4. ENERGY EFFICIENCY
82 million in 2017 to 106 million in 2050, a total growth of 29%. Multifamily households are expected to increase by 25%, from 31 million in 2017 to 39 million in 2050 (Figure 4.11). Further energy efficiency improvements in buildings are therefore required to tackle energy consumption in the residential sector.
Figure 4.11 Outlook for household building stock per type, 2017-50
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Multifamily buildings (millions)
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From 2017 to 2050, single-family homes will grow by 30% and multifamily buildings by nearly 40%, according to EIA projections.
Source: EIA (2019), Annual Energy Outlook 2019, www.eia.gov/outlooks/aeo/.
Energy efficiency policies in the buildings sector
Tax credits
The federal government offers households tax credits for energy efficiency upgrades made to their homes. Specifically, the government currently offers the Residential Energy Efficient Property Credit of 30% for installation of qualified energy equipment, including solar equipment, wind turbines and fuel cells (Smarter House, 2018). In addition, under the Bipartisan Budget Act of 2018, Congress extended the Non-Business Energy Property Credit of 10% (up to USD 500) for qualified energy-saving improvements, such as insulation and high-efficiency heating and air-conditioning systems (ACEEE, 2018a). The credit will phase down after 2019 until the end of 2021, when it fully expires.
Several energy efficiency tax credits, however, expired at the end of 2017. Prior to that, builders of new efficient homes could claim a business tax credit of USD 2 000, while commercial buildings previously received a business tax deduction of up to USD 1.80 per square foot for new or retrofitted buildings with efficient lighting, insulation, and heating and cooling systems (ACEEE, 2018b; DOE, 2019b). Tax credits previously issued to manufacturers of efficient appliances are also no longer in effect.
In addition to the federal government, a number of states offer energy efficiency tax benefits, especially as sales or property tax exemptions for installing qualified equipment. Utilities also often provide rebates to customers for purchasing energy-efficient appliances or equipment.
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Building codes
Building codes continue to be an important driver of efficiency improvements in the residential and commercial sectors. Building codes establish mandatory efficiency requirements for new and renovated buildings, covering areas such as wall insulation, windows and air leakage. The DOE estimates that 75% of buildings in the United States will be either new or renovated by 2035, offering considerable scope for improving the efficiency profile of the building stock (DOE, 2016a).
In the United States, there are no nationally mandated building energy codes, but voluntary model codes. States can choose to set building codes informed by model energy codes. Two private organisations develop model energy codes through a stakeholder process: the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 90.1 and the International Energy Conservation Code (IECC, developed by the International Codes Council). The IECC applies to both residential and commercial buildings while the ASHRAE standard applies only to commercial buildings. States may adopt these codes, or they can choose to develop their own separate codes. The latest IECC was issued in 2018, while the latest ASHRAE 90.1 was issued in 2016. The codes are updated every three years (ACEEE, 2018c).
The DOE, under the Building Energy Codes Program, is legally required to participate as a stakeholder in the model code setting process. The department also evaluates the energy savings of the model codes, tracks the adoption of energy codes across states, and provides technical assistance and training to states in adopting the codes. Enforcement of the codes takes place by inspectors at the local level (DOE, 2018b).
Beyond the prescriptive model codes, there are a number of voluntary codes, standards and certifications that have also achieved results in terms of improving energy efficiency, including ASHRAE 189.1, Leadership in Energy and Environmental Design (LEED) certification, and the DOE’s Zero Energy Ready Home. Several states also have higher efficiency codes, including Massachusetts and New York. California’s 2019 Building Energy Efficiency Standards require all new homes starting in 2020 to have advanced efficiency measures as well as rooftop solar installations.
In addition, other tracking and benchmarking tools also exist to provide information on energy use and efficiency of buildings. The most common for commercial buildings are LEED and ENERGY STAR Portfolio Manager, while the Residential Energy Services Network, Home Energy Rating System and ENERGY STAR certification are prevalent in the residential sector.
California, New York and Vermont are working with utilities and other partners on socalled pay-for-performance pilot programmes, which allow savings from energy efficiency improvements to be monetised in real time, based on meter readings.
Appliance and equipment standards
Under the EPCA of 1975, Congress directed the DOE to develop and implement minimum efficiency standards to lower energy consumption on appliances and equipment. Subsequent legislation has called on the department to upgrade and strengthen those standards (DOE, 2018c). The DOE’s Building Technologies Office administers the Appliance and Equipment Standards Program, which imposes minimum energy conservation standards on over 60 types of appliances and equipment.
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The products covered by these standards account for around 90% of household energy consumption and 60% of commercial building energy demand. Unlike with building codes, appliance and equipment standards are set at the national level to avoid patchwork standards for manufacturers across states. Though states are allowed to adopt their own appliance standards, federal standards for a given product category supersede state standards, even if the state standard is stronger. The DOE is required by law to review standards at least once every six years, including to reflect technological gains, and set standards to levels that are “technically feasible and economically justified” (DOE, 2018d).
The Federal Trade Commission (FTC) has overseen the EnergyGuide labelling programme for appliances and equipment since 1980. The labels provide consumers information on the energy consumption and costs associated with a given appliance in order for them to make more informed choices. Under the Energy Policy Act of 2005, Congress directed the FTC to update its guiding labels, which took effect in 2007. Most recently, the FTC imposed labelling requirements on select consumer electronics such as televisions in 2010 (ACEEE, 2018d).
Lastly, ENERGY STAR is a voluntary programme that is jointly administered by the EPA and the DOE, which certifies products that meet predetermined energy efficiency criteria. The EPA defines ENERGY STAR specifications for individual product classes, ranging from appliances to computers, home electronics and lighting (DOE, 2018f). The labelling system has proven successful in driving consumers to product choices that achieve both energy and cost savings. The EPA has also developed ENERGY STAR ratings for commercial and residential buildings. Since 2011, all ENERGY STAR classifications undergo third-party certification.
Co-generation
The EPA estimates that around two-thirds of energy consumption from electricity generation is released as wasted heat. As such, co-generation1 installations that can capture the heat and use it for space heating, cooling, water heating or industrial processes hold significant potential to increase energy productivity. The EPA estimates that co-generation can reach efficiencies of over 80% compared with 50% for conventional technologies such as gridsupplied electricity or on-site boilers (EPA, 2019b). The Public Utilities Regulatory Policies Act, which permits private entities to sell power at a utilities avoided cost, was a large driver of co-generation installations in the United States, as were broader measures to deregulate the electricity sector. Co-generation is used in factories, residential and commercial buildings, and municipal facilities, though it has not experienced much growth in new installations in the past few years.
Under the Bipartisan Budget Act of 2018, Congress reinstated a 10% investment tax credit for co-generation projects up to 50 megawatts (MW) in capacity (limited to the project’s first 15 MW) that exceed 60% energy efficiency and that commence construction by the end of 2021 (ICF, 2018). Facilities that use a minimum of 90% biomass are exempt from the efficiency requirement. In addition, the act also included other benefits for co-generation projects, including depreciation allowances. Notably, a major factor supporting co-generation projects is low and stable natural gas prices. In this regard, the shale gas production boom has brought an extended period of affordable gas resources, which could improve the investment case for co-generation projects (GE Power, 2017).
1 Co-generation refers to the combined production of heat and power.
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