Gas ban opponents try new approaches as 'fuel choice' bills stall

This article is the second of a two-part series on the potential for 2024 elections to impact campaigns to block restrictions on natural gas use in the building sector. The first part can be found here.

Gas ban opponents are exploring new avenues to block building electrification mandates as the pathways through divided statehouses look difficult ahead of elections in November.

A ballot referendum in Washington state has lined up a test of public support for building decarbonization policy, potentially presenting a model for states where legislation to protect access to natural gas has run aground. Meanwhile, legal challenges to existing building electrification requirements are proceeding in the courts.

The evolution of a nationwide building electrification movement could also test the scope of laws that preempt gas bans, even as fewer cities and states pursue simple restrictions on natural gas use in new construction. Lawmakers in 26 states have passed these preemption bills since 2020, and cities in some of those states are now pursuing building decarbonization policies.

Washington to gauge public sentiment

As Washington moved toward incorporating electric heating requirements into state building codes, legislators sought to explicitly limit code officials' authority to restrict gas use or address the building sector's greenhouse gas emissions. Those efforts failed in the statehouse, but in July a coalition of housebuilders, real estate agents, retail groups and unions succeeded in putting the issue on the ballot with Initiative 2066.

A similar ballot initiative failed in Colorado, while a bid to enshrine fuel choice in Arizona's constitution also stalled.

Proponents have pitched Initiative 2066 as a means of protecting energy choice for Washingtonians. Opponents have said it will raise energy costs, reverse popular energy efficiency policies, harm public health and quash local authority.

Initiative 2066 would prohibit cities, towns and counties, as well as building code officials and regional air pollution control agencies, from "prohibiting, penalizing or discouraging" gas use in buildings. It would also remove language from Washington statute that directs code officials to fulfill a goal of constructing "zero fossil-fuel greenhouse gas emission" buildings by 2031.

Additionally, it would require multi-utilities to provide gas service upon request, undercutting a law passed in April to help Puget Sound Energy Inc. pivot toward its electric utility operations and shrink its gas distribution business. It would also prevent multiyear rate plans and integrated resource plans from facilitating gas-to-electric fuel switching.

Those measures constitute a "U-turn" in Washington's building decarbonization policy, but the text that voters will see on ballots will not reflect the initiative's scope, according to Jim Edelson, director of policy at New Buildings Institute (NBI), which participates in Washington building code development and opposes Initiative 2066.

"It would be impossible for a voter to understand how broad this language is, both as it applies to energy codes and as it applies to air emission standards," Edelson told S&P Global Commodity Insights. "There's no chance with the information that voters are going to receive that they can understand the impact that this language will have."

New policies may test scope of anti-gas ban bills

The broad language raises questions about how a court would interpret Initiative 2066, Edelman said. That reflects a concern among climate advocates about gas ban preemption bills.

Typically, these bills prohibit not only explicit restrictions on gas use in buildings, but any policy that has the same effect. This has created uncertainty as cities subject to preemption bills begin implementing building decarbonization policies that differ from the gas bans and electrification mandates pioneered in Berkeley, Calif., and the wider San Francisco Bay Area.

Kansas City, Mo., and Cincinnati have pursued building performance standards, while some communities in Arizona — the first state to ban gas bans — aimed to encourage electrification.

It would be difficult to argue that the laws preempt building performance standards, said Jamie Long, a senior staff attorney at the Mitchell Hamline School of Law's Public Health Law Center. This is because the policy targets decarbonization broadly, requiring energy efficiency gains or emission reductions without mandating electrification, he said.

Similarly, zero-emission standards, which prohibit the sale of appliances that emit pollutants, are rooted in federal Clean Air Act authority granted to states, Long noted. That means those policies may trump state preemption laws, he said.

"I'm sure that the intent of the gas industry was to be as broad as possible when they were pushing the legislation," Long told Commodity Insights. "But I think that we're not seeing a lot of Berkeley copycats around the country at this point."

New York, Washington, Colorado and Denver are currently battling lawsuits over their building decarbonization policies following a US Appeals Court opinion that federal law preempted Berkeley's gas ban.

Midwest takes the middle road

In some states, a more collaborative approach to building decarbonization policy has taken hold. This partly explains why gas ban preemption bills, and gas bans themselves, have not advanced.

In Minnesota, the nation's 9th-largest residential and commercial gas consumer, preemption bills have failed year after year. Meanwhile, the state legislature has established aggressive energy efficiency targets in building codes, facilitated plans to decarbonize gas utilities and put in motion integrated resource planning for gas distributors.

The policy and regulatory proceedings that produced these outcomes were the product of robust stakeholder processes, according to Margaret Cherne-Hendrick, senior lead for innovation and impact at Fresh Energy, a group that advocates for carbon-neutral policy.

"We have a long history in Minnesota of a collaborative stakeholder process that is really bipartisan in nature," she told Commodity Insights. "And I think that is born out of an understanding that durable policymaking comes from collaboration."

Minnesota utility regulators are now preparing to launch a future of gas proceeding to align gas system planning with state climate goals. In Illinois, another Midwest state where a preemption bill died in committee, utility regulators recently signaled that their own future of gas proceeding would last longer than initially anticipated, saying stakeholders must hash out a wealth of energy transition issues.

There were other signs that policymakers would take a middle road in Illinois. A proposed gas ban has stalled in the Chicago city council, and the Illinois Capital Development Board voted against including a voluntary blueprint for cities to mandate all-electric construction in the state's new stretch energy code.

Cherne-Hendrick declined to comment on the potential for upcoming statehouse elections to influence the trajectory of Minnesota energy policy. However, she expressed a view that the selection of Minnesota Gov. Tim Walz as Vice President Kamala Harris' running mate in the US presidential election reflected a recognition of the state's bipartisan approach.

"We really do try to find a common path forward, recognizing that when everyone is doing better, then we all do better," Cherne-Hendrick said.