The California Energy Commission (CEC) has announced updates to the state’s Energy Code, set to take effect in 2025. The revised code aims to increase energy efficiency in new and existing buildings, helping reduce greenhouse gas emissions and lower utility costs for consumers.
According to the CEC, buildings account for about 25% of California’s total greenhouse gas emissions. The 2025 Energy Code is designed to address this by encouraging the use of energy-efficient heat pumps for both space and water heating, as well as strategies that shift energy use away from peak demand periods. Over a 30-year period, these changes are expected to save Californians an estimated $4.8 billion in energy costs and cut greenhouse gas emissions by approximately 4 million metric tons—the equivalent of the annual energy consumption of more than half a million homes.
Builders will also have the option to adopt higher efficiency standards through CALGreen, which was updated alongside the new Energy Code.
The CEC develops and approves new building codes every three years, incorporating technological advancements and input from public stakeholders. The process is intended to ensure that cost savings and emission reductions are achieved over the life of each building.
“Energy efficiency is the quiet workhorse of the clean energy transition. Efficiency reduces Californians’ bills, improves their health and comfort, and reduces strain on the electricity grid,” said CEC Commissioner Andrew McAllister. “When we build and upgrade homes to use less energy, California families save money, and communities get cleaner air and a more reliable electricity system.”
Compared with national standards, homes built under California’s 2025 code are projected to be among the most efficient in the country. Many new U.S. homes do not meet even current national model codes.
Key updates for single-family homes include establishing energy use budgets that encourage heat pumps for heating, cooling, and water heating; improved HVAC efficiency; smart thermostats that can respond automatically to lower-cost rate periods; and better insulation for exterior walls and windows.
For multifamily housing, similar measures apply: heat pump encouragement through energy budgets; requirements making it easier to install electric appliances; stronger ventilation standards; expanded access to electric vehicle charging; and increased insulation.
Businesses will see incentives for using heat pumps in select new buildings. For certain renovations—such as end-of-life rooftop HVAC replacements—high-efficiency systems like heat pumps will be required in stores, schools, offices, and libraries. Other changes include updated commercial kitchen requirements for electric-readiness and improvements in insulation standards.
An executive order temporarily suspends some requirements of the 2025 update for projects rebuilding after major wildfires in Los Angeles County during 2025. These projects must still be solar-ready but are exempt from immediate solar panel or battery storage installation mandates.
“We are gratified that builders in California will be designing to the 2025 California Energy Code,” said CEC Building Standards Branch Manager Gypsy Achong. “Compliance with this update is the most affordable way to build a resilient and comfortable building for the future. This update does not mandate specific technologies or fuel types. We continued our long-standing tradition of figuring out what energy budget is pragmatically possible and then asking designers to meet that budget. We are delighted that this approach continues to affordably advance our state’s transition to 100% clean energy in buildings.”
California was ranked first nationally for its leadership in energy efficiency policy by the American Council for an Energy-Efficient Economy (ACEEE) in March 2025—the seventh time it has topped ACEEE’s State Energy Efficiency Scorecard since its inception sixteen years ago. In 2025, California received top marks across all six categories evaluated by ACEEE due largely to efforts supporting equitable decarbonization goals such as expanding heat pump installations in low-income communities.
Statewide appliance standards have led Californians to save over $200 billion on utility bills over five decades—a figure expected to reach $300 billion by 2030—and reduced carbon emissions equal to those produced by dozens of gas power plants annually.
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About the California Energy Commission
The California Energy Commission is the state’s primary energy policy and planning agency. It has seven core responsibilities: advancing state energy policy, encouraging energy efficiency, certifying power plants, investing in energy innovation, developing renewable energy, transforming transportation, and preparing for energy emergencies.
