Research and Development
Federal investment in research and development (R&D) supports economic growth, drives down costs for key technologies that can be used domestically and exported abroad, and promotes U.S. leadership on clean energy and climate. Investment in R&D for building electrification technologies is driven primarily by the U.S. Department of Energy (DOE), particularly the Building Technologies Office within the Office of Energy Efficiency and Renewable Energy (EERE). Further R&D for building electrification comes from DOE’s National Labs and Advanced Research Projects Agency (ARPA-E).
Federal policymakers should increase investment and enact programmatic reforms to ensure DOE focuses on advancing R&D for:
- Integrated solutions with dual-purpose heat pumps (HVAC and water heating) and extreme cold climate heat pumps;
- Induction stoves, electrification solutions for historic applications (e.g. radiators); and
- Strategies to repurpose gas distribution infrastructure (e.g. hydrogen, internet cables).
Validation and Early Deployment
To overcome consumer hesitance, federal agencies like the Environmental Protection Agency (EPA), the Department of Housing and Urban Development (HUD), and the Consumer Product Safety Commission (CPSC) can raise awareness of the environmental risks of fossil fuel combustion in buildings and encourage consumers to replace combustion appliances with electric alternatives.
Absent targeted policies to promote early-stage deployment, manufacturers are often not sufficiently incentivized to develop new technologies and consumers tend to shy away from electrification technologies. Tax credits, loan guarantees, and other fiscal incentives targeted at the next generation of electric equipment can reduce the green premium and drive private sector demand. Well-designed tax incentives must be technology neutral, predictable, flexible, and accessible to all.
Rapid, Large Scale Deployment
Carbon pricing, whether through a carbon tax or a cap-and-trade system, creates a financial incentive to take advantage of any opportunity to reduce emissions that costs less than the carbon price. A carbon price will encourage electrification in places where the underlying generation mix is cleaner than fossil sources for heating and cooling. Since a carbon price will also lead to deployment of cleaner electricity, it will help bring about large-scale electrification of the buildings sector. Carbon pricing policies must include design elements that ensure that communities of color and historically disadvantaged communities see direct benefits from these programs. Policies that require on-site GHG reductions, reductions in air pollution, and distribute carbon pricing revenue to targeted low-income and minority communities will promote electrification while offering additional benefits to these communities.
Building Codes and Standards
Federal policymakers have a critical role to play in support of state-level building electrification policies. For instance, they can develop “model” standards and approaches to facilitate faster and broader adoption of smart policy. DOE should also provide resources to encourage the adoption of key state policies, including existing building emissions standards and new building codes.
Access to Finance
Capital constraints, in the form of limited access to capital or financing and/or unwillingness to pay high upfront project costs, keep many building owners from implementing energy upgrades. The federal government can unlock access to more capital for efficiency and electrification upgrades through loans, loan guarantees, and other fiscal incentives. These financing options spread project costs over time. They can also overcome split incentives between building owners and tenants. (For example, owners can be discouraged from investing in upgrades when savings would accrue to their tenants, not them.)
Given their number and size, federally owned and assisted buildings can lead by example to accelerate the decarbonization of the buildings sector. For example, the General Services Administration (GSA), the largest commercial landlord in the US, controls some 377 million square feet of real estate. The Department of Housing and Urban Development (HUD) spends over $5 billion on energy for housing programs each year. Though there is a wide variety of federal avenues where electrification interventions could be implemented, funding for building retrofits and new construction should focus specifically on the GSA and three key affordable housing programs: the Low-Income Housing Tax Credit, Community Development Block Grants, and HUD rental programs.