Rebates and grid decarbonization from the Inflation Reduction Act promote equitable adoption of energy efficiency retrofits

Abstract Residential and commercial buildings account for 75% of electricity and 40% of the total energy consumption in the United States, costing over $400 billion annually. Electrification and energy efficiency retrofits offer a viable decarbonization pathway, especially since half of US homes were built before modern building codes. These older homes are often occupied by low-to-moderate-income (LMI) families. Equitable electrification provides a unique opportunity to considerably reduce emissions in communities where energy bill savings have the most impact on household finances. This study evaluates how the Inflation Reduction Act (IRA) impacts the adoption potential of air-source heat pumps (ASHPs), heat pump water heaters and clothes dryers, and electric cooking ranges across income groups in the United States. Using a database that statistically represents the US housing stock, we estimate the indicative adoption potential of these technologies under scenarios that represent Pre-IRA conditions and a reference case with IRA provisions. After IRA rebates were introduced, adoption potential for LMI households more than doubled for ASHPs, heat pump water heaters, and electric cooking ranges and more than tripled for heat pump clothes dryers relative to Pre-IRA adoption potential. Cooking retrofits had the lowest adoption potential, and homes that electrified space heating without weatherization had greater adoption potential than those that underwent basic or enhanced enclosure upgrades. Our results show that the introduction of IRA rebates and a gradually decarbonizing grid substantially improves adoption potential for LMI households and even surpasses the adoption potential of middle and upper-income households.