The carbon fight’s mundane frontier: Retrofitting homes and buildings

The 1944 house in Portland’s Cully neighborhood had no insulation, and the family had to plug in an array of space heaters to stay warm in winter. And relying on a window air conditioning unit in summer drove the family’s electric bills to between $300 and $400 per month. Plus, after Ramos injured his hand at his job at a recycling facility in 2019, he underwent four surgeries and physical therapy, often spending time at home and using even more electricity.

Thanks to funding from the Energy Trust of Oregon, a nonprofit organization funded by Oregon taxpayers, the Ramoses’ home was upgraded with an electric heat pump and weatherization last year at no cost to the family. The public investment cut the Ramoses’ monthly electric bills by half and improved their lives.

This report is part of InvestigateWest’s yearlong reporting initiative Getting to Zero: Decarbonizing Cascadia. That work is supported in part by the Fund for Investigative Journalism.

“The heat pump system works like a charm,” says Ramos. “It keeps us very warm during the winter and cool during the summer, which I truly believe helped speed up my recovery.”

A new Portland program, the Portland Clean Energy Community Benefits Fund, is funding these kinds of residential upgrades, and is one of several efforts to expand and accelerate improvements to existing homes and businesses that generate a growing share of climate-warming pollution in Oregon, Washington and British Columbia. The fund, which awarded its first grants this year, focuses on equity for low-income residents and communities of color.

Grants, rebates and other incentives help to upgrade individual homes and buildings case by case. But can programs like the one that assisted Ramos make a meaningful difference in significantly reducing the region’s carbon emissions? It is a question of scope, money and pace.

Making buildings efficient is crucial to Cascadia’s goal of getting off fossil fuels — in other words, decarbonizing. Often overlooked, buildings are second only to transportation as a source of greenhouse gases in Washington, Oregon and British Columbia. Residential and commercial buildings account for about 27% of carbon emission in Washington, and about 21% of Oregon’s total carbon pollution. British Columbia reports that “buildings and community” produce about 21% of the province’s climate emissions.

And in Cascadia’s cities, especially those with robust transit systems, buildings top the list of climate offenders. Largely because natural gas is popular for heating and cooking, building emissions are increasing rapidly; in Washington, emissions from buildings were up 51% from 1990 to 2015. And it is estimated that buildings in Vancouver, British Columbia, release nearly 60% of that city’s carbon pollution.

Switching from gas- and oil-fired furnaces to electric heat pumps, or from inefficient electric baseboard heaters, as the Ramoses did, is critical to turning that trend around. This progress, however, depends on concurrent efforts to develop renewable sources of electricity, such as wind and solar, as InvestigateWest reported in April.

In Washington, regulators are setting standards to clean up commercial buildings. A program, rolling out under the state’s 2019 Clean Buildings Standards law, sets efficiency standards to drive businesses to make efficient upgrades that should pay for themselves. While some cities, such as New York City, have mandatory energy efficiency standards, Washington’s is the first statewide program of its kind in the United States.

Innovative policies will be crucial to increasing the pace of electrification, cutting the cost of retrofits and ensuring that the financial burdens of this energy transition are distributed equitably. Business-as-usual approaches will not allow Cascadia to achieve its carbon reduction goals.

For Washington to be on track for its net-zero climate goal — a vow to release no more greenhouse gas in 2050 than it captures — natural gas use in buildings must decline 14% by 2030. Today, however, residential gas use is actually increasing. In March, British Columbia announced sector-based targets needed to meet its 2030 climate goals, with “buildings and community” requiring the largest reductions: emission levels 59% to 64% less than in 2007.

Meeting these targets means mobilizing tens of billions of dollars. Bruce Manclark, an energy consultant with Austin, Texas–based consulting firm CLEAResult, has studied ways to boost energy efficiency for decades. Manclark estimates that converting Seattle’s gas-heated homes to electric would cost more than $3.2 billion.

To achieve that scale of investment, says Manclark, Cascadia must move beyond a “piecemeal” approach that relies primarily on utility-based incentives and rebates to spur change. “Most of them have been well-managed and have solid results. But that’s kind of going the onesie-twosie approach,” says Manclark.

In other words, sticking with the status quo will take decades, time that Cascadia doesn’t have if it hopes to address the region’s climate-fueled wildfires, drought and heat waves — and further climate chaos worldwide.

Upgrades that make a difference

The Portland Clean Energy Community Benefits Fund was approved overwhelmingly by city voters in November 2018. Funded by a tax on retail companies that is expected to generate between $40 million and $60 million in revenue, the fund pays for projects focused on communities of color and low-income households.

A first round of grants was awarded this year. The companies required to pay the clean energy surcharge were given a one-year grace period, so revenue generation began in April 2020. This year, 45 projects totaling $8.6 million were funded, and the next cycle should be much larger. “Our next round of solicitation will be around $60 million,” says Sam Baraso, spokesperson for the Portland Clean Energy Community Benefits Fund. “It should be even higher in the next three years.”

Portland funnels its energy upgrade dollars through community organizations and businesses. One of this year’s recipients is Verde Builds, the contracting offshoot of a nonprofit created to bring environmental restoration to the predominantly Latino Cully neighborhood. Verde Builds began a pilot program to install electric heat pumps in 2019. Thanks to a $165,000 Portland grant and additional funds from the Energy Trust of Oregon, Verde Builds now plans to install 200 heat pumps in low-income homes.

The Energy Trust of Oregon, founded in 2002, is a nonprofit funded by a 3% surcharge on utility bills in Oregon. The trust has focused on providing traditional conservation approaches, such as giving away free LED lights and offering rebate-based assistance to homeowners and businesses wanting to make their buildings more energy efficient. In 2020, the trust assisted with upgrades to 67,000 homes in Oregon and southwest Washington.

Recently, however, the trust has shifted toward equity-based assistance to low-income homeowners, although programs like its solar power incentives program fund only up to 50% of the total project cost.

Portland’s community energy program differs from the Energy Trust’s traditional approach in that it focuses exclusively on low-income homeowners who can’t afford a green energy makeover. With money from both the trust and Portland’s program, Verde is buying ductless heat pumps that can be easily retrofitted for any home, from a women-owned Portland company, The Heat Pump Store. And it is seeking a minority-owned Portland business to assist with installations. The grants usually cover the entire cost of equipment and installation, according to Verde Builds. At most, a few homeowners will be asked to contribute as much as $500.

Themba Mutepfa, Verde’s project coordinator, says his organization is seeing strong interest in heat pumps, which can both heat and cool a home or business. “Especially since the heat wave, people have been very adamant about getting ductless heat pump systems in their homes,” Mutepfa says.

Another recipient of Portland’s inaugural round of clean energy funds is the Community Energy Project, which has been helping low-income residents and people of color in Portland renovate their homes for more than 40 years. Recently, it has been working on roughly 200 homes each year. This year’s $890,000 grant will allow the Community Energy Project to perform retrofits on 20 Black-owned homes in Portland, according to Executive Director Charity Fain.

Many of these homes, formerly heated by oil, will get heat pumps and a thorough renovation to their exterior, including insulation and new windows. Five will get rooftop solar panels. The Community Energy Project estimates that, overall, owners will see utility bills cut by one-third.

Portland’s program will “allow us to go in and do the whole home,” says Fain, something she says hasn’t been possible in the past. “We’re going to go into a smaller number of homes, but we’re going to go much deeper.”

Deep retrofits boost energy efficiency further; address health and safety issues, such as asbestos and lead contamination; and make it possible to renovate homes that might not otherwise be ready. A new roof, for instance, can make it possible to add more insulation or a rooftop solar panel.

As with Verde’s project, the Community Energy Project is using grants to cover almost all the costs. Fain says that’s essential from both an equity and a climate standpoint. She says it’s time to jettison the idea that “somebody’s got to pay something up front” for residential upgrades that are essential to helping Cascadia meet its climate targets. “People who can’t afford it can no longer be left out,” she says. “We don’t have time.”

Baraso, the Portland Clean Energy Community Benefits Fund spokesperson, notes that requirements for cost-effectiveness — maximizing the emissions reduction achieved for every dollar spent — has been a barrier for projects in communities of color, limiting them to the cheapest upgrades. He says the program’s mission is to ensure that often-marginalized communities get what they need: “This is beyond light bulb replacements. Other programs can go shallow, but we’ll go deeper.”

Washington launches a statewide effort

A novel program, Washington's Clean Buildings Standards, is gearing up this year to inspire — and ultimately require — businesses to make their own upgrades in cases that promise reasonably quick returns on investment.

The first phase of mandates will start in 2026, when owners of commercial buildings larger than 200,000 square feet will be required to perform assessments and make needed upgrades. The program will expand to cover buildings of more than 90,000 square feet in 2027, and to buildings covering more than 50,000 square feet in 2028.

To get an idea of scale, Seattle’s iconic Smith Tower has about 300,000 square feet of office space. Smaller stores, such as Seattle’s Elliott Bay Book Company (20,000 square feet), and all residential-only buildings are exempt.

The process of upgrading begins with measurements, according to Emily Salzberg, managing director of the buildings unit at the Washington State Department of Commerce. She says owners will be required to assess their buildings’ energy efficiency, completing so-called “benchmark assessments” that already are required by some Cascadia cities, including Seattle. Because the process is complex, owners will need to get started early, especially those owners that will be required to comply in less than five years.

Once those assessments are made, a building then will be rated according to a standard set by an industry group, the American Society of Heating, Refrigerating and Air-Conditioning Engineers.

Finally, the building’s energy-use intensity rating, which relates energy use to building size, is compared against a state average for different building types, taking the building’s particular energy requirements into account. “The energy use intensity for an average office building might be 60,” says Salzberg. “It might be 250 for a hospital, which has really high process loads.”

Buildings that aren’t at least 15% more efficient than the statewide average industry group score for their building type must be upgraded, but only if the anticipated savings exceed the cost of the retrofit. For example, if an office needs a new $10,000 heating and cooling system to meet the standard, and the system will last 10 years, its owners must make the investment only if the upgrade saves them $1,000 per year in utility costs.

Salzberg says the state is jump-starting upgrades by making $75 million in financing and assistance available to businesses, and the Department of Commerce will make exemptions for businesses experiencing financial difficulties.

Many buildings can achieve significant savings and even comply with the standard simply by making smarter use of existing equipment, says Julia Weigel, a project manager at McKinstry, a Seattle consulting and construction firm.

Weigel predicts that the most common upgrades will likely be to lighting, as converting to LED systems often achieves significant savings. Only buildings with significantly lower scores, she says, will have to take on costlier projects, like upgrading control systems or replacing boilers.

Weigel points to a recent McKinstry client, a U.S. naval base lin the Pacific Northwest that updated its heating and cooling system and switched to LED lighting. As a result of the retrofit, the facility saved $64,000 a year in energy costs.

Even projects that pay off will often require a push from the state, says Weigel, because building owners must pay for them up front. “It requires significant funding that most are not prepared for,” says Weigel.

Meeting climate goals is a megaproject

Manclark, the energy consultant with CLEAResult, started adding up the cost of retrofitting homes in 2019 after the city of Seattle resolved to zero out its carbon emissions by 2050.

In 2016, the Seattle-based consulting firm Ecotope calculated that for Seattle to meet its target, homes would have to reduce their carbon emissions by 82% overall. Based on that figure, Manclark arrived at a $3.2 billion estimate for converting 80,000 Seattle homes that use natural gas in some form (heating, water heating, cooktops) to electric.

His estimate included installation costs and such equipment as electric heat pumps, high-efficiency electric water heaters and electric induction stoves. It also factored in the cost of weatherization upgrades, such as insulation and better windows.

Manclark’s estimate didn’t include project administration and overhead. And since he made that calculation, equipment and installation costs have risen by roughly one-fifth. Tack those on to added costs and the price tag for electrifying Seattle’s homes to meet its 2050 climate goal will easily top $4 billion, says Manclark.

This spring, he repeated the exercise for Oregon and found that the cost of converting natural gas heating and water heaters in homes across that state would cost $16.1 billion.

Still, Manclark says, it’s not an impossible job, noting that the 2 mile State Route 99 tunnel under downtown Seattle cost $3.3 billion. And the projected cost of replacing the Interstate 5 freeway bridge over the Columbia River between Oregon and Washington already has surged to $4.8 billion.

He says upgrading Cascadia’s buildings needs to be thought of as a megaproject like the SR 99 tunnel, or the Climate Pledge Arena built for Seattle’s new professional hockey franchise, the Seattle Kraken. “It’s going to be like we pay for any other major project: We sell bonds, and we raise taxes,” Manclark says.

The scale of investment must be well beyond Portland’s $60 million-per-year clean energy fund or the $75 million assistance program to help businesses comply with Washington’s Clean Buildings Performance Standards, say such experts as Manclark and Weigel.

How could the region raise the billions required? Options are growing, but each comes with strings attached.

Earlier this month in the British Columbia, government and provincial utility BC Hydro announced a five-year, CA$260 million “electrification plan” that includes money for heat pump rebates. Critics estimate, however, that the plan will trim provincial emissions by no more than 1.3%.

Washington state’s carbon cap-and-trade system, approved by the Legislature in May, is projected to bring in hundreds of millions in revenue, though much of that is designated for roads, highways and transit. British Columbia’s carbon tax, first implemented in 2008, generates revenue of about CA$1 billion each year, but the revenue-neutral tax is largely refunded to residents or used to offset other taxes.

Green bonds, like Oregon’s Sustainability Bonds program, are a potential option if they are scaled up; Oregon’s bonds raise about $40 million per year. During Washington’s 2021 legislative session, some Democrats pushed the Washington Strong Act, which would have authorized the sale of $16 billion worth of green bonds, but that measure was set aside in favor of the cap-and-trade bill.

New federal dollars may also be on the table. The $1 trillion bipartisan infrastructure bill approved by the U.S. Senate last month has multiple provisions for improving buildings, including $3.5 billion for weatherization assistance and $500 million in grants to help make schools more energy efficient. In addition, House Democrats proposed a $3.5 trillion “human infrastructure” package that includes $67 billion for solar power for low-income homes, environmental justice efforts and investments in energy-efficient buildings.

Canada’s current federal budget, approved in April, includes a $4.4 billion, five-year effort to assist homeowners in weatherizing and electrification.

For the Ramos family, getting a green retrofit meant more than just reducing their carbon footprint and lowering their energy bills. Verde’s work made the building healthier, eliminating mold in the bathroom and, according to Francisco Ramos, helping him get back on the job more quickly.

These kinds of health and work-life benefits may be harder to capture when evaluating return on public investment. But for the recipients, the impact is very real. “I can’t express enough what a big difference this system made in my life,” Ramos says.