Modern energy codes raise the bar for homes and buildings to waste less energy, lower utility bills, and keep people safe and healthy. In Colorado — a state that has pushed the envelope on energy codes in recent years — a Pacific Northwest National Laboratory study found that adopting the 2021 International Energy Conservation Code (IECC) standards would save the state $1.7 billion. Additionally, it would save the average household $1,200 in lifetime energy savings and create more than 26,000 jobs over 30 years.

In May of 2022, Colorado lawmakers passed a landmark energy code bill (House Bill 22-1363) that required local jurisdictions to adopt the most up-to-date model energy codes whenever they decide to update local building regulations. Then in 2023, following a robust rulemaking process, the Colorado Energy Code Board drafted the first of two new model codes — the Electric Ready and Solar Ready Code — which requires new homes and buildings to include infrastructure that makes it easier and less expensive for future residents to own and charge EVs, install solar, and use high-efficiency electric appliances like heat pumps.

Constructing a building that can meet tomorrow’s energy needs significantly minimizes future costs for home and building owners. According to an RMI meta-analysis, it would cost three times more to retrofit buildings to enable EV charging than it would to include the right wiring and charging capabilities in new construction. Electric readiness, which means ensuring adequate electric panel space and capacity, wiring, and outlets to handle equipment such as a heat pump or induction stove, has similar cost savings.

Now, with the Electric Ready and Solar Ready Code in place, the board is working to advance the second model code contained in the passed state bill — the Low Energy and Carbon Code — which has immense potential to drive down carbon pollution from new residential and commercial buildings and achieve the state’s 2030 greenhouse gas reduction targets.

How the Low Energy and Carbon Code levels the playing field for energy-efficient heat pumps

Traditionally, building energy codes have two compliance pathways — performance or prescriptive — and are based on one of two widely-used standards: the International Energy Conservation Code (IECC) or ASHRAE Standard 90.1. Both these standards set baseline energy conservation targets for buildings to reach through either compliance pathway. However, those efficiency targets are currently stricter for buildings that install heat pump appliances than for buildings that install gas appliances. This results in a mixed-fuel building being able to reach the same level of compliance as an all-electric building even if it uses and wastes more energy than the code-compliant all-electric building.

To level the playing field, the draft Low Energy and Carbon Code introduces a unified site energy use baseline, ensuring that both all-electric and mixed-fuel buildings are compared to the same energy target. By giving heat pumps due credit for their greater efficiency compared to a single, fair baseline, the draft code encourages cleaner, more energy-efficient systems, putting it on a path to be one of the strongest energy codes in the nation.

All-electric new construction saves money

Removing the existing bias against heat pump technology in the code would also provide economic benefits to Coloradans. During new construction, installing electric heat pumps instead of a fossil fuel heating system and separate AC unit reduces up-front costs because heat pumps combine an air conditioner and a space heater into one system. Building all-electric also removes the need for connecting to the gas system, which significantly lowers new construction costs.

RMI’s Economics of Electrifying Buildings report found that the up-front and operating costs of an all-electric home in Denver are lower than a mixed-fuel building, for example. The utility bill savings are due in part to heat pumps being two to four times more efficient than combustion systems, with cold-climate models able to perform efficiently even in temperatures as low as –13° F.

Heat pumps reduce carbon pollution

The draft Low Energy and Carbon Code promises to play a critical role in helping to reduce carbon pollution from Colorado’s building sector — the state’s fifth-largest source of greenhouse gas emissions. RMI analyzed recent levels of new construction in Colorado to evaluate the emissions impacts of a code with “debiasing” measures versus a code without them. At current emissions rates, the draft Low Energy and Carbon Code will reduce an additional 17 million metric tons of carbon emissions by 2050 from both the residential and commercial sectors, equivalent to removing 3.9 million gas-powered passenger vehicles from the road for a year.

Heat pumps mitigate health risks

In addition to reducing carbon pollution, the draft code will protect the health of Coloradans by reducing indoor and outdoor emissions. A recent study found that Coloradans of color are exposed to 17 percent more particulate matter pollution from residential gas appliances than the state average. Statewide, outdoor air pollution from burning fuels in buildings costs Colorado $2 billion annually due to premature deaths alone.

Heat pumps benefit the electric grid

The proposed debiasing measures in the code could also help put downward pressure on electric rates in areas where peak demand on the grid occurs during the summer months. All-electric buildings are somewhat common in Colorado, with recent census estimates showing that 1 in 10 homes in the state are already fully electric. Studies estimate that the electric grid distribution system can support between 23 and 49 percent of households using heats pumps, much higher than the 4 percent of homes today that are using them.

Because heat pumps can operate year-round, encouraging their installation in new homes would help the grid become more seasonally balanced. This increases the utility system’s load factor, allowing utilities to serve more load on the same infrastructure, potentially reducing rates for customers. The draft Low Energy and Carbon Code also promotes demand response and grid-interactive technologies, which could offset up to one-fifth of projected electric demand by 2030, helping to reduce peak summer loads and manage grid growth.

The path ahead

Colorado has positioned itself as a leader on making buildings more energy efficient, healthy, and resilient with its draft Low Energy and Carbon Code. Pending final approval and adoption later this summer, it will join California and Washington as states that are blazing a trail for heat pump adoption through strong codes for residential and commercial modern buildings. With lower utility costs for families and businesses, less air pollution, and cheaper construction costs, this is an opportunity the state can’t afford to miss.