On June 11, 2025, California made a major move to combat climate change with the implementation of stricter building codes aimed at increasing energy efficiency and sustainability for new construction projects. The California Energy Commission (CEC) introduced regulations requiring all newly constructed residential and commercial buildings to meet higher standards for energy performance, renewable energy usage, and the reduction of greenhouse gas emissions.
The changes are part of the state’s ongoing efforts to meet its ambitious climate goals, which include achieving net-zero emissions by 2045. With buildings responsible for a significant portion of the state’s carbon footprint, these new regulations are seen as a crucial step in reducing the impact of the built environment on California’s climate.
Key Changes in California’s Building Codes
Under the new building codes, which will go into effect on July 1, 2025, all new construction projects in California will be required to meet the following sustainability standards:
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Energy Efficiency Standards: The new codes will require buildings to meet higher energy efficiency benchmarks, including improvements in insulation, lighting, and HVAC systems. Buildings will need to use at least 20% less energy than before, making them more cost-efficient in the long run.
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Renewable Energy Integration: All new homes and buildings must incorporate renewable energy systems such as solar panels or wind turbines. These systems will help reduce the building’s reliance on fossil fuels, decreasing the overall carbon emissions from the building’s energy use.
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Water Conservation Requirements: New buildings will be required to implement water-saving technologies, including low-flow fixtures, rainwater harvesting systems, and drought-resistant landscaping. These measures aim to reduce California’s growing water scarcity issues.
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Sustainable Materials: Builders will be incentivized to use environmentally friendly and sustainable materials, such as recycled steel, low-emission paints, and non-toxic building materials, which will further reduce the environmental impact of construction projects.
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EV Charging Infrastructure: In an effort to support the rise of electric vehicles (EVs) in the state, new buildings will be required to include infrastructure for electric vehicle charging stations. This is seen as an essential step in supporting California’s push to electrify its transportation sector.
The California Energy Commission’s new regulations are designed to encourage developers to incorporate green building practices into their projects from the very beginning. By setting these high standards, the state aims to drastically reduce its carbon footprint and contribute to meeting the goals outlined in the state’s 2020 Climate Change Scoping Plan.
Impact on Builders and Developers
The new regulations will have a significant impact on builders and developers in California. While the changes are expected to lead to long-term cost savings, there will be some upfront costs associated with upgrading buildings to meet the new energy efficiency and sustainability standards. Builders will need to incorporate more advanced technologies, such as energy-efficient HVAC systems, solar panel installations, and water-saving devices, all of which come at a premium.
Despite the initial higher costs of implementing these changes, industry experts believe that the long-term savings from reduced energy and water consumption will offset the investment. Additionally, the value of green-certified buildings continues to rise, as both consumers and investors increasingly prioritize sustainability when making purchasing and leasing decisions.
Another significant change for builders and developers will be the increased focus on sustainable materials. As the demand for eco-friendly building materials grows, developers will need to source and utilize materials that meet stricter environmental standards. This could drive innovation within the construction industry, with new products emerging that are both sustainable and cost-effective.
The Role of Policy and Government Incentives
California has long been a leader in environmental policy, and the state’s building code changes are another step in its effort to lead the country in the fight against climate change. In addition to these new regulations, the state has also introduced incentives for developers who go above and beyond the required energy efficiency standards. Builders who achieve “net-zero” energy performance in their buildings will be eligible for tax credits, grants, and other financial incentives.
State officials hope that these incentives will encourage more developers to go the extra mile in reducing the environmental impact of their buildings. They also expect that the higher standards set by the state will ultimately lead to lower operating costs for property owners, particularly when it comes to energy and water consumption.
Some local governments within California have also begun implementing their own sustainability initiatives, with stricter regulations on energy usage and building materials. These local policies will likely complement the state’s building codes and further accelerate the shift towards sustainable development across the state.
Challenges to Overcome
While the new regulations are a step in the right direction, there are significant challenges ahead for California’s real estate and construction sectors. First and foremost, the increased costs of construction could make it more difficult for developers to build affordable housing, which remains a major issue in California. As the cost of building new homes rises due to these sustainability measures, some developers may choose to focus on luxury developments, which could exacerbate the state’s housing crisis.
Furthermore, the availability of green materials and technology may still be limited in some areas, making it harder for developers to meet the new standards. In rural parts of the state, where construction costs are already high, the additional expense of sourcing and implementing sustainable technologies could present a significant challenge.
Finally, there may be resistance from certain industry groups, particularly smaller developers who may struggle to meet the new standards without significant financial assistance. The government will need to ensure that these smaller developers can access resources, financing, and technical support to comply with the new regulations and contribute to California’s sustainability goals.
Looking Ahead: California’s Vision for a Greener Future
California has set some of the most ambitious climate goals in the world, and the new building code regulations represent a critical piece of that puzzle. As the state continues to address the challenges posed by climate change, the real estate and construction sectors will play a pivotal role in achieving its long-term sustainability goals.
With the new regulations in place, California is poised to become a leader in sustainable building practices, setting an example for the rest of the country and the world. If successful, these new building codes will not only reduce the environmental impact of construction but also create a healthier, more energy-efficient built environment for generations to come.
For developers, builders, and real estate professionals, embracing these changes will be essential in staying competitive in the evolving market. The future of construction in California will undoubtedly be greener, and those who adapt to these changes early will be better positioned for success in the years ahead.
