The most cost-effective way to cut greenhouse gas emissions from buildings in Maryland — while also keeping consumers’ electricity bills affordable — could be a hybrid approach of heating electrification with fuel backup, according to an analysis presented Tuesday to the Greenhouse Gas Mitigation Working Group’s Buildings Ad Hoc Group.

Hybrid residential customers, who use a combination of electrification and renewable fuels, “can save money by keeping their existing fuel-based heating equipment to provide backup heating during the coldest hours of a year,” said Jared Landsman, senior consultant with Energy and Environmental Economics (E3). Consumers could end up paying anywhere from $3,100 to $7,800 a year for heating by 2035, depending on how their homes are heated and the strategy the state adopts for building decarbonization, he said.

Christopher Beck, climate change program policy chief at the Maryland Department of the Environment, said Tuesday’s meeting was “a midyear check-in on the work E3 has been doing.” The ad hoc group is scheduled to meet again Aug. 17.

A report from E3, discussed at previous meetings of the working group, identified three main pathways for building decarbonization in Maryland. (See Maryland Looks at Pathways to Net Zero Buildings by 2045.)

• High electrification, in which almost all buildings switch to air source heat pumps and ground source heat pumps, with heating supplied by electricity throughout the year, and efficiency improved through building retrofits.
• Electrification with gas backup, in which “existing buildings keep using fuels for heating and are supplied with a heat pump combined with existing furnace/boiler that serves as a backup in the coldest hours of the year,” while new buildings would be required to have all-electric heat.
• High decarbonized methane, in which “buildings keep using fuels for heating while fossil fuels are gradually replaced by low-carbon renewable fuels.”

While recapping some material from previous meetings Charles Li, a managing consultant with E3, also drilled down into the projected costs and technical details for implementing each pathway. Electrification with fuel backup is expected to be the relatively least-cost and lowest-risk path among the three options, he said. However, costs across the entire building sector could vary widely because of ongoing uncertainties about fuel and equipment costs and evolving installation practices for electric heating systems, Li said.

“A hybrid scenario could potentially hedge for this uncertainty, given its lower overall costs and narrow cost ranges,” he said.

During a public comment period at the meeting, David Smedick, Mid-Atlantic senior campaign director for the Sierra Club, countered that E3’s cost analysis did not take into account the costs and emissions of methane leakage that could occur in the gas backup and decarbonized methane scenarios.

“The state needs to actively plan for rapid shrinkage of the natural gas distribution system,” he said.

Many Ways to Get to Net Zero

Under its 2016 plan for GHG reductions, Maryland is targeting at least a 40% reduction of emissions over 2006 levels by 2030, with an aspirational goal of an 80 to 95% reduction by 2050. The Greenhouse Gas Mitigation Group advises the Maryland Commission on Climate Change, which last year recommended that Maryland get more aggressive on GHG reductions by raising the 2030 goal to 50% and setting a 2045 goal for net-zero emissions.

Cutting emissions from buildings will play an integral part in achieving such goals because, according to 2017 data in the E3 analysis, buildings account for 90% of the state’s electricity load and 13% of its GHG emissions.

To calculate costs in its three scenarios, E3 looked at different combinations of the state’s electricity and gas systems, equipment and other fuel costs, Li said. The electric system’s cost components include investments for expanding transmission and distribution infrastructure, and for additional generating capacity to meet both peak electric demand and any other additional demand for electricity.

Li provided further detail about the estimate he supplied at the July 13 ad hoc group meeting that growing electricity demand under the “high electrification” scenario would result in about $2 billion to $3 billion in annual incremental system costs. The low-end estimate would require improved system configuration, he said, while with current installation practices, annual incremental system costs could even top $3 billion, reaching $3.2 billion by 2045.

The latter figure contrasts with just $400 million in annual incremental costs by 2045 under the electrification with fuel backup scenario, he said.

However, pairing air source heat pumps with fuel systems could save more than 80% of the annual incremental costs in the high electrification scenario, mainly by avoiding transmission and distribution infrastructure and generating capacities, Li said.

Gas system costs in all scenarios show wide ranges because of the high uncertainty associated with renewable natural gas commodity costs, he said. The high decarbonized methane scenario has the biggest range of incremental system costs because it would create high gas demand. Under this scenario, the annual gas system cost could range as high as $12 billion.

Deep Retrofits

Taking a different approach, Montgomery County, Md., is looking at proposed legislation to reduce building GHG emissions through strong building energy performance standards (BEPS) for several classes of commercial buildings. The county, located north of Washington, D.C., has set itself an even more ambitious goal of zeroing out its emissions by 2035, and commercial buildings account for 26% of the region’s GHG emissions, according to a County Council staff report.

Speaking for the bill at a council meeting on Tuesday, Adam Ortiz, director of the county’s Department of Environmental Protection, said while the county has “ambitious green building codes for new construction, we need similar requirements for existing buildings.” BEPS would, he said, “reduce climate impacts through deep energy retrofits, operational improvements and tenant engagement.”

Using a “trajectory approach,” Ortiz said, the bill would provide “a phased, long-term performance standard, highly engaged with our department, that balances building owners’ need for flexibility, while also meeting energy reduction targets, because each building and each industry sector is different.”

While the bill appears to have no strong opposition, some groups and one county resident did have improvements to recommend.

Todd Nedwick of the National Housing Trust noted that affordable housing owners may not have big enough staffs or the access to capital needed for high efficiency building upgrades. The bill should include funding mechanisms for such “under-resourced” buildings.

Timothy Truett, a county resident, said the bill was good, but “the enforcement provisions need to be strengthened. Under this bill, a building owner could do nothing for years and then maybe pay a modest fine.” He called for more frequent performance audits, with results on individual building made public. Anticipating that “the county will have very limited resources for compliance, public reporting of performance data could help produce compliance.”

Several U.S. cities, including Washington, D.C., have passed local BEPS, but if the bill passes, Montgomery County would be the first county in the nation to put one in place, Ortiz said.

The council took no further action on the bill; the public comment period on the legislation remains open through July 27.