The Equity Gap in California’s Housing Decarbonization Programs

Authors:
Carolina Reid, Faculty Research Advisor, Terner Center
Rachel Morello-Frosch, Associate Provost for Energy, Climate, and Environment, UC Berkeley
Yael Nidam, Research Scientist, Equitable Housing Decarbonization Project, UC Berkeley

California has set ambitious targets for decarbonizing its housing stock, with some regions already moving toward gas appliance phaseouts. Meeting these targets will have broad benefits, including lower carbon emissions, cleaner indoor air, improved thermal comfort, and greater resilience to extreme heat. Despite these benefits, however, less than 5 percent of households undergo retrofits each year. Participation is also highly inequitable, with affluent homeowners in single-family homes most likely to undertake decarbonization steps.^[1] High-priority populations, including low- and moderate-income (LMI) households, renters, communities of color, and tribal nations, are systematically underserved by energy programs, despite living in the worst housing and energy infrastructure conditions.^[2]

Over the past three years, our research team at UC Berkeley^[3] has been working with a coalition of community and environmental justice organizations^[4] on a project for the California Air Resources Board (CARB) to understand how to expand equitable access to housing decarbonization. The study combined a statewide analysis drawing on 126 interviews with policymakers, energy providers, implementers, and community organizations; interviews and surveys following households through the retrofit process; and an assessment of how benefit-cost analysis methods could better account for equity.

In this blog post, we highlight some of the report’s findings and recommendations; the full report is available on CARB’s website.

First, we find that LMI households face significant barriers that accumulate across every stage of engagement with a decarbonization program: awareness and motivation to start the process, capacity to navigate complex programs and financial incentives, ability to cover installation costs that incentives do not cover (e.g., removing lead, asbestos, or mold and upgrading electrical panels), and access to knowledgeable contractors.

Among homeowners in our study who had actively sought to electrify their homes—in a region rich with incentives—40 percent were unable to complete their projects. The reasons for the drop-off differed by income. Higher-income households that withdrew did so as a discretionary calculation about return on investment. In contrast, the LMI households that withdrew did so because of structural, technical, and financial barriers. For example, one LMI respondent, a retired individual on a fixed income, abandoned their plans to electrify their home because the rebates did not cover the cost of the ductwork needed before being able to install new space heating equipment.

 “The electrical panel is a cross-cutting issue across a variety of decarbonization programs… Many homes are older and have a lot of deferred maintenance or were not necessarily designed with this future of electrified everything in mind…There hasn’t been dedicated funding for that.”

Fragmentation compounds these barriers; because decarbonization programs are spread across federal, state, and local initiatives with divergent goals, eligibility criteria, and reporting requirements, households struggle to stack the incentives needed to fund retrofits. As one local government respondent put it, applicants sometimes “forego the money” rather than navigate the administrative complexity associated with existing programs.

“Different funding streams have different requirements. So just the administrative burden of trying to take [program name] funds, as well as any federal incentives as well as any local incentives, and just figuring out what the requirements are…it becomes so administratively burdensome that sometimes people just will forego the money.”

Second, most decarbonization programs do not pay enough attention to households’ experiences post-installation. We found that households that didn’t know how to use the equipment didn’t see improvements in their health or energy security, while those who were satisfied with the retrofit and had been taught how to use the new equipment saw significant improvements (Figure 1).

Figure 1: Improvements in Energy Security Post-Retrofit Depended Significantly on User Knowledge of Equipment (Usability Level)Source: Post-retrofit survey data (N=38)
Notes: Building on prior research,[5] we applied a scoring method that captures the physical, economic, and coping dimensions of energy security on a 0–100 scale, surveying households before and after their retrofits. Usability is defined as whether residents could both operate new equipment and were satisfied with the quality of the installation. See full report for additional details on the methodology.

Multiple factors influenced usability. Some respondents received new equipment instructions only in English, thus hindering understanding of how to use new appliances. Others avoided using new systems out of concern about higher electricity bills. Overall, poor installation and limited knowledge of how to operate and optimize the equipment directly affected household behavior and physical comfort, effectively negating the benefits of retrofits.

Drawing on these findings and a series of workshops with our advisory committee, the report presents a series of policy recommendations for state and local agencies, including:

• Improve agency coordination and align funding across programs. Current fragmentation across agencies and funding streams is a key barrier to equitable implementation. The State should form an interagency working group to coordinate eligibility criteria across energy, housing, and health programs so households can stack incentives. In addition, programs need dedicated funding to undertake the health, safety, and electrical upgrades that are a prerequisite for electrification, particularly in older buildings.
• Provide participant support services throughout the process. Program designers should invest in strategies to help participants navigate program complexity. The introduction of ‘energy navigators’ into several pilot programs in California has proven particularly effective. In these pilots, participants are matched with a navigator at enrollment, who explains the program and technologies, scopes the project to household needs, helps complete forms, connects households with contractors, and remains available afterward for questions about use and maintenance of equipment. In priority communities, engaging community-based organizations (CBOs) as fully compensated partners to provide this full suite of supports has shown to increase enrollment and project completion.
• Address the needs of renters. Forty-five percent of California households are renters, yet the barriers to retrofitting multifamily buildings are especially high due to split incentives between landlords and tenants. Policymakers can remove these barriers by redefining utility allowances to support electrification, resolving the single-meter challenge for rooftop solar on multifamily buildings, providing subsidies upfront for capital costs, and offering technical assistance to property owners. Interviews across the state also highlighted the need to ensure that retrofits don’t lead to increased rent burdens or eviction, noting that current tenant protections in decarbonization programs are insufficient and often poorly enforced.
• Invest in the decarbonization workforce. Workforce readiness is a critical factor across all dimensions of engagement, and contractors often serve as guides through program complexity. Yet this sector faces a shortage of skilled labor, especially in rural regions. Small contractors also often lack the capital and/or training to navigate programs. Improving workforce readiness will require actions such as standardizing decarbonization certifications, funding high-road training partnerships, and providing bridge capital for small contractors.
• Make non-energy benefits, like better health or energy security, part of what counts as “cost-effective” in evaluating decarbonization programs. Limiting cost-effectiveness analysis to energy system benefits understates the value of decarbonization programs for priority populations. Monetizing non-energy benefits—health, comfort, and safety—as other states have done can enhance benefit-cost analysis for programs serving these households. In addition, collecting and reporting data on who is participating in residential energy programs can help program designers better understand how public funding is distributed and ensure greater equity in implementation.

One of the key takeaways from our study is that while funding is a critical piece of the puzzle, programs also need to reduce the barriers that priority communities face. The households that live in the least energy-efficient housing face the greatest exposure to extreme temperatures and local air pollution and stand to gain the most when retrofits are done well. Until programs are designed to reach them, the state will fall short of its own decarbonization and equity goals.

Access the full report: Equitable Housing Decarbonization: Implementation Approaches.

Acknowledgments

The authors are grateful to the many individuals and organizations whose contributions made this research possible. We extend our sincere thanks to the members of the Participatory Action Research (PAR) Advisory Committee, whose expertise shaped this work at every stage: Katie Valenzuela, Edgar Barraza, Jessica Tovar, Dohee Kim, Chris Selig, Michelle Vigen Ralston, Katie Wu, Sooji Yang, Fatima Abdul-Khabir, Brendan Wade Brown, Diana Hernández, Emma Tome, and Awoe Mauna-Woanya.

We are also grateful to the interviewees who generously shared their time and experiences, and to all those who participated in the pre- and post-retrofit surveys. We also thank the staff of the California Air Resources Board (CARB)—in particular Melanie Zauscher, Emma Tome, and Awoe Mauna-Woanya—for their support and partnership throughout the project. Finally, we thank the agency staff who participated in progress review sessions and who reviewed drafts of this report; their feedback and engagement strengthened this report immeasurably.

Endnotes

[1] Bird, S., and Hernández, D. (2012). “Policy Options for the Split Incentive: Increasing Energy Efficiency for Low-Income Renters.” Energy Policy, Special Section: Frontiers of Sustainability, vol. 48 (September): 506–14. https://doi.org/10.1016/j.enpol.2012.05.053. Brown, D. P. (2022). “Socioeconomic and Demographic Disparities in Residential Battery Storage Adoption: Evidence from California.” Energy Policy 164 (May): 112877. https://doi.org/10.1016/j.enpol.2022.112877. Frank, M., and Nowak, S. (2016). Who’s Participating and Who’s Not? The Unintended Consequences of Untargeted Programs. Proceedings of the ACEEE 2016 Summer Study on Energy Efficiency in Buildings. Pigman, M., Deason, J., and Murphy, S. (2021). Who Is Participating in Residential Energy Efficiency Programs? Exploring Demographic and Other Household Characteristics of Participants in Utility Customer-Funded Energy Efficiency Programs. November 18. https://escholarship.org/uc/item/12v2603q. Reames, T. G. (2020). “Distributional Disparities in Residential Rooftop Solar Potential and Penetration in Four Cities in the United States.” Energy Research & Social Science 69 (November): 101612. https://doi.org/10.1016/j.erss.2020.101612.

[2] Brockway, A. M., Conde, J., and Callaway, D.. 2021. “Inequitable Access to Distributed Energy Resources Due to Grid Infrastructure Limits in California.” Nature Energy 6 (9): 9. https://doi.org/10.1038/s41560-021-00887-6. Donaghy, T. Q., et al. (2023). “Fossil Fuel Racism in the United States: How Phasing out Coal, Oil, and Gas Can Protect Communities.” Energy Research & Social Science 100 (June): 103104. https://doi.org/10.1016/j.erss.2023.103104. Elmallah, S., Brockway, A. M., and Callaway, D. (2022). “Can Distribution Grid Infrastructure Accommodate Residential Electrification and Electric Vehicle Adoption in Northern California?” Environmental Research: Infrastructure and Sustainability 2 (4): 045005. https://doi.org/10.1088/2634-4505/ac949c. Goldstein, B., Gounaridis, D., and Newell, J. P. (2020). “The Carbon Footprint of Household Energy Use in the United States.” Proceedings of the National Academy of Sciences 117 (32): 19122–30. https://doi.org/10.1073/pnas.1922205117. Memmott, T., et al. (2021). “Sociodemographic Disparities in Energy Insecurity among Low-Income Households before and during the COVID-19 Pandemic.” Nature Energy 6 (2): 2. https://doi.org/10.1038/s41560-020-00763-9. Reames, T. G. (2016). “Targeting Energy Justice: Exploring Spatial, Racial/Ethnic and Socioeconomic Disparities in Urban Residential Heating Energy Efficiency.” Energy Policy 97 (October): 549–58. https://doi.org/10.1016/j.enpol.2016.07.048.

[3] Carolina Reid, Terner Center for Housing Innovation; Rachel Morello-Frosch, Department of Environmental Science, Policy and Management and the School of Public Health; Yael Nidam, Department of City and Regional Planning, Zack Subin and Smitha Buddhavarapu, Terner Center for Housing Innovation; Ruby Zalduondo, Department of City and Regional Planning; Ethan Elkind, Center for Law, Energy & the Environment (CLEE); Ted Lamm, CLEE; Misbath Daouda, School of Public Health.

[4] Participatory Action Research Advisory Committee Members: Katie Valenzuela, Sacramento City Councilmember and Building Energy Equity & Power (BEEP) Coalition Member; Edgar Barraza, Physicians for Social Responsibility Los Angeles and BEEP Coalition Member; Jessica Tovar, Local Clean Energy Alliance and BEEP Coalition Member; Dohee Kim, Local Clean Energy Alliance and BEEP Coalition Member; Chris Selig, People Organizing to Demand Environmental and Economic Rights and BEEP Coalition Member; Michelle Vigen Ralston, Common Spark; Katie Wu, Common Spark; Sooji Yang, Common Spark; Fatima Abdul-Khabir, Association for Energy Affordability, Inc.; Brendan Wade Brown, Green & Healthy Homes Initiative; Diana Hernández, Mailman School of Public Health, Columbia University; Emma Tome, California Air Resources Board; Awoe Mauna-Woanya, California Air Resources Board.

[5] Hernández, D., (2016). “Understanding ‘Energy Insecurity’ and Why It Matters to Health.” Social Science & Medicine 167, 1–10. https://doi.org/10.1016/j.socscimed.2016.08.029; Siegel, E.L., et al. (2024). “Energy Insecurity Indicators Associated with Increased Odds of Respiratory, Mental Health, And Cardiovascular Conditions.” Health Affairs 43, 260–268. https://doi.org/10.1377/hlthaff.2023.01052