Buildings are responsible for high levels of carbon emissions everywhere. Removing natural gas and running heating, cooling and cooking appliances on clean electricity instead can reduce climate-changing pollution and even lower bills for consumers. California is leading the way
FLICK THE SWITCH
Banning gas heating in favour of electric energy for heat is a policy gaining strength and nowhere more so than in California, where 22 jurisdictions have adopted restrictions on gas in buildings. Electrification is often cheaper as well as cleaner
GOING MAINSTREAM
Advocates of increasing the share of green electricity in energy consumption say financial incentives are needed to speed up the transition away from natural gas in buildings and promote policies for attractive, stable and affordable electricity rates
KEY QUOTE
The move to electrify buildings is the fastest-moving clean energy sector trend I have ever seen.
This transition will be unlike anything we have seen so far California, the world’s fifth largest economy, is reaching an energy tipping point. Its cities are rapidly discouraging the use of natural gas in new buildings. The use of gas heating in existing buildings will soon be on the agenda. In July 2019, Berkeley became the first US city to ban gas hook-ups in new buildings. The law, which takes effect in January 2020, is symbolic, given the radical university community is mostly already built. But it is seen as the first step in a national trend. Berkeley is now researching an unprecedented ban on gas hook-ups in existing buildings, with results expected in 2020. The pace of change has been dizzying. By December 2019, another 21 California jurisdictions had adopted restrictions on gas in buildings, says Mike Henchen from the Rocky Mountain Institute (RMI), a not-for-profit organisation. Most have adopted so-called “reach” codes that encourage electrification by requiring new residential buildings with gas hook-ups to waste less energy. On December, 11, the California Energy Commission (CEC) unanimously voted to affirm limits on gas usage in six jurisdictions, including San Jose, the tenth largest city in the US, clearing the way for the policies to take effect in January 2020. Berkeley’s ban was not included and will be submitted to the state’s Building Standards Commission by the end of 2019. The trend is not expected to abate. By the end of the first quarter of 2020, some 40% of jurisdictions in the state are predicted to have a building decarbonisation policy, says Panama Bartholomy, founder and director of the Building Decarbonisation Coalition (BDC). The California-based group’s members include major electric utilities such as Southern California Electric, industry and cities. State-wide policy may not be far behind. California is required by a 2018 law known as AB 3232 to study how to reduce emissions from buildings by 40% below 1990 levels by 2030. CEC must identify policies to meet this target by the start of 2021. As much as 90% of California’s boilers and water heaters run on gas or, to a lesser extent, propane. Natural gas is relatively cheap in the US compared with Europe, a trend boosted in the last decade by shale gas sourced from fracking. Beyond California, cities and towns, especially in more progressive coastal states, are following suit. Seattle is mulling the prospect of a building electrification policy, as are several jurisdictions in Massachusetts. Brookline, a Boston suburb, recently passed a ground-breaking law requiring new buildings and those undergoing major renovation to be all-electric. New York City’s mayor Bill de Blasio has committed to cut citywide greenhouse gas (GHG) emissions by 80% from 2005 levels by 2050. The city’s non-binding roadmap predicts every building must reduce energy use by 40-60%, with half or more of them converting to high-efficiency electric heating and more than 90% converting to electrified water heating. Across the Atlantic, the Netherlands, a main producer of natural gas, is leading the charge. The government is seeking to slash carbon dioxide emissions from the built environment by 80% by 2050 with all residential buildings electrified. That is a major task since almost 90% of Dutch homes have a gas-fired boiler. The UK has a ban on gas boilers in new homes starting in 2020; Vienna, Austria has banned gas in new homes starting in 2020; the Flanders region of Belgium has banned new homes from having gas hook-ups starting in 2021; and Denmark has proposed a phase-out of fossil fuels for heating all buildings by 2050. GAS NO LONGER A BRIDGE A decade ago, natural gas was often seen as a bridge fuel to a cleaner renewable future. But this argument has grown weaker as the case for electrification as the most efficient way to decarbonise has grown. The BDC’s Bartholomy describes the move to electrify buildings in California, which often leads the US in environmental matters, as: “The fastest-moving clean energy sector [trend] I have ever seen.” As recently as a year ago, building electrification was hardly talked about, he adds. “This transition will be unlike anything we have seen so far,” he says, suggesting that until now the move from fossil fuels to renewables “has been pretty invisible to the consumer”. Lobbying by environmental NGOs and the adoption of climate action plans by many California cities have contributed to this fast pace of change, says Bartholomy. In 2008, Berkeley adopted plans to reduce GHG emissions by 33% below 2000 levels by 2020 and by 80% by 2050. Building regulations are a good way for cities to achieve these targets. The building sector is responsible for around 25% of total emissions in California. Two-thirds from on-site fuel use — natural gas and propane for heating, hot water or cooking — and the remaining one-third from electricity usage, says the Natural Resources Defence Council (NRDC), an environmental advocacy group. The electrification argument is boosted by the greening of electricity grids. California’s renewable portfolio standard requires that 33% of retail sales of electricity in the state come from renewable resources by 2020. The state’s three major utilities are ahead of the target, with 36-44% of renewables as of last year, says a November 2019 report by the California Public Utilities Commission. In 2018, the state passed a landmark law calling for a 100% carbon-neutral electric grid by 2045.
ALL-ELECTRIC OFTEN CHEAPER
Reducing California’s GHG emissions with the lowest societal costs in terms of bill savings and consumer capital cost savings includes high levels of building electrification, shows a report by Energy and Environmental Economics (E3). Draft results of a second study for the state government by the consultancy suggest a decarbonisation scenario with a high level of building electrification would cost $20 billion less a year by 2050 in economy-wide annual net costs than if there is no building electrification. For a new home, whether single-family or multi-unit, it may cost the same or less to build it all-electric, says Stet Sanborn from SmithGroup, a major architectural, engineering and planning firm. For about 10% of buildings, it may cost more, he says. RMI has studied the economics of electrification in four US cities in different climates, Oakland in California, Houston in Texas, Providence in Rhode Island and Chicago. For most new homes, electrification of space and water heating and air conditioning reduces an owner’s costs over the lifetime of the appliances compared with using natural gas, propane or heating oil, says the think tank. The E3 study finds that for 24% of new single-family homes and 53% of low-rise multi-family homes undergoing retrofits, lifecycle costs may increase by more than $100 a year. For retrofits, costs are lower in three types of situations, says RMI: for customers who use propane or heating oil; for gas customers who would otherwise need to replace a boiler and air conditioner at the same time; and those who bundle electrification and rooftop solar. This does not include the cost of natural gas services including connection to the mains, services and meters.
Gas cookers — the heat is on
People are increasingly open in certain parts of the US to consider electrification rather than natural gas as a more climate-friendly way of heating or cooling their homes. But even in the most progressive states, chefs and foodies are resisting the move to induction stoves, saying cooking on gas is the only real option for tasty food. “The kitchen seems like the one place we cannot get gas out of,” said David Kaneda from Integral Group, a green engineering design consultancy, at the Getting to Zero Forum in Oakland, California in October 2019. More than 90% of commercial kitchens in California have some gas, says Richard Young of the Food Service Technology Centre, which encourages the food service industry to become more sustainable. Many chefs believe electric stoves, ovens and grills will not cut the mustard when it comes to producing top quality food. Further, electric induction stoves remain expensive to purchase — for restaurants, the cost of an electric induction range top can be three to four times higher than for a gas counterpart, though they cost the same to operate. All other electric appliances cost about the same or less to buy than the equivalent gas appliances, while they are pricier to operate. Until gas cookers are ditched, gas distribution lines cannot be shut down. Some leading chefs and cooking researchers say fears about electric cooking are unfounded with modern induction stoves, in which an electromagnetic field is used for heating. Induction cookers are faster and Kaneda says they are safer—with no open flame—are easier to clean and do not emit dangerous indoor pollutants such as nitrogen dioxide and formaldehyde, as does natural gas. Nor do they radiate excess heat to a degree that interferes with health. The latter is important — California is considering a strict standard for temperatures exceeding 27.8°C in workplaces, which include restaurant kitchens. “Performance-wise, the induction range kicks butt,” says Young. He believes a shift is slowly under way, highlighting that Starbucks cafes have high-speed electric ovens and Safeway supermarkets cook rotisserie chickens in electric ovens. “The message should be, it is the future,” he says. “Can we afford not to [electrify our kitchens]?”
PRIME THE MARKET
Pierre Delforge, senior scientist at NRDC, stresses the need for incentives to prime the electrification market. As of August 2019, the state’s electricity regulators had made available $1 billion annually for energy efficiency measures to help customers switch from gas to electricity for uses such as space heating and hot water. Additionally, by the end of 2020, $200 million for electrification incentives should be available under the new California law SB1477. The state’s Self-Generation Incentive Programme may also expand to include the installation of heat-pump water heaters to benefit from $166 million in incentives annually. The BDC’s Roadmap to Decarbonise California Buildings, published in February 2019, suggests adopting policies that ensure attractive, stable and affordable electricity rates. Our mantra is “rates, rebates and financing,” says Bartholomy. NRDC’s Delforge suggests changes in electric rates could include a no-increasing-block-rate structure, where the more electricity you use the higher rate you pay. Time of use rates that offer lower prices in the middle of the day and higher prices at peak times, better reflecting grid/wholesale costs, could be another useful tool, he adds. This is because heat pump water heaters tend to operate primarily during off-peak times, such as in the middle of the day when there is abundant solar energy on the grid.
THE PUSHBACK HAS STARTED
Unsurprisingly, given the litigiousness of the US, Berkeley has been sued by the California Restaurant Association over its ban on new gas hook-ups. The association says the ban would irreparably harm the restaurant sector and would undermine chefs’ choice. Restaurants work on famously thin profit margins. The town of Windsor, north of San Francisco, was sued in late November 2019 by two property developers claiming the upcoming ban on natural gas in new homes will increase costs for home-owners. Some housing contractors have balked at the electrification programme run by the community-owned Sacramento Municipal Utility District (SMUD), trying to talk customers out of getting heat pumps, says Scott Blunk. He blames the reaction on a lack of familiarity with electrification and says builders just need to learn electrification can be a way to make money. Meanwhile, Southern California Gas (SoCalGas), a major utility, has successfully lobbied politicians in small towns to adopt measures calling for a “balanced” energy future that includes natural gas and biogas, such as methane and CO2. More than 100 small communities and counties in California have passed such non-binding resolutions. “It is clear this transition is hazardous to the gas business,” says RMI’s Henchen wryly. An increase in rates for SoCalGas of 24% was approved at the end of 2019 by state regulators.
PRUNING THE GAS GRID
Matthew Tisdale, executive director of Gridworks, a think tank that advocates decarbonised electric grids, agrees the least pricey path to the state’s GHG goals includes extensive building electrification. But he stresses remaining gas customers will have far higher bills since fewer will be shouldering the burden of the cost of the gas system. The state is predicted to have a $1 billion gap by 2030 and $26 billion gap by 2050 between the revenue collected and what will be needed to maintain the gas system, says a 2019 Gridworks report. Gas distribution lines are still being installed with a 50-60 year depreciation schedule. “That is a problem,” says Tisdale. “If you are in a hole, stop digging.” The gas system must be pruned to become smaller, more affordable and equitable, with geographic targeting of where it should be decommissioned first based on where most capital expenditure is needed. Low-income communities and the gas workforce must not be left behind, he says.
A UTILITY LEADER
Some utilities are already deeply involved in electrification. SMUD with its more than 1.5 million customers, including in the California state capital, has a 50% carbon-free supply portfolio. The utility offers incentives of as much as $13,750 for an existing single-family home to electrify. Its Electrification Programme, launched in June 2018, offers up to $3000 to convert to an electric water heater; up to $2500 to convert to space heating and $1500 for conversion to space cooling with a $500 bonus if proper airflow is achieved; up to $2500 to upgrade an electrical panel; and up to $500 to replace a gas cooker with an induction cooker. Incentives for multi-family homes are about half as much, says SMUD’s Scott Blunk, because they use less energy. In one year, as many as 1200 water heaters, 600 space heaters and air conditioning units and a few dozen cooking ranges have been converted, says Blunk. SMUD plans to have 100% of low-incomes homes converted and 80% of other homes by 2040. Some of the largest investor-owned utilities are also seeing the advantages of electrification. The northern California utility, Pacific Gas & Electric (PG&E), is the nation’s largest with more than 5.5 million customers. It publicly supported Berkeley’s ban on new gas hook-ups. The utility is in bankruptcy because of liabilities from deadly wildfires. PG&E sells natural gas, but it saw the writing on the wall regarding climate policy in California, says RMI’s Henchen.
TEXT Ros Davidson