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California Policy Updates

Published Jan 10, 2023 / Last modified on Jul 01, 2024 at 8:25 am
California Policy Updates

 

July 2024 Updates

CA Budget Updates: Final Budget

  • Governor Newsom and the Legislature agreed on a 2024-25 state budget on June 22, and released budget trailer bills “Budget Bill Jrs” SB 108 and SB 109. 
  • The Final Budget Agreement rejected $25 million in reductions to the Equitable Building Decarbonization Program (EBD) compared to the May Revise but cut $397 million total, leaving just over $500 million for the EBD program from the original $922 million allocation. 

Key Sacramento Deadlines:

  • July 3 – Legislature adjourns for Summer Recess. 
  • August 5 – Legislature reconvenes.

Tracked Building Decarbonization Legislation:

  • AB 2462 (Calderon) Public Utilities Commission written reports
    • Passed out of the Senate Energy, Utilities, and Communications on June 19; Referred to Senate Appropriations Committee to be heard in August.
    • Requires the PUC’s Section 913 report to include how the current rate trends affect households across energy uses and how electrifying more end-uses may reduce the total cost of energy for households.
  • AB 2513 (Pellerin) Gas stoves and ranges: warning label
    • Is currently awaiting a hearing on the Senate Floor. 
    • Prohibits the sale of gas stoves manufactured on or after Jan 2025, unless the gas stove bears a label relating to the air pollutants that can be released.
  • AB 2934 (Ward) Residential developments: building standards: review
    • Passed the Assembly. Will be heard in the Senate Housing Committee on June 24.
    • Requires the Department of Housing and Community Development to perform a review of construction cost pressures for residential construction as a result of building standards requirements and propose revisions to the code to reduce the cost of construction by 30%.
  • SB 382 (Becker) Notice to homebuyers
    • Passed the Assembly and is awaiting a concurrence vote on the Senate Floor. 
    • Requires real estate agents to provide a notice to homebuyers advising them to inspect the property’s electrical system and informing them of any applicable regional laws that would impact replacement of appliances. 
  • SB 1054 (Rubio) Climate Pollution Reduction in Homes Initiative: grants
    • Significantly amended in Senate Appropriations. Set for hearing on July 1. 
    • Originally required the California Energy Commission (CEC) to award grants to provide financial assistance to low-income households for the purchase of zero-carbon-emitting appliances. Current language requires all funding to be returned to customers in California Climate Credit. Author is examining the future of the bill. 
  • SB 1095 (Becker) Cozy Homes Cleanup Act
    • Held in the Senate Appropriations Committee. 
    • Cleans up and clarifies previous statute to ensure that manufactured homes and homes that are part of homeowners’ associations are able/allowed to switch to electric appliances.
  • SB 1182 (Gonzalez) School Master Plan
    • Passed out of the Senate. Scheduled for Assembly Natural Education hearing on June 26. 
    • Requires the CEC to develop a Master Plan for Healthy, Sustainable, and Climate-Resilient Schools.
  • SB 1221 (Min) Gas Planning Bill – BDC Sponsored Bill 
    • Passed out of the Senate. Scheduled to be heard in Assembly Utilities & Energy on July 1. 
    • Establishes a public process at the CPUC that will facilitate responsible utility planning and investments through a transparent review of planned gas investments. The bill will enable gas utilities to pursue cost-effective zero-emission alternative (ZEA) pilots with strong equity and labor benefits.
  • SB 1301 (Stern) Hydraulic Models and Feasibility
    • Passed out of the Senate. Scheduled to be heard in Assembly Utilities & Energy on July 1. 
    • Requires gas utilities to develop and maintain public maps with interactive hydraulic models and feasibility analysis to support zonal projects.

June 2024 Updates

California Air Resources Board

California Energy Commission

  • CALGreen includes voluntary energy efficiency requirements for newly constructed buildings, and additions and alterations to existing buildings. The CEC updates the voluntary residential and nonresidential provisions every three years alongside the rest of the California Building Standards Code (Title 24, Parts 1 and 6). 

California Public Utilities Commission

  • Investor Owned Utilities and Silicon Valley Clean Energy (SVCE) filed a joint proposal for tariffed on-bill financing (TOBF) programs on May 14.
    • The proposal lays out the vision for TOBF implementation at each IOU and at SVCE.
    • The CPUC may issue a Proposed Decision directing the pilots to move forward.

Legislature

  • The last day for policy committees to hear and refer fiscal bills to the appropriate committees was April 26th. Bills that are keyed “fiscal,” or are identified as constituting a state cost, await their fate in the Assembly and Senate Appropriations committees. The Appropriations committees are responsible for weighing the fiscal prudence of passing each of the bills into state law, and subsequent impact on the state budget. 
  • Below are relevant bills from the session that BDC continues to track through the legislative process: 
    • ACA 16 (Bryan) Environmental rights
      • Declares in the State Constitution that the people of the State have a right to clean air, water, and a healthy environment.
      • ACA 16 passed Asm. Natural Resources committee and Asm Appropriations. 
    • AB 1912 (Pacheco) Electricity: measures imposing mandated programs and requirements
      • Requires, before holding a committee hearing on a measure, as defined, affecting electrical corporations, that a request be made to the California Council on Science & Technology to prepare a written analysis of the measure.
      • AB 1912 passed out of the Assembly and is pending committee referral in the Senate. 
    • AB 1999 (Irwin) Electricity: fixed charges
      • Permits the PUC to authorize fixed charges that do not exceed $5/month for residential customers enrolled in the CARE program and that do not exceed $10/month for customers not enrolled in the CARE program.
      • AB 1999 failed passage in the Assembly Appropriations Committee. 
    • AB 2008 (Wallis) Reliable Energy Needs for Everyone in the West Program 
      • Requires the CEC to establish the Reliable Energy Needs for Everyone in the West Program to provide financial incentives for purchasing renewable propane, hydrogen, or dimethyl ether to customers in heating dominant climate zones.
      • AB 2008 died pursuant to a legislative deadline by which all bills keyed fiscal must be moved to the appropriate fiscal committee. The bill was never given a policy committee hearing.
    • AB 2205 (Patterson) Electricity: mandatory rate reduction
      • Requires the PUC to reduce the kWh rate for electricity charged to ratepayers by not less than 30%.
        • AB 2205 died pursuant to a legislative deadline by which all bills keyed fiscal must be moved to the appropriate fiscal committee. The bill was never given a policy committee hearing. 
    • AB 2513 (Pellerin) Gas stoves and ranges: warning label
      • Would require, on or after January 1, 2025, that all gas stoves sold in the state have a label about air pollutants that can be released from them.
      • AB 2513 passed out of the Assembly on a 54-17 vote and will be heard in the Senate Committee on Environmental Quality on June 5th.
    • AB 3011 (Bains) Electricity: rates: unreasonable hardship
      • Requires the PUC to ensure that each electrical rate schedule does not cause an unreasonable hardship on senior citizens, renters, families with minor children, medically vulnerable customers, or economically vulnerable residential customers in hot climate zones.
        • AB 3011 died pursuant to a legislative deadline by which all bills keyed fiscal must be moved to the appropriate fiscal committee. The bill was never given a policy committee hearing. 
    • AB 3263 (Calderon) Electric Corporations: financing orders
      • Authorizes the use of a financing order to recover costs from wildfire mitigation. 
      • Passed the Assembly and is pending referral in the Senate.
    • SB 382 (Becker) Single-family residential property: disclosures
      • Requires notice to be given to buyers of a home that an electrical system inspection is advisable.
      • Passed off the Senate Floor and will next be heard in Assembly Judiciary Committee. 
    • SB 1054 (Rubio) Climate Pollution Reduction in Homes Initiative: grants
      • Requires the CEC to award grants to provide financial assistance to low-income households for the purchase of zero-carbon-emitting appliances.
      • SB 1054 was passed out of Senate Appropriations with significant amendments and is awaiting referral in the Assembly.
    • SB 1095 (Becker) Cozy Homes Cleanup Act: building standards: gas-fuel-burning-appliances
      • SB 1095 failed passage out of the Senate Appropriations committee. 
    • SB 1182 (Gonzalez) School Master Plan
      • Requires the CEC to develop a Master Plan for Healthy, Sustainable, and Climate-Friendly Schools on or before March 31, 2026.
      • SB 1183 passed off of the Senate Floor and is pending referral in the Assembly. 
    • SB 1221 (Min) Neighborhood Decarbonization Pilots
      • Establishes a public process at the CPUC that will facilitate responsible utility planning and investments through a transparent review of planned gas investments. The bill will enable gas utilities to pursue cost-effective zero-emission alternative (ZEA) pilots with strong equity and labor benefits.
      • SB 1183 passed off of the Senate Floor and is awaiting committee assignment in the Assembly. 

May 2024 Updates

Regulatory

  • Action alert: speak and comment in support of the proposed 2025 Energy Code at the California Energy Commission!
    • The California Energy Commission is holding a business meeting on May 8th where members of the public can provide comments. 
    • The proposed 2025 Energy Code includes many important advancements for all-electric new construction, including extending heat pump baselines for both residential buildings and commercial buildings. For existing buildings, the CEC included an important provision that would strongly encourage replacement of single-zone packaged rooftop units (“RTUs”) used in commercial buildings with heat pumps. However, the CEC has moved a proposal to require that central AC systems be replaced with heat pumps out of the mandatory code and to the voluntary code for residential customers, potentially delaying achievement of heat pump installation goals. 
    • Written comments are due to the docket by May 13th. Written comments may also be submitted by email. Include docket number 24-BSTD-01 and “2025 Energy Code” in the subject line and email to docket@energy.ca.gov.  

Legislation

  • The last day for policy committees to hear and refer fiscal bills to the appropriate committees was April 26th. Bills that are keyed ‘fiscal’ or are identified as constituting a state cost, await their fate in the Assembly and Senate Appropriations committees. The Appropriations committees are responsible for weighing the fiscal prudence of passing each of the bills into state law, and subsequent impact on the state budget.
  • Below are relevant bills from the session that BDC continues to track through the legislative process:
    • ACA 16 (Bryan) Environmental rights
      • Declares in the State Constitution that the people of the State have a right to clean air, water, and a healthy environment.
      • ACA 16 passed Asm. Natural Resources committee and will next be heard in Appropriations. 
    • AB 1912 (Pacheco) Electricity: measures imposing mandated programs and requirements
      • Requires, before holding a committee hearing on a measure, as defined, affecting electrical corporations, that a request be made to the California Council on Science & Technology to prepare a written analysis of the measure.
      • AB 1912 passed Asm. Utilities & Energy committee and will next be heard in Appropriations. 
    • AB 1999 (Irwin) Electricity: fixed charges
      • Permits the PUC to authorize fixed charges that do not exceed $5/month for residential customers enrolled in the CARE program and that do not exceed $10/month for customers not enrolled in the CARE program.
      • AB 1999 died pursuant to a legislative deadline by which all bills keyed fiscal must be moved to the appropriate fiscal committee. The bill was never given a policy committee hearing. 
    • AB 2008 (Wallis) Reliable Energy Needs for Everyone in the West Program 
      • Requires CEC to establish the Reliable Energy Needs for Everyone in the West Program to provide financial incentives for purchasing renewable propane, hydrogen, or dimethyl ether to customers in heating dominant climate zones.
      • AB 2008 died pursuant to a legislative deadline by which all bills keyed fiscal must be moved to the appropriate fiscal committee. The bill was never given a policy committee hearing.
    • AB 2205 (Patterson) Electricity: mandatory rate reduction
      • Requires the PUC to reduce the kWh rate for electricity charged to ratepayers by not less than 30%.
      • AB 2205 died pursuant to a legislative deadline by which all bills keyed fiscal must be moved to the appropriate fiscal committee. The bill was never given a policy committee hearing. 
    • AB 2513 (Pellerin) Gas stoves and ranges: warning label
      • Would require, on or after January 1, 2025, that all gas stoves sold in the state have a label about air pollutants that can be released from them.
      • AB 2513 is eligible to be taken up for a vote on the Assembly Floor and subsequently be transmitted to the Senate. 
    • AB 3011 (Bains) Electricity: rates: unreasonable hardship
      • Requires the PUC to ensure that each electrical rate schedule does not cause an unreasonable hardship on senior citizens, renters, families with minor children, medically vulnerable customers, or economically vulnerable residential customers in hot climate zones.
      • AB 3011 died pursuant to a legislative deadline by which all bills keyed fiscal must be moved to the appropriate fiscal committee. The bill was never given a policy committee hearing. 
    • SB 382 (Becker) Single-family residential property: disclosures
      • Requires notice to be given to buyers of a home that an electrical system inspection is advisable.
      • Passed off the Senate Floor and is now in the Assembly.
    • SB 1054 (Rubio) Climate Pollution Reduction in Homes Initiative: grants
      • Requires the CEC to award grants to provide financial assistance to low-income households for the purchase of zero-carbon-emitting appliances.
      • SB 1054 passed Senate Energy and will next be heard in Senate Appropriations. 
    • SB 1095 (Becker) Cozy Homes Cleanup Act: building standards: gas-fuel-burning-appliances
      • Updates code ambiguities to ensure individuals in HOAs, manufactured, and mobile homes can switch from gas to electric appliances.
      • SB 1095 passed Senate Housing & Senate Energy committees and will next be heard in Senate Appropriations. 
    • SB 1182 (Gonzalez) School Master Plan
      • Requires the CEC to develop a Master Plan for Healthy, Sustainable, and Climate-Friendly Schools on or before March 31, 2026.
      • SB 1183 passed Senate Energy & Senate Education and will next be heard in Senate Appropriations. 

April 2024 Updates

California Air Resources Board (CARB):

  • CARB is developing and proposing zero-emission standards for new space and water heaters. There was a public workshop hosted on February 28th. As part of the workshop, CARB proposed two regulatory timelines: (1) one that mirrors the phased timeline approach at SCAQMD and BAAQMD and (2) one that sets a single date of 2030 for the requirement to buy zero-emission space and water heaters. You can find the presentation here.

California Energy Commission (CEC): 

  • On March 12, the CEC held their first public workshop on the 2024 CA Building Energy Action Plan. This report will ultimately identify challenges and make recommendations to legislators, advocates, researchers, the Department of Energy, and other stakeholders about what’s needed to move existing building energy efficiency and decarbonization forward in California. You can find the presentation here.
  • On March 14, the CEC held a Pre-Solicitation Workshop for Equitable Building Decarbonization Direct Install Program. The CEC plans on releasing a solicitation for this program in late April. You can find the presentation here.
  • On March 21st, the CEC held a workshop on the Inflation Reduction Act Home Efficiency Rebates (HOMES) Program. The workshop explored a Pay-for-Performance approach to whole home energy efficiency and the U.S. Department of Energy’s (DOE) guidelines for the HOMES rebates. You can find the presentation here. Comments are due on April 5th at 5pm. 
  • On March 22nd, the CEC held a workshop on their competitive grant application for local government building decarbonization challenges. Up to $4 million is available to provide grants to local governments project activities. You can find the presentation here. 

California Public Utilities Commission (CPUC): 

  • In March, the Public Advocates Office of the CPUC filed a petition for a new proceeding at the CPUC. The motion calls on the CPUC to align demand side program designs and budgets with current electrification, decarbonization, equity, and reliability goals. Comments are due to the CPUC on April 6 and will inform whether or not the CPUC responds to the motion by opening a proceeding. 
  • On March 19, the CPUC held a workshop on the EPIC Strategic Objectives Process. The Strategic Objectives inform an EPIC investment plan to achieve the State’s climate, energy, and equity goals. You can find more information here.
  • The Clean Energy Access Grant program is open for applications to support engagement from underrepresented communities in CPUC programs and proceedings. Proposals are due April 30. You can find more information on the application here.
  • On March 27, the CPUC released a Proposed Decision in the Income Graduated Fixed Charge Proceeding. The CPUC proposal would recover fixed costs associated with our electricity system with a flat monthly rate for most residential customers. Customers who qualify for FERA or CARE would also qualify for a steeply discounted monthly rate. The proposed rate changes are also expected to reduce the cost of volumetric rates (i.e. per / kWh).  The CPUC has issued a press release and a fact sheet explaining this Proposed Decision. 

California Legislature: 

  • In January, the Governor proposed the following cuts to the Equitable Building Decarbonization program to address a $38B to $53B deficit:
    • Equitable Building Decarbonization Program – $283M reduction, $639M total funds remaining. Reductions will occur in the budget year and in the future out years. The Governor also proposes to shift $87 million for this program from General Fund to GGRF in 2024-25.
    • Since then, the Senate, Assembly, and Governor have come together on a proposed Early Action Plan to reduce the deficit by roughly $12 to $18 billion. As of the end of March, we are still awaiting the specifics of the joint Early Action Plan.
  • As a reminder, Legislators have until April 26 to pass fiscal bills out of their policy committees, and the Appropriations Suspense File Hearing will take place the week of May 12. Below are updates on relevant bills that are still moving forward this Legislative Session:

March 2024 Updates

California Public Utilities Commission (CPUC)

  • The CPUC released a white paper on the gas transition supporting Phase 3 of the long-term gas planning proceeding. Parties may serve and file comments on the white paper no later than March 28.
  • Matt Baker has been appointed as Commissioner to the CPUC, replacing Commissioner Shiroma.

California Energy Commission (CEC)

  • On March 14 from 10 am – 1 pm, the CEC will be hosting a workshop to seek input on the draft solicitation for the Equitable Building Decarbonization Direct Install Program regional administrators. Workshop registration can be found here.

 California Air Resources Board (CARB)

  •  On Wednesday, February 28 CARB held a workshop on its zero-emission space and water heater standards. At this workshop, staff informed the public on the engagement process, initial regulatory concepts under development, and staff analysis work underway to develop zero-emission GHG space and water heater standards. Comments on the workshop are due on March 27.

California Legislature

January 2024 Updates

Statewide

  • As of January 2, the U.S. Court of Appeals for the Ninth Circuit will not reconsider its decision to overturn the City of Berkeley’s ban on natural gas hookups in new construction.
    • As a reminder, a three-judge panel of the federal appeals court struck down Berkeley’s ordinance in April 2023, claiming  that the city overstepped the federal Energy and Policy Conservation Act when it passed the ban in 2019.
    • The City of Berkeley filed a petition in May 2023 for an en banc rehearing of the case, in which 11 judges would reconsider the April decision.
    • If the city wants to continue to appeal the decision, its next step would be the U.S. Supreme Court.
    • The full decision can be viewed here.

California Air Resources Board

  • CARB is seeking engagement from qualified members of the public on their zero-emission appliance standards rulemaking and has scheduled an information session to share more information, including funding eligibility and amounts and the application process.
  • There are three tracks for which CARB is seeking support:
  • Staff analysis and engagement support,
  • listening session co-hosting, and
  • implementation planning support.
  • Applications must be submitted by January 8, 2024. More information can be found on CARB’s Zero-Emission Appliance Standards Public Engagement Website.

California Energy Commission

  • The California Energy Commission (CEC) released a Request for Information to inform the CEC’s application to the DOE for the HOMES program.
    •  The CEC has signaled its intent to leverage the HOMES program to expand funding for the Equitable Building Decarbonization Program.
    • CEC is seeking input on both the specific proposal to leverage the EBD program and additional program design guidance if leveraging EBD is infeasible.
    • The CEC has extended the comment deadline to January 26, 2024.

Public Utilities Commission

  • The CPUC voted unanimously to eliminate line extension subsidies for mixed-fuel buildings! BDC’s press release.
  • The CPUC issued a Proposed Decision denying Southern California Edison’s Application to implement a building electrification incentive program. That Decision was held until a future CPUC Voting Meeting – this item is on the January 11, 2024 Voting Meeting Agenda as a consent item.
  • The CPUC approved a Decision in the Self Generation Incentive Program Proceeding clarifying requirements for heat pump water heater incentives and paving the way for central heat pump water heater systems to participate – this will support multifamily properties in accessing these incentives. 
  • The CPUC released an annual affordability report and a ruling seeking feedback on the metrics used for defining affordability. Opening comments are due by January 25, 2024.

California Legislature

  • The Legislature reconvened on January 3, 2024.
  • California is in the second year of its 2 year legislative cycle. Any bills introduced last year that are still in their first house will need to pass into the second house by January 31, 2024, otherwise, they will be dead. February 16 is the last day for bills to be introduced.
  • On February 5, the Senate pro Tem designee Mike McGuire will transition into his new role.
  • In December, the Legislative Analyst’s Office (LAO) announced California faces a $68 billion deficit. The LAO is California Legislature’s nonpartisan fiscal and policy advisor.
    •  Largely because of a severe revenue decline in 2022‑23, the state faces a serious budget deficit.
    • The LAO proposed pulling back one‑time and temporary spending could provide more than $10 billion in solutions. This includes the spending of:
      • $2.2 billion in the transportation sector,
      • $1.9 billion in the natural resources and environment sector, and 
      • $1.8 billion in various education programs.
  • Governor Newsom is required to release his initial 2024-25 budget proposal by January 10. The Governor’s budget proposal kicks off negotiations between the Governor and Legislature. The Legislature must pass an initial budget bill by June 15.

December 2023 Updates

This month’s California Policy Call will be canceled for the holiday. We will be sending any updates over email and posting slides to our Resources Library, so keep an eye out. We hope you enjoy a restful holiday break and look forward to resuming our calls in the new year.

California Energy Commission (CEC)

  • On November 3, the CEC released its draft express terms for the 2025 Building Code. The CEC’s code proposal represents the strongest code in support of clean and healthy electric buildings yet.
      • Strong preference for heat pumps when a central air conditioner is replaced in all climate zones–sized to meet the larger of the heating or cooling load – unless a panel upgrade is required or it increases the load by 1 ton or more.
      • Set heat pump space and water heating as the new construction baseline in single- and multi-family buildings.
      • Expand space heating new construction baseline to larger nonresidential buildings. 
      • Require that gas-fired single zone rooftop cooling units in existing buildings be replaced with heat pumps when equipment is changed out.
  • For details on all the standards the express terms include, you can access the full document here.

South Coast Air Quality Management District (SCAQMD)

  • On Wednesday, December 13 at 9 am, SCAQMD will be hosting the fifth Working Group Meeting for Proposed Amended Rule 1146.2 – Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers and Process Heaters. The Working Group Meeting will provide staff analysis and solicit feedback and comments from stakeholders. You can register for the Zoom here.

California Public Utilities Commission

  • The CPUC is set to vote December 14 on the Proposed Decision for Phase 3 of the Building Decarbonization Proceeding (R.19-01-011.) The Decision proposes eliminating subsidies for electric line extensions that would connect mixed-fuel buildings. This proposal would put California as the first state to eliminate remaining subsidies for line extensions associated with fossil-fuel buildings.
  • The CPUC held the Proposed Decision denying Southern California Edison’s Building Electrification Application. The Proposed Decision was originally on the consent calendar for November 30, but was removed from the agenda before the meeting. BDC expects to see resolution on this Application in the new year. 
  • The CPUC is set to vote on the Proposed Decision to modify the heat pump water heater program requirements in the Self Generation Incentive Program December 14. This PD cleans up language from the original enabling Decision to improve program delivery and better align program requirements with market conditions. 

California Legislature

  • The Legislature will reconvene on January 3, 2024.
  • On Tuesday, November 21, Assembly Speaker Robert Rivas announced changes to both leadership and committee chairmanships. Below are the relevant updates:
  • Speaker Pro Tempore: Assemblymember Jim Wood (previously Assemblymember Cecilia Aguiar-Curry)
  • Majority Leader: Assemblymember Cecilia Aguiar-Curry (previously Assemblymember Isaac Bryan)
  • Appropriations Committee Chair: Assemblymember Buffy Wicks (previously Assemblymember Chris Holden)
  • Budget Committee Chair: Assemblymember Jesse Gabriel (previously Assemblymember Phil Ting)
  • Natural Resources Committee Chair: Assemblymember Isaac Bryan (previously Assemblymember Luz Rivas)
  • Utilities and Energy Committee Chair: Assemblymember Cottie Petrie-Norris (previously Assemblymember Eduardo Garcia)
  • Budget Subcommittee 4 (Climate, Resources, Energy, and Transportation): Assemblymember Bennett (previously Subcommittee 3, with Assemblymember Bennett still the Chair)
  • The current pro Tem Toni Atkins will transition out of her role on February 5, with Senator Mike McGuire set as the pro Tem Designee.

October 2023 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 2023 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 2023 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 2023 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 2023 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 2023 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 2023 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 2023 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 2023 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 2023 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.