Energy Inequity in Low-Income Housing

Many federal initiatives have attempted to improve the efficiency and sustainability of America’s housing, but such policies often miss low-income households, who don’t always have the resources needed to take advantage of these programs.

This insight was a finalist in our fall blog competition.

In the United States, residential energy applications comprise around 17% of the country’s annual energy use. In an attempt to reduce this power draw, the majority of which comes from heating, cooling, lighting, and appliance usage, many federal initiatives and programs have attempted to improve the efficiency and sustainability of America’s housing. For example, the ENERGY STAR program serves to help households understand their energy consumption and efficiency options. Other programs and policies, like the Federal Energy Policy Act of 2005 or the Multifamily Energy Innovation Fund, offer housing contractors tax incentives and resources for building and developing more efficient housing. Similarly, many state governments like California, Illinois, and Pennsylvania have programs to improve residential energy efficiency.

Unfortunately, such programs and policies often miss low-income households, who don’t always have the resources to take advantage of incentives and upgrade policies. Take, for example, tax credits offered for purchasing efficient appliances (like air conditioners, boilers, or furnaces) or for making home renovations (like installing insulated doors, windows, and roofing). Replacing a home’s furnace costs between $3,800 and $10,000; whereas high-efficiency furnaces often cost between 50% and 100% more. Extra costs like this limit participation in residential sustainability programs by low-income households. For the many low-income households that rent, landlords are often unwilling to spare the extra money for greener solutions. Many residential sustainability programs still require considerable financial investment by the homeowner, making them inaccessible to low-income households.

Tragically, lower income households actually stand to benefit the most from financial support for home efficiency investments. Low-income households spend around 16.3% of their income on energy, as compared to 3.5% in non low-income households. The 2015 Residential Energy Consumption Survey reported that 31% of U.S. households struggled to pay energy bills, with 6% and 5% of households facing the inability to heat or air condition their homes respectively. Lower income citizens also tend to live in older housing that is much less energy efficient than newer housing. Therefore, energy programs targeting low-income housing often have larger energy and equity impacts than more general residential sustainability programs. 

Fortunately, there are different energy housing programs targeted at low-income households. For example, the Department of Energy’s Weatherization Assistance Plan “weatherizes” 35,000 low-income households annually through heating and cooling renovations, saving participating households an average of 18% on heating and 7% on energy usage. A large portion of the Department of Housing and Urban Development’s Sustainable Housing Initiative is also focused on green, energy efficient resources for low-income households. However, many energy programs, especially smaller local initiatives, face funding and support problems. For example, a 2015 review of the Low-Income Home Energy Assistance Program (LIHEAP), a program which helps households cover heating and cooling bills, predicted that the program would only be able to serve 20% of eligible households due to lack of funding. Fortunately, the Coronavirus Aid, Relief, and Economic Security (CARES) Act recently expanded the program’s budget and potential for impact. Actions like this – refining and funding existing energy programs, as well as developing new dedicated programs – will help ensure low-income households are not missed in the sustainable energy transition. 

Residential sustainability initiatives that cater to low-income households are essential to a greener and more equitable future. Energy efficiency programs that pass over low-income households miss large opportunities for sustainable impact, while residential energy programs that target low-income households can improve the financial and environmental wellbeing of countless adults, children, and families. Residential energy offers a critical reminder that pursuing sustainability and energy equity are parallel pursuits.

Owen Frausto

Undergraduate Student
Owen Frausto is a student of the Vagelos Integrated Program in Energy Research (VIPER) program studying physics and systems engineering.