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What are the most promising opportunities to promote greater residential energy efficiency? Is there a role for the federal government?

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By Todd Nedwick

There is growing awareness about the role of energy efficiency investments in fighting poverty. Reducing energy consumption in low-income housing not only lowers utility bills, but helps extend the life of the property by freeing up capital that can be used to address maintenance repair needs or make necessary improvements. Energy efficiency investments also create healthier living environments, which can lower the incidence of asthma, and other ailments that keep children home from school or adults from their jobs.

In a time of constrained resources, the challenge is finding new financing sources to scale up efficiency investments in affordable housing. One promising source of resources that has been largely untapped by the affordable housing sector is our nation’s utilities. Utility-sector energy efficiency programs have experienced rapid, large growth since 2000. Funding for such programs, both electric and natural gas, was roughly $7 billion in 2011, which represents nearly a seven-fold increase since 2000. This funding could reach more than $15 billion annually, in less than ten years.

Multifamily buildings represent about a quarter of the housing units in the U.S. and comprise 20% of energy consumed by all housing units, yet have been greatly overlooked when it comes to implementing energy efficiency programs. The American Council for an Energy Efficient Economy (ACEEE) recently completed an analysis of utility energy efficiency spending in the 50 metropolitan areas with the largest multifamily housing stock. ACEEE concluded that in all but three metro areas the share of residential spending on multifamily targeted programs was less than the multifamily share of households.1

Since December 2010, the National Housing Trust (NHT) has been engaging with utilities and other stakeholders in targeted states to advance multifamily energy efficiency programs. Our experience clearly shows that obstacles preventing utility-sponsored investments in multifamily affordable housing can be overcome through collaboration between the housing and utility sectors. In the states where we have focused our efforts, utilities have committed nearly $40 million in funding for energy efficiency improvements to multifamily affordable housing.

NHT is also participating in HUD’s Better Building Challenge, with the goal to reduce energy consumption by 20% in HUD Multifamily properties over the next ten years. HUD has recognized that energy efficiency improvements not only extend the life of a property, but also decrease utility costs for the owner, tenants and agency. HUD has made a number of policy incentives available to owners participating in the pilot program to eliminate barriers that had previously prevented owners from greening their properties.

We are faced with an important opportunity to achieve significant energy savings, and in turn help to sustain much needed affordable housing for our nation’s low-income families. Utility spending on energy efficiency programs is expected to increase substantially over the next decade. By effectively targeting these resources to multifamily affordable rental housing and HUD simultaneously reducing barriers to owners, we can help achieve energy savings goals, increase housing affordability, spur economic growth and put a dent in carbon emissions.

Johnson, Kate and Erik Mackres, Scaling up Multifamily Energy Efficiency Programs: A Metropolitan Area Assessment (Washington, DC: American Council for an Energy Efficient Economy, 2013)

Todd Nedwick is assistant director of public policy for the National Housing Trust

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