WASHINGTON, D.C. — The Department of Energy published updated guidance on June 1, 2025, for implementing $8.8 billion in consumer energy efficiency rebate programs established under the Inflation Reduction Act. The new guidance eliminates federal rebate funding for switching from fossil fuels to electricity for home heating.

Under the revised rules, households can only receive rebates for heat pumps in new construction or if they already have electric heat. The guidance also removes diversity, equity, and inclusion considerations from program implementation and requires households to upgrade insulation and air sealing before using rebates for new appliances.

The guidance covers the $4.3 billion Home Owner Managing Energy Savings (HOMES) program and the $4.5 billion High-Efficiency Electric Home Rebate (HEEHR) program. State programs administer the rebate funds, but the federal government must approve state plans before releasing money. As of May 18, 2025, most states plus the District of Columbia had received at least partial approval for their plans, according to Atlas Public Policy. Some states that already paid rebates under the initial rules now have three months to modify their programs to comply with the new guidance. A Department of Energy spokesperson said, “The Department of Energy has released common-sense revisions to program guidance to align requirements more closely with statutory requirements, advance affordability, ensure good stewardship of taxpayer dollars, and empower grantees to tailor their programs to local contexts and residents’ needs.”

Tony Sirna, deputy policy director for Evergreen Action, said it is “flatly illegal to eliminate funding for electrification, which was part of Congress’ intent.” He added, “This is a deliberate effort to deny relief to millions of families at the exact moment they need it the most.”

Srinidhi Sampath Kumar, director of the Sierra Club’s clean heat campaign, said, “It’s a very standard playbook to incentivize fossil fuel companies and provide a lifeline to them. It’s absolutely been done in bad faith.”