Federal Incentives for Energy Code Adoption

Two recent bills contain provisions that are specifically designed to encourage state and local governments to update their energy codes for new home construction. These efforts represent an intense push for widespread energy code updates that is expected to continue through 2029.

More than $1.2 billion is being offered to states and local jurisdictions to consider adopting more stringent energy codes. But the two programs doling out money have different mechanisms for funding.

Members and HBAs have the opportunity to partner with states and steer decisionmakers to the best program.

• The Infrastructure Investment and Jobs Act (IIJA), or Bipartisan Infrastructure Law (BIL), signed in November 2021, provides $225 million ($45 million per year from FY22 through FY26) for the Department of Energy’s Resilient and Efficient Codes Implementation (RECI) program for states to adopt updated energy codes. This means if a state is currently on the 2012 IECC, for example, if it moves to the 2018 edition, it may be eligible for a grant.
• The Inflation Reduction Act (IRA), signed into law in August 2022, provides $1 billion to support state and local governments’ adoption of the most recent energy codes, which currently is the 2021 IECC. Only moves to the 2021 IECC will be funded.

It’s important that NAHB members and HBAs emphasize that there is no need for a state to update its energy codes in most cases. Adopting new building codes is expensive, which is why federal money was appropriated to help, and can be confusing for both builders and building officials.

But if a state must take grant money, NAHB members and HBAs should encourage state and local governments to apply for IIJA (RECI) money rather than IRA money because the infrastructure bill funding does not mandate the adoption of the 2021 edition of the IECC.

Take a look at the map below to see which version of the IECC your state is currently using.