Measure will reduce energy costs for low-income tenants and homeowners
By Johani Carolina Ponce
The Biden administration has updated minimum energy efficiency standards for federally funded housing, aiming to save tens of millions of dollars each year for low-income renters and homeowners. These new standards focus on improving the efficiency of insulation, windows, HVAC (heating, ventilation and air conditioning) systems and other elements in the construction of new affordable housing. “We believe this rule will help reduce energy costs and make these homes more affordable in the long term, safer and better for the environment,” said Basil Gooden, USDA Under Secretary for Rural Development. Efficiency regulations are seen as crucial tools in the fight against climate change, preventing billions of tons of carbon dioxide emissions.
Financial and energy impact
According to federal officials, these new standards will help reduce energy costs for low-income households, which currently spend 8% of their income on energy, compared to the national average of 3%. The U.S. Department of Housing and Urban Development (HUD) estimates that the updated rule will affect about 150,000 new units per year, with average annual savings of $963 per household, equal to $73 million in total.
Compliance and updating
This move is not a new regulation from the White House, but compliance with a 2007 law that requires HUD and the U.S. Department of Agriculture (USDA) to periodically adopt the latest energy efficiency codes. Since 2015, these agencies had not updated the codes, so this revision represents a significant step forward.
Additional Efforts and Funding
This update is part of a broader effort by the Biden administration to meet its climate goals and reduce costs for consumers by modernizing building codes. Using funding from the Bipartisan Infrastructure Act of 2021, the Department of Energy launched a $225 million campaign in 2023 to drive adoption of stricter building energy codes in state and local governments.
Costs and compensations
Although the improved standards mean higher construction costs, estimated at an average of $7,229 per single-family home, tax credits created by the Inflation Reduction Act and other rebates can save builders between $2,500 and $5,000 for meeting higher energy standards. Homeowners with more efficient homes backed by HUD or USDA could save approximately $15,000 over a 30-year mortgage, despite higher upfront costs.
“The most profitable time to invest in common sense energy efficiency is when you are building a new home. These upgrades not only benefit the residents of these homes. They benefit us all by reducing carbon emissions that contribute to climate change” said Marion McFadden, principal deputy assistant secretary for planning and community development at HUD.
These new standards represent an important step toward more efficient, affordable, and sustainable housing for low-income communities in the United States.
Key points
• Significant annual savings: $963 per household, totaling $73 million.
• Reduced energy costs: Low-income households will spend less on energy.
• Compliance with current laws: First update since 2015.
• Positive impact on the environment: Reduction of CO2 emissions.
• Modernization efforts: Part of a broader plan to achieve climate goals.
• Cost Offset: Tax credits and rebates for builders and homeowners.
