The very large sums of money newly available from the federal government’s climate-focused funds are accelerating the race to update building codes across the United States. These funds could fuel development and renovation projects that could benefit electrical contractors.

The latest research from universities and government agencies shows that states could cut energy use in new buildings by as much as one-third, significantly reducing utility bills and greenhouse gas (GHG) emissions. The key is updating building energy codes with the help of those federal funds. 

A recent report from the nonprofit American Council for an Energy-Efficient Economy (ACEEE) identifies those states best positioned to take advantage of such funding. It analyzes factors including energy savings achievable for new buildings under a stronger code, construction pace and GHG emissions from buildings. ACEEE’s new analysis evaluates how stronger codes could help states meet their climate targets.

The ACEEE study comes as unprecedented federal resources are available to states to update building codes. Earlier this year, the Department of Energy made available the first $45 million of a five-year, $225 million grant program established by the 2021 Bipartisan Infrastructure Law to help states and localities implement updated building energy codes. The Inflation Reduction Act is slated to provide another $1 billion to help jurisdictions adopt and implement stronger codes.

State by state

Building energy codes set requirements for insulation, windows and heating systems. Stronger codes reduce energy use in new buildings and thus cut utility costs and GHG emissions from burning fuels and power plants that provide the buildings with electricity.

Which states offer the best opportunities to use those funds to cut costs and reduce emissions?

“States with out-of-date building energy codes miss out on a cost-effective pathway to reduce energy use and greenhouse gas emissions, leaving residents with higher utility bills,” said Michael Waite, senior manager in ACEEE’s buildings program and author of the study. “States and cities have an unprecedented opportunity to update their codes thanks to federal assistance. The jurisdictions that would see the greatest benefits should not pass up this opportunity.”

The 10 states most primed to benefit from updating outdated building energy codes are listed below:

• Louisiana could reduce energy use 20% in new residential buildings and 32% in new commercial buildings if it implements the latest building codes.
• North Carolina is among the top 20 states for potential residential and commercial energy savings and top 10 for building construction, providing an opportunity for lower emissions with more efficient new buildings.
• Colorado, where local jurisdictions set building codes, has fairly high building emissions and the fifth-highest construction activity among states, meaning it would greatly benefit from local jurisdictions updating building energy codes.
• North Dakota has the highest average building emissions of any state, giving the state an opportunity for progress with widespread adoption of new energy codes by local jurisdictions.
• Minnesota has roughly median building emissions, significant construction activity and ambitious climate targets, so advancing its energy codes would have meaningful impact.
• Virginia needs to see the most emissions reductions of any state to meet 2030 climate targets, so strengthened energy codes should be part of a comprehensive climate strategy.
• Wyoming, where localities set building codes, has very high building GHG emissions, so it would benefit from improving building energy efficiency (in addition to reducing fossil fuel generation in its electric grid).
• Arkansas could see 30% energy cost savings in new residential buildings—more than any other state—and 33% savings in new commercial buildings if it enacts up-to-date building codes.
• South Carolina is fourth among states in per capita construction activity and uses old versions of model energy codes, meaning updated codes would provide major energy savings.
• Tennessee has significant building construction and would see the second-highest cost savings from updating its residential energy code, as well as substantial savings from commercial building code updates.

The full ranking and details for all states are in the policy brief.

Diverse factors at play

In addition to identifying states that would benefit most from federal funding for updated building energy codes, the analysis shows the diversity of factors that affect the energy, monetary and GHG savings of building codes with higher energy-efficiency requirements.

“Ultimately, the benefits depend on how successfully advanced codes are implemented in states and jurisdictions,” Waite said.

ACEEE’s analysis discovered that, by adopting the most recent national building energy codes, 16 states could cut energy costs in new homes by at least 20%, and 14 states could decrease energy costs by 20% in new commercial buildings. ECs will be needed to do the work.

The report found that residents and businesses in Arkansas, Kentucky, Missouri, North Dakota, Oklahoma, South Carolina, South Dakota and Tennessee would see the greatest cost savings from updating residential building energy codes. For commercial buildings, Arkansas, Louisiana, Missouri, Oklahoma, South Carolina and South Dakota residents and businesses would save the most money from adopting new energy codes.

Sun Belt states—those stretching from the Southeast to the Southwest—have among the greatest level of new building construction, so those states would see substantial energy, monetary and GHG savings from updated building codes. Colorado, Idaho, South Dakota and Utah also have widespread construction but out-of-date building codes, offering ECs in those states the opportunity to make significant progress.

Buildings’ GHG emissions vary widely. States with higher emissions often rely largely on coal for power generation and have significant heating needs, so improving outdated building codes would have the greatest benefit as part of an overall climate strategy.

Most states that have set GHG-reduction targets are not on track to meet them, with only Illinois and Maine on a trajectory to meet 2030 climate goals. Oregon, Rhode Island and Virginia need to cut emissions by more than half from 2019 levels to meet their 2030 climate targets. Eight other states and the District of Columbia need to reduce emissions by more than 40% by 2030.

States may adopt building codes statewide or at the local level. Federal funding for code updates is designed to go through states, meaning that where localities set building codes, state and local governments will need to partner to ensure they too are able to benefit from the federal funding. Electrical contractors should monitor their own states to benefit from this growth.  

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