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BDC Reports
Building Decarbonization Policy Brief
Financing and Incentives

Financing a Climate-Safe Future: Low- and Moderate- Income Residential Building Decarbonization


California needs a comprehensive financial and regulatory strategy to support a transition to residential building decarbonization that prioritizes low-income communities. Inclusive utility investment (IUI) financing, also referred to as Tariffed on-bill financing (TOBF) is an approach that should leverage existing funding streams, establish new funding programs, and should tap into third party capital to help finance the cost of electrification while using public funds in a targeted way to bring down the cost of electric appliances and incentivize early retirement of existing gas appliances. Tariffed on-bill financing (TOBF) can enable more equitable adoption by providing homeowners and landlords a cost-effective way to finance a portion of the cost of home electrification. Investor-owned utilities (IOUs) already have the ability under California law to implement TOBF programs with approval from the California Public Utilities Commission (CPUC). TOBF is a critical and underutilized tool, and the state and local governments can facilitate the equitable use of TOBF by deploying targeted incentives and adopting legislative and regulatory changes aimed at reducing the lifecycle costs of heat pumps and electric appliances and phasing out fossil-fueled appliances.

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