Page 118 - Inflation-Reduction-Act-Guidebook

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Supporting Investment in Energy-Efficient and Low-

Carbon Buildings

Although they do not have smokestacks, buildings—including their construction, their powering
and heating/cooling, and the manufacturing of building materials—are a large source of
greenhouse gas emissions in the United States. In June 2022, President Biden announced a
National Initiative to Advance Building Codes that will help state, local, Tribal, and territorial
governments adopt the latest building codes and standards for energy efficiency and safety,
which will create good-paying jobs, lower energy bills, and protect communities from extreme
weather. On December 7, 2022, the Biden-Harris Administration announced a Federal Building
Performance Standard that directs federal agencies to cut energy use and electrify equipment and
appliances to achieve zero direct greenhouse gas emissions in 30 percent of the building space
owned by the federal government by square footage by 2030.

The Inflation Reduction Act supports these programs and provides tax incentives, grants, and
loans to make commercial and residential buildings, including federally-assisted housing, more
energy efficient and resilient to the impacts of a warming climate. It complements investments in
the Bipartisan Infrastructure Law, including $225 million for the Building Codes Implementation
for Efficiency and Resilience Program at the Department of Energy, to help states support
sustained, cost-effective implementation of updated building energy codes.

Funding Overview

The Inflation Reduction Act invests in programs to make buildings part of the climate solution.
Highlights include:

• $1 billion for the Green and Resilient Retrofit Program at the Department of Housing
and Urban Development (HUD), which will provide funding to the owners of HUD-
assisted multifamily properties for projects to improve energy or water efficiency;
enhance indoor air quality or sustainability; implement the use of zero-emission
electricity generation, low-emission building materials or processes, energy storage, or
building electrification strategies; or make the properties more resilient to climate
impacts. HUD also will conduct energy and water benchmarking of HUD-assisted
properties.

• $1 billion for Department of Energy grants to state and local governments to adopt
updated building energy codes, including zero-energy codes. Homes that are zero-
energy ready are so energy efficient that a renewable energy system could offset most or
all the home’s annual energy use.

• Extension and expansion of the energy efficient commercial buildings deduction.
Buildings that increase their energy efficiency by at least 25 percent will be able to claim
this tax deduction, with bonuses for higher efficiency improvements. The claimant can
earn additional bonus deductions by meeting prevailing wage and registered
apprenticeship requirements.

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