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Published Jan 10, 2023 / Last modified on Jun 05, 2023 at 1:13 pm
California Policy Updates

California Policy Updates

California landscape

June Updates:

Zero-Emission Appliance Standards

On May 10, CARB hosted its first zero-emission appliance standards workshop focused on planning the development of zero-emission standards for space and water heaters. Staff discussed an overview of the rulemaking timelines, the planned engagement process, and values that will guide staff’s approach to developing the standards. The slides and additional information from the workshop are available here.

Workshop on Updating the Indoor Air Quality Guidelines for Nitrogen Dioxide

On May 16, CARB held a workshop on the health effects of indoor exposures to NO2, current indoor air guidelines for international agencies, and how updates to the guidelines could improve indoor air quality and benefit public health.

Presenters from health agencies and academia shared their perspectives on indoor air quality issues and the development and use of NO2 guidelines. Representatives of community groups and non-profit organizations also discussed how poor indoor air quality impacts their communities and what factors they consider important for new indoor air quality guidelines. The slides and additional information from the workshop are available here. Any comments can be emailed to IAQGuidelines@arb.ca.gov.

BAAQMD Building Appliance Rules

As part of the recent passage of their zero-emission appliance rules, the Bay Area Air Quality Management District (BAAQMD) committed to convene an Implementation Working Group (IWG). The IWG is composed of over 40 invited stakeholders representing a variety of stakeholder segments.

On May 23, BAAQMD hosted their IWG kick-off meeting. The meeting provided an overview of the rules, IWG purpose and values, and potential implementation challenges. BAAQMD will host quarterly public Working Group meetings. Members of the public may attend these meetings in listen-only mode with the opportunity to provide public comments at the end of the meeting. Moving forward, to receive information on updates and events associated with the implementation of the rules, please sign up BAAQMD’s Building Appliances Email List here.

California Energy Commission (CEC)

Equitable Building Decarbonization Program

On May 17, the CEC hosted a workshop to present the draft guidelines for the Equitable Building Decarbonization Direct Install Program. The CEC is having a 3-region approach to the program, focusing the money on the most disadvantaged communities. Written comments on the draft guidelines will be accepted until June 30. You can find the slides, the guidelines, and additional information from the workshop here.

The CEC will also be having community and regional workshops to seek input on the draft guidelines as follows:

  • San Francisco – June 6
  • Los Angeles – June 9
  • Santa Rosa – June 12
  • Indio – June 15
  • Fresno – June 23
  • Daytime Community Feedback Virtual Meeting (Remote Access Only) – June 10
  • Evening Community Feedback Virtual Meeting (Remote Access Only) – June 21

For in-person workshops, use this RSVP link. For virtual community workshops, you can register for the Zoom here.

California Electric Homes Program

The CEC is announcing the launch of the California Electric Homes Program (CalEHP).  CalEHP provides technical assistance and financial incentives to residential developers and builders who construct new all-electric, market-rate residential dwellings with electric appliances and equipment, or energy storage.

The program offering will serve the following residential sub-sectors:

  • Single-family, which includes duplexes, triplexes, accessory dwelling units (ADU)
  • Multifamily low-rise and high-rise, including condominiums
  • Manufactured homes.

For more information on CalEHP, please visit the program website: California Electric Homes Program (CalEHP) 

California Legislature

On May 18, Assembly and Senate Appropriations Committees voted on their Suspense File. SB 527 (Min) Neighborhood Decarbonization Program (BDC-sponsored bill) and AB 586 (Calderon) Heat pump Medi-Cal Coverage, were held in committee and therefore will not continue in the legislative process this year. All other bills that BDC is tracking progressed to the Assembly and Senate floor.

June 2 was the deadline for all bills to pass out of their first house. Below are updates on BDC tracked bills that made it to the floor:

  • AB 593 (Haney): Carbon emission reduction strategy: building sector
    • Requires the CEC to craft a building emissions reduction strategy with milestones to be implemented starting 2025.
    • Passed off the Assembly Floor with 60-15 votes and is headed for the Senate.
  • SB 48 (Becker): Building Energy Savings Act
    • Now requires the CEC, by 2026 develop a strategy to track and manage the energy and emissions of buildings to achieve the state’s climate goals and report back to the Legislature.
    • Passed off the Senate Floor with 31-9 votes and is headed for the Assembly.
  • SB 306 (Caballero): Climate change: Equitable Building Decarbonization Program: Extreme Heat Action Plan
    • Makes specific revisions to the CEC’s new Equitable Building Decarbonization Program and the requires updating of the Extreme Heat Action Plan.
    • Passed off the Senate Floor with 40-0 votes and is headed for the Assembly.
  • SB 394 (Gonzalez): Master Plan for Healthy, Sustainable, and Climate-Resilient Schools
    • Requires the CEC, upon appropriation, to create a master plan for achieving sustainable and climate-resilient school facilities.
    • Passed off the Senate Floor with 40-0 votes and is headed for the Assembly.
  • SB 410 (Becker) Powering Up Californians Act
    • Requires the PUC to establish, on or before September 24, 2024, reasonable average and maximum target energization time periods and certain reporting requirements so that electrical corporation performance can be tracked and improved.
    • Passed off the Senate Floor with 32-8 votes and is headed for the Assembly.
  • SB 414 (Allen): Climate change: applications using hydrogen: assessment
    • On or before December 31, 2025, requires CARB, in consultation with the CEC and CPUC to complete an assessment of the use of hydrogen in certain applications including in household and commercial appliances.
    • Passed off the Senate Floor with 40-0 votes and is headed for the Assembly.
  • SB 755 (Becker): Energy efficiency and building decarbonization programs
    • Requires the CEC to develop and make publicly available an internet website for all energy efficiency and building decarbonization programs available in the state for residential buildings and residential electricity customers.
    • Passed off the Senate Floor with 40-0 votes and is headed for the Assembly.
  • SB 795 (Stern): Energy: building energy efficiency: heating, ventilation, and air conditioning equipment: sale registry and compliance tracking system: compliance document data repository
    • Requires the CEC to implement an electronic statewide HVAC equipment sales registry and compliance tracking system and create a confidential electronic statewide compliance document data repository.
    • Passed off the Senate Floor with 32-8 votes and is headed for the Assembly.

 

May Updates:

Zero-Emission Appliance Workshop
May 10, 9am-12:30pm PST
CARB will host its first zero-emission appliance workshop focused on planning the development of zero-emission standards for space and water heaters. Register here, or submit written comments following the workshop before May 25.

Program Update: CalSHAPE
The CalSHAPE (California Schools Healthy Air, Plumbing, and Efficiency) program provides funding to upgrade heating, air conditioning, and ventilation (HVAC) systems in public schools. As part of the FY 22-23 budget, CalSHAPE received $20m through Cap-and-Trade funds to conduct zero-emission HVAC replacements.

On March 29, the CEC released draft regulation language that proposes all electric equipment for the entire $190 million in funding. This language would allow electric equipment with a hybrid heating system for climate zones 1 and 16. The CEC expects to adopt guidelines by June of this year.

Legislative Updates
Both of the BDC-led bills – SB 527 (Min) and AB 593 (Haney) – have passed out of their first policy committees and are headed for Appropriations. The last day for bills to pass out of their first house policy committees was April 28. Below are updates on the main bills BDC is tracking:

  • AB 384: Passed out of Assembly Education Committee on April 12 and will be heard next in Appropriations.
  • AB 586: Passed out of Assembly Health Committee on April 12 and will be heard next in Appropriations.
  • AB 593: Passed out of Assembly Natural Resources Committee on April 10 and will be heard next in Appropriations.
  • AB 698: Bill was held in Assembly Utilities and Energy Committee and cannot be acted on until January 2024 at the earliest.
  • SB 48: Passed out of Senate Energy Committee on April 10 and will be heard next in Appropriations.
  • SB 306: Passed out of Senate Natural Resources and Water Committee on April 25 and will be heard next in Appropriations.
  • SB 394: Passed out of Senate Education Committee on April 26 and will be heard next in Appropriations.
  • SB 414: Passed out of Senate Environmental Quality Committee on April 26 and will be heard next in Appropriations.
  • SB 527: Passed out of Senate Energy Committee on April 24 and will be heard next in Appropriations.
  • SB 755: Passed out of Senate Energy Committee on April 24 and will be heard next in Appropriations.
  • SB 795: Passed out of Senate Judiciary Committee on April 25 and will be heard next in Appropriations.

California Budget Update
Both the Senate and Assembly have held their subcommittee hearings on the state’s energy package. In early May, the Governor will release an updated budget proposal based on the most recent budget projections (exact date TBD). Based on the outlook of the budget, stakeholders anticipate additional cuts across sectors.

BDC is leading a budget letter to protect funding for the CEC’s Equitable Building Decarbonization Program, the TECH program, Community Resilience Centers, and Low-GWP Refrigerants.

 

April Updates:

Air Quality Management Districts (AQMD)

Bay Area Air Quality Management District’s (BAAQMD) Rules 9-4 and 9-6

On March 15, 2023, BAAQMD adopted the proposed amendments to rules 9-4, 9-6, and certification of their Environmental Impact Report. The rules require natural gas water and space heaters be replaced with a zero-NOx alternative upon burnout.  

The timelines of the approved amendments are as follows:

Furnace proposal (Rule 9-4):

  • Jan 2024 – ultra-low-NOx
  • Jan 2029 – zero-NOx

Water heater proposal (Rule 9-6):

  • Jan 2027 – zero-NOx for typical single-family
  • Jan 2031 – zero-NOx for MF/commercial

California Energy Commission (CEC)

California Schools Healthy Air, Plumbing, and Efficiency Program (CalSHAPE)

The CalSHAPE program provides funding to upgrade heating, air conditioning, and ventilation (HVAC) systems in public schools. As part of the FY 22-23 budget, CalSHAPE received $20m through Cap-and-Trade funds to conduct zero-emission HVAC replacements.

The CEC has released draft third version guidelines for the CALSHAPE Ventilation Program. Comments are due on April 12, 2023.

California Public Utilities Commission (CEC)

Long-Term Gas Planning Proceeding (Rulemaking R.20-02-007)

This CPUC established this proceeding to assess policies, processes, and rules to ensure a safe and reliable gas system in California and perform long-term gas system planning.

Staff released a proposal December 2022 with comments and questions for party feedback. The proposal sidestepped the obligation to serve issue, which would need to be addressed to enable the proposal. The CPUC doesn’t currently require long term planning for gas infrastructure management, which parties have recommended be included. Regardless, the staff proposal is an important framework for enabling zonal decarbonization.

The CPUC has closed the comment period of the new staff proposal and now stakeholders will wait for the CPUC to respond with a proposed decision. This is one of Commissioner Rechtschaffen’s final actions before leaving the CPUC, so stakeholders anticipate it could take a while before we see a proposed decision.

State Budget

On March 22 and 23, Senate Budget Subcommittee 3 and Assembly Budget Subcommittee 2 met on items related to the Equitable Building Decarbonization Program. Public commenters emphasized keeping the budget cuts as is, staying in line with the Legislative Analyst’s Office report on the Governor’s January Budget proposal.

Stakeholders will now wait for the Governor to release his May Revision to the budget.

California Legislature

Bills have started moving through the policy committee hearing process. Fiscal bills need to pass out of their first house policy committees by April 28.

There are a handful of bills that we are watching closely that are relevant to the building decarbonization sector. Updates on the statuses of the bills can be found below:

 

March Updates:

Air Quality Management Districts (AQMD)

Bay Area Air Quality Management District’s (BAAQMD) Rules 9-4 and 9-6

On March 15, 2023, BAAQMD will consider the adoption of proposed amendments to rules 9-4, 9-6, and certification of their Environmental Impact Report. The rules would require natural gas water and space heaters be replaced with a zero-NOx alternative upon burnout. The rule hearing will allow both virtual and in-person comments. 

The timelines of the proposed amendments are currently as follows:

Furnace proposal (Rule 9-4):

o   Jan 2024 – ultra-low-NOx

o   Jan 2029 – zero-NOx

  Water heater proposal (Rule 9-6):

o   Jan 2027 – zero-NOx for typical single-family

o   Jan 2031 – zero-NOx for MF/commercial

California Public Utilities Commission (CPUC)

Rulemaking on Building Decarbonization (Rulemaking R.19-01-011)

This is a general rulemaking to establish a building decarbonization policy framework, as well as engage in other building decarbonization-related activities.

On February 7, the CPUC voted to adopt the decision to allocate $50m towards the TECH program. This funding was secured through our advocacy on the FY 2021-2022 state budget. 

TECH also projected the following timelines for funding

  • Spring ‘23 – roll out $50m in funding for HVAC systems
  • Summer ‘23 – roll out funding for HPWHs from Self-Generation Incentive Program

State Budget

On February 22, the Legislative Analyst’s Office released its report analyzing the Governor’s January Budget proposal. Despite suggesting major funding cuts to the energy package, the report supports maintaining funding for the California Energy Commission’s Equitable Building Decarbonization Program given the focus on equity. It also suggests the Legislature could reconsider reductions and/or delays in future years if the program struggles to get money out the door. 

California Legislature

February 17 was the last day for new bills to be introduced. 2,632 bills were introduced, the highest number in over a decade. Both of the BDC-led bills – SB 527 (Min) and AB 593 (Haney) – are in print and waiting to get referred to committee.

We are still analyzing and prioritizing the long list of introduced bills, but several bills directly relevant to the building decarbonization sector include:

 

February Updates:

California Energy Commission (CEC)

California Schools Healthy Air, Plumbing, and Efficiency Program (CalSHAPE)

The CalSHAPE program provides funding to upgrade heating, air conditioning, and ventilation (HVAC) systems in public schools. As part of the FY 22-23 budget, CalSHAPE received $20m through Cap-and-Trade funds to conduct zero-emission HVAC replacements.

On January 12, the CEC hosted a workshop on the CalSHAPE HVAC Upgrade and Repair Grants program with a discussion on the eligibility, project scope, project costs, and award limits related to this $20m. In this workshop, the CEC proposed CalSHAPE use the remaining HVAC Upgrade and Repair Grant funds ($192m) for only all-electric HVAC installations in schools. This funding would build on the $20m that was secured for all-electric school appliance installations last year. 

You can access the slides and recording of the presentation here.

Inflation Reduction Act Residential Energy Rebate Programs

On January 27, the CEC’s Reliability, Renewable Energy & Decarbonization Incentives (RREDI) Division requested opening a new docket to support the implementation of the federal Inflation Reduction Act Residential Energy Rebate Programs. More information to come soon as the CEC begins to scope out the implementation of these new federal programs through this new docket.

California Public Utilities Commission (CPUC)

Technology and Equipment for Clean Heating (TECH) Initiative 

Created through SB 1477 (Stern, 2018), the TECH program aims to reduce buildings’ greenhouse gas emissions through the installation and use of clean space and water heating technology.

On February 2, the CPUC officially voted to approve the $50 million for TECH from California’s FY 2022-2023 budget. On February 7 at 1pm, TECH will hold their Clean California Quarterly Stakeholder Meeting to share information on new incentives and implementation plans, Quick Start Grant recipients, and marketing plans for 2023. 

You can register for that meeting here.

Long-Term Gas System Planning (Rulemaking 20-01-007)

The Long-Term Gas System Planning proceeding will examine reliability standards and proposals to mitigate the negative impact of operational issues transmission system and determine the long-term regulatory solutions and planning strategy the Commission should implement.

Back in December, the CPUC staff released a lengthy proposal in the Long Term Gas Planning proceeding. The proposal offers a method for prioritizing portions of the gas distribution infrastructure that are most suitable for decommissioning and poses a lengthy set of questions to stakeholders on their proposal. 

Comments on the December proposal are due February 24.

State Budget

On January 10, the Governor released his proposed budget for FY 2023-2024. The budget proposed cuts to previously committed funding, including:

  • $87 million reduction (9%) for FY 2025-26 funding towards the Equitable Building Decarb direct install and incentives program at the CEC, with delayed access to $370 million.
  • $20 million reduction (50%) for FY 2023-24 in funding towards accelerating the adoption of low global warming pollutant refrigerants in the Equitable Building Decarb program at CARB.

This proposed budget is the beginning of a negotiation process where the Legislature and Governor will negotiate to finalize a budget package by June 15.

California Legislature

February 17 is the last day for new bills to be introduced. For the next two weeks, most of the attention in the Legislature will be placed on introducing new legislation. Bills introduced this year will have 2 years to make it through the full legislative process. Stay tuned next month for an overview of relevant legislation.

January Updates:

California Air Resources Board (CARB)

AB 32 Climate Change Scoping Plan

The 2022 Scoping Plan Update will assess progress towards achieving the Senate Bill 32 2030 greenhouse gas (GHG) reduction target and lay out a path to achieve carbon neutrality by 2045.

On December 15, CARB approved its 2022 Scoping Plan, which solidified goals to:

  • Require zero-emission new construction starting in 2026 for residential buildings and 2029 for commercial buildings.
  • Require 80% of appliance sales are electric for existing residential and commercial buildings by 2030, 100% of appliances sales are electric for existing residential buildings by 2035, and 100% of sales are electric for existing commercial buildings by 2045.
  • Prioritize frontline, low-income, disadvantaged, rural, and tribal communities, with most funds in the new $922 million Equitable Building Decarbonization Program created through the 2022-2023 state budget.
  • Develop building performance standards for existing buildings.
  • Expand consumer education efforts to raise awareness about the benefits of decarbonizing buildings and stimulate adoption.
  • Ensure that incentive programs prioritize energy affordability and tenant protections, promote affordable retrofits, and protect small landlords and homeowners as well as overlooked groups.

On January 4, the Legislative Analyst’s Office released a report assessing the Scoping Plan Update (available here), which criticized the Update for lacking a clear strategy for meeting the state’s 2030 GHG goals.

Strategic Growth Council (SGC)

Affordable Housing and Sustainable Communities (AHSC) Program

The AHSC program is one of the largest affordable housing programs in California that funds land-use, housing, transportation, and land preservation projects to support infill and compact development that reduce greenhouse gas emissions.

The Final Round 7 Guidelines were adopted at the SGC Council Meeting on December 15. These guidelines establish all-electric construction as a requirement for the program and no longer fund projects that include natural gas connection infrastructure.

The Notice of Funding Availability for the AHSC program is estimated to be released the week of January 17. The Strategic Growth Council expects around $750 million to be available for funding projects.

Air Quality Management Districts (AQMD)

South Coast Air Quality Management District’s (SCAQMD) 2022 Air Quality Management Plan (AQMP)

The SCAQMD’s 2022 AQMP is required under the federal Clean Air Act to develop a blueprint for achieving air quality standards and to reach attainment in the district.

On December 2, the SCAQMD voted 9-2 to approve its AQMP. The plan calls for SCAQMD to develop regulations to require zero-emission or low NOx space and water heating appliances in both new and retrofit commercial and residential buildings. Additionally, the plan calls for emission reductions from residential and commercial cooking devices, swimming pool heaters, laundry dryers, and barbecue grills.

On January 23, 2023, CARB will consider approval of SCAQMD’s AQMP. If the CARB Board adopts the AQMP, they will submit it and the relevant portions of the CARB Staff Report to the U.S. Environmental Protection Agency for its inclusion in the California State Implementation Plan.

Bay Area Air Quality Management District’s (BAAQMD) Rules 9-4 and 9-6

On March 15, 2023, BAAQMD will consider the adoption of proposed amendments to rules 9-4, 9-6, and certification of their Environmental Impact Report. The rules would require natural gas water and space heaters be replaced with a zero-NOx alternative upon burnout.

The timelines of the proposed amendments are currently as follows:

  • Furnace proposal (Rule 9-4):
    • Jan 2024 – ultra-low-NOx
    • Jan 2029 – zero-NOx
  • Water heater proposal (Rule 9-6):
    • Jan 2027 – zero-NOx for typical single-family
    • Jan 2031 – zero-NOx for MF/commercial

Comments are due by 5 pm on February 6, 2023.

California Energy Commission (CEC)

Equitable Building Decarbonization Program

The Equitable Building Decarbonization program seeks to reduce GHGs in homes and advance energy equity through its direct install and incentive programs. This program has been committed $922 million through the budget process to be spent through 2026.

On December 13, the CEC held a workshop on the Equitable Building Decarbonization Program where they discussed their initial implementation plan and took input from the public on the program framework, implementation plans, and topics to be considered in program scoping. You can find the recording to the workshop here and the CEC is accepting comments until January 13.

California Schools Healthy Air, Plumbing, and Efficiency Program  (CalSHAPE)

The CalSHAPE program provides funding to upgrade heating, air conditioning, and ventilation (HVAC) systems in public schools. As part of the FY22-23 budget, CalSHAPE received $20m through Cap-and-Trade funds to conduct zero-emission HVAC replacements.

On January 12, the CEC will be hosting a workshop on the CalSHAPE HVAC Upgrade and Repair Grants program with a discussion on the eligibility, project scope, project costs, and award limits related to this $20m. You can register for the Zoom here. Written comments are due by January 26, 2023.

California Legislature and State Budget

  • January 4 was the first day of the 2023-2024 Legislative Session for both the Assembly and Senate.
  • On January 10, the Governor released his January Budget proposal. Based on recent budget projections of lower revenue estimates, the Legislature and stakeholders were predicting a less fruitful budget, with possible cuts. This budget proposal kicks of a multi-month budget negotiation between the Governor and the Legislature.
  • February 17 is the last day for new bills to be introduced. Between now and mid-February, most of the attention in the Legislature will be placed on introducing new legislation. Bills introduced this year will have 2 years to make it through the full legislative process.