By Shiloh Wallack

On September 15, 2022, the California Public Utilities Commission (CPUC) issued a press release announcing it was taking action to “eliminate natural gas line subsidies for new natural gas hookups,” stating “[t]he first-in-the-nation action will reduce greenhouse gas (GHG) emissions from buildings and lower utility bills for consumers.”

Buildings, in general, contribute to California’s overall GHG emissions by about 25 percent. Contemporaneously, natural gas use in buildings contributes roughly 10 percent of these emissions across the state. These natural gas line subsidies were created to offset the cost of extending natural gas pipelines to new buildings at a time when natural gas was supposedly a cleaner alternative to burning fossil fuels like coal or oil. CPUC considers its action the first step towards the transition to cleaner energy and eventual carbon neutrality by the year 2045.

Elimination of these subsidies would take effect July 1, 2023. The proposed decision (R.19-01-011) would eliminate any incentive, financial or otherwise, to expand the natural gas system to more new buildings. By proxy, this decision further paves the way for home and commercial building electrification and reduces the risk of stranded assets. CPUC estimates that close to $164 million could be saved per year amongst ratepayers.

In CPUC’s press release, Current Commissioner Clifford Rechtschaffen states this policy change will not only save ratepayers money and reduce GHG emissions but will also improve both indoor and outdoor air quality, the first of many steps towards cleaner, and ultimately clean, air. California is the first state to enact this decision and may have paved the way for the other 49 to follow suit.

For more information on the details, benefits and drawbacks of this policy change, and what it means for the future of California, visit the Building Decarbonization section of the California Public Utilities Commission website.