Addressing Energy Poverty in the US

The economic impacts of the pandemic and the rising energy costs resulting from the war in Ukraine have revealed just how many Americans cannot afford their household energy costs, and how precarious the situation really is. 

Rising Costs Affect Millions of Families

Even a modest increase in energy costs can have a dramatic impact on the tenuous financial stability of low income households already stretched thin. Consider that before the pandemic, more than 37 million households (or more than 30% of all US households) were “cost burdened,” a federal term meaning that they spent more than 30% of their income on housing.  According to the U.S. Department of Energy, the average energy burden for low income households is 8.6%. That is three times higher than for non-low income households, which is about 3%.  And according to the Kleinman Center for Energy Policy at University of Pennsylvania, more than one-third of US households are experiencing “energy poverty,” having difficulty affording the energy they need to keep the lights on and heat and cool their home. 

Millions of American families are affected by the rising cost of energy and housing, and there are clear socioeconomic and racial disparities. Low income households are disproportionally affected by housing and energy prices, and Black and Hispanic households are affected more heavily than white households.  The financial implication is that these families are forced to make difficult choices about keeping the lights on or feeding their family. Any loss of income or disruption could cause these families to potentially face eviction, foreclosure, or experience homelessness. Our nation faces a fragile and unsustainable situation that threatens the very fabric of our communities.

Innovative Public Policy Solutions

We need innovative public policy solutions that address America’s energy poverty and housing equity crises. One important thing we can do is to create vehicles for investing in America’s housing infrastructure in a significant way—providing scalable solutions for making our homes more energy efficient, and thereby more affordable. A solution could be new programs to provide assistance to retrofit basic systems for energy efficiency, weatherize and properly insulate properties and reduce utility costs, provide underserved areas with access to energy efficient technology, and promote community solar solutions to broaden access to alternative energy. We also need the federal government and states to incentivize and invest seriously in renewable energy—bringing down the cost.

There have been pilot projects that have successfully showed the success of this approach for bringing down home energy costs for low income households. And some places are already trying to do this at scale, including statewide legislation recently introduced in Pennsylvania to support home repair, weatherization, and utility cost reduction in residential properties. If we do this right, it will not only allow millions of families to more easily afford their homes but also create jobs and economic opportunity.

Even before the war in Ukraine and the pandemic, millions of America’s families were paying more than they could afford for their housing and energy. By investing in efficient, safe, healthy homes and alternative energy, and focusing on creating jobs in this fast-growing sector, we can help reduce household costs. We can work to pull millions of families off the edge of the economic cliff, and build a more stable, affordable, and resilient economy for the future.