Meeting Consumer Demand With Green Certifications

Younger generation homebuyers are demanding sustainable homes more than ever, even if it means more upfront expenses.

When it comes to housing, today’s homebuyers are looking for a blend of attainability and sustainability. Affordability is certainly top of mind, but they also want the most sustainable home possible that lowers their total cost of homeownership. They’re willing to forgo fancy bells and whistles and even extra space in favor of upgrades that will lower monthly utility bills, keep them healthy, and enhance the resiliency of their homes. 

Green Builder Media’s COGNITION Smart Data shows more than 50 percent of consumers now look at total value of homeownership rather than lowest upfront cost when purchasing a home. Younger generations are more willing than older generations to invest in sustainability upgrades to enhance energy efficiency, electrification, healthy home, water conservation, and resiliency if those upgrades will reduce ongoing costs over time. 

Roughly 75 to 85 percent of millennial and Generation Z consumers surveyed for COGNITION indicated that they would pay more upfront for sustainability upgrades if they lower the ongoing cost of homeownership over time. This poses a question for building professionals: How do they meet this shift in consumer demand for enhanced sustainability?

One answer: Green certifications.

More than half of consumers now place priority on total value of homeownership rather than lowest upfront cost when purchasing a home. Credit: iStock/gece33

ENERGY STAR and Zero Energy Ready Homes

The Federal government has two primary home certification programs for energy efficiency: ENERGY STAR and Zero Energy Ready Home (ZERH). Both programs are designed to promote the construction of high-performance, healthy homes, but they have different goals and requirements. 

ENERGY STAR, which is administered by the Environmental Protection Agency (EPA), focuses primarily on reducing energy consumption through efficient design and technology. The program utilizes building science best practices to reach specific performance targets. 

ZERH includes all of the ENERGY STAR requirements, but it goes further to prepare homes to be able to produce as much energy as they consume (i.e., net-zero energy) through the integration of renewable energy systems. It also requires Indoor airPLUS certification, and some water conservation and efficiency elements.

Energy Star for Homes Program

The goal of the ENERGY STAR for Homes program is to enhance energy efficiency, reduce energy consumption, increase occupant comfort, and decrease operating costs.  

ENERGY STAR certified homes meet stringent energy efficiency standards through use of high-performance building envelope systems, windows, doors, roofs, insulation, HVAC systems, water heaters, lighting and appliances. Homes that meet ENERGY STAR 3.2 standards are at least 10 percent more efficient than homes built to the 2021 IECC, resulting in lower energy bills for homeowners.  

These homes are also designed for healthy indoor air quality, with rigorous requirements for ventilation, air exchange, moisture control and toxin control.  

ENERGY STAR certified homes are eligible for a variety of rebates and incentives at the federal, state, and local levels, as well as from utility companies, which can offset the cost of upgrades. Builders that construct ENERGY STAR 3.2 certified homes can qualify for $2,500 per home in tax credits under Section 45L of the Inflation Reduction Act.

ENERGY STAR certified homes meet stringent energy efficiency standards through use of high-performance windows, doors, roofs, insulation, HVAC systems and more. Credit: iStock/Nes

The ZERH program

ZERH certification indicates that a home is so energy efficient that a renewable energy system could offset most or all the house’s annual energy use. ZERH homes must meet advanced levels of energy efficiency and be designed to accommodate renewable energy systems like solar photovoltaics and smart electrical panels. 

ENERGY STAR and Indoor airPLUS certifications are prerequisites for the ZERH certification, but ZERH homes have additional requirements, such as advanced moisture control, enhanced indoor air quality, non-toxic materials, and renewable energy readiness. Homes built to ZERH v2 are at least 20 percent more efficient than homes built to the 2021 IECC. 

ZERH homes are designed with climate responsiveness in mind, with construction practices that augment the durability of the home, reduce maintenance needs and enable homes to withstand extreme temperatures and climate events. 

Homes that achieve ZERH certification often have a higher market value because of their energy efficiency, healthy indoor air quality and ability to integrate future technologies and renewable energy systems. 

As with ENERGY STAR homes, ZERH certified homes are eligible for a variety of rebates and incentives. Builders that construct ZERH certified homes can qualify for up to $5,000 per home in tax credits under Section 45L of the Inflation Reduction Act.

Zero Energy Ready Home (ZERH) program requirements prepare homes to be able to produce as much energy as they consume through the integration of renewable energy systems. Credit: iStock/Marc Osborne

Green Program Requirements

There are a variety of administrative and implementation requirements for both the ENERGY STAR for Homes and ZERH programs. For example, a few of the ENERGY STAR Residential New Construction requirements include:

• Mechanical equipment must be sized correctly to meet loads and has mechanical or direct venting, or sealed combustion (no atmospheric venting appliances).
• Insulation and windows must meet or exceed 2021 IECC UA 

Requirements.

• Advanced framing techniques must be used to reduce thermal bridging.
• A whole-house ventilation system that meets test requirements is installed to become ZERH certified, a home must be certified under ENERGY STAR Residential New Construction v3.2 and Indoor airPLUS. Some of the additiona requirements include:
  • Windows must have a maximum U Value of 0.30 and meet specific SHGC requirements. 
  • 100 percent of HVAC equipment must be in conditioned space and ductwork must be installed within the thermal barrier. 
  • House has installed solar PV system or meets the requirements of the PV Ready Checklist requiring infrastructure to allow simple installation of PV system in future

Key Differences 

“For both ENERGY STAR and ZERH, a home is not eligible for the tax credit until it is actually acquired,” explains EPA ENERGY STAR Residential Branch Supervisor Jonathan Passe. “The difference comes in defining which version of the program requirements the home must be certified to in order to earn the credit.”

For the purposes of 45L, for ENERGY STAR, the minimum eligible program version is determined based on the dwelling’s acquisition date. But for ZERH, it is the permit date that governs the eligible version.

For example, if a builder constructs a home in 2024 that meets our v3.1 requirements and the home is also acquired in 2024, it can earn the tax credit in 2024 (because v3.1 is what is required in the legislation in 2024), Passe notes. 

However, if the same home is acquired in 2025, then it would not earn the tax credit at the v3.1 level (because the legislation specifically calls out that v3.2 is required for homes acquired in 2025). 

“For this reason, we’ve encouraged our partners to be mindful of their build-out schedules, especially as they get toward the end of a year where there will be a known transition in the 45L requirements (as is the case from 2024 to 2025),” he says.

In the case of ZERH, however, the required minimum version is established when the home is permitted, and the version required at the time of acquisition does not matter. So, a home can earn the tax credit using ZERH v1 even if, by the time it is acquired, ZERH v2 would otherwise be required.

“It is also important to note that, in some cases, a home may be certified as ENERGY STAR using a version of the program requirements that is not eligible for the 45L credit,” Passe says. 

“For example, even though in 2025 earning the 45L tax credit will require that a home be certified to v3.2, in most states, EPA will continue to allow homes to be certified as ENERGY STAR using v3.1. Also of note, for ENERGY STAR certification (outside of 45L), the required version is defined based on the permit date.”

Other differences include specific requirements in the ZERH program that aren’t in ENERGY STAR, such as:

• Higher performance targets and lower HERS scores (low to mid 40s).
• Enclosed attics for conditioned spaces (applicable mostly for slab on grade construction).
• More stringent water conservation and efficiency requirements for water heaters and plumbing distribution systems (which can include WaterSense certification).
• Readiness provisions and a new set of design requirements to ensure that homes are PV ready, EV ready (with 240-watt circuits), and electric infrastructure for space and water heating

The EPD Imperative

A Life Cycle Assessment (LCA) calculates the environmental impact of products or services throughout their entire lifecycle. Gen Z and millennials understand the importance of having them done. Source: COGNITION Smart Data

Beyond home certifications, demand for low carbon products, verified by Environmental Product Declarations (EPDs), is soaring.

An EPD is a standardized document that communicates the environmental performance and human health impacts of a product over its lifetime. EPDs are based on a product’s life-cycle assessment (LCA) which measures potential environmental impact from natural resource acquisition, through the production and use stage, and ultimately to end of life disposal or recycling.

EPDs are derived from product category rules, or PCRs, which outline how data is collected for specific types of products. As a result of having PCRs, EPDs enable a standard of comparison between different products in the same category, taking into account the most significant environmental aspects of a product, and showing objective and verifiable information about the environmental impact.

An EPD is a standardized document that communicates the environmental performance and human health impacts of a product over its lifetime. Source: Tarkett

Clarion Call

In a very short timeframe, EPDs have transformed from obscure to vital.  According to a recent COGNITION survey:

• Nearly 70 percent of builders say that they’re familiar with EPDs.
• More than 40 percent of builders state that EPDs are a “must-have” when specifying products, and another 50 percent said that EPDs are influential but not a deal breaker.
• Approximately 85 percent of builders currently specify products with EPDs.  
• Of those builders who aren’t currently specifying products with EPDs, 50 percent say that they’ll start doing so within the next year, and 45 percent say they’ll start doing so in the next few years.  Less than 5 percent say that they won’t specify products with EPDs.
• When asked why they specify products with EPDs, the top three responses were understanding product roadmaps, regulatory requirements, and consumer demand. 
• Nearly 50 percent of builders report that they rely on both industry-average and product-specific EPDs equally, whereas nearly 40 percent prefer product-specific EPDs.
• Thirty-five percent of builders look for products with EPDs at the product specification stage, 30 percent during the design phase, and 20 percent at the product comparison stage.
• More than 60 percent of builders assert that they’re seeing an increased demand for products with EPDs by consumers. Another 20 percent respond that while consumers might not be asking specifically for EPDs, they’re looking for product certifications and information to verify sustainability attributes.

This new COGNITION data is important for building professionals and manufacturers alike. For builders, offering homes that have low carbon products backed up by EPDs is an excellent way to differentiate an offering, enhance its brand reputation, justify pricing, and add value to buyers.  

As homebuyers age by generation, Environmental Product Declarations (EPDs) are an increasingly important factor toward home purchases. Source: COGNITION Smart Data

For manufacturers, EPDs are becoming a baseline necessity for builders and other product specifiers, as well as for states like California and municipalities like Boston that are beginning to require that homes and buildings reduce embodied and operational carbon emissions. 

Interested in learning more? Green Builder Media’s COGNITION Academy has robust courses on green building programs like Energy Star, ZERH, Indoor airPLUS, WaterSense, and HERS ratings, as well as EPDs and other green product fundamentals. Visit the COGNITION Academy microsite for more information. 

Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsors: Whirlpool Corporation. Whirlpool Corporation takes sustainability seriously, in both their products and their operations. Learn more about building and buying homes that are more affordable and less resource intensive.