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Business Advisor

What’s Wrong with the Home-Energy Audit Industry?

Conflicts of interest abound, consumers balk at the price of an audit, and nobody is leading change

As satisfying as it is to build new high-performance homes, I have to admit that if I really cared about stopping global warming and conserving energy I’d refocus my company to perform home energy audits and work that would stop the outrageous waste of energy in our existing housing stock. The reason I don’t do this is mostly because I’m having so much fun building new homes, but it’s also because I don’t see how energy audits can be done in a way that would make a profit.

Until recently, I could assuage my guilt by recommending that people in existing homes call one of the larger Energy Star raters in our area. But now they have stopped performing energy audits on existing, occupied homes. It turns out that they couldn’t figure out how to make a profit at it, either. So here is the paradigm we are dealing with in North Carolina: If you want an energy audit performed on a home you are living in you most likely will have to deal with an auditor who is operating out of a beat-up truck and keeps his laptop and answering machine in his spare bedroom. You’ll call and if you’re lucky he’ll get back to you within the week, and maybe he’ll be able to get to your house within the month. He may or may not get your report and recommendations written up and returned to you, with an invoice, in a timely fashion.

What is wrong with this picture? How can we fix it?

Existing homes are MUCH more difficult to analyze and do meaningful blower door and duct blaster testing on than new construction. You’ve got furniture, clutter, and old plaster and paint to protect. The HVAC equipment may be 20 years old and not have any service manual. The bath fans and kitchen hoods are likely to be badly under-performing and require individual testing. You really can’t do a good job solo. And you’re not likely to get it done before lunch. At a minimum you need to plan for six hours onsite with two workers in a high liability environment and another two hours off-site typing up the report. The going rate for this is $600 to $800 and homeowners bitterly gripe about that minimal cost. Can you write a logical, sustainable business plan that has you sending employees into occupied homes (where they may knock over lamps or track mud on carpets) and has a coordinator to answer phones and to schedule visits and follow-up at this rate? The answer is no.

How did we get in this fix?

It’s the unintended consequence of well-intentioned actions once again. Back in the Carter administration we had “the moral equivalent of war” to save energy and we sent weatherization teams out into the homes of the poor and needy to help them stop wasting energy. We used a lot of low-paid, part-time, barely-insured do-gooders who were willing to work for cheap and forgo health insurance to be “part of the solution.” And they shut down and went away once the co-op subsidy dollars got thin.

Can we create a new model where auditors actually earn $1,200 to $1,800 per audit and can afford to have a professional organization that pays taxes and insurance and can grow a professional crew of home energy auditors? That’s hard to do in a culture that is accustomed to valuing this as a nasty job that ought to be subsidized by the government or (I’m serious here) utility companies. Let’s put Exxon in charge of retrofitting Hummers to burn less gas while we’re at it and let’s set the rate low enough that they’re guaranteed to lose money.

The market is trying to adapt. We’re seeing insulation and weatherization companies offer home energy audits. Seems logical enough: call one number and get the diagnosis and the prescription filled from the same source. But people who have no problem with the energy company doing the energy audit somehow are more likely to see a conflict of interest in having an insulation company do it. My dad used to say, “If all you have is a hammer, everything starts to look like a nail,” and that concern is justified.

But what we have isn’t working. The public expects energy audits to be free or cheap and we have something like 75 million homes in desperate need of energy remediation to even get close to current watered down code requirements. Additionally we have thousands of homes ten years old and less that are wasting energy despite being built in compliance with the inadequate codes of their time. We need a new paradigm and we need it soon.

In the commercial sector companies like Advanced Energy
are going into existing factories and replacing outdated electric motors with new energy-efficient ones in exchange for a percentage of future fuel savings. I don’t see this working with home weatherization but we need to at least be thinking outside of the box here. Our electrical distribution system is at its limit. Even if we could build more electric plants we are losing the capacity to reliably move this additional power to where it is needed. So, as a society, our best investment is in energy conservation in our existing building stock, both residential and commercial. We’ll never get there if we ensure that building diagnosticians are underpaid and unable to make up for it by selling and installing the products they need to fix the problems they encounter.

Somebody smarter than me needs to figure out how to lick this problem and get word to the next president as soon as possible so that we can start turning this ship around.

—Michael Chandler is a builder, master plumber, and electrician near Chapel Hill, North Carolina. His website is


  1. Adrienne_B | | #1

    Couldn't agree more!
    My partner and I own a home performance company in central NC and we couldn't agree more about energy audits on existing homes. It's very satisfying to help someone who owns a modest, older home find the places where they can make repairs, add insulation, work on their ducts, crawlspace, etc. because we know these people will see real results in their energy bills.

    The trick is to convince people that they need to have this done. Slowly but surely it's happening. Right now it's hard to convince people to spend money on anything, but most people see the value in getting an energy audit for long-term savings.

    I only have one problem with your post - just because a company is small doesn't mean that the auditor operates "out of a beat-up truck and keeps his laptop and answering machine in his spare bedroom. You’ll call and if you’re lucky he’ll get back to you within the week, and maybe he’ll be able to get to your house within the month. He may or may not get your report and recommendations written up and returned to you, with an invoice, in a timely fashion."

    Ouch. Sorry that it's been your experience that there're either the big companies who seem to have all the local builders sewn up tight, or some random, sloppy, handyman-type guy who doesn't return phone calls. That's not how we run things, although we are a very small operation (for now). Perhaps the larger company quit doing older homes because it wasn't as profitable as other things they do. Perhaps, because they operate out of a big office and have a fleet of vehicles, energy audits didn't help them cover their overhead so they stick to the things they can charge big money for.

    In our experience our customers like to have personal service. They like the owner of the business be the one they deal with most of the time. They like that we started our business out of our experiences weatherizing our own 100 year old home, which was essentially as hole-ridden as a colander when we bought it.

    It seems like the value of energy audits and weatherization by qualified professionals is in the news more and more. This is really the best way for most people to achieve energy-efficiency. The houses you build are gorgeous and exciting and ingenious...and expensive. Plus, what better way to save the planet than by "recycling" old structures?

    Hopefully between increased awareness in the media as well as the stimulus money that will broaden the reach of the low-income weatherization grants we'll see more people seeking out services like ours.

    Adrienne Bashista
    Home Performance NC

  2. Steve Clark | | #2

    on mkaing a living doing audits
    Hear Hear Adrienne,...

    I think that there is a lot of confusion out there because there are many takes on what an 'audit' is. Here are 4 audit levels using RESNETs recent definition:

    701.2. National Standard for Home Energy Assessment Levels There are two categories of assessment defined in this standard:
    1. Home Energy Survey
    a. On-Line Home Energy Survey
    b. In-Home Home Energy Survey
    c. Diagnostic Home Energy Survey
    2. Comprehensive Home Energy Audit

    It is clear to me that most of us are talking about 1c and 2 (1a and 1b are of very limited value to anyone) RESNETs defnition of 2 is the full REMrate or equiv modeling of the house where every detail of the thermal boundary needs to be quantified, entered into software and QAed to tight standards. This is certainly not sustianable for existing home at less that $1000/rating.

    But the RESNET 1c level has a lot of potential: what is the best mix of blower door, caz testing, IR or energy bill analysis performance testing? software? cutting holes in walls? ....that will enable you to get maximum benefit for both the 1c auditor and the homeowner?

    I hope that it is possible to take all these diagnostic tools into a house and quickly figure out the most efficient mix to maximize benefit VS follow exhaustive, heavily prescribed #2 Comprehensive audit.


  3. Chuck | | #3

    Improving older homes
    I believe audits are very important however and see the importance of them. However, the existing home market and those with the income to afford $600 for an audit is still pretty small.

    For homeowners I provide Raleigh, Durham, Chapel Hill and surrounding North Carolina communities with an array of lower-cost services that will improve their homes energy performance . Solutions for reducing their home energy and water consumption -- saving the planet while reducing monthly utility bills!
    We don't do HERS audits or the like but we do work with those that provide audits to actually implement the auditors recomendations.

    Our service focuses on the ‘low tech’ and ‘low-cost’ yet ‘high energy-saving’ and ‘high cost-saving’ strategies. Many of the strategies we utilize include:

    * Use of energy efficient compact fluorescent lightbulbs (CFL)

    * Best weatherization, building envelop sealing, and insulation practices.

    * Upgrading and maintaining heating, ventilation, and air conditioning systems (HVAC).

    * Upgrading, maintaining, and managing water heating systems.

    * Upgrading and managing water usage

    * Promoting use of EnergyStar approved appliances and other products.

  4. M.E.Smith III | | #4

    Perhaps it's where you live.
    " If you want an energy audit performed on a home you are living in you most likely will have to deal with an auditor who is operating out of a beat-up truck and keeps his laptop and answering machine in his spare bedroom. You’ll call and if you’re lucky he’ll get back to you within the week, and maybe he’ll be able to get to your house within the month. He may or may not get your report and recommendations written up and returned to you, with an invoice, in a timely fashion."

    This is not how it's done in New York, perhaps it's because you live where you live...auditors have to be educated, look professional and don't drive beaters. I attempted living in Charlotte once, lasted about 30 days.

  5. Ted Inoue | | #5

    The fundamental approach is wrong
    Background: I've been involved in a consulting approach to home performance analysis for several years and have a couple hundred clients. While I'm not as experienced as some of you who have done this for decades, I think I've seen an wide cross-section of existing homes and discussed these issues with others in the industry.

    I've also been working with an environmental engineer who has been doing extensive research into the problem of retrofitting the existing building stock. The conclusion - the fundamental approach of "one home, one audit" is deeply flawed.

    Let's look at round numbers. Suppose we have 10,000 energy auditors and 100,000,000 homes that need to be audited and retrofitted. An auditor can do about 150 audits per year, and even that is pushing it. But let's be optimistic.

    150 audits * 10,000 auditors = 1.5 million audits/year. That's 67 years of audits at this pace. Even if your goal is to audit half the homes, you're looking at 30+ years with a boatload of auditors. And what about qualified contractors to do the repairs? I live in a affluent county, one of the larger, more populous ones in the Philadelphia metropolitan area, and I can count on one hand the number of contractors whom I trust to do this type of work.

    As the author noted noted, from a business perspective, the work needed to do a comprehensive audit, as defined by the current HERS/BPI standards is untenable. Moreover, it is my assertion that it is unnecessary. Here's why:

    If you begin to survey the designs of homes and construction styles, you find that virtually nothing is unique - the same techniques and styles are replicated millions of times. Take the Levittown communities in my area. Approximately 50,000 homes were built in the 50's and 60's using only a handful of designs. The fundamental designs are identical, as are the problems. You don't need a highly skilled energy auditor to go into a home and spend six hours in order to determine that the knee-walls will be constructed in a certain manner. Before you even go to the house, you know what's wrong.

    Yes, one needs to be concerned about combustion issues. Absolutely. But that can be addressed more efficiently.

    What we are endorsing is the concept of the "community scale retrofit". Most of the development home built, which is a significant fraction of the existing homes in the United States, were built using the assembly line principles put into wide-spread practice by Levitt. Common designs, a few variations, the same mistakes.
    Instead of analyzing every home individually, we need to create standard packages of renovations for development homes. This is the missing link to reasonably priced, safe, consistent quality energy efficient retrofits.

    Right now, every Joe or Jane with a pickup can sell themselves as a home performance contractor, but there's no consistency. Some of these operators are incredibly careful and gifted at weatherization, others are hacks, making it up as they go. By having standardized retrofits built into building codes that contractors are required to follow, you either do it right or you lose your ability to do business.

    The packages take into consideration the HVAC systems and potential combustion hazards. They take into account what we know to work from a building science perspective. They account for known paybacks and project priorities.

    Most of us in the business can walk a home and within 20 minutes could tell you the top 5-10 items that need to be addressed that will give 80% of the energy efficiency benefits while considering potential hazards. And yet we continue to spend 4-6 hours in the home and many hours writing reports. In most cases, It's unnecessary.

    The only way we're going to address the existing building stock in a timely manner and make a living doing it is by taking the same approach used to build the houses - many houses, one solution. This is a case where the cookie cutter solutions are extremely effective.


    Absolutely, couldn't agree with you more.

    I can't agree with you more. In fact I have a white paper that sums up a lot of what you are proposing and offers an alternative to the PACE program and Efficiency First that I've been circulating and had a lot of help from this site in developing. You can take a look at it here:

    I realize that it may not be popular to offer an alternative to those very valuable programs but please take a careful look at what I'm proposing and send me any feedback you may have. I'll be at the Resnet conference in Raleigh later this month if any want to hash it out in person. We don't get there without a massive, production-oriented approach and the current stratagies just aren't there yet.

  7. Ted Inoue | | #7

    On the same page
    Michael, that's a great document, I'm glad we're on the same page.
    Here's a couple pages we've put together describing our vision

    Also see the documents at the bottom of the intro page for more detailed information on the studies we've already done. "Residential Housing" and "What Will We Do About Levittown?" are the key documents.

    If you want to take this off-line, send me a direct email to "ted" at my domain,

    Keep up the good work!

  8. thefutureisnow | | #8

    Great comments!
    Just wanted to add that this is an excellent article.. I've gain even more insight through the individuals who have posted comments.

    The City of Houston is doing exactly what you're speaking of, viewing the challenge of Home Energy Auditing as a community effort.

    Please take the time to watch this link:

    Thanks again for your guidance!

  9. Matt Golden | | #9

    Think retrofit not audit
    We need to change the way we think of the Home Performance process. It is not about auditing, it is about solving problems by getting the work done.

    In a healthy market for Home Performance Retrofitting, the price of an audit falls rapidly. In San Francisco, we are now charging $199 for a comprehensive audit, and without any subsidies or special financing yet in play, 45% to 50% of audits undertake the retrofit.

    As incentives and financing comes into the market, we expect adoption to increase and audit costs to continue to drop -- maybe even free.

    We find that while a very small number of customers have concerns that we are a turnkey shop, the VAST majority of consumers are thrilled that we can make the process easy, and will stand behind our solutions results.

    Auditing, as a profession or program design is going to continue to have a hard time competing in a market where integrated companies do not have to charge for these initial evaluations.

    Audits don't solve problems or save energy, and create few jobs. It is about getting customers to adopt actual measures.

  10. Spencer | | #10

    These guys are doing it and doing it well
    I had a home energy audit by National Energy Audits, which took about 4 hours. They did a full analysis on my home and many tests including the blower door, thermal imaging, ducts, combustion and they were great. The auditor walked me through everything as i followed home throughout my home. He found parts of my home were not insulated and airsealed. This company came back within 3 days and did all the work. The audit would have cost me $150 (i had a BBB mailer coupon) BUT they waived the audit fee since I went ahead with the work. The auditor was BPI certified and was able to translate all the technical chatter into lamens terms for me. The crew that came to do the recommended solutions were actual employees of National Energy Audits. They were very professional, in uniform, and cleaned up when they were finished. I was very impressed. I have learned that they have been in business for over 2 years now and i was shocked that this company does not receive any media attention. If President Obama were smart, he would get in touch with them and find out how they are being so successful at this.

    The solutions needed to make my home more energy efficient came to $2300. After tax credits i believe it was around $1,600. I would have to find the paperwork.

    I highly recommend you check this company out and have an audit performed by them.
    go to their website at

  11. Frank | | #11

    Way wrong approach
    I know I'm a bit late on this. But time does tend to add perspective. Ted, I agree with your comments. "community scale retrofit". That should be a no brainer.
    I believe the energy audit business is having the same problems as the mold,radon, asbestos,insulation,lead, etc.. business's have and will continue to have. Some of those problems are lack of education which creates a lack of interest, also an ingrained mind set " I have to pay for electric and gas and there is nothing I can do about it."
    For example,granted an extreme example: 82 yr old women, in a 96 yr old house wants a plumbing leak fixed. I fix it and point out that there is friable asbestos wrapped pipes, mold on the plaster, and the hot water heater closed up in that little closet appears to be back drafting. Her reply was, I was born in this house on that kitchen table, I remember when those pipes were put in,that mold has been there since I can remember, and when we got our first water heater that closet was built for it.
    My point with that is, "community scale retrofit" I knew it was a very loose house, ballooned framed, minimal insulation.So what is the point of doing an audit, I already know what is wrong.
    Which is why there were no perceived health effects.
    People are complacent about energy use.
    The government, EPA,OSHA, HPwES, etc.. ( as much as it try's) can not create economic growth or jobs by mandating or requiring someone to do something. Especially when it sounds like a scam.

    I think the biggest problem with the energy audit business,( or mold,lead,insulation, asbestos,etc) is that people get involved with it thinking it's the next get rich scheme, which is why there are so many hacks out there. If a person does not have a background in construction they should not be doing audits or any of the other improvements. I am talking about a college degree in whatever engineering, or attending a week long class from BPI, ASHRI,NCAT,HET,HESP,HERS,RFI, or any of the other BS organizations. Here's a few for mold: MACRO, PMII,SEMI,NORMI,IAQA, the list goes on. I'm talking about did a person actually install Tyvek over OSB, did they set tile on 3/4 sub floor,(If they did,it was wrong).
    Do they know without seeing the home what is wrong and what they will find. Most auditors I have met won't.
    You might as well ask a 5 yr old to drive a tractor trailer.

    Ah, Michael, you make assumptions. "If you want an energy audit performed on a home you are living in you most likely will have to deal with an auditor who is operating out of a beat-up truck and keeps his laptop and answering machine in his spare bedroom. You’ll call and if you’re lucky he’ll get back to you within the week, and maybe he’ll be able to get to your house within the month. He may or may not get your report and recommendations written up and returned to you, with an invoice, in a timely fashion"

    I know you said "most likely"

    I do have a well used truck. What lap top? A person has to keep hard copies,as in the real receipt for purchases, why bother wasting the time to input that into a spread sheet , just makes more work. I don't need an answering machine, when my phone rings I answer it. I had to do that 7or8 times today while I was in an attic doing some air sealing.

    What kind of auditor takes ,weeks or months to get back to the homeowner. That is poor customer service. In most cases my company does it in 1-2 days. Testing, improvements, retest,it is not complicated for a person that knows.

    Get busy doing!

  12. Jason | | #12

    Home Energy

    My name is Jason Jannati, and I was reading a recent article from your website, "What's wrong with the Home-Energy audit industry?". Our firm is based in the Baltimore-Washington Metro area, and we initially started as an audit only firm, due to the conflict of interest, which you described so well in your article. In addition, other items you mentioned as far as reports taking forever and client follow up taking even longer rang true for the majority of the industry. What we realized was the industry needed to be transformed and brought into the 21st century. Our organization greeNEWit was built from founders including myself, who are a good bit younger than the majority of our industry and we decided that we knew what was needed. We needed to add a healthy level of efficiency into the retrofit process so that never again, would it take 6 hours to do an audit and then generate a report. We developed a software platform that automates the entire process from intelligent scheduling based on auditors availability and specific work region to automatically generating reports based on a problem/solution library that has been built by leading companies with over 25 years of technical experience. We are currently developing functionality that automatically generates scopes of work estimates from the initial information collected by the energy audit. We are currently operating with 5 states MD, DC, VA, PA and NJ. We are going through initial communications with private equity and we plan to deploy nationally by December 2012.

    I think that you wrote a great article, but I wanted to reach out and share with you what we have been doing to transform a stagnant industry, since as you mentioned, to put a good dent in our global energy consumption we need to stop the bleeding within our existing housing stock.

    Thanks for the great article, I hope to hear back from you with any thoughts or feedback.

  13. MICHAEL CHANDLER | | #13

    Home energy
    Since I wrote this article I've taken it further and have a Market-Based National Weatherization Proposal which has an afinity groups page on facebook at the full text of that proposal is under the discussion tab on that page which was just put up last weekend though I've been promoting that concept for the last two years. If you agree this market based approach has merit please join the group. if not leave comments as to what would make it better.

    Thanks for your thoughts I'll take some time this weekend to look more deeply into your interesting ideas. You may want to talk with the folks at SJF Ventures about start up capitol. This is right up their ally. We are hoping to get a Sustainable Business leadership training started with their new spin-off SJF Institute.


  14. Glen Gallo | | #14

    Connecting with the customer
    This is a fantastic thread.

    I think what the industry lacks the most at this time is the ability connect with the customer base.

    I look at solar in my area and the business is booming. Middle income families are willing to shell out tens of thousands of dollars to invest in these systems. They brag to their friends how cool it is to watch the meter spin backward.

    Here we sit in a similar industry that thorough investment can slow the meter down significantly. Our methods work night and day and whether the sun shines or not.

    So where is the disconnect? Why does one industry far outshine the other? I believe through my experience that most homeowner do not understand what we do. Because of that lack of understanding it is difficult to build value.

    Glen Gallo
    Once we get past that hurdle the industry will be ready to run. How do we get past that hurdle I think is a mystery to all of us. Our industry has value and allot to offer our customer base. We need to convince our potential customers of this value.

  15. Anonymous | | #15

    BPI is a private corporation
    BPI is a private corporation created to drive certification and renewal (perpetual certification) - so now if you want to retrofit or test for it you have to pay $600.00 to test MINIMUM - to apply for a job you've been doing for years or maybe teaching it---but some used car salesman can walk into that job and grab it because they paid BPI or a subcontractor 2300 for a week or 1100 for a weekend plus the 600-----RACKET----now a handful of individuals are taking steps to create 200 acre training centers and investing $1,000,000.00 in training auditors----how did they make that money????? subbing out audits in rate payer and govt funded programs----RACKET----
    they advocate for audits before every home sold, forcibly---BPI told me personally to hurry and pay for my test because the room was filling fast----the guy I went with and myself were the only ones

  16. Anonymous | | #16

    Well, don't forget that some
    Well, don't forget that some Auditors get all their equipment for free, repairs for free, from the rate payers through the power companies-what a deal? How does one compete against them???

  17. Clayton | | #17

    I agree with the author about
    I agree with the author about one thing in particular, there is no money in residential energy efficiency. This problem needs to be tackled with subsidies. Massachusetts is a leader in this area. Check out the MassSAVE program. This is a fantastic example of utilities (with pressure from the state) forming a fantastic program to hammer at the top energy efficiency measures.

    The program offers free energy audits. One of the comments above, Ted, has it right. Most houses are similar, we do not need fancy reports to fix the obvious. We need economies of scale. Auditors doing this every day are very efficient and begin to see the trends. Weatherization teams that do this every day and efficient and productive. The Utilities contract the work out and are not involved in the process. The auditing group is separate from the weatherization contractors and provides quality assurance on the program. It must be done in a large top down way to be efficient and most importantly done right the first time.

  18. Chuck H. | | #18

    What's Wrong With The Home-Energy Audit Industry?
    Everyone says in order to go Green, you have to buy this, or you have to spend money to save money. Baloney. The EA industry is belly-flopping because the people in it want to get rich off the customer. $400 + for a home energy audit? Get real. Blame the training and certification organizations that want you to spend $1,600 - $5,000 to get "certified" to be a home-energy auditor - and their claims you can "earn as much as a doctor." Figure out what the customer needs - not what you think they want. Find the need, fill the need.

  19. MICHAEL CHANDLER | | #19

    Good linked in group for energy auditors
    Folks are working together to work out solutions to the problems here. I encourage people looking for further discussion to join the RESNET.US group at

    In particular I would draw your attention to the discussion at "On Bill Financing - Why Isn't Everybody Doing It?"

  20. Tedkidd | | #20

    We Know People Will Save Energy?
    Great article. Timely, even 5 years later. Only thing that has changed is people will pay for audits.

    I sold them before they were free, performed the free ones until I realized the only way to make that work was abandon Comprehensive for Prescriptive (sorry, won't do it). Now I sell them again even though people can get "free audits" here in NY.


    What does this mean: "...because we know these people will see real results in their energy bills."

    I hear it a lot and it seems logic is completely missing. Please define "real"? How do you know what they will see? Are you tracking results? (Very few people I ask are) If anybody is, can I please see them? If you aren't, PLEASE SHUT UP about saving energy!!

    Don't tell me you play golf like Tiger Woods, but you've never kept score. ETHICS TEST FAILURE!! Do you WANT people thinking you are a liar?

    If you aren't tracking ANY results, please don't make nonsensical statements that are logically false. It hurts everyones credibility.

    TRUST is the thing we most need to prove we are worthy of, or home performance will not scale. It will not scale if we continue to grossly over promise and under deliver, and make statements about savings with no intention of tracking, consumers recognize these statements are empty - completely lack accountability - and trust begins evaporating. TRUTH is what consumers hunger for, we need to prove we provide it.

    There is abundant evidence results are NOT living up to promises (, we need to correct this problem!

    If you have no measurements of "savings," do you expect reasonable people to make decisions based upon unmeasured assurances of goodness? Do you purchase from salespeople who tell you "buy this, it will be full of goodness!" Would you really expect others to abandon rigor in their decision making process that you would require in your own?

    Here's a treatise for driving demand, and yes it includes TRACKING RESULTS:

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