2023 Wrapped: Decarb Edition

Written by BDC and Sunstone Strategies.

We did it, friends! We made it through yet another year. It was filled with record-shattering heat, chilling court decisions, and more gas stove puns than we could count. In short, it was (another) huge year for the movement to upgrade the places where we live, work and play with clean energy. 

Pour yourself a beverage, and sit back to reflect with us on the top 13 biggies of 2023 as we gear up for another year of victories in the movement to secure healthy homes, better buildings, and affordable energy bills for all. 

1. The heat pump market stayed hot 

Even with economic headwinds causing a decline in major consumer purchases across the board in 2023, the market for heat pumps remained strong. The U.S. again ranked second in the world in growth of heat pump sales in 2023, trailing only Europe’s record strides.

But it’s not just about total sales of electric technologies, which ebb and flow according to churning waves of the U.S. economic ocean. To accurately assess the strength of the heat pump market, we need to measure how electric technologies are faring compared to fossil fuel equipment. And on this, we see decarb dominance – electric options remain in higher demand than gas alternatives across the board, and heat pumps are the shining star of their class. 

In the first three quarters of 2023, air-source heat pump shipments clobbered gas furnaces — outpacing them by 700,000 units (or 26.1%), according to the most recent data from the Air-Conditioning, Heating, and Refrigeration Institute. 

Electric water heaters are not far behind, outpacing gas water heater shipments by 11.7%. According to one market research firm, the value of the heat pump hot water market is set to double in the next ten years, and the surge in demand is thanks to “people becoming more aware of the importance of saving energy and being eco-friendly.” 

Is efficiency becoming… sexy? 

We think so, and so do many Americans. A survey of U.S. homeowners conducted by the heat pump manufacturer METUS found 24% of respondents already had a heat pump, and 69% said they would consider installing a heat pump in their home. IRA is likely to seal that deal, according to the CEO of Mitsubishi Electric Trane HVAC US. 

“The financial incentives offered through the IRA are anticipated to accelerate the adoption of energy-saving, all-climate heat pumps,” said Mark Kuntz, the METUS CEO. 

1. AIA members report a doubling of all-electric building projects in past two years

Seeing double? Within two short years, the number of all-electric buildings projects completed by members of the American Institute of Architects doubled, according to their own tracking.  This is a promising sign that all-electric buildings are becoming mainstream. 

1. States’ commitment to heat pump deployment QUADRUPLED (and then some)

The movement secured one of its strongest commitments to date in October, when the U.S. Climate Alliance – a bipartisan coalition of Governors representing 55% of the U.S. population – – committed to quadrupling heat pump installations across their territories by the end of the decade. This collective commitment ensures 20 million new heat pumps will reach consumers in coming years, with at least 40% of the benefits reaching disadvantaged communities. 

And we can’t talk about heat pump targets without a shout out to Maine – which continues to be the sleeper decarb policy hit of all seasons. The Pine Tree State breezed past its target of 100,000 heat pump installations two years ahead of schedule. To celebrate, Gov. Janet Mills set an even more ambitious target of 175,000 heat pumps by 2027. 

1. Manufacturers commit to ramp up production to meet booming demand 

Manufacturers’ commitment to supporting the decarbonization movement hit new highs in 2023 – and it’s no surprise given the market certainty these policy signals and heat pump commitments provide. The nation’s largest heat pump manufacturers united in California to commit to accelerate production in order to help the Golden State meet its target of deploying 6 million new heat pumps in coming years. Manufacturers got another boost when the federal government made good on a promise to mobilize the Defense Production Act to invest $169 million to accelerate heat pump manufacturing.

1. Electric options ABOUND

We’re not just seeing MORE heat pumps hit the market, but also a widely expanding set of offerings – from sleek heat pump window units, designer heat pumps and sexy heat pumps to smart heat pump and cold climate options. These days, there are heat pumps for every type of consumer, business and climate. 

And it’s not just heat pumps. Walk into a big box store in 2023 and you’ll find significantly expanded models and price points for induction cooktops, heat pump dryers, and heat pump water heaters compared to even a few years ago. We’re seeing an increased commitment from the nation’s retailers to support the transition to clean energy technologies. In fact, Lowes, the nation’s second-largest retailer, has explicitly committed to transitioning from gas to electric products across their portfolio as a part of their sustainability plan. 

1. New health research blew the lid off the gas stove debate…

The year kicked off with a surprising start, when new research attributing gas stoves to childhood asthma and comments from a U.S. Consumer Product Safety Commission (CPSC) Commissioner on potential regulatory action went viral, setting off a political firestorm and full-scale national reckoning about the future of gas stoves. For a few weeks, the risks of gas stoves and potential regulatory action were the number one story in America.

The rhetoric got hot, but nothing could obscure the legitimate concern of health professionals, scientists, and everyday Americans – many of whom learned for the first time about the links between gas cooking and pollutants like nitrogen dioxide and benzene. 

The dust has yet to settle on this unprecedented moment, but some outcomes are already becoming clear: the culture of gas cooking in America is shifting. 

After learning about the health risks of gas stove emissions, polling found Americans are less likely to prefer gas stoves over electric stoves, and among gas stove owners, 57% of parents and 59% of Democrats show interest in upgrading to electric. There’s also strong support (67%) for allowing the CPSC to regulate emissions for gas-burning stoves to protect our health. GQ agrees: 2023 was the year we got serious about indoor air quality, thanks in part to gas stoves’ viral moment. 

1. …and sparked the dawn of the induction era 

The biggest winner of the gas stove debate may well have been induction cooking, according to the media and google search trends.

Induction policy innovation also took center stage in 2023. The New York City Public Housing Authority, the largest public housing authority in the U.S., announced an Induction Stove Challenge in July. Manufacturers will compete for a contract to install at least 10,000 induction stoves in NYCHA buildings, so long as they can develop a model that won’t require electrical upgrades. This challenge is set to spur a market transformation that lowers the barrier to induction stoves for everyone and the BDC is proud to be a partner.  

And just as importantly, it will improve living conditions for tens of thousands of residents of public housing in New York City. We saw first-hand this year the power of improving air quality in homes through electric cooking. A study tracking a nationwide gas stove changeout program in Ecuador was published this year, and found a drop in asthma-related and overall hospitalizations in lockstep with the adoption of induction cooking. With projects like the Induction Stove Challenge and federal incentives on the way, we hope to see the U.S. replicate the public health success of Ecuador. 

1. California passed the nation’s first air quality standards for HVACs and water heaters

The focus on air quality in 2023 wasn’t limited to indoors. Fossil fuel space heaters and water heaters contribute to smog pollution outside, and in some cases generate even more pollution than power plants or diesel trucks. 

In April, California’s Bay Area Air Quality Management District approved the nation’s first air quality standard for space heaters and water heaters, starting in 2027 for some equipment classes. The state of California is not far behind, having committed to adopting a similar measure to take effect no later than 2030. And states like Connecticut and Maryland are starting to take a look at this precedent as well.

These rules send a clear market signal that the future of space and water heating is zero-emission.

1. A record number of decarbonization policies advanced 

Despite hurdles posed by the Ninth Circuit Court panel decision on Berkeley’s landmark clean energy buildings ordinance – this was a BANNER YEAR for electrification at the state and federal levels, with the passage of some of the strongest policies to date. 

A whopping 127 bills and budget items promoting building decarbonization were introduced across 25 state legislatures in 2023, and nearly one-third of these policies were approved! 

Lawmakers focused their priorities on limiting expansion of the gas system, new or improved building performance standards, building code modifications, and a suite of bills targeting school buildings and their indoor air pollution and emissions. Several mandated specific low-income protections and provisions while others included workforce development and labor standards.

Bills that helped set the pace for building decarbonization included:

• New York’s passage of the All-Electric Buildings Act, the nation’s first statewide all-electric building standard for most new buildings
• Colorado passed a measure to end line extension allowances, ensuring residents don’t have to subsidize new gas hookups. This was a nice match for another 2023 bill to create greater transparency around utility political spending. 
• Minnesota passed an Omnibus Energy bill, which invests millions in heat pump and electrical panel installations and includes measures to mitigate impacts on communities overburdened by pollution. 
• And Oregon passed a Climate and Resilient Buildings package that will ensure regulators track heat pump adoption while removing barriers to energy efficiency, a must to stabilize energy bills in a heating world. 

California developed an innovative new approach to use its state building code to help decarbonize  existing buildings this year, with a draft code that proposes to encourage replacement of central AC units with two-way heat pumps. According to research released by the BDC earlier this year, converting central AC unit sales to heat pumps can dramatically accelerate the decarbonization of homes while boosting grid resilience.

The Washington State Building Code Council voted to amend its statewide building code to strongly encourage heat pumps in new commercial and residential buildings in a manner that will be well-insulated from legal challenges. 

1. Regulators chart a course for a gas-free future

We have to give a shout-out to The Bay State. In December, regulators laid out a new and “potentially historic” strategy to chart an energy future of Massachusetts beyond gas. In what will now be viewed as the gold standard for a “future of gas” proceeding, state officials rejected the use of renewable natural gas (RNG) and hydrogen blending for home heating as expensive, risky and uncertain, and reinforced that electrification and a strategic decommissioning of the state’s gas system will be the strategy to cut pollution while ensuring safe and affordable home heating for all. 

An “earthquake in Illinois utility regulation” struck in November, when the Illinois Commerce Commission cut proposed rate hikes sought by four major methane gas utilities in half, including the pausing of Peoples Gas’ pipeline replacement program pending further investigation. 

Regulators in Oregon rejected NW Natural’s long-term plan to invest in fossil gas alternatives to cut greenhouse gas emissions as “insufficient,” asking the utility to make a more realistic effort toward clean energy. Those same regulators cut a proposed rate hike by the state’s second-largest utility Avista significantly, eliminating subsidies for new gas lines, requiring the utility to consider whether it can meet demand without new pipelines, and disallowing Avista from charging ratepayers for its political and lobbying activities.

1. TENs glowed up

Thermal Energy Networks (TENs) are reliable and efficient systems for delivering climate-friendly heating and cooling to entire neighborhoods, and they are also an innovative way to bring building decarbonization to scale while maintaining union jobs. 

So it’s no wonder TENs went through a major glow up in 2023, gaining new interest as pilot projects came online and news of their benefits spread.  

Seventeen utility-owned thermal energy networks (TENs) pilot projects were preparing to take flight in 2023 and 13 communities were selected to receive up to $44 million in grants from the U.S. Department of Energy to develop this technology. So far, two projects in Massachusetts have broken ground and 11 projects in New York, three in Massachusetts, and one in Minnesota are in proposal or planning stages. 

The New York State Legislature allocated $30 million to replace two fossil-fueled chiller plants with a thermal energy network on a state university campus, while helping set the stage for 15 more TENs on state-owned campuses and facilities. These pilots feature strong labor standards and will decarbonize some of New York’s highest-polluting campuses and facilities. 

Illinois and Colorado also expressed interest in TENs by holding briefings and funding new grant programs, respectively.

If you missed our TENs explainer, you can check it out here, and dig even deeper here. 

1. We reached a quarter of Americans with decarbonization policies

We hit some major milestones in 2023. Just four years after the nation’s first policy to decarbonize buildings was passed in Berkeley, California, one out every four Americans now lives in a region that requires or incentivizes all-electric new buildings. More than 100 cities and at least seven states have passed policies to kick-start this transition. No climate issue in recent history has moved so fast, or been so successful, so quickly.

And yet, 2023 showed us with vivid certainty that we’re still not moving nearly fast enough. Which brings us to our 13th and final biggie of the year. 

1. Global temperature records were shattered. The ocean boiled. The East Coast was shrouded in wildfire smoke. And our work became even more urgent. 

The Summer of 2023 ushered in an unsettling new era, as global heat records were obliterated and the ocean hit 100 degrees off the coast of Florida. An unprecedented streak of extreme heat baked the Southwest throughout July and August. Residents of cities like Phoenix, Arizona faced 31 days in a row of blistering heat above 110 degrees. On the East Coast, smoke from hundreds of Canadian wildfires enveloped residents, turning New York City’s iconic skyline orange. 

From a climate perspective, this year was terrifying…and clarifying. 

Our apartments, offices, schools and grocery stores were not built for the climate crisis. But our ability to survive it requires them to be. The need for healthy, resilient buildings and reliable, safe and locally-produced clean energy to power them has never been more urgent, and it’s being felt by Americans everywhere. 

A new poll from CNN finds that nearly two-thirds of U.S. adults are worried about the threat that climate change poses to their communities, and a whopping 73% want the federal government to cut emissions in half by the end of the decade. This rising concern about climate change is bolstering support for strong building codes and other health and safety standards for equipment. 74% of Americans report being affected by extreme heat in the past five years. Another poll shows that 64% of the public believe that cooling should be a right. And a recent poll by the American Property Casualty Insurance Association found that 85% of homeowners would support their community adopting the latest building codes for new buildings to ensure these properties can better withstand natural disasters.

What we’re witnessing is a real-time culture shift around the need for high-quality, healthy housing – and this gives us hope. 

Here at the BDC, we’re channeling the challenges of 2023 into our commitment to our work and to all of you. The movement for better buildings has never been more important. We look forward to securing major new victories in 2024 to improve the health and well-being of our communities through building decarbonization.