Even as North Carolina continues to weaken its building energy conservation codes, a new federal rule is poised to spur the construction of thousands of energy-efficient starter homes in the state each year. 

Adopted earlier this spring, the measure requires homes with certain federally-backed mortgages to meet the latest guidance for insulation thickness, window quality, and other energy-saving features — a major improvement over the state’s 2009-era floor for new residential construction. 

The rule is expected to impact more than 1 in 10 new home sales in North Carolina, mostly by lower-income and first-time homebuyers. Government studies show they will pay more for improved efficiency but reap immediate cash-flow benefits from lower monthly utility bills. 

“The requirements are essential for protecting low-income homebuyers and renters,” said Lowell Ungar, federal policy director of the American Council for an Energy-Efficient Economy, “lowering their energy bills, giving them more comfortable and healthier homes, and protecting them in the climate transition.”

The impact extends beyond North Carolina and will lift standards in several states where lawmakers and industry lobbyists have pushed back against energy-saving building code updates.   

Ungar and his colleagues are also working to extend the requirements to the independent regulator of Fannie Mae and Freddie Mac. If they succeed, a large majority of new homes in North Carolina could be built to modern energy-savings standards — even though a 2023 state law prevents any major code updates until the next decade. 

Rob Howard, who builds sustainable homes in the state’s foothills, fought against the law and now serves on the state’s Building Code Council. 

“It’s the first feeling of hope that I’ve had for North Carolina since last year,” he said.

Homebuilders block local improvements 

Reducing energy waste in buildings is a critical component of the clean energy transition. The most cost-effective way to do so is at the point of construction, especially in rapidly-growing North Carolina, where some 90,000 new homes are built each year, about two-thirds of them single-family units. 

Yet the powerful home construction lobby has long resisted stronger requirements for energy-saving features in residential construction, influencing the state legislature, where it is a major campaign donor, and until recently, the state’s Building Code Council, a citizen commission. 

Thus, while model codes are updated every three years, North Carolina’s rules remain outdated. Though the council was poised last year to bring the code in line with 2021 guidelines, lawmakers backed by developers intervened to circumvent the update, overriding a veto from Gov. Roy Cooper, a Democrat. 

This year, the Republican-led legislature relaxed insulation requirements and made other changes to the building code that many experts, including the state fire marshals’ association, argued would make homes less safe. Again, Cooper vetoed the measure, and in a vote last week, lawmakers overrode him.

“The General Assembly has let the homebuilding industry make a quick buck at the expense of North Carolina families who will pay more every month in home energy costs,” Drew Ball, Southeast campaigns director at Natural Resources Defense Council, said in a statement after the vote. “This law rolls back North Carolina’s energy building codes and passes the costs on to consumers.”

‘Let’s set the bar as high as possible’

But state building codes aren’t the only policies that can influence home construction.  

The federal government plays a huge role in promoting homeownership by guaranteeing loans for borrowers who can only make a small down payment or may otherwise risk default.  

In 2007, a sweeping energy law adopted under the George W. Bush administration required any new home purchased with backing from the Department of Housing and Urban Development or the Department of Agriculture to meet the latest model code for energy efficiency. 

It wasn’t until 2015 that the Obama administration tied the loans to the 2009 model energy efficiency code. The Trump administration took no action.

The Biden-Harris administration picked up the torch last year, beginning an examination to make sure the latest model codes would bring more benefits than costs. In May of this year, officials concluded that the 2021 standards wouldn’t negatively affect the affordability and availability of housing.

“As a result of the updated energy standards, energy efficiency improvements of 37% will cut energy costs by more than $950 per year, saving homeowners tens of thousands of dollars over the lifetime of the home,” a press release from the Department of Housing and Urban Development said.

Similarly, last year an independent government lab found that the more stringent standards will add about $5,000 to the cost of the average North Carolina home, but generate a positive monthly cash flow instantly in the form of lower utility bills. 

About 1 in 10 new single-family home loans per year are backed by the Department of Housing and Urban Development or the Department of Agriculture, according to the federal officials. 

The Department of Veterans Affairs must update its lending rules to match those of HUD and USDA, impacting another 3% to 5% of newly built homes, Ungar estimates.

Howard, who’s building a small collection of super-efficient homes in Granite Falls, says just one of the 11 cottages so far is being financed with a loan that would be affected by the new rule. 

“As a small builder who’s focused on attainable housing, I’m going to assume that a certain percentage of my buyers will qualify for the USDA loan programs,” he said. “And so of course, I want them to have the ability to participate in those. But I’ve already made the decision to build to zero-energy ready, which is currently based on the 2021 [model code]. I’m already there.” 

The bigger impact of the new rule will be on large, multi-state, multi-regional builders who focus on starter homes, Howard said. “Those kinds of builders don’t want two different levels that they’re building to. They would rather have one that simplifies their entire construction process.”

With the new rule, then, builders can either adhere to the latest energy efficiency standards so that potential buyers can qualify for federal backing on their loans — or not. 

“Let’s set the bar as high as possible,” said Howard, “and then builders get to choose.” 

If multi-state builders choose to build all of their homes to the 2021 model code, the rule’s impact could extend beyond the roughly 15% of new stock estimated by government officials and advocates.

‘A much broader impact’

If advocates succeed in getting the Federal Housing Finance Agency, the regulator of Fannie and Freddie, to adopt the same standards, the effect would be even greater: the two companies ultimately end up buying over half of mortgages in the country. 

“Now you’re talking about 70% of the loans in this country,” Howard said. “So that’s obviously a much broader impact.”

As they have in North Carolina, the national builder lobby claims the energy efficiency standards will add tens of thousands of dollars to construction costs. They oppose the rule that’s already finalized for the Departments of Agriculture, Housing and Urban Development, and Veterans Affairs, and they object to extending the requirements to Fannie and Freddie. 

“If Fannie and Freddie were forced to comply with the 2021… mandate,” Missouri builder Shawn Woods told Congress this spring, “this would become a de facto national standard and be a massive blow to housing affordability.” 

Unless Republican presidential nominee Donald Trump wins this November, the finalized rule is safe for now, advocates believe. As for the broader requirements on Fannie and Freddie, the director of the Federal Housing Finance Agency said it would study the matter and issue a decision by the end of June. 

“Obviously, they did not do that,” Ungar said.

Even with N.C.’s building code frozen, federal rule poised to boost energy-efficient housing in the state is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

A group of Massachusetts solar installers are working with the state to modify fire codes that they say are too restrictive and are limiting the scale of residential solar arrays. 

“We are not at the finish line, but both sides have been extremely cooperative and collaborative,” said Nick D’Arbeloff, vice president of commercial for SunBug Solar and the vice president of the Solar Energy Business Association of New England. “The dialogue is producing good results.”

At the heart of the debate are provisions of the most recent state fire code, which went into effect in December 2022. 

For the first time, the code includes restrictions on the positioning of rooftop solar arrays intended to make it easier and safer for firefighters to move around on top of burning houses. The code calls for a setback from the ridgeline of a roof, leaving enough space for firefighters to cut into the roof to ventilate the home and allow smoke to escape. It also requires pathways through and around panels so firefighters can get where they need to go.

“It sets requirements on how much space is necessary or required to be there so firefighters can travel unimpeded by solar panels,” said Jake Wark, spokesman for the state Department of Fire Services.

Impacts on solar installations

The solar industry objected to the changes for a few reasons. The setbacks and pathways required mean reducing the total area of just about every rooftop array from 10% to 20%, and smaller arrays mean less revenue for installers. Some potential customers even pulled out entirely because the economics of the system didn’t work for them with fewer panels. 

Some installers also objected that clearing so much room for firefighters isn’t necessary. All modern solar installations, they said, include a switch that can instantly stop the flow of any electricity through the panels, which would allow firefighters to easily and safely break through with a swing of an axe. The state, however, was not convinced these switches could be thrown quickly enough or provide enough safety.

“Panels always provide an electrocution hazard,” Wark said.

The suddenness of the new code also made for a rough transition, installers said. For years, similar rules have been part of the national model code many states use as a template for their own codes. In Massachusetts, however, the solar provisions had always been removed, with the understanding that the state building code would eventually address the issue, Wark said. So the solar rules in the new fire code were unexpected by many in the industry.

“The transition was absolutely awful, and we ended up having to redesign a lot of arrays,” said Mark Durrenberger, president of solar installation company New England Clean Energy. “The code we’re answering to is not entirely clear, so it leaves lots of room for interpretation”.

The municipal code officials in charge of inspecting solar installations were also caught somewhat unprepared. From town to town, building and fire inspectors interpreted the rules with different degrees of stringency. Sometimes, Durrenberger said, they just got it plain wrong – in one case applying the rules for residential installations to an array atop a barn – for example. For installers working on projects in multiple towns, the whole situation was rife with uncertainty. 

“Fire chiefs weren’t necessarily as prepared as they perhaps should have been with regards to how best to review designs and enforce this new code,” D’Arbeloff said. 

Making compromises

In the face of this upheaval, the Solar Energy Business Association of New England, MassSolar, and the Northeast Clean Energy Council reached out to the state to see if they could find a compromise. The Department of Fire Services agreed to create a working group, including representatives of the solar industry, to look for solutions. Several months in, the participants have made significant headway, and the solar industry has accepted the need to make some concessions.

“The solar industry’s concern was that we would be unable to put in place a system capable of offsetting the full load of the household as a result of these setbacks,” D’Arbeloff said. “While that still may be the case, we fully understand why compromise is called for here.”

Whatever adjustments to the rules come out of the process, both sides will have to take responsibility for making implementation go as smoothly as possible, D’Arbeloff said. The Department of Fire Services will need to offer additional training in the new code, but installers will also have to make sure their designs and drawings clearly communicate the ways in which their plans adhere to the rules. 

There is still plenty of work to do, but Durrenberger is hopeful that a modified code will be in place some time next year. 

“I suspect that there will be a lot of back-and-forth to try to refine the language,” he said “With luck, maybe at the beginning of next year, we’ll have a revised fire code that can take back some of the roof we lost.”

Solar installers and fire officials look for compromise on Massachusetts fire code  is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Reality is setting in for clean energy advocates and building professionals who’d long sought to bring North Carolina’s outdated home energy code up to modern standards: the revamp isn’t happening. 

Under a law passed earlier this year by the Republican-led legislature, requirements for windows, insulation thickness, and other building features can’t be overhauled until 2031 — even if a recent lawsuit by the Democratic governor, contesting a separate provision in the statute, gains traction. 

But while experts widely condemned the new law, they say there are still chances — albeit less far-reaching ones — to advance building efficiency in the state in the years to come. 

“It’s unfortunate when you waste an opportunity to save money, to create jobs for energy efficiency, and reduce emissions,” said Luis Martinez, Asheville-based director of southeast energy for the Natural Resources Defense Council. “That triple win is the reason we seek energy efficiency.” But, he added, “the story doesn’t end there.” 

‘Energy codes are the key component’ 

Reducing energy waste in buildings, especially homes, is a critical component of the clean energy transition.

Dwellings are the largest source of electricity demand, according to the state’s Clean Energy Plan, and their 44% share is growing with the state’s population. The less electricity these buildings require, the fewer carbon-free energy sources are needed to replace shuttering fossil fuel plants.

The potential to ramp up energy efficiency in North Carolina homes is vast. A 2017 study from the National Renewable Energy Laboratory, for instance, found that more efficient heating and cooling equipment, added insulation, and other measures could cut energy use in single-family homes by 31%.

Without question, the easiest and most cost-effective way to begin fulfilling that potential is through more stringent standards at the point of construction for insulation and other features for the 90,000 new homes built in the state each year, most of them single-family units. 

“In terms of new build, new construction, energy codes are the key component,” said Cherylyn Kelley, manager of building energy codes and policy at the Institute for Market Transformation.

To make energy efficiency improvements later, she said, “you end up spending more money; it’s more invasive. … It’s just more annoying. Contrast that with energy codes: you have all those improvements built into the home from the outset.” 

Yet the powerful home construction lobby has resisted stronger requirements for years, influencing the state legislature, where it is a major campaign donor, and the state’s Building Code Council, a citizen commission historically populated mostly with builders and their allies. 

While international model guidelines are updated every three years, North Carolina’s rules still resemble those from 2009. So, even when the council looked poised earlier this year to bring the code in line with 2021 guidelines, some observers were skeptical. 

“I’d given up all hope that they would change it,” said Amy Musser, a green building consultant in Asheville.

In fact, before the council finished its work, lawmakers backed by developers intervened to circumvent the update. Though Gov. Roy Cooper vetoed House Bill 488, the Republican supermajority, joined by a half dozen Democrats, overrode him easily.

‘Significant opportunities…to save’

The law allows discrete amendments to the building code in 2026. Still, most advocates are turning their attention elsewhere to advance building efficiency in the coming years. 

While targeting new home construction is the most cost-effective way to improve efficiency, it’s not the only route. Existing housing stock approaches 5 million units in the state, according to Census data. And since minimum energy conservation standards have lagged, there’s plenty of room for improvement. 

“For people that live in a newer home that’s only 10 or 15 years old, there may still be really significant opportunities for them to save,” said Jennifer Amann, a senior fellow at the American Council for an Energy-Efficient Economy. “That’s especially true in North Carolina, where the code hasn’t kept pace with other states.” 

The 2017 study on energy efficiency potential found that replacing electric furnaces with heat pumps would produce the most savings statewide, at $800 million a year. A technique for increasing wall insulation called “drill and fill” was a distant second, offering almost $300 million a year. 

Replacing worn-out equipment can pay for itself within five years, in some cases, according to the analysis. The math looks even better when coupled with enticements for energy efficiency improvements under the Inflation Reduction Act, which authorizes tax credits and $208 million worth of direct rebates to North Carolina.

“It’s a very lucrative time for folks to be thinking about what they can do in their homes,” Amann said. “This might be a great time to go out and get an audit.”

‘The way we market our services’ 

Last year’s federal climate law also increased incentives for builders to go above and beyond the minimum code: a $5,000 tax credit for ultra-efficient homes built to “Zero Energy Ready” standards and a $2,500 credit for those meeting Energy Star guidelines. The requirements for the latter vary by state. 

A less robust version of these tax credits have been around since 2006, and Energy Information Administration data from 2011 showed the height of their popularity in North Carolina, when more than a quarter of new single-family homes met Energy Star criteria. 

The initial tax credit has faced uncertainty, and in 2019, the state’s share of Energy Star-certified single-family homes dropped to one in 10. But green building consultants are bullish on the future, with the tax credit expanded and now extended to 2032. 

“[It’s] a really important incentive that’s helped drive building efficiency forward,” said Brandon Pendry, a spokesperson for Southern Energy Management, an energy rater and solar installer.

In Duke Energy territory, builders can also get rebates of up to $9,000 for homes meeting a standard called the High-Efficiency Residential Option, or HERO. “We’re big advocates of HERO,” Pendry said via email. “It’s been a great tool for helping homes become more energy efficient.”

Clients can and often do combine federal incentives with Duke’s program, said Musser. “It’s the way we market our services,” she said.

To be sure, the code proffered by the Building Code Council early this year would have been even more efficient than HERO, rendering it moot or in need of updating. But with that code proposal now rejected by lawmakers, Duke says the program will endure. 

“We plan to continue offering this cost-effective program that promotes the construction of new high-efficiency housing stock,” company spokesperson Keith Richardson wrote in an email. 

Richardson didn’t provide numbers of houses that had taken advantage of the program, but said it resulted in over 7,000 “energy saving measures” being implemented in 2022, earning builder rebates of over $17.4 million. 

Carrots vs. sticks

To be sure, all these incentives — whether to homeowners who perform energy efficiency upgrades or builders who exceed the minimum code — are carrots that rely on hungry, educated consumers. 

But there is one potential stick on the horizon, said Martinez of the Natural Resources Defense Council: Duke Energy’s Carbon Plan. The company must win approval from regulators every two years for its blueprint for zeroing out its carbon emissions by 2050, and energy efficiency is one small part of that strategy. 

“The last time around, they encouraged Duke to increase the amount of energy efficiency from 1% of sales to 1.5% of sales,” Martinez said.

A stronger mandate from regulators to ramp up efficiency would prompt Duke to beef up HERO and other energy efficiency programs, including those targeted at low-income customers, to achieve carbon reductions required by law. 

“We should be doing at least 1.5% of sales,” Martinez said, “if not more.”

With N.C. home efficiency codes frozen, advocates eye other opportunities is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

The North Carolina legislature advanced legislation Wednesday to block new rules for energy-efficient building construction, brushing aside critics who say the bill would penalize homeowners and hurt communities trying to prepare for extreme weather. 

Passed by the House last month and backed by the state’s powerful developer lobby, House Bill 488 would undo two years of effort by the state’s Building Code Council, which had sought to overhaul the state’s 2009-era standards for insulation thickness, window quality, and other energy-saving features in new homes. 

Instead, the measure scheduled today for a vote in the Senate would create a new, developer-friendly panel to oversee residential codes, stripping that authority from the existing council. The new body wouldn’t be allowed to revamp the entire residential energy code until 2031 but could offer discrete amendments beginning in 2026.

Critics say the bill would deprive new homeowners of the chance to save on utility bills, which will sting even more if hefty Duke Energy rate increases are approved. The Building Code Council’s proposal had been predicted to increase construction costs by about $5,000 but pay for itself in the form of lower energy bills, producing a positive cash flow from the get-go.

For months, the North Carolina Home Builders Association claimed the study’s own authors had said their analysis was flawed. But the Pacific Northwest National Laboratory has repeatedly refuted that notion, most recently in a memo dated last week.

“PNNL stands by the technical analysis and impact estimates previously provided to the Council,” the memo states, “which indicate that the proposed code will result in significant savings for homeowners and renters in North Carolina.”

The state’s Department of Public Safety also says the state’s outdated building code hurts local governments seeking help from FEMA’s Building Resilient Infrastructure Communities (BRIC) Program, which funds projects to reduce risks from disasters and natural hazards.

“One of [FEMA]’s priorities is to incentivize adoption and enforcement of modern building codes,” said public information officer Brian Haines via email. “In each funding year since 2020, FEMA has increased the weight of the scoring for codes adoption-related criteria.” 

Pending applications for that federal program from the state total $141 million this year, when 40 out of 115 total scoring points will relate to building codes. The state forfeited 10 of these points this year, officials say, and could lose 20 more in the future.

“Losing points that we cannot overcome in other scored areas would mean a reduction in projects awarded to the state,” Haines said over email, “impacting residents and businesses alike.” 

Still, Rep. Mark Brody, a builder and Union County Republican, insists his bill wouldn’t hurt North Carolina’s grant competitiveness. FEMA only cares if the state adopts most of the up-to-date model code, he asserts, and skipping the energy chapter is okay. “We will get 100% of the grant points” if the overall model code is adopted, he told senators this week.

The Energy News Network asked Brody if he had evidence for his view. He pointed to the same BRIC guidelines highlighted by bill critics, which don’t specify whether all chapters contained in the model code are required.

Raleigh mechanical engineer Natalie MacDonald, a member of the Building Code Council and supporter of the updated energy conservation code, urged senators this week to consider the budgetary impacts of creating a second code council. 

“This is going to have an additional burden on the Department of Insurance,” she said, pointing out that three new staff to assist the new panel would cost the state another half a million dollars each year, according to a fiscal note from nonpartisan legislative staff. 

Finance Committee co-chair Sen. Jim Perry, a Wayne County Republican, dismissed those concerns, too.

“The chair will point out that [the bill] will only cost money if it’s appropriated,” he said, “and I don’t think that’s going to be an issue.”

If the GOP-led Senate approves House Bill 488, it would face at least one more vote in the House, also controlled by Republicans, before reaching the desk of Gov. Roy Cooper.

Cooper, a Democrat in his second term, has publicly criticized the measure.

“It’s so important that we don’t just stop this and say we’re going to freeze everything as it is,” he told the Energy News Network earlier this spring. “That’s a bad idea because we know that technology is moving so fast, and we can save money in the long run by being more energy efficient.”

But it’s not clear a veto, if it came, would stick. The bill passed the House easily with bipartisan support, and Republicans retain super majorities in both chambers.

North Carolina legislature moves to block new rules for building efficiency is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Amid sustained opposition from the developer lobby, North Carolina’s Building Code Council on Tuesday hit pause on its proposal to overhaul building efficiency rules, sending it back to the public for comment in September and delaying its final adoption until at least December. 

In the works for two years, the proposed energy conservation rules would replace the state’s 2009-era standards for insulation thickness, window quality, and other features in new home construction — a move experts say will save homeowners in the form of lower utility bills. 

But the powerful North Carolina Home Builders Association has objected strenuously to the code update, arguing the upfront costs of added insulation and the like are too expensive and that homes are efficient enough already. 

The dispute set up competing measures at this week’s meeting of the code council: one freezing the current rules in place until the end of the decade, and another moving forward with the revamp meant to align the state standards with the latest international guidelines. 

Though a majority of the council appeared to support the proposed new code, all but one member voted in favor of sending the builders’ proposal for the status quo to a public hearing.

“When we have issues that are this important,” said Bridget Herring, Asheville sustainability director and chair of the council, “it’s important that we hear from the public.”

The code overhaul also hit a technical snag Tuesday: though a cost-benefit analysis by Pacific Northwest National Laboratory commissioned by the council was completed in March, the study didn’t undergo the bureaucratic paces required by law. 

At the same time, the builder lobby has repeatedly insisted the cost-benefit analysis is outdated, since an initial draft was based on 2020 dollars and didn’t reflect pandemic-era inflation and supply chain issues. Gary Embler, a Concord builder and member of the council, brought up those concerns again Tuesday, suggesting that the study contained “errors.”

However, a March 2023 version provided updated costs and still demonstrates savings for homeowners. Despite claims from builders otherwise, the lab has confirmed its numbers as recently as May. 

It’s not clear if that will quell complaints about the validity of the study. But Herring made clear it would be the basis for a proper fiscal note that the public can comment on in September.

By then, the state’s part-time legislature could render all this procedure moot with the passage of House Bill 488, which outlaws a new conservation code until 2031. But Herring and other council members continue to hold out a sliver of hope for compromise between conservation advocates and developers.

“I believe in the process. I believe we need more public comments on this,” said council member Rob Zapple, a Wilmington builder and advocate for the updated code. “There may be shifting opinions. Let’s keep talking.”

North Carolina panel hits pause on new building energy efficiency rules is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.