Chicago to fund electric stoves and heat pumps for lower-income homes

This story was first published by Energy News Network.

Chicago is committing $15 million to help lower-income residents decarbonize their buildings, through grants for electric stoves, heat pumps and energy-efficiency measures.

The city recently issued a request for proposals from organizations that want to apply to carry out the initiative, part of larger efforts to reduce the greenhouse gas emissions of buildings and curb the health and environmental justice impact of indoor gas pollution and escalating gas bills.

Mayor Brandon Johnson, who took office in May, said in a statement that the investment ​“is just the beginning of our commitment to implementing a just energy transition for residents and workers in our city, particularly those hit first and worst by climate change.”

The project aims to create jobs and business opportunities for BIPOC workers and entrepreneurs while making electrification accessible to low- and moderate-income residents of one- to four-unit residential buildings. It is also meant to help the city meet its 2022 goal of reducing citywide carbon emissions by 62% by 2040.

“With this RFP, the Johnson administration is showing their priorities are in the right place when it comes to tackling environmental justice and the problems of energy burden,” said Sarah Moskowitz, executive director of the Illinois Citizens Utility Board. ​“We already had a good feeling about the mayor and everything he’s said about building electrification and the need for healthier and more affordable energy in our homes. This underlines it.”

The initiative is expected to fund upgrades for 200 to 350 households at no cost to them by 2025, with the funding coming from the Chicago Recovery Plan, bond funds created to address the Covid pandemic’s impacts. The work will be carried out by one or more third-party providers chosen through the request for proposals, and the initiative is overseen by the city’s Department of Housing.

Equity focus

The request for proposals notes that investment will be prioritized in South Side and West Side neighborhoods where residents bear the heaviest energy burden, according to an analysis by the organization Greenlink. Those neighborhoods are also disproportionately populated by people of color and face the highest levels of housing insecurity, exacerbated by the pandemic, the request notes.

An ordinance proposed in Chicago would ban gas heating and cooking in new construction, and even without mandates, new homes are increasingly being built with electrification. But initiatives like the one outlined in the request for proposals are crucial to helping lower-income people electrify since they are less likely to live in new buildings.

“Residents who rent, are older or have lower incomes are more likely to live in older buildings with poor insulation, high utility costs and…less control over indoor air quality and temperature,” the request says.

“Small multiunit buildings are traditionally a really tough nut to crack,” said Moskowitz. ​“Oftentimes the inhabitants aren’t necessarily high-income but they may not qualify for other programs” for low-income residents. ​“This framing of the issue points to a gap. We’re excited to see the potential and what some of the responders come up with.”

Renters in such multiunit buildings are also more vulnerable to outdated energy sources and poor energy efficiency, since those are the responsibility of landlords. Moskowitz said she hopes the latest initiative and other programs can help address this ​“split-incentive” problem, wherein landlords may be unlikely to invest in energy efficiency if they don’t benefit from the energy savings.

Record gas rates

Advocates say residential electrification is especially important in Chicago now that utility Peoples Gas has requested record-high rate increases to fund upgrades in its system, potentially increasing the energy burden on households that already struggle to pay their bills.

Peoples Gas is requesting a $402 million rate hike through its ongoing docket before the Illinois Commerce Commission. The commission recently heard public comments on the rate case at an open forum at the University of Illinois at Chicago.

As part of the rate case, advocates are demanding more investment in energy efficiency and electrification, in part to help mitigate racial disparity in the utility’s record of utility disconnections.

Moskowitz said that if wealthier people can afford to invest in heat pumps and electric stoves, there’s a danger lower-income people will be ​“left behind” in the gas system and end up bearing an even larger portion of gas infrastructure costs.

“We need to do this across the board lest we end up in a situation with a small number of gas customers shouldering the cost for the entire system,” she said. ​“That’s a piece a lot of folks don’t get. This transition is happening, and it’s happening in an uncontrolled way that can leave swaths of the population behind.”

“Aggressive” policies

The new decarbonization initiative was modeled based on responses to a February 2023 request for information from organizations including the National Renewable Energy Laboratory and the Midwest Energy Efficiency Alliance.

Last year, then–Mayor Lori Lightfoot convened a building decarbonization working group that released recommendations that guide the new initiative. The working group’s report described the recommendations as ​“aggressive and actionable…in a time where the funding and resources are coming online at the federal, state, and local levels to drive real change in communities.”

The city’s 2022 budget passed under Lightfoot included $188 million for decarbonization and other ​“green recovery” efforts, and the new initiative will build on programs including the city’s long-standing energy benchmarking program and the Retrofit Chicago program that urges building owners to reduce energy use.

The working group’s 2022 recommendations include banning gas hookups in new construction and during major renovations, as the proposed ordinance demands, and charging a ​“fossil fuel mitigation fee” for new construction built during a phase-in period for the ban.

The recommendations also call for a pilot project promoting heat pumps and targeting underserved communities with electrification and energy-efficiency projects.

In general, community outreach will also be crucial to make sure people are aware of opportunities that exist and to help overcome any reluctance about changing to new technologies.

“There’s definitely a big education piece that’s required,” Moskovitz said. But at the Citizens Utility Board, ​“we’ve been surprised at the level of interest we’re hearing from the public about going all-electric. The discourse has shifted much more quickly on that than I was expecting. We’re getting inquiries on a regular basis to our office from people who are curious about what their first steps would be if they want to get fossil gas out of their home.”