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The Need for An Equitable Energy Transition Amidst Increased ESG Efforts and Legislation
This item is part of the Electrification of Transportation - August 2022 SPECIAL ISSUE, click here for more
With market forces aligning with action from the federal government, like the recently-passed Inflation Reduction Act, there’s no doubt that the solar energy industry is primed for exponential growth
As this happens, it’s important to take a holistic look at who gets included in this wave of innovation and how this inclusion can be expanded to those that need it most.
The intensifying climate crisis, combined with the result of our dependence on depleting fossil fuels, has driven public interest in clean energy and climate technology. These events are changing public attitudes and pressuring governments and companies to act. As legislation and corporate efforts expand and sustainable opportunities proliferate, many industries – real estate included – are shifting from reactive to proactive ESG efforts. Increasingly, their sustainable activities are motivated not by regulatory and compliance concerns but the prospect of returns from ESG investment efforts.
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Clean energy retrofits represent one such opportunity within the built environment. To reach clean energy goals, the US will need to work towards retrofitting existing buildings with efficient and renewable technologies by 2030, a goal we are not currently on track to meet. To address that shortfall, many companies are taking action and developing solutions to reduce the built environment’s carbon footprint within existing grid constraints. With energy grid constraints, expanding energy-independent options like solar panels and solar battery systems increases meaningful ESG efforts.
As the real estate industry embarks on these efforts, it is essential they remember the principles of a “just transition” and not leave a key segment of the population behind. Particularly, the solar energy industry continues to neglect a key component to making solar fully accessible to the public–solar has historically benefited homeowners over renters. Additional limitations for clean energy options, like costs and accessibility, lead to finding new solutions like multifamily solar sharing systems. This contemporary strategy within the multifamily space, creates a "split-incentive" where landlords foot the bill of retrofits, and tenants theoretically see the benefit, overall allowing all groups to reap the sustainability benefits.
Recent U.S. legislation, including the Inflation Reduction Act, provides the momentum needed to drive the U.S. into the forefront of equitable climate tech deployment. The Investment Tax Credit (ITC) boost included in the bill allows record breaking expansion for solar efforts, particularly for low- and moderate-income families. As this expansion in innovation happens, it’s very important that the solar industry doesn’t let gaps in clean energy access based on economic disparity grow wider and wider. Renters and low-income families deserve access to clean energy as well. The support for bringing energy to these communities, as outlined in the bill, is significant in providing equitable clean energy access.
One of the most exciting funding allocations slotted into the Inflation Reduction Act is the $60 billion set aside for investment in communities and projects that advance environmental justice. This will help to ensure that the energy transition is as equitable as possible, in addition to being as accelerated as possible. As the $60B is split towards direct investment in technology, infrastructure, and other needs, it will lift and raise disadvantaged communities, some of whom have been historically disregarded. Hundreds of millions of dollars in investments in Native communities have been set aside to develop and deploy tech while investing in infrastructure. Loan guarantees are being increased ten-fold for Tribal energy development, to the tune of $20B. The future of a carbon-free grid powered by renewables is a future that should be available to everyone — regardless of income, race, and geographical location.
As market forces like increased public awareness and ESG investing as a tool for ROI meet up with legislative tailwinds and funding, we stand awaiting an incoming wave of renewable energy deployment and technology. It’s important that the solar industry use these same tools — technology and increased awareness — to identify ways to make the energy transition equitable.
From homeowners to renters, in both urban and rural settings, it’s clear: A carbon-free future belongs to us all.
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Electrification of Transportation - August 2022 SPECIAL ISSUE
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