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New federal programs could ease high home heating bills » Yale Climate Connections

As temperatures fall, heating bills often skyrocket. But new programs available under the federal Inflation Reduction Act, which Democrats passed in 2022, could help ease the burden for some U.S. households by making it easier for people to access energy-efficiency upgrades and cost-saving electric appliances.

That could make a big difference to millions of U.S. residents. One out of every five American households had to choose between basic necessities and heating or cooling their homes in 2020, according to the U.S. Energy Information Administration.

Maine resident Aaron Raymo told CBS last winter that paying his heating bills often means sacrificing in other areas. “It’s a hard one,” he said. “What are you going to choose for food, or what amount of fuel oil are you going to choose to stay warm?” For Deanna Schultz in Rock Falls, Illinois, paying heating bills even in early fall was nearly out of the question. She told Time Magazine last year that she had $16 left after paying bills, months before these bills peaked.

Several programs under the Inflation Reduction Act respond to this need, particularly two home energy rebate programs that provide $9 billion to states and tribes to accelerate the adoption of residential energy efficiency and renewable energy systems. States are currently developing these programs, with some, like Colorado, expecting funds to be available by the fall of 2024.

The Home Efficiency Rebates program will provide instant rebates to homeowners and landlords of single- and multifamily homes for energy efficiency and electrification upgrades that save at least 20% of the home’s energy use, without income restrictions.

In addition, the Home Electrification and Appliance Rebates program is designed to provide direct rebates of up to 100% of the cost of energy-efficient electric appliances to low- and middle-income households. This would include everything from heat pumps and water heaters to stoves, which often cost less to operate than conventional appliances, according to the nonprofit RMI.

How high bills hurt

Prohibitively expensive heating costs, part of a problem known as energy insecurity or energy poverty, are more than just uncomfortable: People often suffer more from poor physical and mental health as a result. And the elderly and children are at greater risk.

When families are unable to sufficiently heat their homes, children are more likely to exhibit rule-breaking behaviors, such as skipping school. People suffer more from poor health, including an uptick in respiratory illnesses, strokes, and higher rates of anxiety and depression. The most extreme cases of energy insecurity can result in direct injury or even death due to unsafe temperatures or from using ovens or stoves as primary or secondary heat sources.

Energy insecurity is widespread, but research shows that it affects low-income households, as well as Native American, Black, and Hispanic households, disproportionately. Renters, those living in low-income multifamily units, and manufactured homes — with notoriously inefficient insulation — also experience disproportionately higher bills.

A chart showing national energy burdens across subgroups
National energy burdens across subgroups (i.e., income, race and ethnicity, age, tenure, and housing type) compared to the national median energy burden. Source: Drehobl et al., 2020.

This distribution of energy poverty is no accident. Historical policies and social context have had a strong influence, and redlining policies that limited mortgages for communities of color, especially Black Americans, have a lasting legacy evidenced in today’s heating inequities. In a 2022 paper in the journal Energy Research and Social Science led by Benjamin Goldstein, the authors examined how much energy households use and their carbon emissions against household race and historical policies.

They found that energy use intensity is significantly higher in historically redlined districts, which are still predominantly Black neighborhoods. People of color are also more likely to be renters than homeowners and are more likely to be in energy-inefficient housing. Landlords have little incentive to invest in efficiency or weatherization because the utility cost for heating and cooling is usually the responsibility of renters.

Many energy-insecure customers do not fall into traditional definitions

Adding to the complexity, traditional approaches to addressing energy poverty overlook some households, according to new research published in the journal Energy Policy led by Luling Huang. That’s particularly true for those who dramatically limit their energy usage to reduce their heating costs.

The authors found that low-income households tend to turn their heat on earlier in the fall or winter, often due to poor insulation and efficiency in affordable housing options. Despite earlier heat use, however, the results showed that energy consumers in low-income homes actually use less energy per square foot throughout the winter when compared to high-income homes, which consume 52% more heat per square foot annually. But many low-income households still shouldered “high” and “severe” energy burdens, spending more than 6% or 10% of their income on heating bills.

But importantly, 24% of the study population exhibited extreme energy rationing, limiting their electricity use so significantly that they would not have fallen into the traditional “high” energy burden category. These households turned heating units on when outside temperatures were in the 30s and 40s Fahrenheit but kept their thermostats so low that their energy bills didn’t reach the “high” energy burden category. As a result, they potentially would not qualify for programs designed to help those struggling to pay energy bills.

Policy change could help

U.S. government assistance programs tend to use eligibility criteria based on the percentage of a household’s income spent on utility bills, which could fail to capture those customers who resort to energy rationing behavior to pay the bills. This is true of both the Low-Income Home Energy Assistance Program, a federal- and state-funded effort to provide assistance for home energy bills, and the Weatherization Assistance Program, which provides whole-house weatherization resources for low-income households.

The new programs available under the Inflation Reduction Act could help more people access energy-efficiency upgrades and affordable appliances. They will be rolled out by state energy offices, which will administer the funds. But their ultimate impact will depend on whether the programs are paired with comprehensive building decarbonization plans, leverage complementary federal funding programs, and provide additional incentives to fill in holes, such as upfront cost gaps for low-income households.

In addition, policymakers could increase the impact of the programs by ensuring that subsidized energy efficiency and renewable energy improvements don’t result in “renovictions,” as energy upgrade costs are passed along to renters, making rents unaffordable.

There is warmth at the end of the tunnel, but we have a long way to go.

Emily Jack-Scott is Program Director of the Aspen Global Change Institute. Michelle Solomon is a Senior Policy Analyst at Energy Innovation Policy and Technology LLC®. Liz Carver is Communications Manager at the Aspen Global Change Institute. Both organizations are Yale Climate Connections content-sharing partners.

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