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A new statewide climate bank will offset costs to upgrade affordable housing properties by replacing fossil fuel-burning building systems.

Gov. Maura Healey said the new $50 million fund is the nation’s first climate bank to specialize in the housing sector.

“We’re centering environmental justice for folks hit hardest by climate impacts and energy costs,” Healey said today at a State House press conference.

The Massachusetts Community Climate Bank will be seeded with $50 million in state funds from the Department of Environmental Protection and will fund renovations of affordable housing properties that will replace building systems that rely on fossil fuels with ones that shrink the properties’ carbon footprints.

MassHousing, MassDevelopment and the Massachusetts Clean Energy Center will run the climate bank.

Green bank advocates say multifamily landlords currently have few incentives to replace inefficient older building systems, because of the upfront costs and ability to pass along heating costs to tenants. Small, older apartment buildings make up a significant portion of the housing stock in Boston and Massachusetts’ Gateway Cities.

“It’s an opportunity to alleviate the extreme pressure that families experience with regards to housing,” Healey said.

Details on the eligibility requirements are still being finalized, but Healey said the program’s first recipients will be affordable housing properties, 

“We are prepared to focus on the first instance on affordable housing, but that doesn’t close the door down the line to other types of investment,” she said.

A 2020 study by consultants Cadmus Group estimated that it will cost commercial and multifamily landlords in Greater Boston nearly $33 billion to retrofit buildings to meet upcoming decarbonization regulations. The state has committed to attaining net-zero building standards by 2050, through regulations that will phase out use of fossil fuels in both commercial and residential buildings.

A 2022 report by the Massachusetts Commission on Clean Heat said the existing Mass Save program, with its dozens of clean energy incentive programs, is insufficient to meet the goal. Mass Save doles out approximately $1.3 billion a year.

The climate bank will “grow over time,” Healey said, noting that the Biden administration has allocated billions in grants and tax credits for green energy projects through the Inflation Reduction Act.

The IRA earmarks $369 billion for climate change and energy security programs over the next decade. 

In a statement, Healey’s office also said the climate bank would also look to attract private capital.

This spring, Boston opted into the state’s new stretch energy code, which requires new buildings and major renovations to be designed to accommodate electric heating systems in the future. Buildings account for more than two-thirds of greenhouse gas emissions in the city, according to the administration.

Boston Mayor Michelle Wu previously announced that her administration will award $10 million in grants to owners of affordable housing properties to replace fossil fuel building systems, using a portion of the city’s American Rescue Plan Act funds.

Through the competitive award process, building owners will get up to $50,000 per unit for deep energy retrofits and replacement of stoves and heating systems.

Appearing at today’s press conference, Wu said the city already has a “pipeline of projects” that would benefit from the new climate bank.

“Of those buildings, many of those are the beautiful historic older homes that very much need support from energy retrofits,” Wu said.