Feds Offering States $1.2 Billion to Adopt More Stringent Energy Codes

The Biden Administration has launched several federal initiatives to reduce greenhouse gas emissions and improve the energy efficiency of buildings, with two specifically designed to encourage state and local governments to update their building energy codes.

Embedded in two recent pieces of massive legislation was some $1.2 billion in incentives specifically for states to update their energy codes for new homes. Newer versions of energy codes add costs to housing production that are not paid back in efficiency gains, further exacerbating the housing affordability crisis.

The $1.2 trillion Infrastructure Investment and Jobs Act signed in November 2021 provides $225 million ($45 million per year for fiscal years 2022-2026) for the Department of Energy’s Resilient and Efficient Codes Implementation (RECI) program. Under the RECI program, states can receive grants to update to more recent model energy codes. The money can be spent on conducting studies, training, implementation and a host of other purposes.

The more recent Inflation Reduction Act sets aside nearly $1 billion for states and local governments to adopt the most recent energy codes, which as of now are the 2021 International Energy Conservation Codes (IECC). These grants are expected to be awarded through the fiscal year 2029.

Both grant programs allow state governments to partner with local jurisdictions and other stakeholders, including HBAs and home builders, in the application process.

The first deadline for the infrastructure act money is Jan. 31, 2023, for the submission of concept papers. Full Applications are due by Mar. 27, 2023. For complete details go to eere-exchange.energy.gov and click on DE-FOA-0002813.

The specific DOE Guidelines for the Inflation Reduction Act grants are still in development.

The most important distinction between the two programs is the restrictive nature of updates under an IRA grant. States must move to at least the 2021 IECC to be eligible. Infrastructure (RECI) money, meanwhile, can be used to update to a more recent version. So, if a state is currently using the 2009 IECC, they may qualify for funding to adopt the 2015 edition.

NAHB members should continue to tell their local and state officials that updating to any newer energy code will result in higher construction costs and higher home prices. And most of the additional requirements do not pay for themselves over time. But if a state still wants to take advantage of the grant programs, one is far better than the other.

Because of the flexibility in the RECI program, NAHB is encouraging states to apply for infrastructure bill grants over Inflation Reduction Act grants and hopes that members will do the same. Even if a state misses the deadline in the first year, there will be more opportunities each year to apply.

NAHB staff is working very carefully to provide resources to members as we navigate the next few years of energy code changes. There have already been two webinars on the IRA and this grant program will be discussed further at the 2023 International Builders’ Show in Las Vegas.