In today's sustainability-conscious marketplace, green building certifications are one of the best publicly visible ways for developers to demonstrate their sustainability consciousness. Certifications provide a framework for developers to follow and environmental and social thresholds that need to be met. This gives credibility to sustainability claims and reduces the risk of greenwashing claims.

Third-party certifications like LEED and WELL are some of the most widely used and have been pivotal in incorporating environmental sustainability into building design and operation. In many cases, the building type is the first detail that dictates the most applicable rating system, as not all systems are created equal. The United States Department of Energy (DOE)  and Environmental Protection Agency (EPA) provide two certifications specific to residential projects: Energy Star Multi-Family New Construction (MFNC) and Zero Energy Ready Homes (ZERH).

Energy Star MFNC and ZERH focus on creating energy-efficient and healthy buildings and are more than just badges of sustainability — they are keys to unlocking financial incentives such as the government's 45L tax credit. The 45L tax credit was extended in the Inflation Reduction Act of 2022 and provides tax incentives for developers based on targets outlined in Energy Star and ZERH. 

Qualifying for the 45L Tax Credit – Energy Star and ZERH  

The 45L tax credit promotes energy-efficient design in new buildings and major renovations. It offers two tiers of credits for multifamily developers: a lower tier for units that meet Energy Star Certification and a higher tier for units that also meet ZERH Certification. In simple terms, Energy Star is the base, and ZERH adds additional requirements and incentives.  

Assuming the worker's prevailing wage requirements are met during building construction or renovation, the lower tier provides a $2,500 tax credit per dwelling unit, and the upper tier provides a $5,000 tax credit. Developers can claim this tax credit the year they sell or lease the unit. 

Energy Star Certification  

Energy Star Certification is a strict certification with lower thresholds than ZERH. However, it is a base requirement for projects aiming for ZERH and the maximum 45L tax credit, so it should be a significant consideration for developers.  

Energy Star focuses on core requirements for building energy efficiency, such as the building envelope, heating and cooling efficiency, and lighting. Because many of these criteria are baked into the building’s construction, it is important to begin energy modeling and consider Energy Star criteria in the initial building design stage. Using qualified sustainability consultants like Emerald Built Environments is a great way to facilitate this process. To officially achieve certification, the building must undergo inspection and testing by an independent Energy Rating Company to verify that it meets the EPA's Energy Star requirement.  

Energy Star is a great baseline for new multifamily construction projects because it is relatively attainable and leads to lower building operational costs and higher rental and occupancy rates. 

Zero Energy Ready Homes Certification 

The Zero Energy Ready Homes for multifamily (ZERH MF) projects take energy efficiency a step further, requiring buildings to be Energy Star and Indoor airPlus certified to be eligible. It goes beyond traditional energy efficiency measures to ensure that multifamily buildings are capable of operating at net-zero energy in the future. This means that the building energy efficiency design criteria are much more stringent than what is required with Energy Star. 

The certification criteria for multifamily structures include twelve mandatory areas of improvement — these range from the building envelope to indoor air quality and space heating and cooling requirements. However, meeting the requirements in each improvement area can be done through one of the two pathways:

• Performance Pathway: The performance pathway allows for flexibility in choosing a combination of energy efficiency measures to meet the ZERH Energy Rating Index (ERI) requirements for a given improvement area. However, improvements must be shown to meet the ERI requirements through energy modeling. For example, using a combination of various insulation materials that meet the ERI levels is acceptable. 
• Prescriptive Pathway: The prescriptive pathway is a single set of measures that must be followed. It doesn’t require energy modeling, but variations are not allowed. For example, all insulation materials need to meet ZERH-specific insulation criteria and efficiency levels. 

Furthermore, a critical component of ZERH is the requirement for renewable energy readiness. This means the building must be designed to easily accommodate the future installation of solar panels or other renewable energy systems. The infrastructure, such as conduit for wiring and appropriate roof load bearing, must be in place, allowing for a seamless transition to renewable energy use when the building owner decides to implement these systems. 

Just like with Energy Star, the building must be reviewed by a third-party inspection agency to verify that ZERH requirements are met. 

The Strategic Benefits of Zero Energy Ready Homes 

Overall, both Energy Star and ZERH are valuable green building certifications that provide substantial benefits, from lower operating costs to positive public image and significant government incentives. For new multifamily buildings and major renovations, starting with these certifications in mind often makes financial sense. Getting knowledgeable sustainability consultants involved in the initial design stage is critical for buildings aiming for either Energy Star or ZERH — sustainability needs to be baked into the project from the get-go. 

Emerald Built Environments has decades of experience helping developers achieve these—and many other—certification requirements. Furthermore, our background allows us to support projects that not only meet current sustainability standards but also are future-proof, enhancing their marketability and profitability. Reach out to learn how your next project can be sustainability certified or click below to learn about various other certifications worth exploring!