New federal clean energy rebates are in limbo for residents of Pa., Del., and N.J.

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Close to a dozen states are offering new rebates for home upgrades like electric heat pumps and insulation, funded through President Joe Biden’s signature climate law. But some worry the incoming administration of President-elect Donald Trump could jeopardize those funds for residents of Pennsylvania, New Jersey and Delaware.

The U.S. Department of Energy has yet to approve those applications even as the Biden Administration draws to a close.

“I think everybody’s a little bit worried,” said Rachel Goodgal, government affairs manager at the Keystone Energy Efficiency Alliance and Energy Efficiency Alliance of New Jersey, which represent dozens of energy-efficiency companies in the two states. “There’s pretty widespread angst.”

The energy efficiency, electrification and appliance rebates, funded with $8.8 billion from the Inflation Reduction Act, are expected to lower households’ energy use, help them switch from gas-burning appliances to electric ones, and save recipients up to $1 billion a year on energy bills.

Trump has vowed to repeal the Inflation Reduction Act. But it’s not clear how his administration will handle the home energy rebates, which are expected to roll out in red and blue states alike.

Discounts for low- and moderate-income families

Some of the Inflation Reduction Act’s other incentives for families to make their homes more climate-friendly — in the form of tax credits — have disproportionately benefited higher-income households. Tax credits require an up-front investment in weatherization or efficient appliances that’s later recouped in part when a household files its taxes.

“It’s hard to put out money like that, pay for costs like that and wait for reimbursement,” said Pamela Darville, a volunteer with POWER Interfaith who helps lead the Pennsylvania advocacy organization’s climate justice and jobs team.

On the other hand, the home energy rebates are expected to be more useful for low- to moderate-income households, because they’ll reduce costs of weatherization and appliances on the front end — and because Department of Energy guidelines say some of these rebates must be reserved for families at these income levels.

The rebates can cover home improvements including insulation and air sealing, as well as electrification investments, electric wiring and appliances such as electric heat pumps, hot water heaters, electric heaters, heat pump clothes dryers and electric stoves.

Under the Department of Energy’s guidelines, which states can modify, the rebates can provide discounts of up to $8,000 per household for energy-efficiency measures and up to $14,000 for electrification and appliances. The rebates can be used in multifamily or single-family housing, by renters or homeowners.

These energy-efficiency investments are expected to lower families’ energy bills — which is important in places like Philadelphia. One in four low-income households in the city spends at least 16% of its income on energy bills, and Black and Hispanic residents experience a disproportionately high energy cost burden.

Advocates also hope the rebates will lower carbon emissions, improve air quality and bring health benefits to communities that have been overburdened by pollution.

“We are very interested in making sure that the communities that have typically borne the brunt of dirty energy industries are seeing the first benefits from this transition to clean energy,” said Melissa Miles, executive director of the New Jersey Environmental Justice Alliance.

Fears for the future of the rebates under Trump

Trump is expected to walk back Biden’s efforts to address climate change and environmental injustice. The incoming president has called climate change a hoax and vowed to boost production of fossil fuels. He’s also said Democrats want to “take away” gas stoves, though the legislation he was referring to actually set efficiency standards.

While Trump has promised to repeal the Inflation Reduction Act, it’s not clear to what extent this could happen. Revoking the law’s funding would require action from Congress. Republican lawmakers have criticized the law, but GOP-leaning districts have been the biggest winners of the law’s clean energy and manufacturing investments. 

Legal experts have said it would be hard for the federal government to pull back funding already sent to states to administer the rebate program, but the incoming administration could delay sending funding to states that have not received it yet.

A spokesperson for the U.S. Department of Energy said last month the agency was reviewing funding applications from Pennsylvania, Delaware and New Jersey, and would award funding once those reviews were complete. As of Monday, an online dashboard showed the agency still had not approved the states’ applications.

“I’m cautiously optimistic that [Delaware will] receive the funding before Biden leaves office,” said Dustyn Thompson, director of the Delaware Chapter of the Sierra Club. “When Trump comes in, it’s anybody’s guess what’s gonna happen.”

What rebates could look like in the Philly region

Delaware, Pennsylvania and New Jersey are designing their rebate programs as they wait for the federal government to approve their applications for funding. Each state has published some information about its planned rebate programs online, subject to federal approval.

Delaware

• Total funding applied for: $66 million.
• Appliance, electrification and energy-saving retrofits rebates available for both single-family and multifamily housing.
• Income eligibility cap: 150% of area median income for single-family homes ($120,450 a year for an individual or $172,050 for a family of four in New Castle County in 2024). Families participating in programs including Medicaid, Heat Start or LIHEAP would qualify automatically. At least half of residents in multifamily buildings must be low- or moderate-income.
• Types of eligible appliances and materials: Heat pump hot water heater, heat pump for space heating and cooling, electric stove, heat pump clothes dryer and electric wiring.
• Landlords cannot raise rent as a result of improvements made through the rebates programs until at least 2031.
• Appliance installer incentives of up to $500.
• Projected launch: first half of 2025. Delaware expects the U.S. Department of Energy will approve its application by inauguration day, said Department of Natural Resources and Environmental Control spokesperson Michael Globetti.

New Jersey

• Total funding applied for: $183 million.
• Appliance, electrification and energy-saving retrofits rebates available for both single-family and multifamily housing.
• Income eligibility cap: 150% of area median income for appliance rebates. No income cap for energy-saving retrofits, although rebate amounts decrease for higher-income residents.
• Types of eligible appliances: not specified.
• N.J. is targeting energy efficiency and electrification programs in traditionally underserved communities, according to a spokesperson.
• Projected launch: 2025. New Jersey’s Board of Public Utilities expects to receive a contract from the Department of Energy in mid-January, a spokesperson said.

Pennsylvania

• Total funding applied for: $259 million.
• Income eligibility cap: 150% of area median income for appliance and electrification rebates. Families participating in programs including Medicaid, Heat Start or LIHEAP would qualify automatically. No income cap for energy-saving retrofits in multifamily buildings, although rebate amounts decrease for higher-income residents.
• Types of eligible appliances and materials: Heat pump hot water heater, heat pump for space heating and cooling, electric stove, heat pump clothes dryer, insulation and electric wiring.
• Rebates for energy-saving retrofits will be available only for multifamily buildings.
• Contractor incentive of $200 for completing projects in disadvantaged communities.
• Projected launch: early 2025 for electrification and appliance rebates, mid-2025 for multifamily energy-efficiency rebates. Pennsylvania’s Department of Environmental Protection declined to comment on when it expects to receive the funding.