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NY climate policy blueprint outlines electrification and phaseout of gas system

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NY climate policy blueprint outlines electrification and phaseout of gas system

SNL Image

Electrifying New York's vast building stock is a cornerstone of a draft plan for climate policymaking released by the state's Climate Action Council.
Source: Krit Jantana / Moment via Getty Images

New York State would electrify its building and transportation sectors, cut natural gas consumption and strategically retire gas distribution systems under a newly released framework for climate policymaking.

The state's Climate Action Council outlined the plans in a sprawling draft scoping plan released Dec. 30. The 861-page document represented the council's synthesis of recommendations from sector-specific advisory panels and a working group designed to ensure a fair transition.

The document will serve as a framework for policymakers as the state moves towards developing a final scoping plan that informs regulations capable of fulfilling climate goals in 2019's Climate Leadership and Community Protection Act, or CLCPA. The CLCPA mandated that New York reduce economy-wide greenhouse gas emissions by 40% from 1990 levels by 2030 and at least 85% by 2050.

Buildings represented a major focus in the Climate Action Council's scoping plan. The state's more than 6 million residential and commercial buildings accounted for 32% of the state's 2019 emissions, followed by the transportation sector at 28% and the electricity sector at 13%.

"Under all scenarios, the vast majority of current fossil gas customers (residential, commercial, and industrial) will transition to electricity by 2050," the council wrote. "New York State will need to implement an ongoing effort to plan for and manage the strategic decommissioning of much of the fossil gas distribution system as the transition to electrification proceeds."

Building electrification central to plan

The scoping plan expected 1 million to 2 million homes to be electrified with heat pumps by 2030, with 10%-20% of commercial space utilizing the equipment by the decade's end. Afterward, about 250,000 homes and thousands of commercial buildings would electrify each year, driving heat pump adoption in 85% of residential and commercial space by 2050, according to the plan.

The approach would depend on New York hitting its target of generating 100% of electric power from zero-emissions sources by 2040 and reducing energy demand in buildings by 30%-50% through retrofits, energy efficiency and demand response programs.

"Even with aggressively managed load, electric consumption doubles and peak load nearly doubles by 2050, and New York becomes a winter peaking system by 2035," the report concluded.

Echoing policies in New York City and dozens of other cities and towns, the plan called for changing building codes to drive electrification of new buildings and would require building owners to replace fossil fuel heating equipment with electric alternatives when they replace the units in existing buildings. New York would also eliminate fossil fuel subsidies and invest in research and development for thermal storage, grid-interactivity and other solutions for hard-to-electrify spaces.

The pathway to building electrification included another key strategy: transitioning away from refrigerants with high global warming potential that are used in today's heat pump technology.

Changing role for utilities

Recognizing a reduced role for gas in heatingand building on recent regulatory proceedings and rate casesthe plan grappled with the decommissioning of portions of the gas grid.

In the final scoping plan, slated for release in 2023, the council expected to include a framework for state agencies, led by the Department of Public Service, to coordinate an "orderly downsizing" of the gas grid, in consultation with utilities, environmental justice groups and sector experts.

That effort must involve identifying the safest, most reliable and least expensive approaches to retiring pipelines, the council said. This could include transitioning entire streets and neighborhoods from gas distribution systems to networks of underground pipes that distribute thermal energy among all-electric buildings. These community-scale projects could run alongside existing infrastructure, be operated by utilities, and use waste heat to smooth load, the council found.

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In the council's view, burning wood and combusting fossil fuels will remain necessary to supplement electric heating during peak winter conditions in the coldest climates, when air-source heat pump performance and efficiency decline. Gas will likely remain necessary for backup heating in large, complex commercial spaces, chiefly in New York City, until technology improves, the council said.

Yet the council projected little use for low-carbon fuels like renewable natural gas, or RNG, or green hydrogen in building heating, a strategy often cited by gas utilities as reason to preserve gas distribution systems. The report projected RNG would provide backup heating in fewer than 10% of electrified buildings.

The report saw these low-carbon fuels playing a larger role in decarbonizing the industrial sector, which accounted for 9% of 2019 emissions and where high-heat processes are often hard to electrify.

The plan stressed the need to tackle fugitive emissions in the agriculture and waste sectors, which accounted for 6% and 12% of 2019 emissions, respectively. These sectors presented an opportunity for RNG, or waste methane processed from sources like dairy farms and landfills into pipeline-quality gas.

Council says benefits outweigh costs

The report estimated the cost of taking action would outweigh the cost of inaction by more than $90 billion. Underpinning the council's estimated net benefits of $90 billion to $120 billion are health benefits of $165 billion to $170 billion and avoided economic impacts from climate change-related damage totaling between $235 billion and $250 billion.

In the council's view, the net direct cost of the framework would be small in comparison to New York's economy — an estimated 0.6%-0.7% of gross state product in 2030 and 1.4% of gross state product in 2050.

Climate action outlined in the framework would create at least 211,000 jobs in New York through 2030, increasing employment by 60% across 21 subsectors, according to council projections.

More than half of the job gains would occur in the building sector, chiefly in residential space conditioning and building shell construction. The council projected strong employment growth in the transmission, distribution and solar subsectors of the electricity space, with more pronounced growth in emerging areas, including offshore wind, storage and hydrogen.

The council concluded seven subsectors would see job displacement totaling 22,000 positions. Gasoline fueling stations would suffer the biggest negative impact, as policies push more drivers to purchase electric vehicles and reduce the overall number of miles driven, which are two key state goals.

The plan would likely impact a number of New York utilities: Fortis Inc. subsidiary Central Hudson Gas & Electric Corp.; Consolidated Edison Inc. subsidiaries Consolidated Edison Co. of New York Inc. and Orange and Rockland Utilities Inc.; National Fuel Gas Distribution Corp.; Avangrid Inc. subsidiaries New York State Electric & Gas Corp. and Rochester Gas and Electric Co.; National Grid PLC subsidiaries Brooklyn Union Gas Co., KeySpan Gas East Corp. and Niagara Mohawk Power Corp.; Algonquin Power & Utilities Corp. subsidiary St. Lawrence Gas Company Inc.; and Corning Natural Gas Corp.