State legislators across the country have targeted energy efficiency and electrification policies in the buildings sector as a top priority, introducing more than 1,000 policies this year alone, according to FiscalNote. But why is this boom happening now, and how can states use buildings policies to support their climate goals? 

Buildings account for 34 percent of the country’s greenhouse gas emissions when including the electricity they use. With the long lifespan of our homes and businesses, passing policies that decarbonize and reduce energy use in this sector is all the more urgent. 

As we construct new buildings, we’ll continue to use existing ones, so it’s important that state policies address energy use from both of them. New buildings need to be designed to support climate goals, and states can pull older buildings along with them. There are a variety of tools that states can use to do this affordably.

Energy efficiency policies can immediately reduce utility bills and indoor air pollution in existing households, while addressing building energy use in new construction will have benefits that build over time. With new federal funding opportunities and record high energy prices, state governments are seeing a chance to tackle this issue immediately.

In this article for our Dashboard Digest article series, we will explore what’s causing this rapid expansion of energy efficiency and building electrification policies, and how states can leverage these policies to achieve their climate goals.

This winter, the Energy Information Administration predicted that household energy costs would rise more for homes heated by fossil fuels than for those that are electrified. This disproportionately affects low-income households and renters who are more likely to utilize fossil fuel heating and experience higher energy burdens.

The Building Sector Uses a lot of Energy

In 2021, commercial and residential buildings accounted for 39 percent of the total energy consumption in the U.S., and 75 percent of all electricity use. This mostly comes from the electricity that powers buildings and the fuel that’s used to heat them, with buildings in the northeast and midwest using more energy because of their colder winter months.

Decarbonizing the buildings sector represents a significant opportunity for reducing emissions. In 2020, commercial and residential buildings accounted for 34 percent of total greenhouse gas emissions in the U.S. when you include the electricity they use. Interestingly, total emissions from the building sector are falling because of an increasingly cleaner power grid, but direct building sector emissions, from things like heating water, cooking, and using other appliances are rising, underscoring the need for swift electrification. At the same time, as buildings are electrified, the need for more efficient buildings increases to prevent further strain on the grid.

New Construction vs Existing Buildings

It’s vital to ensure that new buildings support our climate goals, while addressing the fact that old buildings need to be upgraded to do the same. Building electrification and energy efficiency policies can either target new construction or updates to buildings that already exist.  

More than half of owner-occupied homes were built before 1980, lacking energy efficiency mechanisms that we have today. If we continue to use these older buildings, they’ll need to be retrofitted with modern technologies to increase efficiency and reduce energy costs. For example, Wisconsin provides financial incentives to certain building owners to fund retro-commissioning efforts. States can also implement a newer policy called building performance standards, which set energy efficiency requirements for existing buildings with outdated standards or none at all. This policy is gaining traction, but so far just three states (Maryland, Colorado, and Washington) have been able to pass them.

Strong energy efficiency policies are vital to renters and others who may not own their homes. These buildings may be old, and landlords often lack strong incentives to pay for improvements when the tenants would reap the energy savings. 

Since new buildings will be around for a while, states can pass policies that embrace a cleaner energy economy, or fail to take action and lock in additional reliance on fossil fuels. Residential and commercial energy codes can standardize construction requirements for new buildings, and local governments can adopt more stringent requirements.