Two recent initiatives announced by the White House will help spur additional energy efficiency and decarbonization upgrades in new and existing buildings. President Biden invoked the Defense Production Act to expand domestic manufacturing of a number of critical clean energy technologies, including heat pumps and building insulation. The White House also recently debuted its National Initiative to Advance Building Codes, which will bring together federal agencies to help lower energy costs for families, while making homes and buildings more resilient against the effects of severe weather. Taken together, these policies are a great start toward strengthening the market for important clean energy technologies such as heat pumps, while helping local governments improve both new and existing buildings—but Congress needs to finish the job by passing bills that provide the investments necessary to help transition buildings to clean and affordable renewable energy.
Defense Production Act for Clean Energy Manufacturing
The Defense Production Act (DPA) gives the president the authority to direct private companies to prioritize orders from the federal government. Most recently, the DPA was used to make protective equipment during the coronavirus pandemic. Now, President Biden is using the Act to authorize the Department of Energy (DOE) to rapidly scale up domestic production of several clean energy technologies, including heat pumps, building insulation, solar panel parts, equipment used to make and use cleaner fuels, and critical power grid infrastructure. The White House and DOE will convene stakeholders to determine how to maximize the impact of the tools made available by use of the DPA.
Existing buildings are one of the largest sources of carbon pollution in the country and eliminating the emissions from these millions of buildings will require improving efficiency while dramatically reducing their fossil fuel consumption. Insulation, heat pumps, and solar panels are some of the most critical technologies needed to achieve our 2050 climate goals. Increasing domestic manufacturing of these products will make them more easily accessible to American families by reducing retail costs, smoothing supply chain issues, and building a robust market for these technologies. In addition, the job creation benefits are substantial. Recent reports from Rewiring America estimate that 500,000 manufacturing jobs could be brought back to the U.S. in the solar and clean heating industries, and an additional 450,000 installation and maintenance jobs could be supported through electrification of the clean heating sector.
Additionally, there are cost savings and health benefits from better buildings. Heat pumps have the potential to save $400 to $1000 annually when compared to electric resistance or oil heating systems. Better insulated homes and buildings—especially when insulated with healthy materials—help improve occupant comfort and safety on the hottest or coldest days, while reducing energy waste. Efficient, electrified homes and buildings powered by renewable energy help to protect against spiking fossil fuel prices.
While use of the DPA to quickly increase domestic manufacturing of efficiency and clean energy products will certainly be beneficial, it is only a start. It is still incredibly urgent for Congress to act to pass tax incentives and additional measures to advance manufacturing and deployment in the energy sector.
National Initiative to Advance Building Codes
New buildings are the “low-hanging fruit” of the climate crisis: constructing them to be efficient and zero-emission from the start is the cheapest, easiest way to address energy use while improving resilience and reducing costs. The White House’s National Initiative to Advance Building Codes will examine programs across the federal government to increase the use of updated building and energy codes as follows:
Lead By Example
This initiative commits the federal government to “leading by example” by improving the energy use of federal buildings, which will help drive the market toward greater efficiency. The federal government has more than 130,000 buildings across the country—many of which need modernization—so this initiative could have a huge impact on decarbonizing these buildings.
- All new construction and retrofit projects above 25,000 gross square feet will be designed to be net-zero emissions, which includes all-electric appliances and equipment, and significant energy efficiency above and beyond the minimum required energy code. This takes effect starting now, in fiscal year 2022.
- There will be the first-ever Federal Building Performance Standard, which is currently under development. This will establish the metrics and tracking methods to meet the federal carbon emissions reduction goals: reducing emissions by 50 percent by 2032 and net-zero emissions from federal buildings by 2045.
- The White House Council on Environmental Quality will explore how to integrate resilience standards to protect against natural hazards like floods and fires.
Department of Energy Building Codes Funding
The Bipartisan Infrastructure Law specified $225 million to support energy codes in fiscal years 2022 through 2026, a marked increase for a program that historically has an annual budget of around $10 million. This funding gives the Department of Energy (DOE) a transformative opportunity to support states in the adoption of, enforcement of, and compliance with updated energy codes.
The agency recently solicited comments on a request for information about how to structure the funding opportunity and which projects to prioritize. In joint comments, NRDC and the Building Electrification Institute (BEI) expressed our strong support for energy codes that transition to efficient, all-electric new construction as soon as possible. We requested DOE funds be used to prioritize building decarbonization through a combination of efficiency and electrification, while addressing issues of equity. We support projects which incorporate workforce training, innovative approaches to code implementation (including stretch codes, and standards for existing buildings), and dedicated enforcement and compliance strategies.
DOE is currently reviewing comments, then will release a funding announcement in the upcoming months. The Infrastructure Law specifies that projects must include a state agency, but our comments underscore the importance of projects to include partners that have a real impact on—or are impacted by—new codes and policies. In many states, code adoption and/or enforcement is handled at the local level, so DOE must ensure that those jurisdictions can access funding. Many local jurisdictions are leading the way on energy codes and policies even when their state policies are lagging. We expect DOE to underscore the importance of partnerships in project funding, and state and local governments should stay tuned to take advantage of this opportunity to transform their energy codes.
Federal Funding & Financing
Across the federal government, there are a wide number of programs that fund or finance building construction. These range from funding housing projects through the Department of Housing and Urban Development (HUD) to specifying the codes which must be used when rebuilding from a disaster with FEMA funding. The administration’s building codes initiative lays out an interagency effort to “ensure that building activities receiving federal funding or financing will meet or exceed the latest building codes to the greatest extent feasible regardless of local code adoption.”
Given the broad portfolio of buildings that potentially receive federal funding, the impact could be immense. Several federal programs, including Federal Housing Administration (FHA) mortgages, loans through the Department of Veterans Affairs (VA) or Department of Agriculture (USDA), and HUD HOME Investment Partnership grants already include efficiency requirements, but are dramatically out of date. These programs make up about 20 percent of all new residences and about one-eighth of new units in multifamily buildings. Furthermore, the government-sponsored enterprises of Fannie Mae and Freddie Mac are involved in nearly half of all mortgages for both single-family and multifamily properties, yet there are no minimum efficiency requirements for these properties.
A recent analysis by the American Council for an Energy Efficient Economy (ACEEE) found that, if new homes receiving federal support were required to meet updated energy codes, there would be a net savings by 2050 of more than $27 billion, with emissions reductions of more than 275 million metric tons of carbon dioxide. This is equivalent to the annual CO2 emissions from 59 million cars. Requiring Energy Star certification for new homes would save an additional $16 billion and 154 million metric tons of CO2. And requiring heat pumps for heating and water heating would have the greatest impact while being incredibly cost-effective: ACEEE found that all-electric Energy Star homes would see significant savings within just one year.
Energy Star New Homes
Speaking of Energy Star, the Environmental Protection Agency recently finalized the latest version of its Energy Star New Homes for single (version 3.2) and multifamily (version 1.2), which will require homes to be about 10 percent more efficient than the 2021 national model code. There are various versions of Energy Star in place depending on the minimum base code of the state, and many states are still following version 3, which results in less-efficient homes. As of January 1, 2023, all states will be required to meet version 3.1 regardless of the status of their base energy code, and states that have updated their base code to the 2021 IECC will be required to meet version 3.2. Version 3.2 includes a phase-in for strong building envelope requirements, which ensures that Energy Star new homes will save homeowners money while keeping them more comfortable.
Energy efficient buildings powered by clean energy are more resilient, save energy, and cut carbon emissions. Building them right the first time around means avoiding expensive retrofits later: it just makes logical sense. President Biden’s National Initiative to Advance Building Codes leverages the power of the federal government to move building codes forward—and the resulting climate and energy savings will benefit us all.
Lauren Urbanek is Senior Energy Policy Advocate, Climate & Clean Energy Program for NRDC.