EPA's Plan to Bring Clean Energy to Low-Income Households

A year ago, I wrote about how the Clean Power Plan (CPP) through the proposed Clean Energy Incentive Program (CEIP), could increase energy efficiency investments in affordable housing. In that post (which you can find here), I discussed how the severity of the nation’s affordable housing crisis ensured that more Americans than ever are spending 30 percent or more of their income on housing costs.

But the crisis doesn’t end there. Families lucky enough to find affordable housing pay more for energy than the rest of us, further straining budgets for those who can afford it the least.

A recent study released by Energy Efficiency for All (EEFA) and the American Council for an Energy Efficient Economy (ACEEE) found that the median low-income household’s energy burden was more than twice as high as the average household and three times greater than higher income households.

The higher energy burdens experienced by many households lead to long-term negative effects on health and psychological and physical well-being. More specifically, higher energy cost can leave families at greater risk for respiratory diseases and increased stress, driven by increased economic hardship and difficulty in moving out of poverty.

The Clean Energy Incentive Program

In June, the EPA released a proposed rule for the Clean Energy Incentive Program (CEIP), which is part of the Clean Power Plan. Implementation of the CPP, you may recall, was put on hold in February by the Supreme Court, but states and power companies can move ahead with planning under the expectation that it will ultimately be allowed to move forward.

The CEIP is designed to encourage early investment in energy efficiency and renewables by offering double the valuable emission allowances or emission rate credits (ERCs) for energy saved or renewable power produced in low-income communities in the two years before the CPP takes effect in 2022.

On Aug. 3, the Environmental Protection Agency (EPA) will host a public hearing in Chicago to gather feedback on the CEIP and it is accepting formal comments until Sept. 2. EEFA created this summary document, to help affordable housing and community advocates to understand the updated CEIP proposal as well, as how it changed from the original.

The updated CEIP proposal differs from EPA’s earlier submission in several significant ways that affect how benefits are delivered to low-income communities, including:

  • The “low income” eligible projects now include solar as well as energy efficiency.
  • The matching reserves of allowances or emission rate credits (ERCs) are split 50/50 between low income (efficiency and renewable) and renewable energy projects.
  • Rather than develop or utilize one single definition of “low income community,” the EPA proposes four federal low-income standards that would be presumptively approvable if included in state plans—New Market Tax Credits, HUD-Qualified Census Tracts, Department of Energy’s Weatherization Assistance Program (WAP) Income Guidelines, and Federal Poverty Level Guidelines.

Solar projects implemented to serve low-income communities that provide direct electricity bill benefits to low-income community ratepayers are now eligible under the CEIPs low-income projects. This should be seen as a great opportunity by EPA and community advocates to ramp up programs to deliver solar-generating capacity to low-income communities. In addition, doing so aligns the CEIP with the White House’s Clean Energy Savings for All initiative to increase access to solar energy for low- and moderate-income communities. This initiative includes a goal of 1 gigawatt (GW) of solar to low- and moderate- income families by 2020, the launch of the Department of Energy’s National Community Solar Partnership to help unlock solar access for renters, and the promotion of shared solar policies and programs across the country. The CEIP would help advance these goals.

EPA also seeks comment on the proposed 50 percent/50 percent division of the 300-million short ton of emissions matching pool into separate sectors for renewable energy projects and a reserve for low-income community projects that includes both solar and energy efficiency. A 50/50 split of those reserves is the best and least cumbersome approach. The EPA should be careful to ensure that no less than 50 percent of the reserve is set aside for low-income eligible projects while also ensuring that no portion of those reserves can be “reapportioned” or appropriated for use by non-low income serving projects.

This now brings us to the issue of how the EPA defines low-income under the CEIP. Giving states the flexibility to choose among a number of existing federal and state definitions can make implementation of the CEIP easier but should not enable states to marginalize or exclude households and communities in need of more investment. First, the EPA should emphasize household based definitions to ensure the investments benefit those families directly and are not simply applied to low-income regions with no clear link to the communities who live there. The EPA should consider and include measures as presumptively eligible households already receiving federal housing assistance where program eligibility is set at 80 percent of Area Median Income or less.

Benefits and Needed Improvements

If we were just able to bring African-American, Latino, and renting households to the median level of efficiency as the average household, 42 percent, 68 percent, and 97 percent of their excess energy burdens, respectively, could be eliminated, saving as much as $300 annually on utility bills. This represents real savings to families who need it most.

So, implementing the CEIP can bring big benefits—helping states meet overall goals of reducing carbon emissions, maintaining equity and fairness in the Clean Power Plan and overcoming long-time barriers to delivering energy efficiency to the poorly served low-income housing sector.  

Specifically, more energy-efficiency in rental housing would:

  • Allow low-income families to increase spending on food, healthcare and other essentials;
  • Improve the affordability of low-income housing; and
  • Reduce residents’ risk of exposure to several environmental health threats.

Therefore, the EPA must ensure that the CEIP is implemented in a way that is as inclusive as possible for low-income renters.

There are needed improvements, which we also outlined, including;

  • Ensuring that low-income definitions prioritize household-level eligibility to drive benefits where people live.
  • Ensuring that the low-income reserve of allowances or ERCs is no less than 50 percent of the total and not allowed to be reapportioned to other areas of the CEIP or CPP compliance strategy.
  • Ensuring that low income solar projects complement other federal initiatives such as those proposed by the White House and Department of Energy.

The EPA has, itself, acknowledged there have been “historic economic, logistical and information barriers” to implementing energy efficiency and renewable energy programs in low-income communities. This has fueled our work over the past three years bringing together experts in affordable housing, energy efficiency, community development, finance, and the utility sector and in collaborating with state and local groups to deliver tools and resources to help increase energy efficiency investments in affordable multifamily housing.

The recommendations above can not only make our job easier, but help make millions of American families more prosperous and healthy.

About the Authors

Khalil Shahyd

Senior Policy Advocate, Urban Solutions program

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