No Building Left Behind: The Clean Power Plan and Multifamily Energy Efficiency

Blog | April 15, 2015 - 2:07 pm
By Lauren Ross, Senior Manager, Local Policy

This post was co-written​ by Todd Nedwick of the National Housing Trust

States will soon begin developing compliance plans to meet the greenhouse gas reduction targets required by EPA’s upcoming Clean Power Plan (CPP). As they contemplate different strategies, states should consider the important role that increasing the energy efficiency of multifamily buildings could play in cutting emissions and supporting local economies. Multifamily housing has been underserved by energy efficiency programs in most states, leaving great potential to reduce carbon emissions while also improving affordability of rental housing.

The CPP proposal calls on states to develop strategies for reducing greenhouse gases from existing power plants. The proposed plan grants states a great deal of flexibility in adopting strategies that best address the emissions of their individual energy portfolios. While states may draw from a variety of approaches, there’s increasing evidence that energy efficiency, as a pathway to compliance, might be the lowest-cost option for reducing carbon pollution. For many states, end-use energy efficiency is nothing new. In fact, many have shown much success in developing their energy efficiency resources, including statewide policy and utility-sponsored efficiency programs.

The CPP proposal gives states an incentive to ramp up energy efficiency, especially in underserved sectors. There remains significant untapped potential to cut emissions, save money, and boost local economies by reducing energy waste in affordable multifamily buildings. A forthcoming study by Efficiency for All will determine that a 26% reduction in electricity usage in affordable multifamily housing is cost-effectively achievable by 2034 in some states. The same study concluded that every dollar invested in multifamily energy efficiency returns more than $3 in benefits in reduced arrearages, customer calls, collection activities, and safety-related emergency calls. This is not to mention the higher comfort levels, increased housing property values, and health-related benefits that come with multifamily energy efficiency.

Equally important, because energy costs are often the highest operating expense in affordable multifamily housing, reduced energy costs help ensure the continued affordability of a much-needed housing stock—an issue facing many states and localities.

States should capitalize on recent developments in multifamily energy efficiency by including programs and policies that target the affordable multifamily housing sector in their compliance plans. In states with an energy savings target for utilities, or a similar commitment, utility-sponsored multifamily efficiency programs are a good starting point. Key elements of well-designed energy efficiency programs can be readily adopted to increase participation and savings in this sector. For example, utilities and governments can work together to provide a “one-stop shop” for building owners to access services and improved processes for building benchmarking. Moving forward, states can look to examples such as Massachusetts, Washington, and Minnesota, where energy savings achieved from multifamily, ratepayer-funded programs count towards state-set annual energy savings targets.

Beyond utility-sponsored efficiency programs, a handful of states support financing for multifamily energy efficiency through their state housing finance agency. Maryland’s Department of Housing and Community Development, for example, offers a multifamily loan program for energy efficiency investments that targets affordable rental properties. Similarly, the Pennsylvania State Housing Finance Agency recently provided financing for capital improvements that resulted in a reduction in carbon dioxide equivalent emissions of over 10,000 metric tons across 91 affordable multifamily properties. In their plans, states should consider claiming affordable housing energy programs like this as a means to compliance.

Many communities recognize the multiple benefits of healthier and more affordable housing for their residents. By including energy efficiency initiatives and programs targeted at affordable housing as part of state compliance plans, states can respond to these concerns while cutting emissions. States should seize the moment and collaborate with utilities, communities, and affordable housing stakeholders to ensure multifamily energy efficiency is a state priority.