Bates White reports on heat policy efficacy in the US Northeast
Bates White was engaged to evaluate the value and efficacy of clean heat policies in the northeast United States in the context of decarbonization goals established by states in the region.
The team concluded that policies allowing for and promoting the decarbonization of fuels currently used to heat homes and businesses can offer a cost-effective means to meet interim greenhouse gas (GHG) reduction goals while electrification advances. Promoting emissions reductions from existing fossil-fuel based heating systems can accelerate meeting GHG goals while utilizing existing infrastructure, which limits the cost of achieving policy objectives.
Below are key findings.
- Residential and commercial space heating is a significant source of GHG emissions from the combustion of fossil fuels. Because carbon dioxide (CO2) and other GHGs are so persistent in the atmosphere once they have been emitted, there is critical value in reducing such emission earlier rather than later.
- Electrification of heating, through a shift to electric heat pumps, is one strategy to meet emissions reduction goals, but the effectiveness depends significantly on the scale and timing of decarbonizing the generation of electricity, which will require large additions of renewable generation and storage resources to reduce carbon emissions from electricity generation.
- Exclusive reliance on electrification, combined with electric grid decarbonization, presents significant challenges for a rapid transition. Large-scale electrification of heating—e.g., of 60% of households—would entail more than a 14-fold increase in the number of installed heat pumps, totaling more than 11 million units in the northeast United States.
- Large-scale electrification in the Northeast will also require significant additional infrastructure to generate and deliver low-carbon electric power generation capacity, and likely significant upgrades to feeders, substations, and the transmission system. Incremental costs of new generation capacity needed to meet demand from electrification of heating will require investment on the order of $40 billion in New England alone and additional costs for required upgrades to the transmission and distribution systems in excess of $10 billion. The challenges of such large-scale modifications to the electric system may constrain the ability of electrification to achieve emissions reduction goals quickly.
- As a complement to electrification-focused objectives, decarbonization of fuels currently used to heat homes and businesses can offer a cost-effective means to meet interim GHG reduction goals.
- As an estimate of potential emissions reduction value of low-carbon fuels (drawing on data from California’s successful Low Carbon Fuel Standard Program), incorporation of renewable diesel and biodiesel for heating in the Northeast could provide net emissions reductions of approximately 7 million metric tons of CO2 per year, which corresponds to the net emissions reduction from adding 1.6 million heat pumps—i.e., tripling the current share of residential heat pumps in the Northeast.
- Achieving a portion of decarbonization goals via mechanisms other than electrification alone will help mitigate the likelihood of local electricity price spikes and degraded reliability and resiliency of electric service.
The work was funded by Global Partners LP and Sprague Energy.