This post originally appeared at https://www.badgerinstitute.org/natural-gas-and-regulation-in-wisconsin-a-policy-brief/

Since 1990, gross U.S. greenhouse gas emissions have decreased by just over 2%, according to the EPA, but direct on-site emissions from homes and businesses are increasing and now account for 13% of the U.S. total. Some policymakers and environmental activists opposed to the use of fossil fuels like natural gas have pushed state and local governments to ban their use in homes and businesses without consideration of increased cost to consumers, the nature and reliability of our energy supply or technological advances impacting emissions.

Other policymakers and elected officials — including some in Wisconsin — have in response introduced legislation designed to ensure the continued right to use fossil fuels to heat and power buildings as well as cars and various other devices.

Wisconsin fuel situation

Wisconsin is among the top 10 states in the reliance of homes on gas as a heating fuel,¹ because of gas’ domestically-sourced and reliable availability, its affordability, and its ability to heat effectively in the state’s subzero winter temperatures. These are the factors that distinguish Wisconsin from coastal or milder-climate states in the feasibility of heat-pump adoption.

• Percent of homes heated with any sort of fossil fuel: 78.2%²
  • Natural gas: 64.6%
  • Propane: 12.1%
  • Oil: 1.5%
• Electricity of any sort: 17.5%
• Homes that are all-electric: 11%³
• Homes using heat pump: 1%⁴
• Homes using central heat pumps in Census “east central” region (Wisconsin, Michigan, Illinois, Indiana and Ohio⁵): 3.4%⁶
• Natural gas share of Wisconsin’s… ⁷
  • Water heaters: 57%
  • Stoves and ovens: 34%

State of play in Wisconsin 

Unlike in 14⁸ other states, no Wisconsin governments currently ban or limit the use of natural gas. However, the Evers administration’s 2022 Clean Energy Plan⁹ specifically declares that “we need to simultaneously electrify building heating load as much and as quickly as possible,” urges rewriting building codes to accomplish this, and projects no use of natural gas by 2050.

An Assembly bill, AB 45, bars any local government from “placing any restriction on the connection or reconnection of a utility service” based on its source of energy. The bill has had a hearing in the Energy and Utilities Committee.

On related lines, the Assembly in April passed two bills, AB 141 and 142, to bar the state or local governments from banning “the use or sale of a device” or of a motor vehicle based on its energy source. Companion bills have been introduced in the Senate. Legislative opposition centered on saying the bills were unnecessary since no such bans were proposed,¹⁰ but environmental groups criticized the bills for hindering such bans.¹¹

Bans and their details

One state, New York, “will prohibit natural gas hookups and other fossil fuels in most new homes and other construction.” New York is only state so far to impose an outright blanket ban on gas.¹² 

Four other states have put some statewide restrictions on gas:

• California is banning the sale of all new natural gas-fired space heaters and water heaters by 2030, via its building code.¹³  
• Washington state is in effect banning gas for home heating and water heating while permitting it for stoves, via its building code.¹⁴  
• Colorado law now requires gas utilities must come up with “clean heat” plans to cut “greenhouse gas” emissions by 22% under 2015’s level by 2030.¹⁵ Utilities regulators decreed that all costs for gas network improvements be loaded onto new developments, amounting to a “de facto ban” on new hookups, said Xcel Energy.¹⁶  
• Maryland in 2022 enacted law calling for a 60% reduction in “greenhouse gas” by 2031. Regulators must have a draft plan by June 30, while building codes regulators must draft a plan to bring about “broad electrification.”¹⁷ 

Nationwide, 147 local governments have some kind of “decarbonization” ordinance or rule, according to Building Decarbonization Coalition, a group of utilities, government agencies and HVAC manufacturers.¹⁸  

Countervailing this, 20 states have prohibited local governments from restricting consumers’ use of gas. The states are New Hampshire, West Virginia, Ohio, Indiana, Iowa, Kentucky, Missouri, Kansas, Tennessee, Arkansas, Oklahoma, Florida, Georgia, Alabama, Mississippi, Louisiana, Texas, Wyoming, Utah and Arizona.¹⁹ 

Limits to heat pump adoption in Wisconsin 

Heat pumps, which work by using a refrigeration coil to extract heat from outside air and transfer it inside, are efficient, but that efficiency decreases as outside temperatures fall below about 40 F.²⁰ When exterior temperatures fall below about 25 F, most conventional heat pumps must use an auxiliary heat source, usually electric heating elements, which consume power at a much higher rate than the heat pump’s usual mode. Average daily lows in Milwaukee are below 25 most of December and all of January and February.²¹  

Some advanced cold-climate heat pumps can extract heat as low as exterior temperatures at 0 F. The U.S. Department of Energy’s Residential Cold Climate Heat Pump Challenge²² involves manufacturers competing to produce a heat pump that works at 5 F or below. Competing manufacturers in 2022 produced the first prototypes. 

Cost 

Because of heat pumps’ technical limitations at cold temperatures, they are costly to operate in cold climates. 

A 2021 study found that only 32% of U.S. households nationwide would find it cost-beneficial to use a heat pump, most of those in warm climates.²³ “Homes in cold climates, on the other hand, derive the smallest benefits from heat pump adoption,” wrote Thomas A. Deetjen, a researcher at the University of Texas. Such a switch in cold climates was cost-effective mostly for homeowners burning oil or propane, or using electricity already, such as baseboard resistance heat. Natural gas is cheap enough that the auxiliary heat required would make a heat pump costlier, he and collaborators at Carnegie Mellon University and the University of Michigan wrote.  

Other research confirms that.  

Researchers at Columbia University’s Center on Global Energy Policy found²⁴ in 2019 that while gas was costlier to operate than a heat pump in Atlanta and cheaper in San Diego, “A much larger cost difference exists in Fargo, where [air source heat pumps] are $3,193 (or 31.3 percent) more expensive (to operate) than the natural gas furnace option due to the low efficiency of current ASHPs in very cold climates.” 

The Department of Energy in March 2022 summarized the expected average unit costs of five residential energy sources for the year, as required by statute. The agency put the cost of a million BTU of home heat from electricity at about 3.5 times the cost from natural gas.²⁵

Those added operating costs come on top of higher capital costs associated with heat pumps.  

A New York State agency, NYSERDA, in 2019 estimated the potential for heat pump adoption and concluded, “Generally, installations replacing natural gas have negative [internal rates of return] (indicating that customers do not experience any payback during the life of the installed equipment). … Gas replacement installations [are] as yet not cost-effective.”²⁶ While homeowners heating with electric resistance or fuel oil would make up the cost of switching to a heat pump, the paper found, those heating with gas in chilly upstate New York would come out about 16% worse, or 17% in new construction.  

Trade-offs 

The political impetus for compelling more homeowners to use heat pumps instead of gas furnaces is to further environmental goals about carbon dioxide emissions. The Columbia University researchers discuss heat pumps as a “decarbonization” strategy and note that adding a “carbon tax” to artificially raise the price of natural gas as a way to compel heat pump adoption.  

Deetjen and his coauthors note, however, that there are environmental trade-offs atop the economic costs to individual homeowners. Because electricity generation at power plants that burn fossil fuels can lead to high emissions of soot, nitrous oxides and sulfur dioxide ²⁷, generating the additional electricity needed for a large-scale adoption of heat pumps can have a negative impact on public health. Often, write the researchers, “the climate benefits of heat pump adoption are overshadowed by the health damages. Out of the 69.6 million houses where heat pump adoption provides a climate benefit, 19.7 million create health damages that exceed their climate benefits. This yields a net public value that is negative.” 

“If all single-family homes adopted heat pumps,” the researchers write, it would cut residential carbon dioxide emissions by 32%, “which amounts to $6.4 billion in annual climate benefits. Although this climate benefit is substantial, it comes at a significant cost: $4.9 billion in health damages and $26.7 billion in private economic costs.” 

As a result, when considering both costs to homeowners and to the public, “Switching a home’s heating fuel from natural gas to heat pumps rarely produces a benefit, especially in cold climates where there are almost no houses where such a switch makes sense.”

¹ EIA, 2020 Residential Energy Consumption Survey. https://www.eia.gov/consumption/residential/data/2020/index.php?view=state#hc

² U.S. Energy Information Administration state profile. https://www.eia.gov/beta/states/states/wi/data/dashboard/consumption

³ EIA: 2020 Residential Energy Consumption Survey. https://www.eia.gov/consumption/residential/data/2020/state/pdf/State%20Fuels%20Used.pdf

⁴ EIA: 2020 Residential Energy Consumption Survey, space heating equipment table provides no data because the sample size was too small. EIA researcher Bill McNary by email: “We had less than 1% of households using a heat pump (0.9264%). The number was not published because only three respondents reported a heat pump out of 357 total respondents from Wisconsin.” https://www.eia.gov/consumption/residential/data/2020/state/pdf/State%20Space%20Heating.pdf

⁵ Census Reporter: https://censusreporter.org/profiles/03000US3-east-north-central-division/

⁶ EIA, 2020 Residential Energy Consumption Survey. https://www.eia.gov/consumption/residential/data/2020/hc/pdf/HC%206.7.pdf

⁷ EIA, 2020 Residential Energy Consumption Survey. https://www.eia.gov/consumption/residential/data/2020/index.php?view=state#hc

⁸ Building Decarbonization Coalition, Zero Emission Building Ordinances database. https://buildingdecarb.org/zeb-ordinances

⁹ Wisconsin Office of Sustainability and Clean Energy, Clean Energy Plan. https://osce.wi.gov/Documents/SOW-CleanEnergyPlan2022.pdf

¹⁰ Wisconsin Examiner, April 19, 2023: “Assembly Republicans pass bills to block government from curbing fossil fuel use.” https://wisconsinexaminer.com/2023/04/19/assembly-republicans-pass-bills-to-block-government-from-curbing-fossil-fuel-use/

¹¹ American Lung Association, submitted testimony, April 11, 2023: https://lobbying.wi.gov/Data/PositionFileUploads/04102023_103855_2023_4_11TestimonyAB141.pdf

¹² Washington Post, May 3, 2023: “N.Y. ditches gas stoves, fossil fuels in new buildings in first statewide ban in U.S.” https://www.washingtonpost.com/climate-environment/2023/05/03/newyork-gas-ban-climate-change/

¹³ Los Angeles Times, Sept. 23, 2022, “California moves to ban natural gas furnaces and heaters by 2030.” https://www.latimes.com/business/story/2022-09-23/california-moves-to-ban-natural-gas-furnaces-and-heaters-by-2030

¹⁴ Daily Signal, Nov. 10, 2022, “Washington State Ban on Natural Gas Heating Is All Cost, No Benefit.” https://www.dailysignal.com/2022/11/10/washington-state-ban-on-natural-gas-heating-is-all-cost-no-benefit/

¹⁵ Colorado Springs Gazette, Dec. 16, 2022, “New Colorado rules could limit natural gas line construction, expansion.” https://gazette.com/news/environment/new-colorado-rules-could-limit-natural-gas-line-construction-expansion/article_ea356df8-7dad-11ed-b9fd-538d8289f6d3.html

¹⁶ Denver Post, July 29, 2022, “A crackdown on gas emissions from homes worries utilities, union.” https://www.denverpost.com/2022/07/29/gas-utilities-cut-emissions-colorado/

¹⁷ Washington Post, March 31, 2022, “Md. pursues one of the most ambitious climate change plans in the U.S.” https://www.washingtonpost.com/dc-md-va/2022/03/31/maryland-climate-change-law/

¹⁸ Building Decarbonization Coalition. https://buildingdecarb.org/about-us/our-members

¹⁹ S&P Global Commodity Insights as of August 2022. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/virginia-says-no-to-anti-gas-ban-bill-still-aims-to-protect-gas-users-71656207

²⁰ Center for Energy and Environment, “Cold Climate Air Source Heat Pump Final Report,” 2017. https://www.mncee.org/cold-climate-air-source-heat-pump-final-report

²¹ National Weather Service Climate Norms. https://www.weather.gov/mkx/Climate_Normals

²² U.S. DOE. https://www.energy.gov/eere/buildings/articles/residential-cold-climate-heat-pump-technology-challenge-fact-sheet

²³ Deetjen et al. “US residential heat pumps: the private economic potential and its emissions, health, and grid impacts.”

²⁴ Kaufman et al., “Decarbonizing space heating with air source heat pumps.”

²⁵ Federal Register, March 7, 2022, page 12682. https://www.govinfo.gov/content/pkg/FR-2022-03-07/pdf/2022-04765.pdf

²⁶ NYSERDA, “New Efficiency: New York: Analysis of Residential Heat Pump Potential and Economics” January 2019.

²⁷ See, for instance, Scientific American, Jan. 9, 2014, “Switch to Natural Gas Slashes Power Plant Pollution.“ https://www.scientificamerican.com/article/switch-to-natural-gas-slashes-power-plant-pollution/

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