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California Policy Updates

California Policy Updates

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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.