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Published Jan 10, 2023 / Last modified on Oct 03, 2023 at 9:11 am
California Policy Updates
California landscape

October Updates:

California Air Resources Board (CARB)

  • CARB released a request for information (RFI) for the SB 1206 assessment report. This RFI will help inform CARB staff to complete their assessment report specifying how to transition California’s economy, by sector, away from HFCs and to ultra-low- and/or no-GWP alternatives no later than 2035 as directed by SB 1206.
  • The RFI document includes some guiding questions to help CARB’s analysis. CARB requests responses by October 30 via the docket.

 California Energy Commission (CEC)

  • The Electric Program Investment Charge (EPIC) Program’s annual symposium will take place on October 3 and 4 from 8 am-5 pm. This symposium will bring together leading policymakers, energy researchers, and technology developers, including recipients of EPIC grants, to spotlight the latest clean energy technologies being deployed in the state. The agenda can be found here. You can also register for the event here.
  • The CEC and EPRI will be hosting a two-day summit exploring affordable, reliable, and equitable pathways to electrifying buildings on October 10 and 11 from 8 am – 4 pm. The event will be in-person at the California Natural Resources Headquarters in Sacramento. You can register for the event here.
  • Los Angeles, San Francisco, Sacramento and San Jose are among 25 local governments calling for California Gov. Gavin Newsom to pursue a statewide zero-emission building standard next year. The appeal from local governments follows a widely criticized ruling from the U.S. 9th Circuit Court of Appeals earlier this year that invalidated the city of Berkeley’s landmark climate-friendly building code, creating considerable uncertainty for the 75 local governments in California with similar policies on the books. See press release here.

TECH CA

  • On October 12 at 10am, TECH will be hosting a workshop to share in-depth analyses of data collection (register here). Join TECH Clean California subject matter experts in a data deep-dive exploring topics including:
  • Key drivers of differences in heat pump HVAC project costs Frequency and cost of panel upgrades
  • How energy is used in California homes and what this tells us about the opportunity for heat pump installations
  •  Electricity, gas, and greenhouse gas impacts from several hundred TECH Clean California projects
  • Preliminary utility bill outcomes for TECH Clean California participants
  • Additionally, TECH is tentatively scheduled to launch heat pump water heater incentives by the end of October.

Affordable Homes and Sustainable Communities Program (AHSC)

  • The Strategic Growth Council (SGC) has released its AHSC Round 8 Draft Guidelines. The AHSC team is soliciting public comment on the guidelines through Tuesday, October 24. 
  • The AHSC team will be hosting three virtual Public Workshops to discuss the guidelines:
    • Wednesday October 18 10-12PM: Statewide – RSVP 
    • Monday October 23 10-12PM: Northern Region – RSVP  
    • Monday October 23 2-4PM: Southern Region – RSVP 
  • For Round 8, the AHSC program will release a Notice of Funding Availability (NOFA) of approximately $650,000,000 for affordable housing and transportation funding, including requiring all-electric new construction. The NOFA will be published in January 2024, with a 60-day application window. SGCs plans to make Round 8 awards in August 2024.

California Legislature

  • The Legislature had to vote on all bills by September 14. The Governor has until October 14 to either sign or veto bills. Below are updates after the deadline on bills BDC is tracking:
    • AB 384 (Calderon) School facilities: maintenance in good repair: recommended interior temperatures: reporting of inventory
      • Requires the State Department of Education to develop policy recommendations for safe indoor temperature standards for schools based on statewide inventory statistics and a research study.
      • Passed the Legislature and is on the Governor’s Desk.
    • SB 48 (Becker): Building Energy Savings Act
      • 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 the Legislature and is on the Governor’s Desk.
    • SB 306 (Caballero): Climate change: Equitable Building Decarbonization Program: Extreme Heat Action Plan
      • Requires a progress report on the CEC’s new Equitable Building Decarbonization Program and updating of the Extreme Heat Action Plan.
      • Passed the Legislature and is on the Governor’s Desk.
    • 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 the Legislature and is on the Governor’s Desk.
    • SB 410 (Becker) Powering Up Californians Act
      • Requires the PUC to establish reasonable target energization time periods to improve electrical corporation performance.
      • Passed the Legislature and is on the Governor’s Desk.

September Updates:

South Coast Air Quality Management District (SCAQMD)

 Bay Area Air Quality Management District (BAAQMD)

  • BAAQMD is hosting a series of Implementation Working Group (IWG) meetings to provide input on their Building Appliances Rules.

  • BAAQMD had its second IWG meeting on August 30 from 1-4 pm. The meeting included a panel presentation discussing existing incentive programs supporting market development of zero-NOx appliances

California Energy Commission

  • Title 24, 2025 Building Energy Efficiency Standards

    • The 2025 Energy Code sets requirements for new construction of and alterations to residential and nonresidential buildings, which go into effect in 2026.
    • On August 24, the CEC held a staff workshop on the 2025 Energy Code Heat Pump Baselines, Solar Photovoltaic and Energy Storage Requirements.
    •  The workshop discussed relevant topics including the single-family, multifamily, and non-residential heat pump baselines. You can watch the recording here.

TECH Clean California

  • On September 6, TECH multifamily incentives for heat pump HVAC, heat pump water heaters, and electrical upgrades will be available to TECH-certified contractors supporting the installation of heat pump technologies in multifamily buildings throughout the state. You can reserve the funds here on a first come, first served basis.

California Public Utilities Commission

  • Clean Energy Financing (Rulemaking 20-08-002)
    • The CPUC approved a Proposed Decision (4-1) that will pave the way for an innovative new financing model, Inclusive Utility Investment (IUI). The Decision requests the four investor-owned utilities (IOUs) and Silicon Valley Clean Energy to submit a joint proposal for a pilot program within 270 days of the Final Decision. 

  • Equity and Access Grant Program (more information here)

    • In 2022, the California Legislature appropriated $30 million for capacity grants to Tribes and community-based organizations (CBOs) for participation in the CPUC decision-making process and to make clean energy programs more accessible to underserved and underrepresented communities.
    • On August 9, the CPUC hosted a workshop to share details of how the Equity and Access Grant Program will work. There will be 3 grant accounts: public participation Equity, engagement and education Clean energy access. They also shared the following funding plan: 
  • Applications for the public participation and equity, engagement, and education grant accounts will be available starting September 8, while the clean energy access grant account application will not be available until late 2023/early 2024. You can find more information in the slide deck here.
    • On August 1, the CPUC released the Phase 2 Scoping Memo for this proceeding, which introduced into scope an examination of gas transmission lines. This includes questions around:
      • When should transmission pipelines be derated to distribution? 
      • How should repair / replacement costs be measured against decommissioning? 
      • How to balance declining gas demand with reliability needs? 
      • What are the appropriate regulatory procedures?
    • The memo also shares that the CPUC anticipates questions to parties in Q2 2024, accompanied by potential additional workshops.

California Legislature

  • Bills had to pass out of their second house Appropriations Committee by September 1 in order to move to the Senate and Assembly Floor. Below are BDC tracked bills in Appropriations Committee:
  • Requires the State Department of Education to develop policy recommendations for safe indoor temperature standards for schools based on statewide inventory statistics and a research study.

August Updates:

South Coast Air Quality Management District:

On Friday, August 4, the SCAQMD Board voted to pass Proposed Amended Rule 1153.1, which establishes a zero-NOx standard for four categories of commercial ovens covered under the rule. This rule set the nation’s first zero-emission standard for a stationary source. Other appliance rules at SCAQMD like Rules 1111 (residential furnaces), 1121 (residential water heaters), and 1111.1 (commercial furnaces) should begin their rulemaking processes soon.

California Energy Commission:

Title 24, 2025 Building Energy Efficiency Standards

The 2025 Energy Code sets requirements for new construction of and alterations to residential and nonresidential buildings, which go into effect in 2026. On July 27, the CEC held a staff workshop on 2025 Energy Code Heat Pump Baselines and Solar Photovoltaic System Requirements, including requirements in the Energy Code (Title 24, Part 6) and voluntary energy efficiency provisions in CALGreen (Title 24, Part 11).

During the workshop, the CEC proposed the following:

  • Inclusion of both heat pump space and water heating as the baseline in single-family, multi-family, and nonresidential new construction for almost all climate zones.
  • Requirements that gas-fired single zone rooftop cooling units in existing commercial buildings be replaced with heat pumps.
  • Voluntary proposal around the replacement of residential central air conditioning units with heat pumps (i.e., part of CALGreen voluntary code).

Written comments may be submitted to the Docket Unit by 5 pm on August 9.

Staff Workshop: Indoor Air Quality and Co-Benefits of Integrated Energy Retrofit Packages in California’s Residential Buildings

On July 28, the CEC held a staff workshop on Indoor Air Quality and Co-Benefits of Integrated Energy Retrofit Packages in California’s Residential Buildings. The proposed solicitation will support research efforts to assess the impacts of consolidated packages of electrified retrofit measures on indoor air quality, extreme heat resiliency, indoor comfort, and energy and cost savings. This solicitation will contribute to the implementation of the Electric Program Investment Charge (EPIC) 2021-2025 Investment Plans.

Written comments may be submitted to the Docket Unit by 5 pm on August 11.

Public Utilities Commission:

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

The California Public Utilities Commission (CPUC) has released an amended scoping ruling in the Building Decarbonization Proceeding (R. 19-01-011) to invite questions and engagement from stakeholders on a staff proposal to eliminate electric line extension subsidies for mixed-fuel (i.e., both gas and electric) new construction. Removing these subsidies wouldn’t directly impact new gas line installations, but it would remove the existing incentive for mixed-fuel construction and improve the affordability of all-electric construction relative to buildings that include gas. This in turn would protect ratepayers, who fund these subsidies to decrease the cost of construction, from having to pay to remove gas infrastructure in the near future as the state moves towards 100% clean energy. The Building Decarbonization Coalition will be working with our partners in California to consider policy recommendations. Comments are due Tuesday, August 15.  

Clean Energy Financing (Rulemaking 20-08-002)

The California Public Utilities Commission is set to vote on a Proposed Decision that would pave the way for an innovative new financing model, Inclusive Utility Investment (IUI). IUI is distinct from other financing programs as it is tied to the property (via the utility meter) instead of the borrower. This allows for more flexible financing terms and underwriting, improving access to affordable financing for customers who may lack strong credit history. The program also allows the repayment obligation to transfer with building occupancy, creating the potential to serve renter populations. The Decision requests the four investor-owned utilities (IOUs) and Silicon Valley Clean Energy to submit a joint proposal for a pilot program within 180 days of the Final Decision. 

Self-Generation Incentive Program (Rulemaking 20-05-012)

The California Public Utilities Commission invited parties to comment on two separate sets of questions regarding implementation of the new heat pump water heater incentives in the Self-Generation Incentive Program. The first set of questions invited parties to comment on proposed criteria for equity customers. The second set of questions invited stakeholders to comment on implementation issues for the program, including what eligibility requirements should be changed or updated to improve the ability of the program to leverage other sources of incentive funds and get to the market more quickly. These comments will help to shape approximately $85 million in incentive dollars for heat pump water heaters that are designed to offer grid services through thermal storage and load management devices.

California Legislature:

Bills had to be voted out of policy committees in their second house by July 14 in order to continue moving in the process. The Legislature will be on Summer Recess until August 14. Bills must then make it through Senate and Assembly Appropriations Committees by September 1. Below are BDC-tracked bills that made it through the policy committee and will be heard in Appropriations Committee after recess:

  • Requires the State Department of Education to develop policy recommendations for safe indoor temperature standards for schools based on statewide inventory statistics and a research study.

California Budget:

On June 30, the Governor signed AB 103 and on July 10, he signed AB 102 which outlines the following adjustments to building decarbonization-related funding:

  • Allocates $432m to the CEC’s Equitable Building Decarb program for FY 23/24 and adjusts the allocations for FY 2022/23 to $60m
  • Allocates $95m for the TECH Program for FY 23/24
  • Allocates $10m to the CEC to for the Building Energy Benchmarking Program for FY 23/24
  • Allocates $20m to CARB to accelerate the adoption of ultra-low global warming potential (GWP) refrigerants for FY 23/24
  • Allocates $20m to the CEC for Technical Assistance for Federal Tax Credits for FY 23/24

Although the FY 2023-24 budget bills have been signed, there are still ongoing conversations to restore or increase money in the building decarbonization space through a bond measure. Currently, the two main natural resources bonds are SB 867 (Allen) and AB 1567 (Garcia).

July Updates:

Bay Area Air Quality Management District (BAAQMD)

In March 2023, BAAQMD adopted Rules 9-4 and 9-6. The timelines of the rules 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

On June 21, the BAAQMD Board of Directors voted 19-2 to submit the zero-emission appliance rules (9-4 and 9-6) for inclusion in the State Implementation Plan. Next, the EPA will have to approve the inclusion as well. If included, nonattainment areas would have to consider similar standards in their own jurisdictions.

California Energy Commission

On Friday, July 14 from 1-3 pm, the CEC will hold a pre-application workshop to discuss research on decarbonizing HVAC systems in large buildings. Grant funding for this research is available through the Electric Program Investment Charge Program (EPIC) for applied research and development projects that develop decarbonization solutions for HVAC systems in large commercial buildings with an emphasis on technology advancements, energy efficiency, replicability, and use of ultra-low global warming potential (GWP) refrigerants.

Questions are due on July 19 at 5 pm and the application submission deadline is September 15 at 11:59 pm. You can register for the pre-application workshop here.

California Air Resources Board

On June 26, CARB announced opening a competitive grant solicitation for a Third-Party Administrator Grantee to implement the F-gas Reduction Incentive Program (FRIP) which promotes the adoption of climate-friendly refrigerant technologies and the reduction hydrofluorocarbons (HFCs) emissions, which are potent greenhouse gases.

Third-party administrator applications must be submitted no later than August 7 at 11:59 pm. CARB staff can answer questions regarding eligibility, application completion, and other requirements for the solicitation. Questions can be sent to their email until July 14 at 11:59 pm.

California Legislature

All bills that made it off the floor are now in their second house. Bills have to be voted out of policy committees by July 14 in order to continue moving in the process. From July 14 to August 14, the Legislature will be on Summer Recess. Below are updates on BDC tracked bills that are being heard in policy committees:

State Budget

On June 24, the Senate and Assembly released Budget Bill Juniors (AB 102, SB 102, AB 103, SB 103) which outline the following adjustments to building decarbonization-related funding:

  • $432,000,000 total to the EBD program for 2023/24 ($345,000,000 through the Greenhouse Gas Reduction Fund, $87,000,000 through the General Fund)
  • $60,000,000 towards the EBD program for 2022/23 ($54,000,000 through the Greenhouse Gas Reduction Fund, $6,000,000 through the General Fund)
  • $110,000,000 in reversions to the General Fund from the EBD program
  • $95,000,000 for the TECH Program
  • $10,000,000 to enhance enforce and outreach related to the Building Energy Benchmarking Program

On June 27, the Legislature passed AB 102 and AB 103 as part of the final budget deal. That same day, Governor Newsom signed SB 101 into law. On June 30, Governor Newsom also signed SB 103.

The Governor has 12 days to act on these bills after their passage in both the Assembly and Senate. 

 

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.