The movement to electrify U.S. buildings gathered significant momentum with the passage of a building gas ban in the nation's most populous city.

The New York City Council on Dec. 15 voted to prohibit the use of natural gas in most new buildings, joining dozens of towns and cities along the East and West coasts that have embraced the climate policy since 2019. With the vote, lawmakers in the key battleground city also narrowed the prospects for the gas industry's chief alternative to building electrification: displacing natural gas with low-carbon fuels.

The building gas ban stands to help the city fulfill its statutory mandate to reduce greenhouse gas emissions by 80% from 2005 levels by 2050. New York City's more than 1 million buildings generate roughly 70% of the city's greenhouse gas emissions, according to the city's Office of Sustainability. Combusting fossil fuels for water and space heating accounts for roughly 42% of those emissions.

"If we are serious about meeting our emission reduction goals then we need an immediate shift," Council Member Alicka Ampry-Samuel, the bill's prime sponsor, said in a press release. "The Gas Ban Bill literally provides a clear pathway to codifying and reaching our goals."

The passage of the bill, Introduction No. 2317, marked an 11th-hour victory for Mayor Bill de Blasio, a two-term progressive who leaves office on Jan. 1, 2022. De Blasio pledged to end oil and gas use in buildings nearly two years ago, but city councilors did not introduce legislation to that effect until May 2021. The bill ultimately attracted 29 sponsors and passed on a 40-7 vote with 1 abstention.

Law prioritizes electrification over low-carbon fuels

The legislation prohibits combustion of any fuel that emits 25 kilograms or more of carbon dioxide per million Btu of energy used. The restriction is limited to new buildings. It would bar the use of natural gas, which emits roughly 53 kg of CO2/million Btu, according to the U.S. Energy Information Administration.

An earlier version of the bill set a limit of 50 kg of CO2/million Btu, but climate activists said the threshold would create a loophole. By blending low-carbon fuels such as renewable natural gas, or RNG, and hydrogen into local distribution systems, gas utilities could drive down the carbon intensity of the gas stream to a level that would allow fossil fuel combustion in new buildings, they warned.

A consensus has formed among many environmental groups that RNG and hydrogen should be reserved for sectors where direct electrification is not viable. The gas industry has argued that decarbonizing the gas system presents an affordable way to maintain reliability and resilience in large municipal energy systems.

In prepared testimony on the bill, multiutility Consolidated Edison Co. of New York Inc. said it supported building code changes that reduce fossil fuel use in buildings. However, it implored lawmakers to pass legislation that would allow utilities to deploy low-carbon fuels to decarbonize the gas grid in support of orderly, widespread electrification.

National Grid PLC, which distributes gas to 2 million New Yorkers, opposed the bill, arguing instead for extensive dual-fuel heating and a portfolio of electrification, low-carbon gases, and geothermal resources. "We applaud the intent of this bill to reduce greenhouse gas emissions," National Grid said in prepared testimony. "However, the proposed legislation takes viable options to decarbonize off the table at a time when we need more paths to net-zero, and not fewer."

National Grid and ConEd have already begun electrifying some heating load, as utilities seek to manage demand amid supply constraints and state regulators seek to reduce future gas use through rate cases.

A number of business and real estate groups — including the influential Real Estate Board of New York — joined several unions in pushing for longer implementation periods and other changes. Critics noted that a climate panel is already developing statewide restrictions on gas use and New York City remains reliant on a grid supplied by fossil fuel-fired power generation.

Greening of grid could drive beneficial electrification

A report by the city council's Environmental Protection Committee staff acknowledged that less than 30% of electric power on the city's grid was generated by renewable resources in 2020. However, the report cited research from sustainability research organization RMI, which found converting to an electric-powered air-source heat pump from combustion equipment would significantly reduce emissions.

Staff also noted that New York's Climate Leadership and Community Protection Act requires the state to achieve zero-emissions electric power generation by 2040. Several offshore wind farms and two new transmission projects are slated to increase the flow of renewable power into New York City, staff said.

New analysis by RMI estimated the gas ban would avoid 2.1 million tons of carbon emissions through 2040 and save customers several hundred million dollars in new connection costs over the same period.

The law would begin applying to developers of buildings with fewer than seven stories who submit construction approval documents after Dec. 31, 2023. Developers of larger buildings would have until July 1, 2027, before the restrictions phase in. The law also provides a grace period to developments where half of the units are set aside for affordable housing creation or preservation.

Ahead of the first wave of implementation in 2024, the legislation requires the Office of Long-Term Planning and Sustainability to issue reports on the feasibility and cost of using heat pump technology in city buildings, as well as the reliability and resiliency of the city's electric grid and inbound transmission lines.

Like other gas bans, the New York City ordinance includes several exceptions for building spaces where occupants need to combust gas for manufacturing or to operate a commercial kitchen, hospital, laboratory or laundromat. It also would not apply to power generation plants or food and sewage waste treatment facilities, and includes a carveout for backup power generation.

One key uncertainty among stakeholders was how the law will apply to renovations. An initial bill summary stated the law would apply to "any building that has undergone a major renovation." Stakeholders on both sides of the debate sought clarification during a Nov. 17 hearing. Ahead of the vote, stakeholders generally understood the law to apply only to extensive gut renovations, which typically must comply with new building requirements.

Currently, the city is addressing existing building decarbonization through 2019's Local Law 97, which required many existing buildings to reduce their emissions, though it did not restrict gas use.