Electrifying housing to meet climate goals
Worker installing a residential heat pump. Image credit: Welcomia.
July 3, 2024
Overview
Building electrification is the process of replacing systems and appliances that rely on fossil fuels, like boilers and stoves that use natural gas, with systems and appliances powered by electricity. The long-term goal of electrification, also known as beneficial electrification, is to power processes with renewable energy, reducing emissions in the long term.
According to the U.S. Environmental Protection Agency (EPA), commercial and residential buildings accounted for 30 percent of the greenhouse gas (GHG) emissions in the United States in 2021. In addition, indirect emissions from electricity generation account for roughly two-thirds of the GHG emissions from homes and businesses. Decreased fossil fuel use from buildings can help localities lessen overall GHG emissions contributing to climate change and also improve indoor air quality, leading to better health outcomes, such as reductions in asthma, cardiovascular disease, and premature death.
States are already generating substantial portions of their electricity needs from renewable energy, with California generating half of its electricity from renewable sources in 2022. In many cases, electrification can provide significant benefits to low-income families, such as lower utility bills and decreased exposure to environmental hazards. However, intentional government planning and action are necessary to ensure that these advantages are accessible to low-income households.
This brief discusses key steps and resources localities can use to promote housing electrification in their communities.
Approach
Local governments can support electrification in several ways. The following section includes strategies that localities can use to engage stakeholders, develop electrification goals, modify policies or regulatory frameworks —such as building codes— and evaluate progress towards established goals.
Identify and engage key local stakeholders
It can be helpful for localities to identify and engage key stakeholders to educate them about the benefits of electrification, create an understanding of important policies, and identify potential goals and strategies. Education can be a two-way learning process between communities and governments, where local governments learn how building electrification policies can affect key stakeholders. Localities can support electrification by modifying regulations or policies, including zoning ordinances and building codes. Therefore, it is crucial for governments to include relevant departments (e.g., climate, planning and zoning, permitting, and housing) with the critical expertise needed to modify these policies.
In addition to governmental departments, localities should engage with important external stakeholders, such as energy companies, environmental justice communities, community-based organizations, neighborhood associations, affordable housing developers, and homeowners and renters. When developing a stakeholder engagement strategy, local governments can review strategies for engaging the community along with the Rocky Mountain Institute’s Equitable Home Electrification Toolkit, which provides an iterative framework for local governments.
Develop equitable electrification goals and GHG reduction targets
As local governments develop electrification targets, it is valuable to establish specific, measurable goals that can help localities assess progress. For example, governments can set goals for various metrics, such as the number of housing units upgraded, the number of low-income households assisted, reduced fossil fuel usage (e.g., natural gas), and savings on utility bills per household. In addition, localities can define and develop emissions reduction targets if they do not exist already. Governments can consult EPA’s Local Greenhouse Gas Inventory Tool, an interactive spreadsheet that allows users to create emissions baselines, track emissions, and develop mitigation strategies to measure progress towards meeting GHG reduction goals.
Local governments can also develop policies to ensure that environmental justice communities share in the benefits of electrification. Cities can adopt policies to ensure that building electrification upgrades result in energy savings for low-income customers and that the costs of energy upgrades are not passed along to low-income renters. In addition, cities can establish protections to preserve existing affordable housing by preventing rent or cost increases following electrification and energy upgrades. For example, Minneapolis’ 4d Affordable Housing Incentive allows property owners to reduce their property taxes if they preserve 20 percent of their units as affordable. Owners can also take advantage of Minneapolis’ Green Cost Share energy efficiency program, which provides up to 90 percent—or $50,000—of upgrade costs. Such policies can also include relocation assistance for any displaced tenants, such as Washington, D.C.’s relocation assistance and Massachusetts’ temporary relocation assistance, and a right to return for residents following renovations.
Review and update local regulations
Local ordinances, like building and energy codes, establish requirements for new construction and major renovations. These codes are often adopted statewide, but some states allow localities to adopt stretch codes that exceed the statewide standard. For example, the Massachusetts stretch energy code was adopted in 2009 and provides a more energy-efficient code than the base energy code. Localities interested in electrification will want to understand if and how their state regulates local codes related to electrification.
Electric-ready building codes phase out or restrict the use of natural gas for appliances or home heating and require new construction to accommodate future electrification by providing adequate electrical panel capacity or sufficient space for electric equipment. Oak Park, IL, recently passed an all-electric new construction ordinance. To support its implementation, the city paired the new legislation with multiple opportunities for community members to learn about the impact of the new code. Jurisdictions can also establish electric vehicle (EV)-ready building codes requiring new construction and major renovations to include EV charging infrastructure, like appropriately sized electrical panels, conduits, and wiring.
Building performance standards set energy performance and emissions reduction targets and deadlines for existing buildings. By setting targets, building owners must improve their buildings’ energy efficiency, and often, electrifying appliances is the most efficient way to meet the standard. Local governments across the country have adopted building performance standards, including New York City, Seattle, St. Louis, and the District of Columbia.
Localities can amend their design review and permitting process to encourage or require building electrification from new construction projects. Cities may also consider implementing decarbonization by establishing overlay districts in their zoning ordinance to require higher levels of sustainability in certain areas. For example, Somerville, MA, adopted standards to prohibit on-site combustion for HVAC or cooking equipment for projects that opt into its Master Planned Development Overlay District.
Explore different financing mechanisms for property owners to make upgrades
When considering building electrification and building upgrades, property owners can use EPA’s Clean Energy Financing Toolkit to evaluate local, state, and federal financing mechanisms. Locally, governments can develop rebates, green bonds, property assessed clean energy (PACE), and on-bill financing. States can provide funding through grant programs, revolving loan funds, rebates, and PACE financing. Finally, the federal government offers financing mechanisms. See the Local Housing Solutions Federal Funding Directory for more grants and loans related to energy efficiency. Tax credit programs, including the Low-Income Housing Tax Credit program and the 25C Residential Energy Efficiency Tax Credit, have increasingly adapted or expanded to support residential electrification projects.
Evaluate metrics and program outcomes
Local governments can also develop metrics to evaluate program success when considering implementing policies to encourage building electrification. Cities may gather data to track avoided GHG and criteria pollutant emissions from the building sector. Localities can also gather information on the extent to which building electrification upgrades reduced energy bills for area residents and how equitable these cost savings were. Given the concern regarding the displacement of low-income populations following building electrification upgrades, local governments may also retain data on tenant mix by income level.
Electrification resources
State and Local Solution Center. An overview of GHG reduction strategies created by the U.S. Department of Energy that local governments can implement. It includes energy efficiency, transportation, community planning, waste, and renewable energy strategies.
Clean Energy Finance Tools and Resources. The U.S. Environmental Protection Agency (EPA) developed profiles of clean energy financing options that state and local decision-makers can use to create clean energy programs.
Local Government Leaders for Electrification. Resources for governments to reduce emissions and improve health developed by Rewiring America, a coalition of government leaders.
Electrification Resources for Local Leaders. A Rewiring America toolkit of resources, factsheets, and case studies for local decision-makers on policy options and federal funding sources to support electrification as well as building and community electrification initiatives.
Electrification Policy Menu for Local Leaders. This interactive document, developed by Rewiring America, provides links to resources on local rules, financing options, and local leadership strategies and programs to support electrification.
Energy Codes and Policies. The New Buildings Institute developed these tools and guides for local governments to develop stretch and reach, electric vehicle-ready, and decarbonization codes.
Local Greenhouse Gas Inventory Tool. A U.S. EPA resource that helps communities evaluate and develop their own greenhouse gas inventories by calculating GHG emissions from many sectors, including residential, commercial, transportation, and waste and water management.
Equitable Building Electrification. The Greenlining Institute presents a five-step framework for designing electrification initiatives that ensure low-income populations can access the associated benefits of more affordable energy, cleaner air, and lower monthly energy bills.
Energy Equity for Renters. Developed by the American Council for an Energy-Efficient Economy (ACEEE), this toolkit helps local governments and other stakeholders incorporate energy efficiency into affordable housing policies.