The proposed Home Star initiative, which would provide homeowner rebates for residential efficiency upgrades, could soon bring relief to thousands of unemployed and underemployed contractors, according to a green building advocate involved in the bill’s creation.

Home Star—also referred to as “Cash for Caulkers”—was first announced by the Obama Administration March 2. Once enacted, the $6 billion federal program will work to combat unprecedented levels of unemployment in the residential construction industry, says Matt Golden, chair of Efficiency First, a trade association of residential green building professionals and manufacturers.

“There is agreement from all parties that the current 24% unemployment rate for residential construction is completely unacceptable from an economic standpoint and that something needs to be done quickly,” he says. “The home retrofitting industry is a way out of that.”

Under the proposal, homeowners could be eligible for up to $3,000 in point-of-sale rebates for purchases of efficient product upgrades or whole-house audits/retrofits. Vendors, from small builders and remodelers to national home improvement chains, would market the rebates, provide them directly to consumers, and be reimbursed within 30 days.

On April 14, congressional leaders unveiled a House version of legislation authorizing creation of the program already under consideration in the Senate. The bipartisan Home Star Energy Retrofit Act of 2010 was introduced by Massachusetts Democrat Ed Markey, chairman of the House Subcommittee on Energy and Environment, along with Reps. Peter Welch (D-Vt.), Vern Ehlers (R-Mich.), and Dennis Cardoza (D-Calif.).

“In the next couple months, I believe Home Star will go from an unheralded, small-budget program to become the summer blockbuster our economy needs,” says Markey.

The initiative is often compared to last summer’s successful “Cash for Clunkers” car rebate program in that the money will be delivered directly to consumers through private vendors, notes Golden.

“The rebates will bypass government bureaucracy and go directly to the consumer,” he said, speaking at an April 14 online seminar sponsored by GreenExpo365.

With this streamlined approach, Golden predicts the program will gain rapid acceptance with both vendors and homeowners. Officials predict it could impact up to 3.3 million homes and create or save 168,000 jobs.

The initiative provides two types of consumer incentives: Silver Star, which focuses on the installation of particular products; and Gold Star, in which rebates go to retrofits that achieve energy savings for the whole home. Because the Gold Star level is focused on long-term market transformation, Golden notes, it runs for two years as opposed to one year for Silver Star rebates.

Measures covered under Silver Star include air sealing; attic, wall, and crawlspace insulation; duct sealing or replacement; and replacement of existing windows and doors, furnaces, air conditioners, heat pumps, water heaters and appliances with high-efficiency models. Homeowners will receive between $1,000 and $1,500 for each measure installed in the home, or $250 per appliance, with a benefit not exceeding $3,000 or at least 50% of total project costs, whichever is less.

The Gold Star performance-based path requires households to conduct a comprehensive energy audit and then implement a variety of measures that are designed together to provide greater total returns in energy savings. Contractors implementing Gold Star must be Building Performance Institute-accredited.

Under Gold Star, consumers receive $3,000 for energy savings of 20%, plus an additional $1,000 incentive for each additional 5% of energy savings, with incentives not to exceed 50% of project costs, up to $8,000.

The reasoning behind this two-pronged approach was that even contractors with little remodeling or green building experience can quickly take advantage of new business from Silver Star customers as well as ramp up their companies to be able to participate with Gold Star customers, Golden says.

“For contractors not already doing it, there can be hurdles to getting into home retrofitting because it’s a slightly different business model, but the market is there,” he says. “So contractors can quickly get into Silver Star and then slowly tap into Gold Star rebates.”

To maintain quality control, third-party random inspections will be done on-site on a percentage of completed Home Star projects, Golden says, and will be managed by individual states. These inspections will be done by contractors registered through BPI, RESNET, or a provider designated by the state.

“It’s a way to make sure that things are being installed and that they’re being installed correctly,” Golden says. “It’s paid for by the state, so there’s no undue burden on contractors.”

Home Star has enjoyed considerable support on Capitol Hill since Obama’s announcement last month, but proponents are not celebrating just yet, Golden says. Some members of Congress have objected to open-ended language in versions of the bill and some Republican lawmakers are in favor of lower funding levels.

“It will have a huge impact on the future of the industry and home retrofitting, but it’s not yet a done deal by any means,” Golden concludes.

Jennifer Goodman is Senior Editor Online for EcoHome.