For as many problems as the Inflation Reduction Act solves, there's one that remains stubbornly difficult to address -- how to make the energy transition equitable.
The sad truth is that one of the IRA's most powerful consumer tools to engage consumers in the energy transition is also among its least equitable.
That's because the residential tax credit for solar and battery storage, intended to make renewable energy more affordable, cannot be accessed by the vast majority of low-income homeowners.
In order to combat the worst of the climate crisis, low and middle-income communities domestically and internationally must have access to affordable renewable energy.
What this boils down to is a “just transition,” which according to a video produced by the climate justice organization The Solutions Project and the nonprofit climate newsroom Canary Media, is an energy transition that consists of six key principles, the first of which is equitable access to affordable clean energy, heating, and transportation.
Narrated by Mark Ruffalo, the video’s other principles include ensuring communities democratically decide how the clean energy transition plays out for them; policies that ensure the equitable distribution of clean energy benefits; new finance options that address and remedy the harmful practices of the past; supporting workers displaced by the transition; and considering the impact the transition has on people and environments while protecting diverse ecosystems.
Residential renewables like solar are becoming more affordable and accessible to lower-income households. But it's not happening fast enough, a long-term November study from the University of California Berkeley finds. Despite growth in disadvantaged communities, solar adoptor income still skews high, with slower rates among individual less affluent households.
Several startups are on the cusp of working against this development, transitioning communities away from fossil fuels to clean energy, heating, and transportation through equity-based climate solutions while prioritizing principles set by organizations like The Solutions Project.
BlocPower, a Brooklyn-based climate technology company, is emerging as a leader in urban clean energy projects. According to Russ Lindell, a business development associate at the startup, a just transition means focusing on communities historically left out of the energy transition conversation.
“That’s something we see globally on a very macro level, like countries that have contributed the least to greenhouse gas emissions are some of the ones that are going to suffer the most,” Lindell said pointing to the similarities between the lack of climate justice internationally in low-lying Pacific Island nations and Southeast Asia, and domestically like in “neighborhoods across the country where low-income communities typically aren’t offered the opportunity for electrification or other climate-friendly upgrades.”
This shortfall of opportunity happens for two reasons Lindell said. For one, businesses typically don’t focus on low-income communities. They go for “low-hanging fruit,” he said, like a wealthy condo building on the Upper West Side of New York, “where residents will have more money to pay for these kinds of upgrades.”
The second reason is the lack of access to capital needed to provide for equitable electrifying projects. In focusing on low and moderate-income communities, BlocPower employs a unique form of financing to address this hurdle head-on.
One of their biggest sources is Goldman Sachs to finance energy-efficient upgrades like air source heat pump installations, electric water, and insulation upgrades. Typically, BlocPower finances its projects through an energy service agreement, a 15-year term where the company does not put a lien on the property owner’s building and doesn’t require any money upfront.
Instead, they employ a set monthly rate, saving their customers between 20 and 70% on annual energy costs. Over the 15-year period, BlocPower covers the cost of maintenance and operations and is present for the length of the term to ensure installations are working properly. To date, the company has raised over $111 million in funding, including $50 million from Goldman Sachs and $30 million from Microsoft Climate Innovation Fund.
Lindell is the head of BlowPower’s recently-launched initiative in Denver, Colorado. In partnership with Energy Outreach Colorado (EOR) and the City and County of Denver's Office of Climate Action, Sustainability and Resiliency (CASR), the startup is spearheading the Healthy Homes Program to expand equitable building electrification efforts in the city and county of Denver.
Around this time last year, Denver released the five-year plan for its climate protection fund. Funded through a sales tax, the plan generates about $40 million annually for programs to reduce greenhouse gas emissions, reduce air pollution, and adapt to climate change. At least half of the fund is dedicated to projects that support people who are of color, Indigenous, low-income, have chronic health conditions, and/or are most impacted by climate change.
The Healthy Homes Program will decarbonize 200 housing units, concentrating on both income-qualified single-family households and multifamily housing buildings. BlocPower will focus on the latter, electrifying at least 100 buildings over the next three years, Lindell said, a crucial element when residential and commercial buildings by themselves, represent 29% of greenhouse gas emissions nationwide.
BlocPower and EOR will focus on energy efficiency retrofits, access to solar and community solar gardens, and replacing gas appliances with electric induction stoves and heat pump heating and cooling systems specifically designed for cold regions like the Mile High City.
Aligning with The Solution Project’s parameters for a just transition, BlocPower will work with local contractors to advance green workforce development along with facilitating community conversations, outreach, and education for local residents.
BlocPower’s flagship program is in New York City, where last year, the startup launched the Civilian Climate Corps, an initiative that provides on-the-job training in various green construction fields.
In speaking to its success, Lindell pointed to the high proportion of historically underrepresented groups, such as the corps’s 18 and 35-year-old participants, making up 52%, women, making up 25%, and Black and brown individuals, making up 97%. In its first year, the program trained over 1700 New Yorkers.
Civilian Climate Corps is dedicated to Brooklyn and the Bronx, funded through a $37 million initiative. Just last month, the Corps received a huge $54 million boost from the city.
While every city cannot put as much money into a program like this as New York has, Lindell says BlocPower hopes to implement it everywhere it can. In Denver specifically, energy audits and installations will be executed by local companies, with a well-representation of women and minority-owned businesses.
The company will do workforce development in Denver later down the road, Lindell says.
With every project, the startup wins over local residents by meeting with a community advisory board every one to two months. Boards are made up of neighborhood leaders, religious groups, and nonprofits. “It’s not just a one-off meeting at the beginning,” Lindell said. “There's transparency into how we're working and what progress we're making.”
“We can fine-tune our approach and our messaging as we go with community input because these are really the leaders who can help us understand what's working and what's not in the community.”
BlocPower plans to get people on the ground in Denver soon. The program mirrors other projects the company implemented in Ithaca, Menlo Park, and Oakland.
Uniquely in Denver, BlocPower is partnering with a team of researchers from Colorado State University, to measure health impacts. The team will conduct pre- and post-retrofit air quality surveys, measuring the amount of nitrogen dioxide volatile, organic compounds, fine particulate matter, and CO2 in the air.
The before-and-after surveys will add to the wealth of evidence of the negative impacts gas appliances have on respiratory health, and study improvements made after fossil fuels are evicted.
70 million U.S. homes and businesses burn fossil fuels like gas for cooking, water heating, and space heating and cooling. Aside from gas appliances’ contributions to climate change, the harmful
combustion pollutants are connected with chronic health outcomes like respiratory illness, cardiovascular disease, poor birth outcomes, and adverse childhood development.
Whether it be indoor or outdoor, air pollution is the leading cause of early death worldwide. BlocPower is addressing the problem of electricity to heat, with the ultimate goal of “getting every building off of fossil fuels,” Lindell said. “The climate crisis demands it for environmental and health reasons. That's a very broad goal and there are a lot of other organizations working toward similar goals.”
Since the Ithaca project, dozens of cities are reaching out to the startup about equitable greening projects, as Fast Company recently reported. The publication also named BlocPower the world’s fourth most innovative company of 2022.
Lindell noted that it’s very heartening to see interest from not only deep blue states and cities like Ithaca, but also from red and purple states prioritizing citizen health, climate, and their economies outside of the confines of politics.
The startup is also emerging as an integrator of companies with consonant missions.
On November 14, the company announced a strategic partnership with Harvest Thermal, which is now a key vendor for BlocPower's heat pump home electrification projects across California, offering Harvest Thermal a pathway to scale in a core market.
Other startups working toward the just transition include PosiGen, a rooftop solar and energy efficiency startup out of New Orleans. In August, the company added Massachusetts to its growing list of operational states. Already with projects in Connecticut, New Jersey, Pennsylvania, Mississippi, and of course Louisiana, PosiGen helps families who traditionally do not have access to rooftop solar and lowers energy burdens through their No Credit Needed, Solar for All program.
To date, the company has served over 22,000 residential customers with a lease program that covers the full cost of installing, maintaining and ensuring the rooftop solar system. It also provides energy efficiency upgrades with no minimum credit score or minimum income requirement. Like BlocPower, the company also employs within the states they operate. In addition to forming local community partnerships, the Solar for All Mass program will add over 80 jobs to the Bay State’s market.
In the realm of job creation, Bitwise Industries, a startup based out of Fresno, California, is a digital business hub dedicated to connecting people from what they call, “underestimated cities,” to the skills and resources necessary to access opportunities in the tech industry.
Honolulu-based Sifted Energy is working to enable the transition to a fully renewable grid through a distributed energy aggregation software platform. The startup installs its Ara controller, grid-interactive water heating technology intended to maximize heating when renewable energy is prevalent on the electric grid, and minimize heating when electricity is expensive or the electric grid is stressed.
Utilities express interest in the service, thus the device is completely free to residents, paying them to support their local electric grid via utility savings. Using Hawai’i as a case study, Sifted Energy is leading a program to bring heat pump water heaters to hard-to-reach and Indigenous communities across the islands in an effort to create community-led virtual power plants.
Like BlocPower, Bitwise and Sifted are both a part of Kapor Capital’s portfolio, an Oakland-based investment firm focused on early-stage tech-driven companies working toward a more fair, just, and equitable society.
TransitTech leader Via, is tackling the just transition from another standpoint: transportation. Serving over 600 communities around the world, the company most recently announced a partnership with the city of Birmingham this month, expanding its successful, sustainable public transportation service to 19 new neighborhoods.
In Alabama, Via is creating equitable, accessible mobility through a low-cost ridesharing service. Rides cost a flat fee of $1.50 and cut down on traffic and pollution. Focusing on low-income areas, the company reports that in the original zone, half of the riders make less than $25,000 annually, two-thirds don’t have a car, and most use the service to get to essential destinations, like work, grocery stores, and medical appointments.
Other startups contributing to the transportation aspect of the just transition include Remix, an urban mobility mapping startup acquired by Via, and KIGT which is promoting EV adoption in overlooked areas through their low-cost, smart charging stations and incentivizing software.
The just transition isn’t going to happen without community-based approaches from companies looking to work with cities to make a difference. From energy to heating to transportation, these startups are prioritizing the communities they serve one building retrofit, heat pump, job training, grid, and ride-share at a time.