By Jonathan Passe
In 1995, the U.S. Environmental Protection Agency (EPA) first offered the fledgling ENERGY STAR® label for new homes in a market where many builders were already marketing energy efficiency through their own in-house labels, with varying levels of quality and third-party verification.
Today, ENERGY STAR has grown into one of the nation’s most trusted and influential brands, with over 2.6 million homes certified and thousands of participating builder partners. To date, the program has resulted in nearly 3.8 million metric tons of CO2 emissions reductions — the equivalent of removing nearly 820,000 passenger vehicles from the road. Last year alone, more than 140,000 homes and apartments earned the label, representing nearly 10% of all U.S. homes built.
Building on the successful foundation of ENERGY STAR, the program’s newest iteration has finally arrived. In November 2023, EPA debuted the long-awaited “ENERGY STAR NextGen” certification — an exciting next step in helping the home building industry innovate towards greener homes that will pave the way to a clean energy future.
Curbing Emissions Starts at Home
It’s no secret that green building is a critical step in unlocking a healthier, clean energy future for us all. Many recognize that the energy used to heat, cool, and operate a home is typically the most significant aspect of its environmental impact.
For the past 25 years, the easiest way for consumers to make sure that a new home or apartment was energy efficient has been to look for the blue ENERGY STAR label, the government-backed symbol for energy efficiency. ENERGY STAR certified homes and apartments are independently verified to meet EPA’s strict guidelines for energy-efficient construction, resulting in homes that are at least 10% more efficient than those built to code and, on average, deliver savings of more than 20%.
Now, the newly launched ENERGY STAR NextGen certification program offers an additional level of recognition for homes and apartments that go above and beyond the core ENERGY STAR program requirements and incorporate leading-edge efficient electric technologies (such as heat pumps and heat pump water heaters), as well as electric vehicle charging capabilities. At the end of the day, homes that earn this new certification can help reduce greenhouse gas emissions by up to 80% compared to typical homes. ENERGY STAR NextGen homes and apartments are also designed to minimize exposure to harmful gases such as nitrous oxide (NO2). Learn more about the ENERGY STAR NextGen program at energystar.gov/nextgenhomes.
45L Tax Credits for Home Builders
Whether building to ENERGY STAR or ENERGY STAR’S NextGen specifications, constructing energy efficient homes and apartments just got more profitable for home builders. Did you know that as part of the Inflation Reduction Act (IRA), the Section 45L New Energy Efficient Home Credit was updated and extended through 2032? And, in September 2023, the Internal Revenue Service (IRS) issued Notice 2023-65, which contained additional valuable guidance for taxpayers.
For eligible homes and apartments acquired on or after January 1, 2023, the tax credit of up to $2,500 is now specifically tied to certification to an eligible version of the relevant ENERGY STAR program requirements. A larger tax credit is also available for certification to DOE’s Zero Energy Ready Home (ZERH) Program (learn more about the ZERH Program below).
For more information, and to see which versions of the ENERGY STAR program requirements are eligible for the § 45L credit in 2023 and beyond, visit: www.energystar.gov/taxcredits.
A Full Suite of Green Building Options
When coupled with other home certification programs from EPA and the U.S. Department of Energy (DOE), ENERGY STAR and ENERGY STAR NextGen can help green builders realize even more environmental, health, and cost-saving benefits for their customers.
- EPA’s WaterSense ® program ensures that homes use at least 25% less water than average. WaterSense homes are inspected and certified to meet both indoor and outdoor water efficiency requirements.
- EPA’s Indoor airPLUS program addresses the indoor environment component of green building, with required construction practices and product specifications designed to minimize exposure to airborne pollutants and contaminants.
- DOE’s Zero Energy Ready Homes (ZERH) program builds on the comprehensive building science requirements of EPA’s ENERGY STAR and Indoor airPLUS programs and includes additional energy-saving requirements that result in homes that are 40%-50% more energy-efficient than typical new construction.
Together, the family of Federal home certification programs address many of the most important aspects of green building. For those who want to go further, consider one of the many national and locally based green home certification programs, many of which incorporate these Federal programs as requirements or optional measures.
Jonathan Passe joined EPA’s ENERGY STAR Residential Branch in 2000 and has served as Branch Chief since 2011.