Spring 2023
Renting and Retrofits: To Decarbonize More Housing, Organize More Tenants
Written by David Thompson & Mia Saito Callahan
- A Survey of the Relationship Between Countries’ Retrofit and Tenant Policies -
It’s widely understood that in order to significantly reduce carbon emissions and slow the pace of climate change, we must improve the energy efficiency of our housing stock. Buildings account for 37% of emissions, and residential buildings’ constitute 63% of those building emissions. But the road to better energy efficiency for rental housing runs through the no-man’s land of the “split incentive”--an economist’s term for a “market failure” where the benefit of a transaction does not accrue to the one who pays.
The incentive, in theory, can “split” on either side of the landlord-tenant divide. For tenants with leases where utility costs are not included in the set monthly rent amount (“cold leases”), tenants derive benefits from housing that is energy efficient. It costs them less to pay their heating bill when their home is well insulated. But from the perspective of the put-upon landlord who must fork over the cash to insulate the property, it’s a cost they pay for which they get no benefit.
On the flip side, for tenants whose heating costs are paid by the landlord directly and rolled into the monthly cost of rent (“warm leases”), the tenant gets no direct benefit from increased energy efficiency. The tenant can blast the heat with the windows open and it won’t change how much is due on the first of the month. While it incentivizes the landlord to make things more efficient, the landlord can point to evidence that tenants in such arrangements use their energy inefficiently.
There’s an additional dilemma. While increased energy efficiency and reducing carbon emissions are laudable, the climate crisis overlaps with an equally pressing housing crisis. Those whose primary concern is the housing shortage point out the dangers of policies that may improve housing’s carbon efficiency only to pass on the costs to residents via higher rents and increased homelessness.
For instance, ACORN Canada fought the Ontario Conservative Party’s Bill 23–legislation that would ostensibly ameliorate the housing crisis via increasing the pace of housing construction and renovation. [see interview later in this issue] The reality, ACORN Canada members argue, is that Bill 23 will simply remove roadblocks for landlords who want to use renovation or improved housing as an excuse to turn out a lower paying tenant, renovate the property, and be able to market it to a higher paying tenant. If the worst possible outcome of a policy seeking to build energy efficient homes would be a “demoviction,” the worst possible outcome of policies seeking to retrofit homes would be “renovictions.”[1] The International Union of Tenants notes that twenty-one EU countries allow for landlords who make energy improvements to pass on costs to their tenants.
As Sarah Knuth put it, the challenge is to find policies that do not play into “cleantech aspirations to make energy efficiency a resource and articulated efforts to sell retrofits as new green value for real estate development and investment.”[2]
Organizing Efforts Suggest Solutions
Mindful of these two dilemmas–the split incentive as well as the risk of tenants paying dearly for improvements– we believe that improving apartments’ energy efficiency and improving renters’ material circumstances are two goals that can be achieved in concert. In fact, our initial review of the literature suggests that tenants, especially tenants who are organized to make collective demands on their owners, are the housing residents most capable of achieving rapid, large-scale retrofits of housing. Private homeowners must be pushed or incentivized to consider their long-term savings in order to make the short-term retrofit investment, cooperatively owned multi-family buildings run into “tragedy of the commons” style conflicts, but tenants have only savings to win from better energy efficiency. Organizing more tenants into unions capable of making collective demands for weatherization may cut through the Gordian knot of the split incentive.
The experience of ACORN International, a federation of community organizations in 15 countries, began to point us tentatively to this conclusion. ACORN in England and Wales regularly takes on “member defense” campaigns to back tenants dealing with cold and damp apartments,[3] and ACORN’s affiliate in Scotland, Living Rent, includes a demand for refurbishments in its programmatic “Statement on Climate Change.”[4] ACORN Canada is running a citywide campaign in Hamilton for an ordinance that would require landlords to make their tenants safe from extreme heat.
But most notable is the Lyon experience of Alliance Citoyenne, ACORN’s affiliate in France. The group organized a tenants’ union there. The high cost of heat and the lack of insulation were some of the members’ most deeply felt issues, and they demanded improvements. They found an ally in Enerlis, a company that performs retrofits but had struggled to tap into the multifamily apartment market due to the split incentive problem. Enerlis made the ultimately profitable decision to provide the tenants union with a 35,000 euro grant. The union used this grant to identify homes with significant heat inefficiencies, raise demands for retrofits there, and share data with the company. For their part, Enerlis provided free energy assessments and bulk deals to some of the union’s targets–striking a deal, for instance, to sell high performance boilers to Lyon’s housing authority. These improved the heating for 120 apartments in the union’s base area.[5]
We then began to survey the policies of various countries to see whether this hunch had merit. Indeed, we observed a noticeable correlation between a nation’s level of tenant organization and tenant-friendliness and its level of progress decarbonizing their housing stock. It merits further study, but our initial observations suggest that scaled up tenant organizing could be an essential part of the answer to the question: how will the world’s nations acquire the political will to meet their decarbonizing goals?
Notable Policy Trends
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No nation is on track to meet its goals for decarbonizing housing or reducing emissions.
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Effectively retrofitting requires leveraging economies of scale to bring down costs. Even projects that span a city block are better than projects confined to an individual home. Citywide endeavors like those in Nottingham and Freiburg show that some progress can be made on the municipal level.
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But ultimately the coordinated resources of entire nations will be required. The scope of need requires each country to develop a coherent plan with buy-in from industry, labor, and residents. Large-scale retrofitting will require labor training in retrofit methods, improved supply and manufacturing of key materials, long-term agreements between owners and residents that share and stabilize costs, and financial instruments that allow retrofits’ positive future externalities to be invested now (i.e., requiring banks to loan more and/or providing more government grants).
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Including energy costs in rent structures (“warm rents”), as is the norm in Sweden and the Netherlands, seems to be correlated with better energy efficiency outcomes than rent structures that make energy costs separate (“cold rents”) because the owner benefits directly from energy efficiency improvements.
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Incentivizing retrofitting is not enough, requirements for efficiency are an essential part of the puzzle. The EU has developed a world-leading grading system for housing that nations outside of Europe should look to, but how it’s being used across the continent is uneven. In all countries, as one study put it, “there should be legislation that forces owners to engage in energy renovation.”[6]
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On the physical side of retrofitting, the most effective approach is “deep retrofits” --where housing is “rationalized, electrified, and then decarbonized.” Just closing leaks and installing insulation is good in the short term, but doesn’t reduce consumption in the long run because residents gradually put savings toward increased energy use.[7] So, electrification, where heat pumps replace furnaces and air conditioners, needs to follow. With those two steps accomplished, communities can invest in local renewable energy sources and governments should provide incentives for reduced energy consumption.
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The policy approach that has incorporated many of these lessons, Energiesprong, was pioneered by the Dutch. It is a comprehensive, proven policy suite whose success has spread to several countries outside the Netherlands. In other words, we know what works. So given the shrinking time window for addressing climate change, “pilot projects” and “demonstrations” should be regarded as unnecessary delay tactics.
What follows then, is an initial comparison of several European and North American retrofitting policies compared against their tenant friendliness and level of organization. Progress within energy retrofitting varies significantly by country. However, there are many overlaps in policy used to meet retrofitting goals. Most commonly, countries use grants and tax breaks to incentivize businesses and households to begin home upgrades. Besides incentivization, targets are met by gradually increasing requirements for buildings within a country. For example, a country may rank a home’s energy efficiency from A to F, and then plan to outlaw all homes below D in 5 years, C in 15 etc. This enforces a certain level of across-the-board efficiency on top of what is incentivized through grants and tax breaks.
In the coming months, we will broaden our survey to additional nations and look to whether we can find additional ways to quantify the effectiveness of specific policies. This review draws heavily on two studies we recommend for further reading. The first, Robert Kilgour et al’s 2022 Global Retrofit Index (GRI) was produced for construction sustainability consultancy 3keel[8]. It ranks each of the G20 nations on their retrofit progress based on three indices: the efficiency of its existing housing stock, its performance in reducing building emissions, and the thoroughness of its policy approach to retrofitting. The second study is Jan Philip Weber’s 2017 thesis, “The Regulation of Private Tenancies - a Multi-Country Analysis.”[9]
European Union
Of the G20 nations ranked in the Global Retrofit Index, the six European countries all come out ahead of their non-European peers. The EU’s Energy Performance in Buildings Directive (EPBD), whose initial version came into force in 2003, established a comprehensive carrot-stick policy approach–incentives and requirements.
The “sticks” EPBD established include requiring compliance with boiler and air conditioning inspections and a rating scheme, Energy Performance Certificates (EPCs), that assign energy efficiency and environmental impact grades from A to G. The EU aims to retrofit the lowest performing 15% of its housing stock by 2030, and again by 2033.
In 2012, to address the split incentive problem, the EPBD required member states to establish financial incentives for the owners of multi-family housing to weatherize their properties. The International Union of Tenants noted that in a number of European countries, however, landlords are able to pass on the costs of the weatherization directly to tenants. They argue for the EU forbidding this practice, potentially with cost-sharing “green leases,” and for including energy performance in the calculation of rents.[10]
The Netherlands
The Netherlands’ approach to housing retrofits–Energiesprong (“energy leap”)–is the most effective so far devised, so much so that it’s been taken up on a smaller basis in pilot projects in the UK, France, Germany, and US states New York and California.
Launched in 2010, Energiesprong is a program that coordinates residents, owners, and financing around affordable, rapidly applied multi-home retrofits. The physical retrofits themselves follow a three-step process: “rationalization, electrification and smarter systems.”[11] Rationalization entails reducing drafts and leaks and installing insulation. For this, Energiesprong has pioneered prefabricated external facade add-ons with triple-glazed windows built in. Those are precisely fitted to each home.[12] Electrification involves replacing gas boilers with heat pumps. Heat pumps can replace both air conditioners and furnaces–they work like refrigerators insofar as they transfer rather than generate heat.[13] Energiesprong will often power these heat pumps with newly installed solar panels via integrated systems that, packaged and built together, are cheaper than the components would be separately. When enough housing in a given area has been rationalized and electrified, they establish shared renewable energy centers–blockwide thermal storage and batteries, for instance.[14]
Energiesprong coordinates long-term financial agreements between groups of residents and owners to address the split incentive problem. Owners project their thirty-year expected maintenance costs and invest that into the retrofits. Residents agree to divert a portion of their future energy savings into payments to the owners. The incentives for both are that ultimately, the homes’ energy bills approach zero. In the Netherlands, Energiesprong has been able to financialize this positive externality. They’ve won legislation requiring banks to support these homes with loans on top of mortgages.
There are many components, but the coordination of all the parts is essential. PBS interviewed an Energiesprong representative and got to the heart of the matter:
PBS: Can this approach work if you don't have the finance guys, the government, the contractors, the homeowners essentially pulling in the same direction?
Ron Van Erck: The answer is no. And what we see is that there are a lot of initiatives going to try to do something about energy efficiency in buildings and try to scale that. But what they all try to do is tweak one thing and work on solving one problem. But if you don't solve all the problems at the same time, you know, the puzzle never really fits. So, what we tried to do is to understand which are all the pieces that we need to move and then talk to everybody that can move them and make sure that everybody knows that the other person also moves them.
The Global Retrofits Index notes that the Netherlands has holes in the energy standards it will require in the future and isn’t funding enough retrofits for it to reach its carbon goals. But, Energiesprong, the minimum standard requirements they have implemented, and relatively generous funding for retrofitting have together reduced the Netherlands’ buildings’ emissions by an impressive 31% from 2010 to 2019. The Global Retrofit Index ranks the Netherlands as the second place leader on retrofits.
Although the share of private rentals is rapidly increasing and landlords are driving up costs there (from 4 to 8% from 2012 to 2022), social housing still constitutes a significant 34% of all homes in the Netherlands.[15] It is among the highest total percentage of renters among G20 nations. On balance, Dutch renters were able to fend off the liberalizing push of the 1970s, hanging onto their high security of tenure and limits based on the quality of the “free” rental sector. More than 53% of tenants in the Netherlands are represented by the Woonbond tenants’ union[16], which won a rent reduction in 2023 for low-income tenants.
Germany
Germany has the Global Retrofit Index’s top spot among the countries it ranked. It’s been able to reduce its building emissions over a five-year period by 27%. Germany has committed the majority of the climate action funds it allocated for 2023 to 2026 to retrofits, amounting to some 20 billion euros a year,[17] creating Europe’s most extensive network of retrofit loans and grants.
Although GRI takes care to note that Germany’s policies “do not add up to a comprehensive roadmap for the decarbonization of buildings,” it has a range of both incentives and requirements. On top of tax deductions and loans, Germany also allows landlords who make their buildings more energy efficient to raise rents outside of existing rent control restrictions. Germany increased building code standards in its Energy Savings Ordinance and Renewable Energy Heating Act.
Despite its achievements, GRI considers the nation’s retrofit posture to be only “almost sufficient.” Germany is behind its goal of retrofitting 2% of homes a year. To meet its goals, it will need to invest more and accelerate its implementation of neighborhood or citywide projects that take advantage of Energiesprong’s or Germany’s own ecoworks’ pre-fabricated facades. The city of Freiburg boasts such examples, and its upgrades of high-rise apartments depended on coordinated, systematic cultivation of citizen input–not unlike the process of an ACORN organizing drive.[18]
Germany’s top spot on retrofit policy correlates with its effective top spot in Europe for percentage of tenants (54.3%) and pro-tenant policies. Germany is, as landlord trade publication Global Property Guide put it[19], “depressingly pro-tenant.” Unlike much of Europe, Germany resisted the liberalizing trend in landlord-tenant laws and has roughly the same regime it established in the 1970s. Tenants there enjoy security of tenure for a lifetime–they can only be evicted for special reasons.
Germany has a highly organized body of tenants. Its national tenants’ association, the DMB (Deutscher Mieterbund), federates more than 300 local tenants’ associations and employs around 1300 full time employees. All this adds up to more money in tenants’ pockets and less in landlords’--GPG puts Germany in the bottom third of countries of Europe for gross rental yield per annum.[20]
France
France is serious about retrofitting, with a nationwide plan calling on everyone to get involved: Rénovons (let’s retrofit!). In 2013, they committed to renovating 400,000 homes a year. France is putting its A through G energy efficiency rating system to work. In 2025, renting homes that are in the G category will become illegal. F rated properties will be illegal to rent in 2028 and so on. This is one of the more stringent requirement based policies in our survey.
On the incentives front, France has invested 6.2 billion euros over 2 years into residential and commercial retrofits. The city of Paris started coachcopro.com, which helps to connect Paris’ many condominium owners to building teams able to perform energy retrofits. The website has been rolled out for 22 regions and cities of France and has renovated 45,000 homes.
MaPrimeRénov’ is a french aid plan that provides funds for energy retrofits. The grants are given for both industrial and residential retrofits. Grant size is based on the environmental impact of the retrofit and income level. From 2019 to 2020, MaPrimeRénov’ insulated 1.5 million homes and replaced 550,000 boilers.
One unique scheme used by France is Energy Savings Certificates (CEE), a cap-and-trade market that imposed tradeable obligations for energy improvements.[21] Funding from this was put toward residential retrofits. France has also attempted to address the shortage of trained labor. They’ve invested some 60 million euros into “the ecological transition of businesses and trade workers”, and by creating the RGE or Recognized Guarantor of the Environment Standard. This certification is given to workers who meet specific criteria and is used to increase retrofit work standards and education.
But despite France’s efforts, and although GRI puts it third among the G20 nations for them, France still has a long way to go. It needs to hit a pace of 500,000 homes per year to meet its climate goals. Additionally, its lack of centralization may pose problems for the future. Andreas Rüdinger, research fellow at sustainability think tank IDDRI, argues that a key danger for the French retrofitting approach is the creation of a short-term boom in surface-level retrofits–just enough to get housing above the F or G levels–that crowd out “high performance” deep retrofits. In line with the recommendations of France’s High Council on Climate, he urges the creation of local “one-stop-shops” that can coordinate retrofitting projects from assessment to completion, a long-term strategy to bring all housing to high levels of energy efficiency, and weaving deep retrofitting expertise into required training for all new building sector hires.[22]
There are some efforts that look like this. For instance, Bouygues Construction has its very own “BYSprong '' that manufactures prefabricated facades. In line with our hypothesis about tenants’ key role in decarbonization, Bouygues has had more success getting retrofits installed in social housing–which comprises 40% of rentals in France–than in cooperatively owned housing.[23]
France is a pro-tenant country. Unlike the UK or US, landlords must allow tenants to have pets! Tenants are guaranteed three year minimum leases and it is difficult for a landlord to evict after that period. Rents are tied to the construction cost index. A landlord’s rate of expected return is low there, 3.97%-- 54th out of 65 countries in GPG’s scale.
France has a number of tenant organizations but nothing that approaches the scale or hegemonic influence of Germany’s or the Netherlands’. Its Conféderation Nationale du Logement, National Confederation of Housing, boasts 70,000 members–impressive compared to Canada or the United States, but falling short of several European peers. L’Union Sociale pour L’Habitat federates a number of tenant associations and cooperative enterprises rooted in low-income housing, HLMs, which can be public or private.
Italy
Italy has the world’s most generous incentive structure for homeowners retrofitting their own homes. Its “Superbonus” tax credit scheme lets homeowners recover 110% of retrofitting costs. 21 billion euros have been spent weatherizing the homes of 122,000 applicants.[24] The success of this program has helped offset Italy’s lack of efficiency minimums and lack of serious approaches to renter-occupied housing. But its new far-right government threatens to turn Italy from a policy leader to a policy laggard. The leading party, Forza Italia, argues that EU mandates are more costly for Italy than other European nations due to its older housing stock. Italy’s building association ANCE estimates that 400 billion euros would need to be spent to retrofit 1.8 million homes over 10 years in order to meet EU goals. Right now, just 15.3 billion euros are allocated. “60% of buildings here are in the two worst energy classes, against, for example, 17% in France and 6% in Germany," ANCE’s chief told Reuters.[25]
Italy is currently ranked 6th among G20 nations by the Global Retrofit Index. Italy’s tenancy laws have been liberalized in landlords’ favor since the 1970s. Nevertheless, its relatively low portion of renters, 25%, enjoy four-year minimum leases, security of tenure, and a number of checks and exceptions to the free landlord tenant market. For instance, government supported housing rent is capped. However, Italy ranks high, 12th of 65, for landlords’ 6.26% expected rental yield per annum.
The United Kingdom
The GRI considers the UK to be a standout in pushing low carbon heating and cooling–it’s phasing out new gas boilers in homes by 2035 and has allocated significant funding to homeowners who want to switch from a boiler to a heat pump. The UK also makes comprehensive efficiency data available.
However, Britain’s older housing stock loses heat faster than any of its peer European nations.[26] They haven’t set comprehensive targets for retrofit rates, and funding for some incentive programs has decreased. The UK is not currently aiming to reach net zero carbon emissions. As its Climate Change Committee put it, “UK homes are not fit for the future.” Serious analyses of the problem from the building, engineering, and real estate sectors builders, engineers, and real estate call for a nationally coordinated strategy. For instance,
There is no simple policy ‘fix’ for housing retrofit. A joined-up, cross-sectoral approach is needed with several key features: a commitment to creating a long-term market; developing finance mechanisms to leverage private investment; improved quality and competence based on a license to trade; and space and funding to trial innovative approaches in the real world.[27]
This sounds an awful lot like Energiesprong, and, indeed, the City of Nottingham and London’s Borough of Sutton have welcomed Energiesprong in with solid results for 160 retrofitted homes.[28] There are convincing proposals for simply scaling this up across the UK.[29] However, although the “innovative approach in the real world” has had success, there isn’t yet sufficient political will to implement it at the necessary levels. The Institution of Engineering and Technology estimates that the UK would need to retrofit 26 million homes between 2018 and 2050 to reach even its own relatively modest climate goals, a home every minute and a half. [30] The current pace falls well short.
One additional challenge for advocates of the Energiesprong approach in the UK is that it will mean changing the appearance of many historic homes. Architect Ben Ridley notes that “the vast majority” of housing in the UK was “built with uninsulated solid masonry walls and single glazing.” Adding insulation to external walls and upgrading windows changes their appearance in ways that might run afoul of fiercely guarded historic preservation regulations. Internal insulation is an option in those situations, but the tradeoff is that it’s much costlier and time-consuming to install. It requires, for instance, a total reworking of all internal molding.
The above cited Institution of Engineering and Technology echoes other experts in arguing that the immediate focus for retrofit policy should be on the social housing sector, 17% of the UK’s housing stock. Social housing as a whole in the UK is already more energy efficient than owner-occupied or privately rented housing. As the IET puts it regarding the supply side, “as the owners have an explicit social goal, [they] can be encouraged to take a longer-term view of housing quality and performance than other sectors.” There are, of course, natural demand-side incentives for the tenants who would save on energy costs, provided they could be organized. So far, while the Social Housing Decarbonisation Fund (SHDF) has made some headway, the amount invested falls vastly short of the need.
In a holdover from its time in EU, the UK has all of its housing ranked from A to G. By 2025, all private landlords need to have their properties at least at C-level, and by 2035 that requirement will apply to all domestic properties. It’s estimated this will cost £330bn, and it’s not clear that that investment will be forthcoming. Paul Testa argues that the Value Added Tax for existing homes should be scrapped–pointing out that it disincentivizes retrofit projects on homes, while newly built homes are exempt.[31]
Although around 35% of the UK’s population are renters, the country is relatively unfriendly to tenants by European standards. Landlords enjoy a high rate of return on investment there–the 12th highest of 65 countries ranked. The landlord tenant legal regime was radically revised in landlords’ favor in 1988 and 1996, making the most common type of tenancy one in which the landlord can evict a tenant at the end of a lease for any or no reason. There are a number of tenant organizations in United Kingdom, and this is where ACORN’s efforts have exploded around the country, but no significant tenant union density.
Russia
The GRI doesn’t even attempt to rank Russia in its G20 list because Russia doesn’t bother to keep sufficient data. But the trends we know are all in the wrong direction. In 2020, Russia scrapped its remaining minimum energy standards for buildings. Its building emissions have increased 19% over five years, “nearly double that of the rest of the G20.”
This increase took place over the same period the Russian government eviscerated its remaining independent civil society–banning organizations, instituting new crackdowns on demonstrations of dissent, diverting social discontent into scapegoating campaigns against LGBT people, defanging the mild opposition current of the Communist Party’s younger wing, shutting down independent media, and jailing and assassinating remaining political dissidents. There is far less room for organizing of any type in Russia today than there was in 2015. Russia’s case unfortunately demonstrates the inverse of the correlative trend we posit: that more robustly organized tenants correlate with more robust retrofitting results.
Canada
The Canada Greener Homes Initiative[32] is Canada’s flagship program for retrofitting housing. It is for homeowners only, and they can access funds by applying for them online. When they do, they can get up to 5,000 CAD in grants and interest free loans of up to 40,000 CAD for additional projects. Off-grid and Northern Canadians can access some additional funds. From May 2021, when it began, to June of 2022, some 171,495 homeowners applied, and roughly 13,700 projects have been completed. Heat pumps were the most popular project. Over the course of the year, Canada has had to train up and hire 446 new “energy advisors” who conduct energy audits just to keep up with the demand.
But there are 14.6 million homes in Canada, and it’s estimated that some 11.4 million would need to be retrofitted by 2040 for Canada to reach “net zero” carbon emissions. That’s 600,000 a year. 13,700 falls quite short. In other words, “Canada’s home energy retrofit funding [is] woefully inadequate.”[33]
Moreover, landlords and renters simply aren’t eligible for the modest incentives in the Greener Homes Initiative. [34] Playing catch up on this front, the Canadian government “Announc[ed] Calls for Applications for Green Building Retrofits to Enable Climate Action in Industries and Communities” on February 9th[35]. But this announcement was for precious little–small pots of money for companies and non-profits to experiment with small-scale projects. All told, it’s $200 million for a “Deep Retrofit Accelerator Initiative” and $35.5 million for a Greener Neighbourhoods Pilot Program, both of which invite years-long planning processes.
The Global Retrofit Index ranks Canada 9th among the G20 nations for retrofitting, and rates its exclusively incentive-based policy approach “highly insufficient.”
Canada decontrolled new rents in the 1990s, but still sets limits on increases during a tenancy. Canadians have a higher degree of security of tenure than Americans or Britons. Unsurprisingly, landlords’ rate of return is lower there than in both countries (they place 26th). Canada has many tenant organizations, the largest of which is the 160,000 strong ACORN Canada, but no dominant tenant organization with major density.
Mexico
Mexico ranks 8th in the GRI, higher than Canada or the US. Its building sector emits relatively little, and it has reduced its building emissions 12% between 2015 and 2020. But it’s not clear that that trend will continue. Unfortunately, Mexico has no coordinated policies on retrofits, just voluntary energy certifications. As in the U.S., Mexico has no major tenant organizations and rentals are effectively a free-for-all.
United States
The United States is tied for 12th in the GRI’s index. The U.S’ buildings have high emissions–higher than the entire transportation sector–and reductions in those emissions are not sufficient. Like Canada, the US has made no reduction in “direct emissions.” There are no mandatory standards for buildings in the works, and very little investment in retrofits. There have been several Energiesprong style projects piloted in New York and California on an extremely small scale.[36] There are countless public private partnerships that have sprung up and done limited retrofits–something some in the United States’ gargantuan non-profit sector celebrate.[37] Meanwhile, the US would need to be retrofitting some 2.8 million homes a year to hit the 2% threshold to become carbon neutral by 2050.
What’s needed is the same as everywhere else. The way the American Council for an Energy-Efficient Economy lays it out in its report calling for “Federal Support” is typical, and unsurprising:
While the technology for deep retrofits exists, the report notes several barriers that limit its adoption: a lack of standardized insulation packages that reduce time and error; a limited range of heat pump products that deliver high-efficiency at lower cost; and the limited use of passive technologies that decrease building loads. In addition, most contractors are not yet ready to undertake a deep retrofit’s complexity, nor are homeowners ready for its costs. To address these challenges, the report recommends that energy efficiency programs standardize retrofit packages, split upgrades into two or more phases, include electrification, and offer both financing and incentives.
There are good ideas out there, such as focusing on retrofitting low-income and public housing.[38] But in a period when the largest public housing authority in the US, New York City’s Housing Authority, estimates that it has $40 billion in unmet basic capital needs, it’s hard to see any prospects for significant federal investment.
The United States Department of Energy has a national program known as the Weatherization Assistance Program, which partners with local organizations across the country to weatherize some 35,000 low income homes a year. The program covers up to 100% of costs for retrofitting projects with the amount covered being dependent on the household income level. There was a significant push for major investments in retrofits via the defeated Build Back Better plan. It would have dedicated hundreds of billions to retrofits, including money for increasing tax breaks and retrofitting incentives such as the WAP.
Despite a recent uptick in tenant activism, tenant unions in the US are small and disorganized. Landlords enjoy a robust 6.12% gross annual rent per annum (14th of the 65 ranked countries), and many tenants have no more than several days’ worth of security of tenure.
Conclusion
There is no way to address the climate crisis without retrofitting housing to make it energy efficient. But there is also no sign that any country is on track to renovate enough housing to hit its climate targets. If the status quo pace of retrofits continues, the planet is heading toward an uncertain future.
However, our initial review suggests that organizing tenants into associations could be a major intervention to speed that pace. It will organize the demand-side market pressure for energy efficiency into a coherent force capable of pressuring the resistant supply-side through direct and government intervention. This process is already under way in the most tenant friendly nations. There, it must be accelerated by expanding the density of organized tenancy. In places with legal regimes more hostile to tenants, strong tenants’ unions resembling that of Germany’s and the Netherlands will have to be built.
David Thompson is the research director ACORN and its family of organizations and is based in New Orleans.
Mia Saito Callahan is a student at University of Washington studying economics and mathematics. She is the co-president and founder of the Student Organization for Product Transparency, a group dedicated to increasing accessibility of information regarding companies and supply chains.
[1] Abu-Zahra, Bader, Eddy Roué, and Ashley Reyes, “ACORN Canada : Fighting Bill 23 in Ottawa.” ACORN Radio. Transcript available upon request. https://spotifyanchor-web.app.link/e/EatZkOPMNxb
[2] Knuth, Sarah. “Cities and planetary repair: The problem with climate retrofitting,” Environment and Planning A: Economy and Space, Volume 51, Issue 2. https://tinyurl.com/3h9mk2nu
[3] Such as this one, in Bristol: https://tinyurl.com/2veeua87
[4] Living Rent Statement on Climate Change. https://tinyurl.com/53dvf8je
[5] Alliance Citoyenne campaign description: https://tinyurl.com/yhth6ubm
[6] Matschoss, et al, 2013. “Energy renovations of EU multifamily buildings: do current policies target the real problems?”. ECEEE 2013 Summer Study– Rethink, Renew, Restart. Emphasis added. Available at: https://tinyurl.com/ysjte6a9
[7] Peñasco, Cristina. “Assessing the effectiveness of energy efficiency measures in the residential sector gas consumption through dynamic treatment effects.” Energy Economics. January 2023. Available at: https://tinyurl.com/mt3vscdd
[8] Kilgour, Robert, Joshua Deru, Laura Watson et al. “Global Retrofit Index.” October 2022. https://tinyurl.com/53ktmju9
[9] Weber, Jan Philip. “The Regulation of Private Tenancies…” Thesis for International Real Estate Business School, Universität Regensburg. October 2017. https://tinyurl.com/5bb7rkf4
[10] Lanzilloti, Pasquale. “How to avoid the poverty trap for tenants…” European Commission’s Joint Research Centre Workshop. January 2016. https://tinyurl.com/2vdt2h4w
[11] Ballantyne, Bernadette. “Rising to the Challenge of Housing Retrofit.” Catapult. December 5, 2022. https://tinyurl.com/48jr3r3f
[12] Marx, Willem and Joan Martelli, “The challenge of retrofitting millions of aging homes to battle global warming.” PBS Newshour. Aug 28, 2021. https://tinyurl.com/4cbpbh5y
[13] Read more about heatpumps here: https://www.energy.gov/energysaver/heat-pump-systems
[14] Overview of Energiesprong UK: https://www.ukgbc.org/solutions/energiesprong-uk/
[15] “Percentage of low cost social housing falling…” NL Times. Oct 20, 2022. https://tinyurl.com/548d2zm6
[16] Woonbond website: https://www.woonbond.nl/
[17] “Germany’s €177bn climate budget to focus on renovations.” Nikolaus Kurmayer. June 28, 2022. https://tinyurl.com/29czbjw4
[18]“Connecting energy efficiency and social sustainability…” Steffen Ries. National Housing Maintenance Forum. May 2020. https://tinyurl.com/yckp4thu
[19] Global Property Guide, Germany. https://tinyurl.com/2tfak59w
[20] Global Property Guide. See Appendices.
[21] The French Energy Savings Certificate Scheme. Powerpoint by Agency for Environment and Energy Management. https://tinyurl.com/5n8dsjdt
[22]“Buildings Efficiency: France must embed deep retrofits into its market,” energypost.eu. Andreas Rüdinger. July 2020. https://tinyurl.com/c3vvwhkv
[23] Interview with Christian de Nacquard, R&D Director of Bouygues Bâtiment International. March 2022. https://tinyurl.com/2rh35x76
[24] “Italy’s superbonus 110% scheme prompts surge of green home renovations,” The Guardian. April 13, 2022. https://tinyurl.com/4uyzyjz5
[25] “Italy gets cold feet…” Reuters. Feb 3, 2023. https://tinyurl.com/mua8pk7f
[26] Tado press release on study, Feb 2, 2020. https://tinyurl.com/4yvwm8dy
[27]Killip, Gavin, Tina Fawcett, Marina Topouzi et al. Building On Our Strengths…, Centre for Research into Demand Solutions. July 2021. https://tinyurl.com/5f6e89ux
[29] European Union European Regional Development Fund, Green Alliance. “Reinventing retrofit: How to scale up home energy efficiency in the UK.
[30] Institution of Engineering and Technology and Nottingham Trent University. Scaling up retrofit 2050. https://www.theiet.org/media/8758/retrofit.pdf
[31] https://tinyurl.com/Effective-RetroFitting-UK
[32] Government website. https://natural-resources.canada.ca/energy-efficiency/homes/canada-greener-homes-grant/canada-greener-homes-grant-spring-2022-update/24060
[33] Gottlieb, Nick. https://canadiandimension.com/articles/view/home-energy-retrofit-funding-woefully-inadequate
[34] https://www.theenergymix.com/2022/09/08/opinion-canadas-landlords-need-green-incentives/
[36] See PBS Newshour.
[37] For instance here, where they call it “citizen-led” retrofits: https://www.resilience.org/stories/2021-12-16/citizen-led-retrofitting-how-the-poor-relation-of-climate-policy-is-becoming-its-secret-weapon/
[38] https://www.fastcompany.com/90618542/a-simple-way-to-tackle-americas-most-entrenched-problems-retrofit-houses
