The Economic Impact of Energy Codes

Julie Ruth
October 1, 2009
COLUMN : Code Arena | Codes & Standards

Talking recently with my younger son, whose passion is physics, I explained my concerns about the continued push within the energy codes to lower the maximum SHGC, which in turns lowers the visible light transmittance of the window. There are proposals pending for the next code change cycle that would establish the maximum SHGC as 0.25 in Southern climate zones. Even with very good glass, what can be seen through those windows, and the amount of light they permit in, is limited.

“I’m afraid we are going to end up with a situation where homebuilders are going to be forced to put these windows into new homes, and people who buy the homes are going to be unhappy with the windows," I said. "Then we will either end up with a black market for windows being brought in from other countries, as currently exists for water closets due to the water conservation restrictions on those, or else people are just going to chose not to buy a new home. If they want to buy a home, they will buy an existing home instead. How can that be good for our economy?”

My son pointed out that the amount of light transmitted into a home or building would be a result of the amount of window area, as well as the percentage of light permitted to enter through any particular window area. I replied that while this is true, increasing the window area also raises the average U-factor for the total wall, the net effect of which is to reduce the resistance to heat loss offered by the entire building envelope.

As we entered a sandwich shop, my son pointed to the room darkening shades that had been installed and drawn along the storefront windows in one corner of the shop. “You see, Mom, not everyone wants a lot of sun coming in through the windows.” I admitted he was probably right, but personally I like a lot of sun coming in through the windows. But then again, I live in a northern climate. To me “a lot of sun” is a rare treat.

We ordered our food and I invited my son to choose a place for us to sit. As he settled at a table on the unshaded side of the restaurant, I thought, “Perhaps not everyone wants to let the sun in, but I think most people would at least like to have that choice.”

Right now, the first-time homebuyer tax credit, combined with other factors, is resulting in some homes being sold that otherwise, perhaps, would not be sold right now. That is good for the economy, and good for our industry.

If, on the other hand, legislation is passed that basically establishes criteria for buildings that consumers may not want, or they may want, but may not necessarily be willing to pay for, would that in fact be helpful to the economy in general, or our industry in particular? Or would it damper whatever sparks of economic recovery other legislation may have been able to kindle?

The question about the economic impact of the codes on construction is not a new one. I remember reading an analysis on the subject many years ago. The question addressed in the piece I was reading was “How significantly do code requirements contribute to the cost of a home?” The specific code used for the report was the old BOCA National Building Code, but the findings were basically applicable to other model codes as well.  The answer was that the requirements of the BOCA code for one and two family homes contributed to less than 40 percent of the cost of a home.

Yes, the code had specific requirements with regards to the foundation, the framing and the roof and floor decking. It required doorways to be a certain height and width, and limited the height of stair risers while requiring the stair treads to be a certain depth. But the code did not require plush carpeting, or a tile foyer, or kitchen cabinets with an oak finish. The code did not require a living room and a family room, or separate bedrooms and bathrooms for each child living in the house, or twin walk-in closets in the master bedroom and double sinks in the master bath.

When submitting code change proposals, we are asked to provide a cost impact statement to accompany the proposal. Often, the proponents of energy code changes will argue that their proposals are cost effective–meaning that the energy savings that will be achieved by putting a new requirement in place will justify the initial expense of meeting the requirement. Many consumers are concerned over the amount of time it takes to “pay back” their initial expense for higher priced energy efficient products. It’s difficult for buyers to be motivated when pay back periods exceed their average life span, or even just the length of time they plan on living in that particular home.

It really comes down to what is the consumer willing to pay for, or more importantly, what can the consumer afford to pay? This is never discussed during code change hearings, but it is paramount to the potential impact of an energy conservation code, particularly a nationwide energy conservation code, on the economy. If the consumer would rather buy an existing home than pay a higher price per square foot for a new home that is more energy efficient, then any legislation that places those energy conservation requirements in place will have a negative impact on the economy. If the consumer is willing to pay more, then these requirements will not have a negative impact. I am neither an economist, nor a marketing person so I don’t have any answers to these questions. But I do think they are ones we need to be concerned about.
