Which States Could Gain the Most from Modern Energy Codes?

Buildings account for 35 percent of U.S. carbon emissions and 76 percent of electricity use. According to the latest projections from the U.S. Energy Information Administration, even by 2050, as much electricity will come from fossil fuels (44 percent) as from renewable sources.

Building standards that incorporate best-available strategies for energy efficiency are essential to reducing emissions, not to mention operating costs. But according to the Building Codes Assistance Project, only two states have adopted the most recent residential and commercial energy codes.

In July, the U.S. Department of Energy (DOE) announced plans to provide $225 million in Bipartisan Infrastructure Law (BIL) funds to state and local governments to “expand the implementation of the latest building energy codes.” Concept papers for the first $45 million in grants are due at the end of January. The Inflation Reduction Act (IRA) provides $1 billion more to advance standards for commercial buildings.

A new analysis by the American Council for an Energy-Efficient Economy (ACEEE) identifies which states stand to gain the most by accessing these funds, taking into account factors such as existing codes, construction activity and climate policies.

The states with the greatest potential upside have varied political landscapes and circumstances around emissions, said study author Michael Waite, senior manager in ACEEE’S buildings program. Five are home rule states, not empowered to mandate code implementation on a statewide basis.

“There are benefits across the country, for a diverse group of states,” says Waite.

Code Adoption Is Just the Beginning

Code adoption occurs in the context of state commitments to sustainability. The ACEEE analysis found that almost half of the states in the U.S. have not set 2030 targets for emissions reduction, a milestone for global and national efforts.

These include more than half of the 15 states it identified as best positioned to benefit from federal funds. On the other hand, Louisiana’s position as the state poised to gain the most from federal support is in part because of its commitment to reductions.

Adopting code is just the beginning. Implementation can require training building officials as well as builders and designers, developing a workforce capable of executing projects according to new standards or new protocols for inspection. There can also be pushback regarding added costs, though these can be affected by the skill levels of designers and builders and are more than offset by long-term savings.

The BIL and IRA funding is intended to help with all of this, but state-level commitments provide the impetus to overcome obstacles. “We either need more states to get on board, or major action at the federal level,” says Waite.

Beyond this, most of the nearly $370 billion in the IRA is for tax incentives, creating an imperative for state and local governments to partner with the private sector to develop local economies around energy innovation. It’s hard to imagine that a state dragging its feet on efficiency would appeal to companies at the leading edge of the energy transition.
Home rule states won’t adopt statewide codes, but ACEEE points to Colorado as an example of how they can lead. In June 2022, Gov. Jared Polis signed a law requiring local jurisdictions to adopt and enforce the most recent version of available model energy codes when they update other building codes.

The Rising Profile of Codes

Building codes were experiencing a heyday even before the BIL, says Gabe Maser, senior vice president of government relations and national strategy at the International Code Council (ICC). A 2020 report from the National Institute of Building Sciences stated that “adopting the latest building code requirements is affordable and saves $11 per $1 invested,” with the greatest benefits from the most recent versions.

Codes gained attention and bipartisan support as disaster mitigation tools during the previous administration, and in 2022 the current administration launched a National Initiative to Advance Building Codes. “There’s never been this level of resources allocated specifically toward this niche function of building code,” says Maser.

Unlike a tax credit or a rebate, once an energy code is adopted it governs all future construction and can also apply to renovations. It targets building features, such as HVAC, that are the biggest sources of energy waste. Modern codes also address issues that are integral to the energy transition, such as energy storage, vehicle charging and on-site energy generation and are defining standards for zero net energy buildings.

Maser sees the staff working to implement and enforce codes as “the most important people you’ve never heard of,” a status that can lead to a building department being under-resourced, understaffed and undertrained. Energy technology changes and advances quickly, exacerbating these challenges. The resources in the BIL and IRA could go a long way toward addressing this situation.

ICC recently announced that it will provide no-cost assistance to states preparing proposals for grants from the DOE’s Resilient and Efficient Codes and Implementation (RECI) program. The first $45 million from this $225 million in BIL allocations is anticipated to go to 10 to 30 recipients. The funding was only announced on Dec. 19, but concept papers are due at the end of January 2023.

Stella Carr, energy and resiliency project manager at ICC, is leading the effort. “It can be a daunting task to tackle federal grants, and it can be intimidating as well,” she says. “We recognized that more support is needed for communities that are interested in utilizing these grants programs for code-related projects; we can lessen the learning curve and help them get ahead of the game.”

Not every state or jurisdiction has an energy office to negotiate this process. In addition to government entities, other stakeholders in code implementation can be involved in projects funded by RECI, Carr says, and she can assist them as well from her position at ICC. ICC members include architects, engineers and builders.

Moving Together

Waite and ACEEE also want to help states seize the moment. The potential for good from the BIL and IRA investments is enormous, but funding alone doesn’t solve problems.
“We're really interested in working with states on realizing the broad benefits of implementing updated energy codes,” he says. “We’re talking to as many people as we can.”

Two-thirds of the $1 billion from the IRA is intended to get states moving toward net-zero codes. Thoughtful and coordinated use of the RECI grants, and the first third of the IRA funds, will be essential to paving the way toward the 2045 goal of a net-zero building sector.

The current code landscape is piecemeal, says ICC’s Carr, with communities using outdated codes as well as those eager for 2024 versions. Smaller jurisdictions may be out of sync with state or regional priorities. “Wherever they are in the process, we want to be connected with them.”