Issue Briefing:
Building Electrification
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By making it cheaper to retrofit homes and businesses, policymakers can catalyze building electrification on a national scale.
Photo by Bradley Zorbas on Unsplash
Clear Policy Ask
Congress must 1) provide tax credits to manufacturers of electric appliances, and 2) let constituents know there are tax credits available to them.
Proposed Legislation
The Heating Efficiency and Affordability through Tax Relief, or HEATR Act (S.4139)
To incentivize the production (thereby increasing the supply) of heat pumps, or electric HVAC systems, the HEATR Act creates a manufacturer tax credit. The tax credit has the dual benefit of lowering prices for consumers who are seeking to electrify their homes and businesses and stimulating the domestic manufacturing sector.
Check whether your senators are cosponsors here.
This bill hasn’t yet been introduced in the House, so consider asking your House rep to introduce it!
The great news is that Congress has already passed legislation that addresses the demand side of the equation. The Inflation Reduction Act of 2022 helps lower consumer energy costs by providing consumer rebates for approved electric appliances, like heat pumps, induction stoves, and clothes dryers. Over time, this provision is expected to dramatically lower domestic demand for natural gas. You can ask your House rep and senators to let their constituents know that these tax credits will be available to them.
The Case for Building Electrification Incentives
Decarbonizing buildings is critical to reducing emissions. The U.S. residential and commercial building stock accounts for almost a third of emissions, including 10-15% from direct fossil fuel use in heating and cooking. Research from RMI indicates that heat pump technology has matured to the point of being more efficient than gas heat in almost every state, even in cold weather.
Timing matters for heat electrification. Because furnaces and water heaters have extremely long lifespans, every new gas heating unit sold is a 15-year missed opportunity for electric heat. Each year, 5 to 8 million buildings in the U.S. add or replace heating equipment, so we need to rapidly scale the availability of affordable electric units when building owners are making those purchasing decisions.
Building electrification has even bigger benefits once the power grid reaches net-zero. Electrifying everything goes hand-in-hand with decarbonizing the power sector. As in the transportation sector, the benefits of building electrification are magnified when power sources are fossil-free. Since the Biden administration and 17 states have 100% clean power targets in place, we could start seeing these enhanced emissions reductions as early as 2030.
Over 60 percent of U.S. homes still use fossil fuels for heat. Barriers to replacing equipment that burns natural gas or oil are mostly cost-related. That’s why it’s so important to enact a combination of supply- and demand-side policies that work to dramatically reduce costs across the board.
There are massive economic benefits to building electrification. Research by Rewiring America found that nationwide home electrification could directly and indirectly create over 1.3 million jobs. It would save an average of $500 per year, per household, including substantial savings for low- and middle-income households.
Electrified buildings are better for human health. According to Rewiring America, electrifying indoor appliances would address the 42% increased risk of childhood asthma caused by gas stoves alone and would help reduce the 15,000+ premature deaths from outdoor building emissions.
In the News: The Defense Production Act
Photo by Josh Beech on Unsplash
In June, the Biden administration declared a state of emergency with respect to electricity and invoked the Defense Production Act to stimulate clean energy manufacturing. This allows the administration to tap into federal funds set aside for emergency response. Importantly, this new authority specifically includes electric heat pumps and insulation for making buildings more energy-efficient.
It’s great news for increasing domestic heat pump supply, but acts of Congress are still required to further stimulate the market (after all, we’ll need heat pumps for every building in America) and to keep the DPA coffers full.
Policy Update: By passing the Inflation Reduction Act, Congress has appropriated $500 million for the administration’s DPA energy projects!
Sample Social Post
Electric heating and cooking would save American households hundreds in energy costs each year and help us breathe healthier air. [@MoC1] [@MoC2] [@MoC3] pass the HEATR Act to make electric appliances plentiful & affordable!