2023 was a year for the books for building decarbonization developments. The Ninth Circuit’s Berkeley court ruling destabilized state- and local-level policy approaches, “StoveGate” swept the nation, Midwestern governments made strides forward, and, unfortunately, some areas took steps back. Here are our top ten building electrification policy moments of 2023.
New federal regulations
Several federal departments released guidelines and standards set to change the building energy efficiency landscape. In September, the Department of Energy (DOE) adopted energy efficiency standards requiring new non-weatherized residential gas furnaces to convert at least 95 percent of the natural gas used into caloric heat, up from a previous standard of 80 percent. This is the first change of its kind in almost four decades that could result in $25 billion in household savings over the next thirty years. This new rule is slated to take into effect in 2028.
Earlier in July, DOE also proposed new residential water heater standards, requiring new electric appliances to utilize heat pump technology and gas equipment to employ condensing technology. And in May, the Department of Housing and Urban Development, alongside the Department of Agriculture, published new energy codes for affordable housing and high-rise multifamily homes.
Berkeley court ruling forces cities to reverse course, other actors to innovate
In April, the Ninth Circuit Court of Appeals blocked Berkeley’s 2019 electrification mandate, citing regulatory overreach of federal law. In response, many cities that had enacted similar requirements for new construction, many based on Berkeley’s first-in-the-nation action, paused or walked them back. Nonetheless, several jurisdictions have pressed on despite the court ruling, such as Oak Park, IL, San Francisco, CA, Lafayette, CO, and the State of New York (though the latter is now being sued). At the same time, Washington State paused its regulatory all-electric requirement, instead taking an innovative approach through the building code process to incentivize heat pump deployment without running afoul of federal law.
And in early December, the Massachusetts Department of Public Utilities (DPU) took significant steps forward in phasing out natural gas in the Commonwealth through its “Future of Natural Gas” docket. As the first state in the nation to do so, the DPU ruled that Massachusetts would benefit from fuel switching and electrification, and required gas distribution companies to evaluate alternative, electric options for network expansion. The DPU rejected gas industry proposals to replace methane with “renewable natural gas” or hydrogen, ruling in favor of a transition to fully electric heating. Another eleven states are poised to take similar action and will be places to watch over the coming year.
Gas stoves take center stage in national news
In January, Richard Trumka, Commissioner of the U.S. Consumer Product Safety Commission, offhandedly mentioned that his office may take steps to prohibit the installation of new gas stoves to mitigate their adverse health effects, especially childhood respiratory illness. In response, Senators Ted Cruz and Joe Manchin introduced the Gas Stove Protection and Freedom Act in February while Representatives Kelly Armstrong and Debbie Lesko introduced a companion bill, the Save Our Gas Stoves Act, in the House. This flurry of action and attention emerged following the release of a study in December 2022 attributing 12.7 percent of childhood asthma to household gas stove use.
No action has been taken on the Senate bill since its introduction, while the House bill passed in June only to die in the Senate. Neither of these bills will become law, but their introduction and debate highlighted the complex tension between protecting consumer choice, safeguarding human health, and combating the climate crisis.
Maine, Michigan, and Minnesota make big moves
In 2019, Maine Governor Janet Mills signed an executive order establishing a goal to install 100,000 heat pumps statewide by 2025. This July, the governor’s office announced that it had blown past that initial goal, reupping the target by an additional 175,000 heat pumps installed by 2027.
Over in the Midwest, Michigan and Minnesota passed historic state budgets containing millions for building electrification. In particular, Minnesota passed the Energy Omnibus Bill, which included $216 million for energy financing and a $115 million-fund to match federal energy infrastructure grants. The bill also appropriated funds specifically to support residential pre-weatherization, electric panel upgrades, and heat pump rebates to incentivize electrification across the state.
North Carolina legislature blocks adoption of new building codes
While some states took steps forward, others moved backwards. In August, North Carolina’s House and Senate overrode Governor Roy Cooper’s veto of HB 488, prohibiting the State Building Code Council from updating North Carolina’s residential building code until 2031. The North Carolina Home Builders’ Association pushed back against the anticipated update and successfully lobbied to have it rejected. The politicization of state building code updates in the state will have negative impacts on home health and safety, as well as energy efficiency and associated consumer savings.
Home Energy Rebate programs guidance released
In July, the DOE released official guidance to states for the development of their Home Energy Rebate Programs. State energy offices are now off to the races to design their rebate program plans, which are to be submitted to the federal government by January 2025. Once states launch their programs, everyday residents will be able to claim rebates on many electric appliances and efficiency upgrades. Importantly, the programs will establish foundational consumer awareness around household electrification that will have long-term market impacts. The DOE anticipates most states will have operational programs by the end of 2024.
Inflation Reduction Act (IRA) tax credits go into full effect
The IRA expanded, elevated, and extended the existing Energy Efficient Home Improvement Credit (25C) and the Residential Clean Energy Property Credit (25D). Both tax credits were extended for ten years and are slated to expire in 2034. While its previous iteration offered a lifetime credit of just $500, under the IRA, 25C now affords residential taxpayers an annual $1,200 credit for a constellation of home energy efficiency improvements (e.g. insulation, doors, windows) as well as home energy audits. In addition, 25D now allows residential taxpayers to claim 30 percent of the project cost for geothermal heat pump installation, and that credit is available for the next ten years.
Two other building tax credits that were expanded under the IRA include the New Energy Efficient Home Credit (45L) and the Energy Efficient Commercial Buildings Deduction (179D). All of these credit enhancements came into force in January 2023. More information on these federal incentives, and all other relevant federal programs, is available on the Buildings Hub Federal Policy dashboard.
Federal agencies lead by example with clean buildings standards
The White House, Department of Energy, and Department of Defense (DOD) all released clean building plans or standards that went into effect this year. In December 2022, the Biden-Harris Administration announced a Federal Building Performance Standard with a goal of cutting energy use by 30 percent in all federally owned buildings by 2030. And in April 2023, DOE’s building energy code requirements for federal buildings went into effect, requiring that all new construction and retrofits comply with the IECC 2021 and ASHRAE Standard 90.1 energy codes. Also in April, DOD released its plan to reduce emissions at military installations, prioritizing onsite decarbonization measures such as onsite clean energy generation, heat pump installation, low-carbon building materials, and energy efficiency improvements.
These actions follow on the heels of President Biden’s Executive Order 14057, signed in December 2021, to achieve net-zero emissions in federal buildings by 2045, including halving emissions by 2032.
Nationwide, states put out heat pump and clean energy incentives
State heat pump and clean buildings incentives took off across the country, many of which may be stackable with utility and federal programs. To name a few, Colorado’s Energy Office announced a $10,000 rebate for households impacted by the Marshall Fire to install ground source or cold- climate air source heat pumps. Rhode Island’s Office of Energy Resources launched the Clean Heat Rhode Island program in September, making $25 million available for heat pump incentives to support residential, commercial, and income-eligible applicants. In July, Oregon launched a more than $3 million heat pump incentive program specifically targeted at residential renters and those living in mobile homes. Lastly, Pennsylvania opened bids under its CHECK program, which offers $8,500 rebates to support the purchase and installation of combustion-free and induction cooking equipment in commercial kitchens. Check out these programs and all others state incentives on the Buildings Hub Spotlight States Dashboard.
VT launches second-in-the-nation clean heat standard
In May, Vermont enacted the Affordable Heat Act, establishing the nation’s second clean heat standard as a vehicle to decarbonize its portfolio of fossil heating fuels. Its passage kicks off a two-year project for Vermont’s Public Utility Commission to design a program that will require entities making or importing fossil heating fuels to reduce their carbon footprint. This standard is set to reduce emissions and energy consumption for space heating and will set a strong example for other states to follow.