This article was originally published on Common Edge.
The urgency to reduce greenhouse gas emissions has never been greater, and getting there is going to require bold steps for buildings, infrastructure, and communities. Incremental reductions are not enough; we need to focus on full decarbonization, which means removing carbon emissions caused by our built environment.
These big changes in the way energy is generated and used will raise important questions about who benefits and who pays. Technology-focused incentive programs can wind up leaving our most vulnerable communities behind, exacerbating a legacy of underinvestment and health disparities, while also failing to reach the essential goals of a complete energy transition. Instead, we need holistic solutions that put disadvantaged communities first and transition buildings that would otherwise be left out, leading to bottom-up market transformation that benefits everyone.
In places like California, the Pacific Northwest, New York, and New England, state emissions reduction targets are leading to decarbonization of the electric grid.
The share of energy generated from renewables is increasing, while fossil fuels are being phased out. As grid-supplied electricity gets cleaner, it makes more sense to look for ways to eliminate combustion of natural gas in buildings as well. This process of electrification involves replacing fossil fuel burning equipment used in buildings for space heating, water heating, and cooking (i.e., boilers and furnaces, water heaters, and stoves and ovens) with highly efficient electric equivalents (such as electric heat pumps). There are co-benefits to removing natural gas from buildings—natural gas combustion has harmful air quality and health impacts. Electrification must be combined with energy efficiency to reduce demand, energy storage to make best use of intermittent renewable resources like solar, and demand management to limit peak loads and curtail the need for increased generation capacity, even as overall demand for electricity grows (through vehicle electrification). Passive strategies such as improved envelope and natural ventilation that help limit energy demand can also help keep buildings comfortable in the face of a more extreme climate.
Energy efficiency is essential to electrification because renewable energy supplies are both limited and more expensive than gas. Accordingly, decarbonization tends to rely on heat pumps for space heating and water heating, which use one-quarter to one-third as much electricity as older electric boilers and water heaters. A heat pump works like a refrigerator, except that instead of moving heat from inside the refrigerator compartment to the coils on the back of the fridge, it moves heat from outside your building into the air or water tank inside. This process can be reversed, so that the same units can provide both heating and cooling. There’s a lot of research and development going into heat pump technology to make it more versatile (in cold climates) and less costly, and to find zero-emission refrigerant chemicals that are a key part of their makeup. (Ironically, many heat pumps use refrigerant working fluids that, if leaked or released, have hundreds of times the greenhouse gas impact of CO2.) Because heat pumps are generally more expensive than gas-burning or electric-resistance equipment, we must look beyond simple one-to-one equipment replacements and try to find cost-effective efficiency and heat recovery opportunities that can make a decarbonization project financially beneficial.
Decarbonization is being driven by policy at the local and state levels. In New York City, for instance, Local Law 97 will start to assess fines on owners of larger buildings for their direct carbon emissions. Building owners can avoid those penalties if they convert their gas-burning boilers to electric heat pumps before the phase-in date of the fines. In California, many cities have already banned the installation of new gas-burning equipment in new construction and have started to plan the replacement of municipal gas-burning equipment with electric equipment. State estimates also indicate that 70% of buildings must be fully electric by 2045 to meet state emissions reduction targets, which will require a focus on the electrification of existing buildings, in addition to no new gas connection. And while federal laws are stymied by partisan politicization of climate solutions, recent Biden administration executive orders have mandated the decarbonization of the thousands of federal buildings across the country. Large private property owners like universities and real estate investment trusts are also looking to decarbonize their holdings, generally as part of corporate social responsibility (CSR) initiatives that also are linked to investment strategies prioritizing positive environmental, social, and governance (ESG) outcomes.
In this context, for the owner of an individual building or a portfolio of buildings, decarbonization appears primarily as a technical and financial challenge. They need to find practical and cost-effective ways to eliminate carbon emissions. This usually takes the form of a prioritization exercise that starts with an inventory of combustion equipment (and refrigerant chemicals), looks for alternatives, and compares the capital cost, operation and maintenance cost, savings from efficiency, and avoided tax penalties to look for the lowest net present cost. Some approaches—such as the Strategic Decarbonization Assessment tool developed by Arup for the City of San Francisco and the NYSERDA Empire building Challenge—add factors like the remaining useful life of existing equipment and planned financial hold period of commercial buildings to optimize not only the energy costs but the total financial performance of the project. Other building owners seek to coordinate decarbonization projects with regularly scheduled building equipment replacement to minimize downtime or disruption.
Policy approaches are needed that prevent low-income communities of color, which already bear the greatest burdens of climate impacts, from being left out of the benefits of decarbonization.
For communities, decarbonization creates a different set of challenges. On the positive side, replacing gas with electricity is a significant public health improvement. Natural gas combustion produces little visible pollution, unlike the smog of the mid-20th century, but the invisible combustion products of gases (nitrogen and sulfur oxides) and particulates cause thousands of premature deaths and millions of cases of asthma and respiratory distress every year. Unlike the impact of greenhouse gasses, which accumulates at the global scale, these impacts are local, and—like every other source of pollution—fall more heavily on poor communities of color. Policy approaches are needed that prevent low-income communities of color, which already bear the greatest burdens of climate impacts, from being left out of the benefits of decarbonization.
The challenge is in how community decarbonization will be accomplished, and who will pay for it. To decarbonize a house, not only do you need to pay for some or all of a new water heater, new furnace, and new cooking appliances, but you’ll probably have to upgrade the electrical panel as well to accommodate all these new loads (though you should check with a tool like WattDiet to see if you could squeeze it in without a panel upgrade). As we at Arup found while working with the Natural Resources Defense Council on a decarbonization approach to affordable housing in Los Angeles, older homes (where many low-income families live) often have deferred maintenance and other issues that compound the work required for decarbonization. Once you open a wall to wire a new appliance, you might find mold, or decayed studs, or lead pipes, leading to unexpectedly escalating costs that can quickly outstrip limited funds.
We also found that while heat pumps are far more efficient than gas-burning appliances, in rental apartments in Los Angeles the energy savings may not be big enough to pay for the full cost of retrofits, especially if panel upgrades are needed. That means that while energy bills might go down, the reduction won’t be enough to offset first costs passed on to tenants in the form of higher rent. In communities that are already facing housing shortages and where rent and utility burdens are at crisis level for many households following the pandemic, this increase could lead to displacement.
But not decarbonizing is also a challenge at the community scale. As a neighborhood decarbonizes, the number of gas users declines, but the cost of maintaining the entire gas system does not. It lands on a shrinking user base that faces rapidly rising gas prices. If left purely to market forces and incentive programs, those without the funds to pay for the switchover will be stuck on an upward spiral of gas prices, while their wealthier neighbors claim rebates for the early adoption of decarbonization technologies. To avoid perpetuating these deep inequities, and to increase community resilience, decarbonization must be looked at from a systems perspective. Decarbonization should be planned in inclusive geographic areas so that small groups of users are not left behind. In addition, for families already struggling to pay for the basics, decarbonization must be accompanied with a flexible and supportive funding source to make sure that household projects can succeed even if they grow in scope, and this support must be a central part of a community decarbonization plan.
Above all, because affordable housing is fundamental to the resilience of any community, maintaining housing affordability while decarbonizing it and keeping it overall fit for purpose is essential. However, the affordable-housing sector is one of the most challenging to address from a policy perspective: its finance is exceptionally complex, the populations it serves are highly vulnerable, and multifamily housing is often left out of energy programs, due to conflicting incentives between owners and tenants. Traditional approaches to decarbonization policy and implementation tend to focus on market-rate buildings and either ignore or exclude affordable housing, perpetuating cycles of discrimination and disinvestment. By turning this pattern around and developing solutions that provide financial incentives for affordable housing, linked to strong renter protections, governments can drive the benefits of decarbonization into communities while mitigating unintended consequences. And by supporting transition of buildings and communities that have been chronically neglected, the demand for emerging technologies can be boosted to support bottom-up market transformation.
Decarbonization is essential to addressing the climate crisis, but it isn’t enough. Taking a systems-based approach that links decarbonization, equity, and resilience, we can leverage investment to reduce emissions while keeping communities safer and healthier. We must address the climate crisis alongside and together with addressing the crises of inequity and injustice that are just as urgent and, if anything, more apparent.
Government policy is essential to provide leadership and help balance the playing field by getting all building owners to understand the real cost and impact of burning fossil fuels. The ESG investing movement is pushing real estate owners to develop approaches to achieve rapid decarbonization, but while owners and investors are inherently part of our communities, they do not always understand the interconnections they have with other kinds of community members. Designing solutions in partnership with affordable housing stakeholders is fundamental to not only reducing emissions, but also to keeping people safe, healthy, and housed as we face a more extreme climate. Decarbonization is essential to reduce the threat of global warming, but we must also make sure that it makes our cities more resilient, inclusive, and healthier for all.
