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A Closer Look at the Math

  1. California’s climate goal requires all buildings to be net zero by 2045, including all affordable housing. The current financial funding allocation is $1.1 billion over the next 5 years for LMI retrofits and the creation of new affordable housing.
    Source: California Legislative Analyst’s Office 2022-23 California Spending Plan: Resources and Environmental Protection

  2. There are a total of 1,638,000 affordable housing units, 1,134,000 unsubsidized (NOAH), and 504,000 subsidized affordable housing units. The goal is to decarbonize all existing affordable housing units while making sure new construction is all-electric.
    Source: California Housing Partnership data

  3. The gross cost to decarbonize a housing unit in CA ranges from $10,000 to $40,000. The average cost is approximately $25,000. The cost for retrofitting energy efficient technology will likely be $25,000 or higher, while creating all-electric new construction will be significantly cheaper.
    Source: California Energy Commission data

  4. Based on new affordable housing construction trends over the past 3 years, there are around 20,000 new units created per year. Assuming the continuation of this trend, a total of 440,000 new units will exist by 2045. Their cost of new construction is added to the overall calculation.
    Source: California Housing Partnership data

  5. All existing affordable housing units at 1,638,000 combined with the 440,000 new construction results in 2,078,000 total affordable units that will require retrofitting or will be all-electric construction. At $25,000 per unit, the resulting cost is around $53 billion total or $2.4 billion a year.

The gap is the total of $53 billion - $5.1 billion = $48 billion gap, or $2.2 billion per year gap over 22 years.

 

Conclusion

California continues to lead the way in addressing climate change. Its current climate plan is more aggressive than any other state, and its climate goal requires all buildings to be net zero by 2045, which includes all affordable housing. The current energy package for California provides $1.1 billion through its Equitable Building Decarbonization Program over the next 5 years for decarbonization of affordable housing.

Unfortunately, as of June 2023, the state legislature is currently in the process of negotiating the final budget, and the $1.1 billion is at risk of being cut. The state must protect its current funding commitment and add billions of dollars more. If current funding remains consistent for the next 20 years, the state will decarbonize 176,000 affordable housing units, which is significantly less than the 2 million affordable housing units in need. In order to decarbonize 2 million units by 2045, the actual funding required is $2.4 billion per year. The current funding is $220 million per year. If state leaders do not increase energy and housing funds for decarbonization, we calculate that on top of typical rent increases, rents of every existing and planned new unit will need to be increased by approximately 8% to raise all of the capital required to fund decarbonization.

 
 
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