For decades, efficiency advocates have had a tenuous relationship with home builders over energy codes. Although both parties generally support updates to local and federal rules that improve efficiency of new houses, it's often very difficult to get them to agree on how stringent those rules should be.

But a new agreement in the works could be a sign that these groups are starting to cooperate more.

Late last month, twenty of the nation's largest home builders joined together with two major efficiency advocacy organizations to support new residential energy codes that, if passed, could bring dramatic efficiency improvements to America's new housing stock.

The Natural Resources Defense Council (NRDC) and the Institute for Market Transformation (IMT) announced recently that they had reached an "unprecedented" agreement with the Leading Builders of America (LBA) -- a group that represents 40 percent of the single-family-home building market -- to develop performance-based standards that would cut energy use in new houses by 20 percent in the next two years.

According to David B. Goldstein, co-director of the energy and transportation program at the Natural Resources Defense Council, this is the first time in four decades that builders and advocates have come together in support of significant changes to national efficiency codes.

"This is a breakthrough -- this agreement shows there's progress," said Goldstein in an interview. "This is the first time we've talked to LBA as a group on overarching code issues. While we didn't agree on everything, we narrowed the differences enough."

The agreement is a positive sign. But the proposed change itself is also very significant.

The current International Energy Conservation Code used by states and municipalities throughout the U.S. uses a "prescriptive" process for efficiency measures. By following a rigid checklist for air conditioning, insulation, windows, lighting and other building materials, home builders can meet the code. But it doesn't provide much flexibility -- or guarantee improved performance for the home owner.

The new code would implement an energy rating index, such as the  Home Energy Rating System (HERS) that measures the energy performance of a home. NRDC and IMT argue the new system would allow home builders to meet energy codes in a much more open way, while also giving prospective home buyers an easy metric with which to compare efficiency.

"People in the efficiency community recognized that we weren’t going to get much out of prescriptive improvements," said Goldstein. "So we had a good discussion with leading builders, who agreed. We finally reached consensus on actual changes, not just on principle."

The conflicts between home builders and groups pushing stronger energy standards usually arise because of worries about cost. But Goldstein said all parties agreed that this latest proposed update could be "met at a reasonable cost" and would offer a roughly six-month payback for the homeowner through reduced energy bills.

LBA estimated that meeting the proposed performance-based code would cost builders half of what it would cost them under a prescriptive checklist.

NRDC projects that the new system would drop energy use 20 percent compared to the 2012 code, and 40 percent compared with 2006. That could result in up to $100 billion in savings over the next decade and a half.

The code will be considered at the International Code Council's meeting in October, where proposed updates will be voted on.

This is not the first major alliance between advocates and builders. Over the last year, a wide-ranging group of organizations, including the National Association of Home Builders, the Leading Builders of America, NRDC, IMT, and the U.S. Chamber of Commerce have banded together in support of the SAVE Act, a bill that would require federal lenders to factor in the value of energy efficiency when underwriting mortgages.

According to a recent empirical study from IMT, Energy Star-rated homes are 32 percent less likely to go into default than non-Energy Star homes -- a statistic that has been largely ignored in the home lending community. 

Tags: building codes, energy codes, energy efficiency, home builders, institute for market transformation, natural resources defense council