In 2024, California stood at a critical crossroads in its fight against climate change and energy affordability. Record-breaking extreme heat, a longer wildfire season, and worsening air pollution all converged in the summer, underscoring the urgency of the state’s impending climate commitments. Energy affordability posed a significant challenge, especially for low-income households, exacerbated by extreme weather and gas infrastructure costs. Amidst these challenges, our coalition worked to make urgently-needed progress in equitable building decarbonization to help create safer, healthier, and more climate-resilient homes and communities––which Californians need now and in the future.
This is because we know that powering neighborhoods to run on clean energy with highly efficient, modern electric appliances like heat pumps can create long-term energy affordability, improve air quality, provide life-saving cooling, protect public health, and cut harmful emissions. As the year comes to a close and a new federal administration looms on the horizon, California’s progress shines light on the groundbreaking work of our coalition to advance neighborhood-scale building decarbonization and energy affordability.
Energy Affordability
One of the biggest building decarbonization wins in the Golden State this year makes headway for both of these priorities. Senate Bill (SB) 1221, authored by Senator Dave Min, is the first bill in the nation to fast track the clean energy transition in residential neighborhoods and pave the way for responsible utility investments and long-term energy affordability for Californians. It enables utilities to shift away from expensive investments in aging natural gas pipelines toward more cost-effective, community-scale clean energy pilot projects with priority for low-income and frontline communities, so that they are the first to benefit from expanded access to life-saving cooling, lower utility costs, clean air, and climate resilience.
The pilots will focus on upgrading blocks of homes or entire neighborhoods to run on clean energy with the aim of managing the transition off of gas systems. Replacing California’s aging gas pipelines could cost gas utility customers an estimated $20 billion over the next decade, resulting in up to a 900% bill increase by 2050 for gas customers. Avoiding these expensive pipeline replacement projects helps California invest in infrastructure projects that align with the state’s clean energy goals and promotes energy affordability by lowering and maintaining more consistent utility costs. The bill and these pilots can offer the state and nation a model and important lessons for neighborhood decarbonization.
California also expanded energy credits for low-income households by broadening eligibility for the Family Electric Assistance Rate (FERA) program through Senate Bill (SB) 1130. Authored by Senator Steven Bradford, this bill will help income-eligible households pay their energy bills, regardless of the size of the household. FERA has historically been undersubscribed because the current model excludes certain income-eligible customers, especially single parents or elderly couples living on fixed incomes. By lowering the household size requirement, SB 1130 will promote more equitable energy rates—which have deterred many from adopting more energy-efficient technologies like heat pumps—and support long-term energy affordability.
Equitable Building Decarbonization
Ensuring that low-income and frontline communities are the first to benefit from the clean energy transition is critical to addressing environmental justice and historical inequities, and building climate resilience for those who need it most. The coalition joined environmental justice organizations in protecting $500 million in funding for California’s new direct installation program for households, the Equitable Building Decarbonization (EBD) Program. Funded by the state budget, the program provides weatherization and other essential home upgrades as well as pollution-free appliances like heat pumps—which can cool Californians during extreme heat. This initiative serves as a national model in the way that it prioritizes low-income and frontline communities and includes strong tenant protections, and is already being referenced in California as new programs are developed. Prioritizing continuous funding for large-scale programs like EBD is crucial to promote energy equity and boost climate resilience.
Clean energy financing developments and incentives also launched to promote affordability in California. State utility commissioners paved the way for a new clean energy financing program that can help millions of low- and moderate-income Californians access clean, electric appliances like heat pumps. The California Public Utilities Commission (CPUC) directed investor-owned utilities and Silicon Valley Clean Energy (SVCE) to create a joint proposal for inclusive utility investment (IUI) financing for residential customers. If adopted, the program can help accelerate heat pump adoption, speed the state’s transition to clean energy, and expand access to financing. Silicon Valley Clean Energy is set to pilot a program next year that could lay the groundwork for statewide expansion through the CPUC.
California is one of the first states in the nation to distribute funding from the Inflation Reduction Act (IRA) through the Home Electrification and Appliance Rebates (HEEHRA) program with $80 million for low- and moderate-income households to upgrade their homes with clean, electric appliances. The incentives will help both single-family households and multi-family building owners upgrade to heat pumps for space and water heating. Importantly, the federal incentives can be stacked on top of TECH Clean California’s incentives, and may also be added on to other local and state incentives to bring down costs. This first phase of the program represents a positive step for future funding in years to come./p>
These incentives are a critical component for the transition to clean energy and also send a crucial market signal for the production of clean, electric appliances. And more and more, industry is increasingly ready to meet growing demand as heat pump adoption grows.
Market and Statewide Momentum
The California Heat Pump Partnership (CAHPP) launched, bringing together state leadership and actors in the heat pump supply chain to kickstart action toward the state’s goal to install six million electric heat pumps by 2030. This trailblazing public-private partnership includes the vast majority of heat pump and heat pump water heating manufacturers, utilities, retailers, distributors, and other market actors. The CAHPP is developing a blueprint outlining strategies to address technical, market, and policy barriers and advance widespread heat pump adoption across the state. Next year, CAHPP will launch a comprehensive marketing campaign to engage both consumers and contractors building upon the success of The Switch Is On. This partnership can serve as a model for other states in aligning and convening stakeholders to make forward movement in statewide heat pump adoption.
The California Energy Commission (CEC) officially adopted a new energy code––a major step forward for electrification in California’s history. The 2025 Building Energy Efficiency Standards for newly constructed buildings, building additions, and alterations to existing buildings sets space and water heating heat pump baselines for residential buildings, requires heat pumps when replacing air conditioning systems for commercial single zone systems, expands electric readiness requirements, and more. The new code will help promote market growth while supporting the state’s economic, clean energy, climate, and public health goals.
California local governments continue to accelerate the movement for healthier, more resilient buildings even in the face of the April 2023 California Restaurant Association (CRA) vs. Berkeley federal ruling. Despite the court’s decision, local and state governments retain many options to decarbonize their buildings, and 15 California jurisdictions have since taken action to encourage all-electric buildings.
California also passed Senate Bill (SB) 382, authored by Senator Josh Becker, to protect prospective homebuyers, help them make informed decisions, and support upgrading properties with clean, electric appliances. The bill ensures that prospective homebuyers receive disclosures regarding the electrical systems of a property as well as future state or local requirements related to replacing existing gas appliances.
Looking ahead
California made progress in building decarbonization this year because of the tireless work of a broad coalition, which included environmental justice groups, environmental organizations, manufacturers, energy providers, and local governments. The need for energy affordability and market momentum is urgent and will require close coordination between this coalition, its partners, state agencies, and the Legislature. As a new federal administration prepares to take office in 2025, we’ll need to continue building momentum on what we’ve accomplished this year as there is much work ahead.
With the fifth-largest economy in the world, California’s climate leadership influences other states and larger federal action. The state must continue to protect and expand funding for equitable building decarbonization programs, scale neighborhood decarbonization, build market readiness, invest in clean energy infrastructure, and accelerate towards its climate targets. This year of building decarbonization progress is a powerful step in the right direction––and there are no signs of slowing down.