Electric Heating Belongs in New York Climate Fight

By 2030, two thirds of New York’s households could be powered by clean electric heating and cooling systems, according to a new report released today. Converting heating and cooling equipment in New York buildings to more efficient models powered by low-emissions electricity is an important step toward meeting the state’s energy efficiency and climate goals.

Far too much of New York’s heating and cooling comes from burning gas and oil, which stresses the state’s aging pipeline infrastructure, increases greenhouse gas (GHG) emissions, and releases harmful pollutants that contribute to asthma and other health conditions. Fortunately, efficient electric heating and cooling technologies that can reduce these problems are making rapid strides, and—with the right policy support—could soon be widely adopted to replace gas and oil boilers, furnaces, and inefficient air conditioning.

The report, commissioned by NRDC from VEIC, a nonprofit sustainable energy consulting organization, models an ambitious yet achievable scenario in which clean heating and cooling technologies could be installed in over 5 million buildings by 2030. VEIC’s analysis also confirms that the climate advantages of heat pumps will only become greater as the technology matures and the grid runs increasingly on cleaner energy sources like wind and solar.

To realize these benefits, the state must adopt a comprehensive clean heating strategy, with the New York State Energy Research and Development Authority (NYSERDA) coordinating utility programs to advance electric heat pumps.  

Heat pump adoption can help reach climate goals

To help get to New York’s goal of cutting economywide greenhouse gas emissions 40 percent by 2030, Governor Cuomo set an ambitious energy-savings target of 185 trillion British thermal units (TBtus) by 2025. The plan calls for energy efficiency to deliver nearly one-third of the state’s overall needed emissions reductions by 2030. The VEIC analysis shows, heat pump installations could achieve at least 31 TBtu of energy savings in that time, or 17 percent of the target.

That’s too big to ignore—especially when you consider additional benefits, such as helping low- to moderate-income households that rely on expensive and unhealthy heating oil to convert to cleaner, less expensive heat pump systems.

Heat pump electrification replaces heating systems that use natural gas, propane, or fuel oil with either air-source pumps or ground-source pumps. Air-source heat pumps (including increasingly popular “ductless minisplits”) work by moving heat to and from the outside air. Ground-source (aka “geothermal”) heat pumps work in a similar manner, except they move heat to and from the ground or an outdoor water source. (More on how heat pumps work here.)

As the electric transmission system moves more pollution-free electricity to our homes and businesses, the climate advantage of heat pumps compared to burning fuel in a gas or oil system will only grow. For this reason, NRDC promotes "beneficial" or “strategic” electrification: electrifying technologies that often run on fossil fuels, such as heating systems or vehicles, especially in areas with strong renewable energy goals. Ultimately, heat pumps powered by a largely renewable energy grid will provide near-zero carbon heat and hot water in buildings, and play a central role in efforts to meet economywide climate goals.

Examples of heat pump incentive programs include rebates for reducing installation costs to residential customers, incentives for accelerating equipment sales, and training installers. While all have a role to play, previous VEIC research underscores the critical nature of customer cost savings in increasing electric heat pump adoption—the most successful programs offered more generous incentives to reduce the equipment cost, which is an incentive of at least $500 per unit for ductless mini-splits.

A coordinated, holistic approach is needed

VEIC’s report includes a number of recommendations for New York policy reforms to advance heat pump adoption, including:

• Adopt an aggressive, yet achievable installation target;
• Evaluate approaches to advance heat pumps based on each approach’s contribution to energy savings across all fuels (thereby capturing savings that occur from outside the electric sector);
• Coordinate between state and utility programs, drawing upon best practices across the industry to maximize adoption.

Most importantly, New York should establish a statewide target of 30 TBtu of energy savings from heat pump installations by 2025 that counts savings achieved across all fuels (including reductions in total energy used from electricity, gas, and oil). This ambitious yet achievable target will send a clear signal to the market about the state’s commitment to beneficial electrification. Each utility should be held responsible for a portion of this goal, and NYSERDA should help coordinate and monitor progress statewide.

As the report notes, several existing programs encourage heat pump adoption in New York—such as customer incentives offered by utilities and community-based partnerships focusing on workforce training and increased participation of lower-income households. These programs must be expanded and carefully coordinated to achieve the 30 TBtu target. It will necessitate clearly communicated, cost-saving options for customers (and suggests more study is needed on policies to make heat pump options as affordable as possible).

Utilities are well-positioned to lead in engaging with customers and providing customer incentives. NYSERDA’s focus on market development makes it a natural fit to play a central coordination role: administering a statewide upstream initiative that focuses on market interventions at the wholesale level before the technology is ultimately sold to homes and businesses, standardizing incentives for distributors and requirements for contractors, ensuring consistent equipment standards, engaging with the supply chain on marketing strategies, and collecting data. Additionally, the New York Green Bank is an important partner for supporting customer financing options.

With these steps, heat pump adoption could account for a significant percentage of the state’s efficiency target. However, electrification is a means to cost-effective decarbonization, not an end. It must be closely integrated with broader efficiency efforts, presented as a suite of policies to use electricity more strategically in order to maximize its potential benefits for the environment, customers, and the grid.

With the potential for heating electrification to contribute nearly 20 percent of New York’s energy efficiency goal, NYSERDA and utility companies should build on an already-strong foundation, and work to make efficient heating and cooling strategies part of a truly integrated climate solution. This is an opportunity too promising to pass up.