The federal government is making $8.8 billion available in home electrification and energy efficiency rebates.

Home energy rebates make important electricity upgrades affordable.

The federal government is offering an unprecedented level of assistance to homeowners for making cost-saving, zero-carbon, safer upgrades to their home energy systems and appliances. Cost savings will be particularly concentrated among low- and moderate-income households (< 150% the area’s median household income). The rebates will be distributed through the states, which means state governments must submit competitive applications for their share of the rebate funding by the deadline. As constituents, we can nudge them toward submitting a timely application, connect them to important resources, and demonstrate to them that we’re engaged on this issue. We can also help spread the word to contractors, who need to be up to speed on which zero-emissions upgrades are eligible for rebates.

Quick Frames

We (and the decision-makers we want to persuade) are each approaching the climate crisis through different lenses. Facts are facts, but it can be helpful to frame them differently to match those individual lenses. Here are some common frames that speak to different perspectives:

  • 💡RAPID DECARBONIZATION: Residential buildings account for more than 10% of annual U.S. greenhouse gas emissions.

  • ♥️ HUMAN HEALTH: Residential appliances that burn fossil fuels, such as gas stoves, create harmful indoor air pollution and are significant contributors to childhood asthma. Meanwhile, outdoor air pollution from residential buildings accounts for over 15,000 premature deaths every year.

  • ✊ EQUITY AND JUSTICE: Low- and moderate-income (LMI) households bear 3x the energy burden as higher income households, while communities of color are disproportionately impacted by poor indoor air quality.

  • 💰 COST SAVINGS: Electrifying residential buildings nationwide would save an average of almost $500 in energy costs per year, per household.

  • 💼 JOB CREATION: Nationwide home electrification could catalyze the creation of over a million jobs in installation, manufacturing, and further down the supply chain.

The Inflation Reduction Act’s home energy rebate programs

The Inflation Reduction Act (IRA), a landmark climate law, is a spending bill at its core. It allocates billions of federal dollars toward important programs, but the money is only as good as the implementation of the law’s programs. Already, consumers can save thousands in tax credits for residential electrification upgrades.

Next, two home energy rebate programs will be made available once states receive their grants from the Department of Energy. In their applications, states are required to include a “market transformation plan” that demonstrates the state’s ability to catalyze long-term demand for these types of upgrades. Applications will be approved on a rolling basis, which means consumers could start receiving rebates during this calendar year.

Rebates are cash reimbursements for eligible purchases, used to incentivize those purchases. The IRA’s home electrification rebates will be issued by the Department of Energy to low- and moderate-income households, covering 100% and 50% of costs for those respective categories. These rebates will be applied directly at the point of sale (including for installation), so eligible households will never have to front the cost of electrification upgrades. There’s also a $500-per-project rebate for contractors who take on electrification installation work. (If this amps you up, read more about the rebates from Rewiring America).

What kinds of upgrades qualify?

The kinds of home upgrades eligible for rebates are designed to reduce your home’s direct emissions as well as your home’s overall energy usage. Qualifying projects eliminate the sources of emissions, like replacing gas-powered clothes dryers with electric ones, and/or reduce the amount of energy used, such as making your home a more efficient consumer of electricity. Energy efficiency saves you money, but it’s also important for emissions reduction. Even when all of your home’s appliances are electric, fossil-burning power plants still supply 60% of grid electricity in the U.S.

The rebates are split into two distinct programs. The Home Electrification and Appliance Rebates Program covers electric appliances (heat pumps, heat pump water heaters, electric clothes dryers, electric coil or induction stoves) and associated ventilation, insulation, and electrical upgrades. This program is only available to low- and moderate-income households and can yield $14,000 in savings from the rebates alone, but potential savings are even higher when stacked with other federal rebate programs.

The Home Efficiency Rebates Program is eligible to households at any income level and covers efficiency upgrades that reduce a household’s overall energy consumption. That might mean adjusting a home’s power generation and storage (rooftop solar, geothermal heat, home battery storage) or making significant upgrades to electrical panels, wiring, weatherization, and insulation. Claiming this rebate requires energy audits (which are themselves eligible for a rebate) to demonstrate that the upgrades resulted in a reduction in overall energy consumption of 15%, 20%, or 35%, depending on the type of measurement being used.

Using less energy saves money. But why is electrification so important?

Converting residential buildings to all-electric dwellings means eliminating direct fossil fuel use in the home (such as gas stoves or water heaters). Combined direct emissions from residential and commercial buildings account for ~13% of emissions nationwide (you can check your state’s residential building emissions here). Fossil gas represents up to 87% of direct building emissions (or ~11% of total nationwide emissions), so replacing gas-powered appliances at their end of life is particularly effective at bringing down those numbers over time. And eliminating residential building emissions delivers huge benefits when coupled with the decarbonization of our electric grid, as shown in the graph to the right.

Source: Rewiring America

Quick Facts: Home electrification

  • The U.S. residential and commercial building stock accounts for almost a third of emissions, including 10-15% from direct fossil fuel use in heating and cooking. (The other 20% comes from electricity use, which would be eliminated by decarbonizing the power sector). Research from RMI indicates that heat pump technology has matured to the point of being more efficient than gas heat in almost every state, even in cold weather. Current heat pumps range from 2.2 to 4.5x more efficient than Energy Star gas furnaces.

  • Because furnaces and water heaters have extremely long lifespans, every new gas heating unit sold is a 15-year missed opportunity for electric heat. Currently, over 60% of U.S. homes are still heated by fossil fuels.

    The urgency of the climate crisis means we should have started replacing carbon-intensive appliances—and cutting CO2 emissions across the economy—25 years ago. Now that we’ve waited so long, our work needs to happen much more quickly, and that’s what the IRA was designed to do. And even though a fully implemented IRA will make a huge dent in our emissions, completely decarbonizing our building stock will take much more time and resources than what the IRA can offer. Our work is cut out for us.

  • Research by Rewiring America found that nationwide home electrification would save a collective $37.3 billion per year in energy costs, distributed across 88% of U.S. households, including substantial savings for low- and middle-income households. That’s an average of about $500 per year, per household.

  • According to Rewiring America, residential electrification would create over 460,000 installation jobs, 80,000 manufacturing jobs, and 800,000 indirect and induced jobs nationwide.

  • Building electrification can deliver substantial benefits to both indoor and outdoor air quality. According to Rewiring America, electrifying indoor appliances would address the 42% increased risk of childhood asthma caused by gas stoves alone.

    Meanwhile, it would reduce premature deaths from the outdoor air pollution caused by building emissions, which currently total over 15,000 per year in the U.S.