For years, Tami Nelson struggled with what she called the “temperamental old man” in the basement. He was inefficient. He was smelly. Plus, he took way too much of her money.
That was Ms. Nelson’s nickname for the ancient oil-fed burner that provided heat and hot water for her 8-unit apartment building on a historic block in Brooklyn’s Bedford-Stuyvesant neighborhood.
Her tenants called to complain of cold showers. In winters, her monthly heating oil bill went upwards of $1,000. Her basement walls were coated with soot and stench.
No more. This past spring, she evicted the old machinery and replaced it with electric heat pumps. In so doing, she brought her century-old property in New York City along an increasingly urgent global transformation: weaning homes and offices off oil and gas.
In the United States, the Biden administration is trying to hasten that shift with billions of dollars in tax rebates to electrify buildings and make them more energy efficient. The global energy crisis, spurred by the Russian invasion of Ukraine has also hastened that shift. In 2021, sales of heat pumps grew significantly in the United States and several other major markets, according to research published in Nature.
It’s important because emissions from buildings — primarily for heat and hot water — account for more than a quarter of the nation’s emissions. In New York City, it’s roughly 70 percent, and under a 2019 city law, most large buildings have to drastically reduce their numbers starting in 2024. If they exceed their emissions limits, they will be fined.
Enter a new business opportunity.
Ms. Nelson converted her building with the help of Donnel Baird, an entrepreneur who grew up nearby and founded a company called Bloc Power. His contractors installed the equipment. Ms. Nelson rents it on a long-term lease.
All summer, the heat pumps have also cooled the apartments, since they function as air-conditioners as well as heaters. This winter will be her first without the smelly, troublesome oil burners in the basement. She hopes her bills will be lower too.
Mr. Baird, for his part, hopes other landlords will follow suit, and quickly.
The city has a tough law, he said, but carrying it out is another matter. “New York City, I would argue, is the most aggressive city in the country on energy efficiency and green buildings.” Mr. Baird said. “We are so far behind, and we are underperforming. ”
It’s a tall order in New York City. Buildings are old and drafty. Many apartment building owners, including cooperatives, can’t readily afford to go all-electric. There aren’t enough workers trained to retrofit them.
And often, even in new buildings, to say nothing of old buildings that were built decades before heat pumps existed, there isn’t enough space to accommodate all the equipment. Expect to see new electric kits on high-rise rooftops — like in the Brooklyn neighborhood of Williamsburg, where an array of heat pumps will be housed in a glass dome above the old Domino sugar-refinery building, right behind an old smokestack.
A few cities, such as Ithaca, N.Y., and Berkeley, Calif., have passed laws requiring all buildings, new and old, to get rid of all oil and gas in the coming years, whether for heating or cooking. Dozens of cities across the United States have also passed laws that prohibit new gas hookups. With that has come a counteroffensive, funded by gas companies and local utilities, to prohibit or discourage local laws to ban gas.
What’s in the Inflation Reduction Act
A substantive legislation. The $370 billion climate, tax and health care package that President Biden signed on Aug. 16 could have far-reaching effects on the environment and the economy. Here are some of the key provisions:
Auto industry. Until now, taxpayers could get up to $7,500 in tax credits for purchasing an electric vehicle, but there was a cap on how many cars from each manufacturer were eligible. The new law will eliminate this cap and extend the tax credit until 2032; used cars will also qualify for a credit of up to $4,000.
Energy industry. The legislation will provide billions of dollars in rebates for Americans who buy energy efficient and electric appliances. Companies will get tax credits for building new sources of emissions-free electricity. The package also includes $60 billion set aside to encourage clean energy manufacturing and penalties for methane emissions that exceed federal limits starting in 2024.
Health care. For the first time, Medicare will be allowed to negotiate with drugmakers on the price of some prescription medicines. The law also extends subsidies available under the Affordable Care Act, which were set to expire at the end of the year, for an additional three years.
Tax code. The law introduces a new 15 percent corporate minimum tax on the profits companies report to shareholders, applying to companies that report more than $1 billion in annual income but are able to use credits, deductions and other tax treatments to lower their effective tax rates. The legislation will bolster the I.R.S. with an investment of about $80 billion.
Low-income communities. The package includes over $60 billion in support of low-income communities and communities of color that are disproportionately burdened by climate change. Among the provisions are grants for zero-emissions technology and money to mitigate the negative effects of highways and other transportation facilities.
Fossil fuels industry. The legislation requires the federal government to auction off more public space for oil drilling and expand tax credits for coal and gas-burning plants that rely on carbon capture technology. These provisions are among those that were added to gain the support of Senator Joe Manchin III, Democrat of West Virginia.
West Virginia. The law is expected to bring big benefits to Mr. Manchin’s state, the nation’s second-largest producer of coal, making permanent a federal trust fund to support miners with black lung disease and offering new incentives to build wind and solar farms in areas where coal mines or coal plants have recently closed.
The Inflation Reduction Act, the climate law signed in August by President Biden, offers up to $8,000 in tax rebates for property owners to purchase electric heat pumps and make energy efficiency improvements (think insulation and better windows). Many buildings will need to upgrade their electric panels in order to fully electrify. There are rebates for that, too. The bill also allocates $200 million to train workers who can install new electric appliances and insulate homes.
But as buildings electrify, along with cars and buses, other challenges loom. One is cleaning up the electrical grid so that it burns less fossil fuel. Utilities will also need to produce much more electricity as demand grows.
At the moment, New York City’s 24 power plants run mostly on methane gas and fuel oil, spewing greenhouse gas emissions into the atmosphere and polluting the air nearby. New York City aspires to have what it calls a fully “clean energy” electricity grid by 2040.
Mr. Baird said that if any city can do it, it’s New York. It has the money and the political consensus to take climate action quickly. “New York is a test case of can you turn buildings into Teslas and can you use a municipal mandate to do it?” he said. “Those are the two real strategic questions.”
Europe’s New Urgency
Across the Atlantic Ocean, Vladimir Putin’s invasion of Ukraine has changed the strategic calculations for electric buildings.
The European Union relies on gas to heat homes, much of it from Russia. The European Commission is now scrambling to wean itself off gas, in part by doubling the installation of electric heat pumps by 2025, while also pushing for energy efficiency.
An independent analysis jointly produced by four nonprofit research groups recently concluded that electrifying buildings could slash gas use by 25 billion cubic meters, or about one sixth of all the gas that the European Union imports from the Kremlin.
Individual countries are taking their own measures. Germany is mandating heat pumps by 2024, and the Netherlands by 2026. Austria this year banned the sale of new gas boilers altogether. “Every gas heater we get rid of is a step out of our dependence on Russian gas,” its climate minister, Leonore Gewessler, said in June.
Heat pumps work by expelling warm air out of buildings when it’s hot outside and pulling warm air into buildings when it’s cold out. They have a bad reputation to overcome: Older ones weren’t great at heating homes in really frigid temperatures. Their proponents say that the technology has markedly improved. And the evidence suggests that, too. Some of the coldest parts of the world have some of the highest penetration of electric heat pumps.
Consider Sweden. Winters are very cold there, and fossil fuels account for less than 5 percent of home heating. That shift took 50 years.
Sweden once heated its buildings with oil. The 1970s oil crisis was the first tipping point. Next was a 1991 carbon tax, which made heating oil more expensive with a levy on the carbon dioxide emitted.
Today, Sweden relies on district heating: Pipes carry heat into apartment buildings. The heat comes mostly from burning garbage and biomass (which has environmental problems). Single-family homes, meanwhile, rely mostly on heat pumps.
Sweden faces a new challenge. There might not be so much garbage to burn as the country expands recycling, and its buildings need to become more energy efficient.
Mr. Baird’s Journey
Mr. Baird, the heat-pump installer who worked with Ms. Nelson in Bed-Stuy, grew up in Brooklyn, then Atlanta, then returned to Brooklyn after college. For years, his company made money by hooking up homes that relied on heating oil, like Ms. Nelson’s property, to the city’s gas grid. Gas is less polluting that heating oil.
The birth of his first child brought an epiphany. He realized that by hooking up those buildings to gas, he was helping prolong the city’s reliance on fossil fuels. “I was like, ‘Oh, when my kid’s 35, and he’s my age, this gas pipeline that I just paid for is still going to be there,”’ he said.
At the same time, two of his most prominent investors, the former Google chief executive Eric Schmidt and his wife, Wendy, nudged him to consider ditching gas altogether.
It made business sense. Not only could he help the city’s 10,000 buildings leapfrog from dirty heating oil and go electric, but there were tens of thousands of other buildings that could also pivot from gas boilers to electric heat pumps.
He shifted Bloc Power’s core business. It now focuses mainly on electrification in churches, swanky condos and apartment buildings in several cities nationwide. Bloc Power is also training 1,000 workers from low income neighborhoods.
For Ms. Nelson, the switch to electric hasn’t gone entirely smoothly. It took much longer than she had hoped for the city to issue permits. The equipment is now installed, but the plumbing lines and wires haven’t been removed. The two machines in the back yard are enormous. So much for her plans to build a terrace back there.
“Everyone was learning,” she said. “There was a lot we didn’t know.”
Indeed, space is a huge challenge. Most high-rise buildings don’t have enough space to house the equipment. Developers of new buildings, if they want to go all-electric, need to set aside expensive real estate to accommodate the kit. Architects will have to find ways to cut down on energy use. “It really puts pressure on the design team to be massively efficient,” said Hale Everets, who manages new construction for Two Trees, the company remaking the old sugar refinery into office space.
At the moment, Mr. Baird is vexed by a vast 300-unit housing cooperative in Queens, the Dorie Miller Cooperatives, one of the first where Black New Yorkers could buy their own homes. Like Ms. Nelson’s building in Bed-Stuy, this one too has been struggling with ancient, inefficient boilers that guzzle heating oil.
If the cooperative replaces the old oil boilers with new oil boilers, it risks being hit with city fines. If it leases a new electric kit from Bloc Power, its residents’ maintenance fees go through the roof.
Michael De Valera, the treasurer of the cooperative’s board of directors, worried about space. And he wondered if the city would have transmission lines in place to meet all the new electricity demand. It is a test of whether and how the new federal climate law can help a big city housing complex wean itself off fossil fuels.
At the moment, Mr. De Valera said, the plan is to switch out the old oil boilers for gas ones, prolonging the building’s reliance on fossil fuels for another 40 years or so. “There’s less work that has to be done, there’s less cost, there’s less of an education for shareholders,” he said. “When you look at all of the above, the transition is going to be a bit slower for us.”