New York adopted a suite of legislation that redefined the goals of its building energy code and allowed utilities to operate new types of clean heat infrastructure.

Gov. Kathy Hochul, a Democrat, signed the three bills into law July 5, setting in motion building code reforms and new regulatory frameworks that could have substantial ramifications for the state's natural gas distributors in particular. While changes to the energy code process could lead to restrictions on fossil fuel use in buildings, the new authority to operate thermal energy networks gives gas utilities a chance to use their skill in maintaining underground infrastructure.

The energy code changes reflected an emerging strategy in progressive cities and states to incorporate climate change mitigation into building codes, which have historically focused on improving energy efficiency.

New York redefines energy policy in construction

The Advanced Building Codes, Appliance and Equipment Efficiency Standards Act of 2022 revised state energy policy, which currently encourages energy conservation in constructing and rehabilitating buildings. The state will also use the New York State Energy Conservation Construction Code to promote clean energy and New York's climate agenda, including reducing emissions of greenhouse gases.

The law did not preview code changes, but it could lay the groundwork for building electrification mandates. The bill tied future code updates to the Climate Leadership and Community Protection Act, or CLCPA, which established New York's legally mandated climate goals. A council charged with developing recommendations to implement the CLCPA has advised phasing out fossil fuel heating in new and existing buildings through energy code updates.

The law also overhauled the state's method for determining cost-effectiveness in future code updates. The State Fire Prevention and Building Code Council determines whether the cost of materials and installation necessary to meet standards are equal to or less than the anticipated value of energy savings over a 10-year period.

Going forward, the code council will assess whether a building's life cycle costs can be recovered through energy savings over its useful life. Members will also have to consider the secondary and societal impacts of code updates, such as greenhouse gas reductions. The New York State Energy Research and Development Authority, or NYSERDA, will establish life cycle cost-analysis methodology and define secondary and societal effects following a public comment period.

To ensure code updates dovetail with the CLCPA, the law allowed Hochul to designate the NYSERDA president and Department of Environmental Conservation commissioner as members of the code council.

The law also gave NYSERDA the authority to adopt efficiency standards for appliances and equipment across 50 product classes. The process of setting state-specific energy efficiency performance standards has been in progress since at least 2005, when New York passed legislation to set standards for 14 product categories.

Under the law, efficiency standards can define either performance metrics or prescriptive design requirements that reduce energy and water consumption and greenhouse gas emissions. The law also set out the process for NYSERDA to adopt standards for additional product categories.

State to set rules for geothermal districts

The Utility Thermal Energy Network and Jobs Act requires the New York State Public Service Commission to establish a regulatory framework for investor-owned utilities to own, operate and manage thermal energy networks. The infrastructure class includes district geothermal projects and other community-scale thermal systems that use waste heat from water, wastewater and other sources.

The law will allow utilities to operate shared loops that provide building heating and cooling, creating a new opportunity for gas distributors as the state considers strategically retiring parts of the gas grid. The commission will direct utilities to pilot projects in their service territories, building on NYSERDA's work funding feasibility and design studies and project construction incentives.

The law also represented an olive branch for unionized pipefitters, a frequent gas industry ally in debates over building electrification. John Murphy, international representative of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, said the bill "will provide a just transition for thousands of middle-class New Yorkers."

"This will unlock tremendous job opportunities," Hochul said during a July 5 press conference. "We're reducing harmful emissions from buildings. It also replaces fossil fuel underground pipe systems for new clean energy systems."

The final piece of legislation, Assembly Bill 9598/Senate Bill 8648, required developers to pay prevailing wages for renewable energy projects of 1 MW or larger that procure renewable energy credits from a public entity. Hochul said the law will support the state's goal of building 10 GW of distributed solar resources by 2030, which will support 6,000 new jobs, according to the administration's forecast.

The legislation added to several other energy and climate bills that Hochul has signed this year.

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