Green Building Policies: Jeopardizing the American Dream of Homeownership (U.S. House Committee on Energy and Commerce, Subcommittee on Energy, Climate, and Grid Security)

Hearing	Green Building Policies: Jeopardizing the American Dream of Homeownership
Committee	U.S. House Committee on Energy and Commerce, Subcommittee on Energy, Climate, and Grid Security
Date	May 22, 2024

 

Hearing Takeaways:

• Building Code Policies: The hearing focused on how building codes are being used to promote the construction of energy efficient homes and buildings and to encourage the adoption of energy efficient building practices. The Infrastructure Investment and Jobs Act (IIJA) and the Reduction Act of 2022 provide states and localities with grants and funding to adopt and implement the 2021 International Energy Conservation Code (IECC). Subcommittee Republicans, Mr. Bonnell, Mr. Woods, and Mr. Casper raised concerns that new building codes are raising construction costs and eliminating energy choices for Americans, which are leading to building affordability challenges and housing shortages. They asserted that these building codes fail to consider relevant local factors. Subcommittee Democrats and Mr. Howard argued however that these new building codes reduce energy costs for U.S. consumers through boosting energy efficiency and that these codes provide significant environmental benefits (including reductions in greenhouse gas emissions). They also emphasized that states and localities (rather than the federal government) are responsible for setting building codes and that states and localities are voluntarily adopting the 2021 IECC.
  • Costs of the 2021 IECC’s Building Standards: Subcommittee Republicans and Mr. Woods contended that the adoption of the 2021 IECC’s more stringent building standards would significantly increase new home construction costs, which they stated would make homeownership unstainable for tens of thousands of U.S. households. Subcommittee Democrats and Mr. Howard disputed this claim and noted how other estimates (including from the Pacific Northwest National Laboratory) project that the adoption of the 2021 IECC’s building standards would increase new home construction costs by a much lower amount than is claimed by Subcommittee Republicans. Mr. Howard further stated that his company can more cheaply build houses to the 2021 IECC’s standards using off-site construction technologies (which take advantage of controlled environments to building housing elements more efficiently). He acknowledged however that his company specializes in smaller homes, which could lead it to have lower overall construction costs.
  • Benefits of the 2021 IECC’s Building Standards: Subcommittee Democrats and Mr. Howard acknowledged that while the use of the 2021 IECC’s building standards will lead to higher initial construction costs, they stated that improved energy efficiency resulting from these standards will ultimately pay for itself over the lifetime that a homeowner spends living in their home. They also stated that these building codes can address important policy concerns, including public health, safety, and environmental protection. They argued that building codes that promote energy efficiency are especially important given how buildings are responsible for 40 percent of climate change emissions. Subcommittee Republicans and Mr. Woods argued however that any energy savings realized from these more stringent building codes would be very modest and would take too long to realize in order to offset higher construction costs. Mr. Woods remarked that the higher prices for energy efficient homes would lead to higher monthly mortgage and private mortgage insurance (PMI) costs and that these higher costs would be much greater than any energy savings. He also stated that most people would not live in their homes long enough to realize savings from more energy efficient homes.
  • Market Demand for Energy Efficient Homes: Subcommittee Republicans also criticized model building codes and U.S. Department of Energy programs (including the Zero Energy Ready Home Program) for encouraging the construction of smaller homes that do not meet market demands. Mr. Howard stated however that his company’s homes (which are built to the Zero Energy Ready Home Program’s standards) do receive sufficient market demand. He testified that his company’s target market for these homes includes first-time homebuyers and retirees that wish to downsize into single level living. He further testified that his company’s customers are “pleasantly surprised” regarding the ease of heating and cooling their homes, the comfort of their homes, and the quietness of their homes.
  • 45L New Energy Efficient Home Credit: Subcommittee Democrats and Mr. Howard highlighted how the 45L New Energy Efficient Home Credit provides $2,500 to builders that certify their homes to Energy Star Program standards and provides $5,000 to builders that certify their homes to Zero Energy Ready Home Program standards. They stated that this tax credit helps to address the concerns that more stringent building codes will result in higher building costs.
  • Other Federal Building Energy Efficiency Tax Credits: Rep. Kathy Castor (D-FL) further highlighted how the U.S. Tax Code provides additional incentives for the construction of energy efficient buildings. These incentives include the 25C Energy Efficient Home Improvement Credit (which provides $2,500 per year for renovations of an existing home for new heat pumps and air conditioning systems) and the 179D Commercial Buildings Energy-Efficiency Tax Deduction (which provides a tax deduction based on a commercial building’s square footage). She explained that the 179D Commercial Buildings Energy-Efficiency Tax Deduction makes it easier for building owners to qualify for larger tax deductions for heating, ventilation, and air conditioning (HVAC) systems, facades, and lighting upgrades.
  • Current Federal Home Energy Support Programs: Rep. Paul Tonko (D-NY) also discussed how there exist effective federal programs to support Americans that are struggling with home energy affordability. He indicated that these programs include the U.S. Low Income Home Energy Assistance Program (LIHEAP) and the U.S. Weatherization Assistance Program (WAP). He called on Congress to provide attention and support to these programs and commented that these programs have a proven track record of upgrading existing homes.
  • The U.S. Department of Energy’s Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings Rule: Subcommittee Republicans and Mr. Casper criticized the U.S. Department of Energy for their recent issuance of a final rule to eliminate the use of fossil fuels (including natural gas) in all new and modified federal buildings starting in 2030. They warned that having federal buildings exclusively rely upon electricity would significantly increase energy costs, reduce fuel diversity, and impact the functioning of military installations. Mr. Casper further warned that this rule would require federal facilities to undergo expensive appliance retrofits. Subcommittee Democrats stated however that this rule is merely implementing a provision of the Energy Independence and Security Act of 2007 (which was signed into law by President George W. Bush). Subcommittee Ranking Member DeGette (D-CO) also mentioned how the U.S. Department of Energy had estimated that this final rule’s total net benefit to the public would reach up to $134 million and would result in reduced carbon and methane emissions.
  • The U.S. Department of Energy’s Energy Conservation Standards for Consumer Furnaces Rule: Mr. Casper raised concerns over the U.S. Department of Energy’s Energy Conservation Standards for Consumer Furnaces Rule. He indicated that this final rule would establish 95 percent efficiency standards for furnaces, which he asserted can only be met by condensing furnaces. He stated that this final rule would effectively ban non-condensing furnaces that have been in the homes of millions of Americans for generations. He noted how some homeowners may not be able to accommodate a condensing furnace’s additional venting or drainage requirements due to structural issues or code restrictions. He added that other homeowners may not be able to afford the additional costs associated with installing condensing furnaces.
  • Home Electrification Policies: Subcommittee Republicans, Mr. Bonnell, Mr. Woods, and Mr. Casper criticized home electrification policies (including heat pump and electric vehicle (EV) charging mandate) and asserted that these policies drive up the cost of building homes. They raised concerns that the U.S. can supply the electricity required to satisfy these mandates, especially given the retirement of many fossil fuel generating stations. They specifically criticized the U.S. Department of Energy’s recently issued distribution transformer energy efficient standards and the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan 2.0 and asserted that these policies would reduce the U.S.’s energy capacity. Mr. Bonnell further stated that electric heat pumps have performance limitations in colder climates, which makes fossil fuels a necessary option in these climates. Subcommittee Democrats and Mr. Howard argued however that the incorporation of these electrification policies in home budling codes will make it cheaper to install heat pumps and EV charging stations and result in long-term energy savings. Mr. Howard also disputed claims that heat pumps cannot be installed in all climates and noted how cold climate heat pumps are rated to operate at 100 percent capacity at as low as -5 degrees.
  • Proposed Restrictions on Natural Gas Appliances: Subcommittee Republicans, Mr. Woods, and Mr. Casper criticized current U.S. Department of Energy and EPA proposals that discourage and/or ban natural gas appliances. They argued that these proposed bans would have negligible health and energy benefits and ignore consumer preferences and financial realities. They also noted how the direct use of natural gas is more efficient than using electricity generated by natural gas. Rep. Kim Schrier (D-WA) stated however that it is not overly expensive to replace natural gas stoves with induction stoves and that these replacements would result in energy savings.
  • Building Energy Efficiency Requirements for Federally-Backed Mortgages: Subcommittee Republicans and Mr. Woods raised concerns over how the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) will soon start requiring 2021 IECC compliance for all projects receiving financing from these Departments. They also raised concerns that the U.S. Federal Housing Finance Agency (FHFA) is considering applying 2021 IECC standards to homes financed by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). The argued that these requirements could result in the imposition of a de facto national building requirements, disrupt new housing construction, compound existing housing supply shortages, and harm housing affordability.
  • Impact of Building Codes on Insurance Affordability: Rep. Greg Pence (R-IN), Mr. Bonnell, and Mr. Woods raised concerns that current building codes and energy requirements are driving up insurance prices and causing certain insurance carriers to exit markets. Rep. Pence and Mr. Woods expressed particular concerns that home EV charger mandates are causing some homeowners to lose homeowners insurance coverage. Rep. Scott Peters (D-CA) argued however that building codes play an important role in terms of supporting the resiliency of houses, which is key for houses to obtain insurance coverage. Rep. Castor further contended that climate change is a key driver of insurance costs and that policies to address climate change will help to bring down insurance prices.
  • Acknowledgement of Energy Savings within the Home Appraisal Process: Rep. Lizzie Fletcher (D-TX) and Mr. Howard argued that the housing appraisal process should better account for the energy efficiency of homes and asserted that this energy efficiency information would serve as a “critical market signal” for promoting the adoption of energy efficiency measures. Mr. Howard expressed support for the establishment of such a rating system. He noted how the Residential Energy Services Network’s (RESNET) Home Energy Rating System (HERS) provides the capability to certify and rate homes based on energy efficiency. He asserted that this energy rating capability is “grossly underutilized.” He also mentioned how the Appraisal Institute had developed an addendum that provides appraisers with the ability to recognize the additional value of energy efficiency features. He asserted that this resource is “grossly underutilized” as well.
  • The Build More Housing Near Transit Act: Rep. Peters mentioned how he had proposed the bipartisan Build More Housing Near Transit Act to support the construction of housing near federally-funded transit projects. He commented that this legislation would ensure that the economic and environmental impacts of these transit projects will be fully realized.
  • The Affordable Housing Over Mandating Efficiency Standards (Affordable HOMES) Act: Rep. Larry Bucshon (R-IN) remarked that the U.S. Department of Energy’s recently finalized energy efficiency standards fail to account for the design and factory construction techniques of manufactured homes and would drive up housing costs for working class Americans. He mentioned how he had proposed the Affordable HOMES Act, which would rescind the Energy Independence and Security Act of 2007’s provision directing the U.S. Department of Energy to establish energy efficiency standards for manufactured homes.
  • The Federal Bird Safe Buildings Act of 2023: Rep. Morgan Griffith (R-VA) discussed how hundreds of millions of birds are injured or die annually following collisions with glass structures and buildings. He called on Congress to advance the Federal Bird Safe Buildings Act of 2023, which would require the installation of a special film on glass structures and glass buildings to prevent bird collisions. He stated that the cost of this film installation is minimal and could lead builders to adopt this film installation in their construction of non-government buildings and structures.
• Energy Policies: The hearing also focused on various federal energy policies and their impacts on businesses and consumers. Subcommittee Republicans, Mr. Bonnell, Mr. Woods, and Mr. Casper raised concerns that many federal policies are unnecessarily increasing energy prices and threatening the U.S.’s energy security. Subcommittee Democrats and Mr. Howard stated however that these policies will bolster the U.S.’s energy efficiency and supplies and reduce overall emissions.
  • Bans on Natural Gas: Subcommittee Republicans, Mr. Bonnell, Mr. Woods, and Mr. Casper raised concerns over proposed state and local bans on natural gas. They stated that these bans result in higher energy costs and reduce the U.S.’s energy diversity (which is key for resiliency and stability). They highlighted how the direct use of natural gas is very efficient and stated that natural gas will be necessary to meeting the U.S.’s increased demands for energy. They further emphasized how natural gas is critical for manufacturing certain building materials and that bans on natural gas jeopardize domestic production of these materials. Full Committee Chairman Cathy McMorris Rodgers (R-WA) further expressed frustration that restrictions on the use of natural gas are thwarting efforts to rebuild wildfire-damaged homes in her region.
  • Use of Renewable Energy Sources: Rep. Randy Weber (R-TX), Mr. Bonnell, and Mr. Casper raised concerns over the U.S.’s growing reliance of renewable energy sources (such as wind and solar power). They stated that the intermittent nature of these energy sources undermines their reliability and leads to energy price volatility. Mr. Casper stated that while the U.S. may eventually be able to fully transition to renewable energy sources, he asserted that this transition cannot be completed within the immediate term.

Hearing Witnesses:

1. Mr. Phil Bonnell, President, PABCO Building Products
2. Mr. Shawn Woods, President, Ashlar Homes LLC, (on behalf of National Association of Home Builders)
3. Mr. Mike Casper, President and CEO, Jo-Carroll Energy Inc. (on behalf of American Public Gas Association)
4. Mr. Rob Howard, President of Howard Building Science

Member Opening Statements:

Subcommittee Chairman Jeff Duncan (R-SC):

• He remarked that the Biden administration’s “radical” energy and homebuilding policies are jeopardizing the ability of Americans to own homes, increasing energy costs, straining the electric grid, and putting U.S. national security at risk.
• He discussed how state and local jurisdictions adopt building codes based on a variety of factors (such as climate and economic conditions).
  • He noted however that the Biden administration has encouraged the adoption of model building codes that seek to restrict the use of gas and promote electrification (even if these objectives are not cost effective or affordable).
• He mentioned how the Inflation Reduction Act of 2022 had allocated $930 million to states in grants and funding to encourage the adoption of the 2021 model energy code.
• He indicated however that many states have chosen not to adopt the most up-to-date energy codes because these codes would increase housing costs.
  • He stated that the adoption of the 2021 model code in his state of South Carolina would increase the average cost of a new home by up to $31,000 and that it would take between 44 and 50 years to recoup these costs from energy savings.
  • He noted that this increase would result in 60,000 households no longer being able to afford to purchase houses in South Carolina.
• He remarked that the impacts of these energy codes on housing prices are not unique to South Carolina and that families across the U.S. cannot afford to purchase homes as a result of these new energy codes.
  • He noted that while supporters of these energy codes argue that these codes will lead homebuyers to save money over time, he asserted that this argument is moot if people cannot afford to buy homes in the first place.
• He also criticized the U.S. Department of Energy’s Zero Energy Ready Home Program for increasing housing costs.
  • He noted how the U.S. Department of Energy’s website acknowledges that homes under this Program are expensive and recommends that people purchase smaller homes to accommodate these higher energy costs.
  • He described this recommendation as “asinine.”
• He further criticized the Biden administration for maintaining a near $1 billion “slush fund” to encourage energy efficient building policies.
  • He asserted that the Biden administration’s climate change policy agenda will result in excess spending and lower quality homes.
• He remarked that the Biden administration’s efforts to ban fossil fuels in buildings and housing are contributing to the U.S.’s housing affordability challenges.
  • He highlighted how energy is a key input for all elements of the U.S. economy and commented that energy cost increases therefore lead to higher prices for all goods and services.
• He stated that the Biden administration’s energy policies are increasing manufacturing and construction costs for residential homes and commercial properties and that these costs are directly passed along to consumers.
• He discussed how natural gas is key for heating homes, generating electricity, and supporting transportation.
  • He noted how the U.S. Department of Energy’s own statistics indicate that homes with natural gas connections are 3.4 times more affordable than electrically powered homes.
• He also mentioned how the U.S. Department of Energy had recently issued a rule to eliminate the use of natural gas in all new and modified federal buildings starting in 2030.
  • He indicated that this rule applies to military installations and housing, multifamily high-rise residential buildings, and low-rise residential buildings.
• He warned that the U.S. Department of Energy’s rule would compromise the U.S.’s military and national security and increase energy usage.
• He concluded that the Biden administration’s energy efficiency and homebuilding policies are driving up costs for consumers during a period of record high home prices.

Full Committee Ranking Member Frank Pallone (D-NJ):

• He criticized Subcommittee Republicans for attacking popular federal energy efficiency programs that help to reduce energy costs for U.S. consumers and to combat climate change.
  • He commented that energy efficiency had previously been an uncontroversial bipartisan issue and that both Republicans and Democrats had viewed energy efficiency as beneficial.
• He expressed frustration that Congressional Republicans have repeatedly sought to rollback energy efficiency standards and commented that the current hearing constitutes a continuation of this trend.
• He stated that building codes are currently saving American households thousands of dollars on their energy bills.
  • He mentioned how HUD had found that a typical household would save $15,000 from a house built to the current model building code as compared to a house built to the 2009 model building code.
  • He also noted how the upfront expenses associated with energy efficiency measures for low-income households using U.S. Federal Housing Administration (FHA) loans can be recouped within one and a half years.
• He also highlighted how model building codes ensure some basic energy conservation standards for renters who cannot choose how their residences are built.
• He noted how buildings account for 40 percent of the U.S.’s total energy consumption and stated that building codes are critical for saving Americans money, reducing energy consumption, and decreasing climate pollution.
  • He indicated that energy conservation codes are projected to save Americans $182 billion and to avoid 840 million metric tons of carbon pollution by 2040.
• He accused Subcommittee Republicans of engaging in fear mongering and spreading misinformation regarding federal building policies.
  • He asserted that Subcommittee Republicans are providing exaggerated upfront cost estimates and false payback period figures when discussing federal model building codes.
• He further emphasized that federal model building codes are voluntary in nature and that states are not required to adopt these codes.
  • He indicated that third party organizations set these model building codes and that states and localities can choose whether or not to adopt these codes.
• He stated that Subcommittee Republicans could better address high energy costs through investigating the collision between large oil companies and the Organization of the Petroleum Exporting Countries (OPEC) to increase consumer gasoline prices.
  • He also suggested that Subcommittee Republicans should be concerned over how the International Code Council (ICC) had violated its own policies in the recent code development process.
• He warned that Subcommittee Republican efforts to combat energy efficiency standards would increase energy costs for U.S. families and commented that these efforts are meant to benefit the oil and gas industries.
• He remarked however that the Biden administration is making progress in terms of reducing energy costs for middle-class Americans.
  • He noted how the bipartisan IIJA and the Inflation Reduction Act of 2022 had both provided funding to states and local entities to support the adoption of voluntary model building codes.
  • He also mentioned how the Biden administration had recently finalized a rule to phase out fossil fuel-generated energy consumption in new and remodeled federal buildings.
• He expressed interest in exploring how building and energy conservation codes save Americans money and provide other benefits.
  • He indicated that these other benefits include improving indoor air quality and reducing emissions.
• He contended that Congress should be exploring how to further assist states and local entities that want to adopt model building codes instead of attacking the codes.
  • He emphasized that these model building codes are not mandatory.

Full Committee Chairman Cathy McMorris Rodgers (R-WA):

• She asserted that the Biden administration’s “radical” pursuit of building energy efficiency policies will undermine U.S. entrepreneurship, innovation, and emissions reduction efforts, as well as reduce opportunities for Americans.
  • She commented that the Biden administration’s policy agenda is “wreaking havoc” on the U.S.’s economy, energy security, and national security.
• She stated that inflation, energy prices, and grocery prices have all reached historic levels under the Biden administration and asserted that the Biden administration and Democrat-governed states are pursuing policies that will exacerbate these problems.
  • She indicated that these policies include solar panel, EV, and electric appliance mandates.
• She noted how U.S. home prices have achieved record highs and indicated that the average price of a home in the U.S. is now over $380,000.
• She stated that “aggressive” energy efficiency regulations have been a “major” contributing factor to housing price increases.
  • She also asserted that “radical environmental activists” have hijacked the process for establishing state and local regulations for building energy codes.
• She discussed how certain policies (such as natural gas bans and electrification mandates) are becoming increasingly widespread (especially in Democratic-leaning states).
  • She noted how numerous cities across seven states and Washington, DC have enacted some type of a natural gas ban and added that New York has a state-wide natural gas ban.
• She mentioned how the Biden administration had recently finalized new regulations to enforce a fossil fuel ban on all federal buildings, including military installations and residential housing.
• She also mentioned how the Biden administration had recently finalized new energy efficiency building regulations for federally-backed mortgages.
  • She warned that these regulations will “substantially” limit the availability of affordable housing.
• She stated that dozens of federal agencies are drafting rules and regulations for buildings and homes to force the adoption of energy efficient practices and that these policies are harming Americans.
• She remarked that the U.S. has historically balanced the need for affordable energy, a strong economy, and emissions reduction.
  • She commented that the Subcommittee should work to maintain this balance.

Subcommittee Ranking Member Diana DeGette (D-CO):

• She indicated that she would submit her full opening statement for the hearing’s record given the need for the Subcommittee to recess for votes.
• She then remarked that the hearing’s subject does not involve federal policy issues because local governments are generally responsible for building codes.
  • She noted that there does not exist a federal building code and that the U.S. Constitution makes the regulation of construction a state right.
• She mentioned however that the U.S. Department of Energy and other federal agencies have developed voluntary building codes.
  • She commented that these voluntary building codes can address important policy concerns, including public health, safety, and environmental protection.
• She noted how these voluntary building codes are developed using a democratic and deliberative process and address cost efficiency and investment value concerns.
  • She emphasized that state and local governments are the primary developers and promulgators of building codes.
• She discussed how building codes provide important protections from fires, natural disasters, and health hazards.
  • She noted how Americans spend about 90 percent of their lives in buildings, which underscores the importance of building codes for public health.
• She stated that while model building codes can support safe construction practices, she commented these model building codes only work if state and local governments use and enforce these codes.
• She noted how many buildings are energy inefficient because the building construction process had previously not prioritized energy efficiency considerations.
  • She asserted that building codes should now acknowledge the importance of energy efficiency.
• She discussed how U.S. buildings account for about 70 percent of the country’s electricity use, about 40 percent of the country’s primary energy consumption, and about 30 percent of the country’s operational greenhouse gas emissions.
  • She commented that the energy consumption and waste associated with buildings unnecessarily cost homeowners and building owners billions of dollars a year.
• She asserted that the adoption of new building codes will result in greater energy efficiency, which results in lower energy costs and fewer emissions.
  • She further stated that these building codes will ultimately result in savings to building owners and homeowners.

Note: The Subcommittee took an approximately 30-minute recess at this point of the hearing for votes.

Witness Opening Statements:

Mr. Phil Bonnell (PABCO Building Products):

• He discussed how his company, PABCO Building Products, is a family-owned business that manufactures and sells residential housing building products.
  • He indicated that his company’s core products are gypsum drywall and asphalt roof shingles.
  • He also indicated that his company makes paper for its gypsum wallboard surfacing.
• He testified that his company employs about 550 people and has net sales of about $400 million on an annualized basis.
  • He commented however that his company is the smallest U.S. producer of its products and indicated that his company is very regional.
• He expressed concerns over proposals to ban the use of natural gas in residential applications and commented that such a ban would limit the U.S.’s diversity of energy sources.
• He highlighted how energy cost inputs have increased “dramatically” over the previous five years and stated that his company is constantly looking for ways to reduce its energy consumption.
  • He commented that this reduction in energy consumption is in his company’s best interest and noted how energy input represents a very significant cost factor for his company’s product offering.
• He discussed how energy policies in the western U.S. have resulted in the closures of more than five coal-fired power plants over the previous decade.
  • He indicated that these closures have caused 5,000 megawatts of energy to be retired.
• He stated that these closures of coal-fired power plants have increased the U.S.’s reliance on natural gas to generate electricity.
  • He testified that his company had observed the use of natural gas in its marketplaces grow from a 19 percent usage for electrical generation to 46 percent for electrical generation.
• He noted that while renewable energy sources (such as wind and solar power) have entered the U.S. energy marketplace, he stated that these energy sources have intermittency problems.
  • He elaborated that wind and solar power cannot generate electricity when there is no wind or when the sun is not shining (respectively).
• He also discussed how his company has faced significant energy price fluctuations over the previous five years.
  • He testified that his company had experienced energy prices as low as $1.03 per MMBTU and as high as $54 per MMBTU.
• He stated that his company seeks to reduce its energy costs wherever possible through its products and materials.
  • He also indicated that his company seeks to hedge its energy costs through purchasing energy futures contracts.
• He testified that his company curtails its production operations when energy costs become too high and indicated that this situation has occurred three times over the previous four years.
• He remarked that while the purchase of energy futures contracts helps his company to hedge its energy costs, he noted that these purchases ultimately raise his company’s costs.
  • He explained that these energy futures contracts provide higher energy rates than would be purchased on the daily spot market when energy prices are low.
• He stated that energy costs have grown significantly and have caused building materials cost increases approaching 30 percent in the last four years.
• He further contended that reducing the diversity of energy sources will only create additional energy market challenges.
  • He commented that this reduction in diversity would impose additional strains on already taxed electrical grids, which will exacerbate housing affordability challenges.

Mr. Shawn Woods (Ashlar Homes LLC, on behalf of National Association of Home Builders)

• He mentioned how his company, Ashlar Homes LLC, focuses on building entry-level houses in Blue Springs, Missouri.
  • He also indicated that this trade association, the National Association of Home Builders, represents over 140,000 members in residential and light construction that build about 80 percent of all new housing in the U.S. annually.
• He remarked that the primary and persistent challenge facing the U.S. housing market is the lack of attainable and affordable housing.
  • He noted how 77 percent of households cannot currently afford the median price of a new home.
  • He also noted how half of all renters are cost-burdened and spend over 30 percent of their incomes on housing.
• He stated that the U.S. must ensure that all Americans (including members of the armed forces, teachers, and first responders) have access to affordable housing where they serve and live.
• He remarked that recent federal actions to adopt more stringent energy codes, including the 2021 IECC, are “significantly” raising construction costs.
  • He indicated that compliance with these codes can add as much as $31,000 to the cost of single-family home.
  • He further indicated that adherence to the zero energy provisions of the 2021 IECC can add an additional $8,200 in costs per home.
• He stated that these increased housing costs make homeownership less attainable, which forces many potential homebuyers to remain in older and less-efficient homes.
  • He commented that this result undermines the objectives of federal energy efficiency policies.
• He noted how the Inflation Reduction Act of 2022 had allocated $1 billion for state and local governments to adopt strict energy codes.
  • He asserted that these “mandates” worsen the U.S.’s housing affordability challenges.
• He stated that the Inflation Reduction Act of 2022’s energy code program has harmed the housing market within his community and recounted how Kansas City, Missouri had adopted the 2021 IECC without amendments in the hope that it could receive federal grant funds.
  • He commented that the adoption of these energy codes has “regrettably paralyzed” Kansas City’s housing market at a time when area housing markets are booming.
• He discussed how the Kansas City metropolitan area (excluding Kansas City) had experienced a 117 percent increase in single family home construction permits in January and February of 2024 (as compared to the previous year).
  • He indicated however that Kansas City had experienced a 22 percent decrease in single family home construction permits during the same period.
• He stated that this decline in homebuilding has resulted in fewer jobs, fewer housing options, hire housing costs, and a lower tax base.
• He then expressed concerns over how HUD and the USDA will soon start requiring 2021 IECC compliance for all projects receiving financing from these Departments.
  • He commented that this mandate raises housing costs and warned that these increased costs would particularly impact entry-level housing.
• He warned that HUD and the USDA’s policies will deter new construction at a time when the U.S. needs to increase the housing supply to lower shelter inflation costs.
• He further raised concerns that the FHFA is considering applying 2021 IECC standards to homes financed by Fannie Mae and Freddie Mac.
  • He highlighted how Fannie Mae and Freddie Mac provide 72 percent of the U.S.’s financing for new home purchases.
• He stated that the FHFA’s application of 2021 IECC to homes financed by Fannie Mae and Freddie Mac would establish a de facto national energy code.
  • He warned that this change would disrupt new housing construction, compound existing housing supply shortages, and harm housing affordability.
• He also raised concerns over proposals to ban the use of natural gas and propane in new housing constructions.
  • He commented that new homes are already more energy efficient than older homes and called these bans costly and impractical.
• He noted how home electrification increases upfront housing construction costs by between $3,000 and $15,000 per home, which prices thousands of families out of the housing market.
  • He further mentioned how electric heat pumps have performance limitations in colder climates, which makes fossil fuels a necessary option for these climates.
• He also discussed how the costs for upgrading electrical service and community infrastructure are “substantial” and indicated that these costs are often not included in initial estimates.
• He further asserted that restrictions on gas appliances will provide “negligible” health and energy benefits and ignore consumer preferences and financial realities.
  • He noted how over 187 million Americans use natural gas appliances, which save an average of $1,068 annually.
  • He mentioned how gas stoves are used in nearly 40 million homes nationwide and have proven to be a safe, efficient, and affordable appliance choice for families for over a century.
• He remarked that the key housing issue facing the U.S. is the lack of affordable housing and that the only way to improve housing affordability is to increase the housing supply.
  • He commented that federal building mandates that are ill-conceived and costly will undermine the U.S.’s pursuit of affordable housing.

Mr. Rob Howard (Howard Building Science):

• He mentioned how his company, Howard Building Science, is a home building company and indicated that he has been building sustainable affordable housing for 20 years.
• He stated that building codes should be viewed as providing baseline standards for homebuilding rather than prescriptive standards for homebuilding.
  • He asserted that the U.S. should build homes that are affordable to purchase, own, and operate.
• He remarked that his professional experience does not align with the complaints that building codes make housing less affordable.
  • He acknowledged that while building codes tend to add between $6,000 and $7,000 to home building costs, he asserted that these costs become relatively small when amortized over the life of a 30-year mortgage.
• He stated that the monthly energy savings associated with the use of building codes exceed the costs associated with building more energy efficient homes.
  • He commented that building codes result in reduced net spending for homeowners and the construction of better, more efficient, more comfortable, and more durable homes.
  • He added that these homeowners will save “thousands of dollars” over time when their homes are constructed according to building codes.
• He discussed how homebuyers face challenges projecting their future energy bills when purchasing homes and noted how this problem is especially acute for new houses where there does not exist an energy bill history.
  • He commented that a better understanding of energy costs would cause buyers to demand that their homes be constructed according to building codes.
• He stated that the housing appraisal process should better account for the energy efficiency of homes and asserted that this energy efficiency information would serve as a “critical market signal.”
• He then discussed how his company is currently building a pocket neighborhood in Granite Falls, North Carolina and noted how the homes in this neighborhood will be “starter homes.”
  • He indicated that these homes may also be appealing to retirees seeking to downsize into single-level living.
• He testified that this pocket neighborhood’s homes are above code, all-electric, and come with high efficiency inverter heat pumps for space conditioning, heat pump water heaters, ventless heat pump dryers, and induction ranges.
  • He also indicated that these homes have mechanical ventilation systems to ensure healthy indoor air quality with no wood or gas burning appliances.
  • He commented that his company’s use of these appliances means that it has no concerns about carbon monoxide or other byproducts of combustion.
• He noted that this pocket neighborhood’s homes comply with the U.S. Department of Energy’s Zero Energy Ready Home Program and are roughed-in for future solar panels and EV charging.
  • He mentioned how the federal 45L New Energy Efficient Home Credit offers a $5,000 incentive for building to the U.S. Department of Energy’s Zero Energy Ready Home Program’s standards (which are based on the 2021 IECC).
• He stated that the current $5,000 tax credit for building homes to the U.S. Department of Energy’s Zero Energy Ready Home Program’s standards comes “very close” to offsetting the additional cost of insulation, high efficiency HVAC and water heating equipment, and mechanical ventilation systems.
  • He commented that these upgrades will eventually pay for themselves through providing energy savings.
• He then mentioned how he will be moving into one of the aforementioned pocket neighborhood homes and testified that his utility bills will decrease from almost $400 per month to under $100 per month.
  • He commented that this new home is more comfortable, quiet, low-maintenance, and efficient.
• He stated that while certification programs support progress in homebuilding, he asserted that building and energy codes can have a much broader impact on all new home construction.
  • He indicated that these impacts include health, safety, durability, comfort, and energy savings.

Mr. Mike Casper (Jo-Carroll Energy Inc., on behalf of American Public Gas Association):

• He noted how his organization, JCE Co-op, is a not-for-profit distribution cooperative that is member-owned and controlled.
  • He indicated that the cooperative serves about 26,500 electric and natural gas accounts in four counties of rural Illinois.
  • He also mentioned how the cooperative is a member of the American Public Gas Association, which represents about 1,000 communities across the U.S. that own and operate their retail gas distribution entities.
• He remarked that proposed energy efficiency policies will harm his cooperative’s members, as well as all community-owned gas utility customers.
• He asserted that all levels of government are currently pursuing energy policies that will “pick winners and losers.”
  • He commented that states and localities are adopting “misguided” building codes and standards that effectively limit a consumer’s ability to choose a gas appliance.
• He discussed how the U.S. Department of Energy is proposing appliance efficiency standards that would eliminate consumer choices and force consumers to use electric appliances.
• He also mentioned how the Biden administration had recently finalized a rule utilizing Sec. 433 of the Energy Security and Independence Act of 2007 that would “significantly” restrict the future onsite use of natural gas in federal buildings.
• He stated that not permitting the direct use of natural gas would force U.S. consumers to pay more for energy.
  • He asserted that affordable, reliable, and sustainable energy requires the continued utilization of community-owned gas infrastructure and its workforce.
• He stated that the U.S. Department of Energy’s final rule would significantly restrict many federal buildings from using onsite energy from affordable and resilient natural gas.
  • He noted how the U.S. Department of Energy’s own data indicates that natural gas is three times more affordable than electricity.
• He discussed how his cooperative serves a federal prison in Thompson, Illinois with natural gas and noted how the recent U.S. Department of Energy final rule will require this prison to undergo retrofits for its appliances.
  • He raised concerns that it will be very expensive to retrofit this prison to accommodate electric appliances.
• He also noted how his cooperative offers both electric and natural gas service and expressed concerns over how his cooperative’s “already strapped” electric grid will adapt to greater demand for electricity.
  • He commented that allowing for the continued direct use of natural gas will not further strain the electric grid.
• He stated that the direct use of natural gas in buildings efficiently and affordably meets energy demands and provides fuel diversity and reliability to federal facilities.
• He further discussed how many military installations across the U.S. receive natural gas from community-owned utilities.
  • He cautioned that requiring military installations to exclusively use electricity for power could impact military readiness and national security.
• He then raised concerns over the U.S. Department of Energy’s U.S. Department of Energy’s Energy Conservation Standards for Consumer Furnaces Rule and noted how many Americans rely upon natural gas furnaces to heat their homes and businesses in the winter.
  • He indicated that this final rule would establish 95 percent efficiency standards for furnaces, which he asserted that can only be met by condensing furnaces.
• He stated that the U.S. Department of Energy’s U.S. Department of Energy’s Energy Conservation Standards for Consumer Furnaces Rule would effectively ban non-condensing furnaces that have been in the homes of millions of Americans for generations.
• He noted how some homeowners may not be able to accommodate a condensing furnace’s additional venting or drainage requirements due to structural issues or code restrictions.
  • He added that other homeowners may not be able to afford the additional costs associated with the installation of condensing furnaces.
• He remarked that Americans deserve the right to choose their appliances, especially when the U.S. Energy Information Administration (EIA) forecasts natural gas prices to remain low.
• He further thanked the Subcommittee’s advancement of bills that would address “harmful” appliance energy efficiency standards.

Congressional Question Period:

Subcommittee Chairman Jeff Duncan (R-SC):

• Chairman Duncan criticized the Biden administration for promulgating an “avalanche” of new rules that mandate expensive building codes and eliminate energy choices for Americans. He discussed how the U.S. Department of Energy had announced a $1 billion grant program to “coerce” states to adopt “unproven” net zero building energy codes. He also noted how HUD has announced new home energy efficiency mandates for FHFA and USDA-backed mortgages, even when state building codes do not require these home energy efficiency standards. He further mentioned how the U.S. Department of Energy has banned the use of fossil fuels in federal buildings starting in 2030. He indicated that this ban applies to military installations and family housing. He then discussed how the EPA is planning to eliminate natural gas appliances from the Energy Star Program and begin certifying homes and apartments to measure greenhouse gas emissions. He further stated that the Biden administration is actively encouraging states and localities to adopt stretch codes to ban natural gas and to mandate the use of solar panels, EV charging, and electric appliances. He remarked that the Biden administration’s building energy efficiency policies are driving up home prices and reducing homeownership opportunities for millions of Americans. He stated that the Biden administration’s energy efficiency policy agenda includes rules and regulations that restrict the use of natural gas. He asked Mr. Casper to indicate whether policies that force Americans to switch from natural gas to electricity for their homes would increase the cost of living.
  • Mr. Casper answered affirmatively. He mentioned how his cooperative had seen firsthand that natural gas can serve as the cheapest form of energy for homes from both an upfront cost perspective and a future utility cost perspective.
• Chairman Duncan reiterated that the U.S. Department of Energy had recently issued a final rule to eliminate the use of fossil fuels in all new and modified federal buildings beginning in 2030. He noted how Mr. Casper’s testimony states that this final rule would have far reaching impacts, including on federal prisons and military bases. He asked Mr. Casper to indicate whether this final rule undermines U.S. national security.
  • Mr. Casper stated that this final rule could undermine U.S. national security based on his conversations with his trade association’s other members that supply power to U.S. military bases. He remarked that his main concern with this final rule is that it would force federal buildings to rely exclusively upon a single energy source and commented that a diversity of energy sources is key. He also noted how the U.S.’s increased demand for electricity will necessitate the use of natural gas for power generation. He indicated that natural gas will be key to supplying energy when renewable energy sources cannot supply the energy.
• Chairman Duncan recounted how he had visited Misawa Air Base in northern Japan in June 2023. He noted how this Air Base currently relies upon solar panels and natural gas. He raised concerns that having this Air Base rely exclusively upon electricity would be very expensive (especially given how the Air Base is located within a colder climate). He then asked Mr. Woods to indicate whether the Biden administration is working to push states and localities to adopt aggressive national model building codes.
  • Mr. Woods answered affirmatively. He noted how Kansas City, Missouri had only decided to adopt the 2021 IECC building code so that it could obtain federal grant funding under the Inflation Reduction Act of 2022.
• Chairman Duncan lastly noted how Mr. Howard had discussed how his company was building a series of starter homes that range between 800 square feet and 1,400 square feet. He asked Mr. Howard to indicate the price per square foot of these starter homes.
  • Mr. Howard indicated that the price per square foot of these starter homes range between $200 and $250.
• Chairman Duncan stated that the homes being built by Mr. Howard’s company resemble the types of homes that surround college campuses within his state of South Carolina. He commented that these types of homes are generally used as rental properties for college students rather than as single-family residences. He then indicated that his question period time had expired.

Subcommittee Ranking Member Diana DeGette (D-CO):

• Ranking Member DeGette asked Mr. Howard to confirm that his company is building smaller houses that adhere to higher efficiency standards because these houses will be affordable.
  • Mr. Howard confirmed that his company is building smaller houses that adhere to higher efficiency standards because these houses will be affordable.
• Ranking Member DeGette asked Mr. Howard to confirm that these homes will be built for a variety of people (including professionals and retirees) and not just for college students.
  • Mr. Howard confirmed that these homes will be built for a variety of people and not just for college students. He testified that his company’s target market for these homes includes first-time homebuyers and retirees that wish to downsize into single level living.
• Ranking Member DeGette noted how there have been claims that the Biden administration is pursuing building codes that would add between $22,000 and $31,000 to the price of a new house. She indicated that these claims significantly exceed estimates from HUD, the U.S. Department of Energy, and the Pacific Northwest National Laboratory. She asked Mr. Howard to indicate whether these building codes would add between $22,000 and $31,000 to the price of a new house.
  • Mr. Howard stated that his experience suggests that these claims are incorrect. He testified that he is observing that the adoption of updated building codes is causing home building costs to increase by between $6,000 and $7,000. He commented that these increases align with the estimates from the Pacific Northwest National Laboratory.
• Ranking Member DeGette asked Mr. Howard to indicate whether his company is building houses based on the Biden administration’s proposed building codes or based on more stringent building standards.
  • Mr. Howard testified that his company is building its homes to the Zero Energy Ready Home Program’s standards. He indicated that these standards are based on the 2021 IECC.
• Ranking Member DeGette asked Mr. Howard to confirm that the costs associated with building homes to the Zero Energy Ready Home Program’s standards could be offset.
  • Mr. Howard confirmed that the costs associated with building homes to the Zero Energy Ready Home Program’s standards could be offset. He noted how the 45L New Energy Efficient Home Credit can directly offset some of these costs. He also stated that the adoption of these building codes results in energy cost savings that are realized over the time that a person spends living in the home.
• Ranking Member DeGette interjected to note how a person with a 30-year mortgage would have their energy efficiency costs (which should be between $6,000 and $7,000) amortized over the life of the mortgage. She asked Mr. Howard to indicate whether current projections of the total energy costs associated with energy efficiency requirements account for the reduced energy bills that will stem from the fact that the homes will become more energy efficient.
  • Mr. Howard estimated that a person purchasing an energy efficient home would recoup their energy efficiency-related costs within six or seven years. He commented that this estimate is based on his company’s experience building homes in a small town.
• Ranking Member DeGette asked Mr. Howard to indicate whether his company’s starter homes being built with high energy efficiency standards are popular.
  • Mr. Howard testified that his company is typically able to sell its homes before the homes have been completed.
• Ranking Member DeGette asked Mr. Howard to discuss the reasons that his company’s homebuyers provide for purchasing the company’s homes.
  • Mr. Howard stated that most of his company’s homebuyers are interested in the price points of his company’s homes. He added that location is a relevant factor in real estate transactions. He stated that these homebuyers often do not appreciate the energy efficiency benefits of his company’s homes until the buyers live in the homes for an extended period of time. He mentioned how his company holds monthly property owner’s association meetings, which provide these homebuyers with the opportunity to provide his company with feedback. He testified that these homebuyers are “pleasantly surprised” regarding the ease of heating and cooling their homes, the comfort of their homes, and the quietness of their homes.
• Ranking Member DeGette then noted how the Energy Independence and Security Act of 2007 had required the U.S. Department of Energy to develop and finalize a regulation that phases out fossil fuel consumption in federal buildings. She commented that the recent Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings final rule would merely implement the Energy Independence and Security Act of 2007’s statutory requirement. She mentioned how the U.S. Department of Energy had estimated that this final rule’s total net benefit to the public will reach up to $134 million. She also noted how this final rule is expected to reduce carbon emissions by 2 million metric tons and methane emissions by 16,000 tons. She remarked that Congress, states, localities, and homebuilders could work together to develop affordable and energy efficient buildings that could also be economically viable and positive.

Subcommittee Chairman Jeff Duncan (R-SC):

• Chairman Duncan stated that the U.S. had experienced a “fracking revolution” that had occurred after 2007. He commented that this advent of domestic fracking had caused the U.S.’s natural gas production to significantly increase.

Full Committee Chairman Cathy McMorris Rodgers (R-WA):

• Chairman McMorris Rodgers remarked that the governors of California and Washington want to close the manufacturing facilities of Mr. Bonnell’s company and drive the company out of business through banning natural gas. She asked Mr. Bonnell to indicate whether his company can produce sheetrock, asphalt, shingles, or paper products without using natural gas.
  • Mr. Bonnell stated that while it is possible to produce drywall using electrical dryers, he asserted that it is not commercially feasible to produce drywall using electrical dryers. He testified that his company is always to make capital investments to lower its energy costs. He stated however that it costs more money to produce drywall without using natural gas.
• Chairman McMorris Rodgers asked Mr. Bonnell to indicate whether his company can produce asphalt, shingles, and paper products without natural gas.
  • Mr. Bonnell remarked that asphalt, shingles, and paper products cannot be produced in a commercially feasible manner without using natural gas. He highlighted how paper products are highly energy intensive to produce and that their production requires natural gas and electricity.
• Chairman McMorris Rodgers asked Mr. Bonnell to indicate whether the U.S. can continue to domestically manufacture drywall, asphalt, shingles, and paper products moving forward.
  • Mr. Bonnell mentioned how other countries have previously manufactured these products and commented that this foreign manufacturing had resulted in a “horrible experience” for the U.S. He recounted how Chinese-manufactured drywall in Florida had created significant problems, which had necessitated millions of dollars in rebuilding work. He stated that U.S. consumers are likely not interested in purchasing Chinese building products. He remarked however that the inability of U.S. manufacturers to use natural gas would result in more offshore materials production.
• Chairman McMorris Rodgers asked Mr. Bonnell to project what would happen to construction material prices if there were to exist a state-wide natural gas ban.
  • Mr. Bonnell predicted that a state-wide natural gas ban would cause the price of drywall products to increase by between two and four times.
• Chairman McMorris Rodgers then remarked that climate change activists and international groups have significant influence with the ICC and other standards setting groups that develop model energy codes. She stated that these model energy codes increase construction costs and justify these increases with promises of long-term energy savings. She asked Mr. Woods to discuss how these model energy codes work in practice.
  • Mr. Woods mentioned how Kansas City, Missouri had recently adopted the 2021 IECC and commented that he had therefore not yet observed the full impacts of this model energy code. He stated however that the 2021 IECC’s cost estimates fail to account for the code’s impacts on home construction methods. He highlighted how the 2021 IECC requires R60 insulation and noted how homes in Kansas City, Missouri are built using stick frame roofs. He stated that R60 insulation cannot fit into a stick frame roof and that the 2021 IECC’s R60 insulation will force his company to develop new roofing practices, which he commented would significantly change the production process. He testified that these changes are increasing his company’s housing production costs. He further mentioned how his company had assessed that its movement from the 2009 IECC to the 2021 IECC would only result in energy savings of $125 or less per year. He indicated however that the cost increases associated with adopting the 2021 IECC would cause mortgage and PMI costs to increase by as much as $800 per year. He asserted that the energy cost savings associated with adopting the 2021 IECC would not offset the increased costs that this model energy code imposes on housing prices.
• Chairman McMorris Rodgers asked Mr. Woods to indicate how conflicts between federal policies and state and local energy codes impact the supply of new homes.
  • Mr. Woods mentioned how Kansas City, Missouri is experiencing a “drastic” reduction in housing production. He partially attributed this reduction in housing production to builders stalling to construct new homes.
• Chairman McMorris Rodgers interjected to mention how wildfires had damaged hundreds of homes in her region. She noted how restrictions on the use of natural gas are thwarting efforts to rebuild these homes. She asked Mr. Woods to address the frustrations of homeowners that cannot rebuild damaged homes due to natural gas restrictions.
  • Mr. Woods called the situation that Chairman McMorris Rodgers had described “unfortunate.” He mentioned how his house cannot comply with his locality’s energy codes without installing a natural gas furnace. He asserted that it is counterproductive to prohibit the use of natural gas furnaces when natural gas furnaces can enable homes to be constructed more efficiently and meet the 2021 IECC’s standards.
• Chairman McMorris Rodgers stated that current restrictions on the use of natural gas for homes makes the home rebuilding process unaffordable.

Full Committee Ranking Member Frank Pallone (D-NJ):

• Ranking Member Pallone asked Mr. Howard to discuss how his company builds energy efficient houses and the upgrades and features that his company incorporates into these houses. He commented that the statements from the other witnesses suggest that the construction of an energy efficient home is impossible. He asked Mr. Howard to explain how his company can construct energy efficient houses.
  • Mr. Howard noted that his company focuses on building smaller homes and commented that these houses are therefore cheaper to construct. He added that smaller homes tend to require fewer construction materials. He then discussed how his company can successfully build 2021 IECC-compliant homes through using structural insulated panels (SIPs) for wall and roof assembly. He explained that his company obtains its SIPs from a small factory in North Carolina and that these SIPs are delivered to job sites on flatbed trucks. He mentioned how his company can assemble SIPs using two or three laborers. He noted how stick frame homes by contrast require more skilled labor. He testified that his company’s use of SIPs allows it to make its houses weather-tight within two or three days. He indicated that a home being constructed via traditional labor would take between two and three weeks to be made weather tight. He stated that this shorter building time reduces his company’s carrying costs for its houses. He indicated that these carrying costs stem from construction loans.
• Ranking Member Pallone asked Mr. Howard to discuss the existing federal incentives that encourage the construction of more energy efficient houses.
  • Mr. Howard noted how the 45L New Energy Efficient Home Credit provides $2,500 to builders that certify their homes to Energy Star Program standards and provides $5,000 to builders that certify their homes to Zero Energy Ready Home Program standards. He stated that these tax credits nearly offset the initial costs associated with constructing energy efficient homes.
• Ranking Member Pallone interjected to ask Mr. Howard to indicate whether these federal incentives for energy efficient housing construction are difficult to obtain.
  • Mr. Howard stated that these federal incentives for energy efficient housing construction are not difficult to obtain.
• Ranking Member Pallone then asked Mr. Howard to explain why there exists a wide discrepancy in the provided estimates for energy efficient housing construction.
  • Mr. Howard remarked that the higher estimates for energy efficient housing construction often incorporate unnecessary factors. He acknowledged that home construction costs can vary widely across markets. He stated that it may be more expensive for home builders to adopt more stringent energy efficient standards if the homebuilders lack experience using these standards. He asserted however that these homebuilders would likely gain efficiencies over time. He also acknowledged that his company tends to focus more on the building envelope and less on building finishes. He noted that most homeowners tend to modify their building finishes over time and are less likely to modify the more structural aspects of their houses (such as insulation systems).
• Ranking Member Pallone remarked that many people often oppose innovation based on an aversion to change. He commented that while changes may be initially daunting, he stated that these changes are often less expensive and less difficult to make than anticipated.

Rep. Bob Latta (R-OH):

• Rep. Latta discussed how half of the housing units within his state of Ohio were built prior to 1965 and how more than two-thirds of Ohio’s housing units were built prior to 1980. He noted how 43 percent of Ohio homebuyers are purchasing houses located in small towns and how 95 percent of first-time homebuyers are financing their home purchases. He raised concerns that “far-reaching” federal energy efficiency mandates can have unintended consequences for his state’s first-time homebuyers. He noted how Mr. Woods had testified that compliance with the 2021 IECC’s standards can increase the prices of new homes. He asked Mr. Woods to explain how these higher prices impact middle-class and first-time homebuyers.
  • Mr. Woods noted that every $1,000 added to the price of a house results in 106,000 Americans being priced out of the housing market. He highlighted how 77 percent of Americans currently cannot afford the price of a medium-priced house. He stated that the imposition of energy efficiency mandates will therefore result in many Americans not being able to purchase houses.
• Rep. Latta stated that HUD’s new regulations would significantly increase the stringency of the building codes for homes backed by the FHA and the USDA. He asked Mr. Woods to indicate the number of regulators that he had interacted with that have professional backgrounds in construction.
  • Mr. Woods stated that “very few” regulators have professional backgrounds in construction.
• Rep. Latta stated that no one is against the existence of regulations and that people and businesses simply desire that regulations be feasible. He asked Mr. Woods to address how regulators can develop revisions to model building codes if the regulators lack actual construction experience.
  • Mr. Woods remarked that model building codes should not be “one size fits all” and asserted that the 2021 IECC had taken such an approach. He stated that homes located in different geographies must adopt different measures to improve their energy efficiency and environmental impact.
• Rep. Latta expressed agreement with Mr. Woods’s assertion that homes require different building standards based on geography. He then mentioned how current U.S. law requires that houses receiving federally-financed mortgages comply with the 2009 IECC standards. He noted however that there are now efforts underway to require that new houses comply with 2021 IECC standards. He asked Mr. Woods to address how builders can comply with a situation where one set of regulations requires that houses be built to 2009 IECC standards and another set of regulations requires that houses be built to 2021 IECC standards.
  • Mr. Woods called it impossible for builders to comply with these conflicting building code regulations. He stated that he could not sell a house to a customer that is not built to 2021 IECC standards, even if the municipality where the house is located does not require compliance with 2021 IECC standards.
• Rep. Latta interjected to note how a state may only require that homes be built to the 2009 IECC’s standards. He asked Mr. Woods to indicate what would happen in this situation.
  • Mr. Woods noted that a home that is not built to the 2021 IECC’s standards could not receive financing from the USDA.
• Rep. Latta further asked Mr. Woods to indicate whether first-time homebuyers may experience challenges obtaining a federally-backed home loan for an older home.
  • Mr. Woods answered affirmatively. He stated that while he did not know how the USDA’s current financing regulations apply to older homes, he commented that older homes could not receive USDA financing if the financing was conditioned on the house’s adherence to 2021 IECC standards.

Rep. Scott Peters (D-CA):

• Rep. Peters remarked that the cost of housing is one of the greatest challenges facing his state of California and his city of San Diego. He asserted that the cost of housing constitutes the largest barrier to the continued prosperity of his state and city. He noted how states and localities form most building code policies and lamented how California has imposed significant barriers on new housing construction. He then mentioned how he had proposed the bipartisan Build More Housing Near Transit Act with Full Committee Chairman Cathy McMorris Rodgers (R-WA). He stated that this legislation would support the construction of housing near federally-funded transit projects and would ensure that people are making use of these transit projects. He also commented that this legislation would ensure that the economic and environmental benefits of these projects will be fully realized. He then remarked that improved energy efficiency standards will lead homeowners to save money on their houses through efficiency gains and reduced spending on heating, cooling, and water services. He expressed interest in ensuring that these updated energy efficiency standards do not increase barriers to homeownership through imposing additional costs on lower-income homebuyers. He noted how the IIJA and the Inflation Reduction Act of 2022 contain billions of dollars in grants for states and localities to implement the updated energy efficiency codes. He also mentioned how the 45L New Energy Efficient Home Credit supports the adoption of energy efficiency homebuilding practices. He stated however that these grant funds do not go toward housing construction or reducing the cost of more energy efficient materials. He also stated that the 45L New Energy Efficient Home Credit does not fully cover the cost of adopting energy efficiency homebuilding practices. He asked Mr. Howard to provide recommendations for reducing the cost of compliance with updated energy efficiency codes and ensuring that energy efficient homes are more affordable.
  • Mr. Howard remarked that the homebuilding industry would ultimately adapt to more stringent building codes. He acknowledged however that this adoption would take time. He mentioned how there has occurred significant innovation within the construction industry in recent years. He stated that off-site construction technologies have the potential to expedite construction through building construction components in a controlled environment. He also stated that off-site construction can lower the costs of construction materials. He indicated that these off-site construction technologies include panelized construction and full volumetric modular construction.
• Rep. Peters then discussed how building codes play an important role in terms of supporting the resiliency of houses, which is key for houses to obtain insurance coverage. He mentioned how his state of California had lost many homes to wildfires. He stated that policymakers must consider the role that building codes play in ensuring that houses are worthy of financing. He commented that these housing resiliency investments have short-term costs and long-term benefits. He then criticized the Subcommittee for holding a hearing on energy efficiency standards for homes after the rules had been finalized in April 2024. He asserted that the Subcommittee should have either passed legislation on the topic or addressed the rules when they were being considered if it wanted to change policy in this area. He described the hearing as an “academic exercise” and reiterated that Congress should have sought to become more involved in these housing energy efficiency standards before the rules had been finalized. He asserted that the development of bipartisan policies for housing energy efficiency would likely have been better and more durable. He expressed concerns that a change in administration could cause these rules to get repealed. He contended that the Subcommittee should be more proactive in addressing housing energy efficiency standards and not rely upon the Executive Branch to develop these policies.

Rep. Morgan Griffith (R-VA):

• Rep. Griffith discussed how many birds die every year from flying into glass structures and glass buildings. He also noted how many birds that survive collisions with these glass structures and glass buildings experience injuries that cause them to die later. He referenced a January 2023 American Bird Conservancy article that had estimated that bird strikes on buildings are responsible for between 365 million and 1 billion bird deaths annually. He expressed frustration that Congress is more focused on banning the use of natural gas in federal buildings and asserted that Congress should instead work to pass the bipartisan Federal Bird Safe Buildings Act of 2023. He stated that the cost of installing special film on glass structures and glass buildings to prevent bird collisions is very minimal and that this special film could be installed immediately. He also asserted that federal action to prevent bird collisions with glass structures and glass buildings would save hundreds of millions of animal lives. He further stated that the demonstration of film installation in federal buildings would likely lead builders to adopt film installation in their construction of non-government buildings and structures. He expressed concerns however that the U.S. is instead pursuing fuel consumption restrictions and energy efficiency requirements that will drive up the cost of housing. He warned that these higher housing costs would force many of his constituents to forgo traditional housing and pursue mobile homes. He asked Mr. Bonnell to indicate whether he agrees with his statements.
  • Mr. Bonnell expressed general agreement with Rep. Griffith’s statements.
• Rep. Griffith noted how many people that are constructing buildings and homes do not consider that the buildings and homes can endanger birds. He stated that the installation of special film on glass buildings and glass structures could save the lives of birds.

Rep. Lizzie Fletcher (D-TX):

• Rep. Fletcher discussed how her city of Houston has an ample supply of affordable housing, which has led many people to move to Houston. She also stated that there exists a strong demand for energy efficient houses and buildings and that energy inefficient homes and buildings can harm the energy grid. She expressed optimism that policymakers can address both housing affordability and the need for houses and buildings to be energy efficient. She mentioned how the energy efficient buildings in her Congressional District have been more resilient during extreme weather events. She then noted how state and local jurisdictions have primary responsibility for building energy codes. She discussed how the Biden administration is working to develop voluntary building energy codes and encouraging states to adopt these voluntary codes. She then reiterated that while Houston has historically had an ample supply of affordable housing, she indicated that there are growing concerns regarding the city’s supply of affordable housing. She asserted that Congress must work to address housing affordability and housing energy efficiency. She commented that these goals do not need to be mutually exclusive. She then mentioned how Mr. Howard has firsthand experience developing energy efficient houses. She commented that the long-term benefits of energy efficient homes are often difficult to appreciate at the time of purchase. She noted how Mr. Howard had asserted that the current housing appraisal process does not adequately account for the value associated with energy efficient investments. She asked Mr. Howard to indicate whether the establishment of a new rating system could better highlight the potential cost savings associated with upfront energy efficiency investments to both homebuyers and home lenders. She indicated that other countries have established these types of rating systems.
  • Mr. Howard expressed support for the establishment of such a rating system. He noted how RESNET’s HERS provides the capability to certify and rate homes based on energy efficiency. He asserted that this energy rating capability is “grossly underutilized.” He also mentioned how the Appraisal Institute had developed an addendum that provides appraisers with the ability to recognize the additional value of energy efficiency features. He asserted that this resource is also “grossly underutilized.” He stated that the U.S. should take advantage of existing tools to better account for the potential cost savings associated with upfront energy efficiency investments.

Rep. Larry Buchson (R-IN):

• Rep. Bucshon remarked that the U.S. Department of Energy’s recently finalized energy efficiency standards fail to account for the design and factory construction techniques of manufactured homes and that would drive up housing costs for working class Americans. He mentioned how he had proposed the Affordable HOMES Act, which would rescind the Energy Independence and Security Act of 2007’s provision directing the U.S. Department of Energy to establish energy efficiency standards for manufactured homes. He stated that the manufactured housing industry plays a significant role within the affordable housing space. He then remarked that the U.S. can reduce emissions through using a variety of energy sources and that his constituents desire reliable and affordable energy. He raised concerns that currently proposed federal energy efficiency standards could weaken energy reliability and affordability. He noted how the housing industry is responsible for a very small percentage of global emissions. He questioned the wisdom of pursuing policies that will impede lower-income Americans from affording entry-level homes and that will have very minimal impacts on climate change. He further expressed concerns over how proposals to transition the U.S. from gasoline-powered vehicles to EVs would cause the U.S.’s energy demands to increase by between 30 percent and 40 percent. He stated that the source of the energy needed to meet these new demands remains unknown. He discussed how U.S. natural gas is the cleanest natural gas in the world and mentioned how Europe is very reliant on liquefied natural gas (LNG) from the U.S. and Qatar. He noted how Europe had cut off its supply of Russian natural gas. He reiterated his concerns that the U.S. is pursuing energy efficiency policies that would impede homeownership and that would have very minimal impact on climate change. He noted how his Congressional District’s average annual income is $55,000 and stated that the Biden administration’s energy efficiency policies will harm the manufactured housing industry. He noted how many of his constituents can only afford manufactured housing. He contended that the U.S. must take pragmatic actions to ensure energy affordability, provide energy reliability, and decrease emissions.

Rep. Doris Matsui (D-CA):

• Rep. Matsui discussed how her state of California is the world’s fifth largest economy and attributed the state’s economic success to its ability to foster innovation. She remarked that the largest problem facing the U.S. is climate change and noted how buildings are responsible for 30 percent of U.S. greenhouse gas emissions. She asserted that increasing the energy efficiency of buildings can therefore play a significant role in addressing climate change. She also stated that improving building energy efficiency would constitute one of the most cost-effective ways to combat climate change. She highlighted how Mr. Howard has extensive professional experience as a homebuilder and is an energy efficiency expert. She asked Mr. Howard to indicate whether homebuilders are providing accurate estimates regarding the cost of constructing energy efficient homes.
  • Mr. Howard answered no. He testified that he had observed that new federal energy efficiency standards are increasing the cost of building new houses by between $6,000 and $7,000. He commented that these cost increases are significantly lower than the estimates claiming that these new standards would increase homebuilding costs by over $30,000.
• Rep. Matsui asked Mr. Howard to provide recommendations for how homebuilders could reduce the cost of producing an energy efficient home.
  • Mr. Howard recommended that homebuilders take some of their construction off-site into controlled environments. He commented that controlled environments can support increased efficiencies and optimize material resources. He noted how this off-site construction can involve panelized construction or full volumetric modular construction.
• Rep. Matsui then mentioned how there have been claims that certain energy efficiency measures (such as heat pumps) do not work for all climates. She indicated however that the Pacific Northwest National Laboratory’s analysis shows that the average payback period for modern energy efficient homes in North Carolina is less than 11 years across all climate zones. She noted how Mr. Howard lives in western North Carolina where winter temperatures can be “bitter.” She asked Mr. Howard to discuss how energy efficiency measures perform in colder climates.
  • Mr. Howard discussed how his company’s all-electric homes are heated using cold climate heat pumps. He indicated that these cold climate heat pumps are rated to operate at 100 percent capacity at as low as -5 degrees. He commented that North Carolina does not experience temperatures this low for prolonged periods of time. He remarked that energy efficiency technology has made significant progress and that the U.S. is “grossly underestimating” this technology.
• Rep. Matsui then discussed how California’s building codes require that all new buildings be EV ready. She explained that these new houses must allow for an electrical charger to be easily installed if the homeowner desires such a charger. She asked Mr. Howard to discuss how homebuilders can construct houses that are EV ready.
  • Mr. Howard noted how a house built to the U.S. Department of Energy’s Zero Energy Ready Home Program’s standards would need to have space in the electric panel to add a breaker for a future EV charger. He also noted how this type of house would have conduit run from the electric panel to an exterior location. He estimated that it would cost between $500 and $600 per house to add a 240-volt outlet where an EV could be plugged in. He stated however that it is not necessary to add in an EV charging station under the Zero Energy Ready Home Program. He commented that EV charging stations can be “quite expensive” to build.
• Rep. Matsui then noted how studies from the U.S. Department of Energy and RMI have found that retrofitting a house to install an EV charger can be several times more expensive than completing the wiring during the initial construction phase. She remarked that many energy efficiency measures are cheaper to install during the construction phase as opposed to after the house has been built. She then indicated that her question period time had expired.

Rep. Gary Palmer (R-AL):

• Rep. Palmer asked Mr. Howard to indicate how many small homes his company has built.
  • Mr. Howard indicated that his company is currently working on constructing an 11-unit community. He testified that he had constructed over 100 small houses and indicated this figure includes his experience with Habitat for Humanity. He also defined these small houses as being between 800 square feet and 1,400 square feet.
• Rep. Palmer noted how houses during the Great Depression were the size of the houses that Mr. Howard’s company is building. He asked Mr. Howard to indicate whether he is promoting smaller houses in response to the threats posed by climate change.
  • Mr. Howard stated that he does not believe that small houses between 800 square feet and 1,400 square feet are appropriate for all families. He indicated that these small houses are intended to serve households consisting of one or two people.
• Rep. Palmer stated that the hearing’s questions and responses have suggested a desire for the U.S. to adopt smaller houses as a response to climate change. He then asked Mr. Casper to comment on how natural gas is critical to homebuilding in terms of supporting appliances, kiln-dried lumber, and kiln-dried brick.
  • Mr. Casper noted how his cooperative’s customers include industrial and commercial users. He mentioned how his company has a manufacturer customer that wants to expand its operations and that needs reliable electricity and natural gas service. He stated that fuel diversity is key for supporting all types of manufacturing.
• Rep. Palmer asked Mr. Bonnell and Mr. Woods to indicate whether they prefer air-dried brick and air-dried wood to kiln-dried brick and kiln-dried wood in terms of strength, reliability, and quality.
  • Mr. Bonnell mentioned how his company’s sister subsidiary manufactures clay brick. He remarked that the manufacturing schedule of air-dried clay brick is not feasible in terms of moving volume. He stated that the manufacturing of air-dried clay brick would result in a “much diminished” throughput, which would constrain the supply of available clay brick.
• Rep. Palmer asked Mr. Bonnell to indicate whether a movement in production from kiln-dried brick to air-dried brick would result in diminished quality.
  • Mr. Bonnell stated that a movement in production from kiln-dried brick to air-dried brick would likely result in diminished quality.
  • Mr. Woods testified that all of his company’s lumber is kiln-dried.
• Rep. Palmer interjected to note that builders must cull some of their kiln-dried lumber supplies because moisture can often remain in the lumber. He commented that this remaining moisture can warp the lumber. He asked Mr. Woods to confirm his understanding of the need to cull kiln-dried lumber supplies.
  • Mr. Woods confirmed that builders must cull some of their kiln-dried lumber supplies due to the presence of moisture.
• Rep. Palmer asked Mr. Woods to confirm that other wood products (such as plywood and particle board) can pose challenges if these products are not adequately dried.
  • Mr. Woods confirmed that other wood products can pose challenges if the products are not adequately dried.
• Rep. Palmer criticized many Biden administration officials for their lack of familiarity with building science and engineering.

Rep. Paul Tonko (D-NY):

• Rep. Tonko discussed how energy insecurity has been a longstanding issue facing millions of Americans. He mentioned how the EIA had found in both 2015 and 2020 that more than one-quarter of U.S. households had reported experiencing challenges paying energy bills or keeping their homes at unsafe temperatures because of energy cost concerns. He also noted how millions of Americans will forgo food and medicine to pay their energy bills. He remarked that there exist effective federal programs to help Americans afford energy. He indicated that these programs include LIHEAP and WAP. He stated that these programs provide weatherization services and save homeowners money, as well as enable Americans to live in healthier and more comfortable homes. He called on Congress to provide attention and support to these programs and commented that these programs have a proven track record of upgrading existing homes. He stated that these programs enable major cost savings because the houses served by the programs can be very expensive to own, operate, and maintain. He highlighted how these houses were often built at a time with no or minimal energy codes to ensure cost-effective operations. He noted how Mr. Howard’s testimony had discussed how upfront home costs are just one of several factors that should be considered when determining home affordability. He asked Mr. Howard to address how certain features will make houses more affordable to own and operate during the construction phase.
  • Mr. Howard remarked that he is very focused on ensuring that houses will be affordable to own and operate. He stated that the U.S. cannot exclusively focus on housing affordability at the point of purchase and commented that deliberate choices must be made during the construction process.
• Rep. Tonko asked Mr. Howard to indicate whether his company discusses the importance of houses being affordable to own and operate with its customers.
  • Mr. Howard answered affirmatively.
• Rep. Tonko asked Mr. Howard to discuss how his company decides which energy efficiency features it will include as part of its homebuilding process
  • Mr. Howard remarked that his company engages in cost-benefit analyses to determine which features it will include as part of its homebuilding process. He stated that his company seeks to identify building technologies and building materials that are the most cost-effective.
• Rep. Tonko then expressed interest in working to bolster the U.S.’s minimal building standards. He mentioned how HUD and the USDA had recently announced that new homes financed by those Departments would need to meet the 2021 IECC’s standards. He asked Mr. Howard to indicate whether raising building standards from the 2009 IECC’s standards to the 2021 IECC’s standings would deliver significant cost savings.
  • Mr. Howard answered affirmatively.
• Rep. Tonko commented that HUD and the USDA agree with Mr. Howard’s response. He noted how these Departments had found that the adoption of the 2021 IECC’s standards would lead residents of single-family homes to save on average $963 per year on energy costs. He commented that these findings align with the Pacific Northwest National Laboratory’s finding that North Carolina’s decision to adopt the 2021 IECC’s standards would save North Carolina households almost $400 annually on energy bills and recover the upfront cost increases associated with stronger building standards within a matter of a few years. He noted how this update would save North Carolina residents over $5.3 billion in energy costs over 30 years. He expressed support for the adoption of more stringent building code energy efficiency standards.

Rep. Randy Weber (R-TX):

• Rep. Weber remarked that Congressional Republicans have advocated for affordable, reliable, and dispatchable energy sources to remain as baseload power for the U.S.’s energy grid. He noted how the IIJA seeks to deploy 500,000 EV charging stations throughout the U.S. He stated however that the U.S.’s current energy grid cannot support its existing EV charging stations. He warned that the U.S.’s failure to bolster its energy grid will create problems if the U.S. were to deploy 500,000 EV charging stations. He noted how renewable energy sources face intermittency challenges, which can limit their ability to contribute energy to the U.S.’s energy grid. He highlighted how Mr. Bonnell’s company’s Las Vegas, Nevada plant had experienced a 248 percent increase in the cost of natural gas and electricity. He noted how electric heat is the most expensive method for heating a house. He asked Mr. Bonnell to discuss how unreliable energy markets impact the construction of new houses.
  • Mr. Bonnell noted how the average house has approximately 10,000 square feet of wallboard and indicated that this amount of wallboard generally costs between $1,000 and $2,000. He stated that the absence of reliable energy would raise the costs of this wallboard to between $4,000 and $5,000 per house. He also stated that the absence of reliable energy would raise the costs of asphalt roofing. He asserted that proposed federal energy mandates would impose more strains on the U.S.’s electrical grid. He further questioned how the U.S. would be able to replace the 46 percent of its electricity that is generated by natural gas.
• Rep. Weber asked Mr. Bonnell to indicate whether federal policies are forcing his company to look outside of the U.S. for cheaper building materials.
  • Mr. Bonnell expressed his company’s desire to remain a U.S. manufacturer and stated that his company would not source its products from foreign suppliers. He noted however that his company’s products are largely commodity products and warned that higher prices would cause these products to go unpurchased.
• Rep. Weber called it important for localities to implement building codes that best meet their needs. He alleged that the Biden administration is seeking to undermine these local building codes. He then indicated that his question period time had expired.

Rep. Kathy Castor (D-FL):

• Rep. Castor remarked that building energy codes save homeowners money and pay for themselves through reducing electricity costs. She criticized Congressional Republicans for their opposition to these building energy codes and stated that energy efficiency is popular among Americans. She discussed how the Inflation Reduction Act of 2022 had included policies that promote energy efficiency and reduce pollution. She highlighted how buildings are responsible for 40 percent of climate change emissions. She noted how the Inflation Reduction Act of 2022 includes incentives for states and localities to update their building energy codes and provides tax incentives to promote the adoption of energy efficiency measures. She mentioned how the 25C Energy Efficient Home Improvement Credit provides $2,500 per year for renovations of an existing home for new heat pumps and air conditioning systems. She indicated that this tax credit is available through 2032. She also mentioned how the 179D Commercial Buildings Energy-Efficiency Tax Deduction provides a tax deduction based on a commercial building’s square footage. She commented that this tax deduction makes it easier for building owners to qualify for larger tax deductions for HVAC systems, facades, and lighting upgrades. She further mentioned how the Inflation Reduction Act of 2022 expands the 45L New Energy Efficient Home Credit to support builders, developers, and contractors with new construction and renovation. She indicated that this tax credit provides up to $5,000 per year. She emphasized that state and local community adoptions of more stringent building codes are voluntary in nature. She then remarked that the hearing was failing to consider the rising costs associated with climate change. She asserted that climate change is dangerous and intensifying and stated that climate change is driving up the cost of property insurance, flood insurance, and electricity. She commented that these rising costs are undermining housing affordability. She mentioned how U.S. homeowners insurance rates are expected to rise by 6 percent on average in 2024 and how these rates could rise as much as 23 percent in states with severe weather. She noted how her state of Florida is already paying more than four times the national average for homeowners insurance. She further noted how early forecasts indicate that there will occur a hyperactive 2024 Atlantic hurricane season, which would bring even greater insurance rate increases in 2025. She attributed these climate change-related problems to the current burning of fossil fuels. She also stated that climate change-related natural disasters have health costs and significant federal budgetary impacts. She remarked however that there currently exist solutions for addressing climate change. She asked Mr. Howard to identify promising homebuilding innovations that could support housing resiliency and efficiency.
  • Mr. Howard mentioned how he had worked for several years for Mitsubishi Electric’s HVAC division. He stated that Mitsubishi Electric had made significant progress in developing cold climate heat pump technology.
• Rep. Castor interjected to note that heat pumps also serve as cooling units.
  • Mr. Howard noted how heat pumps provide both heating and cooling services to structures. He explained that heat pumps merely move heat from one location to another location. He stated that heat pump technology supports space conditioning, water heating, and ventless drying. He commented that improvements in this technology can reduce energy costs.

Rep. Greg Pence (R-IN):

• Rep. Pence expressed interest in exploring how the Biden administration’s energy policies would be implemented. He mentioned how energy companies, energy transmitters, and housing developers had told him that installing additional EV chargers would require new transformers to power neighborhoods. He stated that the U.S. currently experiences challenges transmitting energy to neighborhoods in need. He asked the witnesses to indicate whether they are aware of any instances where homeowners insurance providers have dropped customers for installing EV chargers in their homes.
  • Mr. Bonnell indicated that while he was not aware of any instances where homeowners had lost their homeowners insurance coverage because of EV charger installations, he commented that homeowners in his state of California are struggling to maintain their insurance coverage.
• Rep. Pence asked Mr. Bonnell to explain why California residents are struggling to maintain their homeowners insurance coverage.
  • Mr. Bonnell discussed how many insurance companies are withdrawing from the California market. He testified that he had lost insurance coverage on his personal home and had been forced to obtain more expensive tertiary insurance coverage. He largely attributed California’s insurance market challenges to the state’s wildfire problems.
• Rep. Pence interjected to comment that wildfires are largely attributable to powerline problems and inadequate transmission.
  • Mr. Bonnell expressed agreement with Rep. Pence’s comment that wildfires are largely attributable to powerline problems and inadequate transmission. He also remarked that California’s restrictions on the pricing policies of insurance companies had caused insurance companies to drop their insurance coverages.
• Rep. Pence then asked Mr. Woods to indicate whether he is aware of any instances where homeowners insurance providers have dropped customers for installing EV chargers in their homes.
  • Mr. Woods testified that he is aware of instances where homeowners have lost their homeowners insurance coverage due to fires caused by EV chargers inside of their homes.
• Rep. Pence mentioned how he had heard of an instance where a home EV charging station had caused a fire in the home’s carriage house. He warned that home EV charging mandates would increase the likelihood of fires. He then asked Mr. Howard and Mr. Casper to indicate whether he is aware of any instances where home insurance companies have dropped customers for installing EV chargers in their homes.
  • Mr. Howard answered no. He mentioned how he had personally driven EVs for almost ten years and has had a home EV charging station for this entire time. He testified that his insurance company has never raised concerns over his house’s EV charging station.
  • Mr. Casper stated that he is not aware of any instances where homeowners insurance providers have dropped customers for installing EV chargers in their homes. He noted how his cooperative provides electricity and natural gas and testified that his cooperative is observing strains on U.S. energy distribution systems. He stated that increased installations of EV charging stations would require more electricity distribution.
• Rep. Pence interjected to mention how a local utility company had told him that installing additional EV chargers would jeopardize neighborhood power reliability. He also stated that many EV chargers being installed on interstate highways are not receiving sufficient electricity. He asserted that federal building code mandates are nonsensical because of current energy transmission constraints.

Rep. Kim Schrier (D-WA):

• Rep. Schrier discussed how the U.S. Department of Energy commissions the Pacific Northwest National Laboratory to conduct analyses of every new edition of the IECC’s standards. She indicated that these analyses consider the impact of these building codes on commercial buildings and residential homes and how these updated building codes compare to previous building codes. She noted how the Pacific Northwest National Laboratory’s study of the 2021 IECC had taken a fuel-neutral approach and had concluded that homeowners over a 30-year period across all domestic climate regions would experience a net cost benefit. She added that this study had factored in construction costs, new building materials, and interest rates. She further indicated that these savings on average would be returned within ten and a half years. She commented that homeowners with a typical 30-year mortgage will recoup their energy efficiency investments and will continue to enjoy energy savings as energy costs increase. She remarked that every Pacific Northwest National Laboratory study has found that updated IECC standards result in lower overall costs for homeowners. She then asked Mr. Howard to explain why there exist significant discrepancies in the cost estimates for the implementation of 2021 IECC’s standards.
  • Mr. Howard expressed confusion regarding the significant discrepancies in the cost estimates for the implementation of 2021 IECC’s standards. He acknowledged that while building costs will vary across regions, he reiterated his confusion regarding the significant discrepancies in the cost estimates for the implementation of 2021 IECC’s standards.
• Rep. Schrier then asked Mr. Howard to identify the most cost-effective measures that homeowners can take to maximize energy efficiency for their houses.
  • Mr. Howard remarked that homeowners should primarily focus on improving their building envelopes during the construction phase. He commented that homeowners will face challenges improving their building envelopes once they live in a house. He indicated that these building envelope improvements include increasing insulation levels and focusing on air sealing measures (such as better windows and doors).
• Rep. Schrier mentioned how she had improved her personal home’s building envelope. She also mentioned how she plans to replace her personal home’s gas stove with an induction stove and commented that this replacement does not appear to be expensive. She added that her region has lower electricity prices, which will contribute to the induction stove’s cost savings.

Rep. Rick Allen (R-GA):

• Rep. Allen mentioned how the price of concrete has doubled over the previous three years. He asserted that “terrible energy policy” (rather than building codes) is responsible for this price increase. He also stated that the U.S. Department of Energy’s recently issued distribution transformer energy efficient standards are reducing access to distribution transformers. He remarked that U.S. consumers are facing significant challenges affording basic necessities and asserted that federal energy efficiency policies are contributing to these affordability challenges. He noted how natural gas can heat homes quicker than electricity and raised doubts that the U.S. could obtain a sufficient electricity supply to meet the Biden administration’s energy policy goals. He then asked Mr. Woods to discuss how the 2021 IECC is problematic. He expressed particular interest in exploring the problems with the ICC’s process for developing its building standards.
  • Mr. Woods remarked that building structures to the 2021 IECC’s standards more expensive. He called these higher costs “unfortunate” given the U.S.’s current challenges with housing affordability. He asserted that the U.S. should instead work to reduce housing prices. He also testified that very few of his company’s customers voluntarily choose to upgrade the energy efficiency of their homes.
• Rep. Allen asked Mr. Woods to indicate how long it takes for homebuyers to experience a return on their energy efficiency investments.
  • Mr. Woods noted how estimates of the time it takes for homebuyers to experience a return on their energy efficiency investments range between 10 years and 20 years. He indicated however that most people will live in a house for just seven years, which means that most people will not experience a return on their energy efficiency investments. He further stated that energy efficiency investments are never actually recouped. He mentioned how an assessment of his personal home had found that the 2021 IECC’s standards would result in annual energy savings of $125 while raising the home’s mortgage costs by $860 per year.
• Rep. Allen then stated that green energy policies have been a significant driver of energy costs since 2010 and that these higher energy costs lead to higher construction costs. He asked Mr. Bonnell to discuss how his company is dealing with current energy pricing volatility.
  • Mr. Bonnell stated that his company has two methods for dealing with energy pricing volatility. He indicated that the first method involves purchasing energy futures contracts, which tend to provide energy at a higher price than the daily spot market. He indicated that the second method involves curtailing production. He commented that this reduced production causes commodity prices to increase.
• Rep. Allen criticized the Biden administration’s energy policies, including the administration’s proposals to ban gas stoves.

Rep. Tony Cárdenas (D-CA):

• Rep. Cárdenas criticized a March 2024 letter from Committee Republicans to U.S. Secretary of Energy Jennifer Granholm for suggesting that the U.S. Department of Energy’s building code grant programs are mandates. He remarked that the U.S. Department of Energy is not mandating new minimum building code standards for communities and that states are voluntarily adopting these standards. He noted how the IIJA had provided $225 million to help states, tribes, and local entities to implement updated building codes. He also mentioned how the Inflation Reduction Act of 2022 had established the Assistance for Latest and Zero Building Energy Code Adoption programs, which provides $1 billion to states and local governments to adopt and implement the latest building codes. He asked Mr. Howard to discuss how choice is embedded in these federal grant programs and t address how these programs support the localized needs of communities.
  • Mr. Howard discussed how building codes have prescriptive paths and performance paths and indicated that most builders (including himself) have exclusively relied upon the prescriptive path. He stated however that the U.S. Department of Energy’s Zero Energy Ready Home Program better enables builders to use the performance path to achieve savings. He commented that the performance path can allow for builders to construct more cost-effective homes.
• Rep. Cárdenas asked Mr. Howard to indicate whether most industries consider the extent to which upfront expenditures will result in long-term savings.
  • Mr. Howard answered affirmatively. He remarked that his company seeks to ensure that its houses are affordable to purchase and remain affordable over time.
• Rep. Cárdenas interjected to ask Mr. Howard to indicate whether reduced ongoing monthly energy costs can fully offset higher initial costs in some cases.
  • Mr. Howard answered affirmatively.
• Rep. Cárdenas asked Mr. Howard to indicate whether the U.S.’s approach to building codes resembles a “one size fits all” approach or states and localities have flexibility to adopt building codes that best suit their needs.
  • Mr. Howard remarked that building codes in the U.S. are very flexible. He mentioned how Mr. Woods had previously raised concerns that building codes require the use of R60 insulation in roofs. He acknowledged that R60 insulation would be difficult to install in a stick frame roof. He stated however that building codes contain options that allow for the use of R49 insulation or R38 insulation in certain instances. He added that the use of these options does not require a special exemption.
• Rep. Cárdenas then asked Mr. Howard to address how the U.S. Department of Energy’s grant programs established under the IIJA and the Inflation Reduction Act of 2022 would help to improve energy efficiency (which would in turn better ensure long-term housing affordability).
  • Mr. Howard mentioned how his company was already building its houses to the U.S. Department of Energy’s Zero Energy Ready Home Program’s standards prior to the 45L New Energy Efficient Home Credit’s renewal. He stated that the 45L New Energy Efficient Home Credit has helped to offset additional costs associated with building houses to these standards.
• Rep. Cárdenas asked Mr. Howard to indicate whether the U.S. Department of Energy’s grant programs established under the IIJA and the Inflation Reduction Act of 2022 provide both short-term and long-term benefits.
  • Mr. Howard answered affirmatively.
• Rep. Cárdenas indicated that his question period time had expired.

Rep. Troy Balderson (R-OH):

• Rep. Balderson mentioned how the North American Electric Reliability Corporation’s 2024 Summer Reliability Assessment shows “significant risk” for electricity supply shortfalls and power outages across the U.S. He remarked that the EPA’s Clean Power Plan 2.0 will shut down existing reliable power generation and prevent new natural gas-fired power plants from being built. He also stated that the U.S.’s electric grid is experiencing record increases in demand. He mentioned how Mr. Casper had raised concerns that the U.S. Department of Energy’s policies will harm U.S. Department of Veterans’ Affairs (VA) facilities and military bases. He also mentioned how Mr. Bonnell had raised concerns that increasing electricity demand from artificial intelligence (AI) and data centers would impose further strains on the U.S.’s electric grid. He asked Mr. Casper and Mr. Bonnell to elaborate on their concerns regarding the impact of U.S. Department of Energy policies on electric grid reliability. He also asked Mr. Casper and Mr. Bonnell to address why electric grid reliability is essential for their organizations and customers.
  • Mr. Casper noted how the direct use of natural gas for energy is 90 percent or more efficient. He also stated that the U.S. will need to use natural gas to produce the electricity required for the U.S.’s current efforts to electrify homes, businesses, and commercial operations. He indicated that the process for converting natural gas into electricity is between 35 percent and 66 percent efficient. He concluded that the direct use of natural gas for energy is significantly more efficient than the conversion of natural gas into electricity for energy.
  • Mr. Bonnell discussed how the western U.S. is in a “very strained energy position.” He mentioned how 5,000 MW of coal electricity production had been retired in the western U.S. over the previous decade. He indicated that natural gas electricity production has supplanted retired coal electricity production. He also mentioned how renewable energy sources now account for between 12 percent and 13 percent of California’s energy portfolio. He stated however that the intermittent nature of renewable energy sources poses problems and creates energy price volatility. He recounted how these energy intermittency problems had caused California to experience the highest natural gas prices in the world at one time during 2023. He stated that these higher energy prices make his company’s products and homebuilding more expensive.
• Rep. Balderson then expressed interest in the cost savings associated with natural gas. He noted how Mr. Casper had indicated that homeowners using natural gas appliances for heating and cooking can save an average of $1,000 per year on their energy bills compared to homeowners that use electric appliances. He asked Mr. Casper to project how banning the use of natural gas and propane home hookups would impact rural Americans. He also asked Mr. Casper to indicate whether this ban would result in higher or lower energy costs for rural Americans.
  • Mr. Casper mentioned how his cooperative provides evaluations of energy options for its customers. He stated that fuel diversity supports fuel reliability and that consumers should be empowered to choose the energy options that best meet their needs.

Rep. Marc Veasey (D-TX):

• Rep. Veasey discussed how buildings consume a significant amount of the U.S.’s electricity and noted how this consumption significantly contributes to greenhouse gas emissions. He added that the addition of new devices and data centers will only increase the U.S.’s electricity demand and consumption. He also mentioned how his state of Texas’s population is growing rapidly and will experience significant increases in energy demand. He stated that the U.S.’s adoption of new building codes could result in $182 billion in energy savings and avoid about 840 million metric tons of carbon pollution by 2040. He discussed how states can decide whether to adopt model building codes and whether their cities have the authority to adopt their own codes. He noted how Mr. Woods’s testimony had asserted that states and local governments can choose to adopt or amend the various provisions of model building codes based on their individual needs. He noted however that Mr. Woods’s testimony had also raised concerns over the prospect of implementing a national building code with no consideration for local conditions. He further noted that Mr. Woods’s testimony had argued that federal policies and programs must provide sufficient flexibility and incentives. He asked Mr. Woods to indicate whether the U.S. Department of Energy is providing flexibility and incentives in its work to promote the 2021 IECC.
  • Mr. Woods answered no. He indicated that the U.S. Department of Energy is providing grants to states and localities on the condition that these states and localities adopt the 2021 IECC unamended. He remarked that energy codes in his area have traditionally been amended and asserted that the U.S. Department of Energy’s approach regarding the 2021 IECC is unprecedented. He stated that his area had adopted the 2021 IECC unamended in order to qualify for grant money.
• Rep. Veasey then noted how Mr. Woods’s testimony had asserted that compliance with the 2021 IECC can add $31,000 to the price of building a new house. He noted however that the American Council for an Energy-Efficient Economy (ACEEE) had asserted that this claim is based on old speculation by homebuilders in one city about a proposed local update to the city’s building code. He asked Mr. Woods to respond to the ACEEE’s assertion.
  • Mr. Woods stated that the $31,000 estimate that he had provided is based on Kansas City, Missouri and asserted that this estimate is valid. He noted that his company builds small houses and that the 2021 IECC would not add $31,000 to the costs of his company’s houses. He testified that the compliance with the 2021 IECC’s standards would add between $13,000 and $18,000 to his company’s housing construction costs. He further mentioned how his company has performed estimates on the energy cost savings associated with building homes to the 2021 IECC’s standards. He stated that the increased energy efficiency savings gained from these more stringent building codes would not offset the initial construction costs. He elaborated that these more stringent standards will result in higher mortgage costs that would exceed any realized energy savings. He noted how many Americans already face significant challenges affording houses and that slightly lower housing energy costs will not address this upfront affordability issue.
• Rep. Veasey then mentioned how the U.S. Department of Energy has stated that it does not mandate new minimum building codes for communities and that its funding assists states and localities that voluntarily choose to update their building codes. He asked the other witnesses to respond to the U.S. Department of Energy’s statements.
  • Mr. Bonnell commented that he is not an expert on building codes and indicated that he is a manufacturer of building materials. He then remarked that the U.S. currently faces problems with housing affordability. He asserted that federal energy policies (including policies related to building codes) are contributing to these problems.

Rep. August Pfluger (R-TX):

• Rep. Pfluger expressed concerns that the Biden administration’s various energy-related mandates do not account for the availability of electricity and power supplies. He asked Mr. Casper to project the U.S.’s demand for natural gas and electricity over the next 15 years.
  • Mr. Casper noted how AI and data centers will likely cause the U.S. to significantly increase its demand for natural gas and electricity. He testified that his cooperative is struggling to construct a new natural gas-fired facility. He noted how his cooperative’s members directly use natural gas for manufacturing, commercial, and residential purposes.
• Rep. Pfluger asked Mr. Casper to indicate whether electricity demand in the U.S. is expected to increase over the next 15 years. He also asked Mr. Casper to provide any estimates of the U.S.’s future electricity use.
  • Mr. Casper stated that data centers alone are expected to demand as much electricity as four cities that are the size of Chicago.
• Rep. Pfluger asked Mr. Casper to address the role that natural gas would play in supporting the U.S.’s energy needs moving forward. He also asked Mr. Casper to indicate whether fossil fuels will be eliminated globally.
  • Mr. Casper stated that fossil fuels will not be eliminated globally. He noted how about 40 percent of the U.S.’s natural gas is being used for electricity generation. He indicated that that natural gas that is converted to electricity is about 40 percent efficient. He indicated that the direct use of natural gas by contrast is about 90 percent efficient.
• Rep. Pfluger then mentioned how some municipalities and localities across the U.S. are banning natural gas. He asked Mr. Casper to discuss how these natural gas bans impact consumers and the economy.
  • Mr. Casper remarked that natural gas is key for ensuring energy reliability and consumer choice. He noted how his cooperative provides energy assessments for its members and emphasized that the cooperative is a not-for-profit organization. He mentioned how many of his cooperative’s fixed income members cannot afford to install heat pumps. He stated that natural gas would be a preferable energy source for these customers.
• Rep. Pfluger asked Mr. Casper to address how proposed bans on natural gas hookups and appliances and EV mandates would impact the U.S.’s global competitiveness.
  • Mr. Casper discussed how China is constructing all types of energy generation facilities while the U.S. is exclusively constructing renewable energy generation facilities. He warned that the U.S.’s exclusive focus on renewable energy sources would undermine the U.S.’s energy reliability, which will harm the U.S. economy. He stated that while the U.S. may eventually be able to fully transition to renewable energy sources, he asserted that this transition cannot be completed within the immediate term.