Will California’s Darker Shade of Blue Be Electrifying?
By Tom Sheehy
California Democrats further strengthened their supermajority on November 3, 2020 by adding seats in the state Senate. While not unexpected, the outcome is a disappointment as it pushes California further left into a one-party state. Democrats hold all constitutional offices in the executive branch and have deep supermajorities in the legislative branch. The practical effect of this is to make it more difficult for business to stop new trial lawyer, labor, and environmental regulations from becoming law.
One such fight the HVAC industry has been engaged in is “electrification.” Electrification is a movement gaining momentum in California and is targeting both residential and commercial buildings. California’s aggressive climate goals are driving efforts to decarbonize the building sector, which accounts for 26 percent of statewide emissions. That means getting natural gas out of buildings — no small task with so many homes, businesses and appliances burning gas onsite.
Will California Ban New Natural Gas Furnace and Stove Installations Across the State?
Most Californians LOVE their gas stove, furnace and other gas appliances. Why? Because they perform superbly, are economical and there are hundreds of models to choose from in the marketplace.
However, if California regulators at the Cal-EPA and Air Resources Board get their way on electrification, gas appliances may become a thing of the past in California. In fact, over 50 progressive cities from San Diego to San Francisco have enacted, or are in the process of enacting, ordinances banning the installation of gas infrastructure in any new developments—not good if you are in the natural gas industry or a vendor to it.
In July 2019, Berkeley, California, was one of the very first cities to approve a complete ban on new gas installations, effectively forcing all new appliance and HVAC systems to operate on electricity. These new types of ordinances being enacted around California impact single-family homes, townhomes, apartments and commercial buildings as well.
California Is Ground Zero in the Natural Gas War
Historically, natural gas has always been viewed as a bridge fuel to a cleaner future and has been on its way to becoming more prevalent across the country. Natural gas distribution expenditures tripled between 2009 and 2017 (to $15 billion per year) and oil companies across the United States have been increasing production of it.
California, the second-highest consumer of natural gas in the United States, is ground zero for the electrification-versus-gas war. The battle being fought here is a case study of the potential issues coming to states and companies across the nation.
Shortly after Berkeley approved the gas ban, the California Restaurant Association (CRA) filed a lawsuit in November 2019. The CRA suit claims, among other things, that a city ordinance allowing only electric appliances and temperature controls in new buildings is unlawful and will have a negative effect on restaurants. The CRA argues that restaurants would not be able to properly or economically prepare food for their customers or heat their buildings without access to natural gas. The association also questioned Berkeley’s rush toward a fully electric future given all the problems with California’s power grid, which has increasingly been subject to multi-day blackouts across the state.
What Is Going on in Sacramento?
In 2018, California passed AB 3232 into law, requiring the California Energy Commission (CEC) and the California Air Resources Board (CARB), to assess the potential for the state to reduce emissions of greenhouse gases (GHG) in the state’s residential and commercial building stock by at least 40 percent below 2013 levels by January 1, 2030. Though meant as a compromise between environmentalists and the business community, AB 3232 has accelerated California’s move towards electrification.
The CEC, CARB and many in the California Legislature believe that California must eliminate gas-powered furnaces and appliances to meet these GHG objectives because natural gas (methane), although very clean, contains “carbon”—the key element being targeted in GHG reduction efforts in the state. Of course, the real losers here will be consumers who love gas appliances and manufacturers who build them – largely outside of the heavily regulated state.
Is There an Electrification Alternative?
A more commonsense approach would be for California regulators to promote the responsible development and use of all energy sources including “green energy.” Regulators must recognize that the dual goals of reducing GHG and improving energy efficiency do not have to result in an outright ban on natural gas, especially when California and the United States are blessed to be major global producers of this clean energy source. Overly restrictive regulations and the implementation of policies that limit or eliminate energy sources like natural gas, limit consumer choices, and increase manufacturer production costs. Ultimately, the consumer pays for it all through significantly higher prices. This is a lose-lose proposition.
What Will California Policymakers Do?
California policymakers will continue to “push the envelope” when it comes to clean energy regulation and goals. This is not good for consumers. Future state legislative proposals are expected to target ways in which new buildings can reduce their carbon footprint, thus putting a giant “bullseye” on the natural gas industry.
Given that California has become such a deep blue state, it makes it even more difficult for the gas industry to get their message out on how they are reducing their carbon footprint through using renewables, developing higher efficiency appliances and reducing fugitive gas through infrastructure upgrades.
When the CARB regulators and the CEC cite residential and commercial buildings for being responsible for 25 percent of all GHG emissions, and with a 40 percent emission reduction target in place for the state, it is hard for progressive legislators to be patient on the issue just because consumers could be inconvenienced.
California’s parallel goal to increase the housing supply by 3.5 million new homes by 2025, will put additional pressure on assurances that new construction will be more environmentally friendly. Environmental advocates are also using this platform to push for prohibitions on the use of natural gas in buildings. This fight is heating up and not going away anytime soon.
As Principal and founder of Sheehy Strategy Group, Tom Sheehy is recognized as one of Sacramento’s most experienced and influential lobbyists, as well as a fiscal expert. Contact Tom here.