Advancing Equity through the Inflation Reduction Act: Lessons Learned from EEFA

EEFA Background and Goals:

In 2014, National Housing Trust joined the Natural Resources Defense Council, Elevate, and the Energy Foundation to launch EEFA, with funding and direction from the JPB Foundation. EEFA began with a clear and specific goal: increase funding and well-designed energy efficiency programs so that affordable multifamily housing residents get their “fair share” of the nearly $6 billion in funding spent annually by utilities on energy efficiency. EEFA facilitated state-level coalitions of diverse partners to engage utilities and their regulators in designing programs and equitably allocating funding for affordable multifamily housing. 

Ten years later, EEFA has had a major impact on the affordable multifamily sector. EEFA seeded and strengthened 12 diverse state coalitions of equity, health, housing, environmental, and anti-poverty interests by investing in capacity-building, fostering sharing across coalitions, and supporting them with national expertise to augment local and state-level efforts. These coalitions increased available energy efficiency funding for affordable housing and under-resourced communities by more than $1 billion and made progress toward achieving a fair share of funding for multifamily housing  in the majority of EEFA’s 12 states. 

Overcoming Challenges

EEFA partners had to address several challenges to successfully implement the initiative: 

• Affordable multifamily housing can be “hard to reach” due to its complex funding and regulatory requirements that are often poorly understood by energy efficiency program providers.  As a result, energy efficiency funding primarily benefitted low-income single-family households.   
• Efforts to build frontline community-driven coalitions unfolded in different ways across all 12 states due to a range of local and political contexts, organizational capacities, and engagement with national partners. Over time, coalition structures limited the agency and self-direction of some local coalition partners, necessitating a reimagining of roles and responsibilities. 
• Under-represented frontline community groups and affordable housing organizations had limited capacity and funding to engage decision-makers. 

In addition – and related to these challenges – advancing racial equity was not a forethought in EEFA’s original program design, warranting a reimagining process in recent years to center racial equity in the initiative’s structure and goals. Over time, the relationship between national organizations and frontline coalitions had exposed fault lines in how power and resources were allocated within the EEFA initiative and the broader energy and environmental movement. Moreover, the national reckoning around race that followed George Floyd’s murder in 2020 brought to the surface long-simmering dynamics within state coalitions that needed to be acknowledged and corrected. In 2021, the JPB Foundation initiated a reimagining process to center frontline community groups in both determining and advancing coalition priorities.  In so doing, it affirmed that the success of EEFA would not only be shaped by the results it achieved, but equally by the process it used to get there, and the relationships that made the work possible.

Ten years since its founding, EEFA coalitions -- consisting of more than 60 state and local organizations with diverse expertise -- continue to collaborate with an adjusted focus on racial equity to advance energy justice for under-resourced communities, including a shift in how under-resourced communities are involved in setting priorities and developing solutions. The network secured at least 60 new or improved utility programs representing over $1 billion in additional funding on behalf of underserved households for energy efficiency upgrades. More than 214,000 housing units have been retrofitted through utility incentive programs in EEFA territories. This number will continue to grow as programs and funding are implemented. As the coalitions evolved and centered the priorities of under-resourced communities, the focus of the work evolved and expanded beyond energy efficiency to include reducing energy burdens and advancing equitable decarbonization.

 1.  Decisionmakers formulating plans for IRA and other programs need to hear from frontline community groups and experts and technical experts when making decisions. Supporting frontline communities in ways that build their agency and self-determination while strengthening their ability to engage in the policy decision-making process is central to driving both equitable outcomes and procedural equity. This can be achieved through shared priority-setting, identification of appropriate intermediary partners and collaborators, and applying a racial equity lens to the capacity-building process. Equitable engagement is also advanced by meeting frontline community groups where they are. For example, several EEFA coalitions created ongoing forums for state agency representatives to regularly meet with community-based organizations.

Many energy agencies at every level of government lack expertise in multifamily affordable housing, resulting in program design that is often tailored to single-family housing. Programs intended to benefit disadvantaged BIPOC communities should engage directly impacted residents to understand their priorities, concerns, and lived experiences. This starts with developing robust community engagement plans, as required by some IRA programs.

In several EEFA states, environmental justice EEFA members conducted training targeted to community-based organizations to help them engage in the public utility commission (PUC) decision-making processes. Utilities in Michigan and Missouri set up stakeholder-based processes and information sharing by providing pathways to engage impacted communities in advance of PUC filings.

Similarly, equity and environmental justice training opportunities should be offered to utility, PUC, and government agency staff to help them understand key concepts such as implicit bias and how it impacts energy policy. EFFA members have provided this type of training to agency and utility staff in Missouri.  Such staff should be encouraged to visit affordable housing properties, attend community-led meetings, and establish ongoing mechanisms to build relationships and trust with affected groups.  EEFA coalitions across the Midwest worked in partnership with PUC staff to create formal working groups that meet regularly to discuss the needs of under-represented communities.

 2. Providing an array of funding sources is needed – but incentives alone are not enough.  
Technical assistance is critical to assist, as are an array of funding sources, including market-based sources*. IRA programs like the Greenhouse Gas Reduction Fund and Home Energy Rebates will provide critical capital and funding to support clean energy and zero-emission technologies in disadvantaged communities. However, the EEFA initiative demonstrates that incentives alone are not sufficient to drive market change and widespread adoption of energy efficiency retrofits or decarbonization and resilience upgrades. 

It is critical to identify technical assistance mechanisms and administrative solutions that can facilitate access to funds for owners.  Affordable multifamily housing providers have limited technical and staff capacity for energy efficiency upgrades. For IRA programs, states are encouraged to ensure technical assistance is available to help affordable housing owners navigate unique funding and energy upgrade challenges, including through options like one-stop shops and dedicated staff. For example, EEFA funds were used in Minnesota to create an energy-focused fellowship position at the state housing finance agency that was key to better integrating EEFA priorities into the agency’s efforts. 

 3. Programmatic fixes are often needed to change the market, and to change how parties interact.
Other barriers exist – and must be resolved – to increase participation of affordable multifamily housing providers and residents in low-income energy-efficiency programs: 

• Greater workforce training opportunities are needed to address the shortage of workers who understand multifamily building retrofits, energy audits, and installations. These opportunities should prioritize job training for residents in under-resourced communities. 
• Requirements that affordable multifamily owners contribute a cost share to the retrofit should be eliminated or reduced (a significant barrier to adoption in the Weatherization Assistance Program). Instead, program administrators should consider pairing subsidies for retrofits with longer or deeper affordability covenants to maximize community and resident benefits.
• Program administrators should engage owners and residents of naturally occurring affordable (unsubsidized) housing, who may be skeptical of the benefits of participating in energy efficiency funding programs. Programs should be designed to minimize the burden on building owners to collect and verify household income and for individual tenants to have to provide this information.

The IRA provides a unique opportunity for states to develop such fixes. For example, the Department of Energy’s Home Energy Rebate program allocates valuable administrative funds to develop funding mechanisms that align and braid with existing state and utility incentive programs. 

4. Data measurement is critical to meeting energy equity goals. 
IRA programs should be designed to measure impacts across household income, race, and ethnicity to evaluate equity in program implementation. For example, Maryland has established benchmarks to ensure that low-income households are achieving an equitable level of energy savings through the utility-funded energy efficiency programs. The IRA Home Energy Rebate programs require states to spend a minimum of 40% of funding on low-income households and an additional 10% on multifamily low-income households. Best practice policy includes establishing energy and cost savings goals for communities of color (per census track data) and measuring what savings are achieved.  A national utility scorecard is needed to evaluate how utility programs benefit low-income communities. No such scorecard currently exists. 

In particular, data measurement should prioritize energy equity and energy burden as metrics of focus. EEFA’s research on energy burdens influenced state energy plans, such as the plan in North Carolina, to prioritize the goal of lowering the cost of energy for lower-income households. Most notable are the sweeping requirements adopted by Pennsylvania that lowered the acceptable household income cost burden attributable to energy from 15-17 percent to 6-10 percent for low-income households.

Ultimately, more pressure needs to be brought to bear on utilities by federal agencies, state energy offices, and public utility commissions to compel utilities to provide data in pursuit of broader public goals to reduce energy consumption and utility burden and assure the effectiveness of programs to achieve those goals.

Conclusion: 

Despite EEFA’s successes, much work remains to be done to engage decisionmakers in advancing energy efficiency in affordable multifamily housing.

The IRA represents an unparalleled opportunity to deliver on the goals of Justice40, which aims to direct 40 percent of federal investments in climate change to benefit low-income, disadvantaged, and BIPOC communities.  The lessons learned from EEFA make clear that those benefits will be hindered without an intentional focus on advancing both equity outcomes and procedural equity through the implementation of IRA programs. These once-in-a-generation funding programs offer the potential to significantly bolster the power and agency of residents and frontline communities while delivering energy efficiency and climate resilience benefits for affordable multifamily housing owners and residents. EEFA coalitions are engaging in IRA discussions and applying the lessons learned discussed here to ensure that affordable housing residents are not left behind as they have been in the past. 

*Proceeds generated by the Regional Greenhouse Gas Initiative. Virginia, for example, dedicates 50 percent of its RGGI proceeds to fund energy-efficiency in new and existing low-income housing, providing nearly $114 million in revenue in the first year.  Learn more at VA EEC.