Energy Policy Shifts: How to Help BPA Protect At-Risk Programs

The new Congress and presidential administration taking office this month have set the stage for shifts in energy policy that could significantly impact the energy efficiency industry and its stakeholders. For home performance and energy efficiency contractors, understanding potential  changes is critical to support the industry moving forward and advocate for the continuation of vital programs. 

Status of Home Energy Rebates

President Donald Trump’s “Unleashing American Energy” Executive Order, issued last week, ordered all agencies to immediately pause the disbursement of funds for certain key clean energy initiatives under the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA). Because the Home Energy Rebate programs were enacted as part of the IRA, some states have reported issues accessing funding since the issuance of the Executive Order. These rebate programs, Home Efficiency Rebates (HOMES) and Home Electrification and Appliance Rebates (HEAR), were designed to help American households, particularly those with low- and moderate-incomes, save money on energy bills by covering the costs of energy-efficient home upgrades. 

Red and blue states alike have actively engaged with the U.S. Department of Energy to set up these rebate programs using IRA funding, applying for nearly the full $8+ billion allocated by Congress under the HOMES and HEAR programs. As of January 17th, every state except South Dakota, Washington, D.C., and five territories have applied for and been awarded funding, with 12 having already launched their programs. BPA will continue to work with allies and stakeholders so that full funding can reach states across the country to support critical home energy rebate programs.

25C Tax Credit at Risk

As Congress weighs passing new legislation, expanded clean energy and energy efficiency IRA tax credits are at risk of being eliminated or weakened. The Energy Efficient Home Improvement Credit (25C), for example, could be susceptible to repeal as lawmakers seek cost offsets for new proposals. 25C is vital to sustaining demand for contractor services and reducing household energy costs.

25C offers consumers an annual credit of up to 30% of the cost of qualified building envelope improvements and energy-efficient appliances, with a maximum total annual credit of $3,200. Eligible upgrades—including insulation, air sealing, high-efficiency gas furnaces, high-efficiency gas water heaters, electric or natural gas heat pumps, and electric or natural gas heat pump water heaters—can help reduce monthly energy consumption and energy costs, regardless of the fuel source a home relies on. In 2023 alone, this credit saved over 2.3 million taxpayers an average of $882.

For contractors and industry professionals, 25C has been a major driver of business, creating demand for energy-efficient products and services. Without it, contractors could see a significant decline in consumer-driven projects, leading to potential job losses and a slowdown in the adoption of energy-saving upgrades.

BPA and its partners are working hard to protect the 25C credit. Nearly 1,000 contractors, distributors, and manufacturers from the U.S. insulation, HVAC, and home performance industries across all 50 states have already signed onto a letter co-organized by BPA to defend the 25C tax credit from repeal. This letter is just one of the many ways that BPA mobilizes its nationwide community to advocate for the industry.

While the future of the 25C tax credit and other key energy efficiency policies remains uncertain, there are still opportunities for bipartisan support to protect these initiatives.

Opportunities for Bipartisanship in Support of Energy Efficiency

Historically, energy efficiency has been strongly bipartisan. The 25C tax credit, for example, was initially signed into law by President George W. Bush in 2005. It provided a homeowner tax credit of 10% for efficiency investments and a lifetime limit of $500. However, the credit’s impact diminished over time due to inflation and uncertainty surrounding its reauthorization, necessitating its extension and expansion in 2022. 

Additionally, while the IRA passed across party lines, programs within such as the HOMES rebate program have bipartisan roots—HOMES stems from the HOPE for HOMES Act (H.R. 3456), a bipartisan bill that existed in various forms for over a decade before being incorporated into the IRA.

Take Action to Protect Energy Efficiency Programs

Shifts in the political landscape bring new opportunities for energy efficiency stakeholders to educate new House and Senate members about how key rebates and tax credits support the contractors in their states.

BPA will continue to advocate for the industry by mobilizing members and allies to protect important programs, engage with policymakers, and provide contractors with the resources needed to navigate the evolving landscape. Sign up here to receive updates and ensure you stay connected with the latest developments.