Flawed Assumptions

Like most of you, KPIs are my deliverer or my doom. So when I saw a recent study from McGill University and University Michigan at Ann Arbor on energy justice, efficiency, and emissions, I was wide-eyed. The study found a paradoxical relationship between energy efficiency and emissions. They call it the emissions paradox, and it will make any marketer or program manager go back to the drawing board and ask the age-old questions, “what are we trying to achieve, and how do we measure it?” And for any energy group with DEI goals, race plays a significant factor.

When modeling the energy habits and impacts of 60 million US households, African Americans and Latinos demonstrated lower efficiency AND lower emissions, while Caucasians showed higher efficiency AND higher emissions. The findings blow a massive hole in a widely held assumption that higher efficiency universally equals lower emissions.

The cause for this paradox boils down to racial disparities in building age, ownership, and floor space rooted in redlining and other racist policies. The authors suggest three policies to address this issue: home retrofit financing (especially for rentals), income-qualified solar access, and disincentives for high emissions and consumption.

What This Means for Planning and Marketing

Policy is not what this blog is about, however. I’m thinking about planning and KPIs. Suppose we seek to deploy efficiency solutions while also reducing emissions and pursuing equity goals (as many contemporary utilities do). In that case, our metrics must go beyond the traditional measure for planning and marketing efficient, clean energy access. We must incorporate housing metrics such as floor area capacity, weatherization, landlord engagement (overcoming the split incentive problem), and accessibility to retrofit financing. Without planning, measuring, and acting around these additional metrics, our desire for energy-efficient, low-carbon housing will not materialize.

This scenario will illustrate how enhanced energy justice metrics might play out.

Under traditional EE marketing and program models, adoption and participation rely on a mixture of incentives, including rebates. The EE gets deployed, and we assume there will be fewer household emissions. Under those assumptions, housing A and B are the most likely participants. Both A and B are owner-occupied, which eliminates a large barrier to participation. However, the outcome will not create efficient, low-carbon housing because we are missing critical KPIs for carbon footprint – floor area capacity (FAC) and housing age. 

The priority target for efficiency technology is housing B and C. Housing B and C are more likely to be racial minority households. Due to their FAC and age, efficiency tech paired with weatherization, incentivization, and retrofits is more likely to to produce low emission housing than targeting larger and newer residential assets.

What the Study Missed

So, if you desire to drive down emissions through efficiency, DEI community engagement and traditional data with enhanced housing KPIs should be the default strategy from day one. What the authors of the study need to account for with their solution set is the need for coordinated engagement between utilities, real estate groups such as Real Estate Investment Trusts (REITs), policymakers, facilities managers, building engineers, community organizations, etc. This cadre represents a much more diverse stakeholder group that must be involved from day one. Under these findings, even planning around grid-interactive efficient buildings (GEBs) might not achieve the desired outcomes of creating low-carbon housing stock due to incomplete data sets and evaluation criteria.

“Utilities, real estate groups such as Real Estate Investment Trusts (REITs), policymakers, facilities managers, building engineers, community organizations, etc.; this cadre represents a much more diverse stakeholder group that must be involved from day one.”

In my hometown of Washington, DC, you can see this problem at work. Public policy attention focuses on creating new affordable housing (which is sorely needed) but coordinated action on retrofits, efficiency, and financing for existing low-income residential real estate is largely absent.

The Way Forward

In light of these findings, the next step to creating low-carbon housing quickly is to reframe our engagement, metrics and deployment.

We need to get rid of the old way of thinking that high efficiency deployment = low emissions housing. We must move to a new model where we are start with enhanced metrics (only come about through direct engagement between real estate owners, utilities, financers, and other previously mentioned stakeholders). Then we move toward minority community engagement which SHOULD naturally be the next step based on the findings of this study. From there, we marshal retrofit financing, coupled with energy efficiency (EE) deployment. This should get us to a lower-carbon housing stock quicker, and in the process, create greater energy justice in the decarbonization movement.

Ian Perterer

Ian Perterer

Sr. Manager of Marketing and Communications, AESP

Ian is a marketing and communications veteran specializing in clean energy, efficiency, and engineering. He possesses steeped knowledge in association management, thought leadership, lead generation, emerging social marketing, and community engagement strategy. In prior roles, he helped Fortune 500 companies expand their market reach, continually develop their technical experts, and achieve their ESG and infrastructure goals.