How to Decarbonize the American Household
October 30, 2020
We asked co-author Sam Calisch, MIT-trained engineer and energy nerd, to walk us through some of the report.
Rewiring America: What’s the biggest take-home message of this report on household decarbonization that you did?
Sam Calisch: About 40% of greenhouse gas emissions are controlled by things we do in our households, decisions we make as individuals. Most of us feel powerless about confronting climate change, but the things in our basements, garages, and on our roofs directly influence the largest single slice of the problem. The biggest message of the report is that the technology exists today to completely cut these emissions, but it’s currently not economically viable for most people to do that on their own; they need help. We looked at what happens if we take the best versions of help for the individual – low-cost financing, streamlined regulations, scaled-up technology – and we see that households can actually save thousands of dollars a year on energy costs by decarbonizing. If we can get the wheels in motion in the right way to help people decarbonize their homes, it actually starts to pay for itself.
Just as importantly, the project of building clean residential infrastructure will create millions of jobs, spread across every zip code. In a previous report we analyzed how many jobs decarbonization could create. It’s an economic stimulus that pays itself back, directly into the pockets of American households.
RA: What does decarbonizing your home look like?
SC: The key is that the next time you buy one of a few large appliances for your house, you buy electric. You replace your old car with an electric vehicle, your gas furnace and water heater with heat pump versions, and your gas dryer and stove with electric versions. If you’re re-doing the roof (or building a new house), you put solar on it.
RA: Does that mean I have to throw away my perfectly good fossil-fuel burning car or furnace?
SC: We need 100% adoption of the things that power our homes and sit in our garages. But 100% adoption means replacing things at the end of life with new electric versions powered by renewable energy. People will have to spend a little more on an already large purchase, but it’ll save money on energy bills in the long run.
RA: How will people afford those big up-front costs to decarbonize their homes?
SC: If you wanted to push a button and switch out all your residential infrastructure to clean energy today, it would come to about $70,000. Very few people can do that. In the real world, that's going to be spread out over several years because of the lifetime of the appliances; but still, there's going to be an up-front capital cost. That’s why low-cost financing will be critical in the early stages of transition – when done correctly, the savings in energy expenses is larger than the loan payments, and you start saving money immediately, with nothing out of pocket. That’s a critical threshold we need to cross to spur large scale electrification. In the 1930s, the federal government developed programs like the Electric Home and Farm Authority to encourage adoption of electrical appliances and spur demand for the grid. That program helped hundreds of thousands of households afford appliances and actually generated a surplus. If the government went all in like this again, electrification can be a very attractive proposition, from a purely financial point of view.
RA: So with low interest rates, how do things pencil out for a household?
SC: Right now, the average household spends about $4470 a year on energy. Of course, it’s higher if you live in cold climates, or in places where you drive more, and lower if you live in a place where you don’t use much heat or air conditioning or where energy prices are really low. Overall, in the best scenario where we have the interest rate, the regulations in place, a little bit of an upgrade in technology, and massively scaled-up production of these clean technologies, we could see energy bills drop to $1600 on average, for an annual savings of about $2600. Places with higher current energy costs can save more (New Hampshire families could see a savings of $4000), but even in the most challenging states (like Illinois), households still stand to save $2000.
RA: What accounts for the savings?
SC: Once you’ve built the infrastructure, renewable energy is basically free – especially if it’s generated right on your roof. Even counting the financing of energy infrastructure, electric cars are significantly cheaper per mile to operate than cars with internal combustion engines – most of that comes from avoiding the thermoelectric losses of the combustion. Electric heat pumps don’t burn fuel to provide heat; instead they transform the low-grade thermal energy available in the air or ground into usable space or water heating – providing ~3x the thermal energy than it takes to run the pump. All of these are examples of the inherent performance advantages of electric machines. And though we don’t directly include it in our analysis, electric machines tend to be cheaper to maintain, as they have fewer moving parts and fluids to change. New research shows an electric vehicle has half the lifetime maintenance cost of a gas powered car.
RA: What else besides financing is standing in our way?
SC: We have a lot of regulations that were built for the fossil-fueled world. Critically, part of our transition to clean energy households is regulatory reform, making it easier to get solar permits, streamlining the inspection process, and allowing you to use the full capacity of your roof to generate electricity. Places like Australia have done a great job of this already. In some places, electricity rates are structured to reward efficiency, at the cost of penalizing electrification. We need to be smarter about this. In many cases, electrical service panels must be sized for the case when all of your devices are on full blast at the same time. Many people would gladly avoid paying to upgrade their panels by agreeing that the electric vehicle will start charging after the clothes dryer is finished.
RA: We’ll have to expand the grid.
SC: The grid will play a critical role in residential electrification, supplying renewable electricity to those without rooftops to generate it. It will have to grow and accommodate a massive amount of distributed generation as well as distributed storage – people will have home batteries to increase the reliability of their electricity. The grid won’t just be supplying you with electricity, you’ll be giving back to the grid and to your neighbors. In the electrified scenarios we modeled, there’s plenty of room for utilities to make money, as current electricity prices are lower than the price at which households would still break even on energy expenses.
RA: How did you actually go about doing this report and coming up with the numbers you did?
SC: We took a bottom-up approach to the analysis, starting from what infrastructure is currently in people's homes and what fuels are being used to provide energy, based on data from the U.S. Energy Information Administration’s detailed studies. We then modeled the infrastructure required to provide the same reliable energy services without fossil fuels, using worldwide best practices and currently available technology.
We then calculated financing payments on the total of those capital costs and compared them against the ongoing annual savings provided by new electrical systems, which provide cheaper service than their fossil fuel equivalents across the board. Then the question becomes: What do you have to do in order to start saving people money right now, so that their monthly bill on the loan for the capital cost plus whatever they pay to run those plans is less than what they currently pay?
We examined that question on a local basis across the U.S. We used weather data to extract heat pump performance, insolation data for solar capacity factors, highway monitoring data for driving trends, survey data for vehicle ownership, and historical sales data for existing infrastructure and energy pricing.
So if you read this report, you can look based on where you live and see how much money you could save per year if you electrified under three different scenarios, representing “Business as Usual” today, worldwide best practices, and a potential future with government backing and industrial scale.
RA: How does decarbonizing your household compare with, say, trying to use less plastic or driving less to address climate change?
SC: Right now a lot of people I know who are concerned about climate change try to avoid single use plastics, and they recycle. Let's call these efficiency measures. I certainly don't want to encourage anyone to buy more single-use plastic or throw recyclables in the trash. But the changes made by offsetting a couple of grams of plastic material or a little bit of packaging are kind of like noise compared to what fossil fuels are doing to our world today and the magnitude of the impact we could make by transitioning to decarbonized households. There's been a longstanding culture of “let's just try to use a little less of tons and tons of greenhouse gasses.” That’s not a solution – we’ll still be headed into a climate crisis. The goal of the transition we described is to not require massive behavioral change on a scale that is unlikely to have widespread appeal. The transition we described will provide the same standards of comfort and reliability that people are used to enjoying in their household now.
RA: Are electric appliances better?
SC: The electric future is going to be cool. In addition to having lower ongoing maintenance costs, electric appliances tend to operate with higher performance and provide pretty amazing user experience and safety as well. There will still be the luxury if you want it in the electrified future, and if you leave the stove on, it'll turn itself off.
RA: We’ll have cleaner air, too, right?
SC: Definitely. One of the things that isn't quantified in this report are the positive health effects from switching to clean energy. There are more and more reports coming out (including a great one from Rocky Mountain Institute) on the negative respiratory impacts of burning fossil fuels in our homes. And of course, we will decrease outdoor air pollution when people drive electric cars powered from their roofs. The economic costs are hard to model, so we don’t directly include them, but the effects are real.
RA: What motivated you to work to confront climate change, and to join Rewiring America?
It’s pretty clear that we are not anywhere close to the response that's necessary to address the climate crisis before we’ve gone over an irreversible edge. The timeline is extremely short. That's terrifying.
But there’s a great opportunity here, and as someone born, raised, and educated in Red states, I don’t want this to be a partisan issue. I’ve always been interested in building systems for personal and community reliance, in the role technology can play to improve people's lives, and also in the role of people to be empowered over their own choices in technology. We face massive climate challenges today, but we actually already have the technologies we need to solve them. It’s my hope that this work can be another stepping stone to paint a vision of the future that doesn’t require any miracle R&D and can empower people to cut their emissions, save money, have reliable electricity, and be part of a transition that puts tons of Americans back to work in these perilous times.