Building Efficiency Is So Hot (And Cool) Right Now — Here’s Why

Between construction- and operations-related processes, the built environment is responsible for nearly 40% of the planet’s energy-related carbon emissions, according to the United Nations. That’s a huge share that rivals any other industry’s.

Shelter is a basic human need, of course. So is there anything we can do about the built environment’s massive carbon footprint?

Actually, yes. A whole lot. Relatively simple and inexpensive retrofits could significantly reduce existing buildings’ ongoing emissions. Decarbonizing construction is harder, but we’ve already made great strides within the limits of existing technologies by adopting more sustainable building materials and making supply chains more efficient. 

Building efficiency experts like ABB’s Karim Allana drive this relatively new and fast-growing construction and property management niche. All will tell you that while there’s much more work to be done, there’s also reason for optimism. Here’s why building efficiency is in the spotlight right now and why it matters to you.

The IRA Offers a Bunch of New Tax Credits for Homeowners 

If your inefficient old furnace is showing its age, you could save thousands off the price of a more efficient replacement thanks to energy-efficiency tax credits in the Inflation Reduction Act, a major new law that aims (in part) to improve building performance and reduce carbon emissions.

Same goes for your old water heater and air conditioner. According to the Department of Energy, improvements eligible for IRA tax credits include:  

  • Air source heat pumps
  • Central air conditioners
  • Biomass wood stoves
  • Boilers for heating
  • Furnaces fueled by natural gas, oil, or propane
  • Heat pump water heaters
  • Water heaters fueled by natural gas, oil, or propane 

To be eligible, appliances must meet certain standards for efficiency and performance. Certain other upgrades may be eligible too, including geothermal heat pumps, electric panel upgrades related to qualifying efficiency improvements, home solar panel arrays, and home battery storage systems.

Builders May Qualify for Efficiency-Related Tax Credits As Well

Separate IRA provisions may benefit builders in the business of constructing energy-efficient homes. 

Known as Section 45L (New Energy Efficient Home Credit), this credit applies to eligible single-family homes and apartments constructed after January 1, 2023. It’s a much-needed tailwind for the struggling home construction industry, which has seen a downturn thanks to rising construction costs and higher interest rates. And it means that if you’re in the market for a new house or apartment, your next dwelling could be considerably more efficient than your last.

Heating & Cooling Systems Are Much More Efficient These Days

Let’s step back for a minute and consider why experts believe these new tax credits will have a real impact on the built environment. 

The short version is that energy-efficient technology has finally caught up with the hype. Today’s new furnaces, boilers, air conditioners, and especially heat pumps are far more efficient than in the past. New systems pay for themselves in less time than ever, which makes the choice to switch much more straightforward.

Speaking of straightforward, these new technologies are often easy to drop into existing heating and cooling systems. For example, next-generation heat pumps can run on existing ductwork, eliminating the need for costly retrofitting. 

“If you already have a ducted HVAC system then there is no reason not to use it when you convert to a heat pump,” , an efficiency expert at Jacobs Heating & Cooling

Fuel & Electricity Prices Are Going Up

Electricity and fossil fuel prices vary depending on where you live, but the expert consensus is that they’re going to go up across the board in the coming years. That’s reason enough to invest in efficiency now, before utility-bill sticker shock forces your hand.

Tighter, Cleaner, Greener — What’s Next for the Built Environment?

Building efficiency advocates are bullish on the future of the built environment. If you’re responsible for your home’s utility bills, you should be too.

But progress tends not to happen in a straight line. In the short term, how optimistic do we deserve to be? That depends on who you ask. And to some extent, it depends on what you do. Now could be the perfect time to invest in those long-delayed energy-efficient retrofits, a new energy-efficient appliance, or even a new energy-efficient home of your own.