The most important investment proposed in President BidenJoe BidenHouse clears bill to provide veterans with cost-of-living adjustment On The Money — Dems dare GOP to vote for shutdown, default To reduce poverty, stop burdening the poor: What Joe Manchin gets wrong about the child tax credit MORE’s infrastructure plan doesn’t deal with bridges, roads or airports. Rather, it’s the $213 billion allocated to retrofit more than 2 million homes. No objective is more important to U.S. climate goals.
Home-energy use represents one-fifth of America’s carbon emissions. Sealing air leaks, upgrading insulation and installing modern heating and cooling systems can reduce those emissions. But at our current pace, it will take over 500 years to retrofit every house.
Government money alone is not enough. The Biden plan’s success depends on three things: better appliance standards, incentives for private companies to make home-energy upgrades and much more funding to low-income communities. Only then will we be able to take every home off fossil fuels.
Make polluters pay
Current home-energy standards, however, are outdated. Traditionally, appliances are graded on a scale up to 100 percent: A gas boiler, for instance, should generate as close to one unit of heat for every unit of gas burned. Yet, new technology enables a new era of efficiency, something Biden recognizes with his push to establish Energy Star standards for heat pumps. Because they just move air from one place to another, they generate three times the amount of heat for every unit of energy.
But as the Biden administration crafts new guidelines, they need to make them aggressive and flexible, framed around the principle the modern environmental movement started: Polluters pay. The White House can propose that manufacturers who roll out heat pumps earn regulatory credits — similar to how the car industry now works — that manufacturers slower to respond can buy to avoid fines. Over time, such incentives will spur companies to focus on installing heating and cooling technologies that decarbonize the home.
An investment in our future
There’s already a growing trend toward new energy tech: More than 40 percent of new homes in the U.S. include heat pumps. Updated standards should only improve that number, since manufacturers tend to make products that meet new benchmarks. Where Biden’s proposed investment can play a pivotal role is by accelerating the deployment of private capital alongside public funds to retrofit the more than 100 million houses built before 1990. That is, as long as the money is distributed efficiently.
In the past, catalyzing the development and adoption of clean energy was typically done through tax credits, but these have proven to be an inefficient way to subsidize new technology. We don’t want a distorted market dependent on obscure tax regulations. Instead, it should be easy for any company, contractor or resident to make home upgrades. That could be through incentives, like what Congress is proposing now with the Hope for Homes Act: Homeowners get money on a sliding scale, with more going to retrofits that reduce the most energy.
The Biden administration can also increase the $27 billion figure in the retrofitting plan earmarked for the Clean Energy and Sustainability Accelerator. This federal “green bank” would provide loans and investment to private companies that augment their clean-energy offerings: insulation, heat pumps and more.
This is an approach proven in New York, home to one of the largest and oldest green banks.
A retrofit for every American
Of course, these types of standards and funding mechanisms won’t matter if they don’t go to where they’re needed most. This is where government investment makes the most impact. Biden’s plan includes supporting a Department of Energy program that provides weatherization grants for low-income housing. It also pledges 40 percent of federal funds for retrofits in low-income areas. That number is far too low.
Low-income Americans have long been an afterthought when it comes to retrofitting. Fixing up their homes needs to be the priority. For one, it’s an opportunity to financially help low-income families, who spend a larger amount of their household budget on home-energy costs. It also represents a significant chunk of America’s efficiency equation: There are roughly 40 million low-income households eligible for retrofitting, yet barely 2 percent are weatherized every year.
We know that government resources are limited. They should be used to help people who would otherwise miss out on the benefits of upgraded home-energy tech, including improved air quality, temperature-controlled rooms and better overall health. America’s carbon reductions are tied to expanding the pace and scale of home retrofits. The president’s plan is a crucial first step. With these further steps, we can bring energy efficiency to millions more homes — and meet our climate goals.
Andy Frank is the founder and president of Sealed, a New York-based home wellness company. He also serves on the boards of the Alliance for Clean Energy New York as well as the Energy Efficiency Alliance.