claims a double benefit because of the energy savings but that is dubious. If improvements such as this reduce your energy bill by 20% the payback period for the average American household is over 20 years. My last A/C unit didn’t last that long and neither did my last refrigerator so the payback period might as well be infinite.

Another concern is fraud. The plan is to use private contractors to conduct energy audits and then sell and install the new gear. How many people will get ripped off to make changes they don’t really need? How many contractors will fudge the energy audit numbers for people who are making changes for other reasons? If the government has to implement a program to oversee the contractors to prevent fraud, what will that cost?

Another part of this program will provide loan guarantees for renewable energy projects. If ethanol projects qualify (and I’m pretty sure they do) then this is just another boondoggle that won’t accomplish anything for the economy or the environment.

This program is a waste of time and money.