Clean Power Plan Can Boost Energy Efficiency Investments in Affordable Housing

One of the overlooked elements in President Obama's Clean Power Plan (CPP) to set the first limits on carbon pollution from power plants is the positive effect it will likely have on low-income Americans - those who suffer most from climate change and who are facing a crisis in available affordable housing.

The Clean Power Plan, announced by the president on Aug. 3 to limit, will limit the emissions from power plants-- the nation's largest source of the pollution driving dangerous climate change-- It has been called ambitious by some and tepid by others. However, it's groundbreaking in its recognition of the need to include America's families in efforts to address climate change. The rule established a Clean Energy Incentive Program to provide additional incentives to states that make early investments in energy efficiency and renewables targeting low-income communities and communities of color (as further outlined by my colleague, Dylan Sullivan).

The CPP also requires states to show evidence they have included low-income communities and communities of color in state implementation planning processes (SIPs). The Environmental Protection Agency (EPA) adopted the Clean Power Plan under the authority of the Clean Air Act, which gives states the opportunity to develop state plans to curb emissions.

Low-Income households' disproportionate exposure

Low-income households are disproportionately burdened by exposure to toxins in the atmosphere and the built environment. Climate change compounds these vulnerabilities when unstable weather patterns increase exposure and/or the potency of toxic chemicals in our environment. Additionally, low-income households are often forced to make housing choices in which they rely on inadequate or lower quality housing. Poor ventilation can cause homes to be drafty in winter and allow in moisture in summer that leads to mold and illness. Poor construction and inefficient appliances and energy grid connections leave families unable to safely maintain comfortable temperatures, leaving them further vulnerable to illness or potentially deadly accidents.

Across the nation rents continue to rise while the number of people who need low-priced housing has increased, creating an entrenched housing crisis and an urgent need for the development and preservation of quality affordable housing. More Americans than ever are spending 30 percent or more of their incomes on housing costs. According to a 2013 study by the Urban Institute, there are only 28 adequate and affordable housing units available for every 100 families who need them nationwide.

The issues of affordability are particularly acute for renters in multifamily buildings, where close to 50 percent of our nation's low-income renters live. In these homes energy expenditures run 37 percent higher per square foot than in owner‐occupied multifamily units (i.e. condos or cooperatives), 41 percent higher than in renter‐occupied single family detached units, and 76% higher than in owner‐occupied single family detached units. From 2001 to 2009, while average rents in multifamily housing increased by 7.5 percent, energy cost for these renters increased by nearly 23 percent.

Energy efficiency investments can improve affordable housing

Now well into its second year, the Energy Efficiency for All (EEFA) project is working in 12 states to overcome long-held barriers and increase the levels of energy efficiency investments targeting affordable multifamily housing. We accomplish this through partnerships with environmental and energy advocates, utility program administrators and regulators, and most importantly, owners, developers, advocates and tenants.

Through our work with EEFA, we have leveraged our partnerships with affordable housing organizations to establish a national working group of advocates supporting the Clean Power Plan. EEFA's affiliate partner, the Natural Resources Defense Council, and other organizations such as the National Housing Trust, National Housing Conference, Enterprise Community Partners and the Green and Healthy Homes Initiative all released statements and joined more than 70 affordable housing organizations across the country in signing a letter of support to the EPA.

Despite the fact that energy efficiency was removed as one of the main building blocks for determining the emissions limits in the final rule, smarter energy use remains the most affordable pathway to compliance for states and will likely feature heavily in most state implementation plans. However, much more work needs to be done to ensure that affordable housing and multifamily housing, in particular, are seen as key investment targets for energy efficiency resources in state compliance planning.

Why should states focus energy efficiency investments in affordable housing?

  1. By investing in affordable housing states and cities can address dual crises of the long term climate/health threats of carbon pollution and the affordability gap in low-income housing being driven in part by rising energy costs. This is particularly important for master-metered multifamily buildings where reducing operating expenses in low-income multifamily buildings frees capital for the owner to use for maintenance and other necessary improvements while keeping rents affordable.
  2. There are significant savings potentials in affordable housing and multifamily housing, in particular. Efficiency measures have thus far been less likely to be applied in multifamily rentals than in any other type of housing.
  3. The Clean Energy Incentive Program (CEIP) creates additional incentives for states to invest early in efficiency and renewable technologies that service low-income communities. States will earn twice as many credits than otherwise would have been available to apply toward their emission reductions total.

A recent study released by Energy Efficiency for All estimates efficiency programs in multifamily affordable housing could realistically cut electricity usage by as much 26 percent, based on data from a sample of states. The chart below gives estimates of potential carbon savings by gigawatt-hours (GWh) from investing in energy efficiency for affordable multifamily housing in nine states. The final column gives the ratio as a percent of a state's carbon reduction target that could be met through energy efficiency in affordable multifamily housing where for example in states such as Georgia, Virginia, Maryland and New York, anywhere from 6 percent to 11 percent of the carbon reduction target could be met.

A holistic approach

When solutions to our nation's affordable housing crisis are discussed, the challenge is usually seen as an issue of developing more housing. We now understand that a more holistic approach must also include preserving and reducing the operating costs of existing housing. As energy costs continue to take on larger proportions of a household's disposable income, energy efficiency is vital to improving affordability and access to quality housing for all. Increasing the energy efficiency of low-income rental housing saves energy, reduces pollution, maintains reasonable rents and improves resident and community health, especially among the elderly and the young.

The Energy Efficiency for All network has released a Clean Power Plan Primer for Affordable Housing that details the opportunities for targeting investments for energy efficiency retrofits through state implementation plans (SIPs). It provides invaluable information about what the affordable housing community - advocates and residents alike -- can do to identify and engage with state officials in developing those plans. As the chart shows, there is a strong case to include energy efficiency investments in drafting the SIPs.

Virginia, Pennsylvania and Georgia have already scheduled stakeholder meetings to get input for development of their SIPs, with more states to follow. Affordable housing advocates, developers, and property owners need to participate in these conversations to ensure energy efficiency investments reach their communities. The Clean Power Plan creates an historic opportunity to increase energy efficiency in affordable rental housing because those investments will provide a cost-effective way to meet individual states' compliance targets, which will also benefit the environment, affordability, and healthy communities.

About the Authors

Khalil Shahyd

Project Manager, Urban Solutions program

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