Decarbonizing the Housing Sector

Decarbonizing the Housing Sector

HUD Secretary Marcia Fudge tours a model demonstrating an energy-efficient home at the 2023 Innovative Housing Showcase in Washington, DC. Decarbonizing the built environment can help reduce energy burdens for residents, with efforts supported by the Infrastructure Investment and Jobs Act of 2021 and the Inflation Reduction Act of 2022.

In June 2023, HUD hosted the Innovative Housing Showcase in Washington, D.C., to highlight innovative building technologies and practices. During a preshowcase session at the National Building Museum that focused on “energy efficiency, resilience, and decarbonization,” panelists discussed strategies to decarbonize the built environment. After summarizing the energy burden that residences and other buildings generate, the speakers shared new technologies and strategies that can reduce structures’ energy costs and carbon footprint. Representatives from different federal agencies discussed federal decarbonization efforts, highlighting recent developments under the Infrastructure Investment and Jobs Act of 2021 (IIJA) and the Inflation Reduction Act of 2022 (IRA).

Housing and Energy Use

Hayes Jones, a program manager at the U.S. Department of Energy (DOE), said that the Biden administration is committed to a clean energy economy with net-zero emissions by 2050 and a carbon-free electrical grid by 2035. Because residential and commercial buildings are responsible for approximately three-quarters of the country's energy use, Jones explained that changes in building design and construction will play a significant role in decarbonization goals. Retrofitting existing buildings to become more energy efficient and climate resilient is also vital to reaching these goals, because 80 percent of existing buildings will still be in use in 2050. "The building retrofit work that HUD, DOE, and other agencies are leading is really critical for us to address the climate crisis and also support lowering utility costs and improving residential health and well-being," said Trisha Miller, former senior director for industrial and building emissions at the White House Office of Domestic Climate Policy.

The United States spends approximately $400 billion annually to heat, cool, light, and power residential and commercial dwellings. HUD's portfolio of 4.5 million public and subsidized properties generates particularly burdensome energy costs. HUD spends approximately $5.6 billion, or roughly 14 percent of its annual housing subsidies, on energy costs for these households, which produce an estimated 13.6 million metric tons of carbon emissions annually. Alexis Pelosi, senior advisor for climate in HUD's Office of the Secretary, said that climate change disproportionately burdens public and other HUD-assisted housing because of their location and age and because of disinvestment. Todd Richardson, general deputy assistant secretary of HUD's Office of Policy Development and Research, explained that since many public and HUD-assisted homes are not insured, HUD spends approximately $6 billion each year rebuilding and repairing damage to properties from natural disasters.

The panelists agreed that existing technologies can propel many decarbonization efforts. Sven Mumme, acting program manager of emerging technologies at DOE, said roughly half of the emission reductions needed to meet the 2050 net-zero emissions goals will come from technologies that are currently in the demonstration or prototyping phase. Eric Werling, national director for DOE's Building America program, pointed out that tens of thousands of nearly net-zero homes, including affordable ones, are being constructed today. The speakers then discussed the funding and other support needed to hasten this progress and reach the federal government's net-zero emissions goal.

Recent Policies and Programs

With the passage of IIJA and IRA, the federal government has several funding opportunities to support clean energy and decarbonization efforts. HUD’s Green and Resilient Retrofit Program, an IRA initiative, allocates $837.5 million in grants and $4 billion in loans to help HUD multifamily property owners reduce carbon emissions, improve utility efficiency, enhance indoor air quality, and make their properties more climate resilient. Pelosi described it as “HUD's first program to invest in utility efficiency, renewable energy generation, and climate-resilient strategies.” Similarly, IRA authorized the U.S. Environmental Protection Agency (EPA) to administer a $27 billion Greenhouse Gas Reduction Fund, which helps communities reduce greenhouse gas emissions and other pollutants. Included in the fund is the Clean Communities Investment Accelerator, which provides funding and technical assistance to local communities to support clean energy projects. Fifty-five percent of the Greenhouse Gas Reduction Fund’s benefits must be dedicated to low-income and disadvantaged communities; Ted Toon, the senior advisor for building carbonization and finance at EPA, pointed out that this target exceeds the administration’s 40 percent goal under the Justice40 Initiative. Alejandro Moreno, acting assistant secretary for energy efficiency and renewable energy at DOE, said that with the passage of IIJA and IRA, the department “has never had more programs or money available to the public in this space.” This funding includes $8 billion to support electrification and home energy rebates through state and local governments. Panelists also noted the success of legacy programs such as the Weatherization Assistance Program and the Building America program in helping homeowners finance retrofits.

The speakers also highlighted recent initiatives that encourage property owners to conserve energy and reduce carbon emissions. Multifamily property owners participating in DOE's Better Climate Challenge voluntarily commit to reducing greenhouse gas emissions by at least 50 percent over 10 years. The Connected Communities program unites housing developers, utility providers, and appliance manufacturers to demonstrate how housing reforms can reduce energy use and costs. These efforts can include shifting to a behind-the-meter energy generation system, such as solar panels, and adding smart appliances.

The panelists also discussed using regulatory reform to make homes more energy efficient. HUD has already increased the energy efficiency and resiliency of more than 25,000 existing HUD-affiliated properties and is strengthening minimum codes and standards for their new properties. In May 2023, HUD and the U.S. Department of Agriculture jointly proposed higher energy standards for new construction that, if adopted, could save households between $972 million and $1.4 billion and reduce carbon emissions by 2.2 million metric tons over 30 years.

Other Challenges

Even with the benefits of technological advancements and new federal programs, the panelists acknowledged that technical and financial hurdles to retrofits persist. Joan Glickman, IRA program manager at DOE, said that green retrofits are out of reach for many families even with the incentives. Glickman believes that financial institutions, including Fannie Mae and Freddie Mac, must see value in addressing the climate crisis. Werling and Glickman also discussed the need for training and workforce development to address the labor shortage in the green energy sector. The speakers generally were confident that the administration's net-zero goal is attainable, but they stressed that reaching this goal will require further commitment from the public, corporate, and nonprofit sectors as well as households.