Building Decarbonization Update: Local Governments in California Consider Strategies to Reduce Natural Gas Use in Buildings

October 30, 2023

Ninth Circuit decision does not dissuade most local governments around the state from decarbonizing buildings

A recent Ninth Circuit ruling may have implications for cities and counties across California that have been adopting ordinances to incentivize or require the use of electricity in new buildings as a way to combat climate change and improve indoor air quality. In April 2023, a decision by a panel of the Ninth Circuit Court of Appeal in California Restaurant Association v. City of Berkeley generated some questions about certain local government strategies. In that decision, the court held that Berkeley’s ban on natural gas piping in new buildings, which the city adopted as an exercise of its police power, was preempted by the federal Energy Policy and Conservation Act (EPCA).

EPCA preempts local regulations concerning the energy use or energy efficiency of appliances for which a federal efficiency standard is in place. According to the court’s decision, Berkeley’s ordinance regulated the quantity of energy used by appliances by requiring that they use no natural gas. Berkeley filed a petition for rehearing by the entire Ninth Circuit, which is still pending. In the meantime, most cities and counties around the state that adopted electrification ordinances have continued to press ahead with their efforts. The Ninth Circuit did not reach the question of how to apply an exemption to EPCA’s preemption provision that applies to building codes for new construction, which arguably should protect most local governments’ electrification ordinances.

Original article, June 2021:

Following up on the October 2019 and February 2020 editions of In the Public Interest, this article provides an update regarding strategies proposed by several cities and counties to encourage or require existing buildings to go all-electric.

As reported in the October 2019 and February 2020 editions of “In the Public Interest,” local jurisdictions throughout California have adopted ordinances incentivizing or requiring the use of electricity or banning natural gas infrastructure in new buildings. The use of natural gas in buildings to power appliances and provide heat, along with the transport of natural gas to buildings, is a significant source of greenhouse gas (GHG) emissions. Accordingly, reducing the GHG emissions from the built environment is a key strategy to reach the State’s climate goals, including reaching carbon neutrality by 2045.

Many cities and counties across the State began adopting all-electric reach codes, natural gas bans, or ordinances encouraging the use of electricity in new buildings in 2020. The next wave of local action on this front aims to tackle the use of natural gas in existing buildings. Existing buildings far outnumber new buildings, and thus they represent a significant portion of the GHG emissions associated with buildings. Although retrofitting existing buildings is challenging, tackling the use of natural gas appliances and infrastructure in these building provides local governments with an opportunity to substantially reduce GHG emissions.

Some local governments’ reach codes have already addressed the use of natural gas in existing buildings undergoing remodels or renovations. For example, Piedmont’s reach code includes incentives to electrify low-rise residential buildings undergoing renovations, and San Carlos requires that remodel projects that update more than 50% of the building be all-electric with some exceptions. Remodels and renovations represent a good opportunity to require electric appliances at a relatively low cost. However, some local governments are now considering additional measures to address the use of natural gas in buildings that are not undergoing such significant changes.

The most straightforward mechanism for doing so is to require that natural gas appliances be replaced with electric at the end of their useful life. Requiring replacement before the end of an appliance’s useful life will be costly, as a San Francisco Board of Supervisors report recently detailed. The report also explained that the cost of a replacement requirement decreases significantly when the requirement is imposed at the end of the appliance’s useful life. Half Moon Bay is considering such a policy. It issued a draft building electrification ordinance that would prohibit permits to replace fuel gas appliances with other fuel gas appliances. Although this draft ordinance is in its early stages, it nevertheless provides an example of a strategy that other local governments might consider.

Jurisdictions that want to explore other options for eliminating natural gas use in existing buildings could consider imposing a replacement requirement before the end of the appliances’ useful lives. Alternative triggering events for a replacement requirement could include the time of building sale or condominium conversion, for example. These triggering events may present natural opportunities to impose an electric replacement requirement, as some municipalities already impose other energy and water conservation requirements at the time of these triggering events. .

In an effort to explore these and other policies, Berkeley issued a draft Existing Buildings Electrification Strategy, which examines a variety of policies and actions to achieve full electrification of existing buildings by 2045 or sooner. In addition to the replacement policies already mentioned, Berkeley’s Strategy also assesses the possibility of  imposing a building performance standard to minimize GHG emissions or eliminate natural gas use and neighborhood electrification and gas pruning.

Other potential tools for reducing or prohibiting the use of natural gas appliances in existing buildings could include indoor air quality standards, or emission limits on appliances or buildings. San Francisco’s report also contemplated incentivizing retrofits by charging owners a GHG emissions fee. While these measures are less direct than simply requiring that natural gas appliances be replaced with electric appliances, some cities have begun adopting them as a way to address emissions from existing buildings. For example, in 2019, New York City adopted a law that imposes a greenhouse gas emission cap on large buildings, requiring them to reduce emissions 40 percent by 2030 and 80 percent by 2050 relative to 2005 emission levels.

As the strategies being proposed and considered by local governments reveal, there are many ways to encourage or require electrification of existing buildings. Cities and counties considering adopting such options as part of a building code update or reach code can do so at any time.

For more information about how your municipality can reduce local use of natural gas, contact Ellison Folk and Lauren Tarpey.