Equity in Action: The Inflation Reduction Act and the Future of Energy Efficiency
The Inflation Reduction Act (IRA) rebate programs present an opportunity to help homeowners implement energy-efficient upgrades and subsequently boost the value of these homes. This potential premium can transform the market by showing homeowners that efficiency upgrades, like air-sealing and insulation, hold comparable value to traditional upgrades like kitchen remodels.
While higher home values and market transformation are good things, assessing the potential for unintended consequences, like gentrification and displacement in low-income and disinvested communities, is essential. States and program implementers should consider a few questions as they plan for IRA:
To address these questions, Elevate, in partnership with Pearl Certification, recently interviewed professionals of diverse backgrounds who provided insights based on their knowledge of environmental justice, housing justice, community development, and real estate. Interviewees were selected based on their professional and personal experience with energy efficiency, real estate, and gentrification. Semi-structured interviews were conducted to get their perspective on the social and economic impacts, both positive and negative, of potential benefits provided by the IRA and selling high-performance homes in low-income and disinvested communities. Additionally, we discussed potential gentrification and displacement consequences in communities of color that could result from increased home value from energy upgrades.
The interviewees were passionate about the topics we discussed and thoughtful with their responses. Our full paper will be released towards the end of the summer of 2024, but our findings are summarized here.
This is part three in our three part series.
Key Finding 3: Efforts to avoid gentrification should not limit or delay needed investments in disinvested communities.
While gentrification was undoubtedly a concern for interviewees, they spoke of more significant systemic issues — transportation, healthcare facilities, schools, and utilities — that need to be addressed in disinvested communities that are more pressing than gentrification. Moreover, they agreed that massive investment from outside sources is more likely to lead to gentrification than individual homeowners upgrading their homes.
As one community activist noted:
Gentrification happens because of developers who take up real estate, not from energy efficiency upgrades. Gentrification doesn’t occur from individual investment in homes, it comes?from collective investment and city investment. This is especially true for Black and Brown?neighborhoods because the disinvestment is so deep. Individual homeowners making energy?improvements are not going to spur developers—it’s literally just doing good for the homeowner so they can possibly get a bit more than they spent.
领英推荐
Recommendation for States
State Energy Officers should actively support and expedite energy efficiency upgrades and home certification programs in disinvested communities, recognizing that these improvements primarily benefit individual homeowners and are unlikely to trigger gentrification. The focus should be on addressing broader systemic issues such as transportation, healthcare, schools, and utilities while implementing anti-displacement measures. By doing so, the state can ensure that energy upgrades enhance homeowner benefits without contributing to large-scale gentrification, fostering community stability and growth.
Key Finding 4: Displacement can be avoided through active community engagement and investment.
The importance of a shared vision and open dialogue with a community, rather than assumptions or impositions, cannot be overstated. In our discussions, interviewees from disinvested neighborhoods called for increased investment, particularly in the community’s residents through training and education.
As one community advocate pointed out:
One particularly valuable engagement channel is the real estate community. Real estate professionals among our interviewees highlighted their local insights and connections. Agents are deeply involved in the neighborhoods, towns, and cities where they live and work. They are invested in their communities, often have excellent relational skills, and have pre-existing communication networks to reach others.
Recommendation for States
State Energy Officers should engage communities in dialogue and invest in resident training for affordable housing development and energy retrofits. Partnering with local real estate professionals can amplify these efforts. Initiate outreach to agents through workshops, emphasizing energy efficiency benefits and their role in promoting community projects. Encourage agents to champion initiatives within their networks, enhancing community involvement and support.
The IRA rebate programs promise to revolutionize the housing market by increasing home value in low-income communities through energy-efficient upgrades. Our interviews show consensus on the potential benefits of energy efficiency incentive programs, rather than concerns about gentrification and displacement — which most agreed were driven by systemic issues unrelated to investments in individual homes. Still, there are proactive measures states can take, including local outreach and property tax exemptions, that can ensure the wealth created by energy efficiency programs stays in the communities where the upgrades are being made.
The full findings from Elevate and Pearl Certification will be published in the summer of 2024. For comprehensive overviews and detailed insights into leveraging state energy rebate programs to increase home values and foster equity, visit Pearl’s Market Transformation Resource Center, or reach out to a member of Pearl’s Public-Private Partnerships team.