The IRA’s Home Energy Efficiency Programs Are Still Kicking ... Sort Of

The Trump administration and Republicans in Congress have done a pretty good job working in tandem to tear down American climate policy. But one key set of clean energy programs has remained relatively unscathed.

The Inflation Reduction Act’s two home energy efficiency rebate programs — one for carbon-cutting appliances and one for whole-home efficiency upgrades — have not been targeted for agency termination or Congressional repeal, or at least not to date.

Still, that doesn’t mean they haven’t run into roadblocks. The rebate programs are paid for by the federal government and administered by states, which have to apply for the funding and stand up programs to disburse it. While the Biden administration had obligated funding to all 49 states that applied for it, only a small handful of states had fully executed contracts enabling them to use the money by the time Biden left office. The rest are now being stonewalled by the Department of Energy, which is still undertaking a “review” of Biden-era funding decisions. Some officials are wondering whether they’ll ever get their applications approved.

Vermont, for example, is stuck in a holding pattern for its Home Electrification and Appliance Rebates, or HEAR program. HEAR provides low- and moderate-income households cash back on appliances like heat pumps and induction stoves, as well as on insulation, air sealing, and electrical upgrades. The Biden administration “conditionally” approved Vermont’s $58 million application, which focused almost exclusively on heat pumps, according to Melissa Bailey, the director of efficiency and energy resources at the Vermont Department of Public Service. It’s not clear that anything in the application is deficient or needs to be changed, she told me. But the new administration has been unresponsive about next steps.

“Candidly, we were concerned that the funding may just not come through at all, so we essentially have paused our planning efforts,” Bailey said.

Vermont is fortunate in that its application for the other IRA rebate program, known as Home Efficiency Rebates and often referred to as HOMES, was finalized before Biden left office. HOMES offers rebates for upgrades based on the amount of energy the upgrades saved, rather than for specific purchases, and Vermont plans to funnel its $29 million HOMES funding into an existing weatherization program. The state has been able to get administrative expenses reimbursed, but it hasn’t technically launched the program yet, as it’s still waiting on the DOE to approve the modeling software the state plans to use to estimate energy savings.

“DOE is very actively engaging with us on the HOMES application as we move forward,” she said. But on HEAR, which is further back in the approval process, the administration has been much more cagey. “Anytime we bring up HEAR, verbally on calls and email, it’s just this kind of standard language that is, thank you for your patience, we’ll let you know when we’re ready to talk about it.”

By combing through public data and reaching out to state energy offices, I found that just five states plus the District of Columbia have been able to launch both rebate programs. Seven additional states have launched HEAR, but their HOMES applications are in various stages of approvals. But 36 states, plus five U.S. territories, have not launched either program, almost three years after the passage of the IRA.

The Department of Energy did not respond to my questions about the rebate programs. But the agency has been reviewing all Biden-era funding decisions. On June 10, Secretary of Energy Chris Wright told the House Committee on Energy and Commerce that his review was ongoing, but didn’t give a clear indication of how long it would take. “We got a process in place, we have a team in place, we’re getting through maybe a dozen or more projects a week, maybe more than a dozen projects a week,” he said. “And so by the end of this summer or middle of this summer we’re going to have clarity on most of the big projects.”

Since neither the reconciliation bill nor Trump’s budget nor his requested rescissions have threatened the rebate programs, there’s no reason to suspect that the DOE will try to claw back the obligated funds. But the funding review and soft pause on applications has created lingering uncertainty.

Meanwhile, Republicans in Congress are working to strip away other funding for energy efficiency. Both the House and Senate have proposed repealing the federal energy efficiency home improvement tax credit — which has existed in some form since 2005 — as part of Trump’s One, Big Beautiful Bill.

The program helps homeowners reduce their energy use, save money, and make their buildings more comfortable. It also eases strain on the grid. The latest iteration offered 30% off the cost of Energy Star-rated windows and doors, insulation, air sealing, heat pumps, and new electrical panels, up to $3,200 per year.

If Trump signs off on terminating this tax credit and the tax credit for rooftop solar, which also seems doomed, the IRA’s rebate programs will be some of the only subsidies left in many states to help Americans afford home improvements that have high up-front costs but long-term financial benefits.

But the termination of the tax credits could also have a negative impact on the rebate programs. That’s what Brian Kealoha, the Chief Growth and Impact Officer at VEIC, a nonprofit that’s working with seven states and the District of Columbia on their IRA rebate programs, is worried about. “The return on investment is just not going to be attractive enough” for heat pumps, he told me. “Unless you’re passionate about decarbonization … how much participation are you going to get without making the return look good?”

Some of the states that have already launched their IRA rebates were able to move quickly because they had pre-existing energy efficiency programs that they could funnel the funding into, rather than having to develop entirely new initiatives. New York, for example, which launched the first HEAR program in the country, put about $40 million of its $158 million award into its Empower+ program, which already provided incentives to low- and moderate-income New Yorkers for upgrades like insulation and heat pumps. Since then, the program has “supported nearly 5,700 projects, yielding $1.82 million in total energy bill savings,” a NYSERDA spokesperson told me.

The state later launched a second program in November offering rebates for heat pump clothes dryers. That has approved 1,100 applicants so far, 350 of whom have redeemed the rebate.

California, similarly, has launched its appliance rebate program in phases, with only the first phase of funding for heat pumps operating so far. The program is already fully subscribed for single family homes, having approved more than 4,000 applications totaling more than $32 million, but is still accepting applications for multifamily buildings. The California Energy Commission told me the second phase is still under development, and that staff are also working on implementation plans for the HOMES program, which they will submit to DOE later this summer.

Other states have taken the opposite approach, choosing to target projects that were not already served by existing programs. Maine already had a successful rebate for homeowners who switch from fossil fuel heating to heat pumps, for example, so it created two new programs using HEAR funding to get heat pumps to other markets — new multifamily buildings that serve low-income households and manufactured homes, often called mobile homes. To date, it has received 12 multifamily applications and approved five, providing up to $2.5 million to install heat pumps in more than 300 low-income units. It’s also awarded an average of $10,500 to 19 manufactured homeowners to switch their propane or kerosene heating systems to heat pumps.

Afton Vigue, the communications manager for the Governor’s Energy Office, told me in an email that Maine’s application for the HOMES program has been “conditionally awarded” and it is “awaiting guidance from the U.S. Department of Energy” but doesn’t know when that will come.

But it seems that everywhere these programs are operating, they have seen high demand.

Georgia was one of the first states to launch both HEAR and HOMES rebates. As of June 12, the state had paid out 178 HEAR rebate applications totaling $1.6 million, and had 72 more in the pipeline, Shane Hix, the director of public affairs at the Georgia Environmental Finance Authority, told me. Its HOMES program had awarded 93 households totaling $922,500, with 89 applications pending.

North Carolina is also operating both programs, but is rolling them out one county at a time, starting in “high energy burden, disadvantaged communities,” Sascha Medina, the Public Information Officer at the State Energy Office told me. Between the launch in January and June 13, the state had received more than 4,100 applications, she said.

The good news for those living in places that are stuck in limbo is that the funding for the rebate programs was authorized through 2031. As long as Chris Wright doesn’t decide the rebates are a waste of taxpayer dollars, and he ultimately resumes approvals for the programs, you’ll still have a number of years to take advantage.