Energy Efficiency, Regulation  -  May 31, 2023 - By Cherylyn Kelley, IMT

Why Leslie Knope Would Be Proud of the New Federal Energy Efficiency Requirements

Some days, codes work is difficult, and I have to channel my inner Leslie Knope. Like the lead fictional character from the sitcom Parks and Rec, EECC  (Energy-Efficient Codes Coalition) is always trying to make government serve the people. We work all hours of the day preaching the good word of energy efficiency and we don’t always succeed or get recognized. That’s why, after years of advocacy work by many individuals and organizations—including, but not limited to the folks who signed on to this letter last year—this month’s codes news has me feeling like a Pawnee superstar.

On May 11, the White House announced that Department of Housing and Urban Development (HUD) and the United States Department of Agriculture (USDA) are proposing to require the latest energy codes as a condition of financing and assisting newly constructed homes. If your heart isn’t racing, let me break it down for you.

Why this announcement is a Big Deal
Section 481 of the Energy Independence and Security Act of 2007 (EISA) lays out procedures for setting minimum energy standards for certain categories of housing financed or assisted by HUD (which the Federal Housing Administration falls under) and USDA. Since 2015, HUD and USDA have set the standard for new homes at the 2009 International Energy Conservation Code (IECC) for single-family and low-rise buildings. For multifamily buildings with 4 or more stories, they set the standard to the 2007 edition of ASHRAE 90.1. These are several code cycles behind, and weren’t even up-to-date when they were adopted. So, the jump to the 2021 IECC is a Big Deal. The first two steps to initiating the updated standard are for HUD or USDA to make a preliminary determination that the codes won’t negatively affect the availability or affordability of the housing it impacts and for the Department of Energy (DOE) to make a separate determination that the codes would improve energy efficiency. I don’t want to spoil the opportunity for you to read a bunch of technical jargon, but the topline is that both of those things have already happened with favorable outcomes, and you can find the high-level findings in the HUD announcement on minimum energy standards.

While the U.S. doesn’t have a national building code, eligibility requirements for federally-backed loans are one notable way that all states are impacted by efficiency requirements. Builders everywhere—including places with no statewide code—will have to meet the new requirements or miss out on a key part of the market. This move will help prepare builders if the jurisdictions in which they operate adopt the 2021 IECC in the future.

States that haven’t updated their codes or that don’t have a statewide code are likely going to feel the transition more acutely. North Carolina is an example of a state with a high number of residential construction starts with a fairly poor energy code; they use the residential 2015 IECC amended down to the 2009 level. The state is currently working through its process to update to the 2021 IECC and the federal update may be the extra push they need to get this new code approved in the face of flawed builder arguments that the 2021 IECC would add to the housing affordability crisis.

Energy codes and affordability
That affordability argument comes up frequently, so let’s revisit it for a moment.  I’ve argued against the idea that more efficient energy codes exacerbate housing affordability in the past, and remain steadfast in my opinion that better energy codes can actually improve housing affordability. Energy burden—the percentage of income spent on home energy bills—is a big issue in the U.S. and one that disproportionately impacts Black, Indigenous, and people of color (BIPOC), the elderly, renters, and low-income multifamily building residents. Energy burden is caused, in part, by inefficient housing and appliances coupled with lower household incomes. The best way to lower energy burden is to reduce household energy use through energy efficiency measures such as better insulation and higher efficiency equipment. While the federal update won’t impact homes that have already been built, recent, more efficient versions of the energy code can help reduce energy burden in the long-run by cost-effectively reducing energy costs in new construction. Furthermore, the Infrastructure Reduction Act provides incentivizing tax credits to offset some costs for builders constructing to Energy Star New Homes and Zero Energy Ready Home standards, both of which use the 2021 IECC as the minimum requirement.

The 2021 IECC and the ‘army of Leslie Knopes’
Let’s take a little detour to talk about why else the federal update is a Big Deal.

Incremental Energy Savings Associated with Each IECC Version 2006-2021

As shown in this chart from the HUD determination linked above, the IECC made significant gains in efficiency for a couple cycles before falling off for a couple cycles, then the 2021 IECC bounced back with a national weighted energy cost savings of 8.7%. This whiplash is largely political. In the 2021 IECC development cycle, an unprecedented outpouring of government representatives—affectionately referred to as “the army of Leslie Knopes” by one reporter—voted overwhelmingly in favor of measures that would increase building efficiency in the code.  Industry groups appealed the outcome. and ultimately, stripped the Leslie Knopes of their influence.

Bottom line: The 2021 IECC is the people’s code, and getting it adopted or at least used in houses nationwide is a big step toward reducing our national energy use and energy burden.

Time for action
So, how do my fellow energy advocates ensure that this Big Deal really happens? An open comment period is the next step to getting this across the finish line—and this is where you come in. HUD is accepting comments through the Federal Register until July 17. In addition to the Federal Register, HUD will accept comments at their live listening sessions listed below.

It’s hard to overstate the importance of providing comments. Updates to the federal efficiency standards don’t happen often. Let’s make Leslie proud and take this opportunity to improve and protect the lives of thousands.

This column originally appeared as a blog on the IMT website.

Cherylyn Kelley is Manager, Building Energy Codes and Policy at IMT. She supports policy development and implementation, and actively participates in code development and adoption processes that dictate the energy efficiency of new construction throughout the U.S. For more than 25 years, the Institute for Market Transformation (IMT) has partnered with government, business, and philanthropy to improve the spaces where we live, work, and play. IMT focuses on creative and practical solutions that catalyze greater investment in high-performing, energy-efficient buildings. IMT offers hands-on technical assistance and market research, alongside expertise in policy and program development and deployment and promotion of best practices and knowledge exchange. Our innovations have helped reduce carbon emissions and energy costs across billions of square feet of real estate in major U.S. cities; empowered landlords and tenants to overcome barriers to mutually-beneficial building improvements; and increased market demand for better buildings. Visit us at www.imt.org and follow us on Twitter @IMT_speaks.

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