Heated Efforts to Decarbonize Cities Continue After Berkeley Settlement

Below, we will explain and contextualize “decarbonization” — a fundamental aspect to meeting collective climate goals — and walk through various approaches taken by US cities.

 “Decarbonization” Basics in Real Estate

As defined by the US Green Building Council, “decarbonization” refers to “the goal of ending our dependence on oil and gas as power sources to reduce carbon dioxide (or CO2) emissions … .” According to the US Environmental Protection Agency (EPA), residential and commercial end-use of fossil fuels accounted for nearly 31% of greenhouse gas emissions after factoring in power-plant emissions tied to generating electricity for residential or commercial use. 

Commercial and residential buildings can take various steps to limit direct and indirect carbon emissions, even in existing building stock. Possible steps include:

• Electrifying fossil fuel-based end uses (e.g., space and water heating) where possible. Switching to LED lighting can help reduce energy consumption by 75% compared to incandescent lighting.
• Sensors can be used in infrequently used areas, such as lecture halls and restrooms, to further reduce energy use.
• Buildings can elect to use renewable energy sources. This can significantly offset carbon use and contribute to a building becoming carbon neutral.
• Finally, buildings could choose to install on-site energy generation. Options include solar panels, wind turbines, or other renewable energy technologies.

While some solutions may be costly, building owners can sometimes use expansions in tax incentives and green financing options to offset the significant upfront capital investment required to construct, renovate, or retrofit buildings to reach sustainability goals.

Tools Cities Deploy to Decarbonize

Some local jurisdictions are mandating decarbonization. We’ve previously written about state and local attempts to “ban” gas hookups in buildings here and here.

As we discussed, the Berkeley, California ban was litigated through the Ninth Circuit and, in an update to this case, the California Restaurant Association and the city of Berkeley entered into a settlement agreement in March. The settlement was reached in response to an April 2023 ruling from the Ninth Circuit that held the ban violated the Energy Policy and Conservation Act. “The Energy Policy and Conservation Act expressly preempts State and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens,” wrote the Ninth Circuit judges in their ruling.

As a result of the settlement, Berkeley will work towards repealing the ban in the coming months. While Berkeley is the only city involved in this settlement, some cities with similar bans — desiring to avoid potential attorneys’ fees related to a form of ban already found precluded by an appellate court — may choose instead to pursue decarbonization through some other means. 

Nearby Berkeley, San Francisco, California has indicated that it will continue to enforce its own building bans on gas hookups, despite the Berkeley ruling. San Francisco officials have stated the city may be inoculated from a lawsuit because its policy focuses on building safety. Unlike Berkeley, San Francisco argues its policy does not operate as a total ban because it allows some restaurants and other businesses in new buildings to opt out of the regulation — even though none have done so.

Incentives 

Other cities have deployed a mix of incentives. These include:

• Santa Cruz, California; San Jose, California; and San Luis Obispo, California have adopted strict energy efficiency standards that do not explicitly ban gas but incentivize developers to install electric appliances over less efficient gas products.
• As part of its A2Zero climate plan, deploying changes to the transportation sector, renewable energy generation, and electrification, Ann Arbor, Michigan, has offered incentives to residents to switch from gas to electric appliances.
• Denver, Colorado has imposed a full ban on gas in newly built structures and offered more than $30 million in incentives to help replace gas-fired heating and cooling equipment with heat pumps in existing buildings.

Decarbonization Through Building Codes

A third approach some cities have taken is to compel decarbonization as part of overall building code reforms. Boulder, Colorado adopted policies intended to push residents toward electrification. The new code established a “maximum energy use per square foot on new residential construction and major renovations” in order to reach the city’s net-zero emissions goal by 2030.

We will continue to monitor all of the different approaches. Stay tuned. 

Members of the firm’s Environmental & Energy & Cleantech groups regularly monitor local, state, and federal regulations affecting the energy space.