Residential Decarbonization and Affordability - California Climate and Energy Collaborative

Barrier 8: Residential Decarbonization & Affordability

Barrier Statement

Residential energy bills are increasing, making electrification initiatives more difficult, and CA lacks a coordinated strategy to address the root issues of system costs that impact the trajectory of rates while protecting energy efficiency programs that help lower customer costs.

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How communities are experiencing this barrier

View the details on what communities have shared with SLECC from across the state.

Key challenge discussed in - Los Angeles, Inland Deserts, San Diego

High and rising electricity costs are discouraging household electrification and slowing residential decarbonization. Despite available incentives, many Californians hesitate to switch from gas to electric systems because electricity rates—driven upward by costly utility infrastructure investments and overspending—are among the highest in the nation, while gas remains comparatively cheap. As a result, about one-third of households that electrify face higher utility bills. Stakeholders also noted that energy efficiency programs, which can reduce overall energy demand and costs, remain undervalued despite their proven cost-effectiveness.

Key challenge discussed in - Los Angeles, Inland Deserts, San Diego

Retrofitting California’s older housing stock is a major challenge for electrification and resilience. In regions like San Diego—where most of the 800,000 buildings built before 1978 are ill-equipped for upgrades—homes often require extensive pre-work such as roofing repairs, panel and insulation upgrades, or appliance replacements before heat pumps and other zero-emission technologies can be installed. Each building’s unique conditions make retrofits costly and highly individualized, creating stacked barriers for low- and moderate-income homeowners. Local energy and air-quality agencies in the Inland Empire have emphasized that the transition to zero-emission housing must prioritize affordability and equity to ensure retrofit programs reduce, rather than reinforce, existing economic divides.

Key challenge discussed in - Inland Deserts

There are concerns about the emissions that are going to come from new housing development. Without careful planning and updated building standards, new development could deepen the Inland Empire’s emissions burden through increased car dependence, fossil-fuel-based appliances, and construction-related pollution. Given the Inland Empire’s topography—where pollutants get trapped by surrounding mountains—expanding housing without decarbonization measures threatens to exacerbate both public health risks and climate impacts.

Key challenge discussed in - Los Angeles

Local governments and contractors struggle to keep up with frequent state policy shifts (e.g., reach codes, new CPUC proceedings, AB 360 restrictions on local codes)

Key challenge discussed in - Inland Deserts

While several energy programs are available to support home retrofits and electrification, residents face confusion, trust barriers, and communication gaps that limit participation—especially in disadvantaged communities.

Local Solution Opportunities

SLECC stakeholders have brainstormed the following solution opportunities that can be taken by local leaders. Existing examples of progress or pathways to make further progress are highlighted if known.

Local Solution

Incorporate energy efficiency measures in older buildings (e.g., retrofits for roofs, appliances, insulation).

Existing Examples of Progress:

1. Watts Rising and Habitat for Humanity whose programs are addressing structural building needs and going beyond basic energy saving upgrades. 2. The City of Palm Springs is exploring ways to assist multi-family developments with energy efficiency upgrades and provide more affordable options for low-income residents to access decarbonization measures. Extreme heat and climate impacts are disproportionately affecting low-income and disadvantaged communities in the Coachella Valley, leading to high energy costs and health issues. Many residents in the Coachella Valley have fixed or single incomes, making it difficult to afford rising energy costs, especially during the hot summer months.

Further Progress Pathways

Region(s): Los Angeles, Inland Deserts

Local Solution

Integrate affordability into CAPs – Local governments recommended explicitly including energy affordability metrics and protections in climate action plans to prevent inequities during electrification

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Diego

Local Solution

Target cost barriers through direct incentives and rebates.

Existing Examples of Progress:

The South Coast AQMD Go Zero Program (launching 2025) will dedicate $21 million in mitigation funds to cover technology conversion costs, prioritizing overburdened communities and pairing rebates with installer training and outreach

Further Progress Pathways

Region(s): Inland Deserts

State Solution Opportunities

SLECC stakeholders have brainstormed the following solution opportunities that can be taken by state leaders. Existing examples of progress or pathways to make further progress are highlighted if known.

State Solution

Expand affordability-focused programs that provide direct financial support for low- and middle-income and tribal households. The State should scale initiatives that subsidize utility bills, offer targeted rebates, and cover up-front retrofit and electrification costs—such as for heat pump installations—to make efficient options accessible year-round and during emergencies. Providing statewide subsidies, not just rebates, can help ensure affordability and resilience for vulnerable households.

Existing Examples of Progress:

Further Progress Pathways

Region(s): Los Angeles, Inland Deserts, San Diego

State Solution

Develop a coordinated statewide affordability and reliability strategy that links decarbonization goals with household protections from rising energy costs. This framework should align policies across the CPUC, CEC, and investor-owned utilities (IOUs) to ensure unified energy planning that avoids redundant or conflicting infrastructure investments. By integrating affordability, reliability, and decarbonization, the State can protect consumers while advancing a just and efficient energy transition.

Existing Examples of Progress:

Further Progress Pathways

Region(s): Inland Deserts, San Diego

State Solution

Protect and reinvest in energy efficiency programs that reduce consumption, lower bills, and provide broad system benefits. For every dollar invested in efficiency, Californians realize roughly four dollars in returns through reduced energy demand, lower infrastructure costs, and avoided generation buildout. Continued investment in energy efficiency—alongside electrification—is essential to maintain affordability and advance decarbonization cost-effectively.

Existing Examples of Progress:

Further Progress Pathways

Region(s): Inland Deserts, San Diego

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Additional Resources

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