March 4th, 2019 by Carolyn Fortuna
How can municipalities grow the market for clean, low-emission heating sources in new and existing homes and buildings? Can building electrification really save consumers billions of dollars compared to other carbon reduction strategies? Those and other questions are answered within new white papers that highlight opportunities and challenges of finding ways to significantly support building electrification, slash emissions, and help consumers face the least home energy costs.
Decarbonization is the process of reducing economy-wide carbon or other greenhouse gases. While emissions from transportation continue to rise, emissions from other sectors, particularly residential and commercial buildings, will need to decrease by more than 80% of 1990 levels to help meet economy-wide carbon neutrality by 2045. There are many ways to decarbonize economies, and experts call out 3 high priority strategies as the Pillars of Decarbonization:
- Highly efficient energy use in buildings, transportation, and industry
- Development of zero- and low-carbon fuels
- Switching all end uses to zero- and low-carbon fuels
3 white papers that discuss these decarbonization strategies in detail are “California’s Building Decarbonization Opportunity: Knowing Where We Are and Delivering What We Need,” “Rate Design for Building Electrification,” and “Strategies and Approaches for Building Decarbonization.” Below are highlights from each paper.
California’s Building Decarbonization Opportunity: Knowing Where We Are and Delivering What We Need
This paper outlines the most important costs and barriers that need to be overcome to deliver the benefits of building decarbonization to all Californians, and it is a model that can be extended outward to the entire US. As the building decarbonization market continues to develop, regulators and stakeholders will need to understand short- and long-term risks to customers, utilities, policy goals, society, and climate as related to investing or not investing in certain technologies and intervention strategies.
The authors, Alejandra Cunningham, Michelle Ralston, and Katie Wu, say that some risks like impacts to air quality or to policy goals will be inherently difficult to quantify. Yet, it will still be imperative to understand, manage, and reduce these very risks.
The paper also discusses how current regulatory tools are inadequate for valuing the costs and benefits of building decarbonization. The authors recommend 4 guiding principles for a regulatory framework for building decarbonization:
- Focus on key results (GHG reductions)
- Put in place rules that support customer-centric interventions
- Allow flexibility to adapt to changing market realities
- Keep clean energy affordable
Rate Design for Building Electrification
The rates that gas and electricity utilities charge customers are a product of a complex, negotiated process that inherently involves policy choices. Those choices are made to align with the principles of cost-causation, address the needs of individual customer groups, balance cost burdens across different groups, or support other policy goals. Rate design elements are balanced so that they collectively reflect the real costs of using different fuels, and rate design can convey price signals to support building electrification where it is societally beneficial.
Today, beneficial electrification, the switching of building end uses, such as space and water heating from fossil fuels to clean electricity, is a key tool for building decarbonization, Cunningham, Ralston, and Wu argue. By adjusting key rate design levers, utilities and energy providers can send optimal price signals to help customers purchase and operate new electrification equipment in ways that reduce costs for all consumers. Key rate design levers that will need to be considered in the near-term are:
- Adjustable baseline allowances for electrified water heating and other essential home energy uses
- Volumetric rates with meaningful peak to off-peak differentials
- Time differentiated solar export prices
- Seamless compensation for GHG reductions and grid services
Cunningham, one of the report authors, notes that the policy framework to guide implementation should incorporate the recommendations of these papers — “adjusting rates to send optimal price signals, investing in market development and workforce readiness, and implementing a range of cross-sectoral strategies to support building electrification.”
Strategies and Approaches for Building Decarbonization
As certain states adopt increasingly aggressive greenhouse gas (GHG) reduction and climate change policies, regulators are asked to consider shifting attention from conservation and energy use reduction to reducing GHG emissions. With cleaner electricity on the wires, building electrification is an increasingly important strategy for meeting GHG reduction policy goals. Several states, particularly in the northeast, already promote moving from expensive and carbon-heavy delivered fuels, such as oil and propane, to less carbon-intensive fuels, such as gas and electricity.
This paper discusses a wide range of example strategies and approaches, from market development to direct installation, and the workforce training and consumer education that must be part of a building electrification initiative. It presents best practices from across the nation that can inform building decarbonization approaches. Cunningham, Ralston, and Wu discuss successful initiatives that focus on affordability and equity; workforce training and development; industry and customer engagement and incentives; financing; and local government initiatives.
The authors say that overarching regulatory frameworks should consider the long-term market development process necessary for successful building decarbonization. Stakeholders will likely have to prioritize implementation depending on funding availability and the state’s ability to leverage certain market development milestones to scale building decarbonization efforts. Nevertheless, prioritized implementation approaches should overlap so that market supply and demand develop in parallel.
By incorporating best practices to cut building emissions, municipalities can pursue zero-emission buildings “in a way that upholds our values – with a focus on affordability and equity, supporting workers, and creating a positive experience for consumers,” adds researcher Cunningham. Local governments are on the ground and have the best understanding of their building stock, the authors concede, noting that a suite of energy policies will allow them to play a strong role in accelerating building decarbonization. From energy benchmarking, consumer education, and especially leading-by-example, local jurisdictions will be the face of the electrification effort.
The Building Decarbonization Coalition unites building industry stakeholders with energy providers, environmental organizations and local governments to pursue fast, fair action that accelerates the development of zero-emission homes and buildings in California. Through research, policy development, and consumer inspiration, the BDC activates strong leadership to help California cut one of its largest sources of climate pollution, while creating safe, healthy and affordable communities.
Unless otherwise noted, images copyright free via Pixabay
Share this post if you enjoyed! 🙂