DOE Revives Home Efficiency Rebates, Electrification Suffers Most
TL/DR –
The Department of Energy has withdrawn support for federal energy efficiency rebate programs to cover a switch from fossil fuels to electricity for heating. The department’s new guidelines also eliminate considerations of diversity, equity and inclusion. The guidance concerns the $4.3bn Home Owner Managing Energy Savings (HOMES) program and the $4.5bn High-Efficiency Electric Home Rebate (HEEHR) program, both designed to assist low-income and disadvantaged households with energy efficiency upgrades.
U.S. Federal Energy Efficiency Rebate Program Removes Provisions for Fossil Fuel-Electricity Switch
The U.S. Department of Energy has released new guidelines indicating that its federal energy efficiency rebate programs will no longer cover the cost of switching from fossil fuels to electricity for heating. The long-awaited update outlines how the department plans to implement consumer programs, backed by $8.8 billion in funding.
Changes to the Rebate Programs
Significant changes to the programs include the removal of diversity, equity, and inclusion considerations, among other factors. This follows legal disputes that emerged after an executive order was issued last year by President Donald Trump, who returned to office and halted the release of funds from Biden’s Inflation Reduction Act. These funds included rebates for home energy efficiency, but a group of states successfully sued to have the funding reinstated, acquiring an injunction in March 2025.
In the wake of this legal victory, states have eagerly anticipated the Department of Energy reopening the funding, which this latest guidance begins.
The HOMES and HEEHR Programs
The updated rules, announced on June 1 and effective from May 29, apply to both the $4.3 billion Home Owner Managing Energy Savings (HOMES) program and the $4.5 billion High-Efficiency Electric Home Rebate (HEEHR) program. Additional guidelines have also been provided for Indian tribes participating in the HEEHR program.
The HOMES program offers households up to $8,000 to make energy-efficient upgrades, such as insulation, air sealing, heating and cooling equipment, water heaters, duct sealing, appliances and lighting. To be eligible, these upgrades must reduce energy use by at least 20 percent. On the other hand, the HEEHR program provides up to $14,000 in rebates per household for qualifying efficient electric equipment and appliances. These rebates can be offered by retailers and contractors at the point of sale.
Furthermore, the programs, originally designed by Congress and the Biden administration, aimed to ensure that disadvantaged and low-income households received considerable benefits. However, the new guidelines shift this focus, reflecting the Trump administration’s stance against considering diversity, equity, and inclusion in federal spending and their decision to eliminate Biden’s Justice40 environmental justice initiative.
Changes to Funding and Program Eligibility
The updated guidelines also remove funding support for shifting from oil, gas or other fossil fuels to electricity for home heating. Now, only households planning new constructions or those already using electric heat can qualify for funding for heat pumps, as opposed to the previous rule that encouraged people to switch away from fossil fuels. The Department of Energy now also requires households to upgrade their insulation and air sealing before using rebates for new appliances.
Response to the changes has been mostly negative among groups advocating for energy efficiency improvements. Tony Sirna, deputy policy director for Evergreen Action, stated that it’s “flatly illegal” to cut off funding for electrification, which was initially intended by Congress. “This is a deliberate effort to deny relief to millions of families at the exact moment they need it the most,” he commented.
Implementation of the New Guidelines
While states manage the funds, the federal government must approve the state plans before releasing the funds. As shown in a May 18 update from Atlas Public Policy, most states, including the District of Columbia, have had at least some of their plans approved. States that have already paid rebates based on the initial guidelines under the Biden administration now have three months to modify their programs in line with the new guidance.
Consumers are encouraged to reach out to their state energy offices to find out more about the availability of these programs.
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