How New Federal Policy Raises the Bar for Energy-Efficient Housing

In May 2024, the US Departments of Agriculture (USDA) and Housing and Urban Development (HUD) updated minimum energy standards for new construction, requiring new covered buildings under four stories to comply with the 2021 International Energy Conservation Code (2021 IECC) and taller buildings to meet ASHRAE/ANSI Standard 90.1-2019. These updates, combined with 45L tax credits from the Inflation Reduction Act (IRA), make high-performance multifamily housing financially viable, particularly for all-electric constructions and those in specific climate zones.

• The US Departments of Agriculture (USDA) and Housing and Urban Development (HUD) updated minimum home energy standards for new construction in May 2024. New covered buildings under four stories must now comply with the 2021 International Energy Conservation Code (2021 IECC), while buildings four stories or taller must meet ASHRAE/ANSI Standard 90.1-2019. HUD and USDA estimate these changes will affect more than 40,000 new apartments annually.
• Implementing the ASHRAE/ANSI Standard 90.1-2019 for new high-rise multifamily buildings is highly economical, costing less than $20 per unit with an average payback period of less than two months. The 2021 IECC standard for low-rise buildings has higher upfront costs but typically becomes cashflow-positive for residents within 18 months due to utility savings.
• Under the Inflation Reduction Act (IRA), multifamily developers paying prevailing wages can receive 45L tax credits of $2,500 per ENERGY STAR New Construction (ESNC) unit or $5,000 per Zero-Energy Ready Home (ZERH) unit. RMI estimates that the 45L tax credit typically covers the incremental cost of ESNC-certified construction in most of the US, particularly in climate zone 3A (the inland Southeast and coastal Carolinas, extending from eastern Texas to North Carolina).
• The $5,000 45L incentive is estimated to more than cover the costs of ZERH certification in three specific climate zones: 2A (Gulf Coast and adjacent areas), 2B (desert Southwest), and 3A (inland Southeast and coastal Carolinas). In zone 2A, developers could net over $600 per ZERH unit.
• All-electric construction is often more financially attractive than dual-fuel systems because it requires only one utility connection. For ESNC certification, the median cost reduction for an electric unit compared to a dual-fuel unit is approximately $375; for ZERH certification, the financial upside for all-electric construction is approximately $1,400 per unit.

APA

RMI (2024). How New Federal Policy Raises the Bar for Energy-Efficient Housing. https://rmi.org/resources/how-new-federal-policy-raises-the-bar-for-energy-efficient-housing/

Chicago

RMI. How New Federal Policy Raises the Bar for Energy-Efficient Housing. 2024. https://rmi.org/resources/how-new-federal-policy-raises-the-bar-for-energy-efficient-housing/.

Wikipedia

{{cite report |author=RMI |title=How New Federal Policy Raises the Bar for Energy-Efficient Housing |date=18 June 2024 |url=https://rmi.org/resources/how-new-federal-policy-raises-the-bar-for-energy-efficient-housing/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024how, author = {{RMI}}, title = {{How New Federal Policy Raises the Bar for Energy-Efficient Housing}}, institution = {RMI}, year = {2024}, month = jun, url = {https://rmi.org/resources/how-new-federal-policy-raises-the-bar-for-energy-efficient-housing/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }