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North Carolina kills effort to make its building code energy-efficient

State Republicans have banned residential building-code updates until 2031, a move that will increase energy costs and make it harder to decarbonize buildings.
By Jeff St. John

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Workers direct a large crane as it maneuvers a prefabricated panel of wood onto a home being constructed under a blue sky
Workers build a home in Wilmington, North Carolina. (John Greim/Loop Images/Universal Images Group/Getty Images)

Building codes are a vital tool for states to improve energy efficiency and reduce carbon emissions. But in a drastic move, North Carolina state lawmakers have just made it illegal for the state to overhaul its residential building codes until 2031.

On Wednesday, North Carolina’s Republican-controlled legislature overrode Democratic Governor Roy Cooper’s veto of House Bill 488, passing it into law. The law strips authority from the state’s Building Code Council, whose members are appointed by the governor, to revise residential building standards. The BCC had planned a major overhaul this year to update the state’s codes for new single-family and multifamily homes, which haven’t seen a significant revision for more than a decade.

Instead, HB 488 puts that power in the hands of a new entity, the Residential Code Council, which will be barred from undertaking a broader code revision until 2031. The bill was supported and largely crafted by lobbyists for the North Carolina Home Builders Association, which argued that updated codes would increase building costs, and thus housing costs, in the fast-growing state.

But multiple studies suggest the updates would actually save households money, while the eight-year pause will cost them on the order of hundreds of millions of dollars in unnecessary energy expenses.

Bringing the state up to date on building new homes and multifamily buildings with more efficient windows and doors, insulation, heating and cooling equipment, and materials that make them more resistant to extreme weather would not only save residents money, but also help the state meet its decarbonization plans. The ban will also likely make the state ineligible for federal funding from sources including the Inflation Reduction Act and drive up insurance costs for storm-threatened coastal communities.

Based on independent analysis, adopting these standards is just a win across the board,” Zach Amittay, Southeast advocate for nonprofit group Environmental Entrepreneurs, said in a Thursday interview. At the end of the day, this is, unfortunately, a reflection of the influence that homebuilders have on the legislature.”

Building emissions have become a flashpoint in the battle over climate policy between Republicans and Democrats. States controlled by Democrats, including California, Colorado, Massachusetts, Maryland, New York and Washington, have passed laws or instituted regulations that alter building codes to increase efficiency, promote the switch from fossil-fueled heating and cooking to efficient electric heat pumps and induction stoves, and restrict the use of fossil gas in new buildings.

Republican-controlled states have, in turn, passed laws restricting the right of cities and counties to ban fossil gas use in new buildings, with gas utilities spending heavily on lobbying and public relations campaigns in support.

Building codes, which are administered at the state, county or city level depending on the region, have gotten less attention comparatively, although they’ve seen their own lower-profile battles. Some Republican-controlled states have blocked code upgrades, as happened in Wisconsin this month when a state senate committee voted on a party line to prevent the adoption of more modern commercial-building standards. For years, climate and energy-efficiency advocates have fought homebuilders and gas utilities for influence over the International Code Council, a nonprofit body that sets model building codes used as a basis for state and local governments.

These codes largely govern new construction, limiting their impact on energy efficiency and carbon emissions from existing buildings, which account for roughly one-third of U.S. greenhouse gas emissions. But they’re still a huge opportunity to get very significant gains in building performance at minimal cost,” said Luis Martinez, senior attorney and director of Southeast energy at the Natural Resources Defense Council. Once the walls are up, it’s much more costly to install new insulation.”

The U.S. Department of Energy estimates that modern energy codes for residential and commercial buildings will enable $138 billion in energy cost savings and reduce carbon dioxide emissions by 900 million metric tons from 2010 to 2040. The impact is greater in places with more construction like North Carolina, which ranks in the top 10 states for new homes.

That makes HB 488 a significant setback for North Carolina’s clean energy and climate goals,” Martinez said. North Carolina has a goal to reduce carbon emissions from electricity generation by 70 percent from 2005 levels by 2030, and buildings are a significant part of energy consumption. To not be able to update the use of energy within buildings blocks off a significant and cost-effective opportunity to address emissions.”

Sparring over the costs and benefits of building codes 

The homebuilding industry’s argument against adopting modern building codes boils down to one word: cost. The North Carolina Home Builders Association argued that the average cost of new homes would increase by about $20,000 under the update planned by the state Building Code Council.

But a study from the DOE’s Pacific Northwest National Laboratory found that North Carolina’s proposed code updates would increase the average cost of new single-family homes by between $4,700 and $6,500, while reducing average household energy bills by 18.7 percent, or about $400 per year per household — enough savings to pay back the additional construction costs within two to four years.

These savings would add up to about $5.3 billion in reduced energy expenditures for North Carolina households over 30 years, the study concluded. More efficient homes would also reduce CO2 emissions by 130,700 metric tons in just the first year of the new standards being in place, equivalent to the annual CO2 emissions of nearly 29,000 cars on the road.

The savings potential of modernized building codes is backed up by a January study from the nonprofit American Council for an Energy-Efficient Economy (ACEEE). That study ranked North Carolina behind only Louisiana in terms of the savings that could be achieved by adopting the most modern building codes.

Portion of ACEEE table that puts Louisiana first among states for benefits from adopting better energy codes.
Louisiana, North Carolina and Colorado lead the rankings for which states would benefit most from implementing better building energy codes. (ACEEE)

That’s in part because North Carolina is building new homes at a rapid clip, noted Mike Waite, a senior manager in ACEEE’s buildings program. By passing HB 488, state lawmakers are basically saying, We don’t want to improve the energy efficiency of that new construction for another decade.’”

Risks to federal funding for storm resiliency

Beyond resulting in unnecessary household energy use, HB 488 may also bar the state from receiving hundreds of millions of dollars in federal funding for making communities more resilient to extreme weather, critics warn.

The law may disadvantage North Carolina’s efforts to win funds from the Federal Emergency Management Agency’s Building Resilient Infrastructure and Communities program, Amittay said. The state has already been awarded $73.8 million from this program, but North Carolina’s position will be weakened relative to states with stronger building codes” in future applications, he said.

FEMA ranks hazard-resistant” building codes as one of the best means of protecting communities against natural disasters, both in terms of preventing death and injury and reducing property damage. A 2020 study by FEMA estimated that modernized building codes will reduce nationwide property losses by $132 billion while increasing average construction costs by less than 2 percent.

Opponents of the new system also point out that failing to update residential building codes could put residents at higher risk from hurricanes and floods. That risk was highlighted in a letter supporting Cooper’s veto of HB 488 signed by more than 40 state agencies, businesses and trade groups, including the American Property Casualty Insurance Association, the American Society of Civil Engineers and the Flood Mitigation Industry Association.

The letter notes that North Carolina’s residential building codes have not been updated in nearly a decade, which has already hurt the state’s access to federal mitigation dollars.” The cost of outdated building codes during disasters includes additional deaths, injuries, disaster suffering, property damage, emergency response costs, family displacement, longer recovery times and business closures.”

Freezing those codes until 2031 could also cost the state’s residents insurance premium reductions — including through FEMA’s Community Rating System for flood insurance — that are only available to communities with strong codes in place,” the letter states.

With the new law, North Carolina has also forfeited eligibility for federal funds to support updating building codes, Amittay said. The Inflation Reduction Act will provide $1 billion to distribute among states undertaking this work, and the Bipartisan Infrastructure law provides another $225 million.

ACEEE’s Waite highlighted that Louisiana and Colorado, the states that ranked first and third on ACEEE’s list of states that could benefit the most from updating building codes, both received funding from the first $90 million allocated under the Bipartisan Infrastructure law, while North Carolina didn’t.

That funding is not just about updating a regulation,” he said. It’s about building up a next-generation technology workforce. It’s about ensuring that benefits of energy efficiency accrue throughout a state.”

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.