The Healey-Driscoll administration launched a fifty million dollar grant program in 2023 to help decarbonize low- and moderate-income housing across Massachusetts. The Affordable Housing Decarbonization Grant Program, administered by the state Department of Energy Resources, funds comprehensive energy retrofits in buildings that serve lower-income households, combining heat pump installations with electrical panel upgrades, insulation, window replacement, and in some cases rooftop solar.

Program Purpose

Affordable housing buildings across Massachusetts often rely on aging fossil-fuel heating systems, inefficient windows, and minimal insulation. Those characteristics make them expensive to heat and cool, which drives up utility costs for tenants whose rent is already a stretch, and they generate significant greenhouse gas emissions that run counter to the state's climate goals.

Retrofitting these buildings is technically feasible but financially difficult. Owners of affordable housing often operate on thin margins with limited access to capital for major upgrades. Without targeted subsidies, deep energy retrofits simply do not happen, and the buildings continue to consume fossil fuels and waste energy for decades more.

The Affordable Housing Decarbonization Grant Program addresses that gap directly. By providing grant dollars rather than loans, the program removes the debt-service burden that would otherwise make these projects unworkable for many owners.

Funding Sources

The fifty million dollars came from two main sources. Twenty-five million dollars in Alternative Compliance Payments collected through the state Renewable Energy Portfolio Standard provided the foundation. Another eighteen and a half million dollars came from the Massachusetts Department of Environmental Protection's Climate Protection and Mitigation Trust. Additional funds rounded the program to the announced total.

Using compliance payments from utilities that fell short of clean energy requirements, along with existing climate trust funds, allowed the state to launch the program without drawing on general fund dollars. The mechanism also creates a helpful alignment. Emissions shortfalls by utilities translate directly into emissions reductions at affordable housing buildings that would otherwise remain carbon-intensive.

What the Grants Fund

Eligible projects can include a broad range of decarbonization measures. Typical projects combine several measures to achieve meaningful emissions reduction rather than isolated single-measure upgrades. Common components include:

Air-source or ground-source heat pumps to replace oil, gas, or propane heating and cooling
Heat pump water heaters replacing fossil-fuel water heaters
Electrical panel upgrades to support increased electrical load from new heat pumps and appliances
Insulation and air sealing in attics, walls, and basements
Window and door replacements
Rooftop solar photovoltaic systems
Energy recovery ventilation for fresh air in tightly sealed buildings

Because the program funds buildings rather than individual units, it can achieve economies of scale that would be difficult in single-family retrofits. A single building-wide project can replace a central boiler, upgrade a whole-building electrical service, and install coordinated heat pumps across dozens of units in a single construction mobilization.

Eligible Applicants

The program identifies private parties, non-profits, municipalities, and other public entities as eligible applicants. That breadth captures the diverse ownership structures of affordable housing in Massachusetts, including nonprofit community development corporations, private for-profit owners operating under Low-Income Housing Tax Credit requirements, municipal housing authorities, and state-run developments.

Initial applications were due June 1, 2023, at 5 p.m., with DOER accepting applications on a rolling basis thereafter until funds were committed. The rolling structure allowed the program to move quickly once launched while giving later applicants a meaningful chance to submit.

Early Results

The program's first round of awards totaled approximately twenty-seven million dollars and was announced in November 2023. That round distributed funds to projects spread across the state, prioritizing buildings where energy retrofits could produce meaningful emissions reductions and affordability benefits for tenants.

Subsequent rounds built on that start. Across multiple funding rounds, DOER awarded more than ninety-six million dollars total, helping to decarbonize more than twenty-nine hundred homes. The continued funding reflected both demand from building owners and the state's ongoing commitment to climate investment in the affordable housing sector.

Tenant Benefits

Tenants in decarbonized buildings typically see several benefits. Utility costs go down as heat pumps replace less efficient fossil-fuel systems, and rooftop solar reduces electric bills. Indoor air quality improves as combustion equipment is removed from residential spaces. Cooling becomes standard in units that previously relied on window air conditioners or had no cooling at all, an increasingly important benefit as summers grow hotter.

Because the program focuses on buildings already providing affordable rent, retrofit investment does not displace existing residents. Tenants stay in place while the work happens, with owners typically coordinating construction to minimize disruption.

A Model for Other States

The Massachusetts program has drawn interest from other states considering how to decarbonize their own affordable housing sectors. Key design features, including focus on whole-building retrofits rather than single measures, use of compliance payments and climate trust funds rather than appropriations, and eligibility for diverse owner types, could be adapted to other jurisdictions.

Federal support has expanded through the Inflation Reduction Act's Greenhouse Gas Reduction Fund and other programs, some of which flow through state housing finance agencies. Combining state grant programs with federal tax credits and rebate programs can further reduce costs and accelerate retrofit pace.

Looking Ahead

Massachusetts has set a goal of net-zero greenhouse gas emissions by 2050, requiring deep decarbonization of the state's building stock. The Affordable Housing Decarbonization Grant Program is one piece of the strategy for reaching that goal without leaving lower-income residents behind. Continued funding rounds, paired with expanded technical assistance and coordination with federal programs, will be critical to meeting the state's climate and equity commitments.

Mass. $50M Grant Helps Decarbonize Low-Income Housing