HomeMy WebLinkAbout6/16/2020 Item 11, Peacock
Clerk, Intern
From:Peacock, Tanya <
To:E-mail Council Website
Subject:Clean Energy Choice Policy for New Buildings
Attachments:SoCalGas Comment Submittal_6.16.2020.pdf
Dear Mayor and Councilmembers,
Please find attached SoCalGas’ comments on the proposed Clean Energy Choice Policy for New Buildings. We look
forward to continuing the conversation.
Thank you,
Tanya
Tanya Peacock
Public Policy & Planning Manager, SoCalGas
213-700-3183 (m) 213-244-5554 (o)
1
June 16, 2020
Re: Clean Energy Choice Policy for New Buildings
Dear Mr. Read,
Southern California Gas Company (SoCalGas) appreciates the opportunity to provide
comments on the City of San Luis Obispo’s (City or SLO) proposed Clean Energy Choice Policy
for New Buildings, which includes an ordinance adopting local amendments to the Energy Code
to support all-electric new buildings. SoCalGas acknowledges the changes made since the
September 2019 proposal and shares the City’s commitment to being part of the solution.
However, we believe that a portfolio approach, utilizing all energy sources and technologies to
meet our climate goals, will best serve the interests of the citizens of SLO and every municipality
that wants to play a role in reducing greenhouse gas (GHG) emissions particularly from the
building sector. Moreover, with millions of Californians out of work, and reports of families and
businesses struggling to get by, it is not clear how this proposal will achieve the City’s ambitious
clean energy transition goals and keep it affordable for everyone. As currently drafted, SLO’s
proposed ordinance contains several elements that appear to allow developers to build mixed-
fuel buildings, but in fact introduces a byzantine set of terms and conditions that effectively bans
the use of natural gas in new buildings, both residential and commercial. Therefore, SoCalGas
recommends the SLO City Council reject this new ordinance and postpone hearings on this
highly complex and impactful issue so that a safe and more comprehensive public
discussion can occur that thoughtfully considers different options for building
decarbonization and their effects on energy reliability, resilience and affordability
particularly for working families.
Everyone at SoCalGas is committed to being part of the solution to climate change and
strongly supports reducing carbon emissions from commercial and residential buildings as part
of California’s strategy to meet climate goals. Unfortunately, SLO’s proposed ordinance contains
Chris Read
Sustainability Manager
Office of Sustainability
City of San Luis Obispo
900 Palm Street
San Luis Obispo, CA 93401
Andy Carrasco
Vice President,
Strategy, Engagement &
Chief Environmental Officer
555 W. 5th Street, GT21C3
Los Angeles, CA 90013-1011
Tel: 213.244.4424
ACarrasco@SoCalGas.com
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several elements that create the illusion of being supportive of developers wanting to build
mixed-fuel buildings while introducing a set of terms and conditions that in effect prohibits gas
infrastructure in the City. The most egregious example of which is the City’s confusing and
burdensome EDR scoring process. Developers would very likely need to hire highly specialized
consultants to calculate EDR scores, making compliance with the stricter standards cost
prohibitive for most developers. Moreover, even if accurate calculations were performed, it
would still be extremely difficult for a mixed-fuel building developer to meet the proposed EDR
scoring requirements. Thanks to our geographic and climate diversity and abundant natural and
human resources, California feeds the country and shares innovation and ideas that help feed the
world. As such, we believe the City’s proposed carbon emissions reduction strategy should
reflect this diversity and not be limited to a one-size-fits-all approach. Natural gas continues to
play a valuable role in a carbon emissions reduction strategy, because it is affordable, reliable
and provides infrastructure that enables the use of intermittent renewable energy sources such as
wind and solar. In the future, natural gas may also be used in support of other clean energy
sources such as hydrogen, and is the fuel of choice for many SoCalGas customers.1 We therefore
believe that the best approach for SLO and citizens aiming to reduce carbon emissions from the
building sector is a multi-energy portfolio approach, utilizing all energy sources and technologies
to meet climate goals through policies that are fuel- and technology-neutral and which
incentivizes greater efficiency and emissions reductions.
The environmental benefit of going all-electric is unclear at best.
Notwithstanding the questionable economic benefits of electrification in California, it is
by no means clear that forcing residential and commercial developers to construct all-electric
buildings will benefit the environment. Most electric supply in California still runs on natural
gas, so greater electric use at least with the current mix of energy resources may actually increase
emissions.2 Natural gas in fact is the lynchpin for ensuring the reliability of the electric grid,
during increased energy demand especially in a state with an emphasis on renewables. In theory,
the exemptions stated in the ordinance would allow a homebuyer in a new subdivision to enjoy
outdoor amenities fueled by natural gas. However, if a residential subdivision developer does not
install natural gas infrastructure in the subdivision due to the new technical and financial hurdles,
the costs to the individual homebuyer to connect to the nearest gas line would be substantial. The
1 Natural Gas Institute. California Reports Show Homeowners Prefer NatGas Over
Electrification. April 25, 2018. Available at:
https://www.naturalgasintel.com/articles/114152-california-reports-show-homeowners-
prefer-natgas-over-electrification.
2 Stanford University researcher, Professor Kovscek, estimates that when renewable
power is unavailable, such as during the evening hours, residential electricity consumption
produces three times more GHG emissions than natural gas consumption due to the relative
inefficiency of using electricity derived from natural gas power plants rather than directly using
more efficient natural gas-powered appliances such as water heaters. Source: Anthony R.
Kovscek, Is a natural gas ban an ‘antidote to climate change’? San Jose Mercury News (Nov.
12, 2019), https://mercurynews-ca.newsmemory.com/?publink=754c8d2e3_13411ac
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new proposal’s de facto gas prohibition also holds true for a newly constructed commercial
kitchen not located in proximity to existing natural gas infrastructure. These cost-prohibitive
policy provisions could also have considerable unintended environmental consequences,
especially for local air quality and greenhouse gas emissions. If residents cannot realistically use
natural gas for outdoor recreational uses, they will likely turn to higher polluting alternatives,
such as wood, charcoal, or propane-fired barbeques and firepits. These fuel sources produce
greater amounts of harmful forms of emissions and would run counter to the City’s stated
environmental efforts.
The natural gas system also holds out the promise of providing substantial emissions
reductions, through efforts such as increasing the supply of renewable natural gas and new
technologies for excess renewable energy storage such as hydrogen and carbon capture and
sequestration. In particular, a 2018 study by Navigant Consulting found that if California
replaces less than 20 percent of the current natural gas supply with renewable natural gas, it
would reduce greenhouse gas emissions the same amount as converting 100 percent of the state’s
buildings to electricity by 2030. This is a remarkable emissions reduction made possible by the
fact that renewable gas is captured from existing sources of methane emissions, and thus
removes methane that would otherwise be released into the atmosphere. In fact, more than 80
percent of the state’s methane emissions come from waste streams—dairies, landfills,
wastewater and agriculture. SoCalGas has taken the proactive step of converting this waste into
clean, renewable natural gas – which Navigant estimates can achieve emissions reduction goals
at one-third to one-half the cost of electrification, with less disruption to gas ratepayers. In
addition, the natural gas infrastructure can potentially be leveraged in new ways as an energy
storage system (for example through electrolytic hydrogen technology) for excess renewable
energy from sources like solar and wind that now are being wasted.3 Sufficient long-duration
storage is one of the huge technological hurdles to increasing reliance on intermittent renewable
resources, and the natural gas system may be part of the solution. But to leverage these
opportunities, there must be a natural gas distribution system in place.
Municipalities thus should recognize that the natural gas infrastructure is a huge asset that
will allow distribution of new, alternative fuels, and that has the potential to provide large-scale
energy storage. The new ordinance compromises energy service and will have the collateral
effect of diminishing the opportunity for customers and the City to take advantage of cleaner
fuels in the future. Instead, the City should preserve customer choice by allowing buildings to be
fueled by natural gas and renewable natural gas, and work to achieve its environmental and
emission reduction goals faster and more cost-effectively than through pushing for
electrification. If the goal is to make significant strides to combat climate change in the near
term, the City’s policies should encourage ingenuity and more cost effective and less disruptive
ways to quickly lower carbon emissions from building usage.
3 Green Tech Media. Renewable Curtailments Surge as Coronavirus cuts energy demand: The
Golden State solar output already outpaced demand at times. Then came the coronavirus
lockdown. April 2, 2020. Available at:
https://www.greentechmedia.com/articles/read/california-renewable-curtailments-spike-as-
coronavirus-reduces-demand
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Diverse energy sources provide reliability and resilience.
SLO and other cities also need to consider the impacts of promoting a sole-source energy
system on reliability and resilience of that city’s energy supply. As a city located along a
wildland-urban interface and situated near three major faults, SLO has self-identified as a
community at considerable risk from natural disasters. Failure to have resilient energy backup
generation systems would leave the City and its residents especially vulnerable to the effects of
utility Public Safety Power Shutoffs (PSPS). During PSPS events, natural gas allows residents to
continue to heat their homes and cook their food. But more importantly, consumers and
businesses can use natural gas to fuel backup generators to meet their long-term power needs. In
the absence of natural gas, more residents and businesses will suffer from the effects of PSPS
events or natural disasters and may be forced to resort to using diesel generators. According to a
CARB emissions report, use of diesel generators during October 2019 PSPS events caused more
tons of diesel pollution than emissions from almost 29,000 heavy duty diesel trucks in one
month.4 Further, in the absence of natural gas, the provision of public safety services may be
affected by PSPS events or other natural disasters, for example, there may be a lack of pumping
capacity for fire department personnel. Having two interconnected energy systems—electric and
gas—improves energy reliability as well as enhancing resilience in the wake of wildfires and
increasingly frequent PSPS events. SoCalGas therefore strongly encourages SLO not to rely on a
single energy source that puts the reliability and resiliency of the City’s energy delivery system
at risk. While the proposed ordinance does not mandate all-electric, that is SLO’s clear goal and
this ordinance’s intended effect; SoCalGas asks that the City seriously reconsider the public
safety impacts of that decision.
The ordinance will make housing and energy less affordable.
Implementation of the proposed ordinance would negatively impact housing and energy
affordability, especially for low-income and disadvantaged communities that often are comprised
of working-class families. SoCalGas understands that SLO (like many other cities) is relying on
a cost-effectiveness study sponsored by the electric company that suggests that gas will become
more expensive than electric. But this plainly has not been the historic trend, nor does it
represent current pricing, where gas is less expensive than electricity. The study also uses state-
wide information, not information local to SLO. SoCalGas has sound reason to believe that the
assumptions in the cost-effectiveness study are flawed and inaccurate and are not supported by
objective evidence.
For example, the study portrays natural gas rates as significantly increasing year over
year, when rates have historically remained constant. And the study significantly underestimates
electricity rates going forward – which it predicts to remain constant – as well as electrification
4 California Air Resources Board. Potential Emissions Impact of Public Safety Power
Shutoff (PSPS). Available at: https://ww2.arb.ca.gov/sites/default/files/2020-
01/Emissions_Inventory_Generator_Demand%20Usage_During_Power_Outage_01_30_20.pdf
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costs. Unlike the study’s projections, electric rates have historically been volatile in California,
and available evidence indicates rates are likely to increase in the future, especially with
increased electric demand. For example, the study’s projected rates do not account for wildfire
costs that will ultimately be passed on to ratepayers; PG&E’s settlement from the 2018 Camp
Fire alone is expected to be $13.5 billion. Nor do they account for the need to expand electric
utility infrastructure to accommodate increased demand and to meet targets for use of renewable
sources; this significant expansion and related upgrades (of solar and wind installations,
distribution facilities, battery storage capability, and transmission lines) will impose substantial
costs which will be passed through to ratepayers. These costs make it a virtual certainty electric
rates will increase significantly more than what is projected in the study.
SLO and other cities would benefit from independent studies.
There currently is a paucity of independent, neutral studies looking at the true costs and
benefits of various energy supply alternatives, both environmentally and economically. SLO
could work with other cities or various stakeholder groups to commission studies that examine
the feasibility and costs of alternative approaches, including consideration of models that
leverage the existing natural gas assets to incentivize the use of renewable natural gas – options
illustrated in the recently released research by Lawrence Livermore National Labs, Getting to
Neutral: Options for Negative Carbon Emissions in California.5 SoCalGas urges SLO to explore
all options to achieve the City’s climate change goals while prioritizing reliability, resiliency,
affordability, and customer choice.
Again, while SoCalGas supports reducing carbon emissions, and believes it can help do
so through greater efficiency and use of renewable natural gas or other technologies, it does not
believe that an “all electrification” strategy is helpful or required. All-electrification is not the
policy of the State, which instead emphasizes fuel diversity for purposes of assuring economic
and energy security.6 Relying solely on a single energy source puts the reliability and resiliency
of the City’s energy delivery system at risk. SoCalGas believes the City can most effectively and
affordably reduce carbon emissions by incentivizing lower emissions from both electricity and
natural gas supplies—not just by electrifying end uses but through decarbonized molecules and
electrons working together to drive down emissions and provide options so that families and
businesses have access to safe, reliable and affordable energy services during these difficult
times and beyond.
Given the complexity of SLO’s proposed ordinance, the City’s stakeholders need more
time to clearly understand and assess alternative ways to achieve its climate change goals. Now
5 Available at: https://www-
gs.llnl.gov/content/assets/docs/energy/Getting_to_Neutral.pdf (Jan. 2020).
6 The Warren Alquist Act created the CEC and gives it the authority to “…conduct an
ongoing assessment of the opportunities and constraints presented by all forms of energy, to
encourage the balanced use of all sources of energy to meet the state’s needs, and to seek to
avoid possible undesirable consequences of reliance on a single source of energy.” Source: CEC.
Warren Alquist Act. 2019 Edition. Available at:
https://ww2.energy.ca.gov/2019publications/CEC-140-2019-001/CEC-140-2019-001.pdf
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is not the time to introduce new rules that would make the already strict California Building
Code more burdensome for developers, as we continue to battle a worldwide pandemic and when
homelessness and unemployment rates are at the highest level in decades. The City is just now
reopening and the public has not yet had sufficient time to review the significant changes made
to the ordinance since September, 2019. SoCalGas recommends postponing consideration of the
ordinance to enable stakeholders, particularly those from historically underrepresented and
underserved communities, ample time to evaluate the proposal’s full effects.
SLO’s neighboring city of Santa Barbara is deferring consideration of a potential
ordinance until next year; a similar deferral would, among other things, allow SLO to assess the
impact of similar ordinances in other cities and to engage in a more informed discussion about
the implications of building electrification particularly in relation to affordability and public
safety. SoCalGas strongly believes that the City’s proposed ordinance should be modified to
support a fuel neutral, diversified energy approach that can incentivize emissions reductions
through efficiencies and new technologies and decarbonized fuels. But this type of discussion
and careful analysis and assessment takes time.
We therefore strongly oppose this Reach Code as currently drafted and urge the SLO City
Council to postpone the hearing on the Clean Energy Choice Policy for New Buildings ordinance
until later this year so that a safe and more comprehensive public discussion can occur.
Regards,
Andy Carrasco
SoCalGas
Vice President, Strategy, Engagement & Chief Environmental Officer
Attachment A: SoCalGas Verbal Comments
“PATHWAY TO A CLEAN ENERGY FUTURE”
SoCalGas Comments
Good evening/afternoon, my name is (SoCalGas Rep) and thank you for allowing us
to comment on this very important issue that will affect the quality of life for the
50,000 residents of this great city.
As currently drafted, SLO’s proposed ordinance is misleading and contains several
elements that appear to allow developers to build mixed-fuel buildings, but in fact
introduces a byzantine set of terms and conditions that effectively bans the use of
natural gas in new buildings, both residential and commercial.
And with more than 1 in 4 Californians out of work, and families and businesses
struggling to get by, it is unclear how this proposal will achieve the City’s ambitious
clean energy goals and keep it affordable for everyone.
We therefore strongly urge the SLO City Council to reject the new ordinanc e
proposed by staff and postpone the hearing on this highly complex and impactful
issue to allow all stakeholders the opportunity to fully understand how this
proposal will affect energy reliability, resilience and affordability, particularly for
working families
We are concerned that the proposed Reach Code ordinance introduces onerous
requirements, such as the complicated EDR score, that, in effect prohibits gas
infrastructure in the City.
This action will also have unintended consequences for SLO residents by making the
City more vulnerable to natural and man-made disasters during PSPS events.
Specifically, the absence of a resilient, long-duration energy source during wildfires
may result in a lack of pumping capacity for fire fighters and the potential loss of life
and property in SLO.
This new proposal may also increase harmful emissions in the city and further
burden residents with increased energy costs at a time when few can afford it.
If home builders do not install natural gas infrastructure because of technical and
financial hurdles, the City could see similar increases in harmful emissions as
homeowners will likely resort to using higher polluting diesel generators as well
charcoal, wood and propane for outdoor barbecues and firepits.
In terms of cost, your monthly gas bill is probably the lowest bill you receive each
month. By comparison, California electric rates are amongst the highest in the
nation and this trend is likely to continue.
Electric infrastructure expansion costs, along with $13.5 billion from the Camp Fire
settlement, offer a virtual certainty electric rates will increase significantly more
than those projected in the City’s Cost-Effectiveness Study.
Not only are the economic benefits of electrification in California questionable, it is
not certain that forcing residential and commercial developers to construct all-
electric buildings will benefit the environment.
SoCalGas supports another pathway to achieving a cleaner, greener future.
By choosing not to partner with SoCalGas to decarbonize and not decapitalize our
gas infrastructure system, this Reach Code will simply shift the GHG burden to other
non-coastal cities and may increase harmful emissions in the state.
SoCalGas strongly opposes this Reach Code as currently drafted and urges the City
to delay hearings on this highly complex and impactful issue to allow ALL
stakeholders the right to safely and fully understand how this proposal will affect
energy reliability, resilience and affordability, particularly for working families.
SoCalGas stands ready to partner with the City on an approach that supports
another pathway to achieving a cleaner, greener future for ALL SLO residents and
businesses.
Thank you for your consideration.
Attachment B: SoCalGas List of Referenced Attachments
1. Natural Gas Institute. California Reports Show Homeowners Prefer NatGas Over Electrification.
April 25, 2018. Available at: https://www.naturalgasintel.com/articles/114152-california-reports-
show-homeowners-prefer-natgas-over-electrification
2. Anthony R. Kovscek, Is a natural gas ban an ‘antidote to climate change’? San Jose Mercury News.
November 12, 2019, https://mercurynews-ca.newsmemory.com/?publink=754c8d2e3_13411ac.
3. Green Tech Media. Renewable Curtailments Surge as Coronavirus cuts energy demand: The Golden
State solar output already outpaced demand at times. Then came the coronavirus lockdown. April
2, 2020. Available at: https://www.greentechmedia.com/articles/read/california-renewable-
curtailments-spike-as-coronavirus-reduces-demand
4. California Air Resources Board. Potential Emissions Impact of Public Safety Power Shutoff (PSPS).
Available at: https://ww2.arb.ca.gov/sites/default/files/2020-
01/Emissions_Inventory_Generator_Demand%20Usage_During_Power_Outage_01_30_20.pdf
5. Lawrence Livermore National Lab. Getting to Neutral: Options for Negative Carbon Emissions in
California. Available at: https://livermorelabfoundation.org/2019/12/19/getting-to-neutral/
6. CEC. Warren Alquist Act. 2019 Edition. Available at:
https://ww2.energy.ca.gov/2019publications/CEC-140-2019-001/CEC-140-2019-001.pdf
7. Navigant Consulting. Analysis of the Role of Gas for a Low-Carbon California Future. Available at:
https://www.socalgas.com/1443741887279/SoCalGas_Renewable_Gas_Final-Report.pdf