States Are Using Innovative Financing Programs to Spur Climate Resilience

As communities around the United States face rising sea levels, increased floods and droughts, and stronger storms, policy makers are increasingly focusing on not just reducing greenhouse gas emissions, but also adapting to current climate impacts. To do so, many environmental advocates are emphasizing a need for resilient communities—communities that not only reduce their contributions to climate change, but also establish infrastructures and systems that are able to adapt and thrive in spite of external shocks, such as natural disasters.

One way to build resilient communities is by using property assessed clean energy (PACE) legislation, which was first passed in 2008 by California. Under the PACE financial model, property owners can receive energy efficiency and renewable energy improvements to their property, and, instead of paying the costs of the improvements upfront, owners repay the cost over the span of 10 to 20 years as part of their property tax bill. Reductions on the participant’s energy bill are ideally the same or larger than increases on the tax bill, resulting in a net savings. By using a PACE financing structure to fund resilience measures, states can help families and businesses—especially those that cannot afford high up-front costs—make their buildings more resilient to natural disasters.

Florida was the first state to use PACE legislation to fund resilience; in 2010, the state enacted PACE legislation that allowed for wind resistance improvements, such as installing storm shutters and wind-resistant shingles. Though the Florida legislature did not specifically cite the threat of climate change as a reason for this provision, they nevertheless helped build resilient communities by passing legislation that protects houses against increasingly powerful hurricanes. Adam Hasner, the author of the original Florida PACE law, wrote in a 2017 opinion piece that “thousands have used PACE financing in Florida,” with the majority of projects being “geared toward improvements that help protect properties from severe storms and hurricanes.”

In 2015, Alabama became the first state to pass a PACE program with the explicit purpose of increasing community resilience, as well as energy efficiency. This legislation allowed for flood mitigation, wind resistance programs, and other storm-related improvements to almost any property—including both residential and commercial properties. In 2019, Virginia amended its existing commercial PACE (C-PACE) legislation to include resilience improvements, such as flooding and stormwater management, as projects that are eligible for funding. Virginia’s C-PACE law was also further amended this year in an effort to make it easier for utilities to opt-in. With this revision, Virginia’s Department of Mines, Minerals, and Energy is authorized to serve as a statewide sponsor of the program. Other states with resilience measures in their PACE programs include Utah, California, and Oregon, all of which allow for earthquake-related upgrades.

During the 2020 legislative session, the Washington legislature passed the first commercial property assessed clean energy and resilience (C-PACER) financing bill, so titled to draw attention to the fact that resilience measures could also be funded. Such measures include “seismic improvements, stormwater management, flood mitigation, wildfire and wind resistance.” However, despite signing the bill in March, Governor Jay Inslee vetoed funding for the bill in April due to budget cuts caused by the COVID-19 pandemic. The Maryland legislature also introduced a bill that would have amended their existing PACE program to include several of the same resilience measures featured in Washington’s legislation. However, just a week after the Senate unanimously passed the bill, the Maryland House adjourned early due to the coronavirus, leaving the bill in committee.

When used as a tool to bolster resilience, PACE legislation has the potential to not only implement protective measures against wildfires, hurricanes, and flooding, but also to help promote community-driven and community-centered resilience infrastructures. As climate change continues to exacerbate natural disasters around the United States, PACER legislation provides a path to resilience for lawmakers looking to help strengthen their states.

Author: Maia Crook