New Standards for Residential Energy Efficiency

The past several years were full of exciting advances in the technology and systems that power residential energy efficiency. The potential of residential energy efficiency to combat inequality in energy access and fight back against rising greenhouse gas emissions is more relevant than ever, and new regulations and standards are meeting the moment.

What is residential energy efficiency?

Residential energy efficiency programs consist of strategies and technologies that reduce energy waste, pollution, and greenhouse gas emissions while minimizing the cost burden of energy for households. Residential energy efficiency programs can cost utilities less than generating and distributing energy from power plants, and have the potential to combat inequality in household energy costs.

Residential energy efficiency has come a long way: In the past 30 years, space heating efficiency has increased from 55-65% to up to 96% by transitioning from coal and fuel to natural gas furnaces, and refrigeration energy use has decreased from 950 to 362 kWh annually.

Today, new standards and regulations alongside advances in technology like heat pumps, appliances, lighting, and more are shifting the energy efficiency landscape.

Standards and regulations for a new era of efficiency

Thanks in part to funding in the Inflation Reduction Act of 2022 (IRA) and the Bipartisan Infrastructure Law (BIL), there are new standards and regulations helping to innovate residential energy efficiency programs.

In April 2024, the U.S. Departments of Housing and Urban Development and Agriculture (HUD and USDA) finalized energy efficiency standards applying to new residential construction. These HUD and USDA standards are based on the 2021 International Energy Conservation Code, and can help reduce energy use by a third for high-rise apartment buildings and more than a quarter for single family homes and low-rise apartment buildings.

There are also recent developments in appliance-specific regulation. In April 2024, the Biden administration adopted new standards to regulate energy efficiency in residential water heaters. In December of 2023, the Department of Energy finalized their energy efficiency standards specific to residential furnaces, requiring more efficient new furnaces using about 15% less energy, effective in 2028.

In addition to standards and regulations, the IRA and BIL have allocated over $1.2 billion in grants to help states and localities update their energy efficiency codes and a historic $391 billion to clean energy and electrification measures.

Impact across sectors

These new regulations in residential energy efficiency have the potential to transform homes, communities, and environments across the country.

Economic savings

Energy efficiency cuts down on costs across the board: Energy-efficient buildings are less expensive to heat, cool, and operate.

The standards announced by HUD and USDA could impact up to a third of new homes built nationwide and provide such significant energy savings that the efficiency measures would pay for themselves within two years on average.

The bundle of energy efficiency standards announced by the Biden administration in 2024 are estimated to save households and businesses nearly $1 trillion over 30 years, saving the average family $100 or more a year in utility bills. The water heater standards alone can save Americans $124 billion in energy costs and approximately $1,800 per household in utility bills over the life of the appliance.

Environmental benefits

As the climate changes, energy efficiency programs can help reduce emissions and increase resiliency to extreme weather events. That reduction in emissions also results in cleaner air, water, and land, benefiting the local environment.

The latest energy efficiency standards from the Biden administration could eliminate greenhouse gas emissions equivalent of taking 18 million gas-burning cars off the road in the next 30 years. Specifically, the regulations for water heaters should save as much greenhouse gas emissions as 43 million homes would generate in a year.

Combatting inequality

Energy efficiency can help address social inequalities by cutting down on energy costs and local air pollution in communities.

The cost of energy is disproportionately high, relative to income, for low-income households and the cost of energy relative to income is 13% higher for renters. The HUD and USDA standards will affect affordable housing and starter homes eligible for low-down-payment mortgages, helping low-income homeowners save more than $80 on monthly energy bills, amounting to annual savings of $524 and positive cash flow within 18 months.

Residential energy efficiency in the future

As the technology and systems that power residential energy use become more efficient, and regulations and standards support these improvements, the future is full of potential for cutting back on energy waste. Get started today with Resource Innovations.