Chapter 1.1
Climate Change

• ALL
• Remove Code Barriers
• Create Incentives
• Fill Regulatory Gaps

Fossil Fuel Bans and Electrified Construction

INTRODUCTION

Fossil fuels are the primary method for heating, cooling, and producing hot water in residential homes and commercial buildings in the U.S.[1] Millions of homes and businesses burn natural gas, oil, or propane on-site to heat their space and water.[2] The Rocky Mountain Institute estimates roughly 70 million American businesses and households burn natural gas, oil, or propane for just heating alone.[3] This is estimated to generate 560 million tons of carbon dioxide emissions in a single year.[4] Further, that equates to a tenth of the nation’s total emissions. Burning these fossil fuels is a significant source of localized pollution in many communities.[5] In addition, it also is a significant contributor to greenhouse gas emissions.[6]

Many local governments are seeking to reduce the use of fossil fuels in residential and commercial buildings by banning or limiting fossil fuels from new construction and phasing it out from existing buildings. This brief examines local ordinances restricting fossil fuels in new and existing development in order to identify  and encourage recommended best practices.

Minimizing reliance on fossil fuels is crucial to deterring the worst impacts of climate change.[7] The combined use of fossil fuels in boilers, furnaces, and hot water heaters represents a significant greenhouse gas contribution.[8] Phasing out this use of fossil fuels and replacing it with clean renewable energy is necessary to accomplish any meaningful greenhouse gas reductions, primarily because it is likely the largest source of GHG emissions that is within the control of local governments.[9] Local ordinances that require beneficial electrification, of which building electrification is one type, have been introduced in some areas.[10] Construction in these areas utilize efficient electric air source heat pumps and heat pump water heaters, as well as other techniques to replace natural gas.[11] These offer a cleaner alternative to the traditional oil and gas fired building systems.[12] Incorporating building electrification into new construction and phasing it out of existing buildings requires electricity that can be readily powered by renewable energy.[13] Of course, when not powered by renewable energy, electrification does not have the beneficial impacts.

While building electrification has promising benefits for residents and for meeting greenhouse gas emission reductions, it should be pursued equitably. This includes ensuring that all people, and particularly people historically not able to benefit from technological advances in energy,[14] are able to take advantage of clean energy and not left with polluting and increasingly expensive fossil fuel appliances and heating and cooling systems. Local actions involving fossil fuels should ensure that the actions do not exacerbate existing inequalities, particularly around housing and energy justice. This requires intentional policymaking and a planned transition for environmental and social justice communities to gain access to the major benefits of electrification, including cleaner air, healthier homes, good jobs, empowered workers, and greater access to affordable clean energy and energy efficiency to reduce monthly energy bills. (for specific briefs on energy conservation and efficiency see Chapter 7.5).

Ordinances helping to reduce reliance on fossil fuels may help decrease harms stemming from fossil fuel burning in underserved areas. Fossil fuel plants are historically located in low income and minority neighborhoods.[15] Often these neighborhoods are categorized as environmental justice communities. Environmental justice is an inter-generational, multi-racial, and international movement that promotes environmental, economic, and social justice by identifying the causal links between economic, environmental, and health issues while simultaneously striving for a safe and clean community and environment.[16] In many instances, the community does not reap rewards of environmentally conscious housing design or zoning regulations, especially when those design and zoning changes increase costs that are filtered down to renters and homebuyers. Many in environmental justice communities also carry the pollution burden for others that do not live near a fossil fuel burning plant.[17]

The communities surrounding fossil fuel plants have higher rates of asthma.[18] Further, Black children are 79% more likely to live in neighborhoods where industrial pollution is suspected of posing the greatest health danger.[19] Reducing reliance on fossil fuels for residential buildings may reduce emissions stemming from fossil fuel plants and associated impacts to those communities.[20] Currently, the benefits of clean energy are disproportionately shifted away from BIPOC and lower income neighborhoods. Part of the purpose of this SDC brief is to unify at least some of the benefits across the housing stock, regardless of race, income, and wealth, so that everyone can benefit from reduced emissions.

Local governments that wish to pursue requiring electrification or reducing fossil fuels in new construction have several examples to consider mirroring. The following examples are further detailed in the “Examples” section below. First, the forerunner of the electrification movement is the City of Berkeley, CA.[21] Berkeley created the groundbreaking ordinance that mandates that there be no gas connections in any new residential construction.[22] Berkeley’s ordinance does not speak to preexisting structures. The California Energy Commission is in the process of finalizing local Reach Codes which would also work to complement the mandate for any structures that are exempt.[23]

In San Jose, CA, the city council approved an ordinance that  prohibited natural gas infrastructure in dwellings, single-family homes, and low-rise multi-family buildings. This was enacted as a means to complement the Reach Code ordinance, similar to Berkeley’s approach.[24] San Jose enacted the ordinance in response to growing concerns of environmental degradation and the safety of their community members. What differs from Berkeley, however, is that San Jose does explicitly provide an exception for safety reasons.

Further, Boulder, CO pursues a “phasing-out” approach which exemplifies the beginning stages of creating an electrified construction market.[25] This code imposes maximum energy uses depending on the size of the structure. In addition, San Mateo, CA began with a mandatory green energy code amendment in 2019, and then in 2020, it took the additional step of encouraging building electrification either completely or requiring mixed fuel buildings.[26]

Finally, New York City is the now the largest city in the United States to sign into law a mandate phasing out the combustion of fossil fuels in new buildings. The law places restrictions on fossil fuel usage in newly constructed commercial and residential buildings requiring that buildings of all sizes be constructed fully electric by 2027.[27]

A reality of our economy is that it will continue to develop and evolve. This is in response to the growing population, an aging housing market, and climate migration. By 2050, it is estimated that roughly 27 million more homes will be required to match the growing U.S. population.[28] If local governments do not push the envelope and commit to electrification, it will result in locking in buildings and fossil fuels use for decades due to the old ways of construction, often referred to as “path dependence.”[29] Furthermore, not making necessary changes now would also lock the economy into expensive retrofits in the not so distant future. Pursuing now a strong clean building electrification initiative will steer the country’s economy in the direction of cleaner energy sources, reduced greenhouse gas emissions in the housing construction market, and disperse the benefits amongst all communities. Of course, building electrification reduces emissions only where electricity generation is also getting cleaner.

Local governments should be sure to consider equity when designing and implementing electrification and decarbonization policies. Given the costs and benefits of retrofits, split incentives between landlords and tenants, and health and safety risks, it is important that low and middle income, as well as disadvantage communities, do not bear disproportionate costs and have ample opportunity to reap the benefits of building electrification.[30] An example of these efforts is California’s Public Utilities Commission (PUC), which has been funding pilot programs to provide aid to disadvantaged communities in the transition to an all-electric future.[31] In 2019, the PUC awarded $50 million to electrify appliances in 1,600 low-income households in the San Joaquin Valley that currently lack access to gas distribution lines.[32]

Underserved communities wrestle with different obstacles and barriers to electrification. Understanding these obstacles and barriers, providing education on electrification, more equitably providing funds to electrification, and being cognizant of specific needs and concerns will help ensure an open pathway of communication and engagement to equitable electrification.[33] Increased community enthusiasm across all backgrounds will increase involvement and input results, ultimately leading to tangible benefits that the community as a whole will benefit from.[34] Local governments should also consider creating a system of tracking, statistics, and metrics for different areas and delivering the information in an easy-to-read report. (For our brief on energy benchmarking see Energy Benchmarking, Auditing, and Upgrading) This would engage the community and would encourage more support and additional engagement.[35] Further, providing a tracking plan and using the metrics and baselines would create a consistent cycle of feedback and allow for improvements as local governments see fit.[36]

State Action Effecting Local Governments

Local governments considering action on electrification must also check their state preemption laws. Unfortunately, many states have chosen to preempt local governments from prohibiting or limiting fossil fuels.[37] Although beyond the purview of this brief, states should do their part in creating incentives for not only building electrification in new construction but retrofitting preexisting construction as well.[38] State financial incentives might include, but are not limited to: low-interest loans, financing, property tax financing, and cash rebates at point of sale or for distributors and contractors for building retrofitting.[39] Incentives such as these could significantly improve the economics of retrofitting.

Although also beyond the purview of this brief, facilitating the move to electrification would occur if each state’s building energy code clearly allowed or required local jurisdictions to adopt a more stringent code for purposes of limiting fossil fuels.[40] States should consider adopting the latest International Code Council’s International Energy Conservation Code as an alternative to creating their own building energy code.[41] At present, most state building energy codes only address energy efficiency, but state codes could also incorporate electrification measures, such as requiring all new construction be built all-electric and/or requiring conversion to all-electric following major renovations. Furthermore, by including major building retrofit measures, building codes will be able to expand their reach, increase the rate of building electrification, and reduce the all-in cost of building decarbonization.[42]

As states shift focus to decarbonizing their electricity, they can create additional building decarbonization policies in an effort to continue reducing emissions.[43] Some, but not all, state tools include target setting, regulatory reform, and aligning regulation with a devalued natural gas utility business.[44] Target setting involves setting a statewide target to measure building electrification. Short-term, interim targets that accompany long-term targets would provide the legislature with regular progress updates throughout the process.[45] Further, setting targets for retrofits, which encompasses major equipment upgrades and fuel switching,[46] can also be set.

In addition to target setting, states can establish more aggressive regulations concerning utility companies. Such regulations may include incentives to shift customer usage to hours when energy is cheaper and cleaner through pricing and community education.[47] Additionally, performance-based regulation can aid in aligning utility incentives with climate and customer goals and require procurement of renewable energy. This can be achieved by providing incentives when utilities meet building electrification targets, while simultaneously keeping peak demand increases and system costs low.

Finally, when considering legislation or regulation, states should be conscious of locking themselves into gas utilities. Gas utility infrastructure is constructed to last 30-50 years.[48] Given the necessity to reach near-zero emissions nationwide to ensure a safe climate and the fact that investment in new and existing pipelines is still happening at present-day, utility revenue models must be radically restructured to promise a smooth transition to all-electric buildings.[49] It is imperative that policymakers reevaluate how long utilities will be allowed to depreciate new investments in piping systems, and carefully adjust the investment rate of return and compensation for stranded assets.[50]

EFFECTS

Building electrification can lower the costs of operating and constructing new housing.[51] The Sierra Club estimates that building all-electric would reduce costs by an average of $6,000 per single family house, or $1,500 per multifamily unit.[52] This reduction in cost is achieved mostly by eliminating gas lines running into the building.[53] The challenge, however, lies in upfront capital cost of electric appliances, lack of efficiency funding, incomprehensible building codes, subsidies for natural gas, incentives for natural gas infrastructure, and outdated electric utility regulations.[54] A study by the Rocky Mountain Institute concerning building decarbonization in different climates shows that customers who have all-electric new homes will ultimately save money over the lifetime of their electric space and water heaters, as well as air conditioning systems.[55] All-electric homes may also be built faster given their ability to avoid permitting and installation associated with gas lines.[56] Affordable-housing developers who build all-electric can use the savings from those projects and put them towards additional projects, thus stretching the benefits for low-income tenants.[57]

A tenth of total carbon emissions in the U.S. come from burning fossil fuels – primarily gas – for heating and cooking in homes and businesses.[58] The emissions produced from these appliances are a threat to climate action and public health. The spread of gas infrastructure and its harmful effects can be inhibited through the electrification of buildings, which is vital in the fight to eliminate fossil fuels.[59] Historically, low-income and minority neighborhoods bear the burden of outdated construction.[60] Older homes and complexes often have outdated heating and cooling equipment, and those that live there have higher incidences of respiratory and cardiac problems.[61] The American Medical Association estimates that poor indoor air quality results in 15 billion productivity losses every year.[62] Productivity losses are the lost productivity and time that different sectors of the economy endure due to employees not being able, healthy, or present to complete their tasks as expected.[63]

Finally, electrification has become a greater issue as the increase in renewable power generation leads to conversations about converting and updating our energy infrastructure and power grid.  The large leap to an economy that is more dependent on renewables will also require investments in electric grid modernization in order to transmit electricity from where the renewable generation sources are located.

EXAMPLES

San Jose, CA

In October of 2019, the City Council of San Jose approved an ordinance which prohibited natural gas infrastructure in new dwellings, single family homes, and low-rise multi-family buildings. The City designed this ordinance to supplement the California state Reach Code.[64] In December 2020 the City Council approved an updated ordinance which went further to prohibit natural gas infrastructure in all new construction, not just residential. This ordinance went into effect on August 1, 2021.

The City Council added the provisions in response to the Bay area’s dense and growing population, likelihood of earthquakes and fires, as well as the concern for safety associated with gas pipeline infrastructure.[65] Further, the City found that seismic events have the ability to interfere with gas mains and put extreme demands on the limited and widely distributed resources of emergency responders, specifically the fire department.

The City provided exceptions to the natural gas infrastructure ban. If an applicant for a newly constructed low-rise building or accessory dwelling unit (for more on accessory dwelling units see our brief, Accessory Dwelling Units) believes that circumstances regarding the type of project or physical site conditions make it infeasible to meet the chapter’s requirements, then the applicant has the opportunity to request an exemption. However, the burden of proof is on the applicant to demonstrate that the exemption should be granted.[66]

To view the provision, see San Jose, CA Ordinance No. 30330.

Boulder, CO

Boulder, CO is using its building code to encourage electrification, but has yet to implement an actual ban on natural gas. The code imposes a maximum energy use per square foot on new residential construction and major renovations. The goal is to ensure that all new homes are built to net-zero emissions standards by 2030.[67] To reach this goal, the code has a periodical approach. On July 1, 2020, Boulder tightened the code so that new residential construction of 3,000 square feet or larger must met the net-zero threshold, which is down from 5,000 square feet in the 2017 code.[68] Requiring rooftop solar panels may also aid in offsetting some of the emissions, but even with the solar potential, the code leaves little wiggle room for natural gas hookups.[69] Compliance with the code makes it difficult to install natural gas heating appliances in the home for space heating or water heating.[70]

Boulder takes a multi-pronged approach to electrification. Boulder is one of many cities that has adopted ordinances to improve energy performance in existing buildings. The Institute for Market Transformation helped design a groundbreaking version of Boulder’s policy called the building performance standard.[71] This standard updates regularly and gets more stringent. It establishes a minimum energy efficiency or greenhouse gas emissions standard for buildings. Property owners must take steps to bring buildings up to standard, although the standard provides for flexibility in choosing how property owners decide to meet the target.[72] This aspect does make it uncertain as to how many will follow through and commit to an electric conversion.[73]

This “phasing-out” policy is a natural tool where in which a building performance standard could drive significant building electrification over a shorter period of time.[74] This ordinance is a promising example of a successful pathway for gas-to-electric conversion. Boulder provides an illustration of phasing-out in order to encourage all-electrification in new construction and retrofitting preexisting construction.

To view the provision, see https://perma.cc/KPM4-YP73.

Berkeley, CA

The City of Berkeley, CA was the first in the nation to pass a ban on fossil fuels in new construction.[75] On July 23, 2019, the City Council passed a monumental ordinance which required new construction to be built all-electric. This requirement became effective on July 1, 2020, and mandated that there be no gas hook-ups installed in new homes, apartment complexes, and commercial buildings. The law is only applicable to new construction and does not have an impact on preexisting structures. More than 50 other cities in California are exploring the possibilities of encouraging or requiring all-electric in new construction in efforts to eliminate fossil-fuel heating sources from buildings.[76]

The July 2019 proposal was met with an outpouring of support by residents, business owners, designers, and architects alike.[77] The ordinance does allow for a few temporary exceptions for buildings that cannot be fitted as all-electric such as central hot water systems in large complexes and hotels.[78] To combat this roadblock, the California Energy Commission is aiming to finalize local “reach codes” which would complement the ordinance for any exempted buildings and/or equipment. This would aid in avoiding the need to install gas infrastructure in new buildings. Further, the new reach codes would require that any exempted buildings be “electric-ready” to aid in reducing the cost of later conversion to electricity for remaining gas end uses.

To view the provision, see Berkeley Municipal Code Chapter 12.80.040.

San Mateo, CA

In 2019, the City Council adopted mandatory local green building energy code amendments.[79] The amendments align with the City's goal of transforming San Mateo into a clean energy city by utilizing electrification. In 2020, the local amendment encouraged building electrification by either constructing a new building that was 100% electric, or constructing a mixed-fuel (i.e. relies on both electricity and fossil fuels for power) building that is ultimately more efficient than what is already required by the state.[80] Those requirements are further explained in the chart below.

Effective January 1, 2020 - December 31, 2020

Towards the end of 2020, the City Council updated the reach codes, which required that residential buildings and office buildings be constructed all-electric and have zero fossil fuel hook-ups. These reach codes went into effect the first of the year.[81]

Effective January 1, 2021 - December 31, 2022

In conjunction with Peninsula Clean Energy (PCE) and Silicon Valley Clean Energy (SVCE), the San Mateo County Office of Sustainability (OOS) has been working to reduce greenhouse gas emissions by developing electrification reach codes that are forward-thinking and focus on the overall wellbeing of the community and the environment. [82]

To view the provision, see: San Mateo County Local Ordinance No. 4284.

ADDITIONAL EXAMPLES

Seattle, WA (announcing that the City will update its energy code to eliminate the use of fossil fuels for space heating in new commercial and large multifamily construction as well as water heating for large multifamily constructions).[83]

Ithaca, NY (encouraging all buildings in the City, both public and private, to be electrified by 2030 through incentives). Ithaca Energy Code Supplement, May 5, 2021; Resolution to Authorize Mayor Svante Myrick to Designate a Program Manager for the City of Ithaca’s Energy Efficiency Retrofitting and Thermal Load Electrification Program.

ADDITIONAL RESOURCES

So What Exactly is Building Electrification? (an explanation of the world of renewable energy and the role of electrification). https://perma.cc/4432-5FNT.

How Electricity Deepens the South’s Racial Divide (a report of how socioeconomic status combined with the Covid pandemic has impacted minority neighborhoods). https://perma.cc/67FS-F8R4.

Building Electrification Technology Roadmap (a guide for utilities and other organizations developing, implementing, and supporting electrification technology programs as a way to advance high efficiency technologies, reduce emissions, and improve the health of the community. https://perma.cc/3X3S-5M7E.