Department of Energy Secretary Jennifer Granholm is beefing up the agency’s support for energy efficiency building standards – including a ban on natural gas in new homes and commercial buildings. The DOE’s efforts to bolster electrification mandates will come at the expense of consumers and achieve few environmental benefits for the investment.
Electrification Mandates Crash Into Reality
Last week, at the DOE National Energy Codes Conference, Granholm said:
“We need state and local officials to step up. You are the only ones who can adopt and implement smart and ambitious building codes.”
This electrification call to arms ignores that local codes haven’t always meshed into many state’s energy plans. In Massachusetts, Attorney General Maura Healey had to block the town of Brookline’s natural gas ban after her office found that it conflicted with state regulations.
In California, the state has been silent on the wave of electrification mandates despite an increased possibility of rolling blackouts and a high cost of energy. At the same time cities and counties across the state electrify, their electricity is becoming more unreliable and dependent on energy imports while ratepayers are stuck paying the highest prices in the contiguous United States.
New York City doesn’t look to be fairing any better with challenges emerging between the electric grid’s required maintenance and seasonal planning. Mark Chambers, director of Sustainability for New York City, explained the threat to New York City’s grid:
“As we start to electrify, we start to get same if not larger winter peaks than we would see in the summertime. That reduces the ability for the kind of maintenance and operational upkeep that would typically happen in a lot of the grid-related systems. It changes the entire paradigm of what is possible, given systems [in] a city like ours are extremely antiquated as they are.”
The federal government has no authority over building codes, but if they support an electrification mandate as part of an energy efficiency program, the states and cities will be left holding the bag.
Cost Advantage of Natural Gas
Putting jurisdiction aside, it is increasingly clear that any energy efficiency plan including a natural gas ban has severe consequences.
A working paper from University of Berkley’s Haas Energy Institute found that large departures from the natural gas grid would raise prices in a utility’s service area and leave ratepayers remaining on the gas grid with exorbitantly high costs – which often include lower-income and minority communities, who rely on natural gas for heating and cooking and its price compared to electricity.
Energy savings are a huge factor in American’s purchasing habits and preference for natural gas. According to a Morning Consult poll, cost is a major influence for homeowners when considering a purchase of an electric appliances. Less than half surveyed said reducing their carbon footprint was the determining factor. At one-third the price of a fully electrified house, it is delivering more value on every dollar spent.
And the federal government still hasn’t found its legs on the topic of electrification.
Outgoing FERC Commissioner and former Chairman Neil Chatterjee admitted that the federal agency was not in the driver’s seat of electrification, with Commissioner Allison Clement saying that the agency must consider how to balance cost and benefits of new investments across the system. The agency only recently held a conference to discuss electrification and the future of U.S. energy grid. Without proper management, utility loads could double by 2050, and if the Haas Institute study is right, a 90 percent loss of ratepayer base on the gas grid would increase prices $1,600 for remaining customers by 2050.
Natural Gas is Helping to Increase Efficiency and Reliability
All this is not to say that emissions reduction has to come at the cost of natural gas use for the sake of energy efficiency. Utilities and the natural gas industry have been working to reduce their emissions and ensure they can provide affordable, low carbon natural gas while working to lower end use emissions.
Through the ENERGY STAR program, utilities have helped save American $350 in energy cost savings for every dollar invested into the program. It means that American families and businesses save more than $450 billion in energy costs while reducing 4 billion metric tons of greenhouse gas.
Members of American Gas Association (AGA) and the Consortium for Energy Efficiency (CEE), who participated in their 2018 natural gas efficiency programs, spent $1.41 billion on efficiency programs in the United States. This breaks down to over $3.8 million on energy efficiency programs every day.
It shows that DOE shouldn’t be too quick to force natural gas out of any energy efficiency package or for the sake of emission reductions. Former Energy Secretary Moniz acknowledged as much in a 2021 forum:
“It’s going to be a transition, but I think that the ground truth is that natural gas is going to remain a very important part of the global picture.”
DOE can learn a lot from our friends across the pond to see exactly how a national electrification mandate has played out:
“The UK’s ban on gas boilers could be pushed back five years due to backlash over the soaring cost of ‘net zero’ on households ahead of the COP26 climate conference this year.
“Boris Johnson is said to be looking at delaying the ban on sales of gas boilers to 2040, in a move that would allow firms extra time to develop more affordable alternatives including cheaper hydrogen boilers and heat-pumps.”
The cost for consumers in the UK to transition to a heat pump can total $14,000 and cost the nation $556 billion.
At the same time, the United Kingdom’s National Grid’s Future Energy Scenarios report outlines credible, potential pathways for the energy transition over the next 30 years to meet the UK’s emission reduction goals included hydrogen in residential heating.
In the United States, hydrogen blending, use of renewable natural gas, and renewable sourced natural gas are becoming an increasingly attractive and realistic option. The inclusion of these resources utilizes existing infrastructure to decarbonize the residential sector, keep prices low and homes warm.
A 10-15 percent blend of hydrogen in existing natural gas assets is possible according to Williams Companies and renewable natural gas is putting waste methane from farms, water treatment facilities, and other sources to good use. In fact, the DOE’s National Renewable Energy Laboratory recently signed a memorandum of understanding with Sempra Energy to pursue these resources as decarbonization strategies.
Cities and counties can reduce their emissions through these pathways and in some cases will have to prioritize natural gas decarbonization first and foremost. Some buildings in cold weather climates like Minnesota require backup heating in the event of a heat pump failure during cold temperatures.
New York State’s Energy Research & Development agency found that heat pumps in the state do not presently pass the societal cost test as a heating replacement option and even had to include conventional heating systems to serve peak heating loads. Through the inclusion of low carbon natural gas resources, New York could continue its streak of reduced building emissions, building on the 14 percent decrease in carbon emissions in the city’s largest buildings since 2010.
Legislative Support for Natural Gas Bans
Despite the integral role of residential natural gas use, electrification proponents are ready to do away all the gains consumers have seen by presenting electrification as the only energy efficiency option. Senator Martin Heinrich’s (D-NM) Zero Emissions Homes Act of 2021 is the most egregious in presenting electrification in this way. The bill offers rebates to residents to switch to electric appliances, but does nothing to help them pay for the higher monthly bill. If the package were to move forward, space heating costs would increase and quickly seep out of poorly sealed building envelopes.
Instead of understanding each resident’s situation, activists are attacking natural gas in the name of energy efficiency. In Massachusetts, the Mass Saves program is being petitioned to remove natural gas appliances from their offerings, sticking older, less efficient homes with electric appliances. Such aggressive movements threaten to force residents to purchase less efficient equipment to keep their affordable natural gas options, and runs counter to the goal of improving efficiency, reducing emissions and increase savings.
People are turned off by the prospect of higher electricity bills in all electric houses. Homeowner in Massachusetts are reporting difficulty in selling an all-electric house:
“Steve McKenna, a Massachusetts real-estate agent, was hired last year to sell a new, all-electric home in Arlington, a town outside of Boston that is considering gas restrictions. The home initially listed for $1.1 million, but many prospective buyers were uncomfortable with the prospect of facing higher electric bills, Mr. McKenna said. It ultimately sold for about $1 million.”
Instead of focusing on electrification, emissions reduction could be reached through incentivizing upgrades of all appliances, and investing in energy efficiency that reduced overall home energy use. People don’t want electric appliances, per se, but are looking for energy and cost savings.
Secretary Granholm’s support for electrification at the state and local level risks incentivizing bad policies and hurting consumers. Local bans are interfering with statewide planning and threatening residents far from the more affluent epicenters of electrification mandates with higher prices. Even FERC admits that it is in the early stages of understanding the implications of electrification. If the federal government moves too quickly, it risks following the United Kingdom’s lead in walking back on its commitments when faced with reality.
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