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Voluntary Rating Systems

Voluntary energy rating systems are an excellent complement to mandatory energy codes and may even replace some energy regulations. Voluntary energy rating systems include such programs as ENERGY STAR®, the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program, or a home energy rating system.

The important distinction between voluntary energy ratings and energy codes is that codes mandate minimum acceptable building requirements, and voluntary rating systems are intended to spur innovation and achieve energy efficiency improvements above the minimum.

Codes ensure that a planned building has adequate minimum thermal resistance in the building shell and windows; minimum air leakage; and minimum equipment efficiencies. However, voluntary energy rating systems generally go substantially beyond these minimums, requiring the use of more, or more efficient, energy efficiency measures. Some states do not enforce a minimum mandatory energy code and rely instead on voluntary programs to achieve their energy efficiency goals.

Voluntary energy rating systems address two major obstacles to energy code adoption and compliance: (1) builder resistance to regulations, and (2) the lack of local and state resources for enforcement.

Surveys conducted over the years indicate that mandatory energy codes are often ignored because they are too complex and difficult to understand. Many effective voluntary energy rating systems are simple. For example, a home energy rating can be a numerical score, such as 1 to 10 or 1 to 100. Alternatively, it can be a graphical rating, such as 1 to 5 stars, with 5 or 5+ being the highest rating.

Most states do not possess the resources to enforce the minimum energy code, much less be responsible for energy efficiency improvements above the code. In some states less than one full-time-equivalent employee is dedicated to enforcing the energy code. Voluntary energy rating systems can help address this shortage by supplying much-needed raters and inspectors. Many voluntary rating systems require that the builder build 10%-30% above the minimum energy code required in the state before they earn their special rating. Consequently, builders often are willing to pay for third-party verified energy calculations for each home they build above the minimum energy code. Local governments are not relieved of the legal responsibility to ensure that the home meets minimum energy standards, but they can accept these third-party voluntary energy ratings as proof that the home meets minimum code.

Voluntary energy rating systems can be organized by the sector(s) they target, such as the building-related voluntary energy rating systems in the residential and commercial sectors.

The Commercial Sector

The U.S. Green Building Council (USGBC) manages the Leadership in Energy and Environmental Design (LEED™) program, a voluntary, consensus-based, market-driven building rating system based on current technologies. Although energy efficiency is an important component of the program, LEED goes beyond energy to evaluate environmental performance from a whole-building perspective over the life of the building. LEED provides a national certification for several levels of green buildings.

The LEED program is based on accepted energy and environmental principles and attempts to find a balance between known effective practices and emerging concepts. A self-certifying system designed for rating new and existing commercial, institutional, and high-rise residential buildings, LEED is a system where credits are earned for satisfying each criterion. Different levels of green building certification are awarded, based on the credits earned. The program is proprietary, and the USGBC charges for software and related rating tools.

The Residential Sector

With more than one million new homes built each year across the U.S., the residential sector is characterized by hundreds of large production builders, thousands of smaller custom home builders, and thousands of lenders, vendors and suppliers.

Probably the most well known voluntary energy rating system in the residential sector is the Home Energy Rating System (HERS). The Home Energy Rating System rates the energy consumption of a home and estimates the annual energy costs for it. An energy rater usually inspects the home and determines its energy characteristics, such as window performance, insulation levels, orientation of the home, heating and cooling system efficiency, and other related factors.

The measurements are entered into a computer program, usually producing a rating for the home and a series of likely cost-effective options available for improving the energy efficiency of the home. The rating analysis may be reported in a paper document, which can be given to the homebuyer and/or lender. Each HERS requires that a minimum set of features be rated, consistent with evaluating a home against the Model Energy Code requirements. The HERS rating scale, from 1 to 100, is tied to the Model Energy Code. A home that meets the minimum requirements for Model Energy Code compliance earns a score of 80. A new home that earns a score of 86 or higher can qualify as an ENERGY STAR home.

Energy Efficient Mortgages

Home energy rating systems are tied to Energy Efficient Mortgages (EEMs). An EEM is any home mortgage for which the underwriting guidelines have been relaxed specifically for energy efficiency features, or for which any form of financing incentive is given for energy efficiency. Several lenders that offer EEMs require that a home energy rating be performed to verify the energy efficiency features of a home. (PDF 658 KB) Download Adobe Reader.

Green Builder Programs

Green builder programs are increasingly popular across the United States. These programs usually differ from community-wide energy programs by focusing on one manageable area: new or older residential construction. By focusing on new residential construction exclusively, city and county governments generally report quicker, more meaningful success and higher builder participation rates. The recent proliferation of green builder programs is due mostly to the voluntary nature of the programs, so most programs include some form of a voluntary rating system. In some of these programs, local governments streamline the permitting and inspection process for builders who meet the increased standards.

Examples of green builder programs include Austin's Green Building Program, Built Green Colorado, Community Energy Efficiency Program (CEEP) in California, and the Scottsdale Green Building Program. For a summary of green builder programs, see the July 2002 Summary of Existing Green Building Programs (PDF 248 KB), published by the National Association of Home Builders Research Center and the National Renewable Energy Laboratory. Download Adobe Reader.

Arguments for Voluntary Energy Rating Systems

• Voluntary energy rating systems have two decades of implementation experience.

• Voluntary performance-based ratings generally encourage more innovation than mandatory prescriptive codes.

• Using voluntary rating systems can shift some of the cost of code compliance away from local governments and to the private sector.

• Voluntary energy rating systems result in more homes being built above code, which results in better air quality, as well as more disposable income for consumers. The money saved on energy costs usually exceeds the additional cost of the home.

• Smaller and medium-sized states benefit from voluntary energy rating systems since their staffs gain access to private sector raters and certified inspectors.

Arguments against Voluntary Energy Rating Systems

• Voluntary systems do not guarantee energy savings.

• Some voluntary energy rating systems, such as EEMs, have not gained much market share, despite two decades of effort.