How energy codes save California families money

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OPINION — California is grappling with both housing and energy affordability crises as we head toward midterm elections. As residents are increasingly struggling with the cost of living and high utility bills, it’s critical that state leaders and consumers alike understand and use the tools we have to lower costs for new homeowners.

The conversation around housing affordability needs to move beyond discussion of the purchase price and consider the cost of maintaining a comfortable and safe home. It is an enormous issue with complexities of material costs impacted by tariffs, regional labor costs and supply chain disruptions. 

But energy efficiency, which modern energy codes provide, is the one thing that keeps money in Californians’ pockets through savings on utility bills over the life of the home. And we know homebuyers care about this: Energy efficiency requirements for new construction are strongly supported by 78% of U.S. voters in a new poll from Data for Progress.

But a recent analysis from the Department of Energy (DOE) asks Americans to look at home ownership based solely on the first costs of construction. It incorrectly inflates the cumulative cost of building to the most updated energy code by comparing it to an outdated one that 49 states don’t use. In fact, the vast majority of states –– including California –– have already adopted the 2015 standards or more stringent codes. 

So then, what is the actual cost of building to an updated energy code? An earlier DOE report, prepared by the Pacific Northwest National Laboratory, gives a more complete analysis comparing the 2024 code with the latest code update: The total average increase in construction costs is $282 for a single-family home and $949 for a multifamily dwelling.

If we use $428,000 as the average cost to build a home in the U.S. (the most recent data available from the National Association of Homebuilders), the energy code adds a fractional 0.07% in total construction cost. 

For California homeowners, the utility bill savings of building to the 2025 code make up the slight increase in construction costs in less than four years. On top of this, homeowners across every single climate zone in the state benefit from utility bill savings. In hot regions like the Central Valley and Southern California, homeowners can save on average $2,509 over 30 years. In the coldest parts of Northern California, the savings can reach $3,790. 

On average, the California Energy Commission states just a $424 increase cost per home that reaps over $4.8 billion dollars in savings and public benefit for the state’s latest energy code. 

In addition to leaving out the efficiency measures that save homeowners over decades through lower monthly utility bills, the DOE also neglects to mention other benefits of building efficiently: protection from volatile energy prices, greater comfort, resilience against weather, improved health, reduced maintenance and more.

Housing affordability isn’t just about what families pay to close on a house. After all, a house isn’t just a structure. It’s a home that families live, play and rest in. And what does it cost a family’s health to have poor insulation against a heat wave and winter freeze, or smoke and pollution outdoors? 

Extreme heat resulted in over 10,600 emergency room visits between 2013 and 2022 in California, and causes more deaths than all other weather-related events combined in the U.S. Major extreme heat events have totaled over $7.7 billion in health care costs, lost wages, infrastructure damage and more. Air pollution in the state also contributes to 5,400 premature deaths and thousands of emergency room visits and hospitalizations every year. Low-income households and communities of color bear a disproportionate share of these impacts.

Looking at housing affordability solely through initial construction costs prioritizes the developer, not the true affordability for California homeowners and renters. It doesn’t take into account the overall costs of owning and living in a home, and the public health impacts and financial tolls avoided by building to updated energy codes.  

Ted Tiffany is the senior technical lead at the Building Decarbonization Coalition.