Panama Bartholomy on Promoting Affordability & Resilience Through Building Decarbonization

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This month, the city of Sacramento became the 46th in California since 2019 to mandate building electrification and commit to phasing out natural gas infrastructure and appliances in new building construction this decade. VX News interviewed Panama Bartholomy, the executive director of the Building Decarbonization Coalition to address the resilience and affordability concerns of an all-electric future. Citing the health and climate benefits of phasing out gas, Bartholomy emphasizes the need to gold plate the state’s electric infrastructure to support a sustainable and resilient transition from fossil fuels.

Panama, quoting from the The Wall Street Journal this month, ‘cities are considering measures to phase out gas hookups amid climate concerns spurring some states to outlaw such prohibitions.’ Address what's driving the Building Decarbonization Coalition which you lead—both the progress made and the resistance experienced.

The reason why cities are taking action to ban or heavily restrict gas within their jurisdictions for new construction and are now looking at existing buildings is because there's no way that we achieve our clean energy goals, climate goals, or clean air goals if we don’t stop burning gas in our buildings, burning gasoline in our cars, and burning gas in industry.

When you look at where city greenhouse gas emissions come from, it's generally about two-thirds transportation and one-third buildings, some of which is industry or agriculture, but buildings always play an outsized role.  Cities have a hard time addressing transportation issues because they don't usually have tailpipe regulatory authority.  Land use practices take a long time to have a big impact on something like transportation emissions. So buildings are a clear area where cities can express leadership and very quickly to meet some of their ambitions on climate change.

Obviously, the main folks who are opposed are those companies whose whole business model is the continued expansion and maintenance of a gas distribution and transmission system. It's the gas utilities and their partners who haven't been doing the forward planning to see that there's no way they can continue to sell their product into the market past the next 25 years.

 So, you're seeing some states with heavily Republican legislatures and governors, taking away the choice of local governments to decide how they want buildings being built within their jurisdictions. I always thought that Republicans were all about getting political decisions as close to the individual as possible, but in the case of climate change apparently, it's about taking away people's choice.

To help benchmark the progress that the Coalition’s campaign has made to date, what is the status of efforts to rewrite the California Building Code as it relates to efficiency standards and emissions requirements.

The possibility of decarbonizing, electrifying or completely eliminating emissions from buildings is a very new concept. We update the building code every three years in California, and just in this last code cycle has building decarbonization really come into its own as a topic. The Energy Commission has been grappling with what they know is the climate imperative that we can't keep burning things in buildings—as Mary Nichols would say, we’ve got to stop combusting things.

Through the leadership at the Energy Commission of Andrew McAllister and David Hochschild, Commissioner and Chairman, respectively, they have proposed a building code that would go into effect 2023 to 2026 that takes us a huge step forward on getting to an all electric building code and puts in place regulatory incentives for builders to go all electric. The governor and the legislature have also approved a budget that's going to provide about $150 million over the next three years to also incentivize builders to go all electric.

So the state’s approach is a combination of regulatory push—still no requirement— and a lot of money. We should be seeing a significant amount, about 50 to 80 percent of the buildings built between 2023 and 2028 moving towards all electric. That will give us a good four years for the market to get familiar with the technologies, to train people on installing them, and to educate consumers about the technologies,which should set us up well for a 2025 all electric building code in California and match what the state of New York is also proposing for their building code. The two states that use the most amount of natural gas and have the highest emissions from buildings are both proposing to say no more new gas in buildings as of 2025. That is going to send shockwaves across investor confidence in the gas industry and have a ripple effect on the ability of continued expansion of gas, gas exploration, and hydraulic fracturing.

In your opening interview remarks you were critical of “red” state legislatures’ efforts to ban—in response to your initiatives—choice at the local level, but rather than critical, you seem to laud efforts by “blue” state legislatures to ban local choice to accomplish the Coalition’s goals. Are your views related to governance simply explained by expediency?

The markets are like people; they need TLC like we all need TLC. In the case of the markets, transparency, longevity, and consistency are what they're looking for and those principles are always best offered at the highest governmental level as possible. Having cities individually adopt a whole bunch of slightly different policies doesn’t help installers to work across city borders or help manufacturers be able to supply products into all these different jurisdictions.

In California, fortunately or unfortunately depending on your perspective, cities have always been at the vanguard of climate, clean energy, and environmental policy. It’s cities that push the limits and then bring the state along to adopt the policy after it's been tried out in our laboratories down at the local level. So, that's what we're seeing. We're seeing 46 cities in California that have now adopted local codes either banning or restricting gas.

Let's take a half step back, elaborate on the mission of the Building Decarbonization Coalition and your role as  executive director. And, is California the only state you are engaged with in the US?

The Building Decarbonization Coalition is a coalition of energy providers, heating equipment manufacturers, design and construction community, local governments and non-governmental organizations that are all working together to eliminate emissions from the built environment. We do this through extensive policy work. We don't do any direct lobbying, but we do a lot of work with policymakers to help them explore the many faceted issues of what it means to get off gas and get to an all clean energy building stock. We also work heavily in the market, as well on what needs to be done around the workforce and supply chains? What do we do with a lack of adequate infrastructure in many of the buildings in California to support powering our buildings completely off of energy? We’re a young organization just as the issue is young.

We've been around for about three years and have primarily focused in California but, I’m happy to say, we just hired a New York director to start an office there. Then we're going to be assisting 10 other states coming up as well and starting to really support their Coalitions. I would say the exciting thing that we're seeing is a lot of bottom-up leadership on this issue in California from a lot of the agencies and the agency leaders that VerdeXchange is very familiar with and hosts on a regular basis at the conference. We're seeing that reflected in other states as well, which is what the market really wants to see. The market wants as large a number of jurisdictions as possible sharing common standards on common timeframes and making investments around common areas. And so that's what we really want to share with each other to get all of the different stakeholders that are working in the space to agree on what are the most common issues and then catalyzing the solutions that will overcome those issues, whether they be policy or market.

What’s changed related to energy policy and the building decarbonization campaign since you last attended VerdeXchange in 2018?

I would say one is the success of local governments across California adopting local codes. I mean, fundamentally, we take a very simple approach to this: one, we need to stop the bleeding and find a way to stop making the problem worse by continuing to expand the gas system and infrastructure. Two, we need to set a date for when we decide we're going to phase out the sale of fossil fuels appliances here in the state and provide that clarity to the market. Three, we really need to build the marketplace for building electrification to make sure that it’s a viable alternative to our natural gas appliance-dominated market that we built here in the state.

Cities have really taken on that first piece to stop the expansion of the gas system so that we can start to set a date for the phase down of existing buildings; we're not going to make the problem worse. We're going to stop it now and start to plan for how we can phase it down.

We have about $450 million in incentives rolling out across California thanks to state programs, utility programs, and Community Choice Aggregator programs combined. It's a drop in the bucket, to be honest with you, but it’s a good start for creating that spark around the first generation of these types of homes and buildings. The awareness at the policymaker level over such a short time is also incredible. You see Nevada, California, Washington, Colorado, New York, New Jersey, Massachusetts, Maine, Connecticut, all adopting building decarbonization plans affecting all building types.

 And so three years ago, when we had that panel, I think probably many people were coming to that panel wondering what building decarbonisation was, and now you're having plans and legislation passed all over the country that are actually putting it into law.

Given the very real wildfire threat in California and the West, how do you respond to those who question the wisdom in terms of resilience of local reliance on a single source of energy (rather than redundancy) for homes and businesses in California?

I live in what's formerly known as wine country in Northern California, we now call it fire country. We, for the last four years, have experienced devastating fires in Sonoma and Napa counties and know firsthand some of the challenges of the public safety power shut offs. Fundamentally, we need to demand of our elected officials a stable, clean, and resilient electricity grid. We cannot function without the electricity. Our lifestyles are built around electricity and so we have a choice coming up.

 Over 65 percent of our natural gas lines are over 50 years old and nearing the end of their useful life. Those lines cost between $4 million to $6 million per mile to replace and upgrade. We also need to make investments into our electricity system. My preference would be to invest in one system that we know is actually in line with our climate goals: our electricity system and gold plate it rather than continuing to invest in two different energy systems, one of them that we know fundamentally, we're going to have to abandon in 25 years anyway. Why pour billions of dollars into bringing that system  up to speed when we're just going to abandon it?

The truth is that gas doesn't make us any more resilient. Every modern gas appliance has an electric ignition for safety reasons to prevent carbon monoxide poisoning and explosions. Your water heater, furnace, dryer, and gas stove will not function in a power safety shutoff. They do not make us more resilient. Yes, you can manually light your gas stove to boil some water and cook some food with that, but you won't be able to run your fume hood to get the nitrogen oxides, the carbon monoxide, and the formaldehyde that comes from burning gas in your home out of your kitchen. You're basically running a small generator inside at a time when many of us like to keep our windows closed due to the smoke from the wildfires. So I bring it back to what's truly going to make us resilient is a large-scale investment into our electrical infrastructure, and then building out the types of buildings that are going to use that infrastructure and pay for it effectively.

Panama, your answer assumes natural gas producers and suppliers are not already moving to offer fossil free energy—renewable gas and green hydrogen; and, is it not true that even environmentalists approve?

I look forward to the day when we can have supplies of truly green hydrogen that we can use to run hard to electrify sectors. It's going to be tough to electrify planes, at scale, with the level of aviation that we have in the world, it's going to be tough on some industries to replace the sheer amount of BTUs that are needed for some of that work. There are just going to be some sectors, like freight, that are going to be hard to electrify and won't be cost effective for the next 20 or so years to electrify. Those are excellent candidates for what is an extremely expensive and very rare product of green hydrogen.

Green hydrogen is a great concept. But until you actually are forced to buy it—and it's the same with renewable natural gas—people like the idea of not having to change anything and just have different gas provided through their appliances. But the reality is that what’s needed to scale it to be able to lower that price point is so far off that once you get to the point of actually talking to industries about whether or not they want green hydrogen, to a T, they've said no, because they're not willing to pay for it because of the impact that it would have on their bottom line. So I think we're going to have to use green hydrogen, and I think it'd be great in  freight, in aviation, in power plants.

 We shouldn't be putting billions of dollars into maintaining a gas system just so I can heat my water with green hydrogen. The reality is if we're going to be putting hydrogen into the gas system, anywhere over 15 percent blend leads to severe embrittlement of our gas lines and the need to replace them. And so again, we come to a choice of do we make massive investments in two infrastructures for energy? Or do we focus on really gold plating our electrical infrastructure?

What do you see in the way of leadership from our state utility regulators: the PUC, the Energy Commission, CARB, etc. Are they aligned? Are they as responsive as you would prefer to the immense challenge that you have articulated?

The leadership is there. The work has been done in our early stage to really understand the issues and the challenges, and 2022 will be the year where, in a number of different forums and different agencies of California, we will collectively be deciding about dates, timelines, and approaches for the wind down of the gas system and the wind up of the electrification of the building stock. I'm confident that we have the right team on board and they've taken their time to understand the issues.

In a recent VX News interview with USGBC-LA’s Ben Stapleton, he highlighted the challenges of introducing new technologies into buildings. How is the Coalition assuring the alignment of public regulations and incentives to facilitate coordination between building owners, managers, and tenants wishing to adopt decarbonizing technologies?

Fundamentally, we have an existing building issue and the news for building decarbonization is that your appliances—water heating and HVAC systems—break. On average for water heaters, it's about every 12 years and for furnaces it's about every 15 to 20 years, and that's within the timeframe of the carbon neutrality goals that we're trying to hit. The reality is that buildings produce more smog than all the cars that drive all over LA. We need to clean up LA's buildings to clean up LA's air.

We need to be putting in incentive programs and financing programs that will make it a no brainer, whether you're a homeowner or a building owner. And at some point, we'll likely have to require it because there's no way that we meet our emissions and climate goals unless we're putting in those technologies.

Panama, assess the progress large investor-owned utilities in California have made in this regard—PG&E, Southern California Edison, and San Diego Gas and Electric. Which has been made the most progress in meeting the State’s emissions and climate goals?

I'd say Southern California Edison, but I would also point out that they're in very different situations. They deal with different geographies that have faced different difficulties over the past few years, and they have different ultimate owners and shareholders that lead them to make different decisions.

Southern California Edison, as a pure electricity company, can go all in on building electrification. Pacific Gas and Electric has not only dealt with wildfire issues, but also the PSPS (public safety power shut off) issues to an even higher degree than the other utilities, and they have a legacy gas system that they now have to plan to wind down.

San Diego Gas and Electric has the same exact business model as PG&E. I bring that up because PG&E has gone around to every city in its territory that wants to adopt a ban on new gas and is encouraging them to do it. We know that an expanded gas network doesn't have a role in California's climate future, and our ratepayers won't be able to afford this system into the future. San Diego Gas and Electric has that same business model, but due to the ownership structure of that utility, they are having to make different decisions and have different considerations when they think about the future of their energy mix.

There are great people who work at San Diego Gas and Electric and Sempra Energy, and I wouldn't in any way cast aspersions on their ability to run a quality business under the regulatory structure. I would also just point out that the other two utilities have faced some pretty challenging years over the past few years.

Turning to the federal government: clearly the Biden administration and Congress presently have a commitment to climate change, cleantech, and economic development. What then in the way of policy, enforcement and procurement do you anticipate in the near term from the administration and Congress?

The Biden administration, in their infrastructure proposal, have gone in big on all electric buildings. I've never seen the White House have press releases or plans that mentioned heat pumps or induction stoves until the Biden administration came in.

They are proposing hundreds of billions of dollars in multiple different pots and pieces of their infrastructure plan for the electrification of buildings, particularly focused on low-income buildings and making sure that we are putting those communities at the front of the line for the benefits of electrifying buildings.

I'm very encouraged by the Biden administration's approach and I'm hopeful, but I would never make a prediction about Congress' taking up the totality of the President's plan and passing it in the near term. We need the Joe-mentum to be able to bring the Biden bucks to California to make Build Back Better a reality.

Lastly, when you rejoin us in late January for VX 2022, what progress will you report?

We'll be spending a lot of time in New York, which is about to adopt a building decarbonization roadmap that lays out no more expansion of the gas network as of 2025, no more gas appliances sold starting in2030, and is a real commitment to building the marketplace there. We're going to be spending a lot of time in the states of Washington, Colorado,  and Minnesota.

Then, we’ll be spending an increasing amount of time starting in Glasgow, but really working on partnerships and international relationships with European countries who are adopting as ambitious, if not more ambitious, policies on building decarbonization. It's not just in California, but there’s recognition in many states across the country and many countries across the world that there's no way that we meet our climate goals and still burn gas in buildings. And so we're going to be looking to partner with those other entities to be able to bring the market forces together to make it a reality.

“The reason why cities are taking action to ban or heavily restrict gas within their jurisdictions for new construction and are now looking at existing buildings is because there's no way that we achieve our clean energy goals, climate goals, or clean air goals if we don’t stop burning gas in our buildings, burning gasoline in our cars, and burning gas in industry “—Panama Bartholomy

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