An Energy Code Board set up by a 2022 law will vote next week on recommendations that could require future homes to be built to much more efficient standards — but that also could exacerbate Colorado’s housing affordability crisis, critics fear.
The final draft of the model low energy and carbon code is extensive, dealing with everything from the energy source needed to power key equipment to insulation requirements to rules mandating covers on indoor pools. Its rules aim to require newly built homes to generate far fewer emissions through more electric connections and through efficiency that is based on the site energy usage.
Colorado Energy Office leaders are a prime driver in code development, and organizations from the Southwest Energy Efficiency Project to the Sierra Club to Denver’s Climate Action Office have supported efforts to create what they call a “high-ambition code.” In comments submitted on code drafts, they’ve supported going beyond what they call a weakened version of the International Energy Conservation Code passed in 2024 and adopting rules that focus more on reducing the amount of energy used in homes than on reducing energy costs.
What should matter most in developing codes?
“Energy cost is the most frequently used conservation metric in model codes. However, the assumptions needed to quantify the energy cost savings of individual efficiency measures are often inaccurate when applied across multiple utility service areas,” read comments from a group of seven prominent local-government and environmental organizations. “Those assumptions also disregard energy rate options available to building occupants. Site energy use is a simpler, less error-prone metric.”
A bathroom in a Classic Homes model
But organizations like the Colorado Association of Home Builders warn that the narrow focus on requiring electric stoves and heating systems will add such high costs to new homes that residents will not occupy them long enough to see a return on investment. Rhett Osko, architecture department manager for Colorado Springs-based Classic Homes, estimated that it will take 78 years for a homeowner to recoup savings equal to the upfront cost of some requirements like continuous insulation board, and he said proposed rules could boost sticker prices for some new homes by $25,000 to $35,000.
“It doesn’t matter how efficient a home is if you can’t afford to get into one,” CAHB CEO Ted Leighty said, arguing that the proposed rules could set back the multiyear efforts of Gov. Jared Polis to speed up construction of attainably priced housing. “We do not think they’re taking housing affordability into account.”
Specific points of debate for board
HB 22-1362, which established the code board and led to a first round of rules in 2023 requiring that new homes be able to accommodate solar panels and electric-vehicle charging, mandates the rules take home affordability into account. Those rules must minimize carbon-dioxide emissions associated with new and renovated homes and commercial buildings while providing compliance pathways for all-electric and mixed-fuel-use power.
Leighty and Osko, who have participated in the code-board meetings, both feel there’s been a not-so-subtle push to progress to all-electric homes by doing things like minimizing credits builders can get for installing high-efficiency natural-gas equipment. Board members have pushed increased credits for installation of electric heat pumps — a tool that has been a focus of the Polis administration as well — but Osko warned that heat pumps don’t work as efficiently in cold-weather climates, yet cost several thousand dollars more than gas furnaces.
A kitchen in a Classic Homes model
Several building groups also are concerned that the board is looking not at giving builders multiple compliance pathways to achieve minimal efficiency scores in construction of homes but at using only the Energy Rating Index. This won’t allow for inclusion of more high-efficiency, non-electric options, and it doesn’t give builders flexibility in how they can keep costs down while still generating the needed credits to declare a home as efficient, Leighty said.
Fights over model codes passed in 2024
As esoteric as it may sound, debate over whether to just use the 2024 IECC standards as the base standard for energy efficiency in Colorado rules is central to most arguments around the coming recommendations. Whatever recommendations are approved will establish the baseline that local governments must use for their building codes whenever they update any other building codes after July 1, 2026.
Environmental groups have argued that the 2024 IECC codes took a step backward from the 2021 codes because the council that established the newest codes stripped several key provisions supporting electric readiness and decarbonization. Therefore, those groups have said, Colorado’s new codes must incorporate ideas that were banished to IECC appendices.
“Those appendices are essential to help Colorado achieve its clean-energy and carbon-reduction goals,” the local-government and environmental groups wrote in comments that they submitted.
But Leighty noted that the 2024 IECC changes were made to allow for more paths to affordability as housing costs rose nationally, and they still were projected to boost energy efficiency of new homes built under the codes by 6.6%. With most homebuyers likely to stay in the new residences they buy for only five to seven years, the payback time of upfront cost upgrades must be limited to that same time frame, or else the cost of the efficiency mandates will outstrip the return on them and leave buyers unwilling to pay those costs, he said.
Board action comes amid bigger housing discussions
A Classic Homes residence in Colorado Springs
Polis and legislative Democrats spent much of the 2024 legislative session pushing laws to incentivize the quick construction of lower-cost housing by mandating increased zoning density around transit hubs and banning minimum parking requirements that add costs. This year, bipartisan legislators passed a long-sought construction-defects reform measure that shields condominium builders from lawsuits to try to boost condo construction.
The proposed energy code regulates building of all types but has some of the toughest rules around residences of 5,000 square feet or more — a home that once upon a time was rarer in Colorado. However, with more families consolidating several generations under one roof in order to absorb the rising cost of housing and the Legislature banning local laws that limit the number of unrelated people living together in a house, those larger homes are going to become more common, Osko said.
The Front Range area stretching from Douglas County to the Wyoming border is in serious or severe noncompliance with federal ozone standards, and Colorado regulators are looking at numerous ways to try to reduce that air pollution. Buildings are one of the leading cause of man-made emissions native to the Front Range, so having new standards requiring those buildings use less energy is a key way to deal with that, officials say.
Cutting carbon vs. cutting costs
“I have worked on about 500 affordable housing units which are all-electric with hi-level building envelopes. My experience is that the construction industry is ready for these low-carbon codes,” wrote Erik Johnson of Northwest Builders LLC in comments on the draft. “Subcontractors and suppliers have stepped up and are able to install hi-efficiency systems with their regular workforce.”
But Colorado is also the most expensive state for housing that is not located on one of the two coasts, and 79.4% of Colorado households already can’t afford a median-priced home, Leighty said. So, while builders are working to try to make homes more energy-efficient, they must be able to do so in a way that doesn’t escalate home prices beyond the reach of even more state residents — and groups like his are worried these proposed new energy codes will do that.
“Raising the cost of new construction housing for marginal gain in efficiency, especially during a housing affordability crisis, makes zero sense unless we truly don’t care about the attainability of home ownership,” Leighty said.
The Energy Code Board is set to meet Tuesday and Friday to vote on the codes. Meetings can be viewed on the board’s YouTube channel.