Gas ban 2.0: Building wars

By David Iaconangelo | 04/18/2022 06:54 AM EDT

Daikin heat pump.

Electric heat pumps like this one, installed in Denver, are seen by many policymakers as a more climate-friendly source of building heat than fossil-fuel-fired boilers. Dennis Schroeder/NREL

Across the U.S., government officials, utilities and the natural gas industry are unveiling road maps that could change how buildings derive their heat over the coming decades, a shift with major consequences for emissions.

The blueprints wrestle with the same question: Will natural gas and its alternatives be the fuel of choice or will electricity?

The tug of war between the two visions could decide how — or if — the nation manages to scale down a top source of greenhouse gases for many cities and states. It also could influence the trajectory of U.S. natural gas and how it is used.

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For the gas industry and its allies, low-emissions heating can be achieved by still using gas and gradually blending in lower-carbon substitutes like hydrogen.

But many climate activists and progressives are aiming to grant electric technologies the overwhelming share of the market, while banning the use of gas boilers, water heaters and stoves.

This year, the battle has heated up with competing legislative plans and industry road maps. It remains unclear which technologies will win and ultimately dominate.

Nationally, natural gas and electricity currently are neck and neck as sources for building heat, with each one providing roughly 40 percent of the market.

“We’re just starting down this road,” said Sam Evans-Brown, executive director of the nonprofit Clean Energy New Hampshire. “We’re still not sure what the future holds.”

In Maryland and New York, Democratic legislators tried to push through this year what would have been the first statewide fossil fuel bans for new buildings — but fell short amid resistance. Other states are contemplating a more limited step of ending free natural gas hookups in new homes.

On Capitol Hill, progressive Democrats also are urging President Joe Biden to guarantee a federal buyer for millions of electric heat pumps. They say that could help Europe disconnect from Russian gas and, in passing, make it cheaper for Americans to ditch gas heat.

Across much of the country, however, there are already multiple laws backed by the natural gas industry that have helped lock in the fuel’s role in heating buildings. Twenty states prevent cities from banning gas use in buildings. Ten others prohibit electric utilities from encouraging customers to ditch gas.

The industry is adding to that foundation with road maps that eye greater use of new fuels such as “renewable natural gas” and hydrogen for building heat.

In February, for example, the American Gas Association published a road map called “Net-Zero Opportunities for Gas Utilities” in which low-carbon gases would supply anywhere from 39 percent to 58 percent of the necessary emissions reductions.

“Through this work we’re really hoping to elevate the conversation beyond just a simple — is it electric versus gas?” said Richard Meyer, AGA’s vice president of energy markets, analysis and standards.

A first state gas ban?

One electric technology in particular — heat pumps, which can cool and heat a house — has become the favored technology for climate advocates, offering a tool that roughly does for buildings what the electric car did for transportation. About 11 percent of the U.S. uses them for their homes, with the vast majority coming in the warm climates of the South, according to the U.S. Energy Information Administration.

Officials in some cities with cold climates want the heat pump to power their new housing stock, despite the elevated cost of using them in frigid temperatures, compared to gas boilers. Last year, New York City effectively made them the go-to choice for new buildings, when it passed the nation’s biggest municipal gas ban (Energywire, Dec. 16, 2021).

In California, state regulators also are planning new building codes that give strong preferential treatment to electric heat for new houses, although the provisions stop short of a hard mandate.

In 2022, at least four state legislatures — Rhode Island, Massachusetts, New York and Maryland — were vying to become the first to institute similar bans.

Three have so far stalled or failed this year, however. The fourth, Massachusetts, is only beginning to consider a bill from this month that would explicitly allow cities to ban gas, although it would not cover the entire state.

Perhaps the most surprising failure for the electricity movement came in New York, where a fossil fuel ban for new buildings had the support of the governor, Kathy Hochul, and the speaker of the state Senate, both of whom are Democrats.

This month, the ban was removed from the state’s budget — a vehicle for many high-profile legislative ideas — due to pushback from the Democratic-controlled state Assembly.

Climate activists reacted with indignation, accusing the Assembly speaker, Carl Heastie, of caving to the gas industry and developers. Alex Beauchamp, a regional director for Food & Water Watch, said the speaker was “singlehandedly killing progress on climate change” just days after the release of another gloomy report from the United Nations’ Intergovernmental Panel on Climate Change that said the world would need to use 65 percent less oil and 45 percent less gas by 2050 in order to limit global warming to 2 degrees Celsius.

Mike Wyland, communications director for Heastie, called the accusations “beyond silly” and suggested that the budget was the wrong vehicle for the idea — though without clarifying whether Heastie would back a gas ban through separate legislation.

“Because we didn’t include policy in a fiscal document they need to make up a bunch of conspiracy theories,” said Wyland in an email. “We discuss every issue with our members and that is what the Speaker is guided by, always.”

Similar pushback occurred in Maryland.

In March, a fossil fuel ban for new buildings was stripped from a major climate bill, known as the Climate Solutions Now Act, prior to passage in the Democrat-controlled Legislature (Energywire, March 31).

It came despite an official endorsement of the ban from the Maryland Commission on Climate Change, a task force that advises Republican Gov. Larry Hogan and the state Legislature on climate policies.

In November 2021, the commission said the Legislature should pass an all-electric construction requirement for new homes, commercial buildings and state offices that would go into effect in 2024, at the latest.

It also said that two independent studies performed by E3 and RMI showed that all-electric new homes in Maryland would have lower construction and energy costs than those that decarbonized by using a mixture of fuels for heat, including low-carbon substitutes for natural gas.

The all-electric requirement was the first prong of a more ambitious suite of building-policy recommendations. By 2030, every low-income house in Maryland should be weatherized, at little or no upfront cost, wrote the commission. And electric utilities should be made to offer incentives for fuel-switching to a wider swath of homes, such that by 2025, heat pumps make up half of all newly sold equipment for water and space heat.

The commission saved its boldest recommendation for the fate of the gas business: State regulators should direct gas utilities to prepare plans for a “shrinking customer base” that include a 50 percent to 100 percent scale down of gas throughput in utility systems, the commission said.

The final version of the Climate Solutions Now bill, which became law on April 9 without Hogan’s signature, cast aside the gas ban. That followed fierce criticism from gas utilities, real estate developers and Republican opponents.  

Instead of calling for electric technology, the final legislation required modest emissions reductions from the largest types of commercial and apartment buildings by 2030.  

A decade later, those covered buildings would have to reach net-zero emissions, although the law doesn’t specify how.

“It sets really important groundwork for climate action. But it doesn’t really line up the programs and policies needed to reach the goals,” said Victoria Venable, Maryland director for the Chesapeake Climate Action Network, in an interview after the bill’s passage.

Electric heat would have to be the climate solution for buildings, she added. “We know what we need to do next to make good on this promise of emission cuts — we need to electrify across the economy and we need to expand renewable energy so that electricity is coming from clean, renewable sources,” said Venable in a statement.

During one February hearinghowever, staff at Baltimore Gas and Electric Co. (BGE) argued that banning fossil fuels in new buildings was unnecessarily prescriptive and expensive for consumers and could compromise the grid’s reliability.

Mark Case, BGE’s vice president of regulatory policy and strategy, took issue with the climate commission’s conclusion that all-electric heat was the cheapest pathway for building decarbonization.

“The gas delivery system can and must be part of the solution mix,” said Case.

Gas industry’s road map

Few independent researchers have done comprehensive, nationally focused analyses on whether renewable natural gas (RNG) and hydrogen — the industry’s preferred alternatives — could really emerge as climate-friendly, cost-effective rivals to clean electric heat. “I am not aware of any studies in that space specifically,” said Marianne Mintz, a principal transportation energy analyst at Argonne National Laboratory.

In the interim, utilities’ gas blueprints present their own visions of a net-zero system.

Along with the American Gas Association, the San Diego Gas & Electric Co. also rolled out a road map for carbon neutrality in which renewable natural gas would make up 28 percent of the fuel in the utility’s pipelines, with hydrogen making up another 14 percent. Natural gas would remain the dominant presence at 58 percent, although the overall fuel in the pipelines would decrease by 65 percent, according to the plan.

Environmentalists and some clean energy groups say that alternatives to traditional natural gas could present more challenges than they solve.

Renewable natural gas, for instance, is essentially methane captured from landfills, dairy farms and other biogenic sources. Hydrogen could also be turned to methane before being blended into gas lines, as envisioned in one February road map from the AGA.

That means the threat of leaks would still pose major consequences for climate change. Methane is a more potent greenhouse gas than CO2, although it has a shorter lifetime in the atmosphere.

One 2020 analysis published in Environmental Research Letters by Emily Grubert, a Georgia Institute of Technology professor of environmental engineering, warned that renewable natural gas production is “not inherently climate friendly” and under many circumstances could end up contributing to climate change. Grubert is now a deputy assistant secretary at the Energy Department’s Office of Fossil Energy and Carbon Management.

Clean energy advocates argue that “clean” supplies of methane would fall far short of what would be needed — an assertion disputed by the gas industry, whose analyses have suggested renewable natural gas could displace much of the current consumption of natural gas. They also note that low-carbon hydrogen is rarely produced in the U.S., given its high cost

“It’s not realistic to expect the fuels to be available in the necessary quantities. Even if you tried to get there, the cost of the fuels would be pretty high,” said Mike Henchen, a principal for the carbon-free buildings team at RMI, which promotes building electrification.

Local climate activists are almost universally opposed to scaling up renewable natural gas and hydrogen, with many state- and city-level groups blasting those fuels as “false solutions.”

Yet both renewable natural gas and hydrogen would give gas companies a way to repurpose assets that may otherwise become stranded — a looming problem for regulators that could drive up costs for the broader public.

The ability to use existing gas lines for renewable natural gas and hydrogen was cited by Southern Co. as providing a special economic advantage for those fuels, when the company released a net-zero road map on March 25. The document found that the company could achieve net-zero CO2 mostly through efficiency gains and the introduction of lower-carbon sources of methane. That pathway was deemed to be lower-cost than relying on electrification.

The gas utility road maps emerge amid a growing market for RNG and hydrogen, in part for use in transport or power production, respectively.

A few state legislatures, like Missouri and Tennessee, have enacted recent laws that encourage regulators to approve utility investments in RNG and other “innovative” fuels like hydrogen, with an eye toward reducing the gas system’s emissions. Those add to existing state and federal incentives for low-carbon fuel production that can include RNG, like California’s low carbon fuel standard or the national renewable fuel standard program.

And last year, 33 states took action of some type to promote the use of RNG for building heat, up from 26 the year prior, according to the Business Council for Sustainable Energy. Overall, RNG production capacity grew 12 percent on a year-over-year basis, with $3 billion in investment set aside in 2021.

For the U.S.’s building sector, the feasibility of deep decarbonization may end up depending on whether those RNG and other low-carbon substitutes can become what they are cracked up to be.

Cities at the forefront

The battle over building heating began at the city level, with Seattle; Berkeley, Calif.; and New York City being the first to enact gas bans.

With statewide policy uncertain, cities are once again coming to the forefront.

In the city of Austin, Texas, for instance, sustainability officials want all new buildings to be carbon-free by 2030, followed by the rest of the housing stock a decade later.

To hit that mark, the city wants to combine efficiency upgrades with incentives for electric heat pumps, among other main planks of its plan.

“Over the course of the next 15 to 20 years, yes, it would be easier and simpler if gas was banned,” said Zach Baumer, climate program manager at Austin’s Office of Sustainability.

“But at the same time, if we have the incentives right, and if we do education right with the building community and HVAC contractors, we can win and get to net-zero buildings,” he added.

At the same time, the ability of cities to move policy is limited in many pockets of the country. Nearly a quarter of the U.S. cities that once pledged to observe the Paris climate accord, back in 2017, are located in states that have preemptively blocked gas bans.

On the federal level, the Biden administration is taking a similar approach to the buildings sector.

Last December, the president issued an executive order calling for federal agencies to decarbonize their 300,000 buildings by 2032, with an emphasis on electrifying their heat sources. That was meant partly to boost demand for electric heat pumps, from federal buyers, on the assumption that it would subsequently bring down costs for private buyers.

Building electrification advocates and progressive Democrats are pushing for much bigger version of that plan as a response to Russia’s invasion of Ukraine.

Hundreds of environmentalist groups and clean energy advocates have called on Biden and Congress to use Defense Production Act authority to guarantee federal contracts for heat pumps that would be either sent to Europe or sold in the U.S.

The fullest vision of that was laid out in a plan called “Electrify for Peace” by electrification advocates at Rewiring America.

As heat pump production grows, “the price will drop, because manufactures will make more of them,” said Ari Matusiak, CEO of the group.

“We’re at a moment in time where we have a very active choice about how we’re going to invest in our energy future,” he added. “That’s why we think we should be investing in U.S. manufacturing capacity now.”

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