Pathways to Equity and Savings for Low-Income Households

This report by RMI analyzes how updated energy efficiency standards and Inflation Reduction Act (IRA) tax incentives can reduce energy costs for low-income Americans by encouraging the construction of high-efficiency, all-electric homes.

• The US Departments of Agriculture (USDA) and Housing and Urban Development (HUD) have proposed adopting the 2021 International Energy Conservation Code (IECC). This update could reduce energy consumption by 27 percent compared to the 2009 IECC, create positive cash flow within two years, and provide $14,536 in life cycle cost savings per single-family home.
• The Inflation Reduction Act's (IRA) New Energy Efficient Homes Credit (45L) provides financial incentives for new or renovated dwellings: up to $5,000 for those meeting Zero Energy Home (ZERH) V2 criteria and up to $2,500 for those achieving ENERGY STAR certification.
• All-electric homes are cheaper to build and operate than those with gas appliances across every International Code Council climate zone in the United States. The median additional cost for gas homes to reach ENERGY STAR levels is approximately $480, while the cost for ZERH homes is $2,000.
• The IRA incentives effectively eliminate the incremental cost gap between 2021 IECC-compliant and ENERGY STAR homes in the Southeast (climate zones 1, 2, and 3). This region, including Texas and Oklahoma, accounts for over 60 percent of the HUD and USDA single-family and low-rise portfolio nationwide, representing more than 100,000 new homes annually.
• While ENERGY STAR certification is increasingly viable, the IRA does not fully cover the costs of ZERH certification. In climate zone 3A (spanning from Oklahoma and northeastern Texas to North Carolina), builders must spend over $600 more to achieve ZERH certification than they can recover via the 45A credit.

APA

RMI (2023). Pathways to Equity and Savings for Low-Income Households. https://rmi.org/resources/pathways-to-equity-and-savings-for-low-income-households/

Chicago

RMI. Pathways to Equity and Savings for Low-Income Households. 2023. https://rmi.org/resources/pathways-to-equity-and-savings-for-low-income-households/.

Wikipedia

{{cite report |author=RMI |title=Pathways to Equity and Savings for Low-Income Households |date=11 August 2023 |url=https://rmi.org/resources/pathways-to-equity-and-savings-for-low-income-households/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023pathways, author = {{RMI}}, title = {{Pathways to Equity and Savings for Low-Income Households}}, institution = {RMI}, year = {2023}, month = aug, url = {https://rmi.org/resources/pathways-to-equity-and-savings-for-low-income-households/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }