1 STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of September 28, 2021
TO: Members of the City Council
SUBMITTED BY: Robert Reber, Community Development Director Larissa Alchin, Contract Assistant Planner
SUBJECT: Discussion of building decarbonization through possible adoption of all- electric building code amendment
RECOMMENDED ACTION:
Discuss and p rovide direction if and w hat type of a ll-electric ordinance should or should not be pursued.
COMMISSION/SUBCOMMITTEE ACTION AND RECOMMENDATION:
No Commission or Subcommittee actions or recommendations are yet applicable for this action. If an ordinance were to be considered, it would require Planning Commission review. If Council directs staff to initiate adoption of an all-electric ordinance, staff recommends that the process be completed early enough that it can be approved by the California Energy Commission (CEC) no later than September 2022, prior to the start of the next building code cycle that will take effect January 1, 2023.
FISCAL IMPACT OF RECOMMENDATION:
If Council desires an ordinance be drafted, additional but unknown staff and attorney time will be needed to draft the o rdinance, notice and hold required public hearings, and then implement a mandatory program, which would also affect costs of construction in Hercules.
BACKGROUND:
The primary component in natural gas is methane. Methane is a short -lived pollutant whose contribution to climate change (“global warming potential”) is, pound for pound, 25 times greater than carbon dioxide over a 100-year period. In addition to being a source of greenhouse gas emissions, natural gas has other attributes negatively affecting public health and safety. Indoor natural gas use, particularly for cooking, worsens indoor air quality, which disproportionately harms children, who are 42% more likely to develop asthma as a result of exposure. Ruptures in natural gas lines caused by earthquakes pose a secondary hazard of fires (half of the fires in San Francisco after the 1989 Loma Prieta earthquake were due to ruptured gas lines). Reducing a community’s reliance on the natural
2 gas system improves its physical resilience, reduces fire risk , simplifies building systems and maintenance, and reduces greenhouse gas emissions.
In September 2018, Governor Jerry Brown signed two bills aimed at reducing greenhouse gas emissions from buildings, SB 1477 and AB 3232. SB 1477 calls on the California Public Utilities Commission (CPUC) in consultation with the California Energy Commission (CEC) to develop two new programs: the Building Initiative for Low Emissions Development (BUILD) program and the Technology and Equipment for Clean Heating (TECH) program to promote the use of high efficiency building appliances. AB 3232 required the CEC to develop a feasibility assessment (Building Decarbonization Assessment) for reducing greenhouse gas emission of buildings to 40 percent below 1990 levels by 2030. According to the
California Building Decarbonization Assessment – Final
Commission Report presented to the CEC on August 11, 2021,1 residential and commercial buildings jointly account for 25 percent of greenhouse gas (GHG) emissions and 70 percent of electricity use in the state. The assessment concludes that reducing building emissions is an essential component of meeting California’s GHG reduction targets.
State Building Code
Every three years, the State of California adopts new building standards that are codified in Title 24 of the California Code of Regulations, referred to as the California Building Standards Code (“Building Code”). This regular update is referred to as a “code cycle.” The current code cycle is for the year 2019 and was adopted by Hercules, via Ordinance No. 526 with amendments adopted by Contra Costa County and the Rodeo–Hercules Fire Protection District. The next code cycle will be for the year 2022 and will become effective statewide on January 1, 2023.
On August 11, 2022, the CEC approved the 2022 Energy Code which includes elements to incentivize all-electric construction for newly constructed and renovated buildings to increase efficiency and lower emissions. The 2022 Energy Code focuses on four key areas in newly constructed buildings:
• Encouraging electric heat pump technology for space and water heating, which consumes less energy and produces fewer emissions than gas-powered units. • Establishing electric-ready requirements for single-family homes to position owners to use cleaner electric heating, cooking, and electric vehicle (EV) charging options whenever they choose to adopt those technologies.
• Expanding solar photovoltaic (PV) system and battery storage standards to make clean energy available onsite and complement the state’s progress toward a 100% clean electricity grid. • Strengthening ventilation standards to improve indoor air quality.
The proposed 2022 Energy Code stops short of requiring new buildings to be exclusively electric (gas ban); nevertheless, the code does require homes to be electric-ready, with dedicated 240-volt outlets and space (with plumbing for water heaters) so electric appliances can eventually replace installed gas appliances (see Attachment 2 for 2022 Building Energy Efficiency Standards Summary passed by the CEC). The proposed code update for 2022 does not dictate the type of energy to be used in buildings (as between such options as natural gas, propane, or electricity). Rather, the code applies prescriptive or performance-based standards to each individual building design submitted for review.
1 https://efiling.energy.ca.gov/GetDocument.aspx?tn=239311 3 The 2022 update next moves to the California Building Standards Commission (CBSC) for approval and is scheduled for consideration in December 2021. If approved, the building standards will go into effect January 1, 2023, to provide time for all interested parties to prepare for the changes.
DISCUSSION:
The State of California allows cities to amend the California Building Standards Code to make them more restrictive by adopting “Reach Codes.” When a local government adopts a reach code, that agency must make an official finding that the new requirements save energy and are cost-effective.
To be cost effective, the money saved from the reduced energy costs needs to be enough to cover the initial cost within a reasonable period of time. Therefore, exploring cost-effectiveness is a key step for local governments in California interested in establishing a reach code. There is no official method for determining cost effectiveness, but local governments must make a cost -effectiveness determination, based on the m ethod they deem appropriate, and provide such evidence to the California Energy Commission.
In practice, cost-effectiveness is often measured by a benefit-to-cost ratio, whereby the benefit is the total energy bill savings expected from the energy conservation measure(s) , and the cost is the incremental cost of installing the measure(s). A ratio of at least 1.0 is considered cost -effective, indicating the benefit exceeds the cost.
Another commonly used measure of cost-effectiveness is “simple payback,” which is calculated by dividing the up-front installation cost by the annual utility savings. The resulting value indicates the number of years it takes to pay back the initial cost. Generally, an energy -efficiency measure is considered cost-effective when it pays back in less than 15 years. The exact cutoff value is a matter of opinion and depends on the context, but usually falls between 10 and 20.
Each cost-effectiveness study sets out to evaluate a specific set of energy conservation measures (e.g., home energy efficiency measures) for one or more specific building types (e.g., new single-family homes). The studies start with a digital building model that reasonably represents a typical building of that type in California. Next, installation costs are typically estimated for each measure by surveying building contractors. Then software is used to simulate the energy needs of the building with and without the measures. From these simulations, savings estimates are derived. Besides measuring benefit-to-cost ratio, cost-effectiveness studies also present additional results related to how much energy, money, and emissions are saved. As weather patterns and utility rates differ across the state, the cost-effectiveness energy-efficiency measures may differ from one location to another.
Cost-effectiveness studies model cost-effectiveness using climate zones to approximate the local weather pattens.
Cost-effectiveness studies can be funded directly by a city, but most studies are developed with the California Energy Codes & Standards Reach Codes Subprogram which is funded by ratepayer funds.
Using an automated online tool
2 provided through this statewide utility program, City staff have generated a preliminary sample estimate of c ost effectiveness in Hercules for possible energy efficiency measures (see Attachment 3).
Some cities and counties in California have already adopted reach codes to go above and beyond the statewide building code to require building electrification using an array of building code approaches.
2 Cost Effectiveness Explorer: https://explorer.localenergycodes.com/ 4 According to the Sierra Club, as of September 2021, 49 cities and counties (about 10% of jurisdictions statewide) have adopted reach codes to reduce their reliance on gas. In addition, the California Green Building Standards (“CAL Green” Part 11 of Title 24) includes voluntary reach standards and offers model building code language for local governments that wish to adopt reach codes that exceed the minimum statewide requirements. Table 1 below offers a sample of recently adopted reach codes and the range of approaches.
Table 1 – Adopted Electrification Ordinances
City Residential Commercial Remodels Exemptions Date
Adopted
Fairfax Yes Yes No Commercial kitchens 8/4/2021
Emeryville Yes No Remodels of
50% or more
Nonresidential
buildings but must be
pre-wired for future
electric appliances
7/20/2021
Petaluma Yes Yes Substantial
remodels or
addition of 50%
or more
Essential Services
Buildings and backup
power facilities for
Essential Services
Buildings.
5/3/2021
Daly City Yes Yes No 100% affordable
housing, ADUs,
commercial kitchens,
and laboratories
4/27/2021
Piedmont Yes Yes Based on project
evaluation and
Home Energy
Score
A Home Energy Score
Report demonstrating
a Home Energy Score
of 7
2/1/2021
Millbrae Yes Yes No Laboratories, and most
residential buildings
may have non-electric
cooking and fireplaces
10/27/2020
East Palo Alto Yes Yes No Affordable housing,
and commercial
kitchens
10/6/2020
In addition to the adopted reach codes referenced above, Contra Costa County’s Sustainability Commission voted on August 23, 2021, to present a letter and report to the Board of Supervisors in support of adopting building electrification reach codes for new construction.
Removing natural gas as an energy option would reduce the carbon footprint of buildings in Hercules by removing or reducing a source of greenhouse gas emissions from buildings. If Hercules adopts an all-electric ordinance, the building code amendment could remove natural gas as a possible energy source for new construction and remodels as directed by the City Council. Should the City Council direct staff to proceed with the development of an all- electric ordinance requiring new buildings and/or substantial remodels to be all-electric, an initial discussion of parameters would be helpful to enable staff to develop a proposed ordinance.
5 General Steps to Develop All-Electric Ordinance
Figure 1 below provides a generalized timeline for implementing the following steps necessary to adopt and implement a reach code ordinance (actual time to implement may vary depending on the scope and nature of the ordinance and the resources available):
1. Develop idea for a reach code ordinance:
o Ideas for reach codes can come from several places, including direction from City Council, General Plan policies, and neighboring jurisdictions.
2. Work with stakeholders:
o Both internal and external stakeholders such as elected officials, building officials and staff, local developers and contractors, environment advocacy groups , and others involved in implementing and enforcing the reach code.
3. Obtain a cost-effectiveness study
4. Develop and draft an ordinance
o All-electric reach codes typically include the purpose of the reach code, what types of buildings and actions trigger the reach code, whether there are any exceptions to or exemptions from reach code requirements, relevant definitions and interpretations and any additional administrative requirements. (See Attachment 2 for a model ordinance)
5. Public process and revisions
o The proposed draft ordinance would initially be considered by the Planning Commission followed by review and consideration by the City Council.
6. Formal adoption process
o Since a reach code is a local ordinance, it is adopted by the City Council.
7. Application for approval by California Energy Commission o Once the local reach code is adopted, but before it can be enforced, the ordinance must be submitted to the CEC. The CEC will verify that the reach code is at least as stringent as the California Energy Code and then post the reach code and accept comments on it for 60 days.
Figure 1 - BAYREN Generalized Timeline
6 ATTACHMENTS:
1. 2021 Building Energy Efficiency Standards Summary
2. All-Electric Model Code Ordinance
(version of the Menlo Park all-electric code, edited by Peninsula Clean Energy and Silicon Valley Clean Energy for use as a model)
3. Sample estimate of cost effectiveness results for Hercules