How to shift building heat to electric? NY activists have lots of ideas

Can New York state meet its ambitious climate goals without drastically speeding up the switch from fossil fuels to electricity for heating buildings? The environmental and community groups in the Renewable Heat Now coalition say no.

Now, with lawmakers racing to meet a March 31 deadline for completing the state budget, the coalition is calling for a major increase in funding and policies to support the deployment of heat pumps in homes and buildings, along with passage of bills that would move even more rapidly to end the state’s use of fossil gas.

“We don’t have enough in place to move buildings at the pace we need to move from fossil fuels,” Liz Moran, a New York policy advocate for Earthjustice, said at a Wednesday press briefing on the budget and legislative package the coalition is advocating.

Roughly 60 percent of the state’s carbon emissions are linked to heating and powering buildings, she said. But New York so far has failed to scale up investments in building energy efficiency and electrification that are needed to meet the state’s climate goals. A 2019 law calls for economywide greenhouse gas reduction of 40 percent by 2030 and no less than 85 percent by 2050 (both from 1990 levels).

In January, Governor Kathy Hochul (D) released a budget proposal that calls for increased funding for a host of environmental programs, including $500 million for offshore wind development and a $4 billion Environmental Bond Act to fund climate change mitigation and infrastructure and water quality improvements. Hochul also set a target of 1 million all-electric homes by 2030 and another 1 million ​“electrification-ready” homes that can easily make the switch away from fossil gas. And she threw her support behind legislation to set a 2027 deadline for halting fossil fuel use in new buildings, which would be the most aggressive state-level move of its kind so far.

But the governor’s budget proposal does not call for more funding for home electrification. It would hold steady the roughly $250 million per year that the state provides for energy-efficiency and electrification grants, incentives and technical assistance for low- to moderate-income housing, Moran said. That funding assists roughly 25,000 homes per year, according to data from the New York State Energy Research and Development Authority.

To reach its decarbonization targets, the state needs to be moving 10 times faster, Moran said. NYSERDA analysis indicates that the state must electrify at least 250,000 homes per year. To do that, annual spending must increase to roughly $1 billion per year, according to the state’s Climate Action Council, the body tasked with creating a plan to reach New York’s climate goals.

That $1 billion annual target is at the top of the coalition’s agenda for state lawmakers. The coalition’s policy statement notes that this funding could come from the New York Green Bank, which has invested $1.6 billion in projects to reduce greenhouse gas as of mid-2021, or from the $12.75 billion in federal aid that New York state received from last year’s federal Covid relief law, the group noted.

It could also come from savings that would result from reducing the amount of utility spending that goes to expanding gas networks, according to Amar Shah, manager of the nonprofit think tank RMI’s Carbon-Free Buildings group. (Canary Media is an independent affiliate of RMI.)

U.S. gas utilities have tripled their spending on pipeline infrastructure over the past eight years, Shah noted. Utilities pass on those expenses to their customers as a component of their bills, masking the true cost of continuing to rely on the fossil fuel compared to moving to electric power, he said. It also leaves those customers at risk of being forced to continue to pay for systems even after they must be shut down to meet carbon-reduction goals.

What’s more, the health harms of indoor fossil gas use only compound the value of switching to electric heating, Shah said. A 2021 study from the Harvard T.H. Chan School of Public Health found that gas heating and cooking in buildings is responsible for tens of thousands of premature deaths and billions of dollars in health-related costs, with New York leading all other states in deaths related to gas use in buildings.

Add those health costs on top of the climate and air-pollution costs, and you can see why there are efforts across the country to limit or end the use of gas in buildings. Last year, California adopted building codes that will provide significant incentives for new buildings that use electricity instead of gas. Colorado passed laws that will set greenhouse gas reduction targets for gas utilities that can be met through switching customers to all-electric heating and cooking, and Washington state has set policies in place that will require gas utilities to reduce their emissions under the state’s cap-and-trade regime.

Cities are also moving to reduce reliance on gas. New York state’s proposed ban on gas in new buildings was inspired by similar policies being implemented in cities across the country, including New York City. This movement has spurred a counter-reaction from the gas industry, which has successfully promoted legislation that bars city gas bans in 20 states so far.

Policy carrots and sticks to level the playing field for heat pumps 

A heat pump is a double-duty device that essentially works like both an air conditioner and a hyperefficient heater, transferring heat into buildings from outdoor air, water pipes or underground thermal sinks. They are much better at converting energy into heat than are fossil-gas-fired furnaces and boilers. But they still come with a higher upfront cost, both in terms of the equipment itself and the cost of installing them and retrofitting buildings to use them.

That’s why the Renewable Heat Now coalition is supporting several bills that aim to both lower the cost of switching to heat pumps and make it less financially attractive to stay with fossil gas.

One bill, the All-Electric Building Act, would accelerate Hochul’s 2027 target for all-electric new construction to 2024, with some exceptions for commercial kitchens and buildings that can’t achieve compliance with current codes and standards without having some fossil fuel infrastructure in place.

Another bill, the Advanced Building, Appliance and Equipment Standards Act, would set new building codes and appliance standards that NYSERDA analysis indicates could reduce energy spending by more than $15 billion through 2030, according to the sponsors of the legislation.

A third bill, the Gas Transition and Affordable Energy Act, would task the New York Public Service Commission with ending ratepayer-subsidized utility incentives for fossil gas expansion, such as the costs for extending gas lines to homes, and create new rules to support electric service for heating, cooking and other loads.

Jens Ponikau, owner of Buffalo Geothermal Heating, strongly supports removing subsidies that make gas heating more financially attractive than the ground-source heat-pump projects his company carries out for customers including the New York City Housing Authority.

“It’s not necessarily that geothermal is significantly more expensive than conventional,” he said. ​“The problem is that the cost of the conventional — the gas — is socialized.” 

A fourth bill being proposed would offer tax credits and sales tax exemptions for heat-pump installations. Zach Fink, owner of Long Island–based ZBF Geothermal, said that a sales tax exemption could cut roughly one-third of the cost of his company’s ground-source heat-pump projects.

Stabilizing incentives for heat-pump installations could also help, according to Fink — but right now, New York’s most lucrative heat-pump incentive is being cut back. The Clean Heat program was launched in 2020 with $454 million to spend through 2025. As customers have flocked to the program, utilities have reduced incentives to make the funding last longer. The Public Service Commission would have to approve any increases in funding through rate increases on utility customers.

“It’s disappointing to see that the Clean Heat incentives have been reduced, especially for air-source heat pumps,” said Francis Rodriguez, director of weatherization for the Association for Energy Affordability, a group that’s working with the New York City Housing Authority on energy-efficiency and electrification projects.

As heating shifts from gas to electricity, the cost of electric power will also become a pressing issue, particularly for lower-income customers, Rodriguez said. ​“Especially in the city, the price we pay for each kilowatt is much too expensive.”

New York, like other states, will have to figure out how to manage the new electricity demands that will come from building heating, transportation and heavy industry while also reducing the carbon-intensity of its power grid and keeping electricity affordable for residents. It will be a significant challenge.

But that’s not an excuse for failing to cut fossil fuel use at a pace that will meet New York’s decarbonization mandates, according to Earthjustice’s Moran. ​“What we’re still looking for are the policies to be put in place to help us meet those goals that are in law,” she said.