How the New Climate Bill Helps Energy Investments Pencil Out

Ben Evans

During the Senate debate on the Inflation Reduction Act, Republican Sen. James Lankford of Oklahoma criticized a provision in the bill allocating $1 billion for clean energy improvements in affordable housing.

“It’s not about increasing access to housing for those that are homeless, it’s solar panels in public housing,” he joked. “I’m confident the people that are living on the street, trying to survive a 9 percent inflation rate, are really hoping they can find someplace with a solar panel.”

The provision Sen. Lankford referenced is on page 569 of the bill, titled, “Improving Energy Efficiency or Water Efficiency or Climate Resilience of Affordable Housing.” While his description of the program doesn’t quite tell the whole story, the senator’s concerns about the housing crisis are valid. As an organization that helped advocate for the funding, we’re happy to explain why—far from being a misguided, out-of-touch agenda—the investment is precisely what’s needed to help low-income families maintain stable, long-term housing.

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Like many other energy efficiency and clean energy provisions in the bill, it will drive down energy costs while tackling urgent health and climate crises that disproportionately impact disadvantaged communities. It allocates $1 billion—in part to seed up to $4 billion in loans—to the Department of Housing and Urban Development for affordable housing projects that strengthen energy efficiency or water efficiency, improve indoor air quality, and incorporate clean power sources such as, yes, solar power.

Affordable housing advocates know their work is not just getting a family in a home. It’s also about putting the conditions in place that will allow them to stay in the home and thrive. One key factor in that equation is energy costs.

Low-income households spend an average of more than 16 percent of their income on energy bills, compared with 3.5 percent for higher-income households, according to the Department of Energy’s Oak Ridge National Lab. Some 17 million households report receiving disconnection notices from their utility over lack of payment—the kind of destabilizing event that too often pushes low-income households into chaos and deeper poverty.

Additionally, HUD already spends nearly $7 billion a year—an estimated 14 percent of its budget—on utilities in public and assisted housing. And Congress appropriates several billion dollars per year on the Low Income Home Energy Assistance Program, which provides grants to states to help households cover energy bills. That includes helping nearly 110,000 Oklahoma households in 2020 at a cost of $55 million.

One-time investments in improved energy efficiency and low-cost renewable power can permanently reduce those costs. That puts more money into the pockets of households that need it most—year after year—while directing scarce federal housing funding toward building more affordable housing instead of paying monthly utility bills.

Equitable Solutions

On top of that, it begins to address historical inequities that have left poor communities, particularly black and brown communities, with higher rates of asthma and other ailments while also facing the consequences of climate change far more directly than wealthier communities.

All of this is why the U.S. Green Building Council has long supported robust energy efficiency and clean energy investments in affordable housing programs. In fact, we think it should be a requirement that all new affordable housing construction and major renovations meet green building requirements that protect residents from thousands of dollars in unnecessary energy bills, improve indoor air quality, and generally create more livable communities.

There could be up-front costs for improvements, but with smart planning and design, it is a drop in the bucket in the overall construction budget. And the investments pay for themselves many times over during the life of the project, in a host of ways, for the individual residents and for society.

After years of inaction in Washington, the Inflation Reduction Act puts the U.S. in a global leadership position in the transition to a more sustainable future. A central pillar of that work must be ensuring that historically disadvantaged communities—rural and urban—are included in the transition and reap the benefits that come with it, including lower prices, cleaner air, and new economic opportunity.

Ben Evans is federal legislative director for the U.S. Green Building Council.