New York City Council passed a resolution banning the use of heating and hot water heaters as well as boilers, stoves, and heat pumps that are powered by fossil fuels. This ban applies to new buildings with less than seven floors built after 2024 and buildings above seven stories from 2027. This ban will reduce city emissions of greenhouse gasses that contribute to rising global temperatures. 70% of city’s greenhouse gases emissions are caused by buildings, primarily carbon dioxide. New York City will follow the lead of cities such as San Francisco, Oakland and Berkeley (in California), or Ithaca upstate New York. As of July 19, 19 Republican-controlled states had passed laws banning municipal electrification mandates.
Home Innovation Research Labs research associates with homebuilder lobbying groups and other construction groups calculated that full electrification would result in higher construction costs than a similar new house built using natural gas. These additional costs could be between $3,988 to $11,196 in Houston, $3,832 or $14,495 for a mixed climate (Baltimore), $10,866 to $15,100 for a cold climate (Denver, Minneapolis), and $10,866 to $15,100 for a house in Denver and 15,100 in the winter. According to the researchers, retrofitting an existing house using natural gas heating and hot water for cooking and heating would cost between $24,282 – $28,491. Replacing worn-out gas-fired appliances will cost you between $9,767 to $10,359.
Further, the researchers estimate that an increase in installation cost depending on what mix of appliances was installed would pay off in heat savings between 27 to 64 years in Houston. Most equipment is not durable. In cold cities such as Minneapolis, the installation cost would not be recouped in energy savings. A July 2021 study is also available. Environmental Research LettersAn electric heat pump could reduce energy consumption by 32 percent of the single-family houses in America, according to a study.
A similar industry group, The Consumer Energy Alliance estimated earlier this year that the cost of retrofitting homes currently heating with natural gas, water hot and for cooking, would be $258 billion.
On the other hand, the Rocky Mountain Institute (RMI), an energy think tank with the stated goal of transforming the global energy system to zero-carbon emissions, finds that electrifying new single family homes is actually cheaper than one that uses a mix of gas and electricity. RMI estimates that for New York City the cost to install natural gas in new buildings is $18,700 compared with $21,600 for full electrification. A new house built with gas appliances will have an annual cost of $4,310, while an all-electric home would cost $3,880. The natural gas ban advocates argue that residential electrification is more expensive than natural gas consumption.
American Gas Association’s (AGA) report that the average cost for residential energy related costs would rise by approximately 38 to 46 percent if the utility bills and electric appliance costs are amortized. AGA also mentions data showing how burning natural gas to generate electricity (40% of U.S. electricity currently is produced this way) is far more inefficient than using it to power residential appliances.
“When used directly for cooking, clothes drying and home and water heating, natural gas has a source-to-site efficiency of 92% — meaning nearly all of the energy contained in the original gas is utilized in appliances. The efficiency of natural gas-fired power stations that generate electricity to these appliances is 37%,” stated Dave Schryver (CEO American Public Gas Association) in an op-ed. Proponents of full residential electrification will, of course, counter that this is not relevant in the long run since future electric power generation will increasingly consist of solar, wind, and other zero–carbon emissions sources.
The fact that electricity and natural gases are consumed by residential customers is another problem. Natural gas will soon be banned. This means that customers who use electricity at peak hours, such as during the summer and winter months, will demand more. It also means that more money must be spent to improve the electrical power grid. However, as homeowners switch to electricity more people will still be burning natural gas. This means that the rates for maintaining the distribution system’s residual capacity will rise.
According to Lucas Davis of the University of California Berkeley, “Electrification mandates can be fairly easily quantified using carbon content of different fuels but the costs remain poorly understood.” He wrote this January 2021 National Bureau of Economic Research study. Davis creates an econometric modeling to attempt to quantify those costs. Davis’s model shows that residents of warmer states are only $500 more likely to be affected by an electrification mandate. Residents of states such as New York, Massachusetts and Michigan, however, would be $3,000 less fortunate.
Building electrification would not be required to reduce greenhouse gas emissions if it was already more affordable than fossil fuel options for heating, water and cooking. Davis points out, “The percentage of U.S. houses heated by electricity has increased steadily, from 1% in 1950 to 8% 1970 to 26% 1990 to 39% 2018”. Why? Lucas explains that residential electricity prices have fallen since 1950, in comparison to the rising prices of natural gas and heating oils. The adoption of electric heating in homes has taken place quickly and without any mandates.