Viktor MusilEffective July 1, a decision by the California Public Utilities Commission (CPUC) mandates an end to utility subsidies for new buildings utilizing on-site natural gas combustion. This decision aligns with California’s ambitious climate goals, aiming for carbon neutrality by 2045 and a 40% reduction in greenhouse gas emissions by 2030. The move, lauded by environmental groups and Southern California Edison Co., intends to incentivize all-electric construction and discourage reliance on fossil fuels.
While supported by various stakeholders, opposition from utility worker coalitions and small business advocates raises concerns over employment impacts and infrastructure reliability. CPUC, however, assures measures to aid small businesses in electrification transition and mitigate risks to vulnerable communities.
To facilitate the transition, CPUC plans gradual implementation, allowing builders time to adapt. Additionally, utilities will be required to report energy line extension expenditures, aiding in monitoring cost savings resulting from subsidy elimination. By 2025, new gas-based construction projects will be accountable for actual electrical line extension costs, fostering a shift towards sustainable building practices.
California’s Path to Carbon Neutrality: CPUC’s Decision on Fossil Fuel Subsidies for All-Electric Construction
California wants to become carbon neutral by 2045 and reduce greenhouse gas emissions by 40 % below 1990 levels by 2030.
According to Beckie Menten, top regulatory and policy specialist at the Building Decarbonization Coalition, a national organization that aims to assist communities in eliminating fossil fuels in buildings, investor-owned utilities in California have generally covered at least some of the cost of expanding gas pipelines or energy lines to new construction.
However, this subsidy model undermines California’s efforts to promote all-electric new construction by enjoyable contractors who build more gas lines, as determined by the CPUC on December 14.
Solid support for CPUC’s decision to stop providing subsidies for the expansion of electronic lines for fresh gas-powered buildings came from the Sierra Club, California Environmental Justice Alliance, and Natural Resources Defense Council, as well as the Southern California Edison Co. utility.
The California Building Industry Association also included two other utilities, Pacific Gas and Electric Co. and San Diego Gas And Electric Company, which typically supported the choice but suggested some changes. For instance, PG and E proposed eliminating subsidies for the expansion of electronic lines for all new construction, regardless of whether it uses all-electric or mingled fuel. But, CPUC argued that maintaining the subsidies is crucial to advancing all-electric fresh construction.
Navigating California’s Energy Transition: CPUC’s Policy Shift on Fossil Fuel Subsidies and All-Electric Construction
The Coalition of California Utility Employees opposed the decision, claiming that the state must address employment effects on gas workers and that safety and reliability issues may arise from fewer customers paying for gas infrastructure. Small Business Utility Advocates disagreed with CPUC’s choice as well, citing small business owners ‘ financial concerns.
By implementing the subsidy elimination this summer, CPUC said in its news release that it was giving the builder community enough time to get ready for the change. Additionally, it stated in its decision that it is dedicated to assisting small businesses in overcoming any possible electrification barriers. CPUC added in the decision that the elimination of subsidies wo n’t endanger low-income and affordable housing; rather, it might shield vulnerable communities from future gas rate increases and possibly lower rents because all-electric new construction is less expensive than mixed-fuel construction.
Beginning on May 1, the decision will also mandate that California’s three largest electric investor-owned utilities report their annual energy line extension expenditures for all new construction. The reporting requirement aims to assist CPUC in tracking the cost savings brought on by the elimination of subsidies for gas-powered buildings ‘ energy line expansion.
Additionally, beginning at the beginning of 2025, all new gas-based construction projects must cover the true costs of an electrical line extension in addition to the original estimated costs.
Summary: CPUC Ends Fossil Fuel Subsidies for On-Site Gas Burning in New Construction
- According to a Dec. 14 decision by the California Public Utilities Commission, new buildings that burn fossil fuels on-site will no longer be eligible to receive subsidies from utilities for electronic line extensions starting on July 1.
- According to a statement from CPUC Commissioner Darcie L. Houck,” Ending direct incentives for the expansion of the normal gas system helps us correlate state climate goals with our subsidies and economic incentives.” She added that the move will even save ratepayers money.
- California has renounced all utility subsidies for innovative construction that expands the gas system as a result of this decision The CPUC had made California the first state to do away with these subsidies for the construction of new buildings that burn fossil fuels on-site healthy gas lines in 2022.
