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California is usually at the forefront of most environmental movements in the U.S., and its plan to aggressively reduce — and ultimately eliminate — carbon emissions is no different. By law, the state is required to achieve carbon neutrality by 2045, and California is taking a multipronged approach to reach that outcome. Building electrification is one part of the overall strategy, and in a recent workshop (video below), the California Air Resources Board (CARB), other state agencies, and experts detailed how the state is working to achieve this goal.

GAS WATER HEATING: Over 60% of California's households still rely on natural gas for space heating, water heating, and cooking, which will make electrification challenging. (Staff photo)

Reaching that goal will be a challenge, as over 60% of California's households still rely on natural gas for space heating, water heating, and cooking, and nearly 40% rely on gas for clothes drying. The price to electrify those existing structures will be immense, experts concede, with cost estimates expected to be in the multiple hundreds of billions of dollars. Those costs could fall disproportionately on poor and disadvantaged communities, so California is carefully considering those factors in its quest to reach carbon neutrality.

Why Electrify?

There are many benefits to electrifying buildings, said Dana Papke Waters, staff air pollution specialist in the sustainable transportation and communities division at CARB. She noted that each building electrified today has the potential to reduce greenhouse gas (GHG) emissions by 30% to 60%, in most cases, compared to mix fuel design, where buildings are powered by both electricity and natural gas.

“In future years, building electrification provides even greater emission reduction potential, as the grid has increasingly higher percentages of renewable and carbon free energy,” she said. “From an outdoor air quality perspective, combustion of natural gas for space heating, water heating, and cooking contributes to statewide criteria pollutants that are harmful to human health and the environment. Building electrification can help meet air quality standards while providing cleaner air and healthier homes. If all homes were electrified today, the health benefits would be tremendous.”

Papke Waters cited a meta-analysis of more than 40 studies spanning over 20 years, which show that children living in a home with a gas cooking appliance have a 42% increased risk of having current asthma and a 24% increased risk of lifetime asthma. Other studies demonstrated the effects of combustion emissions from appliances that are vented through the outdoor air.

“A UCLA study found that about 350 annual deaths and thousands of illnesses could be avoided statewide by reducing NOx related secondary PM 2.5 through electrification of residential natural gas appliances,” she said. “In other words, 100% electrification of residential and commercial buildings in California will reduce deaths and illnesses from combustion emissions that occur in buildings.”

Heat pump technology is readily available to replace gas-fired space and water heating equipment, and it is far more efficient. She noted that heat pump space heaters are three to five times more efficient and heat pump water heaters are two to four times more efficient than typical gas burning and electric resistance units. For cooking, both electric resistance and induction equipment is available to reduce or to replace gas appliances in both residential and commercial buildings, she said, while clothes drying heat pump clothes dryers are technically ready but not as common in the U.S.

California is evaluating a range of policy levers that could help achieve the level of emission reductions that will be needed, including incentives, market support programs, government partnerships, and regulations. In addition, the state is looking at creating an emission standard that would require zero NOx and carbon limits on sales of all new space and water heaters beginning in 2030. CARB is also working with the Green Building Standards (CALGreen) code to draft concepts for zero carbon new construction, with an emphasis on transitioning cooking equipment to electric options.

Strategies

As noted earlier, building electrification is just one part of California’s strategy to support building decarbonization. The others, which are outlined in Assembly Bill (AB) 3232, include:

• Decarbonizing the electricity generation system;
• Making sure appliances and end uses are energy efficient in order to right size the generation portfolio and manage grid impacts;
• Using low-GWP refrigerants in technologies that are going into new construction and existing buildings;
• Managing distributed energy resources, such as behind the meter, rooftop solar, or energy storage to provide load flexibility;
• Decarbonizing the gas system; and
• Demand flexibility, which ensures loads are shifted to align with the GHG content of the electricity system.

“The real conclusion from the AB 3232 assessment is that it is possible to achieve a 40% reduction goal [from 1990 levels] by 2030 with a variety of the above measures, sort of a portfolio approach,” said Michael Sokol, deputy director of the efficiency division at California Energy Commission (CEC). “As we look out to 2045 and decarbonizing the entire state's economy, it gets a lot more challenging. Even the aggressive electrification scenario doesn't quite get us there, so there's work to be done.”

HEAT PUMPS: Electrifying California will require a large-scale, coordinated deployment of efficient electric end uses such as heat pumps. (Staff photo)

Part of that work will require a large-scale, coordinated deployment of efficient electric end uses such as heat pumps, he said.

“We know that the building standards work is not done,” said Sokol. “There's a lot of additional potential themes that we're going to be looking at moving forward. An assessment by end use, by climate zone, by building type of where heat pump baselines make sense to continue to move forward. Also refrigerants, looking at low-GWP opportunities.”

And decarbonizing existing buildings is key, as in any given year, new construction represents less than 2% of total building stock. As a result, existing buildings provide the greatest emission reduction potential in the near term.

“In order to do that, we know the costs are going to be immense,” said Sokol. “We know the costs are likely going to be in the multiple hundreds of billions of dollars when you consider things like panel upgrades, remediation with existing buildings, and structural issues within the building. In order to achieve this, we've got to focus and prioritize equity at the core. To alleviate energy burden of the building occupants, consider how to benefit both building owners and renters. And balancing affordability with the existing housing stock and new construction while considering a range of non-energy benefits that don't always come into play for cost effectiveness.”

Costs and Barriers

In a panel session, experts provided insights on issues such as consumer costs and market barriers to electrification. Pierre Delforge, senior scientist of building carbonization at the Natural Resources Defense Council, noted that building electrification and decarbonization can be both a risk and an opportunity for affordability.

“We have a housing affordability crisis today, and we have a risk that we can aggravate this affordability crisis if we don't do it well,” he said. “The costs are often higher than gas replacement, so equipment costs can be passed down to tenants and from higher rents, which can lead to displacement, loss of affordable housing, and higher operating costs. Also minimum efficiency equipment and poor installation practices, which unfortunately are common in the state, can lead to higher costs for people. And lastly, the risk of people getting stranded on the gas system that is becoming obsolete. So these risks are real and need to be faced and addressed.”

He also stressed that building decarbonization can be an opportunity for improving affordability of housing, if done right. He said it needs to be done with efficiency of the building envelope and the equipment being installed, as well as demand flexibility that allows owners to take advantage of time-varying rates to reduce cost.

“That's why we can't separate electrification from efficiency and demand flexibility, because they have to go together if we want to make them affordable,” said Delforge. “And if we do that, we can reduce cost. And then if you add solar to the mix, then you can reduce cost dramatically by maybe 50% or more. So we really need to look at this opportunity to make building electrification and affordability a solution and not an affordability risk.”

He added that in order to make electrification and the use of clean energy affordable, it will be necessary to ensure the rates make it cost effective to electrify. The challenge is that California’s rates are much more expensive than affordable, he said, and “we are locking people out of electrification and keeping them using fossil fuels when we should do the opposite.”

Nick Janusch, environmental and behavior economist in the demand analysis office at the CEC, discussed some of the challenges and barriers to electrifying buildings.

“Depending on the building characteristics, the benefit of electrification could vary, so it could be financially beneficial to some households, and maybe more costly to other households,” he said. “Depending on the age of the building, the need for a panel upgrade is going to vary, so that's going to also be a considerable cost as well. Another is the scheduling of retrofits, because when it comes to electrification, households need to be proactive and switch from using natural gas appliances to electric appliances.”

The other problem, Janusch noted, is that households have strict preferences when it comes to things like cooking practices, as many homeowners prefer gas stovetops to electric. But changing to electric stoves is necessary in order to achieve the goal of decommissioning neighborhoods from the natural gas distribution network, he said.

Moving homeowners to heat pump water heaters may also be a challenge, as many consumers are unaware of their existence. Also, it will be necessary to ensure that the technology is a good fit for the existing building.

“Certainly to some degree, space consideration and the age of the home is going to be key,” said Josh Green, vice president of government and industry affairs at A.O. Smith. “Customer adoption and market awareness is another prong of this, as well as workforce and contractor training. For equipment manufacturers, this really boils down to having business certainty. That's what we really are looking for over the longer term — a consistent set of policies and regulations so that the capital investments that we need to make in helping with market transformation will be there.”

Delforge agreed that heat pump water heaters are currently a niche market, and very few contractors know how to install them. They’re also expensive, but he believes costs will come down significantly once a greater volume of units are sold.

In the ensuing public discussion, some were skeptical about how buildings can be electrified without significantly driving up costs for owners. Jeli Gavric, legislative advocate for the California Association of Realtors, noted that the current median price of a home in California is over $800,000, making the state “alarmingly” unaffordable to most people who would like to buy a home.

“Any recommendations to meet decarbonization goals via ‘retrofit on resale’ will only drive-up home sale prices and exacerbate California’s housing affordability crisis,” she said. “In addition, limited information exists on the average electrical upgrade costs for existing homes, which includes appliances such as electric heat pumps, water heaters, solar PV systems, electric vehicle chargers, etc., in addition to the panel upgrades and contractor prices. One estimate of $25,000 per existing home was given by [an energy consultant] in 2021. This is an outrageous expectation to place upon Californians.”

Decarbonization mandates will also create a disproportionate burden on homeowners who are neither able to afford additional debt nor qualify for publicly subsidized programs, she said. These burdens will fall especially on those working Californians who have fixed incomes or jobs with limited income growth potential and new homeowners who are not eligible for more debt or expenses.

“It is imperative that alternate decarbonization strategies be evaluated as reasonable steps to meet overall greenhouse gas reduction goals while technologies and costs evolve to reasonably meet consumer budgets and demand,” said Gavric. “As part of decarbonizing existing buildings, we respectfully recommend that proposed strategies do not further stress the housing market, working homeowners, and generally further exacerbate the state’s housing crisis.”