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How Building Decarbonization Can Drive Improvements in Air and Housing Quality

Existing regulatory authorities, new funding opportunities, and cross-cutting program guidance can address climate and housing policy challenges.

The domestic content requirement will help build a pipeline of clean energy jobs in America. Pictured: A technology company and nonprofit installing a solar array in Walden, Colorado. (© 2018 NREL/Flickr CC BY-NC-ND 2.0)

In September 2023, we published our blog “What Does the Air in Our Homes Have to Do With the Climate Crisis?” which gave an overview of the role that building decarbonization can play in slashing indoor air pollution that poses significant threats to public health —and which is also leaked and vented outside, compromising our climate and air quality. In this memo, we delve further into the relationship between air and housing quality—and the regulatory tools and funding resources available to improve both for communities with the greatest need. 

Ultimately, the confluence of climate action, standards to meet air quality mandates, and the Inflation Reduction Act’s (IRA) infusion of funds makes it possible to tackle housing challenges nationwide in ways that also address the climate and air quality crises. So, while climate change threatens our homes and health, our homes can also help us build towards a safer climate for healthier communities. This memo begins developing that framework by:


Air Pollution Harms Our Health, Homes, and Climate 

Fossil fuel combustion from common household appliances is not just a significant source of carbon pollution—it also produces other toxic air pollutants with detrimental impacts to our health. Study after study has found that pollution from these appliances (notably, nitrogen dioxide (NO2), carbon monoxide (CO), benzene, and fine particulate matter (PM2.5)) is correlated with increased incidence of asthma, cancer, and other respiratory illnesses. While ventilation systems can help mitigate against higher concentrations of indoor pollution, recent research has shown that mechanical ventilation does not meaningfully reduce nitrogen dioxide pollution indoors. And despite the strides made to decrease air pollution over the past several decades, pollution from fossil fuel appliances for select pollutants actually increased from 2017 to 2020. 

Building decarbonization therefore represents an opportunity to mitigate the negative health impacts of both indoor and outdoor air pollution from these appliances. While the correlation between air pollution from fossil fuel appliances and negative health impacts is clear, the role that housing policy plays in reinforcing some of those relationships cannot be understated. To understand the significance of the latter, it’s critical to take a closer look at key drivers of those feedback loops—our housing policies. The grim truth is that decades of disinvestment in housing—especially for Black and Brown communities—has created a housing quality and affordability crisis that leaves millions of Americans at risk. But climate action can be a key tool to repair that broken legacy. But to use that tool, we have to frankly face past failures while improving our policy choices today.


What Does Housing Policy Have to Do With Air Pollution?

As communities across the country grapple with the impacts of climate and air pollution burdens, they are also contending with an acute housing crisis, driven by a lack of affordable housing supply, inadequate public funding for maintenance and upgrades, and instability from weak tenant protections and rent stabilization policies, which threaten the health, safety, and quality of life particularly for low-income households. But how, exactly, did we get to this point? 

Around the time of the New Deal taking hold in the early 20th century, several housing policy decisions contributed to the challenges to building decarbonization we’re experiencing today. The recently established Federal Housing Administration (FHA), refused to insure mortgages for single-family homes within Black communities, a practice known as “redlining.” While this was occurring, FHA was simultaneously subsidizing single-family housing production for white communities, outside of urban cores. 

Over time, this racist set of policies translated into a lack of federal investment in affordable housing in urban areas, specifically within Black, Brown, and lower-income communities. Paired with exclusionary housing policies (e.g. single-family zoning) that continue to this day, this has resulted in chronically underfunded programs for populations with the greatest need for housing assistance, including critical repairs necessary for weatherization and efficiency upgrades that we are now trying to scale. Consequently, the disproportionate impacts of poor housing and air quality impact many of the same groups subjected to government-sponsored housing segregation nearly a century ago. And this was by design—local policymakers at the time worked with businesses to locate high-polluting facilities in neighborhoods that had been redlined. All of these factors have implications for our ability to equitably decarbonize our buildings sector today. 

Existing policies and programs to incentivize the uptake of clean energy technologies in our homes have too often subsequently followed a pattern reinforcing these inequities. Benefits from existing clean energy tax incentives have historically been concentrated among wealthier homeowners and low-income households, who may not have sufficient tax liability to benefit from them, have generally been underserved by existing programs. Some programs, like rebate programs, may require consumers to pay for the costs of efficiency and electrification upfront, which isn’t always financially feasible. At the same time, affordable rental housing—and homeownership—is largely out of reach for low- and moderate-income households in every state. 

The result: Without focused policy interventions, we could see a future in which the climate and housing crises make each other worse. For many Americans, and especially Black and Brown Americans and lower-income communities, we could see housing quality continue to deteriorate as the climate crisis worsens—further threatening personal finances, public health, and overall livelihoods. But we also have a major opportunity to prevent that outcome. By directing resources to areas that have been underserved by existing housing and climate programs, we can break this cycle and instead begin upward momentum. The IRA, implemented in tandem with pollution standards for appliances and buildings, creates the potential for historic reinvestment that can address both crises at once, charting forward a path for progress.

In this light, addressing challenges to building decarbonization across the housing stock requires meaningfully implementing regulations that reduce carbon pollution—and provide much-needed housing upgrades in the process. 


Moving the Needle through Existing Regulatory Authorities 

Federal agencies have been slow to address both the need for more stringent air pollution policies and the crisis of persistent, substandard housing in communities across the country. States already have some regulatory authority to step in to address these needs and some have begun to do so.

Building Equipment Emission Standards 

First, the Clean Air Act (CAA) offers existing legal pathways for federal and state governments to regulate air quality through pollution control measures. The most important near-term tools are standards created to meet federal air quality standards because these plans can localize federal benefits and state efforts in specific communities. 

The process begins as the U.S. Environmental Protection Agency (EPA) sets standards to regulate outdoor air pollution through the National Ambient Air Quality Standards (NAAQS). These standards have been set—and regularly strengthened—to limit exposure to six common outdoor air pollutants, including nitrogen oxides (NOx), which contribute to the formation of two other designated pollutants, ozone and particulate matter. Notably, these requirements do not apply to indoor air pollution. Periodically, EPA may review and update the standards and in response, states must demonstrate how they are taking reasonable actions to attain the standards. Should they fail to comply with the standards, regions can be classified as “nonattainment” areas—and must outline, within their State Implementation Plan (SIP), how they intend to meet the standards. 

Existing Clean Air Act provisions to address nonattainment areas provide one pathway to compel states to act on appliance pollution, as a recent development in the San Joaquin Valley region of California demonstrates. As a severe nonattainment area for fine particulate matter (PM2.5), the San Joaquin Valley Air Pollution Control District was required under the CAA to submit a SIP outlining the pollution control measures it would take to meet the standard. The Air Pollution District argued that its existing standards were sufficient, but EPA proposed to reject its submission, as the SIP did not consider zero-emission appliances as control measures. 

More recent developments at the state and local level in California further underscore how states can put these existing authorities to use to eliminate air pollution from appliances, while advancing much-needed upgrades to the housing stock. In its most recent SIP, the state has committed to setting a new, state-wide zero-emission standard for space and water heaters, to go into effect in 2030. Implementation of this standard would likely rely on electric heat pump technologies. Nine air districts within the state already regulate NOx pollution from space and water heaters. Earlier this year, one of those districts—the Bay Area Air Quality Management District—adopted amendments to its existing gas furnace and water heater standards that gradually phase in zero-emission standards for those appliances by 2031. 

These examples reinforce an explicit link between appliance pollution and air quality, as well as the authorities that EPA and states have to address both under the Clean Air Act. That link is critical because the Clean Air Act legally requires state plans to coordinate. If one state or region has identified appliance standards as a viable control measure to meet air quality standards, all similarly situated areas must consider such measures in their plans. 

And those standards are not only available, but they have also been appearing in plans for decades. For instance, in 1994, EPA proposed to directly regulate NOx emissions from a range of appliances using its own federal authorities, including water heaters, in a federal implementation plan for several CA air districts explaining that "uncontrolled NOx emissions from residential water heaters" imperiled compliance with federal air quality standards. EPA finalized approval of a different set of residential water heater emission controls into California's State Implementation Plan under the Act in 1996. Los Angeles's similar rules for appliances date back to 1978 and have repeatedly appeared in the SIP. EPA approved Texas's residential water heater rules into the SIP back in 2008. Utah’s appliance rules were also recently approved. The upshot of all this history? State regulators, and EPA regions, must consider appliance standards that can support building electrification when they plan to meet federal air quality standards.

States with nonattainment areas for other criteria pollutants therefore have the opportunity and obligation to take similar action. NOx pollution is a precursor to the formation of ozone and fine particulate matter; regulating NOx pollution will therefore limit the latter two pollutants, both of which are covered under the Clean Air Act. There are several upcoming SIP deadlines for ozone nonattainment areas, for example, in states including Illinois, California, and New York and it follows that these areas should consider zero-emissions appliance technologies as pollution control measures within these plans. Nine states (CA, CO, CT, IL, IN, NJ, NY, TX, WI) with areas designated as being in “severe” nonattainment for the 2008 ozone standard have a SIP submission deadline on May 7, 2024, which means regulators in all nine states have a major opportunity to pair appliance and building pollution standards with programs and funds that can deliver improvements in housing quality. Similarly, in 2022, areas in 18 states (including MD, MI, and PA) were reclassified from “marginal” to “moderate” nonattainment, and were required to submit a SIP in response by January 1, 2023, though some have missed that initial deadline. Still, this requires these areas to implement attainment measures by August 3, 2024, leaving them with a window for regional EPA administrators and state air agencies to include appliance regulations as part of their pollution control measures to attain that standard. With these deadlines coinciding with the deployment of forthcoming funds from IRA programs, like the Home Energy Rebates Program, the Greenhouse Gas Reduction Fund, and the Climate Pollution Reduction Grants Program, states are well-poised to support the implementation of ambitious standards under these existing authorities. 

The opportunity may be most pressing in the states and EPA regions. But EPA headquarters also must act to ensure that all communities can benefit from clean air and healthy building appliances. Section 111 of the Clean Air Act gives EPA clear authority to set national standards for appliances. State governors have the power to call on EPA to list heating appliances as stationary sources of air pollution under the CAA, by directly petitioning EPA under section 111(g). Although Evergreen and many other civil society groups have also petitioned EPA to act, a state governor petition would be especially forceful. Under this authority, a governor must demonstrate to EPA how heating appliances “contribute significantly to air pollution which may reasonably be anticipated to endanger public health or welfare,” among other criteria. If a governor decides to submit a petition meeting the conditions outlined in the CAA, this would require EPA to make a determination to list heating appliances as a stationary source, within 3 months. As demonstrated, the actions taken in California, and the rationale for doing so, provide further evidence of the need for such a petition. However, to date, no governor has exercised this authority. 

Whether in response to the existing Evergreen and allies petition, to a state governor, or on its own authority, it is time for EPA to act. Not only should it ensure that state implementation plans due to it under pending deadlines include appliance standards, as available control technologies that must be implemented to meet air quality needs, but it should also begin the process itself to regulate pollution from these appliances, including issuing any necessary information collection requests and beginning other public processes that can lay a foundation for swift action.

Federal Efficiency Standards

But the opportunities for action extend well beyond air quality. The U.S. Department of Energy (DOE), has authority under the Energy Policy and Conservation Act (EPCA) to regulate energy use of building appliances. Under this authority, DOE through its Appliance and Equipment Standard Program, sets minimum energy conservation standards for over 60 consumer appliances. At present, it is updating rules for several appliances including water heaters and consumer cooking products (like gas stoves), and just recently finalized stricter efficiency standards for residential gas furnaces. These standards provide benefits to consumers across the country by decreasing carbon pollution and often, energy costs through increased efficiency—for example, the new residential gas furnace standard is estimated to reduce carbon emissions by 332 million metric tons over the next 30 years and save consumers $1.5 billion annually in utility costs.

But, the benefits of efficiency standards—and the emissions standards outlined above—can go beyond decreased utility costs, overall pollution reduction, and the associated health benefits from less pollution. They’re also a particularly strong policy lever for improving housing quality for renters, especially in light of the “split-incentive” problem, a key barrier to deploying energy efficiency measures in rental properties. This challenge arises when a building owner is liable for the capital investment in energy efficiency technologies, while tenants typically experience cost savings associated with such upgrades. By requiring manufacturers to ensure that the appliances they bring to market are both energy efficient and less reliant on dirtier energy sources, these regulations ensure that landlords have the most efficient appliances to choose from when the time comes to replace them. Appliance efficiency regulations, from this perspective, can be seen as a win-win-win for climate, health, and housing policy, if implemented equitably.

Building Codes

As we’ve highlighted in previous work, one of the most cost-effective ways for state and local governments to address carbon pollution from commercial and residential buildings is through adopting building codes, typically by adopting model codes written by industry organizations. Building codes are a critical tool for protecting the health and well-being of communities by requiring minimum construction requirements, fire safety provisions, and water and energy efficiency measures. State and local governments have begun adopting the 2021 International Energy Conservation Code (IECC)—the most up-to-date model energy code for buildings—to reduce carbon pollution and increase efficiency for new construction projects. In addition to codes for new buildings, states can adopt rehabilitation codes (rehab codes) which set construction standards for existing properties undergoing less extensive renovations. Rehab codes, paired with decarbonization policies, can ensure that state and local governments also require efficiency and electrification measures for the existing building stock.

Outside of the adoption of the latest model energy codes, some state and local governments have advanced policies aimed at reducing fossil fuel use through existing building code authorities. And even more have committed to exploring pathways for doing so. This typically involves passing legislation to phase out the use of fossil fuels in future residential and commercial buildings, either through incentivizing or adopting all-electric building codes. In fact, the presence of these policies directly factored into EPA’s proposed rejection of the San Joaquin Valley PM2.5 SIP

Building Performance Standards

Building performance standards (BPS) are a relatively new policy tool that states and localities are increasingly adopting to address the pollution impacts for existing buildings. In some cities, like Washington, DC and New York, NY, these buildings can comprise nearly 70 percent of the area’s total carbon pollution, primarily as a result of on-site fossil fuel combustion from appliances, and the use of fossil fuel energy sources to power electric appliances. A BPS requires buildings to reach specific energy performance targets, with the goal of reducing or eliminating carbon pollution from buildings, usually within a predefined time frame. Under these policies, building owners are often required to benchmark their energy use and implement measures to decrease it according to specific targets.

As it relates to housing, some—but not all—residential buildings may be covered under a BPS, depending on specific state and local requirements. Typically, larger multifamily buildings qualify under a BPS, with the range of eligible buildings starting at 10,000 square feet. These policies often allow for additional compliance flexibilities for affordable housing properties. In Washington, DC and Boston, for example, affordable housing properties are subject to longer compliance timelines under its BPS, given the costs and capacity challenges that can be associated with meeting the standards. 

Layering Regulatory Tools for Community Repair

This rich set of regulatory tools means that appliance pollution need not go unaddressed—and indeed, must not. The Clean Air Act, in particular, requires state and federal regulators to take action. State implementation plans must include all reasonably available control measures—and as EPA recently explained to California—those measures include appliance pollution standards, which are long-standing regulatory tools, and have been incorporated into Clean Air Act SIPs for decades. Likewise, the Act and the science plainly require federal air standards from EPA which can set a national baseline, and act in complementary ways to DOE standards and state regulatory efforts. 

Moreover, state and federal civil rights obligations underline the need to apply these tools now. Black and brown communities, empowered and protected by civil rights laws, suffer disparate pollution impacts from air pollution and climate change and from substandard housing quality together, as a direct result of explicit state and federal policy choices. The Civil Rights Act, and related state and federal civil rights laws and policies, call for action to address this continuing, government-caused, harm. And action, if taken, can help communities surge ahead, with cleaner, higher-quality homes, nationwide. Thus, climate and air quality laws stand ready to supplement larger social goals.


Understanding Gaps in Regulatory Coverage

This suite of policies discussed above, while not necessarily exhaustive, provides a robust starting point for rapidly decarbonizing our homes; however, several gaps exist as it relates to certain portions of the residential housing stock. We first identify these gaps and then, in the next section, discuss how to fill them with tools the IRA and other funding programs have made available. Well-designed pollution control efforts need to use these tools to equitably implement building electrification policy. 

As previously mentioned, building codes are essential for ensuring the health and safety of homeowners and tenants alike, specifically for newly constructed or substantially renovated homes. But new construction represents only 2 percent of building activity in a given year, further underscoring the importance of decarbonizing the existing building stock. Moreover, buildings undergoing major renovations are typically required to be built to prevailing codes, which can be a costly undertaking depending on the age and condition of the building as well as the code it must comply with. With many states having yet to adopt the latest model energy codes, these properties are also at increased risk of being built to outdated codes. The emphasis on building codes has incentivized highly efficient and all-electric new construction, though recent efforts to develop rehab codes focused on building decarbonization provide a helpful starting point for states to strengthen codes for existing buildings. 

One particularly important segment of the housing stock is the small, multifamily sector, typically consisting of buildings with between 2 and 24 units. In housing advocacy and urban planning spaces, these buildings are often referred to as the “missing middle.” Their “missing” designation arises from the fact that production and preservation of these units have been impeded by exclusionary housing policies that favor the production of single-family homes and large, multifamily buildings that comprise a larger share of today’s housing stock. These smaller buildings are a large source of unsubsidized, or “naturally-occurring” affordable housing. They also tend to have higher proportions of Black and Latino tenants and landlords, a higher percentage of individual investor landlords, tend to raise rents at lower rates than other types of rental properties, and serve households at the lowest income bands

With building codes covering the primarily newly constructed or substantially renovated housing and building performance standards targeting buildings greater than 10,000 square feet, these same buildings are also functionally “missing” from the existing landscape of building decarbonization regulations and policies. They’ve also been underserved by climate programs, as there are significant barriers to reaching small landlords for existing housing and building efficiency & electrification programs. With over half of low-income (<80 percent AMI) renters living in buildings with at least 2 units–there are significant opportunities to maximize the impact of funding available for these households for decarbonization. 

As states begin to tap into new resources for building efficiency and electrification upgrades, they can also take steps to address these regulatory gaps through the implementation of these programs. The next section provides an overview of several key programs that can help fill those needs while improving air quality through efficiency measures and appliance upgrades and providing much-needed upgrades to undercapitalized segments of the housing stock. 

New and Existing Resources to Support Implementation

Longstanding programs—and new ones funded through the IRA—provide an important set of resources that are available in the same planning and regulatory window needed to meet the U.S.’ Paris climate commitments and to meet state and local regulators' air planning obligations. It is critical that state and federal regulators weave together these resources on the same time frame as their climate and air quality efforts to ensure that solutions to the housing and climate crises are mutually reinforcing.

Climate Pollution Reduction Grants Program

The Climate Pollution Reduction Grants (CPRG) program, funded through the IRA and overseen by EPA, is an important example of the programs available for states, air

pollution control agencies, Tribes, and local governments to leverage these funds to address housing and air quality. The $5 billion program is being implemented in two phases: 1) $250 million for planning grants, and 2) $4.6 billion in competitive grants for states to implement select pollution reduction measures from the Priority Climate Action Plan (PCAP) they develop in phase one. These funds can be used by a variety of stakeholders—including air regulators—to support the implementation of important measures to improve air quality, such as low- to no-NOx emissions standards for household appliances. These grants are also covered under the Biden administration’s Justice40 initiative, meaning that a minimum of 40 percent of the benefits of these funds must flow to disadvantaged communities. CPRG is therefore an important tool for reducing air pollution burdens, potentially through housing upgrades, while ensuring that disadvantaged communities are not left out of the clean energy transition. 

PCAP Submission Deadline: March 1, 2024

Implementation Grant Application Deadline: April 1, 2024

Home Energy Rebates Program

State energy offices (SEOs) across the country are ramping up efforts to plan and implement DOE’s Home Energy Rebates Program, with many beginning to solicit feedback from stakeholders to help shape program design. Consisting of two separate allocations, $4.3 billion for the Home Efficiency Rebates program, and $4.5 billion for the Home Electrification and Appliance Rebates, these represent two significant consumer-facing funding sources included in the IRA, totaling $8.8 billion. Applications are currently being accepted by DOE, though many states are anticipating program rollout to begin well into 2024. These programs—as well as some of the tax incentives available as of January 2023—will be critical for offsetting the costs of both efficiency and electrification measures, a key barrier to building decarbonization for lower-income households. With eligibility for existing efficiency programs like the Weatherization Assistance Program (WAP) limited to households with incomes less than 200 percent of the federal poverty line, and additional efficiency and electrification tax credits made available in the IRA likely flowing to higher income households with sufficient tax liability, the rebate programs have the potential to fill a gap in coverage for related programs. Even then, some states and program administrators for WAP, opt to exclude multifamily buildings altogether, further underscoring the need to improve access to this funding for underserved households. An understanding of the housing stock within states—and local jurisdictions—will be essential to understanding where the need for appliance upgrades is greatest and ensuring those households benefit from this program. 

Notice of Intent Deadline: August 16, 2024

Application Deadline: rolling, until January 31, 2025

Building Code Technical Assistance Grants

In September, DOE announced that $400 million in formula grants would be made available for states and territories to adopt and implement the latest building energy codes and zero energy codes for residential and commercial new construction projects. States that have already adopted the latest energy codes, can leverage it to enact “stretch” codes that result in greater energy savings than the current model energy codes. While the program incentivizes states to adopt the latest energy codes (e.g. 2021 IECC or ASHRAE 90.1) or stretch codes, other building codes, there may be opportunities to explore how to deploy these formula grants in support of adopting building decarbonization rehab codes, so long as the code complies with program requirements and “achieves greater or equivalent energy savings” to those specified in the guidance. Relatedly, DOE has also announced a round of competitive funding to advance the implementation of net zero energy codes, including to support implementation of building performance standards, however a formal request for applications for this funding has yet to be announced as of writing. 

Notice of Intent to Reserve Funds Deadline: November 21, 2023

Application Deadline: rolling, until September 30, 2025

Weatherization Assistance Program (WAP) 

The Weatherization Assistance Program (WAP), overseen by DOE, is one the largest existing federal programs dedicated to providing building envelope and energy efficiency upgrades to low-income households across the country. Though WAP has served more than 7 million households since 1976, today there are nearly 38.8 million households eligible for assistance under the program–and several barriers preventing it from reaching them. While uncertainty around funding has been cited as a key obstacle to its implementation, the program has recently received a $3.5 billion injection of funds through the Infrastructure Investment and Jobs Act (IIJA) to be dispersed over the next few years. Notably, many eligible households, in some states up to 60 percent, are deferred from the program due to substandard housing conditions that limit the ability to move forward with efficiency and electrification upgrades, creating a significant bottleneck to the equitable deployment of these and forthcoming funds (e.g., Home Energy Rebates Program). 

With buildings being a key priority for decarbonization at each level of government, it is necessary to align program rules with our climate goals. Example actions that can be taken include continuing to increase appropriations for WAP at the federal level to keep pace with the need to meet national climate and equity goals and increasing current per-unit caps for eligible WAP projects at the state level (as feasible), to allow for deeper retrofits for homes that are harder to reach and to decarbonize. There are also opportunities for states to modify their programs to more effectively allow them to fund fuel-switching measures (e.g., from natural gas to electric) and for governments at each level to increase coordination and capacity for reaching small, multi-family landlords. 

Low-Income Housing Tax Credits

The Low-Income Housing Tax Credit (LIHTC) is the largest source of affordable housing production and preservation funding nationally, producing tens of thousands of affordable housing units annually and subsidizing more than 3 million housing units since its creation in 1986. There are two categories of LITHCs: 1) a competitive credit that covers the low-income units’ costs in a project (known as the 9 percent credit), typically used for new construction projects, and 2) a non-competitive credit (the 4 percent credit) that usually requires the use of additional subsidies, like tax-exempt bond financing, for most of a project’s costs. Each year, states are tasked with allocating the 9 percent credits through the development of Qualified Allocation Plans (QAPs). These plans also present opportunities to embed building efficiency and electrification measures into a powerful tool for affordable housing production and preservation. 

A recent report from the BlueGreen Alliance scored state QAPs on their performance across several categories, including energy efficiency. They found that many states incentivize the inclusion of efficiency measures through their QAPs, but there are opportunities for states to go further by requiring electrification or other green building provisions as a threshold criteria for receiving a LIHTC allocation. Some of the funds mentioned above could be applied to these projects, with thoughtful consideration of the complexities of financing housing production and preservation under the LIHTC program.


Cross-Cutting Recommendations for Aligning Air and Housing Quality Goals

While the tools and resources described above demonstrate high-impact approaches to align housing and climate priorities, there are additional cross-cutting issues to consider that can help stakeholders administering these programs address regulatory and programmatic gaps. By doing so, governments can maximize the impact of these funds for addressing these housing and climate challenges, while pursuing building decarbonization strategies that are both holistic and equitable. 

States with upcoming SIP deadlines should prioritize the inclusion of zero-emission appliance rules within them, aligning the timing of these rulemakings with IRA implementation. With several SIP deadlines coming due—and some overdue—states have an opportunity to advance strong standards that protect our homes, health, and climate. As appliance pollution control measures are proposed and adopted through the SIP, there are also ample opportunities to leverage IRA funding for future implementation. With the Home Energy Rebates Program under development in almost every state, the availability of clean energy tax credits, and funding for strengthening and implementing strong energy codes, there are clear incentives for building owners to move towards increased efficiency and electrification, all while contributing towards the reduction of harmful air pollutants. Pairing these regulations with intentional and equitable implementation will help catalyze the transition toward cleaner buildings in every community. 

Prioritize Underserved Populations

Program administrators should prioritize groups and segments of the housing market that have been historically underserved by both housing and existing energy efficiency programs as recipients of forthcoming funds. Targeting resources to low-income renters across property types and landlords of smaller, multifamily rental properties, particularly for unsubsidized properties, is one way of ensuring that hard-to-reach communities can tap into the benefits afforded by the implementation of the regulations highlighted above. Program administrators can commit some or all of the allocations they receive from IRA funds to serving these groups. As an example, the Home Energy Rebates Program requires a minimum funding set aside of 10 percent to go to multifamily housing, but this only represents a small portion of the total multifamily units that could be served through this program, by some estimates. The costs of retrofitting these properties—especially given the complexities of financing affordable housing—can be particularly prohibitive for landlords of smaller buildings. Therefore the regulatory tools outlined in this memo must also be paired with significant financial and technical assistance to support these landlords as they work to implement them. 

States can also act to develop and implement supportive programs like Pennsylvania’s Whole Home Repairs program, which provides counties across the state with access to funding for habitability and safety upgrades, water and energy efficiency measures, and accessibility improvements, among other uses. It’s targeted to low-income homeowners (making less than 80 percent of the area median income) and small landlords renting affordable units, one of the key gap constituencies in regulatory and program coverage. Whole home repair programs like this one are essential for reaching landlords and tenants currently underserved by existing resources, while addressing a key barrier to residential building decarbonization, including funding health and safety measures many of these properties must undergo prior to weatherization and electrification. 

Enhance and Enforce Tenant Protections

Program administrators must establish and enforce tenant protections to ensure that retrofitted homes remain affordable and do not exacerbate risks of displacement and eviction. Earlier this year, the Federal Housing Finance Agency (FHFA) published an RFI soliciting feedback from the public on federal tenant protections for properties with mortgages backed by the Government-Sponsored Enterprises (GSE). That directly followed the Biden Administration’s release of the White House Blueprint for a Renters Bill of Rights, which presents a non-binding framework of principles to advance renter protections at federal agencies. Underpinning these developments is federal acknowledgement of the precarity that renters—specifically, low-income renters—face under current market conditions. Despite these recent actions, national legislation focused on strengthening renter protections has lagged (or been confined to emergency authorities from the COVID-19 pandemic), though housing advocates have long called for the passage of just cause eviction laws and rent stabilization policies to mitigate against risks to renters in this housing crisis. 

DOE’s provision of baseline tenant protections in its official guidance for the Home Energy Rebates Program recognizes the unique risks that building decarbonization measures pose to renters. The guidance document includes requirements to continue renting to a low-income tenant for two years following project completion for low-income units, to not evict tenants to raise rents as a result of the upgrade, and to not increase the rents as a result any energy improvements made (with some exceptions)—but states can and should choose to go above and beyond these minimum requirements as they stand up their rebate programs. 

While the exact elements of this program design will vary depending on the existing landscape of tenant protections in a given state, SEOs can draw on previous coalition recommendations—as well as from policies and programs in other states, like those guiding the administration of California’s Equitable Building Decarbonization Program. Those regulations include: 

  • a minimum affordability period of 10 years following project completion for deed-restricted housing; 
  • limitations on rent increases that must be in place for a minimum of 5 years for market-rate housing; 
  • requirements for landlords to share information on project benefits and impacts with tenants; a just cause eviction provision; 
  • and limitations on the project construction period (to 30 days), wherever possible. 

These could serve as additional guidelines for states as they determine this aspect of their Home Energy Rebates Program design. For current subsidized housing, states could allow existing contracts and covenants to satisfy proposed tenant protection requirements under these programs, thereby reducing the administrative burden for compliance. States can also use this as an opportunity to develop or strengthen existing tenant protections while these programs are designed, setting up statewide mechanisms for compliance ahead of or in concert with program rollout.

Clean Energy Program Audits

Program administrators should consider conducting clean energy “audits” of existing housing programs to better them with their climate goals. Programs like WAP are designed to address critical energy affordability and weatherization needs for low-income households, but there are also opportunities for program administrators to align through existing housing tools. As an example, some states opt out of serving multifamily housing in their WAP programs altogether, as a result of capacity constraints and administrative burdens associated with multifamily housing, under current federal guidance from DOE. One way to mitigate against the former would be to tap into supportive IRA funding and technical assistance opportunities for contractors, to help build capacity to handle multifamily housing retrofits. In another example, grant funding from the Home Energy Rebates Program has the potential to reduce the eligible basis for a LIHTC allocation, decreasing the amount of the housing tax credit available for a project. This helps reinforce an unintended tradeoff between housing affordability and building decarbonization goals. Understanding these nuances, by deeply engaging with housing finance agencies and affordable housing advocates, can allow administrators of these programs to better harmonize their operations. 

While the LIHTC program also provides annual opportunities to advocate for the inclusion of building decarbonization requirements, similar assessments could be conducted for other federal, state, and local housing tools, particularly those that serve low-income renters. At the federal level, for example, a coalition of affordable housing, public health, and environmental organizations submitted a petition to HUD earlier this year, outlining the low- to no-cost program tweaks that can be made to align the agency’s housing programs with broader decarbonization and air quality goals. Developing an understanding of the building decarbonization gaps in existing housing programming could aid in targeting resources being made available from newer programs. 

Engage Communities

Program administrators can leverage existing networks of community-based organizations (CBOs) to identify communities with the greatest need for these resources. CBOs are uniquely positioned to serve environmental justice (EJ) communities. These organizations should be consulted at the outset of program design to ensure that priorities for new state and local programs are in line with community needs on the ground. CBOs have been essential partners to housing and community development stakeholders for increasing access to existing housing programs for underserved populations—and entities administering building efficiency and electrification programs stand to benefit from their lessons learned.

Prepare for New Funding

Program administrators can build out new funding vehicles in anticipation of forthcoming complementary IRA programs. Beyond direct funding to buildings programs (e.g., Home Energy Rebates), states are launching new mechanisms for receiving funding from the IRA. Massachusetts recently announced the creation of the Massachusetts Community Climate Bank, the nation’s first green bank dedicated specifically to serving the affordable housing sector, alongside a $50 million dollar initial investment. Housed within the state’s housing finance agency, MassHousing, the bank will be closely aligned with existing affordable housing refinancing cycles to maximize the benefits of efficiency and electrification upgrades to low- and moderate-income households across the state. Additionally, New York State invested $20 million in state funding for projects that reduce emissions from the built environment. These new institutions both explicitly mention an intent to tap into additional funding through DOE’s Loan Program Office, specifically its Title 17 Clean Energy Financing Program. Under this program, states can certify State Energy Financing Institutions (SEFIs) with DOE, giving them an opportunity to tap into $62 billion of loan authority available through the Title 17 program for clean energy project development. Other states can follow suit to ensure that they are poised to take advantage of additional financial resources through EPA’s Greenhouse Gas Reduction Fund and Climate Pollution Reduction Grants Program. 


Climate Policy Is Housing Policy—and Vice Versa

The regulations, resources, barriers, and opportunities outlined in this memo are meant to provide a starting point for stakeholders seeking to maximize the co-benefits, particularly for the housing sector. Successfully decarbonizing buildings across the country requires meaningfully addressing issues at the root of the challenges we face in this sector–and acknowledging the reflexive relationship between carbon pollution, air pollution, and housing quality. Bottlenecks that pose risks to the efficacy of new and existing programs focused on building decarbonization are inextricably linked to entrenched challenges related to producing, preserving, and upgrading the housing stock. We are at a moment where the convergence of these crises means that we can no longer treat them as separate problems with separate solutions—and the IRA, paired with complementary regulations, can help catalyze the cross-sector programs and policies needed to address these interconnected issues.