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A Promising Start for Cleaner Buildings in California

California’s efforts to decarbonize buildings could be a model for other states to follow

Energy upgrades such as heat-pump water heaters are part of a plan in California to reduce carbon emissions from buildings. Currently, about 90% of the state's water heaters and furnaces run on natural gas or propane. [Image credit: Rheem]

The California Utilities Commission has now launched the process for implementing a new law to make the state’s homes more climate-friendly and affordable to heat. The commission is also considering other broad measures aimed at decarbonizing California’s buildings.

The focus on buildings is necessary and arguably overdue. California recently set a goal of becoming carbon neutral by 2045, and the state aims to cut greenhouse gas emissions 40% from 1990 levels within the next decade. Cleaning up the building sector will be critical to these goals.

As California Public Utilities (PUC) president Michael Picker explained, “Renewable electricity alone isn’t enough to help us meet our 2030 greenhouse gas reduction goals; we also need to electrify our homes and buildings to reduce the use of fossil fuels in California. Twenty-five percent of total emissions in California are from homes and buildings and we must make headway on reducing these emissions to meet the state’s overall aggressive climate goals.”

The concept of building decarbonization goes beyond reducing energy use and “zero net energy” (meaning the total amount of energy used by the building on an annual basis is roughly equal to the amount of renewable energy it generates). Instead, it focuses squarely on reducing emissions, which can be achieved both by cutting energy consumption and by using cleaner energy sources such as electricity generated from renewable resources like wind and solar.

Decarbonization requires attention to issues such as burning fossil fuels in buildings, particularly for heating and hot water.

Two hundred million dollars earmarked for two new programs

The commission, as required by SB 1477 passed last year, will develop two new programs to launch as early as July 1 this year: Building Initiative for Low Emissions Development (BUILD), and Technology and Equipment for Clean Heating (TECH). Each is designed to test different approaches to decarbonizing buildings. The programs will receive $200 million in funding over four years from natural gas utility carbon allowance proceeds from the state’s cap-and-trade program.

BUILD will focus on new buildings, encouraging technologies that push emissions savings beyond what could be achieved with building standards that are already in place. These options can include high-efficiency heat pumps, solar thermal heating, energy efficiency, and batteries to store solar energy.

TECH will focus on low-emissions space and water heating technologies for both new and existing homes. Switching to highly efficient electric heat pumps, for example, is imperative to meeting the state’s climate goals, as about 90% of California’s furnaces and water heaters currently run on natural gas or propane.

Both programs stand to lower not just greenhouse gas emissions, but costs for consumers. With policy support behind these new technologies, upfront costs will drop, and so will energy bills. Nearly a third of the funding for BUILD must be spent on new low-income housing, where families tend to spend a higher percentage of their income on energy bills.

Already, the commission has approved a pilot program that will wean more than 1,600 homes from fossil fuels by helping San Joaquin Valley low-income homeowners and renters install high-efficiency electric heat pumps and other energy efficiency upgrades. That effort is expected to save participating households about $1,500 in energy costs each year, while also slashing local air pollution and greenhouse gas emissions.

Other opportunities

The PUC also is considering building decarbonization opportunities in addition to what is required to implement SB 1477. One new focus area is strengthening incentives for homes being rebuilt after wildfires. Utilities “have limited ability to offer increased incentives to customers who agree to make permanent decarbonization investments when rebuilding damaged homes,” the PUC says, opening the possibility for pilot programs that encourage going all-electric.

The state’s building and appliance standards also offer decarbonization opportunities. The new rulemaking proceeding will consider how PUC policies and programs can help speed up adoption of emissions-reducing technologies, paving the way for the adoption of stronger building codes and standards.

Importantly, the commission also intends to create a framework to support building decarbonization through all of the tools available to the agency. This could include rates, programs, incentives, planning processes, and other direction it gives to the utilities.

We need this kind of holistic thinking about how to make buildings part of the climate solution. Panama Bartholomy, director of the Building Decarbonization Coalition that includes NRDC, argues that “We need a long-term strategy across regulatory bodies in California to drive down costs and quickly grow consumer experience with low-emission technologies.”

Across the country, from suburban homes to high-rise office buildings, too many buildings remain yoked to fossil fuels. California’s approach ultimately could offer a model that other states can follow to both reduce climate pollution and improve housing affordability.


Merrian Borgeson is a senior scientist in the Natural Resources Defense Council’s Climate & Clean Energy Program. This post originally appeared at the NRDC Expert Blog.


  1. GBA Editor
    Martin Holladay | | #1

    I don't know who owns the garage in the lead photo -- probably, the CEO of a marketing company -- but I'm guessing that (in spite of the pegboard full of wrenches on the wall) he or she doesn't actually repair any cars, or even change their oil, in the garage.

    1. lance_p | | #4

      You guys missed the obvious answer... the owners sold their dirty polluting cars and bought bicycles instead. Maintaining bikes requires tools, you know! With no more oil changes needed, the garage now does double duty as a living room for driveway parties. ;-)

      I'm a big fan of the museum quality industrial track lighting setup, which nobody put in their garage - ever.

      1. GBA Editor
        Martin Holladay | | #5

        Good answer! The garage is owned by a German-American bicyclist.

  2. user-4435615 | | #2

    The peg board and tools - It's probably a photograph.

    1. JC72 | | #3

      Probably entirely photoshopped just to showcase the Rheem heat pump WH.

  3. user-6184358 | | #6

    It also seems to be missing the required water heater seismic bracing strap and flexible connectors.

  4. user-723121 | | #7

    Energy efficiency is not well spelled out in this initiative. That new homes in sunny CA would need much if any supplemental heating is a bit ridiculous. Even our 1978 house built by others had enough solar gain today for the furnace to shut down for about 4 hours at 20F outdoors.

  5. AndyKosick | | #8

    The most annoying thing in the photo is that there is no insulation on the hot water lines. It's a pet peeve of mine. It seems like every staged marketing photo of a high efficiency water heater I've ever seen lacks insulation on the lines. It's a small thing but it's so easy to do. (This is the second time in a couple days I've had to point this out)

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