States roll back energy rules to tackle rising housing costs

By EPN Staff

Vermont Gov. Phil Scott signed an executive order this month rolling back home energy standards to speed housing construction, one of many efforts advancing in states to lower rising housing costs.

The median U.S. home price is up nearly 25% since early 2020, according to federal reserve data. Many lawmakers see regulatory changes – including delaying or freezing energy efficiency rules – as a way to ease housing shortages.

Why it matters

Homebuilders often blame energy efficiency mandates for driving up costs.

Vermont’s moderate Republican governor pointed to “the persistent application of well intentioned, but now counterproductive land use regulations, energy policies, taxes and fees” as contributors to his state’s affordable housing shortage.

His executive order allows builders to follow Vermont’s less-restrictive 2020 energy standards instead of stricter requirements that took effect in 2024.

The bigger picture

Several states have moved to relax or delay energy mandates and environmental rules in response to housing pressures – even deep-blue ones.

• North Carolina: In 2023, the Republican-controlled legislature overrode the Democratic governor’s veto and voted to freeze energy efficiency rules in the state building code until 2031, leaving some standards in place from 2009. The state homebuilders association opposed the planned energy code updates setting stricter standards.

• Michigan: Homebuilders sued over state energy standards that were set to take effect in August, saying they ran afoul of another Michigan law that requires building codes to be cost-effective. The suit has seen early success, with a court pausing implementation of the new codes.
• California: Even Gov. Gavin Newsom, a liberal Democrat and potential 2028 presidential candidate, signed a legislative package this summer to streamline reviews under the California Environmental Quality Act and freeze residential building standards through 2031, with some exceptions. The state’s Republican legislative leadership accused him of only adopting long-standing conservative reforms now that the state’s housing situation is dire.

At the federal level, the National Association of Home Builders (NAHB) and 15 Republican-led states have sued to block the implementation of Biden-era federal energy efficiency standards for homes constructed through the Department of Housing and Urban Development and Department of Agriculture.

“That statute is now being stretched to the breaking point to support a green agenda that Congress never enacted, with the upshot of reducing the affordability and availability of low-income housing,” the suit states.

Additional details

NAHB has argued for years that energy efficiency requirements add heavily to construction costs and take decades to produce enough energy savings to offset those costs.

Environmental groups don’t dispute that higher efficiency standards increase upfront construction costs, but claim they save home buyers and renters money long-term.