In this new year, California is building on several major wins and forging a path to an all-electric future. Alignment across state agencies will support California in meeting its climate goals: reducing greenhouse gas (GHG) emissions by approximately 30 percent from current output by 2030 and reaching carbon neutrality by 2045. Because the state’s building stock produces nearly a quarter of California’s GHG emissions, it’s critical to decarbonize buildings and homes.
WINS IN CALIFORNIA
In 2022, state agencies aligned and made major commitments to building electrification, laying important groundwork in California and nationally. These victories came as a result of collaboration and leadership from various partners in community-based organizations, labor groups, environmental justice communities, environmental NGOs, manufacturers, local governments, and other groups the Building Decarbonization Coalition had the benefit of working with this past year.
Heat pump targets
In a letter to California air regulators in July, Governor Newsom laid out the most ambitious targets in the nation for transitioning homes off of fossil fuels: 3 million climate-ready homes and 6 million heat pumps deployed by 2030, and 7 million climate-ready homes by 2035. At least 50% of the funding to achieve these goals will be directed to low-income and environmental justice communities. This means that over the next decade, more than half of California’s 13.2 million households could be equipped with clean, efficient electric appliances.
Zero-emissions appliance standard
Aligned with the Governor’s targets, the California air regulators committed to a zero-emissions appliance standard to phase out the sale of gas appliances by 2030. This first-in-the-nation move would increase market share for heat pumps for space and water heating. Rulemaking to develop this appliance standard will kick off this year. Bay Area and South Coast air regulators are also working on appliance standards for residential and commercial buildings ahead of the state’s proposed schedule.
Ending gas subsidies
California became the first state in the country to end fossil fuel subsidies for new buildings. This decision by the California Public Utilities Commission (CPUC), which goes into effect on July 1, 2023, creates consistency in state spending for an all-electric future by ending incentives for gas infrastructure expansion.
Inclusive Utility Investment
The CPUC received pilot proposals for Inclusive Utility Investment (IUI) financing programs from Pacific Gas & Electric, San Diego Gas & Electric, Silicon Valley Clean Energy, Southern California Edison, and Southern California Gas Company. The pilot programs would assist customers with debt-free investments in electric appliances for their homes. Commissioners are expected to hear these proposals this year.
The California Legislature committed to more than $1.4 billion in programs aimed at decarbonizing buildings and providing access to cooling for households in the 2022 state budget. The multi-year funding prioritizes low-income households and environmental justice communities. Governor Newsom released a proposal on January 10, 2023, that cuts and delays some of this funding, and environmental and environmental justice advocates are working to protect these investments.
The Inflation Reduction Act (IRA) increased tax incentives for electric appliances and weatherization this January with up to $2,000 for heat pumps. Households may also be able to access additional rebates of up to $8,000 for heat pumps by 2024. The IRA also commits $50 billion to states to support building decarbonization–which would roughly electrify about 1% of the nation’s households if funding were channeled solely into heat pump installations. Therefore, state investments are critical to decarbonizing California households.
State alignment for building electrification is driving heat pumps sales. Recent federal data shows that electricity has officially surpassed gas as the primary source of energy for heating. In 2022, heat pump shipments outpaced gas furnaces each month. Last year, manufacturers introduced a 120V heat pump water heater and 120V induction stove to enable households to switch out gas appliances without a panel upgrade. Policy alignment is already moving the market and more exciting innovations may be on the way.
All-electric affordable housing
Closing out the year, California’s largest affordable housing program adopted an all-electric design requirement for new projects. Affordable Housing and Sustainable Communities (AHSC) will provide approximately $750 million to fund all-electric projects this year. The program successfully models how other key affordable housing agencies can implement all-electric requirements for new construction and stop funding construction that connects affordable housing to gas infrastructure.
LOOKING AHEAD IN 2023
The new year brings critical opportunities to implement state programs, create new policies that promote electrification in our neighborhoods and establish direction for emission targets through legislation. California must also prioritize environmental justice communities and ensure that workers benefit in the transition. Low-income households and environmental justice communities are disproportionately affected by climate pollution. Ensuring affordability, access to clean technologies, their participation in decision-making processes, and empowerment of community-based organization leadership will help create a more just and equitable transition to a clean, electric future. Similarly, the workforce in California is critical to the state’s transition, and policies should spur economic growth by creating good-paying, high-road clean energy jobs. By aligning funding, programming, and policy across state agencies, California can continue to advance towards an all-electric future where all households can benefit from clean air, improved health, and safe, healthy and resilient homes.