Can cities make landlords care about energy efficiency?

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By Tik Root, Grist

With the federal government retreating from climate action, cities and states have increasingly stepped in to ease emissions and address the crisis. But new research finds that those efforts often fail to reach renters — one of the largest and most vulnerable segments of the housing market — leaving a persistent gap in local climate policy. 

Roughly one-third of U.S. households rent, according to a Redfin analysis of Census Bureau data — about 46 million in all, and they tend to be lower income. Yet many rebates, incentives, and other programs aimed at improving energy efficiency or getting a home off of fossil fuels are targeted at landlords, even though it’s tenants who usually pay the utility bills. 

Those programs often focus on upgrades like installing heat pumps or higher-efficiency appliances, or improving insulation. But because property owners typically don’t cover day-to-day energy costs, they have little motivation to make those investments, even when they would lower emissions and reduce tenants’ bills. Economists call this dilemma a “split-incentive,” and Dovev Levine, who runs the New England Municipal Sustainability Network — a group of about 40 collaborating municipalities — says this quandary is not uncommon.

“The issue of split incentives comes up every single meeting,” he said.

Researchers at Binghamton University in New York wanted to better understand how state and local governments are addressing this. They interviewed dozens of officials from around the country and published their findings earlier this month in the journal Energy Research & Social Science. Only about half of the 59 officials they interviewed said their agencies offered initiatives aimed at improving energy efficiency in rental units. 

“A lot of meaningful upgrades remain undone,” said Kristina Marty, a professor at Binghamton and a co-author of the study. “We’re kind of writing off this kind of very big sector of the residential market.” 

That does not shock Levine. What he’s found more surprising is that combating the problem remains “a pretty novel effort.” Renters aren’t always a priority for city planners and managers, but Stefen Samarripas, who works on local policy issues at the nonprofit American Council for an Energy-Efficient Economy, says that has started to change over the last decade or so. 

“I have seen that more local governments are starting to wrestle with this idea,” he said, noting that progress has been particularly noticeable in recent years. “I think there’s been a lot more interest and emphasis.”

Samarripas has seen municipalities implement a number of effective strategies. One approach is engaging with landlords when they are making replacements, repairs or renovations, and encouraging them to choose more efficient options. If a furnace breaks, for example, state or local governments can help lower the cost of installing a heat pump. 

Highlighting the benefits of efficiency in common areas is also important. “In many rental properties, there is going to be some energy cost that the owner is responsible for,” said Samarripas. While weatherizing a building may largely save tenants money, landlords stand to gain as well.

Funding also plays a key role. Alachua County in Florida makes up to $15,000 for efficiency improvements available based on either a renter’s or owner’s qualifications. Minneapolis provides up to $50,000 per building. Other jurisdictions also offer low or zero-interest financing to help. 

Even when help is available, navigating those resources — or finding out about them at all — can be difficult. Last fall, Boston launched an “Energy Saver” program that provides individual consultations to help address this challenge. The city plans to deliver $300 million in benefits through the initiative by 2027. 

Sometimes, though, even the biggest incentives aren’t enough. Marty’s study found 13 jurisdictions that turned to regulations to address the issue. In most cases, the laws applied only to new construction or major renovations, though some target existing housing stock. Burlington, Vermont, wasn’t included in this latest research, but in 2021, the city passed an ordinance requiring that rentals gradually become more efficient. 

“Despite rebates, we weren’t seeing a lot of change,” Jennifer Green, director of sustainability for the Burlington Electric Department, said about the decision to go the regulatory route. “This is one of the tools in the government’s toolbox.”

That tactic won’t work everywhere. In Florida, for instance, state law prohibits local governments from forcing landlords to make efficiency upgrades. Still, Samarripas remains hopeful that renters will be increasingly taken into account as municipalities develop climate policies. 

“I’m optimistic about being able to address these issues,” he said, pointing to the ingenuity of the government officials he’s worked with. “Those folks have really stretched their minds and worked to be creative and innovative in how they’re approaching this problem.”

This article originally appeared in Grist at https://grist.org/buildings/can-cities-make-landlords-care-about-energy-efficiency/. Grist is a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. Learn more at Grist.org. Banner photo: A sign in front of a rental property (iStock image).

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