After Blocking Gas Bans In Red States, Fossil Fuel Industry Eyes New Jersey
In July 2019 ― while fires blazed from the Amazon to Alaska during what was, at the time, the planet’s hottest month ever recorded ― Berkeley, California, became the first U.S. city to ban newly constructed buildings from using natural gas for heating and cooking.
Nearly 15% of globe-heating emissions in the U.S. come from buildings, and the Berkeley ban marked a major step toward reducing the amount of invisible, disease-causing air pollutants that gas furnaces and stovetops spew into homes and businesses. Several big cities, including San Francisco, Seattle and New York, have followed suit.
But the backlash quickly overtook the bandwagon. As of this month, at least 20 states, virtually all of them under Republican control, have passed laws banning their cities and towns from prohibiting new gas hookups. Some states even considered allowing gas utilities to charge customers who terminate their service a four-figure “exit fee.”
Now Democratic-controlled New Jersey could become the next state to enact legislation that would make it harder to quit using fossil fuels in buildings.
The proposal to add extra bureaucratic barriers to banning fossil fuel heating systems comes on the heels of an industry lobbying blitz, and represents what advocates see as a bid to block electrification long enough for companies to beat the odds and produce a large supply of low-carbon fuel. With U.S. emissions soaring and the window to avoid catastrophic global warming closing, a state where roughly 85% of households depend on gas, fuel oil or propane has little time to spare.
But the legislation highlights legitimate fears over how the U.S.’ piecemeal approach to weaning its economy off fossil fuels might pinch ordinary people in a country where less than half the population can afford a surprise $1,000 expense ― and where millions are bracing for blackouts as the increasingly fragile electricity grid buckles.
The bill from state Senate Majority Conference Leader Vin Gopal (D) would prohibit the state government from adopting a rule or regulation “mandating electric heating or water heating systems” before the New Jersey Department of Community Affairs can complete a two-year assessment of what it would cost, and hold public hearings in every part of the state.
No such rule requiring homeowners and landlords to replace functioning fuel systems is under consideration, and no major environmental groups are proposing policies that would force homeowners to make a sudden switch. But the “energy master plan” that Gov. Phil Murphy (D) released in January 2020 promised to “incentivize the transition” to electric heating and “develop a transition plan to a fully electrified building sector.” And his administration’s lone proposed regulation on heating would force big commercial buildings to start phasing out fossil-fueled heating after 2025.
“There’s been mixed reports on if electrification is the only way to get to 100% clean renewables,” Gopal told HuffPost. “I want to make sure we do it in a way that doesn’t dramatically increase costs on average working-class families.”
Town hall hearings and cost-benefit analyses are already features of the state rulemaking process. And even if a proposed mandate from a state agency makes it through months of public comment and expert scrutiny, New Jersey’s Constitution still gives the bicameral legislature the right to vote by simple majority to veto any executive branch policy.
“There isn’t anything in this bill that won’t occur already,” said David Pringle, a consultant who works with the climate advocacy group Empower NJ. “These legislators have the best of intentions, but they’ve been sold a false bill of goods.”
Rather than task the state’s environmental or utility regulators with analyzing the effects of building decarbonization, the legislation would grant new powers to an agency that has in the past resisted updating the state building codes to the newest, most energy-efficient benchmarks and, as recently as March, challenged new rules intended to curb stormwater flooding.
“The bill really is a solution in search of a problem,” said Eric Miller, the director of New Jersey policy at the Natural Resources Defense Council. “What we really see it as is a naked attempt by the fossil fuel industry to protect their bottom line by bullying states and cities in an effort to delay the transition to electrified buildings.”
Reckless Delay Or Thoughtful Deliberation?
Gopal, a telegenic son of Indian immigrants, doesn’t resemble a typical champion of fossil fuels. The Democrat, 37, earned an 89% score on the League of Conservation Voters’ legislative ranking last year. In 2020, he voted to ban plastic bags and pass New Jersey’s first-in-the-nation environmental justice law, setting a new standard for forcing regulators to consider cumulative pollution effects when deciding whether to renew industrial permits.
But the lawmaker hasn’t totally shunned the industry, either. Leaders from New Jersey’s largest building-trades unions, which have historically advocated for the drilling and pipeline businesses that employ their workers, attended Gopal’s wedding in 2019.
Last August, Gopal’s reelection campaign accepted a $6,500 donation from the Fuel Merchants Association of New Jersey, a trade group representing nearly 600 petroleum sellers. In October, as Gopal battled to keep his seat amid a GOP wave, he received $1,500 from New Jersey Resources, a $4.3 billion gas utility.
Christina Zuk, Gopal’s wife, is a lobbyist at Princeton Public Affairs Group who works for companies including BP America and pipeline builders Kinder Morgan and T.C. Energy. Her employer, considered New Jersey’s largest and most influential lobbying firm, counts among its clients the New Jersey Propane Gas Association. In 2019, that trade group sent a letter to the New Jersey Board of Public Utilities opposing the governor’s plan to incentivize the transition to electric heating and appliances. The letter was submitted by David Smith, Zuk’s colleague at Princeton Public Affairs Group and another guest at the couple’s wedding. Smith later submitted a public comment in support of Gopal’s bill. (Smith didn’t respond to an email requesting comment.)
Gopal told HuffPost he does not know who his wife’s clients are, and scoffed at the implication that he would legislate on their behalf.
“My wife works for a big firm, and she’s worked there since long before I entered the legislature,” he said. “People will try to find a $500 donation and try to throw a conspiracy theory off of it when we all know that’s really not how politics works.”
If anything, he said, “by their logic I shouldn’t be doing this bill,” since he’s an active member of the International Brotherhood of Electrical Workers, a union that has supported electrification proposals in New Jersey.
It was another union that he said stoked his concern. Last year, Gopal said, he met with workers at UA Local 9, the New Jersey union representing pipe fitters and plumbers — people who would lose their jobs if the types of rules that mandate electrification in other states were put in place here. Murphy’s energy plan was vague, but that ambiguity became a Rorschach test in which opponents of electrification saw the clear contours of similar regulations.
Chief among them was the Fuel Merchants Association. This trade group spent more than $1.4 million on a public anti-electrification campaign last year, making it the state’s third largest lobbying entity in 2021, according to the New Jersey Election Law Enforcement Commission. The spree marked a 979% increase from the $132,000 the Fuel Merchants Association spent on lobbying in 2020.
The campaign launched an advocacy website and sponsored op-eds in USA Today. But much of the money went to airing 30-second television advertisements across the state that warned of a looming “$20,000 heat tax.”
That was a back-of-the-napkin estimate ― almost certainly inflated in most cases ― that was meant to illustrate the cost of swapping a gas- or oil-fired home heating system for an electric one. Making the switch requires not only buying a new appliance, but also hiring an electrician to rewire the house.
Inflated estimates or not, the ads worked. Gopal’s office started receiving emails from constituents across the district. Stretching from the central Jersey Shore inland about 15 miles, the 11th legislative district has an aging population and a growing share of elderly residents living in single-family homes, according to a 2017 Monmouth County study. Older ratepayers are especially vulnerable to utility price spikes, particularly if they rely on Social Security or retirement funds as their sole source of income.
The cost of installing electric heating is not set in stone. States provide a range of rebates, with Massachusetts offering residents up to $10,000 to go electric. New federal legislation targeting heat pump manufacturers could slash the price and increase the availability of the machines.
Likewise, the long-term operating costs of electric and fossil heating systems are not static. Northeastern states have some of the highest electricity prices in the country. Their per-unit price of natural gas, by contrast, tends to be closer in line with the national average than that of power. That would suggest an electricity bill that includes heating would cost more than the combined sum of separate gas and electric services.
In all but two of the 15 cities examined in a recently published government study, ratepayers who went fully electric and avoided fixed charges for gas service saved up to almost $700 per year.
A misstep by New Jersey’s Department of Environmental Protection seemed to lend credence to the argument that electric costs more. When the agency proposed its rule to stop permitting new fossil fuel heating appliances in buildings with systems at least 10 times larger than the average home, the regulators initially projected the operational costs of an electric boiler to be between 4.2% and 4.9% higher than the average gas unit. As it happened, though, this was an error — the regulators later amended the estimate, saying the costs would actually be 4.2 to 4.9 times higher.
The Fuel Merchants Association seized on the mistake as proof that electric heating mandates would quintuple utility bills. But this was a flawed argument, because the Department of Environmental Protection based its comparison on electric resistance boilers, which are more expensive to operate ― not on heat pump systems, which are much more efficient than both electric-resistance and fuel-fired boilers. The agency also used 2018 data that didn’t reflect the recent significant spike in gas costs compared to electricity prices.
Natural gas prices surged to a 14-year high last month alone, as a result of policies that failed to account for how the pandemic and the war in Ukraine would shape supply and demand. As the planet grows hotter, the resulting political and economic upheaval is likely to send even more shock waves through the global fossil fuel market.
Because electric heating is far more efficient, it’s less sensitive on average to fossil fuel price spikes, even though the U.S. grid is still powered primarily by gas and coal. Last fall, federal energy researchers released a study finding that U.S. households heating primarily with natural gas would spend at least 30% more than the previous winter’s average. Homes with oil heating were on track to spend 43% more, and propane customers were looking at a 54% price spike.
By contrast, households heating primarily with electricity only faced a 6% cost increase last winter. Once the U.S. grid depends less on fossil fuels, electric heating prices should, in theory, be even steadier. Ratepayers who used all-electric heating in Quebec, where vast hydroelectric dams power one of Canada’s lowest-carbon electric grids, enjoyed some of the biggest annual cost savings, the government study found.
“What we really see it as is a naked attempt by the fossil fuel industry to protect their bottom line by bullying states and cities in an effort to delay the transition to electrified buildings.”
– Eric Miller, New Jersey policy director at the Natural Resources Defense Council
Looming over these scenarios, however, is the question of how a systemic shift away from gas might affect the availability and prices of fuel during the transition. Fixing pipelines, inking new supply deals, maintaining a fleet of tanker trucks ― these things all cost money, and if companies cannot expect to recoup it under policies that aim to depress demand for fuel in the long run, there is little incentive to make those investments.
Absent some tool for centrally coordinating the transition, ensuring that efficiency increases and clean alternatives grow at a faster rate than dirty infrastructure comes offline, there may be little reason, by the market’s logic, to have gas supplies ready when other systems fail.
“You think the natural gas company is going to maintain the gas distribution lines simply for when the power goes out?” said Eric DeGesero, the Fuel Merchants Association’s executive vice president.
Can Electricity Keep Jersey Warm In The Winter?
Cost wasn’t the only concern the Fuel Merchants Association’s ads stoked. The clip claimed that electric heat pumps “will not keep your home warm or comfortable when temperatures drop below freezing during our New Jersey winters.”
Electric heat pumps are among the most popular ways to heat buildings without relying on fuel. There are also electric boilers, which use power instead of fuel to heat and circulate water.
Those are hardly the only options. Geothermal heating systems, which circulate warmth from underground, are growing quickly on the East Coast. States like New York are set to start experimenting with European-style district heating, where heat, like electricity, is generated centrally and piped into homes. It’s unclear what range of options New Jersey might pursue under the Murphy administration’s energy master plan.
It’s true that heat pumps have, historically, struggled in freezing temperatures, when there’s less warm air to pull in from outside. That’s partly why the appliances are most widely used in the Western and Southeastern U.S., where housing stock is newer and winters are milder.
But heat pump technology has improved significantly in recent years. A program at the Department of Energy aimed at pushing manufacturers to develop more reliable cold-weather heat pumps has already borne fruit. Last month, the agency named the appliance maker Lennox as the first to meet its new standards. Some of Europe’s coldest countries ― Norway, Estonia, Finland, Sweden and Denmark ― now have, in that order, the highest rates of heat pump adoption in the region. Maine, which gives residents up to $1,200 to install a heat pump, has an even higher adoption rate than Norway.
“It’s an often repeated myth about heat pumps that they don’t work in cold weather,” said Kevin Kircher, an assistant professor of mechanical engineering at Purdue University who researches heat pumps. “Not every heat pump is going to perform 100% of the time in every place, but it’s not hard to find a heat pump that will. It’s reaching the point where even the mainstream heat pumps developed by U.S. manufacturers can perform year round anywhere in the U.S., except maybe Alaska.”
Industry Charts Its Own Path
The business of refining, selling and delivering combustible fuels will likely never go away. But where those fuels come from, and what they are used for, is hotly debated. The industry sees a profitable future where selling burnable methane and hydrogen produces minimal emissions.
Renewable natural gas ― a fuel harvested from waste such as livestock manure, rotting garbage or sewage sludge ― adds relatively little heat-trapping gas to the atmosphere and functions just like fossil gas from deep underground. The same is true of synthetic natural gas, a fuel made from captured carbon dioxide and hydrogen produced with renewably powered electrolyzers. Like the globally traded commodity liquefied natural gas, these nascent fuels are known in the industry by acronyms: RNG and SNG, respectively.
These fuels are available today. But they are expensive and in extremely short supply. No clear evidence exists that those industries could provide nearly enough fuel to match current residential demand for pipeline gas at any point in the next few decades. Even the gas industry’s own optimistic numbers show low-carbon methane fuels barely seizing a double-digit percentage of demand for pipeline gas.
Two separate studies released in 2020 suggest that gas made from diverted waste should be treated as precious and reserved for things that can’t be easily electrified, like aviation or manufacturing. One came from the Rocky Mountain Institute, a widely respected environmentalist organization. The other came from the Energy Transition Commission, a corporate advocacy group that includes top executives from oil and gas giants Royal Dutch Shell and BP.
And that says nothing about the climate risks of increasing dependence on a gas that leaks twice as much as fossil gas, and ends up trapping 27 times more heat in the atmosphere over a 25-year period than carbon dioxide.
All of which points to electrification needing to do the vast share of the work of slashing emissions from buildings in the near term.
In New Jersey, that task is especially daunting. More than 75% of the state’s households heat with natural gas, and 7.4% do so with fuel oil ― far above the national averages, according to U.S. Energy Information Administration data. About 2% of households rely on propane, roughly half the national average. Less than 14% use electricity for heat, nearly three times below the national average.
Still, as industry groups pushed Gopal’s bill, they promoted another piece of legislation to boost renewable natural gas, in what advocates saw as the second part of a two-pronged legislative strategy to keep the gas business alive in New Jersey.
At an industry expo at the Mohegan Sun casino in Connecticut in May, Rich Carrione, a public relations consultant, warned the audience gathered for a panel on “the heating industry’s response to electrification” that most states’ decarbonization goals were “not going to be possible with petroleum products.” Instead, he said that renewable natural gas and biodiesel, a fuel made from plant or animal fats, offered “attractive alternatives.”
“Make no mistake. I’m still hearing people think that this is all going to go away, it’s a political movement, it’s a liberal agenda, with the next election we’re not going to be facing this issue anymore,” Carrione said, according to audio of the talk obtained by HuffPost. “That is not true. These issues are real, and they’re not going away. So we are at a crossroads where we have to embrace low-carbon heating to carve out a place in the future.”
But the Fuel Merchants Association expressed a more hawkish view later at the event. DeGesero, the group’s leader, compared the battle against building electrification to the Allies’ campaign against Nazi Germany. Casting family-owned fuel businesses as outgunned heroes in this looming struggle, he urged the audience to join the fight and get political by supporting bills like Gopal’s, paying dues to regional trade groups and mustering grassroots opposition to electrification.
“Maybe, as Churchill said, this isn’t the beginning of the end, but rather, the end of the beginning ― the beginning of the next three generations of the business that Great-grandpa started three generations ago,” DeGesero said. “Either way, Great-grandpa is proud. You are fighting with all of your abilities to sustain what he started all those generations ago. Good luck. Godspeed.”
In what he described as an unusual step, DeGesero admitted at the conference that his group worked with gas utilities on this campaign.
One Front In A Nationwide War
Gopal’s bill may have passed overwhelmingly last year, but senators approved it knowing there was no matching legislation in the New Jersey Assembly. The vote was largely symbolic.
This year, the Assembly has a version of the bill that was introduced by state Assemblyman Paul Moriarty, a Democrat from the state’s southwestern region.
“It is the first time I’ve seen a state legislature try to rein in a governor’s authority in the building electrification context,” said Amy Turner, a senior fellow at Columbia University’s Sabin Center on Climate Change Law who researches building-sector emissions.
Advocates doubt it will become law in its present form. Even Gopal admitted the bill is largely to make a statement.
“Let’s be realistic here. This bill is all about a conversation. The governor is never going to sign it. This is a bill that’s never going to go anywhere,” Gopal said. “We need to limit gas long-term. Let’s just do it in a responsible way.”
But Miller, the state policy director at the NRDC, said advancing the bill would send a signal that the playbook the fossil fuel industry has used in red states can be replicated in a subtler form in states like New Jersey.
With their product spurring an unprecedented public health crisis and their rivals offering attractive benefits, gas utilities have sought to leverage their incumbency and political might to wage war on virtually any government policy that makes electrification more appealing.
In Colorado, an industry-run nonprofit backed by the nation’s largest gas-only utility campaigned to block a proposal to eliminate state subsidies for new gas lines. In Austin, Texas, a gas utility ran interference on a proposal to boost electrification, sending legislators line-by-line revisions and marshaling customers to oppose the city’s effort. In Oklahoma, regulators last fall weighed allowing the state’s biggest natural gas utility to charge customers who quit service to go electric an “exit fee” of up to $1,400.
“When I walk into a bakery and I want chocolate cake, I don’t tell the baker how to make the chocolate cake. When the governor wants net-zero carbon energy, just tell us you want net-zero carbon energy, don’t tell us how to get there.”
– Eric DeGesero, Fuel Merchants Association of New Jersey executive vice president
There’s a certain irony in opposing New Jersey’s efforts to dangle carrots that incentivize electric heating over fuel, according to Pringle, the consultant who works with Empower NJ. Decarbonizing the state’s existing buildings ― plus all the new homes, businesses and schools still being built with fossil heating ― will only require more drastic policy measures down the road.
Residential and commercial real estate is directly responsible for 13% of the U.S.’ greenhouse gas output, thanks largely to fuel-based heating and cooking systems. Counting the portion of power plant emissions linked to buildings’ energy use brings that number closer to 40%.
“At some point, we are going to have to do more than voluntary incentives,” Pringle said.
Existing buildings can cost over six times more to retrofit for electrification than if the structures had been wired for electric heating and appliances in the first place, according to a HuffPost analysis of California cost data. Yet the largest trade groups representing homebuilders have worked alongside gas utilities to stave off efforts to make electric-ready circuitry the U.S. standard.
“We’re opposed to electric-only as the only manner of achieving the objective of net-zero carbon energy,” DeGesero said. “When I walk into a bakery and I want chocolate cake, I don’t tell the baker how to make the chocolate cake. When the governor wants net-zero carbon energy, just tell us you want net-zero carbon energy, don’t tell us how to get there.”
The fossil fuel industry he represents, however, has guarded what kind of ingredients make it into the recipe ― and who gets to write the cookbook. And just last year, it tightened its grip on how U.S. buildings are constructed.
Building codes are set on the state and local level, meaning the federal government has little control. But to create some uniformity, all 50 states outsource the highly technical work of code-writing to the International Code Council, a nonprofit consortium of building industry groups, gas utilities and municipal governments.
Every three years, the ICC convenes its members, updates the codes and gives delegates representing local governments the final say in a vote. In turn, every state, and some countries in the Caribbean and Asia, codify those generic codes into law. It’s usually a pretty sleepy, uneventful affair.
In 2019, however, cities fed up with how slowly the energy-related building codes were increasing efficiency and cutting emissions organized to vote for the most ambitious round of codes in years. In response, gas utilities challenged key measures to the ICC’s appeals board, arguing that requiring homebuilders to include the circuitry for electric heating, appliances and vehicle charging in new construction was a step too far.
The ICC, which has for years given industry groups special treatment, agreed with the gas companies, and yanked those code requirements. Then, in a surprise move, the ICC proposed eliminating local governments’ right to vote on energy codes altogether. Despite outcry from the Biden administration, environmentalists and dozens of cities, the ICC made the change permanent last year. Under the new code-writing procedure, which only applies to energy-related codes, industry groups get equal representation with governments on the committees designing the next set round of codes.
Even by the standards of the new system, some delegates helping to write the latest codes fear that corporate interests are once again wielding undue influence over the process, after a single email secretly sent from a gas utility nearly torpedoed a new proposal on electric vehicle charging.
Industry control over the country’s generic codes makes state-level policies that much more important for slashing U.S. emissions to the extent scientists say it will take to avoid catastrophic global warming, said Jeff Tittel, the retired director of New Jersey’s Sierra Club chapter. As if to emphasize that point, the Supreme Court last month limited federal regulators’ authority under the Clean Air Act to regulate power plant emissions, raising the stakes even higher for states. The country’s emissions, which spiked in 2021, are on track to rise again this year.
“If we end up at 100% electric, I’m fine with that,” Gopal said. “Let’s just do it in an organized way, a way where we understand the workers that are affected that have good union paying jobs, and how that affects their lifestyle, how that affects the cost on middle-class families that have to switch their heating oil. None of this is laid out in the energy master plan.”
But Tittel said Gopal’s bill sends the message that New Jersey is “going to stay on natural gas and burn fossil fuels even if it means more fracking, more pipelines, and more indoor air pollution.”
“The problem I see with this bill is it’s basically saying the state of New Jersey is on record stopping or slowing down alternative ways to heat and cool your home that may be greener and, long-term, cheaper,” he said. “This is there to slow progress.”