Buildings & Efficiency

Policies that decarbonize and reduce energy use in the buildings sector

Building Energy Codes

Residential and Commercial Energy Codes

Building codes standardize the design and engineering requirements for new construction of buildings, including renovations. These requirements include energy-related decisions such as insulation, window fabrication, roofing loads, etc., and they are consistently updated to include changes and best practices in technology and methodology. In particular, building energy codes provide a baseline for energy efficiency. 

In the U.S., states can adopt building codes in a few different ways. Some do not put forth any statewide building codes, instead choosing to implement home rule, which shifts the onus of adoption to local jurisdictions including counties and cities. Other states adopt building codes through legislative actions or through mandates of regulatory bodies. A majority of statewide codes are based on the International Code Council’s I-Codes and/or the ASHRAE standards, although some states will create their own codes with more stringent or more relaxed requirements. 

What are I-Codes? The I-Codes are widely adopted in the United States and created by the International Code Council. These codes are created as model rules, meant to be adopted with various amendments in order to better serve each particular jurisdiction. I-Codes include the International Building Code (for commercial structures), the International Residential Code, and the International Energy Conservation Code, among others. The most current versions are the 2018 I-Codes, with the 2021 versions in process.

What are ASHRAE Codes? ASHRAE codes are the other widely-adopted building codes in the United States, used for commercial building standards. ASHRAE 90.1, developed in 1989, established energy efficiency and performance standards for commercial buildings and has been updated regularly every three years since. This model is meant to be adopted as appropriate by states and/or local jurisdictions, and is referenced in specific sections of the I-Codes. The current version is 90.1-2019.

Key Resources

State Examples

  • Vermont’s Residential and Commercial Building Energy Standards — Key changes include a solar ready residential stretch code, tightened ventilation requirements, and electric vehicle charging requirements in both the base and stretch codes.
  • Washington State Energy Code — Adopts 2015 International Energy Conservation Code for residential and commercial buildings, with state-specific amendments. The WSEC establishes a goal of 70 percent reduction in annual new building energy consumption by 2031.
  • Florida 2020 Building Energy Code — Complies with ASHRAE 2016, with strengthening/technical amendments.

    Stretch Building Energy Codes

    While many states have adopted mandatory building and building energy codes, local jurisdictions have the power to adopt regulations that are more rigorous than state codes. These are known as stretch codes (as opposed to the base code) and result in more energy efficiency and thus more energy savings. Local governments can use stretch codes to incorporate technologies, methodologies, and regulations that are not included in statewide mandates. Often, stretch codes will be performance-based codes, which measures the overall energy usage of a building.

    Key Resources

    Model Rules

    State Examples

    • New York NYStretch-2020 — The code is available for voluntary adoption by local governments as a more stringent local energy code that, on average, improves the New York State Energy Code’s efficacy by roughly 10 percent.
    • Massachusetts Stretch Code — The state’s stretch code emphasizes energy performance, as opposed to prescriptive requirements, and is designed to result in cost-effective construction.

      Efficiency Programs and Incentives

      Weatherization Funding

      From the Center for the New Energy Economy (CNEE): Weatherization refers to the process of upgrading existing buildings, specifically regarding insulation and air sealing. Weatherization programs are subsets of more general retrofit policies, distinguished both by the particular upgrades to which they refer and the target of these programs: low-income families in residential buildings. The potential for significant energy and cost savings that low-income households can benefit from make this an increasingly popular set of policies.

      The federal government runs the Weatherization Assistance Program (WAP) and the Low Income Heating and Energy Assistance Program (LIHEAP) to help low-income customers pay energy bills, reduce energy costs, and decrease overall energy consumption. However, the demand for energy assistance services provided by these programs is greater than the level of federal funding required to meet these needs. 

      To help meet the growing need for energy assistance, states have enacted supplemental programs to support LIHEAP and WAP services, including utility-administered energy efficiency programs that target low-income customers. States receive federal weatherization funds to operate a low income weatherization program that is focused on increasing the efficiency of low income customers. The utility is also subsidized with cash assistance to low income customers who are unable to pay their utility bill. One policy might add a rider to utility bills that would go toward a low income weatherization fund that would deploy weatherization assistance to all recipients of cash assistance – using the existing infrastructure of weatherization providers. As a separately funded program to the federal program, this program could benefit from state specific goals that would not be allowable under the federally funded program or could be used to expand the services offered by the federally funded program. 

      Recent state legislative efforts also reflect a growing interest in addressing the low-income energy burden and providing support beyond LIHEAP and WAP. State energy assistance programs generally focus on bill payment assistance for income-qualified individuals, while low-income energy efficiency programs are designed to deliver energy savings and reduce energy costs.

      Key Resources

      State Examples

      • California — The California Solar Initiative, or CSI, reserved 10 percent of its budget, or $216 million, to support the adoption of solar power by low-income families. This budget is divided between the Single-Family Affordable Solar Housing (SASH) and Multifamily Affordable Housing (MASH) programs.
      • Colorado HB 10-1342 (2010) — Established the state’s shared solar program and reserved 5% of all subscribers for low-income. The PUC has implemented this by saying each project needs to have 5% of subscribers qualified as low-income. Another approach would be to provide a larger payment to developers for each kWh going to low income customers – creating a market push toward more low income subscribers.

        Retro-Commissioning Programs

        The commissioning process for new buildings ensures that all building systems work according to the original design. Retro-commissioning, or RCx, applies that process to old, existing buildings. This can include the implementation of “tune-ups”, to ensure that all systems are performing optimally and therefore as efficiently as possible. This can include fixing problems that were incurred during construction or that developed over time. RCx projects are often the outcome of an energy audit performed on the building which identified suboptimal performance. After retro-commissioning, the building will use 5-30% less energy and require less maintenance, providing monetary savings for the owner.

        Key Resources

        Model Rules

        State Examples

        • Hawaii’s Benchmarking and Retro-commissioning Requirements — In addition to benchmarking requirements, Hawaii’s HB 1464 requires retro-commissioning on public buildings at least every five years.
        • Wisconsin’s Focus on Energy Program — Focus on Energy offers financial incentives to eligible business customers to retro-commission buildings to optimize performance. The incentive is distributed in 2 separate payments; the first payment is distributed after measures have been installed, and the second payment is distributed after a site visit 90 days after the installations are verified.

          Energy Audit Programs

          Energy audits are a key element of successful retrofit buildings policy. State policies and programs offer incentives for and/or require energy audits, often as a way to determine opportunities for retro-commissioning. Energy audits assess and provide buildings owners with a defined list of opportunities for system improvements. These audits alone do not result in energy savings but represent a crucial step towards incentivizing retrofits that have the most impact on energy savings, maintenance reduction, and optimal system function.

          Key Resources

          Model Rules

          State Examples

            Financing Programs

            Financing programs provide a way for building owners to complete energy efficiency upgrades, including retrofits, without having to pay the entire cost of the operation up front. Two of the most popular include Property Assessed Clean Energy (PACE) and Energy Savings Performance Contracts (ESPCs). States must pass enabling legislation for both of these programs to function.

            PACE loans can finance up to 100% efficiency upgrades against the property itself, rather than the owner. The PACE loans are tied to property tax assessments, and the repayment period is spread out over ten to twenty years. If a property changes ownership while the loan is still being paid off, the loan stays tied to the property.

            ESPC programs allow building owners, including governments, to pay for efficiency upgrades with the future energy savings of the investment. ESPC programs partner with energy service companies to complete retrofits and other upgrades at no immediate cost. Over time, the savings from those upgrades are used to pay the energy service company. Furthermore, ESPCs include performance guarantees, thus eliminating both the prohibitive cost and any doubts about reliability.

            Key Resources

            Model Rules

            • U.S. DOE Model Energy Savings Performance Contract — DOE has drafted model ESPC language providing process descriptions, examples, and tables as well as the critical details that define the project, operations, and management.

            State Examples

            • California PACE Loan Loss Reserve — California operates a loan loss reserve for PACE loans generated in-state.
            • Hawaii DOT ESPC — The Hawaii Dept. of Transportation completed a $245M contract for deep energy efficiency retrofits, the largest single-state ESPC in the U.S., with Johnson Controls.

              Standards and Market Mechanisms

              Energy Efficiency Resource Standards

              From the Center for the New Energy Economy (CNEE): An Energy Efficiency Resource Standard (EERS) establishes a percentage of energy demand reduction that a utility will achieve by a specific date or on an annual basis through demand reduction programs. States can achieve reductions in a variety of ways, and targets can be set through legislation or by directing the state’s utility commission to set energy efficiency targets. EERSs are often based on these three common models: adopting resource-specific targets, fuel-neutral goals, or multiple-goal approaches that incorporate resource-specific and fuel-neutral goals. As new climate goals are established and regulations change, policymakers are shaping their states’ EERSs to reflect the benefits of energy efficiency: improved air quality, reduced greenhouse gas emissions, and improved public health.

              While EERSs usually take the form of mandatory targets or voluntary goals, there are a few exceptions. In some states, energy efficiency is an eligible resource under the state’s renewable portfolio standard. In others, legislation requires utilities to set certain goals, utilities are not penalized for failing to meet these goals and are instead incentivized to exceed the goals. Targets can also vary greatly, from less than 0.5% of retail sales per year to 2% or more per year. The majority of states that have implemented EERSs have been successful at achieving savings at or above target goals and also enjoy the economic benefits of additional energy efficiency jobs.

              Key Resources

              State Examples

              • Vermont 30 V.S.A. § 209 — The Vermont PUC sets specific energy-savings levels every three years in a Demand Resource Plan proceeding. Annual incremental savings were set to approximately 2.4% of annual sales for electric utilities and 0.5% for natural gas utilities over 2018-2020.
              • Massachusetts Green Communities Act (2008) — Requires that electric and gas utilities procure all cost-effective energy efficiency before more expensive supply resources, and requires a three-year planning cycle. The most recent Three-Year Energy Efficiency Plan set the target at 2.7% of retail sales for 2019-2021.
              • Illinois Future Energy Jobs Act (SB 2814) (2016) — Requires ComEd to achieve a cumulative 21.5% reduction and Ameren to achieve a 16% reduction in energy use by 2030, and also requires $25 million per year to be spent on programs to help low-income homes become more efficient.

                Building Performance Standards

                Building performance standards are an intervention for existing buildings that is gaining popularity in U.S. states. A large portion of existing commercial and residential buildings were built without energy efficiency standards, or while adhering to outdated standards. Building performance standards mandate that existing buildings must meet a minimum energy efficiency target, which is established by the state and becomes more stringent over time. Over time, building owners and developers have to invest in energy reductions, building retrofits, renovations, and construction/design changes to adhere to the standard. Some of these policies include different phases which require different energy savings over set periods of time.

                Key Resources

                Model Rules

                State Examples

                • Washington Clean Buildings Act (2019) — Requires the State Commerce Department to set a state energy performance standard target for each building type by 2020, and develop “conditional compliance methods” to meet them.
                • Colorado’s HB 1286 (2021) — Establishes Building Energy Performance Standards for certain large buildings in Colorado, administrative and reporting requirements, and imposes penalties for violations.

                  Appliance and Equipment Standards

                  Appliance and equipment standards set minimum energy conservation regulations (often including water efficiency). While these are now set at the federal level, states can also legislate stricter standards for appliances and building equipment, including for those not covered by national directives. Over time, these standards are updated to reflect new technologies and energy efficiency targets.

                  Key Resources

                  Model Rules

                  State Examples

                  • California’s 20 CCR 1065 — State law that automatically incorporates any federal efficiency standard that is “repealed or becomes inoperable, inapplicable, or otherwise invalid as federal law.” 
                  • Vermont H411 (2017) — Vermont has followed California’s model, approving legislation that adopts current federal energy-efficiency standards for appliances and equipment “so that the same standards will be in place in Vermont should the federal standards be repealed or voided.”

                    Energy Disclosure

                    Energy disclosure policies serve both as an awareness tool and a market mechanism to encourage energy efficiency adoption in buildings. When potential renters and buyers are aware of the energy usage of a particular building, it can influence their choices as consumers. Thus, owners and sellers who are required to disclose energy use have an incentive to increase energy efficiency in a bid to appeal to more buyers. 

                    There are different types of energy disclosure policies. Some of the most common include benchmarking and labeling, or certification. Benchmarking draws a comparison between a particular building and an average baseline, generally developed based on either peer building usage. This strategy becomes much more effective when the data is made publicly available, encouraging owners to take action to curb energy usage. 

                    Labeling programs are geared towards appliances and other consumer products. When commercially available appliances are required to disclose the energy usage of their products to buyers who may be influenced by that data, they are more incentivized to create goods with higher efficiency.

                    Key Resources

                    State Examples

                    • Washington’s State Energy Benchmark Law — In addition to benchmarking requirements for private buildings, Washington’s State Energy Benchmark Law (2009) put in place strict requirements for public buildings, including mandatory investment-grade energy audits.
                    • Hawaii’s Benchmarking and Retrocommissioning Requirements — In addition to benchmarking requirements, Hawaii’s HB 1464 requires retrocommissioning on public buildings at least every five years.

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