Cities on the Front Lines

Dec 26, 2019
Cities can promote green energy and local deliberations—what they need is more federal resources.
BY JOAN FITZGERALD DECEMBER 5, 2019

 

Cities cover about 3 percent of the land on Earth, yet they produce about 70 percent of all global greenhouse gas emissions. Given their enormous environmental footprint, cities must lead in devising solutions to the climate crisis. But can they? Cities are, of course, creatures of state and national governments, and their ability to develop policies for drastic reductions in climate-destroying greenhouse gases varies widely with constitutional arrangements, fiscal resources, national politics, and the ingenuity of local governments, businesses, and citizens. Yet my decade-long exploration of cities and the climate crisis suggests that urban leadership is pivotal to both reducing greenhouse gas emissions within municipalities and devising the policy innovations that are necessary at all levels of government to bring about further, more geographically expansive reductions. But ultimately, they need support from the federal government to scale up.
Two areas where cities are in a position to lead is in reducing the dirty energy produced to supply buildings and transportation, which together account for about 73 percent of all carbon emissions. Cities are essential to delivering on both fronts, but the nation’s cities are at very different places with respect to climate action and have limited power and cash to scale up their efforts quickly.
While at least 100 cities have established 100 percent clean-electricity goals or committed to reducing emissions by 80 percent by 2050, few have acted at a scale that will get them there. Buildings and transportation are the top targets for achieving these goals. The ultimate step on both fronts will be eliminating fossil fuels in buildings, transit vehicles, and cars. While electrifying, we will have to move to renewable sources of energy, which in turn require massive federal investment in updating the grid and grid-scale energy storage. China’s industrial policy is already moving quickly in this direction, and as in the case of solar, we are in danger of being a laggard in the green technologies of the future.
Three cities—New York, Boulder, and Seattle—show what’s possible, as well as the challenges still to be surmounted.

New York: The Long Path to Efficiency and Electrification
New York City came out with a Green New Deal plan this spring, but the city has been a leader on climate change since Michael Bloomberg became mayor in 2001. Buildings, which comprise about 71 percent of the city’s greenhouse gas emissions and 95 percent of its electricity usage, have been a key focus of climate action. Getting to one of the nation’s most rigorous approaches to reducing building energy use has been a ten-year process. Hopefully, other cities can learn something from New York’s experience and expedite the path to both reducing building energy use and expanding renewable energy.
One key area is energy efficiency. New York City was a pioneer on serious efficiency requirements with its 2009 Greener, Greater Buildings Plan, comprising a local law that enabled New York City to adopt its own Energy Conservation Code and three laws that apply to buildings of 50,000 or more square feet.
The local Energy Conservation Code requires building owners doing renovations to upgrade affected systems to meet the city’s standards. Local Law 84 benchmarking requires building owners to submit energy and water use data annually through the U.S. EPA’s Portfolio Manager software. Nonresidential tenants are required to install high-efficiency lighting and electrical sub-meters for individual spaces so tenants are informed of their individual usage. The Local Law 87 energy audits requirement identifies pathways for achieving deep energy savings in large buildings. The stick is a fine of $3,000 for the first year of nonreporting and $5,000 for every subsequent year of noncompliance. NYC expanded the benchmarking law to include smaller buildings (25,000 to 50,000 square feet), which covers 5,000 more buildings.

Cities can lead in converting to 100 percent clean energy in heating and cooling buildings, and in transportation.

Mayor Bill de Blasio launched the NYC Retrofit Accelerator to provide free technical assistance to building owners in installing and financing energy and water efficiency upgrades and incorporating renewable energy. By supporting retrofits in up to 1,000 properties per year, the program is projected to reduce another million metric tons of greenhouse gas emissions by 2025. In addition to its own financial incentives, the city draws on the state’s energy efficiency financing programs, administered through the New York State Energy Research and Development Authority and the local electricity and gas utilities.
Two laws passed in January 2018 continue the momentum. Local Law 32 upgrades the city’s Energy Conservation Code consistent with the state’s model energy code. Local Law 33 requires that buildings larger than 25,000 square feet display an energy efficiency grade (A to F) based on their annual benchmarking results.
New York City’s Climate Mobilization Act, released in April, establishes emissions caps for different building types larger than 25,000 square feet and fines for landlords who don’t comply. Beginning in 2024, landlords will be required to retrofit buildings to reduce their emissions by 40 percent by 2030 and 80 percent by 2050.
According to Mark Chambers, director of the Mayor’s Office of Sustainability, an essential piece of the law is the city council’s approval of Property Assessed Clean Energy (PACE) financing with no upfront costs, which covers up to 100 percent of energy efficiency and renewable-energy projects. The program works through prequalified private lenders that offer low-interest, long-term PACE loans, which are repaid through the property tax bill and remain with the building upon sale. The administering agent of the loans measures and verifies the installation and performance of the improvements. The idea is that the utility savings from the upgrades cover the cost of the debt payments.
The city mandates the performance standards, but does not dictate a pathway for achieving them. Building owners can invest heavily in the building envelope or mechanical systems, or focus on occupant behavior. Still, such an aggressive mandate runs into predictable political opposition. The real-estate industry is opposed, with many expressing skepticism that the targets can be achieved based on the payoff of previous investments in energy efficiency. Further, they maintain that costs will require rent increases.
But Chambers says affordability is front and center in implementing the requirements. There is a different compliance path for affordable housing, and mechanisms are in place to ensure that building owners don’t pass off costs onto tenants. For the time being, rent-regulated buildings must meet delayed timelines, or implement a list of prescriptive energy conservation measures by 2024. Operational improvements should lead to lower operating costs that can free up capital to make further investments in the city’s housing stock. Chambers says that as the policy is implemented, city officials and building owners will have to negotiate how to achieve the goals without reducing affordable housing.

All the while, the city is leading by example—the Mayor’s Office of Sustainability conducts an annual emissions inventory of its own operations and posts it on its website. The Climate Mobilization Act commits the city to reduce emissions from its own buildings by 40 percent by 2030. The goal of the aggressive standards for public and commercial buildings, Chambers says, is to create a giant load shift in energy for the city.

To transition away from burning fossil fuels for space heating and hot water, New York is one of eight cities participating in a pilot called the Building Electrification Initiative (BEI), which started in October 2017 (Washington, D.C.; Boulder; and Burlington, Vermont, are the other cities). The technology in play is heat pumps.
But electrification isn’t just a matter of transitioning to a different technology. Brett KenCairn, senior policy adviser for Boulder Climate Initiatives, explains there’s a chicken-and-egg problem with reaching widespread adoption. If the city incentives increase customer demand, there need to be enough local contractors to install the systems. The city’s role is to work with the private sector to transform the market—by training contractors to install heat pumps while undertaking other efficiency upgrades; by developing local supply chains; and working with manufacturers, utilities, and state agencies to help cities facilitate rapid adoption. Cities can coordinate these activities while expanding existing energy efficiency programs and upgrading local codes and standards.
But in many of the nation’s cities, single-family homes dominate and we will need a different path to efficiency and electrification. As one of the BEI pilot cities, Boulder illustrates a pathway for these cities.


Boulder: Progress in a City of Single-Family Homes
Boulder, Colorado, is a city of about 108,000 with 40,000 single-family homes, most of which use natural gas for heating. KenCairn says scaling up to achieve the city’s 100 percent renewable goal will require electrifying space heating and hot water. Electrifying heating systems by 2050 would mean that from 2030 on, every furnace and hot-water tank replaced would have to be electric.
The conversion process has started. A city official contacts residents when they pull a permit for a renovation or replacing heating and/or cooling systems to inform them about replacing their gas space and hot-water heating systems with electric heat pumps. Then the house’s hourly energy use is monitored to determine the best range of options. Implementation starts with energy efficiency upgrades, including appliances, and for most houses, upgrading their electrical systems to support electric water heating and space heating and cooling, plus a vehicle charger.
Cost is a barrier. A heat pump system costs about $12,500 versus about $3,600 for a natural-gas furnace. Depending on electric service, and addition of vehicle charging and solar panels, the total cost of electrifying one house can be between $30,000 and $50,000, which is a tough sell given that Colorado has one of the nation’s lowest natural-gas rates. Other than a few well-off first movers, most residents cannot afford the transition. This is one of several areas where federal funding under the auspices of a Green New Deal combined with local implementation could make a major difference.
Another barrier Boulder is addressing is the resistance of landlords to invest in energy efficiency when tenants are paying the utility bills (referred to as the “split incentive” problem). To address this, in 2011 Boulder became the first city to require that rental properties meet energy efficiency standards by 2018. This goal has been met and the task ahead is to stimulate heat pump adoption.
Financing is a problem, and federal subsidies of a $300 Energy Star tax credit toward appliances and Boulder County’s $250 rebate aren’t enough. A case could be made for a business model that would have utilities lead the transition, but the state legislature would have to ask the Colorado Public Utilities Commission to require it.
In this case, the utilities would manage the energy efficiency and electricity conversion process. In exchange for locking in a customer who will use more electricity going forward, the utility manages upgrades and even purchases efficient appliances. It’s like the PACE financing mentioned above—only the cost is assessed on the utility rather than the tax bill.
Seattle is one of two cities in the country in which transit ridership is increasing, the result of many years of infrastructure investment.
While this is a totally different model than utilities currently employ, there are other potential cost savings. Utilities have to be able to supply all the power demanded, which means that they need contracts with providers for spikes in demand. That power is usually expensive and often not needed. By purchasing demand-enabled appliances, the utility would be able to use them to control demand spikes by changing temperature set points and hours of operation. Hot-water heaters could be charged so the utility could store their energy and use it when needed in peak demand times—usually when customers are out for the day. Likewise, other appliances could be programmed to run at night. Customers, of course, would be able to override settings to use appliances when needed. And if solar systems with storage capability were installed as well, the utility would have a controllable energy asset—its customers’ storage—that allows it to shave peaks, thus not having to buy as much reserve energy.
While the idea of utilities controlling appliances has not been met with enthusiasm in the past, the difference is that customers would be more willing if the utility was purchasing the appliances for them. The costs would be paid back via the utility bill, but would be offset by energy savings and passed on to future occupants of the home. Under a Green New Deal, the Department of Energy could identify the geographic and political settings around the country to experiment in and establish one or more templates for localities to replicate across the country. Areas in the Southeast with high heat pump adoption are a good place to start. As companies see high levels of adoption, more facilities to produce heat pump systems will come on board. Already, Daikin, a leading Japanese manufacturer, has opened a manufacturing facility in Texas.
The path to electrification plays out differently among cities. The BEI pilot will inform other cities on how to proceed. Nils Moe, executive director of the Urban Sustainability Directors Network, one of its funders, says electrification is a priority issue for its 215 city members.


Seattle: Electrifying Home Heating and Transportation
Seattle is also transitioning home heating away from fossil fuels, in this case from oil to electric. And because most of Seattle’s electricity is supplied by hydro power, it is already free of greenhouse gas emissions. In September, the city council passed an ordinance that taxes heating-oil providers and requires heating-oil tank owners to decommission or upgrade all existing underground oil tanks by 2028. The tax revenue will be used for rebates to Seattle homeowners to convert to electric heat pumps, with low-income households eligible for grants to subsidize the entire cost.
We look to Seattle as a model for electrifying mass-transit vehicles, cars, and trucks. With 66 percent of its emissions from transportation, this has been a key focus of Seattle’s climate action.
Seattle is one of two cities in the country in which transit ridership is increasing, the result of many years of infrastructure investment funded by taxes approved through ballot initiatives and integrated planning with carrots and sticks to motivate people to use it. And it’s a story of integrated city, county, and state planning with federal dollars to support it. That’s the essence of what the Green New Deal will need to be.
The city broke ground on its first light-rail project in 2006 and has been expanding ever since. But buses are the workhorses of Seattle’s transit system. Investing in more-frequent service on all 200-plus bus lines and changing routes to connect with two light-rail stations has paid off. The percentage of residents near a high-frequency bus route (every 15 minutes) has increased from 25 percent to 64 percent since 2015. According to the Federal Transit Administration, Seattle bus and rail ridership increased by 60 percent between 2003 and 2017, while it has decreased in most U.S. cities.
How does Seattle do it? Everyone I talked with told me of Seattle’s virtuous cycle of building and improving transit based on rider input and incentivizing ridership by providing transit access as a job benefit. Much of Seattle’s new transit infrastructure has been funded by taxes raised through citizen-approved ballot initiatives.
Further, Seattle companies offer their employees transit discounts and price parking high enough to discourage car commuting. Under the state’s 1991 Commute Trip Reduction Law, employers are given quite a bit of leeway in figuring out how to reduce car commuting. Subsidizing transit and vanpooling while charging more for parking is typical.
Electrification is at the core of the Green New Deal that the city council passed in August. Among its elements are a complete overhaul of transit and infrastructure to reach climate neutrality by 2030—20 years ahead of the previous goal. Specifically, a key goal is to electrify the municipal fleet and achieve 30 percent adoption of electric vehicles (EVs) among residents by 2040. King County Metro, which operates the regional transit system, plans on electrifying its entire fleet of 1,400-plus buses by 2030.
Having sufficient charging infrastructure to avoid “range anxiety” is key. Both the Seattle and Washington Departments of Transportation are investing heavily in EV charging stations. To motivate EV sales, particularly for middle-income earners, the state eliminated the sales tax for new EVs costing $45,000 or less, and used EVs worth $30,000 or less. The city incentivizes apartment and office buildings to install chargers and invests in charging infrastructure for ride-hailing services.
Seattle City Light, the municipally owned utility, has invested in charging infrastructure and has been examining how to accommodate increasing demand for electricity for vehicle charging since 2015. The utility is conducting pilot projects that examine different charging technology and pricing mechanisms. One pilot has installed utility-owned fast chargers in areas lacking private chargers, and another is leasing chargers installed in the homes of customers. Seattle City Light is also experimenting with transportation-specific electricity rates to motivate customers to install home chargers.
Where the money will come from as needs expand hasn’t been determined. So far, most of the $1 million to $1.4 million cost of all-electric buses is covered by federal grants—and in the context of a Green New Deal, long-term federal funding could accelerate the pace of city-led change.
But funding for transit additions and charging infrastructure is a contested issue. In 2008, Seattle voters approved a sales tax increase to fund transit expansion in 1996, 2008, and 2016. And in 2014, Seattle voters have approved sales tax increases several times to fund transit expansion. In September of this year, the state legislature passed an annual $75 registration fee on hybrid and electric cars to expand the statewide charging network, which will generate about $9.9 million annually. But in November, voters across the state voted to reduce overall taxes on vehicle registration, which will reduce state and local revenue by $4 billion over the next six years. Rural voters don’t want to pay taxes to fund transit and EV infrastructure from which they don’t see themselves benefiting. (And there is resistance to taxes for climate change generally—Washington voters voted down a carbon tax in 2016 and again in 2018 despite support from Governor Jay Inslee.)


The Federal Role
Electrification, of course, only makes a difference if it draws on clean energy. While cities are on the front lines, they don’t have the revenue to get the job done. We need considerable federal revenue for cities, as well as investment in grid modernization and storage. Microgrid development will be key.
In contrast, China has industrial policy to create the battery storage capacity and grid modernization needed to support high levels of renewable-energy adoption, and to develop both of these industries of the future. China’s 2017 plan for the battery industry details a research and deployment strategy for becoming the world leader in both batteries and electric vehicles. To follow up in 2018, the Chinese Ministry of Science and Technology released guidelines in five key technologies needed to support advancements in batteries and the grid. Government agencies are working on all aspects of technology development—including pricing and market reforms, technology standards, and recycling the batteries at end of use.
Cities are where local ingenuity blends with citizen participation. But only the federal government can provide the long-term financing for research and widescale deployment.