By nearly all accounts and measures, California is the most climate-forward state. California’s climate stances and policies set the tone for the rest of the country and, occasionally, for industry. For example, in 2018 California and a coalition of states sued the Trump administration over weakened fuel economy standards. Then in 2022, California banned the sale of new gas cars by 2035. Yet despite this longstanding climate-friendly policy streak, California’s residential buildings are among the least electrified in the nation.
While a quarter of residential buildings across the country are all-electric, only eight percent are all-electric in California, the eighth lowest rate nationwide. Heat pump deployment nationwide in residential buildings is 14 percent; in California, it sits at just above four percent. California has the lowest rate of homes with electric-only cooktops at 28 percent. And the Golden State is also starkly more reliant on piped gas than other states; 64 percent of residential buildings are primarily heated via natural gas, compared to 51 percent nationwide. These figures are surfaced on Buildings Hub’s Residential Building Characteristics dashboard.
What is impeding California’s electrification progress? One part of the answer lies in the economics of building electrification; the other may be due to California’s historical energy policies.
According to Building Hub’s Market Factors dashboard, as of November 2023, California has the third highest electricity pricing in the country. The national average for residential electricity is $0.17/kWh, while in California it averages $0.28/kWh. A 2021 study by UC Berkeley’s Energy Institute even noted that low-income Californian households supported by the California Alternate Rates for Energy (CARE) program still had higher electricity bills than the average American household. Gas furnaces remain the preeminent heating technology used in Californian homes at 62 percent of households, and space heating using natural gas is cheaper per unit of heating than using electricity. The increased efficiency that a heat pump brings will only affect a household’s energy bill so much if electricity is relatively expensive.
Optimistically, the Market Factors dashboard highlights that while the amount of natural gas customers in the residential buildings sector increased by almost 33 percent in California between 1990 and 2022, the amount of natural gas delivered to residential buildings decreased by about 16 percent. Although gas dependence remains, the efficiency of natural gas appliances is also increasing.
For decades, California promoted the use of natural gas as an energy efficiency measure because the grid was mainly powered by natural gas. The comparative efficiency of burning natural gas directly for heating versus burning natural gas at a facility meant California incentivized the uptake of natural gas in households. Specifically, energy is lost in generation and transmission before it can be converted to heat at a home via electricity, making on-site generation more efficient. As a result, most homes built in California have natural gas hookups. The incentives offered or supported by the California Energy Commission (CEC), the California Public Utilities Commission (CPUC), and the California Air Resources Board (CARB) further drove the cost of natural gas appliances down.
The past few years have seen several policies pushing Californian consumers and households away from natural gas. In August 2021, CEC adopted the 2022 Building Energy Efficiency Standards, which apply to new construction and renovated buildings, with a focus on encouraging the uptake of heat pumps and cementing electric-ready requirements. This year, the CEC will begin work on its 2025 set of standards. September 2022 saw the approval of a CARB plan to halt the sale of new natural gas space and water heating appliances by 2030. And in April 2023, the CPUC announced that beginning in 2024, ratepayer-funded energy efficiency measures would not be offered for residential or commercial new construction projects if they involve the burning of natural gas, unless they are cost-effective. These policies and more are surfaced on Buildings Hub’s Spotlight States dashboard.
One of the biggest drivers of building electrification is in new housing. In California, the Building Initiative for Low-Emissions Development Program is designed to integrate all-electric technologies into the designs for new, low-income multifamily residential construction. Similarly, the California Electric Homes Program incentivizes new construction of all-electric buildings. This is a difficult pathway for California to take, however; only 5 percent of California’s residential building stock was constructed after 2010.
As a result, there is a bit of inertia for building electrification that California has yet to overcome. But policies from the 2020s are encouraging, and the state appears to be shifting gears toward renewable energy and proposing state incentives that favor electric appliances like heat pumps. Notably, 38 percent of homes in California have either heating or cooling equipment that is 15 years or older. Designing incentive programs so that households can replace their gas systems with electric ones may allow California to turn over a new, greener leaf.
