Will Energy Codes survive WWIII?
Lately, geopolitical analyst Professor Jiang has been getting things right. In 2024, he predicted Trump would win, that the US would start a war with Iran, and that United States will restart the draft. He was right on all 3 accounts. His framework — the slow unraveling of the petrodollar, the weaponization of the US dollar through Russia sanctions, the rise of a Eurasian trading bloc that doesn’t need America to intermediate — is no longer a thesis. It’s happening in real time.
I’m not writing to debate his predictions. I’m writing because of what they imply for something almost no one is talking about: the buildings we live in, and the codes that govern how they’re built.
The Signals You Might Have Missed This Month
Last month in April, The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) have rescinded a 2024 federal rule that required new homes financed through FHA or USDA-backed loans to meet the latest model energy codes. In the same month, the DOE released its proposed FY2027 budget.
The headline number — a 10% increase to $53.9 billion — sounds like growth. It isn’t. Nearly the entire increase flows to the National Nuclear Security Administration, nuclear weapons and defense programs. For everything else, the budget cuts non-defense DOE programs by 11%.
The Office of Energy Efficiency and Renewable Energy — the federal home of building energy codes, weatherization assistance, and state energy programs — has effectively been dissolved. Its successor, the Office of Critical Minerals and Energy Innovation, faces a 63% budget reduction from the programs it absorbed. Building technologies: nearly zeroed out. The Weatherization Assistance Program, which reduces energy costs for low-income households: eliminated. State and community energy programs: gone.
Just last week in early May, the Department of Energy (DOE) released a public request to updating and improving methodology for assessing affordability and cost effectiveness of building energy codes. Whether that effort can fully achieve its goals remains an open question, as the underlying construction cost data is rarely transparent and often too inconsistent to produce fully precise results.
The administration’s framing is “energy dominance.” The practical effect is the systematic defunding of the institutional infrastructure that makes energy efficiency policy function at a national level.
Why Energy Efficiency Is Politically Vulnerable
Energy efficiency has always been a “yes, if” policy.
In military construction, UFC-1–200–02 — the Unified Facilities Criteria governing how the Department of Defense builds — frames energy efficiency as “do this, if practical” and “do this, if it meets life cycle cost effectiveness.” That conditional framing reflects standard economic policy logic: optimize under stable conditions.
But what happens when economic stability ends?
How We Got Here
During World War II, the War Production Board banned all nondefense construction in April 1942 and put strict limits on any alteration of existing residential buildings. When the ban lifted, the pent-up housing demand was enormous — and speed became the only metric.
Energy codes didn’t exist yet in that era — they weren’t established and implemented until the 1970s. The oil embargo and the series of blackouts in New York spurred the birth of building energy codes. As a result, we’re seeing homes with 70%+ of efficiency today compared to pre-1960s level.
Energy efficiency policy made sense and saved fuel when crisis set the terms. Politics followed. In 2015, the National Association of Home Builders (NAHB) strongly supported the energy codes and its transparent process in communicating cost effectiveness before adoption. In 2025, NAHB implied that energy codes lead to housing unaffordability. So how did we get here — to a place where energy efficiency has bipartisan concurrence to be deprioritized? Why did the narrative change 180 degrees between 2015 to 2025?
Having gone through a build myself in 2025, I can’t say that the compliance cost alone from the California Energy Codes would actually be significant enough to stop any investor to build as long as there is a strong demand (and there is!) despite of the sunshine tax. So, what’s the real other motivation?
This Isn’t Just a Fuels Fight
At the surface, the latest model codes have been increasing in stringency, while being fuel-neutral, in two notable differences: electrification and heat pumps.
Many of my colleagues naturally wondered whether winding back or pausing energy codes indicates a fight between oil/gas and electrification? Between fossil fuels and heat pumps?
To them, I say: look at Japan. California and Japan are neck to neck in global GDP ranking. Japan has approximately 127 million people whereas California has about 39 million people. Residential adoption of electric heat pumps climbed 38% in 2024 alone, driven by policy incentives and rising gas price volatility. Daikin, Mitsubishi, and Panasonic — all Japanese companies — collectively dominate the global heat pump market. Japan essentially invented the modern heat pump industry. Having lived there for four years, I saw heat pumps everywhere, all-electric in most homes.
Yet Japan still buys natural gas. Their 7th Strategic Energy Plan identifies a 2040 energy mix where renewables make up 40–50% of power generation, nuclear 20%, and thermal power — including gas — between 30 and 40%. Gas isn’t being phased out that fast. It’s being positioned as a flexible backup.
Japan didn’t choose between affordability, energy efficiency, and economic pragmatism because efficiency is foundational in their culture. They are especially sensitive to limited resources. The question isn’t whether America can afford to build efficient buildings. It’s whether we can afford the confusion between a fuel fight and a financial structural problem.
The Petrodollar Trap
Professor Jiang’s argument is that the petrodollar stability is ending. More specifically, the petrodollar’s purchasing power — which has quietly subsidized America’s ability to run deficits, borrow cheaply, and maintain consumer purchasing power — is eroding. The Russia sanctions of 2022 were the inflection point: by weaponizing dollar access, the US broke the foundational promise of political neutrality that made the dollar worth holding. This reflects in gold’s and silver’s prices as China sought another currency. According to Jiang, every country is watching this moment and making moves.
When the economy destabilizes, cost-effectiveness calculations — the entire analytical basis for energy efficiency policy — raises doubts. Tariffs, supply chain disruptions, energy price volatility, and currency pressure make long-term payback calculations increase uncertainties to the roof. And when the analytical basis seem nonintuitive, so does the political will.
The efficiency mandate gets reframed as an overly complex ideology. A bureaucratic burden. An unaffordable distraction.
We’re already seeing this reframing happening even in the “progressive” states:
- AB130 in California pausing the Energy Codes update for housing in 2028
- Hawaii’s Governor singing the 15th Emergency Proclamation Relating to Affordable Housing, and
- New York pausing All-Electric Buildings Act enforcement.
Energy codes get lumped in with activities that incurred unnecessary debt — technical debt for being overly complex, opportunity cost to more housing supply, and affordability barriers to builders and investors. They all sound like they make sense at the surface, but the data is still unclear.
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Part of why it’s unclear is that data isn’t static. People feel the economic symptoms in real time: bills rising even as efficiency improves, and the growing cost of integrating renewables. When utilities shift infrastructure maintenance and upgrade costs into fixed charges for ratepayers, the payback on efficiency investments looks weaker against today’s fuel prices. But that’s a pricing structure problem, not an efficiency problem. The fundamentals don’t change — wasting less is good for everyone. And fuel prices can spike violently in a short period, as any geopolitical conflict reminds us. The fight over resources can happen any day.
At the last Implementer conference hosted by the CPUC, a panelist made a point worth paraphrasing: there are frankly conflicting goals that make implementation difficult when the rubber meets the road. This tension isn’t unique to the EM&V world — it plays out across the efficiency sector at large.
We want affordability and resilience. We want efficiency and reliability.
First costs and long-term implementation goals don’t always align. Until the right thing to do is also the cheapest thing to do upfront — like LED lighting eventually became — policy intervention will always be necessary to bridge the gap while markets catch up.
The Real Tea: A Structural Contradiction
Jiang argues that America’s National Defense Strategy is trying to maintain the petrodollar. If American monetary dominance structurally requires global oil consumption to continue — not just American consumption, but global consumption — then American domestic energy efficiency policy is quietly undermining its own National Defense Strategy.
This is why rebranding energy efficiency under the umbrella of energy security is not really going to be very effective.
Every solar panel installed in Germany, every heat pump deployed in Japan, every EV sold in China is a transaction that didn’t require dollars. At scale, that erodes the petrodollar’s foundation. Every building that uses 40% less energy is a small vote against the system that funds American prosperity. Not intentionally. Not consciously. But structurally.
This is more than just the oil lobbyist. If the US financial system was architected around oil dependence, that architecture created powerful structural incentives against energy efficiency — incentives that don’t need anyone to be villainous to operate.
And here’s the worst part. If Jiang’s prediction is correct about the petrodollar that is quickly eroding regardless of what American energy efficiency policy does — we would be sacrificing American building performance and energy independence to protect a system that’s already broken. That is the worst possible trade.
How Building Energy Codes Actually Collapse
If I allow myself to be a cynic for a second, codes don’t die in a single dramatic vote. They die a slow death and erode through institutional failure:
- AHJs — Authorities Having Jurisdiction, the local officials who enforce codes — become under-resourced and overwhelmed. Enforcement stops not by policy but by capacity and implementation.
- Emergency executive orders suspend “regulatory burdens” in the name of mobilization.
- Supply chain breakdowns make compliant materials unavailable, and builders substitute whatever they can find.
- Political pressure reframes efficiency mandates as elite concerns during a survival moment.
- Federal preemption overrides state and local standards entirely.
Each of these mechanisms can happen under the scenario Jiang describes. Several are already visible in the DOE FY27 budget proposal.
What We Lose When Codes Collapse
The stakes are not abstract.
Buildings permitted during a code collapse window lock in 50 to 75 years of excess energy demand. That is not a rounding error — that is a generation of households paying permanently elevated utility bills, in a period when energy costs will already be rising. We’d also loose expertise, the time to innovate, and technological advantage.
Grid fragility worsens at precisely the moment when military resilience demands the opposite. The Department of Defense’s own energy security strategy depends on reducing military installation dependence on the commercial grid. That strategy is undermined if the civilian buildings surrounding every base are drawing maximum load from an overwhelmed and stressed system. Efficient buildings are part of the load reduction that keeps the grid lean and can even be flexible (with Vehicle2Grid, backup power, and island-mode). We lose what could have been — a strong roll-out of the most resilient and efficient buildings.
And the irony that should trouble every defense strategist: energy codes are more strategically important during wartime, not less. But they are also most politically vulnerable during wartime, especially concurrently with the financial incentives to global dominance.
The Discipline We Actually Need
America needs the discipline of energy efficiency, not just the performative acts of compliance theater. I’m not saying building energy codes are perfect, but the intent has always been clear to moving toward grid resilience and a sustainable future. That intent still matters.
At the national level, the direction to the energy code discipline seems to be about simplification in the name of affordability- a simple payback return vice the traditional cost benefits analysis. This is alarming because it is prioritizing short-term gains first and undermine the underlying intent and long-term outcome.
Remember that the buildings we permit this year will still at least be standing in 2075. The codes we enforce — or fail to enforce — will determine whether those buildings are assets in a constrained future or liabilities we cannot afford.
That choice is being made right now, in budget line items few people are reading and permit offices few people are watching. According to Nora Wang Esram, the CEO at the New Building Institute, the window to affect decisions in the future of energy codes is happening right now. This shouldn’t be driven by narrow set of voices within the code development process, nor should it be overshadowed by the ditch to preserve the petrodollar. It affects all of us. It affects the places we leave behind to our children.
I think my first call of action was to engage and pay attention, but it’s hard and unrealistic. We all have responsibilities and distractions — frankly, we don’t have time. There is urgency to make things work (streamlining) — in speed and quality. We can’t compensate the latter without a plan to make up for it. Let’s work together, lift each other up, and get this right.
