When it comes to energy efficiency in buildings, rapid technological advances are being undermined by outdated regulations. Decades-old federal laws currently prohibit states from setting energy standards for some of the most modern appliances, including heating and cooling systems and water heating equipment.

Industry lobbyists working in Washington, D.C., set the standards, which bind states and cities from moving to more stringent rules in local energy codes than the current federal mandate. This “preemption” effect presents a major barrier to reducing energy waste for many states and jurisdictions in pursuit of better energy performance in building stock and achieving climate action goals.

How Did We Get Here?

Congress passed the National Appliance Energy Conservation Act in 1975, and the act continues to save energy today. The U.S. Department of Energy estimates that current appliance standards will save more than 130 quads, or $2 trillion in energy, by 2030.

The potential for appliance standards savings is enormous and continues to be one of the nation’s most effective ways of reducing energy waste—right up there with fuel economy standards for vehicles. But because the federal statutes mandate a one-size-fits-all standard that has not evolved to follow technology improvements and market conditions, the standards have failed to advance in step with states’ energy targets. This is particularly true for furnaces and water heating equipment.

As a result of preemption, some required equipment has made little progress in energy savings for more than a decade. These lagging standards are a barrier to the efforts of many states and jurisdictions to meet their green economy
development plans and their climate action goals.

Equipment that is more advanced than what current code requires is already widespread in the market and affordable—and in many cases even mainstream. Findings from R and R Market Research confirm this point related to high efficiency ductless HVAC units: “Ductless continues to be a key strategic theme in the HVAC market, which could represent 15 percent of the total U.S. industry for both residential (about 9 percent) and commercial (about 6 percent) in 2016 and 2017.”

Lack of Requirements Yields Complex Workarounds

An owner can go beyond the federal mandate, but a state cannot specify such technology. And, without a code to require it, some builders have little incentive to increase efficiency, and jurisdictions have no way to ensure that buildings take advantage of this improved technology. Without being able to enact these requirements, jurisdictions are sometimes forced to require more expensive ways to meet their climate goals.

There are some complex, and more expensive, workarounds to the preemption problem. Higher efficiency equipment can be required as an option, as long as another “equivalent” option can meet the code with equipment at the federal minimum standards.

When jurisdictions implement these code structures to cope with the one-size-fits-all national standards, it ultimately leads to less user-friendly codes. As a result, designers are strained to figure out which compliance pathway best suits their project, and it becomes difficult for officials to verify compliance.

Not only do these workarounds complicate code compliance, but they also drive up the cost of efficiency. A recent study compared the cost of two methods of achieving a 10 percent to 15 percent efficiency increase above the 2012 International Energy Conservation Code (IECC) baseline. The first option included a code minimum HVAC system with daylighting and controls, and highly efficient water heating, envelope and electric lighting. The second option achieved equivalent energy savings via a code minimum design with an efficient variable capacity heat pump. The study found that the efficient HVAC system option has reduced costs $1.20 to $1.70 per square foot. Due to federal preemption, jurisdictions pursuing efficiency are forced to advance their building energy codes via the workaround methods, effectively driving up the first cost of construction.

International Approaches

Solutions to these issues exist, and many have proven effective in other countries. Japan and Australia successfully use standards that rely on the highest level of efficiency for that product on the market, periodically tightening the code to align with market advancement. Singapore relies on system-based metrics to determine building efficiency, as opposed to regulating individual component savings. In America, states often establish multi-state standards by setting uniform appliance regulations for products not covered by federal mandates. These approaches could theoretically be applied in the United States and reap major energy savings.

The federal law on equipment efficiency standards is now more than 40 years old and has created a major barrier to prescriptive codes trying to meet community and state climate and zero energy goals. Energy codes are a key policy tool in this effort and must evolve concurrently with the goals of jurisdictions to meet the target of zero energy by 2030. Without action, much of today’s potential energy savings from innovative HVAC and water heating systems cannot be realized.

The regulated HVAC and appliance industry has likely captured the agencies that are charged with writing energy-saving standards, at least until there is political will to change the rules. While international examples show what could be done, preemption will continue to hamstring progress in the United States until it is dealt with.