Energy efficiency and electrification are the dynamic duo of a modern building. Technology advances in both these areas mean that we have the ability to improve the comfort and health of a building’s residents, save them money, reduce air pollution and better manage demand on the power system. In a time of rising costs and rising concern about environmental impacts, the opportunity to modernize buildings is more urgent than ever. 

But various barriers to building modernization continue to exist:

  • A lack of financial help to address the high initial cost of making upgrades;
  • The “split incentive” problem for renters, where they pay the energy bills but their landlords bear the costs of improvements;
  • Regulatory barriers such as outdated building codes or energy efficiency rules that prohibit load-building by utilities;
  • Gaps in the energy workforce; and
  • A sometimes arcane decision-making process that doesn’t lend itself well to diverse public participation.

The key to breaking this status quo and catalyzing change is held by state policymakers and legislators, who can pass new policies to give regulators, consumers and utilities the tools they need to modernize buildings. That’s why we’re introducing our Building Modernization Legislative Toolkit, a resource for policymakers seeking to help move forward the energy transition in buildings. Working with partner organizations, we’ve assembled a comprehensive look at key topic areas for building modernization along with legislative options for each area, which states can consider and adapt to their own situations and goals. 

The good news is that legislative change is already starting to happen, and the options outlined in the toolkit are inspired by or based on actions that states have already taken. 

We’ve organized our legislative options into seven topic areas: 

Access to the decision-making process. Energy costs and the impacts of climate change both fall most heavily on overburdened communities. Without wide-ranging public input, policy decisions to address these challenges are less likely to result in equitable outcomes. The toolkit outlines options to set requirements for state agencies in general, or public utility commissions or environmental regulators specifically, to ensure inclusive access. 

Funding and finance policies. Most states already have funding and finance policies; however, existing funding policies may not be updated to address current technologies or may not be effectively reaching all segments of society. Innovative policy options from other states could provide examples of how states can help households and businesses mitigate the cost of modernizing their buildings’ energy use. These include rebates, loans and grants; direct installation programs; income tax credits and deductions; and sales tax exemptions or reductions.  

Weatherization and home repair. Energy-burdened households’ need for financial assistance far outweighs the amount available via federal programs such as the Low Income Home Energy Assistance Program and the Weatherization Assistance Program. State action can fill this gap to help improve energy efficiency, comfort and health. Funding can specifically target homes that need repairs, such as mold remediation, before weatherization can be done effectively. Cutting-edge examples from states include providing authorization and direction to state agencies that take a more holistic approach, improving coordination, “braiding” funds from different programs together and offering a one-stop-shop application process. 

Building codes and standards. Up-to-date energy codes can produce significant health, environmental and economic benefits but are not always updated to take full advantage of current efficient, electrified technologies. Building codes also address new buildings but do nothing to modernize buildings built decades ago. Consequently, some states and localities are going beyond the traditional options to experiment with a more holistic approach in the form of building performance standards to ensure buildings aren’t stuck in the past. 

Electrification. Legislation may be needed to remove various barriers to households going electric, such as prohibitions on fuel switching. The toolkit suggests options for states where policy direction is needed for public utility commissions to create beneficial electrification plans, revise planning processes and promote equity. 

Gas utility planning. As policymakers, utilities and consumers all rethink how to meet their space and water heating needs, the role played by fossil gas will change, and the approach to system planning needs to change likewise. The toolkit focuses on planning and line extension policies; it also introduces the idea of clean heat standards, currently under consideration in several states.  

Workforce development. Without enough qualified workers to weatherize homes and install new appliances, the energy transition will be less affordable and slower than necessary. States have an opportunity to open up new education and training paths, especially for potential workers from overburdened populations. Vocational programs can be designed for students to earn as they learn. 

This blog is the first in a series; in the coming weeks, we’ll take a closer look at each of the tools in our building modernization toolkit. We’ll showcase policy options that legislatures in various states are moving forward — demonstrating how lawmakers can make use of these tools to build an approach that works for their state. Legislative change has the potential to lift barriers, drive market transformation and prioritize communities that need support to realize the benefits of modern buildings.