Gas Burner 1120

A movement to ban usage of natural gas in new construction is underway in California at the local level, but questions are being raised about cost, grid reliability and impacts on lower-income people.

Electrification programs currently gaining popularity in California jurisdictions might increase energy costs for consumers while providing limited impact on greenhouse gas emissions, according to a new study from the University of California, Los Angeles.

The study identifies a list of impacts of electrification programs, such as the fact that they increase daily peak electricity demand, raise household expenditures on energy and probably have a limited impact on greenhouse gas emissions. Still, the move to ban usage of fossil fuels indoors has gained momentum in the past year or so, since Berkeley became the first city in the U.S. to enact such a ban, doing so in August 2019 (see CEM No. 1548). The movement gained major momentum when the City of San Francisco recently enacted a similar ban (see CEM No. 1616).

"California is the world's fifth largest economy and, due to its historically progressive legislature, has become a testbed for energy policy innovation," the UCLA report says.

The gas bans have been controversial, with dueling studies and industry interests lobbying for their causes. Recently, the California Public Utilities Commission's Public Advocates Office and the Sierra Club filed briefs asking the CPUC to impose $255.3 million in fines against Southern California Gas Co., as well as other sanctions related to an alleged misuse of ratepayer funds to support the natural gas utility's opposition to building codes, appliance standards and reach codes (see CEM No. 1616).

But a pair of studies by the National Renewable Energy Laboratory in 2017 found that electrification of buildings is feasible, and that while electrification of space and water heating would increase electricity demand, the rate and extent of load growth could be managed through associated energy-efficiency measures.

The AB 32 legislation in 2006 gave the California Air Resources Board the authority to plan and coordinate efforts to meet initial GHG abatement targets set earlier that year in an executive order signed by Gov. Arnold Schwarzenegger. Since then, state agencies have been responsible for devising and implementing the measures to implement these reductions and must ensure that the entities they regulate comply. In 2019, the CPUC decided to allow investor-owned utilities to offer incentives for electric space and water heaters as part of their energy-efficiency programs, on which over a billion dollars are spent annually, the report says.

The electrification push comes at "an awkward economic moment however," the report says. An explosion in natural gas production enabled by hydraulic fracturing has caused massive declines in the price of gas, while the costs of generating and transmitting electricity are rising. This is driven both by aging grid infrastructure and more renewables capacity to comply with the state's renewables portfolio standard.

"These price trends may weaken incentives for consumers to electrify end-uses of natural gas and other fossil fuels, slowing the proliferation of electric heating technologies in existing buildings, and increasing energy costs for those consumers already living in fully electrified structures," the report says.

As far as methodology, the study accounted for the following: account-level hourly gas usage data; static hourly electricity load profile data; electrical appliance energy-efficiency gains; California Independent System Operator hourly GHG emissions intensity data; and electricity and gas utility rate tariff data.

But this type of data might not convey the actual conclusions. What does it mean? The paper sums it up:

"On paper, California's three pronged approach to the decarbonization of its residential building sector makes logical sense," the report says. "However, if the transition is to be successful in practice, policy makers will be required to navigate numerous potential pitfalls. Careful, integrated planning and sequencing of future electrification policies and programs will be necessary to avoid unintended consequences."

The report does not come from any interests that stand to directly benefit from a slowdown of the electrification movement. But it does note that: "Decarbonization pathways involving extensive electrification efforts will require unprecedented integration of natural gas and electricity systems planning and policy implementation in order to be successful."

All in all, the report introduces a new dimension into the electrification movement—the real-world impacts. Those impacts are more important than any that are "on paper."