Overcoming Energy Inequities Among Low-Income and Renter Households

Overcoming Energy Inequities Among Low-Income and Renter Households

ACEEE’s Energy Equity for Renters initiative provides a report, an online policy tracker, and other resources for local governments trying to develop equitable policies to address energy sustainability and housing affordability.

Improving the energy efficiency of housing is an important component of reducing carbon emissions in the United States. Lower-income households disproportionately live in units and buildings that lack energy-efficient features and spend more than 6 percent of their income on energy bills, the threshold for having a high energy burden. Focusing efforts to improve the overall efficiency of U.S. housing on lower-income households can deliver effective environmental benefits while improving housing affordability among disadvantaged renters.

A report by the American Council for an Energy-Efficient Economy (ACEEE), in partnership with the Urban Sustainability Directors Network, seeks to guide state and local governments and utility agencies in identifying opportunities for equitably greening rental properties that are appropriate to their area’s particular mix of housing stock, renter demographics, and available resources. The report offers a general framework for localities to use and proposes several solutions aimed at both subsidized and naturally occurring affordable housing. ACEEE published the report as part of its Energy Equity for Renters initiative.

A Framework for Energy Equity Programs

The ACEEE report includes a framework governments can use to align their climate initiatives with equity goals. The framework calls for localities to use local and national data to assess the local rental market and energy affordability and determine the local mix of owner-occupied and renter-occupied housing units, rental housing types and age, building-by-building characteristics, and household energy burdens, among other variables. Through meaningful engagement with community-based organizations, including historically marginalized groups, governments gain a better understanding of the issues, legitimacy during policy implementation, and reduced costs over the long term. Partnerships with local philanthropies and foundations can be crucial sources of sustained funding to support renters, landlords, and other stakeholders.

A Toolkit of Energy-Efficiency Policy Options

The ACEEE report also presents policy options for governments to remove regulatory barriers and offer incentives aimed at improving the energy efficiency of subsidized and naturally occurring affordable housing while mitigating resulting rent increases. One option is to include energy efficiency as a criterion for prioritizing applications for low-income housing tax credits. Other options are directed at utility providers, including ensuring that energy-efficiency programs address the needs of low-income renters. Localities might also require landlords to disclose their properties’ energy use so potential renters can consider the energy cost burdens of apartments.

A major barrier to addressing inequitable energy cost burdens, the report contends, is the split incentive problem, in which the benefits of energy upgrades are realized by tenants, who typically pay for their utilities themselves, but the costs of upgrades are borne by landlords. Consequently, landlords may pass on the cost of upgrades to renters, thereby eroding the affordability of those units. One solution is to mandate limited rental property retrofits, triggered during events such as a property sale or major renovation. Such a mandate helps landlords afford the capital improvements while limiting the resulting rent increases and degradation of affordability, and over time, the energy efficiency of the housing stock improves. The report also recommends that governments taking the more proactive approach of offering grant or loan programs for significant energy retrofits should consider including affordability covenants for participating landlords.

The ACEEE report includes a series of case studies reviewing rental housing energy-efficiency efforts in four U.S. cities, providing insight into real-world examples. ACEEE has supplemented the report with other local guidance as part of its Energy Equity for Renters initiative. This work includes research on racially inequitable energy burdens and a compilation of building performance standards that limit energy use or emissions. Also under the initiative, ACEEE is providing free technical assistance to five cities as they improve the energy efficiency of their affordable housing stock. In addition, the initiative includes an online policy tracker that serves as a clearinghouse of local efforts from across the country to promote energy equity among low-income and renter households. An interactive map allows users to locate programs, some of which reduce regulatory barriers or provide incentives to achieve energy efficiency in an equitable and affordable way.

Click here to access information about the Energy Equity for Renters Policy Tracker and how it addresses regulatory barriers. Find more plans, regulations, and research that state and local governments can use to reduce impediments to affordable housing at HUD USER’s Regulatory Barriers Clearinghouse.

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