Electrify Everything (really?)

Building heating and cooling also require transformative change, to reduce and eventually zero out dependence on fossil fuels. Buildings were 32% of New York’s carbon footprint in 2019. New York has some of the country’s oldest building stock –with irregular design, many of them historic, and more that were built without attention to energy performance and in many cases are difficult to retrofit for energy efficiency. Electrification of buildings is the essential strategy outlined in the Scoping Plan, allowing heating and cooling with air source or ground source heat pumps and solar electricity.

The most common way to heat buildings today is by burning fuel; but combustion has climate consequences by its nature.  The Climate Act’s overall vision is to shift heating from fossil combustion to heat pumps powered by electricity (which can be set to cool and dehumidify as well), with increasing shares of that electricity being supplied by renewables year by year.  Heat pump technology works by exchanging warmth with the surrounding air or the ground using a process similar to a refrigerator (only reversible). Commonly used in Japan and parts of Europe, heat pumps have become extremely reliable in cold climates like ours, and serve as the sole heat source today for well insulated homes.  Because these systems cool and dehumidify as well as heating, they replace air conditioners as well as boilers.  

New York has invested in a dazzling array of sophisticated energy efficiency technologies and programs through the New York State Energy Research and Development Authority.  It has run multi-year market building programs for rooftop and community solar power, air and ground source heat pumps, EV charging infrastructure and much more. It has experimented with technologies for deep energy retrofits of multi-family buildings inspired by the Dutch Energiesprong program which uses exterior wrap insulation, lighting and appliance change-outs, and innovative building materials to make buildings radically more energy-efficient.  It has developed a 20-year Carbon Neutral Buildings Road Map.  To achieve the commitments of the Climate Law, these efforts have And with the release of the Scoping Plan, it has renewed its commitment to go much bigger. 

At the same time, building retrofitting is a complex practice that must be tailored to each individual building and guided by the expertise of the building science and building performance industry.  Industry professionals and associations such as the Building Performance Institute emphasize that even buildings of the same general age and architectural type can differ quite significantly in their energy performance.  Contractors performing building upgrades should be allowed and incentivized to provide customized solutions that bring each building to its full potential for low to zero carbon operation, and that maximize the associated benefits such as indoor air quality. Training must be scaled up, not just for building diagnostics but for hands-on installation of insulation, air sealing and high efficiency equipment.  

Some building weatherization practices have their own climate and health impacts.  An example is spray foam and foam board insulation, a commonly used product that is supported by NYSERDA’s incentive program.  Spray foams can be toxic and have high embodied carbon across the lifecycle of materials extraction, production and use.  A shift to non-toxic cellulose and other natural materials, such as hempcrete, should be supported with increasing incentives as building decarbonization scales up.

Those earning the least tend to spend the greatest segments of their income on housing,  energy and on transportation.  Forty-eight percent of households statewide are low to moderate income.  Tenants are especially limited in their options and subject to landlords’ decisions.  Coordinated effort at the local level is needed to bring the available  resources for single family and multifamily building energy retrofits and also for electric vehicle charging systems, used EVs and electric bikes, all into circulation for tenants and homeowners in low income neighborhoods. 

This is the purpose of a new NYSERDA program, Regional Clean Energy Hubs.  It is designed to provide a “holistic, multidisciplinary approach to ensure that all New Yorkers have equal access to the benefits of the State’s clean energy transition.”  Clean Energy Hubs are a platform for collaborative work by energy outreach and service providers, social service agencies, housing organizations and community based organizations that serve low income households.  Led in the Hudson Valley by Cornell Cooperative Extension of Dutchess County,  New Yorkers for Clean Power and Sustainable Westchester, the Hub is providing an energy outreach staffer in each county.  While this is a valuable anchoring structure, it is only the beginning of the network that will be needed to rapidly engage thousands and thousands of building owners representing many demographics, perspectives and needs.  An essential regional strategy is to expand this network with additional partners, from realtors who see the value of greener practices to media outlets serving the climate-concerned demographic.

In addition, expanded outreach will be supported  through new forms of energy service providers, such as Community Choice Aggregation. While most CCA in New York focuses solely on electricity supply, a more holistic CCA 2.0 approach is illustrated by Mid-Hudson Energy Transition. This CCA administrator, currently serving the City of Kingston, is developing a building decarbonization outreach program as a parallel service. 

A promising way to build momentum and manage the costs of outreach for electrification contractors is to organize outreach neighborhood by neighborhood, with incentives for group purchases among neighbors.  The Building Decarbonization Coalition and Gridworks have analyzed this opportunity in a 2023 white paper and identified policy and planning needs for capturing it. They call for steps to:

• Align utility infrastructure investments with climate goals;

• Integrate resource planning; 

• Develop equitable rate models for energy services;

• Reform legal provisions associated with utilities’ “obligation to serve” so that a small number of residents who may opt out of a neighborhood initiative do not make it impossible for a utility to implement it;

• Allow utilities and municipalities to operate as “thermal energy utilities” so that they can provide decarbonized building heating and cooling services, shifting their work forces and revenues from solely providing power and/or fuel;

• Prioritize high-road jobs by supporting new skill building for oil, gas and utility workers;

• Engage communities in decision making;

• Designate funding for neighborhood decarbonization;

• Analyze projects and conduct additional research;

• Encourage knowledge sharing.   

While many of these steps rely on utilities and government to take the lead, neighborhood-scale building decarbonization planning and piloting could align very well with our recommendations for enabling faster, larger-scale construction of renewable energy installations through coordinated planning between utilities and the communities they serve.  A robust model for working at this scale is Community Decarbonization Partners, a national organization which works with local consortia to design customized outreach initiatives for rapid decarbonization of entire neighborhoods through work on both individual buildings and district-scale solutions. The first Climate Smart Community to pilot working with this program would be richly deserving of “innovative action” credit! 

Even with the new tax credits available through the Inflation Reduction Act,  financing building upgrades at the needed scale for low-to-moderate income households and renters is an unsolved challenge.  Funding is needed not only for decarbonization, but for the predevelopment costs of getting rid of asbestos, mold and other hazardous materials in many older buildings, that can be released during the weatherization work.  Without this funding, many homes that are older or not in good condition  can be disqualified for energy improvements. There is a model for addressing these additional costs: the Brownfield Opportunity Area funding program contains language to define eligible cleanup activities on the path to restoring brownfields to usefulness. Energy retrofit programs could adapt this approach.

The Scoping Plan commits the state to increasing education about the existing network of banks that make energy loans, and to scaling up the New York Green Bank. But the Scoping Plan notes “lender apathy” and a need for education, not just about available funding, but to the funders themselves.  In 2022, NYSERDA co-hosted a round table on climate resilience with the Federal Reserve Bank and Community Preservation Corporation, for housing developers and lenders, encouraging building renovations for climate resilience and recommending incentives such as local property tax abatements and longer loan amortization times.  Bringing consumer interest to bear with NYSERDA energy lending banks could lead to better marketing of existing resources.  

To retrofit all our buildings is an enormous task.  The cost to electrify housing statewide is estimated to be as much as $220 billion.  The average cost for retrofitting a single family home with heat pumps and insulation is $27,000, and for an apartment unit in a multi-family building, it is $33,000.  Even energy assessments have their price tag at $300 per unit and an estimate of $2 billion in costs statewide.  NYSERDA has worked with banks to provide energy loans, and provides its own subsidies for energy efficiency upgrades.  But a lot of money will still be needed to finance the work of decarbonization.  Fortunately, fund development efforts are being made by public and private players, from the NY Green Bank to Partners for Climate Action Hudson Valley, which has created a flexible Building Decarbonization Grant program designed to help communities fill gaps and provide matching for other funding sources.  The Inflation Reduction Act is a significant source of tax credits beginning in 2023, with additional rebate programs being designed for rollout in 2024.  EPA’s Greenhouse Gas Reduction Fund will provide an additional $20B in three loan pools recently awarded to partnerships with commitments to leverage these dollars fivefold and more. 

Ultimately, much more money is likely to be needed. But there is significant potential for these large funds to build up momentum for the energy efficiency and renewable energy industries, creating economic benefits that in turn could lead to more available dollars.  

Another approach in development is based on governments’ ability to issue bonds for work that advances that public good.  The successful model behind this concept is New York’s approach to ensure the provision of clean water to NYS citizens. Mandates to ensure the public good of clean water are administered by the New York State Department of Health in association with County health departments. Financing for the infrastructure and staffing to provide the public good of clean water is sourced from bonds issued by the Environmental Facilities Corporation.  Considering the benefits of emissions reductions, efficient buildings, reduced air pollution and reduced energy expenses to be a similar public good, the concept explores how state enabling legislation allowing similar funding sources may be tapped to pay for the building upgrades that are needed to meet Climate Act commitments.  These funding sources can be very low cost and repaid on property tax bills much like how water and sewer improvements are paid for over a long period of time. 

Because this approach can be adopted statewide, it allows for access to deep pools of low-cost bond financing driving the public benefit to all residents regardless of status. Given the success of the model in the provision of clean water, it would send a clear market signal to service providers and supply chains about the reality of a new 30 year  business opportunity to tighten up and decarbonize NYS building stock.  The concept is currently being tested by a team funded by NYSERDA.  This is the kind of sophisticated grassroots innovation that will be key to scaling up building decarbonization.

“Acceleration through Coordination” is a concept that will run through these recommendations.  However it is achieved, a greatly expanded and coordinated outreach partnership will be critical to reaching the scale of building electrification and weatherization that is needed.  The small Clean Energy Hub teams can serve as anchors.  NYSERDA has recently scaled up its recruitment of communications and public relations firms to support this work.  But, while these resources are essential to provide coordination, they do not - by themselves - provide the broad and deep community connections to support exponential growth in the market for building decarbonization.  It will take exponential growth to reach 2030 and 2040 goals.    

The organizations working together to create this Road Map can support and extend the reach of the Clean Energy Hubs through a collaborative outreach and communications strategy that:

• engages each organization’s base;

• creates shared resources such a repository of case studies and informational materials;

• undertakes complementary projects such as piloting new approaches such as district scaling and innovative financing;

• reaches out through commercial and institutional networks to create additional outreach to their work forces and members.

The early stages of building decarbonization are likely to be the most difficult, as a relatively small segment of the population has taken these steps and the concept must still be proven to many more.   Solar panels and heat pumps are beginning to become visible in many neighborhoods, and heat pumps have actually outsold gas furnaces for the last two years;  as they become common, and their benefits are widely understood, the “new normal” of decarbonized living may spread faster and faster.   Organized collaboration is the fastest route to this outcome.