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Carrots and Sticks for Building Decarbonization: Incentive Programs and Codes & Standards

January 11, 2023

Decarbonization of the U.S. building stock presents an enormous opportunity to enhance the quality of our built environment and combat climate change, given that commercial and residential buildings account for over 30% of GHG emissions in the U.S.

This critical transition – long underway – has recently been catalyzed by the enactment of the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA), which promise to bolster the entire clean energy supply chain, including support for the development and enforcement of building energy codes, as well as the introduction of new consumer incentive programs for electric and high-efficiency equipment.

As energy utilities and governmental agencies accelerate energy efficiency and decarbonization initiatives for the communities they serve, they are successfully leveraging two important tool sets:

1) Building efficiency and electrification incentive programs

2) Building energy codes, reach codes and appliance standards.

Respectively, these are the carrots and sticks of market transformation toward building decarbonization.

Presently, governmental initiatives and organizational commitments to decarbonization are motivating industry practitioners to apply these toolsets more aggressively, to accelerate this transition; as a result, the legacy market interactions between these carrots and sticks are increasingly complex and at times, contested. However, our teams and partners who expertly apply both toolsets – designing and implementing incentive programs and supporting local jurisdictions in advancing their energy codes – believe that they can work together.

Next Steps:

Interested in joining the conversation about the complimentary application of each of these toolsets and their dynamic interactions? Tune in to our recent podcast episode, where TRC staff are joined by industry experts from Pacific Gas & Electric (PG&E) and Southern California Edison (SCE) to take a deep dive into the relationship between incentive programs and codes & standards. In our “Carrots and Sticks” discussion, we explore the factors and nuances that influence how these tools can and should work together to drive large-scale building decarbonization in California and the broader U.S. context, including:

  • Intervention points across the market adoption curve for emerging technologies and across the various stages of the building lifecycle,
  • Locationally varied grid conditions and regulatory environments,
  • Evolving goals (and associated metrics), from energy savings to decarbonization, resiliency, and equity,
  • And much more.

We’re excited to work with our utility and governmental partners in carefully applying both carrots and sticks to accelerate this critical market transformation. By designing and implementing both demand management programs and codes & standards, TRC is helping our clients achieve a clean and equitable energy future for the communities they serve.

For more information on TRC’s decarbonization, electrification, and energy solutions, contact us at:

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