What Does President Biden’s Ambitious Climate Plan Mean for the Multifamily Industry?

The President’s signing of numerous climate-related executive orders signals his commitment to climate change and environmental justice—but what does this mean for built environment and housing affordability? 

By Eileen Lee

Since taking office, President Biden has signed numerous executive orders affecting a wide range of issues. Three noteworthy orders took aim at climate change, putting the issue near the top of the president’s priority list for his term. With the Administration and Congress looking to address climate change from a multitude of angles, from taxes to infrastructure and everything in between, it’s clear that the built environment will certainly be viewed as an opportunity area. 

However, unlike progressive agendas of administrations’ past, this environmental agenda goes beyond just climate change to incorporate environmental justice. What this means is, while there will be renewed interest in reducing carbon footprints as well as improving energy efficiency and indoor air quality, this Administration will also be forwarding policies that can improve the health of at-risk populations that have historically endured poor living and working environments. 

Housing providers should expect a big push for change from this Administration and Congress. There is a strong desire to weave some element of climate change and environmental justice into almost every issue, regardless of whether it’s foreign or domestic.”

Within this political framework, housing—and especially rental housing—is likely to be the target of a variety of new policies, standards and regulations. Whether some of these expected policies prove to be effective or unnecessarily burdensome remains to be seen, but it will be a challenge to keep housing affordable as the Administration strives to improve its performance. 

What’s Happened So Far

An executive order by nature gives the President a relatively immediate way to set the Administration’s course on an issue without having to go through Congress.  And given the narrowly divided Congress we have now, executive orders enable the Administration to make substantial policy moves without having to seek bipartisan consensus. However, the advantage of an executive order is also often its weakness, in that Congress can fail to fund the priorities outlined in a presidential order and it can be undone by the next administration.

With that said, President Biden has chosen to push through several policies using this method. And although the policy landscape is changing by the minute, there are a number of already-signed executive orders centered on climate change that we’re paying close attention. 

The Return to the Paris Accord
One of the President’s first executive actions was signing the executive order titled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” that directed the U.S. return to the group of nations committed to the climate goals in the Paris Accord. To meet the goal of 80 percent reduction in CO2 emissions by 2050, it will require an economy-wide shift in power generation and transportation fuels.  

The order also directed the Environmental Protection Agency (EPA) and other agencies to undertake an immediate review of more than 100 regulatory actions taken during the last administration, including several that involve energy efficiency standards for buildings and appliances and hazard exposure standards for toxic substances.  

Climate Change as a National Security Threat
The order “Tackling the Climate change Crisis at Home and Abroad” cites climate change as a threat to national security and directs that climate considerations be made part of all foreign and domestic policies. It also lays out a pathway for substantial reductions in GHG emissions by 2030 and a carbon-free power sector by 2035—all leading to a goal of achieving net-zero emissions by 2050.  

This order also specifies interagency coordination around environmental justice. Finding that communities of color are disproportionately affected by climate change and pollution, the order specifies the 40 percent of the funds that the government spends on meeting climate goals in energy production, transportation, clean water, infrastructure and affordable housing should flow to these communities or the programs that serve these communities.

The Doubling Down on Science
President Biden also signed an order on “Restoring Trust in Government through Scientific Integrity and Evidence Based Policy Making,” which requires federal agencies to restore expert peer review of science and technology-based regulatory policies. This is particularly impactful in the environmental area since several federal advisory panels were ignored or disbanded in preference to policymaking that was less scientifically construed in past Administrations.

What Multifamily Property Owners Can Expect   

It can’t be said enough: Housing providers should expect a big push for change from this Administration and Congress. There is a strong desire to weave some element of climate change and environmental justice into almost every issue, regardless of whether it’s foreign or domestic. As a result, we see changes on the horizon in a number of areas. 

First, we expect climate change and environmental justice considerations to figure prominently in the infrastructure bill that will come up later this year. With housing increasingly considered as critical infrastructure, this shift could have some ramifications for the rental housing industry.

In addition, we’re anticipating ramped-up performance standards will make their way into building energy codes, especially as states and localities eye retrofit activity. Jurisdictions may encourage or require more on-site renewable energy like rooftop solar where it’s feasible. We also expect tightening regulations around water use.       

The continued support of electric vehicle adoption to meet overall emission standards is also on the table. Detroit’s ambitious plan to transition the new car fleet to bolsters the feasibility of Administration’s intention to reduce carbon emissions economy wide. Such a change will mean properties will likely have to provide more charging infrastructure to meet resident needs.  

Many of these changes will require significant investment from private property owners to not only achieve the goals but also just meet whatever standards might be developed. This not only comes at a time when the nation’s economic recovery remains slow and housing remains in a fragile state, but also as development costs have continued to climb, slowing both investment and production activity, as demand swells. The challenge for policymakers will be to do this in a way that preserves housing affordability. 

President Biden has strong support in the new Congress, but when push comes to shove on new legislation or regulations, his ambitious climate change agenda my encounter some headwinds as it attempts to force a shift in energy production.  Recent weather events have exposed the peril of under investment in our energy infrastructure; the catastrophic failure of the Texas grid underscores the need for a carefully considered transition to a more sustainable and resilient energy future for our nation.  In the meantime, NMHC continues to advocate for resource-friendly policies that help or encourage property owners to make investments in energy-efficient systems and technologies.

 Eileen Lee, Ph.D., is vice president for energy and environmental policy, with responsibility for representing the interests of the multifamily industry before Congress and federal agencies on a variety of issues related to energy and environmental quality. She can be reached at elee@nmhc.org.

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