How we heat and cool buildings must change in order to hit carbon goals. Legislators hope these nudges launch a major pivot
by Allen Best
Several bills in this year’s session of the Colorado General Assembly attempt to build on last year’s impressive efforts to start trimming emissions from buildings.
The Colorado Greenhouse Gas Pollution Reduction Roadmap adopted in early 2021 identifies buildings as the fourth-largest sector for emissions in Colorado. What it does not say, in quite so many words, is that the building sector almost certainly will be more difficult to pivot than electrical generation, transportation, and the oil-and-gas sector.
Unlike cars, we don’t trade in buildings very often. And unlike coal plants, of which there are just a handful, we have hundreds of thousands of buildings.
The fuel-switching also is more problematic. Coal has become very expensive compared to renewables. The economics in the pivot from natural gas consumed in buildings isn’t as immediately persuasive.
The easiest pivot is done at the front-end, in the 30,000 or more new buildings constructed each year. Several bills being considered or proposed recognize this. Existing buildings are more difficult and expensive to retrofit, but the bills also provide incentives for that task.
An aside: My house was built in 1889 during a time of horses and buggies. When I bought it in the late 1990s, it had little more than newspapers in the walls for insulation. Attic insulation was probably R-9. (It’s now R-60, although the windows are still R-1—no badges of honor for me). I have a 96% efficient natural gas furnace, but it took some talking to get the company to understand I really was willing to pay more than the off-the-shelf 85% efficiency model. That was about 12 years ago.
This pivoting of buildings is going to be really hard work. It will take a long time.
Colorado’s decarbonization roadmap notes that the target adopted in 2019 for full decarbonization by 2050 is based on a large-scale shift to the use of electric heat pumps, powered by zero-carbon electricity, for space and water heating. “There may be other pathways, depending on technological developments, which is why the near-term actions support a wide variety of strategies for the buildings sector,” the roadmap says.
This thinking was the foundation for the laws passed in 2021, and the proposals being readied in 2022 push them along. As has been a theme, there are both carrots and sticks, pushes and pulls, what Democratic legislators like to call “the Colorado way.”
Heat pumps and more
Carrots are most evident in SB22-051: Policies to Reduce Emissions from Built Environment. The bill is sponsored by Sen. Chris Hansen and Rep. Emily Sirota, both Democrats from Denver. The bill provides tax incentives to encourage low-emission building products in the private sector and to advance the adoption of heatump technology.
The building materials component builds on a 2021 law, HB21-1303: Global Warming Potential for Public Project Materials, also known as “Buy Clean Colorado.” That law requires the state architect and the state’s transportation department to establish maximum global warming potential for asphalt, steel, cement, glass, and other materials used in state buildings and roads.
This bill extends that nudge to the private sector. Instead of mandating their use, however, it proposes sales and use tax incentives for purchases of those materials found to be eligible by the Office of the State Architect. The tax incentives would take effect July 1, 2024, after the state architect has completed the work of inventorying the emissions embodied in building materials.
Adoption of heat pumps would also be encouraged by the tax incentives offered in the bill. This technology will likely be the most important single piece of technology in Colorado’s decarbonization of buildings. The heat pumps must have the capacity to achieve 80% of the heating or cooling needs of buildings.
The carrots come in the sales and income tax breaks for purchases of air-source, ground-source heat pumps, and heat-pump water heaters used in commercial and residential buildings. The bill also provides tax breaks for residential energy storage systems. The mechanism for handling tax credits to purchasers is modeled on what is used for purchase of electric vehicles.
Heat pumps come in several applications: air, ground, and water. All use electricity to extract and move heat from one place to another, both buildings and water.
In the case of air pumps, they milk the heat in the exterior air to warm a building. Ground-source heat pumps require coils buried in the ground 6 to 10 feet below where the temperature is a relatively constant 55 degrees. The same concept can be applied to water, whether ponds, lakes or rivers, as the water near the bottom of the pond will be far warmer than that at the surface.
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The same technology can work in reverse, too, cooling buildings during summer. In both cases, heating and cooling, the electricity is used to move the heat (or coolness) and crunch it, so to speak. That’s why the heat pumps can extract heat from 55-degree air to warm a building to 70 degrees. Or draw coolness out of 90-degree outdoor temperature to cool a house to 70.
“I think there’s a huge upside in Colorado for heat-pump technology. We need to electrify home heating and cooling to reach our decarbonization goals as a state. That is very clear from all of the credible analysis that’s out there,” said Hansen in a Feb. 24 interview.
“The current state of heat-pump technology is very good and improving. For the towns along the Front Range—Denver metro, Pueblo, Colorado Springs, Fort Collins—the technology works very well. Now, when you get to higher elevations with colder snaps in the winter, you may need some backup heating. That’s fine, that technology already exists. And that’s really what we’re trying to do with the bill is allow flexibility to get the right system in the right place, to electrify heating, cooling services as fast as we can.”
In its first legislative review on Feb. 8, in the Senate Transportation and Energy Committee, witnesses from the Natural Resources Defense Council, the Colorado Coalition for a Livable Climate, and other organizations said the tax incentives would chip away at the existing price disparity. The technology exists but the market has yet to catch up, they said.
The Colorado Rural Electric Association also blessed the bill on behalf of the state’s 22 electrical cooperatives, some of whom also offer incentives for heat pumps, said corporate counsel Tim Coleman. Gary Arnold, of the Denver Pipefitters Local 2008 union, also endorsed it at a later committee hearing.
Hansen, responding to a question from Sen. Rachel Zenzinger, said his research had shown that this technology had the greatest bang for the buck. “There’s just a massive payback for these heat-pump systems,” Hansen answered. “Keep in mind they last 10 to 20 years, depending upon the configuration, sometimes longer.”
Natural gas furnaces, though, require natural gas pipelines. Extending those lines to homes in new subdivisions costs an average $2,400 per housing unit, said Brad Smith, the city of Fort Collins project manager for building energy codes, in a January webinar.
“The majority of Colorado’s population lives along the Front Range, which mostly lies within climate zone 5,” he explained in the webinar sponsored by the Northern Colorado Renewable Energy Society chapter. “In that zone the lowest temperatures are likely to be between zero and 10 degrees Fahrenheit. Most air-source heat pumps can handle temperatures – with diminished effectiveness – to even lower temperatures.”
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Standard gas furnaces and heat pumps have comparable lifespans.
Mike Missimer, president of MGI Mechanical Services, who spoke on the same webinar, says that heat pumps, if more costly, can be a great alternative to traditional gas furnaces because of lower energy costs over time.
“When comparing the cost of a gas furnaces vs.an air-source heat pump, you really need to compare the heat pump system with a gas furnace with air conditioning, because they have similar components,” he says.
Missimer advises that heat pumps are best in new construction. They have specific requirements that may not work well with existing duct or electrical system. gas-fueled furnaces.
Heat pumps, though, are the technology of the future in most buildings, he says.
A final benefit that Hansen outlines is the potential for the technology to dovetail with Colorado’s renewable energy production. “Right now we curtail about 7% of the wind turbines in the state, because there is no place for that electricity to go,” he said. The bill, he told Senate Finance Committee members, will enable that electricity to be deployed to homes and businesses for storage or for use when the production of electricity would otherwise be curtailed.
Because of the rebated sales and income taxes, Colorado would come up short of $7.4 million a year by fiscal year 2024-25, according to a Feb. 28 staff memo from the Legislative Council. The report projects a slow growth in acquisition of the technology to 5,415 air-source units in ‘23-24. This assumes an average price of $6,000 for air source heat pumps, $20,000 for ground-source heat pumps, and $3,000 for heat-pump water heaters.
Opening the door to energy services
This Hansen-Sirota bill has yet another provision that might actually be the most powerful. It would allow utilities regulated by the Public Utilities Commission to ask commissioners to be allowed to offer energy services. This would be unlike the current model, where their income is derived from sales of commodities as measured in BTUs of natural gas or kilowatt-hours of electricity. Instead of selling gas to be burned, the utility would sell heat.
Amory Lovins, co-founder of the Rocky Mountain Institute, decades ago talked about energy services. His famous example was that you really don’t care what it took to make your beer cold, only that it’s cold. Hansen said he has talked about this concept with Lovins many times.
In this case, it could allow utilities to explore a new business model where they provide heating and cooling services, not electricity or natural gas. This would open the door for utilities to offer district service, such as for apartment buildings, commercial buildings, or even residential districts. They could, for example, have a field of heat pumps.
Hansen cites the example of the steam that Xcel Energy delivers to large commercial buildings in downtown Denver. “Imagine a similar sort of setup where you’ve got hot and cold loops that are being controlled by heat pumps,” he told Big Pivots. “And you can get the hot or the cold services to the building or facilities at whatever level that is needed.
“That’s a great business model for something like utilities because you get this big capital investment that they can amortize over the service life. I think that holds a huge promise for the state of Colorado.”
Hansen’s bill cleared its first two committee hurdles, the first the Senate Transportation Committee by a somewhat surprising unanimous 7-0 vote and then the Senate Finance Committee 5-0.
“I think there is a fair amount of consensus across the political spectrum that whenever you have a chance to do something better, cheaper, faster, then let’s do it,” said Hansen. “And I think that’s what we’re looking at with this technology.”
Three levels of building codes
Another bill, which still has not been introduced (hence the questions marks), is coming from Rep. Tracey Bernett, a Democrat from Longmont now in her second legislative year, and likely others. She promises introduction of the bill yet in March.
It’s an ambitious three-tiered proposal to use building codes during the coming decade to tamp down emissions. The bill will have three major components.
Staying current on building codes
The first will ratchet up adoption of the most recent building energy codes issued by the International Code Council by towns, cities, and counties that have building codes (some jurisdictions are too small to have building departments). Those codes are updated every three years. In the 21st century, they have dramatically increased energy efficiency requirements about 50%. That includes a 9% improvement in the most recent iteration of the International Building Code that became effective in 2021.
Current law requires local jurisdictions to adopt one of the last three codes that has been revised during the previous nine years. This bill would require jurisdictions to adopt at least the 2021 version by the year 2025 and incorporate recent advances such as the 240-volt wiring needed to accommodate heat pumps and charging of electric vehicles. They’re the sorts of things that would be very expensive to do if you had to call an electrician in later. Building codes commonly apply just to new homes being constructed and to remodels.
Net-zero by 2030
The second element requires local jurisdictions to achieve net-zero emissions standards for buildings by 2030. The Colorado Energy Office would be instructed to develop a model, using the existing national codes as a platform, so that each jurisdiction would not have to do so on their own.
Bernett says there will be choices. Buildings don’t have to be completely absent natural gas. Mixed-fuel buildings will be possible. But residents, builders, and developers will have to think through how they are going to achieve net-zero. “This is the Colorado way of doing things,” said Bernett in a January interview.
“If I were a resident building a new house, I would want my builder or developer to be forward thinking because the lifecycle costs of an all-electric building are less than that of natural gas. The upfront costs are a little bit more to put in an air-source heat pump, but the savings over the life cycle you get back in (saved) energy costs,” said Bernett, an engineer by profession.
The challenge in shaping the bill, says Will Toor, executive director of the Colorado Energy Office, was to make sure it remains truly focused on energy and carbon performance as opposed to identifying favored technologies.
“This bill would have a pathway for both buildings heated by natural gas and by electricity. It is designed to have performance standards that need to be met regardless of whether it’s dual-fuel gas-electric or an all-electric building,” he says.
To meet net-zero, a house might require a larger solar system or perhaps other approaches that reduce emissions. Bottom line is net zero, however that is achieved.
A stretch green code
Can’t get better than net-zero? Think again. This bill also proposes a third level, once again to be developed by the Colorado Energy office. This green stretch code is to go beyond energy, to consider things like water, air quality, and sustainable building materials.
The thinking is that this stretch code can be adopted by jurisdictions that want to reach further. But by creating a model state code, it provides consistency that can save money for jurisdictions like Louisville, a city of 21,000 now itching to rebuild in the wake of the Marshall Fire.
“It’s not just Louisville,” says Bernett, whose district includes that city. “Denver is interested, Boulder and many others whose residents want that. How can the state foster this?
The Polis administration wants this bill to move forward. “From our perspective, we see this as a high priority for both assuring that the building sector will be on a pathway to meet the climate target and provide direct benefits, even lowering long-term costs of energy,” says Will.
Bernett promises to introduce the bill before the in end of March This was at least partly the result of a more rigorous “stakeholder” process.
“There’s been a ton of stakeholder work” says Christine Brinker, senior buildings policy manager for the Southwest Energy Efficiency Project. Homebuilders, architects, engineers, labor, and environmental justice groups have all participated in calls in which Bernett and the state energy office have been trying to work out problems in advance of introduction.
“Some good suggestions came out of these stakeholder meetings,” says Brinker. One example is that the bill will be clear that the Colorado Energy Office will use existing codes as the foundation for the near-zero 2030 code.
Another concern was that this will be an all-electric requirement. It is not, although those with natural gas will have to put extra effort into energy efficiency or alternative energy, such as solar panels.
Cost is a major concern—likely to be a point of contention when the bill does get debated by legislators. This is an argument about the short-term and the long-term costs, and it’s an argument already underway in Louisville and Superior as those communities create the templates for rebuilding from the Marshall Fire.
Brinker’s organization, SWEEP, wants Colorado policy to take the long view. The upfront costs of a more efficient house may rise, but the fuel costs will be far lower over the lifetime of the infrastructure.
“Of course, everyone is concerned about housing affordability,” she says. “But there’s a lot of misinformation and misunderstanding about the net cost of these codes.”
She points to a study by the Pacific Northwest National Laboratory for Louisville and Superior that found the upfront cost is only $5,000—and this during a time of 19% inflation and for a larger-than-average house. The study found that savings on energy bills more than offset any increase in mortgage payments. The study, originally published in December, was updated specifically for consultation by Louisville and Superior.
Wiring for electric cars
This bill by Rep. Alex Valdez, “Concerning Resource Efficiency Related to Constructing a Building for Occupancy,” proposes to require commercial and multi-family buildings of 25,000 or more square feet to include electric vehicle charging for at least 10% of the parking spaces, with requirements bumped up to 50% if the building is part of a larger complex of 40,000 square feet or more.
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