USA TODAY International Edition

A revolution, one HVAC at a time

Landmark climate change bill would offer Americans billions of dollars in incentives to retrofit their homes

- Kyle Bagenstose

When key Senate Democrats agreed to a landmark $ 485 billion climate and health care bill last week, they gave it a name to match kitchen table conversati­ons taking place across the country: The Inflation Reduction Act of 2022.

But for Ari Matusiak, CEO of Rewiring America, a Washington, D. C.- based nonprofit promoting home electrification and efficiency, the bill is really about everything else inside U. S. homes: the gasburning stoves, old water heaters, outdated wiring, even the drafts pushing through windows.

If the law is passed, Matusiak calculates, tens of billions of dollars, perhaps $ 100 billion, will go toward an unpreceden­ted effort to make millions of homes more energy- efficient.

For most individual homeowners, that could take the form of thousands of dollars in annual incentives to purchase the most energy- efficient appliances and technologi­es. Payouts could range from $ 14,000 for a whole- house retrofit to thousands of dollars for high- efficiency water heaters and HVAC units to hundreds for windows, doors, and insulation.

Many of the funds would renew annually over the next decade, meaning homeowners could stack numerous projects year- over- year, ultimately receiving thousands upon thousands of dollars to transform their homes.

The end game? A revolution of what

powers daily domestic life in the U. S.

“What you are witnessing is the ground floor of a market transforma­tion,” Matusiak said. “It will have a significant influence over shifting the U. S. from being a fossil- fuel- based operating system to being a clean- energy, electrification operating system.”

Experts say such electrification is necessary to slow the march of climate change. The Internatio­nal Renewable Energy Agency calculates that converting fossil- fuel- based vehicles, appliances and infrastruc­ture to electricit­y accounts for about 20% of the needed greenhouse gas emission reductions to stave off the most dangerous scenarios for the planet. Increasing efficiency across these and other sectors accounts for another 25%.

Electric appliances are much more energy- efficient than those powered by natural gas or oil, said Kevin Kircher, an electrification researcher at Purdue University. Even if a home’s electricit­y comes entirely from a natural gas power plant, electric devices still use 1 to 3 times less energy than if the gas had been burned inside the home.

“It’s better to burn natural gas at the power plant and then use the electric to run ( appliances),” Kircher said.

The math gets even better as the power sector ramps up its use of renewable energy sources and homes weatherize and decrease overall energy demand, both objectives also supported by the Inflation Reduction Act. Ultimately, the bill could reduce U. S. greenhouse gas emissions by up to 41%, the nonprofit Energy Innovation­s calculates, putting the country within striking distance of its goal to cut total emissions in half.

Advocates say electrifyi­ng homes also comes with a host of additional benefits: cheaper energy bills, more comfortabl­e living spaces and fewer harmful byproducts of gas burning.

But obstacles to home electrification remain.

Advocates are anxiously awaiting word from U. S. Sen. Kyrsten Sinema, an Arizona Democrat whose vote may be essential to passing the bill and has previously objected to some provisions. And even if the bill becomes law, immense logistical challenges loom.

The bill’s billions of dollars in investment­s alone are not enough to guarantee a transition, said Panama Bartholomy, executive director of the Building Decarboniz­ation Coalition, which works to electrify businesses and homes. Many of those dollars would flutter down through the federal bureaucrac­y and into smaller agencies set up in each of the 50 states. Regulators will have to write new rules. Cities and counties may need to rewrite building codes. Potential snags await at each level.

And electric stoves don’t install themselves. Bartholomy worries that the nation’s cadre of home contractor­s may be too small and too unfamiliar with newer technologi­es to hit the ground running. He sees a need to send more students to vocational schools to learn the tech and replace an aging workforce.

“It’s not just about the money,” Bartholomy said. “We need to match it with a whole bunch of market changes. ... The big question now is, do millennial­s and zoomers ( Generation Z) want to work in attics and crawl spaces?”

What could be

Despite the challenges, the energy for the bill is palpable among advocates.

“It includes the largest investment­s in history for energy- efficiency,” said Lowell Ungar, federal policy director for the American Council for an EnergyEfficient Economy in Washington, D. C. “The bill is designed to make it easy to be green.”

Most advocates see nearly $ 10 billion going toward home appliances and retrofits, either in the form of rebates or tax incentives. In either case, the effect is similar: A homeowner invests in a new appliance or home weatheriza­tion solution and receives hundreds or thousands of dollars back.

The rebate program also sets aside robust funding for low- income households, defined as those earning less than 80% of the area’s median income. Such homes could be eligible for up to $ 14,000 in rebates, Matusiak said, including up to $ 8,000 for heat pump installati­ons and thousands for appliances, insulation and wiring upgrades.

Matusiak’s group calculated the rebate program could be enough to electrify 1 million low- and moderate- income homes. But the tax incentives, for which funding has not been fully calculated, could impact millions more. And other efforts, such as a U. S. Department of Energy Loan program, could spur tens of billions of dollars of investment­s toward clean- energy technologi­es.

The final investment could break $ 100 billion, Matusiak calculated.

“I would describe it as market- tilting in its impacts,” Matusiak said.

Contractor­s would be key players

Experts are split on how quickly the bill’s effects would be evident.

As written, the tax credits can be backdated to 2022, Bartholomy pointed out. That means homeowners who make investment­s or purchase appliances this year eventually could be able to recoup some of their costs.

“The joke has been, as soon as the president signs the bill, have your contractor ready to go,” Bartholomy said. “There will be a swamping of the market once people find out.”

While Bartholomy has concerns about the availabili­ty of labor, others hold rosier outlooks.

Lauren Salz, CEO of Sealed, a New York City- based home renovation company, said many contractor­s are gravitatin­g toward clean technologi­es. The company’s business model is to make home weatheriza­tion and electrification convenient by inspecting homes, choosing solutions and then hiring contractor­s on behalf of the client. Salz noted the bill includes more than $ 200 million to help train the contractin­g workforce, which she said is already sufficient in the company’s Northeast market.

“We’re not experienci­ng the ‘ great resignatio­n,’ and hopefully that won’t be the case,” Salz said, referring to workforce shortages from higher- than- usual retirement­s or job changes. “I do think this is a space people want to work in.”

Others note that services like Sealed, along with informed contractor­s, will likely be crucial to residentia­l electrification. Navigating the choices of which appliances and solutions to install, obtaining the right rebates and tax writeoffs, and finding knowledgea­ble contractor­s can be an overwhelmi­ng task. Many homeowners don’t think about new water heaters or HVAC units until the units break, and then they rely on whatever models a contractor has on hand.

Bartholomy said that in addition to carrying the right inventory, contractor­s can make a big difference by discountin­g homeowners for the federal incentives upfront, then handling the paperwork for reimbursem­ent themselves.

“No amount of a homeowner’s life can be spent figuring out how to get a furnace rebate,” Bartholomy said. “Contractor­s hold all this in their hands.”

Contractor­s face other challenges too, said Rob Warren, owner of Impact Solar, a home solar installati­on company in New Jersey. His company offers financial options for customers’ convenienc­e, and he said extending federal tax credits on solar panels until 2032 would be great.

But such incentives aren’t the most important factor, Warren added. Federal credits get poured into a mix of state, utility, and municipal incentives and policies, each with the power to influence contractor­s and consumers. Warren said state incentives and local zoning codes also influence where he markets and prefers to work.

“Every state has its own incentives, and inside every state, there are multiple utilities,” Warren said. “Without ( all the pieces), you could still probably sell, but it does become harder.”

The fragmented nature of the landscape also opens the door for special interests, Bartholomy said. His group will be keeping an eye on whether gas companies and allies within state government­s push policies that try to counteract electrification and keep their pipes – and money – flowing. Such dynamics could determine the ultimate success of how far the bill goes in electrifyi­ng American homes.

“Whether we meet the moment with policy and market changes at the state level will determine whether or not this amount of money is transforma­tional,” Bartholomy said. “Or just a down payment.”

 ?? DAVID RYDER/ GETTY IMAGES ?? Kirstie Allemand, of Ellensburg, Wash., seals the area around her air conditioni­ng unit with cardboard during a heat wave last month. Democrats’ proposed climate bill aims to make millions of homes more energy- efficient.
DAVID RYDER/ GETTY IMAGES Kirstie Allemand, of Ellensburg, Wash., seals the area around her air conditioni­ng unit with cardboard during a heat wave last month. Democrats’ proposed climate bill aims to make millions of homes more energy- efficient.
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