Q3 | 2026: Special Legislation Edition
Momentum: A quarterly update on the building decarbonization movement
Check out our previous Momentums.
Primary Authors
Tiffany Vu, Associate Manager of Research
Claire Wolgast, Summer Building Decarbonization Policy Fellow
Contributing Authors
Kristin George Bagdanov, PhD, Associate Director of Research
Kevin Carbonnier, PhD, Associate Director of Analytics
Table of Contents
The Big Picture
The Legislative Roundup
5-year Look Back
2026 Legislation
The Year of Affordability
Utility Oversight
Customer Assistance Programs
Utility Disconnections for Nonpayment
New Trends
Conclusion
Methodology
The Big Picture
What the 2026 legislative session tells us about the building decarbonization movement
Across the country, households are facing higher utility bills while policymakers and regulators confront a basic question: what kinds of energy infrastructure should customers continue paying for, and what investments can make heating, cooling, and electricity more affordable over the long term?
That question is becoming more urgent as federal support for building electrification recedes and utilities seek substantial increases in customer rates. As of this quarter, electric and gas utilities are requesting a combined $17.2 billion in rate increases, even as energy costs surged 16 percent in the last 12-months—nearly 5x more than the rate of inflation.
Energy costs have significantly outpaced overall inflation over the last 12 months ending August 2026
12-month percentage change in Consumer Price Index (CPI)
On top of that, utilities are requesting an average return on equity (ROE) of 10.5 percent. ROE is the rate of return that private utilities are authorized to earn for shareholders on the equity-financed portion of their infrastructure investments. Because those returns are tied to capital investment, the amount utilities spend on pipelines, power lines, substations, and other infrastructure has significant consequences for both customer bills and shareholder earnings.
Gas infrastructure provides a particularly stark example of those cost pressures. BDC’s recent report, The Cost of Heat: Managing Pennsylvania’s Thermal Transition, found that Pennsylvania’s six largest gas utilities spent approximately $11 billion through Act 11-enabled accelerated pipeline replacement programs from 2013 through 2025, which is project to yield roughly $18 to $30 billion in lifetime customer charges once shareholder returns are factored in. Meanwhile, residential gas use per customer in Pennsylvania has fallen 28 percent since 2000.
Similar scrutiny is being directed toward policies that subsidize gas system expansion: seven states now have at least one utility that has reformed gas line extension allowances, which shift some or all of the cost of connecting new customers onto existing ratepayers, while five more are considering the policy reform.
At the same time, the market for clean electric equipment continues to demonstrate durability. Through June, heat pumps accounted for 58 percent of space-heating equipment shipments, matching their strongest first-half market share to date. Heat pumps are on track to match or exceed their best year even after the federal 25C tax credit expired at the end of 2025. As one recent article put it, “heat pumps may have crossed from ‘policy product’ to ‘HVAC product,’” meaning that people want them because they’re a more efficient and cost-effective technology, not because they may get some money back on their taxes in a few months. In addition, recent court decisions upholding all-electric new-construction policies in several jurisdictions provide another sign that state and local electrification efforts continue to advance.
Year-to-date heat pump space heating market share is 58 percent
Monthly U.S. heating-equipment shipments, 2023-2026
These economic and market conditions help explain the direction state legislatures took in 2026. Affordability emerged as a defining theme, as policymakers increasingly grappled with utility spending, rising bills, consumer protections, infrastructure costs, and access to efficient electric technologies.
This year also marks the fifth anniversary of BDC’s annual building decarbonization legislative roundup, giving us an opportunity to look beyond a single legislative session. Since 2022, the policies we track have expanded from incentives, financing, and building codes into neighborhood-scale decarbonization, gas system planning and reform, utility regulation, consumer protections, and new approaches to affordability. Over the same period, the geographic reach of this legislation has grown substantially.
For this special issue of Momentum, we are stepping away from our usual quarterly format to examine that policy evolution. This edition looks back at five years of state building decarbonization legislation before taking a deeper look at the 2026 session and the affordability concerns that defined it.
The Legislative Roundup
View BDC’s Annual Legislative Tracker
We’re celebrating our fifth anniversary of BDC’s annual building decarbonization legislative roundup. Before looking at 2026 trends, we’ll reflect on the growing momentum, emerging trends, and novel approaches to policy we’ve seen since publishing our first roundup in 2022.
To view these policies in more detail, visit our public legislative tracker at the link above.
5-Year Look Back
Over the past five years, BDC has tracked and analyzed 580 building decarbonization bills in 44 states. Of these 580 bills, 206, or 36%, passed.
In this time, we’ve seen several trends emerge, with Cost & Funding, Regulation, and Energy Efficiency bills earning the largest share of attention.
Over the last five years, BDC has tracked 580 state bills related to decarbonization
Bills introduced by policy category and topic group, 2022-2026. Note: some bills are tagged as multiple categories.
In addition to our regular categories, we’ve also seen new topics of interest emerge, such as Clean Heat Standards, AC-to-Heat Pump policies, and Obligation to Serve reform. Each year has varied in its focus as new policy ideas spread, gain acceptance, and move from one state to another. These developments often overlap and build on earlier efforts, with incentives, gas system reforms, and affordability measures recurring across legislative sessions.
The yearly themes below trace this evolution, highlighting a defining focus of each session. The accompanying landmark bills illustrate the breadth of legislative activity in each year, including policies that anticipated later trends. Each year is also characterized by a set of landmark bills that raise the baseline for managing the gas system transition, encouraging equitable electrification, changing how utilities plan their investments, and so much more.
Incentives, financing, and tax credits were the main focus in 2022. To encourage decarbonization, many states focused on creating funding mechanisms and setting goals to track and reduce emissions.
Landmark Bills:
- CA Budget Package: $1.3 billion in multi-year funding for California programs aimed at decarbonizing buildings and expanding access to efficient cooling in homes (2026 Update).
- CO HB 22-1362: Adoption of 2021 IECC by 2023, development of PV-ready, EV-ready, and low-carbon code by 2026 with $25 million funding including a carve out for low-income communities.
- MA H5060: An Act Driving Clean Energy and Offshore Wind was a sweeping climate law that included a provision to allow 10 municipalities to enact so-called “gas bans” prohibiting the installation of new fossil fuel infrastructure in new construction and major renovations.
- NY S9422: Established the Utility Thermal Energy Network and Jobs Act to promote the development of thermal energy networks along with strong labor protections.
Emerging patterns included limitations on the expansion of the gas system, new or improved building performance standards, building code modifications, and a focus on school buildings and their indoor air pollution and emissions.
Landmark Bills:
- CO 23-291: Ended line extension allowances (LEA), or the practice of ratepayers subsidizing new gas hook-ups, by the end of 2023.
- OR HB3409: The Resilient, Efficient Buildings package, housed within the Climate Resilience Package, dedicated funding to cut emissions and promote heat pumps to replace gas appliances.
- NY A920a: Enacted the All-Electric Buildings Act and established requirements for fossil-fuel infrastructure in new construction.
Neighborhood-scale building decarbonization, which transitions street segments, developments, or even entire neighborhoods to thermal energy networks as well as all-electric buildings, began to emerge as a leading solution in the 2024 legislative session.
Landmark Bills:
- CA SB-1221: Authorized neighborhood-scale decarbonization pilot projects throughout California.
- MA S. 2967: An Act Promoting a Clean Energy Grid, Advancing Equity, and Protecting Ratepayers reformed policies for clean energy procurement, the gas system transition, and thermal energy.
- WA HB2131: Promoted the establishment of thermal energy networks.
To accelerate the market for electrification and right-size the economics of the gas system, states passed a wide array of bills designed to provide funding and encourage investment into building decarbonization.
Landmark Bills:
- MD HB1035/SB937: The Next Generation Energy Act significantly reshapes Maryland’s utility regulations and climate goals to combat rising electricity demands and manage gas system spending.
- NY A8888/S8417: This law ended the “100-foot rule” by removing line extension allowances for new gas customers.
- OR HB 3179: The FAIR Energy Act reformed utility ratemaking to protect residential electricity and gas customers from steep, sudden price hikes.
Affordability was a defining theme of the 2026 session, with states tackling it by streamlining permitting, increasing assistance for monthly bills, and addressing the underlying systems that are driving higher bills.
Landmark Bills:
- CA SB222: The Heat Pump Access Act is a first-in-the-nation bill to standardize and streamline heat pump permitting, making it faster, easier, and more affordable for households to install heat pumps for clean, affordable cooling and heating.
- MD The Utility RELIEF Act: (HB 1532/SB 841) seeks to lower residential utility bills, expand net metering, and increase oversight on data centers.
- RI H7879A: The Thermal Energy Network & Jobs Act advances the study and implementation of thermal energy networks to help heat and cool buildings across the state.
Across the years, we continue to growth in bills addressing the “Future of Gas,” neighborhood-scale decarbonization, the “Obligation to Serve” law, and the implementation of thermal energy networks. As deadlines to reach emissions reductions targets creep closer and closer, states are looking toward solutions that can help them achieve these reductions while reducing customer bills and improving the health of communities.
Bills addressing the thermal transition have grown sharply since 2022
Cumulative bills introduced by category, 2022-2026
Few developments demonstrate the growing prominence of building decarbonization as clearly as the breadth of states that have introduced building decarbonization legislation. When we first began tracking legislation, we only found 16 states that had introduced building decarbonization legislation. Now, 44 states have introduced building decarbonization legislation over the past five years, demonstrating the ever-increasing momentum of this movement.
These bills, as well as the advocacy, education, and community engagement that accompany them, have both contributed to and resulted from growing market strength for electric technologies, consumer awareness of electrification, and increased implementation, whether through single-home and appliance retrofits or whole neighborhood-scale pilots.
The phrase “heat pumps,” for example, which is arguably the most recognizable term from the movement, has seen an 80% increase in search interest on Google over the past five years compared to the previous five.
Interest in heat pumps has steadily grown over the last five years
Google Trends search interest, September 2021-September 2026
At the same time, media coverage for electrification and heat pump technology has been steady over the past five years, with more than 30,000 stories about electrification, building decarbonization and heat pumps being published in the past five years.
And it’s not all just awareness and discourse. Real projects are being implemented, changing whole neighborhoods from gas-service to clean electrification and thermal energy networks. Our neighborhood-scale tracker currently lists 150 neighborhood-scale electrification projects across 39 states and provinces that range from fully decarbonized neighborhoods to early plans to transition from fossil fuels.
And all this is unfurling against a background of ever-increasing energy costs, as energy commodity and utility service costs continue to rise, far outpacing overall inflation. This rapidly accelerating affordability crisis is all the more reason to be focusing on legislation that helps create a more efficient and resilient energy system that reduces costs while increasing sustainability and longevity.
With the past five years summarized, let’s look at what happened this year in 2026.
2026 Legislation
In the 2026 legislative session, we tracked 124 bills and budget items that promote building decarbonization. Of these 124 bills, 41 passed (33%), with more bills potentially passing later this year in states with in-progress legislative sessions, such as Michigan, New Jersey, and Pennsylvania. Illinois will also have a special session later in the year that may increase the number of bills passed.
See more detail in our legislative tracker here.
The Year of Tackling Energy Affordability
As we discussed above, this year was characterized by a focus on affordability, with 44 bills addressing energy affordability introduced this year. There are currently $17.2 billion in rate increases requested by utilities, 36 gubernatorial elections underway, as well as 22 public utility commissioner seats in play. This combination of economic pressure and political opportunity has resulted in energy bills being top of mind for policymakers and voters alike.
Overall, states approached affordability by addressing the underlying systems that determine energy costs and shape monthly bills. Bills proposed strengthening utility oversight, providing energy assistance, limiting customer disconnections for nonpayment, and avoiding cost shifting onto customers due to data center connections to the grid.
One third of decarbonization bills passed in 2026, on par with previous years
Bill status by policy category, 2026 sessions
Utility Oversight
States continue to scrutinize utility spending that is not critical to providing service to ratepayers. As we identified in our Momentum Q2 2026 Report, an emerging theme in this arena is linking rising bills to utility business decisions and investments, not customers’ individual actions. States such as IL, MA, MD, MI, and RI all introduced bills designed to rein in spending by limiting what is recoverable through rates, including advertising, lobbying, membership dues, and private jet travel.
Would have prohibited investor-owned electric, gas and water utilities from charging customers for: utility dues for memberships in trade associations; insurance protection for shareholders; and lawyer and expert witness costs when utilities push for rate hikes before the Illinois Commerce Commission (Citizens Utility Board).
Would have prevented investor-owned utilities from spending ratepayer money on all forms of lobbying, trade association dues, advertising, and unnecessary expenses; required investor-owned utilities to file transparency reports to the DPU; and penalized utilities that attempted to charge ratepayers for these prohibited costs (Environmental League of MA).
This bill requires gas corporations to submit maps of their planned gas line replacement, repair, renewal and retirement projects on a yearly basis. The PSC would identify 5 neighborhoods as priority decarbonization zones where planned replacement or renewal projects can be avoided, with priority for disadvantaged communities, communities with planned TENs, and potential for large emissions reductions.
The bill would have eliminated the Strategic Infrastructure Development and Enhancement (STRIDE) customer bill surcharge that allows gas and electric utilities to recover infrastructure replacement costs more quickly between rate cases. It would have required utilities to demonstrate that non-pipeline alternatives are not feasible before moving ahead with planned gas infrastructure investments.
This legislation would prevent utilities from charging customers for expenses unrelated to providing reliable electric service, including lobbying, public relations, and private jet travel (MI League of Conservation Voters).
This bill would have prohibited public utilities serving more than 100,000 customers from recovering through rates costs for advertising, marketing, communications that seek to influence public opinion; membership dues or sponsorships to a business or industry trade association; charitable giving expenses; and lobbying, travel, entertainment expenses.
Customer Assistance Programs
As states attempt to address rising energy bills more broadly, some states also directed their attention to monthly bill assistance for low-income communities. Indiana, Maryland, Virginia, and Washington were all able to pass bills that expand financial support to alleviate monthly bill pressures.
This bill would have required utilities to prioritize household affordability, the integration of electrification and health and safety measures, and the coordinated delivery across fuel types and housing conditions during any home weatherization services they were performing.
Requires electric utilities to file three-year multi-year rate plans, provide assistance to qualifying low-income households, and establish a summer disconnection moratorium for qualifying households (Citizen Action Coalition).
Includes building decarbonization provisions that will help lower Marylanders’ energy bills and create jobs by encouraging the adoption of heat pumps, which efficiently deliver both heating and cooling from a single appliance (BDC). With regard to customer assistance, it “(1) authorizes EUSP to waive income eligibility requirements to provide assistance to an electric customer who would qualify for a similar waiver under another electric assistance program; (2) expands access to EUSP to electric customers who meet the program’s eligibility criteria but are otherwise ineligible for assistance under federal law; and (3) specifies that SEIF must be used to provide supplemental funds for low-income energy assistance through electric and fuel assistance programs (Department of Legislative Services Maryland General Assembly).
Expands income eligibility for the Percentage of Income Payment Program (PIPP) from 150% to 200% of the federal poverty guidelines.
The PIPP limits qualifying low-income customers’ electricity bills to 10 percent or 6 percent of household income, depending on their primary source of heat. The bill removes the program’s cost cap for Dominion Energy and Appalachian Power Company after 2026. It also directs the Virginia Department of Social Services, in coordination with the Virginia Department of Housing and Community Development, to update rules and guidelines to implement the changed eligibility requirements (Virginia Conservation Network).
Reintroduced from 2025 (previously held).
Establishes a statewide Energy Assistance Program which will:
- Provide sustained and predictable tiered bill assistance based on income rather than one-time bill credits.
- Reduce administrative burden on utilities, community-based organizations, and households.
- Streamline enrollment through automatic eligibility for SNAP recipients and recipients of other state programs with similar eligibility criteria.
Utility Disconnections for Nonpayment
The first federal report to track energy disconnections found that in 2024, utilities disconnected 1.7 million natural gas customers (2% of customers) and 13.4 million electric customers (9% of customers). As monthly energy bills continue to rise, households are struggling to pay their energy bills and are increasingly facing disconnections as temperatures soar. Five states sought to address this gap through extreme-weather disconnection protections, requirements that utilities offer bill assistance, and additional protections for customers with qualifying health conditions. Indiana and Virginia were able to pass their bills, while Pennsylvania is still in session.
Reintroduced from 2025.
This legislation would have:
- Protected the state’s most vulnerable citizens from loss of gas and electricity during the hottest (May 15–Sept. 15) and coldest months (Nov. 1–Feb. 29) of the year.
- Provided realistic payment plans for households struggling to pay their utility bills.
- Ensured that the payments needed for reconnection are feasible.
- Generated the data needed to guide energy equity programs.
Reforms the rate case process by requiring that electric utilities file three-year multi-year rate plans; requires electric utilities to provide assistance to low-income qualified households; and creates a summer disconnection moratorium for low-income qualified households (Citizen Action Coalition).
This bill would reinstate Chapter 14, which establishes consumer protections against disconnections. This bill also amends Chapter 14 to include more protections and extends the sunset date of this chapter to 2036.
Makes it more difficult for utilities to disconnect customers for nonpayment by requiring utilities to make reasonable efforts to offer bill payment assistance, arrearage payment plans, or other bill payment assistance or energy savings programs (Virginia Conservation Network).
Utilities cannot disconnect customers until they are 60 days in arrears. Disconnection notices must be provided in at least English and Spanish.
Would have directed the PUC to amend rule 3300 to ensure that no customer’s gas, water, or electric service be shut off during a period of extreme heat or if a physician notes a serious health hazard.
Additionally, S. 204 would have directed the PUC to design an electric ratepayer protection program that would assist low- and moderate-income households with paying their electric bills.
New Trends In and Beyond Building Decarbonization
In addition to the broader legislative trends highlighted above, several emerging topics show how the building decarbonization conversation is expanding to encompass utility regulation, market access, distributed energy, and new pressures on the electric grid.
Affordability concerns prompted new attention to utility return on equity (ROE), the regulatory-approved rate of return utilities can earn for shareholders on capital investments. Because those returns are recovered from customers alongside the direct cost of infrastructure, lawmakers in several states introduced bills aimed at limiting ROE or changing the incentives that shape utility investment. At the same time, heat pump permitting emerged as another lever for reducing costs and barriers, with California adopting the nation’s first statewide law to streamline the permitting process.
We also tracked two fast-growing trends that extend beyond our narrower definition of building decarbonization legislation. Plug-in solar saw a major bipartisan push in 2026 as states explored ways to make small-scale, household energy generation easier and more accessible. And as data centers drive rapid growth in electricity demand, lawmakers across the country introduced dozens of bills addressing who pays for new grid infrastructure, energy and water use, clean energy requirements, and other emerging impacts of the sector.
This year, four states (CA, MI, PA, and VA) focused on reforming utility ROE to help lower bills.
- CA SB905 (Passed): Limits utilities’ ROE on investments that help them reduce their risks; shifts costs away from customers and into utility or state-backed debt; and creates “performance-based” regulatory structures that reward utilities for improving how they serve customers and climate goals, not just for building new infrastructure (Canary Media).
- MI HB 6095 (In Progress): Would cap utilities’ return on equity (ROE) rate at 8.2%.
- PA HB 2224 (In Progress): Would limit investor-owned utilities’ return on equity (ROE) to the 10-year U.S. Treasury bond yield plus 2% (this would currently equal around 7%, while utility ROEs in Pennsylvania have been around 10–15%).
- VA HB1075/SB691 (Held): This bill would have provided important affordability guidelines for the State Corporation Commission in Appalachian Power Company’s (APCo) 2026 rate case.
CA SB 222 (Passed): First-in-the-nation law to streamline heat pump permitting by making it “faster, easier, and more affordable for California families to install heat pumps for clean, affordable cooling and heating.” The bill enjoyed broad bipartisan support, as it was viewed as a near-term, straightforward solution to cut red tape and grow the heat pump market while reducing delays and headaches for contractors and households alike.
- Utah was the first state to introduce plug-in solar legislation in 2025.
- In 2026, 33 states introduced more than 50 plug-in solar bills, with 11 of these bills passing (CA, CO, CT, MA, MD, ME, NH, NJ, NY, VA, and VT). These bills generally take a similar approach in exempting plug-in solar systems from interconnection and net metering processes to accelerate the adoption of solar. This hyper-local solution is also an accessible way for households to offset rising electricity bills.
In 2026, there were 71 data center bills across 40 states addressing data centers.
- Of these, 36% address concerns around whether grid buildout costs would be unfairly allocated to residential customers; 20% address reporting requirements or require a study; 18% address energy and water efficiency or clean energy sources for electricity; and 8% establish some regulatory framework for data centers.
- The remainder addressed more nuanced and emerging issues, such as waste heat (AK, IL, MN, NJ, and VA), financial guarantees (AK, AL, CO, MI, NJ, OK, PA, and VT), and proposed data center building moratoria (ME, OK, VT).
Conclusion
The 2026 legislative session makes clear that energy affordability has become a defining issue for building decarbonization policy. States have approached rising energy costs from various angles, ranging from strengthening utility oversight and expanding customer assistance to scrutinizing utility profits and infrastructure spending. They’re also looking at emergent issues like data centers to ensure costs aren’t unfairly shifted to households while reducing barriers to affordable clean energy equipment like heat pumps and plug-in solar. At the same time, states continued advancing longer-term strategies for efficiency and affordability such as thermal energy networks and neighborhood-scale electrification.
By looking across the trends of the past five years, it’s clear to see the many ways in which the scope of building decarbonization legislation has steadily expanded. Early efforts, for example, centered heavily on incentives, financing, and building codes. Since then, states have increasingly taken on gas system expansion, utility planning, neighborhood-scale transitions, and the underlying economics of energy infrastructure. Ideas that were once novel, including thermal energy networks, line extension allowance reform, and changes to the obligation to serve, are now appearing in legislative and regulatory debates across multiple states, signaling the growing socialization of these concerns as well as a growing commitment to reducing unnecessary energy system costs while planning for a more sustainable energy future.
States, therefore, continue to lead on decarbonization policy as federal support becomes less predictable and household energy costs continue to rise. This next phase of building decarbonization will be shaped by how states address the technologies inside buildings and the energy systems surrounding them.
Methodology
In our count of bills, we try to include only those that would in some way would enable or support building decarbonization in a positive way. Therefore, this tracker does not include “preemption” bills or policies that would block decarbonization measures. We also seek to only include bills that directly touch buildings through emissions reductions, air quality measures, codes and standards, workforce development, environmental justice provisions, regulations, gas system infrastructure limitations, relevant cost and funding mechanisms, and rebates or subsidies for technologies and appliances. For the most part, we are not including policies related to supply-side issues or complementary technologies like solar panels and electric vehicles. The exception to this rule is that we are including any new or modified state greenhouse gas (GhG) reduction goals as these policies have far-ranging effects on the success of decarbonization legislation. We also added “grid resiliency” bills when they were tied to the build out of the grid for electrification purposes.
In addition, we’ve only included bills that had meaningful sponsorship, made it into committee, and/or were significant due to the difficult political climate in which they were introduced.
Finally, the decision of what to include and what to exclude is of course subjective. We are happy to consider a bill that we’ve missed and that you think should be included. Our goal is to provide some understanding of the depth and breadth of building decarbonization bills throughout the U.S. so that we can more fully understand the trends, patterns, and scope of the movement.
Note: Our categories and tracking approach has shifted slightly over the past five years. For 2022 we only included pending or passed bills whereas 2023 includes pending, passed, and failed bills to offer a more capacious view of what’s being introduced. In 2024, we distinguished between “In Progress, Held, and Failed” to add further detail for bills that don’t pass but also don’t technically fail.
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About Our Research
BDC tracks and analyzes policies, trends, and data to accelerate the building decarbonization movement. We synthesize qualitative and quantitative data to produce rigorously researched, substantively contextualized, equitably cited, and endlessly shareable resources that help move our movement forward. We believe that research only becomes knowledge when it’s shared, so please pass along these resources to your communities and help us equitably decarbonize our buildings and neighborhoods. Read more about our research philosophy, resources, and reports.
Also, check out our Q2 | 2026 Momentum Report.
To view policy details, including those from past years, please refer to our tracker.