Communities across the United States may soon be able to invest federal relief funds in energy-saving measures to create local jobs, reduce energy costs, and improve home health. For governments seeking to address the economic hardships and social disparities exacerbated by the pandemic, it could be an important opportunity to invest in people, housing, and the environment. At stake is $350 billion from the American Rescue Plan dedicated for state, local, territorial, and Tribal governments to invest in an equitable recovery.
The Treasury Department, while launching the program last month, specified how these governments may use the funding, including to replace lost revenue and revitalize government services, invest in certain types of infrastructure, support public health, and address economic harms from the pandemic.
The guidelines explicitly name climate resilience and responding to climate impacts as goals and potential uses of these funds. Energy efficiency measures, which can reduce U.S. greenhouse gas emissions by 50% by 2050, certainly fit that bill. Further, they give these governments across the country the opportunity to reduce systemic inequities in their communities.
Smaller municipalities, generally with populations of 50,000 or less, are now coordinating with their state budget offices to receive their initial funding allocation. Larger cities and states request their funding directly from the federal government. Let’s take a deeper look at how Treasury has specified governments use funding—and where this presents opportunities for energy efficiency investments.
Potential uses for American Rescue Plan funds
Address economic challenges and disparities exacerbated by the pandemic
These federal relief funds can be used to “address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector.” Energy efficiency programs can reduce energy costs for families with low incomes and communities of color. Compared to white (non-Hispanic) households, Black households spend 43% more of their income on energy costs, Hispanic households spend 20% more, and Native American households spend 45% more. Households with low incomes (those with incomes below 200% of the federal poverty level) spend three times more of their income on energy costs than households with higher incomes.
These groups are also experiencing the severe economic impacts of the pandemic. Weatherization efforts can reduce utility bills and improve health and safety of occupants by improving air quality, which can provide relief to communities facing economic challenges that have been magnified by COVID-19 through job loss and health challenges. Nearly 30% of households have income eligibility for home weatherization assistance funded by the government, as of 2019, yet only a tiny share of them receive improvements because the program is so underfunded.
Minneapolis shows how cities can structure their relief efforts, including efficiency investments, to help marginalized communities and advance more-equitable outcomes. The city’s Green Zones Initiative, created in 2017, designates two priority areas in Minneapolis identified to be facing high exposure to pollution and to be economically vulnerable. The city dedicates funding for sustainability initiatives in these areas, with community-led task forces deciding how to allocate funding in their zones. The city and task forces track the outcomes of the initiatives, another key point for governments preparing to invest funds.
These new federal relief funds can also be used to invest in workforce development in response to the job and wage loss during the pandemic. Jobs in energy efficiency offer higher wages than the national average, but most employers in the industry have reported difficulty finding trained employees. Workforce development efforts can get people back to work and ensure availability of a skilled workforce. Because clean energy jobs are disproportionately held by white workers and male workers, governments can partner with utilities and community organizations to train more women and people of color for energy efficiency jobs.
For example, the New York State Energy Research & Development Authority (NYSERDA) plans to invest more than $100 million by 2025 to advance energy efficiency and clean energy job training. In partnership with businesses and organizations that support these efforts, NYSERDA focuses on training and job placement services for individuals with disabilities, veterans, environmental justice communities, former power plant workers, and other priority communities.
Support public health
Relief funds distributed to governments around the country can “support public health expenditures by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff.” They can also be used to make improvements in people’s homes to improve health. Because energy efficiency measures can reduce exposure to pollution and mold, control temperature, and otherwise improve the health of places where people live and work, public health expenditures that address energy efficiency can support economic recovery and health simultaneously. Governments can also make health and efficiency improvements in their own facilities.
Federal relief funds can be used to address health disparities, such as the asthma too often experienced by people residing in substandard housing, where mold and other triggers can flourish. Well-targeted energy efficiency initiatives in affordable housing, including better sealing a home to reduce asthma triggers, can help. Successful, income-targeted energy efficiency programming can include health and safety measures. For example, New Hampshire’s NHSaves Home Energy Assistance Program offers funding for equipment that improves health and safety, such as bathroom fans and vents that improve ventilation and decrease exposure to mold, moisture, and pollutants.
What’s next?
Assistance to governments in the American Rescue Plan could drive monumental progress in reducing greenhouse gas emissions, boosting our economy, and reducing the energy bills of people struggling the most, today and for years to come. Energy efficiency efforts, such as those highlighted here, can be a valuable tool for governments across the country navigating the pandemic recovery.
To inform the use of these funds and potential future federal investments, ACEEE will partner with the Emerald Cities Collaborative, National Association of State Energy Officials, and the National League of Cities to showcase equitable, effective efficiency programs that governments across the country can learn from as they prepare to invest federal relief funds. We encourage governments using American Rescue Plan funds for energy efficiency or renewable energy programs to let us know about your work for our research; please contact Amanda Dewey.
