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 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.

The HEATR Act hasn’t yet been introduced in the House of Representatives, so consider asking your reps to introduce a House version of the bill.

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 reps and senators to let their constituents know about the home electrification tax credits in the Inflation Reduction Act.

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. (The other 20% comes from electricity use, which would be eliminated by decarbonizing the power sector). 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. Current heat pumps range from 2.2 to 4.5x more efficient than Energy Star gas furnaces.

Map by RMI (2020)

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 a collective $37.3 billion per year in energy costs, distributed across 85% of U.S. households, including substantial savings for low- and middle-income households. That’s an average of about $500 per year, per household.

Electrified buildings are better for human health. Depending on which parts of a building are decarbonized, building electrification can deliver substantial benefits to both indoor and outdoor air quality. According to Rewiring America, electrifying indoor appliances would address the 42% increased risk of childhood asthma caused by gas stoves alone. Meanwhile, it would reduce premature deaths from the outdoor air pollution caused by building emissions, which currently total over 15,000 per year in the U.S.

 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.

Invoking the DPA corrects what economists call a “market failure”—the climate emergency requires rapid deployment of a specific technology, but ordinary market demand is too sluggish to prompt an increase in supply.

The executive action essentially shifts the burden of finding sufficient market demand from the manufacturer to the government. The administration is providing assurance to heat pump manufacturers that it will purchase a large quantity of them to resell or distribute however it chooses.

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).

Policy Update: By passing the Inflation Reduction Act, Congress has appropriated $500 million for the administration’s DPA energy projects!

Facts by Issue Frame

+ Equity and Environmental Justice

  • Communities of color and low-income communities are disproportionately impacted by the negative health effects of indoor air pollution from fossil fuels. By fully electrifying homes, those risks are almost entirely mitigated.
  • Low- and medium-income (LMI) households bear 3x the energy burden as other households. Electrifying gas and oil appliances delivers considerable energy savings to households, with LMI households benefiting the most.
  • A recent EPA study on four vulnerable groups found that racial minorities will suffer disproportionately from the effects on climate change. Specifically, Black Americans are 40% more likely to live in areas with increased climate change-related mortality rates. The numbers for other racial groups all show increased likelihood to live in those areas over non-POC Americans: Hispanic/Latino at 43%, American Indians at 48%, and Asian Americans at 23%.
  • Low-income Americans and those with no high school diploma are 25% more likely to live in areas with high projected labor loss due to climate change, according to the EPA.

+ Public Health

  • Children in homes with gas stoves are 42% more likely to develop asthma symptoms than children in homes with electric stoves.
  • Health effects of climate change can be caused by air and water pollution that directly result from the burning of fossil fuels, but climate change also alters environmental determinants of health, such as extreme heat, corroded infrastructure, proliferation of disease, famine, drought, and natural disasters.

+ Rapid Decarbonization

  • The buildings sector accounts for 30% of total U.S. emissions annually, including 12.5% from direct fossil fuel use through heating and cooking.
  • Besides electrifying appliances, another powerful policy lever is to update building codes to set more rigorous energy efficiency standards.
  • When possible, new construction should be passive, which are the most energy-efficient buildings due to their smart use of sunlight, shade, ventilation, insulation, and building materials. It is much more cost-effective to incorporate efficiency and electrification into new builds than to retrofit the existing building stock.

+ Jobs

  • Building electrification is projected to add 1.3 million jobs to the U.S. economy. Some of those jobs are directly involved in the electrification process, such as plumbers, electricians, and other equipment installers. Others are induced jobs created by a rapidly expanding industry, like those in manufacturing or financial sectors.
  • According to Rewiring America, the process of electrifying buildings will create over 462,000 installation jobs alone, plus 80,000 manufacturing jobs.

+ International Affairs & National Security

  • New analysis in the National Intelligence Assessment on climate and the Pentagon's Defense Climate Risk Assessment detect increased risk to U.S. national security due to climate change. The reports highlight heightened risk of migration crises, unstable infrastructure around U.S. military assets, and new risk of conflict over depleted resources.
  • The U.S. military spends at least $81 billion per year defending global oil supplies. This puts American troops at risk and takes resources away from other critical national security objectives.
  • In order to demonstrate credibility abroad, particularly at U.N. climate conferences such as COP26, the U.S. must begin aligning its domestic policy with its commitments under the Paris Agreement.

+ Impacts on Urban & Rural Communities

From the Global Change National Climate Assessment :

  • "Climate change and its impacts threaten the well-being of urban residents in all U.S. regions. Essential infrastructure systems such as water, energy supply, and transportation will increasingly be compromised by interrelated climate change impacts. The nation’s economy, security, and culture all depend on the resilience of urban infrastructure systems."
  • "Approximately 245 million people live in U.S. urban areas, a number expected to grow to 364 million by 2050."
  • "Many major U.S. metropolitan areas, for example, are located on or near the coast and face higher exposure to particular climate impacts like sea level rise and storm surge, and thus may face complex and costly adaptation demands."
  • "The urban elderly are particularly sensitive to heat waves. They are often physically frail, have limited financial resources, and live in relative isolation in their apartments. They may not have adequate cooling (or heating), or may be unable to temporarily relocate to cooling stations. "
  • Meanwhile, "rural communities are highly dependent upon natural resources for their livelihoods and social structures. Climate change related impacts are currently affecting rural communities. These impacts will progressively increase over this century and will shift the locations where rural economic activities (like agriculture, forestry, and recreation) can thrive."
  • "Physical isolation, limited economic diversity, and higher poverty rates, combined with an aging population, increase the vulnerability of rural communities. Systems of fundamental importance to rural populations are already stressed by remoteness and limited access."

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!