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Advocacy Update, August 2019

Decarbonization Workshop

I have written, on several occasions, about the shift in energy efficiency policy from overall savings to emissions reduction. Decarbonization is a statewide effort, and we are at the early stages of this transformation.

The California Energy Commission (CEC) and California Public Utilities Commission (CPUC) held a Decarbonization workshop on August 27, 2019, at the CEC in Sacramento. The meeting was a cooperative effort between the CPUC, the CEC, the California Air Resources Board (CARB) and the California Independent Systems Operator (California ISO). The purpose was to have an open conversation about energy efficiency and decarbonization.

It is pretty rare to see these four agencies participating in a workshop together. The participation of high-level representatives from each agency speaks volumes about the seriousness and commitment of the state regarding decarbonization. The California Legislature has set very aggressive energy savings and greenhouse gas reduction goals. Meeting these goals will require many stakeholders to work together, even to come close.

As more renewable generation sources feed into the electrical grid in California, it is quickly becoming the cleanest source of energy, especially from an emissions perspective. As the grid gets cleaner, the logical choice to encourage the use of electricity over other energy sources whenever possible. 

Thermal loads, heating water, and space heating are the two most substantial loads in buildings. Converting thermal loads to electricity makes sense, both from an emissions standpoint and energy efficiency. Heat pumps can replace furnaces and gas water heaters. Heat pumps provide equal performance, with no onsite emissions, at a much higher efficiency. Using electric heat pump technology for thermal loads in buildings makes a lot of sense.

Modifications to the Three-Prong Test

If you been in the energy efficiency world for long, you have no doubt heard of the “Three-Prong Test.” This outdated regulation is a cost-effectiveness and energy consumption metric that has long been a roadblock to fuel substitution in buildings. The three-prong test has been a barrier to electrification, as it prevents switching from fossil fuels (natural gas) to electricity in nearly all situations. For years the three-prong test has been a barrier for energy efficiency contractors and homeowners when they tried to switch fuels from natural gas to electricity. This year, the language of the three-prong test was modified, after a three-year-long effort lead by the Natural Resources Defense Council, which included over 25 other supporting agencies.

I find it a bit ironic that the leaders of the CEC and the CPUC were celebrating the changes to the three-prong test as part of their presentations, something they were pushing back on for quite some time. Finally, homeowners and contractors can receive incentives for projects that substitute fuels. Another impact of the changes to the three-prong test is that it nows frees up energy efficiency funds for use in the decarbonization effort. Adding EE funds to the decarbonization effort is significant, as these funds represent over one billion dollars annually.

There were a variety of presentations by CEC staff and other speakers. One thing that was very clear to me is the focus on emissions reduction is not a small or limited effort but a paradigm shift in energy policy in the state. Decarbonization is the state’s new long-term strategy.  A significant amount of effort and dollars are being allocated to see this through. Contractors should consider ways they can incorporate solutions that align with the state’s goals. Now is the time to embrace this change, the train has left the station, and there is no turning back.

Charley Cormany
Executive Director

Read Advocacy Update from last month: Advocacy Update, July 2019