cold-reality

Cold Reality

The Cost and Challenge of Compulsory Home Electrification in New York

Executive Summary

In 2030, New York may begin a policy of forcing New York families to use electricity for home heating instead of fuels like heating oil, propane and natural gas. Homeowners whose furnaces fail in midwinter will face a choice between spending thousands—in some cases tens of thousands—of dollars on heat pumps while waiting for weeks or more to have their homes weatherized or buying inexpensive but energy-hungry electric furnaces. Their choices have significant implications for household budgets, utility companies providing electricity, and policymakers who need to ensure a sufficient amount of electricity production to meet the public’s needs.

New York’s 2019 Climate Leadership and Community Protection Act (CLCPA) calls for reducing statewide greenhouse gas emissions by 85 percent by 2050 (from a 1990 baseline). The Climate Action Council has proposed meeting that goal in part by electrifying 85 percent of the state’s buildings. But it also has recommended a prohibition on the replacement of fuel-burning furnaces as of 2030, which would push the mandate closer to 100 percent electrification as units reach their normal end of life.

Over six million residential units in New York use fuels for heating, with over five million also using them for hot-water heating, and over four million using them for cooking. While most of those homes use natural gas, more than 1.7 million New Yorkers use propane, heating oil or kerosene1 for heat, with over a million using those fuels for hot water as well.

The state’s compulsory electrification program—forcing consumers to replace end-of-life fuel-fired appliances with electric appliances—recommends that building owners, including homeowners, install heat pumps. To help ensure efficiency and comfort while using heat pumps, the state also recommends upgrading of the home’s shell through some combination of plugging air leaks, adding insulation and replacing older windows, of which add to the costs of the transition. In cold climate regions, air-source heat pumps users may also need to pay for a supplemental heat source, and due to the risk of power outages, risk-averse electric heat users may also opt to purchase backup power generators (generally powered by a fossil fuel).

In some cases, the costs of heat pump installation and building shell weatherization are high and will place a substantial economic burden on homeowners, even with state and federal subsidies, as shown by the following numbers:

  • The cost of installing a heat pump and weatherizing a New York home: $4,400 to $41,200;
  • Heat pump and weatherization’s share of the median household income of owner-occupied homes in lower-income counties: around 15 percent to over 60 percent; and
  • How long it will take homeowners to recover costs through energy savings: only two years at the low end, but up tot 31 years at the high end.

State policy may drive homeowners to instead buy more energy-intensive electric resistance furnaces that have lower upfront costs but cost more to operate. Even with higher annual energy costs, it will take six to 58 years for total costs to equal the cost of a heat pump installation plus home weatherization.

Widespread adoption of electric resistance furnaces would further increase electricity demand, challenging utilities as they rebuild the state’s electric grid to deliver higher electric loads and policymakers as they struggle to close a sizable future gap in winter electricity production.

Whether homeowners choose heat pumps or electric resistance heaters, the future of oil and propane distribution firms appears dire. Based on their respective expected operational lives, propane furnaces may be eliminated between 2047 and 2050, while oil furnaces would be eliminated between 2056 and 2063.

Because there are a variety of out-of-home uses of propane, the propane industry will not completely disappear in New York, although it will dwindle and need to consolidate. With fewer alternative uses for heating oil, the heating oil delivery industry may be eliminated entirely.

The global effect of the costly program of compulsory electrification will be a reduction in greenhouse gas emissions of less than 0.05 percent. In choosing this approach, New York has closed the door on a more affordable means of reducing greenhouse gas emissions, clean fuel standards that promote biodiesel and renewable propane.

Editor’s Note: this report was revised shortly after release to reflect the effect of EmPower+ subsidies which were appropriated in May 2023 and not reflected in previous state-issued documentation.

Introduction

In 2019, the New York state Legislature passed, and Governor Andrew Cuomo signed into law, the Climate Leadership and Community Protection Act (CLCPA). The Act’s overall goal is to reduce statewide greenhouse gas emissions by 85 percent from 1990 levels and achieve a net-zero carbon economy by 2050. To help achieve its goal, the Act calls for electrifying water- and space-heating in buildings.

The Act also created a Climate Action Council, tasked with drafting a “Scoping Plan” that proposes strategies to hit the CLCPA’s targets.2 While the Plan does not have the force of law, and contains only recommendations rather than mandates, it is intended to guide future action by the state Legislature and state regulatory agencies.

To reduce carbon emissions from the building sector, the Council recommends electrification of 85 percent of homes and commercial spaces statewide by 2050. But either inadvertently or surreptitiously, the Council set a much higher implicit target by recommending a ban as of 2030 on replacements of “residential-sized equipment for the combustion of fossil fuels for heating and cooling“ at the end of the equipment’s useful life.3 The Council’s expectation is that beginning in 2030, “heat pumps will be the majority of new purchases for space and water heating.”4

According to a member of the Council, “the [proposed] rules apply to all fossil fuels.”5 If implemented then, all users of natural gas, heating oil, propane and coal would be unable to replace their furnaces or heating stoves when they break down after 2030. The only combustion heating that would still be allowed would be wood heat (used in about 2.5 percent of New York’s owner-occupied homes).

Currently, natural gas is the most commonly used source for residential space heating in New York, serving just under 4.5 million homes, primarily in urban areas. Heating oil is the second-most common, used in 1.4 million homes in both rural and urban areas. Propane is less common, with just over 330,000 users, and coal is used in just over 16,000 homes (Figure 1).

 

Electricity

Only 13 percent of all New York residential units are heated with either electricity or solar energy. Considering individual counties, the highest rate of home heat electrification is currently found in Clinton County, at 32 percent, with the lowest rate of electric heat being only five percent in Richmond County (Figure 2).

Collectively, the proposed prohibition will require the compulsory electrification of 6.2 million residential units across the state, including 3.7 million owner-occupied homes that use a fossil fuel source for heat.

 

Heating Oil

Heating oil is used by 19 percent of New York households (1.4 million homes). It is most commonly used on the east side of the state (Figure 3) including high use rates in the North Country and the Adirondacks. But it is also common in the Hudson Valley and on Long Island. On Long Island, at least, the use of oil is associated with a historical use of coal, with many homeowners having switched from coal to oil in the absence of a buildout of natural gas delivery lines.6

Despite its prevalence in a few of the state’s more densely populated counties, oil is more commonly used in more rural counties (see Appendix). In four counties, more than half of homes are heated with oil (59 percent in Putnam County, 53 percent in Sullivan County, 51 percent in Greene County, 50 percent in Franklin County), with 10 other counties having rates from 40 to 49 percent.

 

Heating oil is similar to diesel fuel. It has several advantages that make it useful for space heating. It has a higher heat output, so it warms space quickly. It cannot burn in its liquid state—it must be vaporized to ignite—so it can be safely stored with low risk of fire or explosion.

While heating oil is used primarily for indoor space heating, it also serves over 800,000 oil-fired water heaters in New York homes. 7

Propane

Approximately 330,000 households in New York use propane for indoor space heating (4 percent of residential units),8 and around 270,000 households use it for hot water heating.9 Other residential uses of propane include indoor cooking and clothes drying as well as outdoor space heating and cooking. As many as 44 percent of U.S. households own gas grills,10 which would translate into over 3 million households in NY.

Propane is a highly versatile fuel, containing about two-and-a-half times the energy by volume as natural gas.11 A byproduct of natural gas processing and petroleum refining, it is an approved clean fuel recommended by the 1990 Clean Air Act Amendments.12 When used to replace gasoline as a vehicle fuel it reduces greenhouse gas emissions by nearly 13 percent.[xiii] If spilled, it is not harmful to soil, surface water, or groundwater,14 and if inhaled, it is non-toxic to humans, birds, and other animals. In addition to its residential use, propane has many industrial and agricultural applications.

The use of propane for residential space heating is not distributed evenly around the state (Figure 4). In many counties less than five percent of households heat with propane. In five counties 20 percent or more do. Schuyler County has the highest rate at 27 percent, with Hamilton, Orleans and Yates Counties at 23 percent and Oswego County 20 percent.

Notably, propane usage is most common in low population density counties. No high population density county has above 3 percent use of propane for home heating, while in low population density counties use rates of 10 to 15 percent are common, and several counties are above 20 percent (See Appendix).

Propane is most commonly used in counties where the median income is below the statewide median. All counties with high propane use rates are below the state median income, and the highest-income counties all have low propane use rates (See Appendix).

It bears noting that the costs of a compulsory transition to all-electric heating and appliances will be particularly burdensome in low population-density counties, where homeowners have the lowest median incomes.

 

Homeowner Electrification Costs

If New York implements the proposed 2030 ban on replacing natural gas, oil and propane furnaces, homeowners who have an unplanned equipment failure after that date will face a hard choice. They can choose electric resistance furnaces that cost only around $1,500[xv] but saddle them with higher annual energy expenditures or they can spend thousands—potentially tens of thousands—of dollars for heat pumps and the necessary weatherization upgrades to the shells of their homes.

Because of the greater efficiency of heat pumps, the Climate Action Council has emphasized them most strongly in its Scoping Plan. Electric resistance heat is mentioned only four times, with the references either focusing on its inefficiency or limiting its role to just a backup heat source for homeowners using air-source heat pumps in cold climates. Heat pumps are mentioned 70 times, consistently in the context of recommending them and assuming their use in the state’s strategic planning.

In an electric resistance furnace, electricity causes heating elements to heat up and air is blown across to send warm air through the home’s ductwork. It takes a substantial amount of electricity to heat the elements.

Heat pumps draw heat from the source (air, ground, or sometimes water) and transfer that to the air inside the home. Electricity is used primarily to operate the fan that moves the air, which takes much less energy than heating elements.

Because the temperature below the surface of the ground is the same year-round, and normally warmer than the ambient air temperature in a cold-climate winter, ground-source (or geothermal) heat pumps are generally more efficient than air-source heat pumps.[xvi] While air-source heat pumps can draw warmth even from bitterly cold air, efficiency declines at low temperatures and in extreme cold may require a backup heat source to ensure the house remains comfortably warm.[xvii]

Heat pumps can blow air through a home’s standard heating ducts, or in the absence of duct work, wall-mounted air-source “mini-split” heat pumps can be installed. Ground-source heat pumps are the most expensive on original installation because of the cost of excavation to place the heat-exchanger coils in the ground. If no duct work already exists in the home, mini-splits are the least expensive option because they do not require the cost of installing ductwork. In all cases, heat pumps are normally operated by electricity.

Total installed cost (equipment plus installation) for an air-source heat pump is estimated at between $6,800 and $8,600, with prices expected to stay around that high end in the future.[xviii] Ductless mini-split total installed costs are estimated at around $2,000 with prices remaining steady in years to come.[xix] And total installed costs for ground-source heat pumps are estimated at around $14,000 to $23,000, with costs rising slightly in the future.[xx]

Weatherization Upgrades Required

As a beginning point, then, air- and ground-source heat pumps cost in the range of 4.5 to 15 times as much as an electric resistance furnace, but the total upfront costs are even higher because the state recommends combining heat pump installation with building shell upgrades.

The New York Public Service Commission categorizes these shell upgrades as either comfort shells or code shells. A comfort shell includes sealing air leaks and adding attic insulation. A code shell requires meeting the requirements of the New York State Energy Conservation Construction Code, with stricter standards for wall and roof insulation and more energy-efficient windows.[xxi] A code shell will make for a more weathertight home and reduce heating costs but will have a higher upfront cost.

The New York State Energy Research and Development Authority (NYSERDA) has estimated the cost of heat pump installation and shell upgrades for a pre-1980s home in upstate New York that currently uses oil heat (Table 1).[xxii] This may not reflect the full cost for older homes that may need more intensive shell upgrades, such as the 800,000 owner-occupied homes built before 1940.[xxiii]  The estimate is an incremental cost, or the cost above and beyond what a homeowner would spend just putting in a replacement oil heater.

 

The estimate has a wide range, with two factors driving the cost variability: 1) the choice of ground-source or air-source heat pumps, and 2) how much upgrading a building’s shell requires. Home size also makes a difference, with larger homes being more costly, on average, on both factors (both needing larger heat pumps to heat more space, and having more wall and ceiling space to insulate, as well as having more windows that may need to be replaced). Because poorer homeowners often live in older housing that is draftier, more poorly insulated, and often with just single-pane windows, those least able to afford extensive shell upgrades may be among those who face the highest shell-upgrade costs.

Available Subsidies

Because of the high cost of heat pump installation, a variety of federal, state, and utility-based subsidies have been developed to incentivize homeowners to choose them. The Federal Energy Efficient Home Improvement Credit offers up to $1,200 annually for energy efficiency improvements and up to $2,000 for heat pumps.25 New York offers a tax credit of up to $5,000 on ground-source heat pumps (which functions as a subsidy to the relatively well-off. The state also offers the Comfort Home Program26 providing shell improvement assistance of between $1,000 and $4,000.

Adding up these available subsidies, a homeowner installing an air-source heat pump could receive up to $7,200 in assistance during the installation year, while a homeowner installing a ground-source heat pump could receive up to $12,200 (including New York’s $5,000 ground source heat pump subsidy).

Assuming a homeowner can maximize the available subsidies, the estimated net incremental cost (above the cost of replacing an oil or propane heater) falls between $14,400 and $46,200, as shown in Table 2.

In addition, New York’s EmPower+ program provides additional subsidies for low and moderate-income single-family households. For low-income households (up to $62,988 income for a family of four), the subsidy is capped at $10,000, and for moderate-income households (up to $83,984) the subsidy provides a 50 percent discount on eligible projects with a $5,000 cap.27

For low-income households, the EmPower+ subsidy could bring this incremental cost—the cost above replacing a standard furnacedown further, to under $5,000 if less shell upgrading is required and up to around $35,000 for homes needing more extensive upgrades. For moderate income households the cost could run from just under $10,000 to around $40,000.

Additional Considerations on Costs 

How accurate these cost estimates are depends on the accuracy of the underlying estimates from NYSERDA’s analyses. They may be correct for the specific type of single-family home modeled in their research, and which is the primary focus of this report, but there is growing evidence that their dollar amounts may severely underestimate the costs for electrifying some types of housing. While it is not a one-to-one comparison, a group of co-ops and rental buildings recently received an estimate of estimate of almost $77,000 per unit to electrify for compliance with New York city’s Local Law 97, with a considerable part of the cost coming from the need to upgrade the wiring substantially to handle the heavier loads of all-electric appliances in the homes28 And the New York City Housing Authority recently installed heat pumps in a 58-year old apartment building at a shocking cost of $176,000 per unit,29 over three times NYSERDA’s high-end estimate. This suggests that at least for older apartment buildings throughout the state, the costs of electrification may be substantially higher than the state has so far estimated. 

In addition, the NYSERDA estimates might not capture the total cost for homeowners installing heat pumps. According to the Climate Action Council’s Scoping Plan, in the coldest region of the state, air-source heat pumps could be insufficient in winter, so that some homes “may need supplemental heat (wood, home heating oil, propane, or gas).”30 As the Council proposes to ban oil, propane, and gas furnaces, that suggests they expect some homeowners to buy wood stoves or boilers. A pellet stove could add between $1,200 and $5,500 to the homeowner’s net cost.31 An outdoor wood boiler can cost between $6,500 and $18,00032 but could fully provide for a homeowner’s heating needs, eliminating the need to install a heat pump. Elsewhere in the Scoping Plan, the Council indicates the potential for electric resistance heat as the supplemental heat source.

 

Are Heat Pumps Affordable for New York Homeowners?

Affording the upfront cost of heat pump installation may be especially challenging to homeowners with moderate to lower incomes, depending on how much upgrading their home’s shell requires. Figure 5 shows the wide variation in the median household income of owner-occupied homes in New York’s 62 counties, from over $160,000 in New York County to just around $60,000 in Allegany County (with the state median income highlighted).

 

Figure 6 compares the range of estimated costs for installation of air-source heat pumps and shell upgrades as a percentage of the median household income of owner-occupied homes in each county. At the low end of costs, homeowners can expect to spend a minimum of 20 percent of their county’s median household income. But in almost two-thirds of counties, heat pump installations could potentially cost more than half the median homeowner’s annual household income, and in 20 counties the cost could reach 60 percent or more of the county median.

 

For former natural gas, oil and propane users, these upfront costs result in lower annual energy costs, but the cost-recovery time can be lengthy.[33] NYSERDA’s estimate for annual cost savings for a single-family home replacing an oil furnace with a heat pump and a comfort shell upgrade is $1,900 per year. This means a homeowner could expect to recover their costs through energy savings in about eight years, not counting financing costs. However, the Northeast Energy Efficiency Partnerships reported annual energy savings of $1,335 when switching from oil heat to an air-source heat pump (with no shell specified).[34] If real savings are closer to this figure, then cost recovery will take between three and 31 years. The latter is an unreasonably long timeframe for many homeowners, especially older ones.

With a code upgrade, NYSERDA predicts annual energy savings of $2,400 per year. A homeowner who invests in a code shell upgrade and receives the maximum subsidies will need between two and 17 years to recoup the costs (not including financing costs).

The expected operational life of air-source heat pumps is around 15 years, and from eight to 21 years for ground-source heat pumps. This means that homeowners whose costs are on the high end may not recover the costs for their heat pumps and building shell upgrades before they need to spend thousands on new heat pumps (although they will not have the shell upgrade costs the second time around).

Despite the Climate Action Council’s strongly expressed preference for heat pumps, these costs may encourage many New Yorkers hit with sticker shock in 2030 and after to choose the low-cost option of an air resistance furnace. At only around $1,500, these may be much more within the budget of some homeowners (although they too might require wiring upgrades that increase their install cost).

 

Although electric resistance heaters require more energy than heat pumps and thus cost more to operate, they may be a cost-effective choice. On a national basis, electric resistance furnaces are estimated to cost nearly $500 more per year to operate than an air-source heat pump.[35] Because the Empire State’s average electricity cost is roughly 45 percent above the national average, that same amount of electricity could cost over $700.[36]

However, most electric heating is in the southern United States, where lower heating demand means less electricity is used.[37] In New York, especially in its colder regions, higher heating demand will mean greater electricity use, so the incremental energy cost to homeowners could be well over $700 per year.

But conservatively assuming just an extra $700 per year for electricity, it would take a homeowner six years to spend as much as the minimum expected outlay for a heat pump and comfort shell upgrade. To equal the maximum cost of a heat pump with code shell upgrade would take over 58 years.

The attractiveness of electric resistance heaters could create challenges for utilities and policymakers if large numbers of New Yorkers opt for this less expensive means of heating their homes. Even with large-scale heat pump installation the demand for electricity will increase significantly. The current electrical grid cannot handle this increased load, so utilities will have to substantially rebuild it—including substations, transformers, high-voltage transmission lines, and local service lines. Adding higher than predicted loads to the grid because homeowners choose a more energy-intensive form of space heating will exacerbate the challenge of planning the future grid.

At the policy level, higher electrical demand would require even more electricity production than currently predicted. Because the state plans to eliminate gas-fired generators for electricity production, replacing them largely with intermittent wind and solar, the state already faces a gap in winter energy production of up to 10 percent of its needs.[38] New York has no defined plan for filling that gap, and widespread use of electric resistance furnaces would exacerbate it.

The Future of Oil and Propane Heating

With over six million residences in New York using oil, propane, or natural gas for heat, approximately 281,000 of those units will wear out annually and require replacement, including around 53,000 oil furnaces and 19,000 propane furnaces.[39] If fuel-fired replacements are prohibited, then the number of operational oil and propane furnaces must decline year over year. Because most furnaces last less than 30 years, a ban on replacements in 2030 means most will reach the end of their lives by 2050, the target year of the CLCPA for achieving an 85 percent reduction in greenhouse gases statewide, or a few years after.

Using the average lifespan of each type of fuel furnace, Figure 8 shows the expected rate of decline and date of eventual disappearance of fuel-furnaces in New York.[40] Under this scenario, propane furnaces effectively disappear by 2047, while oil furnaces, because of their longer operational lives do not disappear completely until 2056. Assuming every furnace lasts its maximum expected operational life only extends the persistence of propane furnaces until 2050 and oil heaters until 2063. This assumes no other factors either hasten their decline or postpone the implementation of the ban.

 

An as-yet unassessed risk in this transition is whether labor or supply shortages will cause bottlenecks for New York homeowners face unexpected equipment failures and need a speedy replacement, especially in the depths of winter. Delays in recovering heat can cause discomfort, at a minimum, and additional costs for safe lodging and cold weather damage to homes. Most HVAC contractors will require additional training to become heat pump installers,[41] and New York needs to address the task of ensuring enough contractors are trained so that beginning in 2030 there will be no shortage of qualified installers.

However, homeowners who are faced with a sudden requirement for a replacement heat source in winter will face an additional challenge if they opt for a heat pump. While installation of the heat pump itself takes only about the same amount of time as installation of a furnace, it will take homeowners time to arrange for excavation to install heat exchanger loops if they prefer a ground-source heat pump (potentially having to wait for frozen ground to thaw). It will also take time to arrange for inspecting the needs of the home’s shell and contracting to get the necessary work done, without which homeowners may find their heat pumps do not keep them comfortable. The ideal situation for a heat pump installation is when the homeowner can plan ahead, but many will not have that luxury.

Compulsory electrification will cause economic havoc in oil and propane industries. As an increasing number of oil and propane heat users are forced to electrify, the number of customers for oil and propane distribution companies will shrink. This will initially force industry consolidation, but as the number of customers continues to shrink, so will the number of firms.

While the use of propane heat is predicted to disappear several years before the disappearance of oil heat, the varied uses of propane outside the home—in grills, exterior space heating, and in business and agricultural applications, as well as propane generators used as backup for heat loss during electrical power failures—may allow some propane distributors to survive. The lack of alternative uses for heating oil suggests the future is even bleaker for oil distribution firms.

Shutting The Door on More Affordable Approaches

In pursuing compulsory electrification as the only path toward reducing greenhouse gas emissions, the Climate Action Council shut the door on an alternative approach that would not impose such potentially heavy financial burdens on lower-income and rural New Yorkers: clean fuel standards.

Critically, the global greenhouse gas contribution of home heating in New York is so small as to be effectively unmeasurable. The Climate Action Council identifies buildings as responsible for 32 percent of the state’s greenhouse gas emissions, with 34 percent of that coming from the combustion of fuels in residential buildings. Collectively, then, natural gas, heating oil and propane (and wood) in all their interior home uses account for only 11 percent of statewide greenhouse gas emissions. With New York’s total greenhouse gas emissions contributing less than one half of one percent of global emissions, combustion of fossil fuels in residential buildings accounts for less than 0.05 percent of global emissions.

Heating oil is similar to diesel and can be replaced with biodiesel or renewable diesel made from non-petroleum feedstocks, primarily vegetable oils and animal fats. The carbon intensity of each depends on the particular feedstock and the energy source used to produce it, but biodiesel can reduce greenhouse gas emissions by greater than 50 percent compared to petroleum diesel.[42] Renewable diesel normally has a somewhat higher carbon intensity because it requires a more energy-intensive production process,[43] but that difference would disappear if produced with a greenhouse gas-free energy source.

New York has already taken steps towards a clean fuel standard for heating oil. Since 2022, state law requires a blend of at least 5 percent biodiesel in heating oil (a standard that has been in place in New York City and on Long Island since 2017). The minimum blend increases to 10 percent in 2025 and 20 percent in 2030. Many heating oil distributors already deliver blends of 20 percent,[44] and some supply blends as high as 50 percent.[45] Greater gains are possible, as the heating oil industry itself has submitted draft legislation proposing a standard of 50 percent biofuel by 2030 and 100 percent biofuel by 2050.[46]

Renewable propane is also produced from vegetable oils and fats.[47] It has a carbon intensity roughly half that of conventional propane.[48] Being chemically identical to conventional propane, it is a “drop in” replacement fuel that does not require any equipment upgrades for homeowners. It can be blended with traditional propane at any percentage or used as a 100 percent replacement fuel.

Both biodiesel and renewable propane are slightly more expensive than their conventional counterparts, but the costs imposed on lower-income and rural New Yorkers who would shift to them would be substantially less than the costs of compulsory electrification.

Implementing a clean fuel standard need not hinder New York’s ultimate target of electrifying 85 percent of the state’s buildings. A clean-fuel standard would ensure all New Yorkers could have warm homes while the state pursues continuing electrification through financial incentives.

Because clean fuel standards can be implemented in the near future, they could even hasten reductions in greenhouse gas emissions, moving them forward in time, while also reducing the cost of reducing those emissions.[49]

Simultaneously, the state could emphasize the goal of 85 percent electrification, backing away from the implicit goal of nearly 100 percent electrification created by the proposed fossil fuel furnace ban. An approach that continues to emphasize incentivizing New Yorkers to transition rather than exerting a command-and-control policy could move the state toward its goal with less economic harm to moderate- and lower-income New Yorkers.

Conclusion

New York’s proposed program of compulsory electrification could impose enormous costs on homeowners while making nearly unmeasurable gains in reducing global greenhouse gas emissions. As of 2030, some homeowners will be faced with the choice of potentially spending tens of thousands of dollars toward the purchase of heat pumps and upgrading their home’s shells or buying electric resistance heaters at a fraction of that cost.

The low rate of electric heating in many of the state’s more rural and lower-income counties means much of the choice will fall on homeowners who can least afford it. And those who have unexpected equipment failures in midwinter may not be able to arrange contractors for their necessary shell upgrades in time to ensure comfort for the remainder of the season.

While the state’s Climate Action Council recommends heat pumps because they use less energy, the upfront cost advantage of electric resistance heaters could lead to large numbers of homeowners choosing them. This would increase the energy demands of the state beyond what has been predicted, challenging utilities as they rebuild the grid to deliver higher electric loads and challenging policymakers to close a predicted, and potentially growing, shortfall in future wintertime electricity production.

Whether homeowners choose heat pumps or electric furnaces, compulsory electrification will lead to the elimination of propane and oil furnaces by the late 2040s and early 2050s, and no later than the early 2060s. Business consolidation in both industries is to be expected as the number of customers shrinks. The extinction of the heating oil delivery industry appears imminent, while non-in-home uses of propane will keep that industry from disappearing entirely.

By choosing a single model for all homeowners to follow, the state’s Climate Action Council closed the door on the potential to reduce greenhouse gas emissions through the use of clean fuel standards using fuels supplied by an existing distribution system. In doing so, it acted without regard for consumer preference, homeowner cost, or whether there were more cost-effective means of achieving reductions in greenhouse gas emissions.

Appendix: Propane and Heating Oil Use by Population Density and Median Income

Despite the high population density of counties in the downstate area, most New York counties are largely rural, with 42 percent of the state’s counties having a population density of less than 100 people per square mile. Overall, these more rural counties have lower household incomes among owner-occupied homes, indicating that the financial burden of heat pump electrification will, on average, be highest in more rural regions of the state.

 

Figure A2 shows that propane use is very low in the state’s more densely populated, urbanized counties. While not all low population density, rural, counties have high propane use rates, all counties with high propane use rates are heavily rural counties.

 

Figure A3 shows that propane use is most common in the state’s lower income counties. While not all lower income counties have high rates of propane use, all counties with high rates of propane use are lower income counties (the circled counties).

 

Figure A4 shows that heating oil use is slightly more common in low population density, more rural, counties. While not all low population density counties have high heating oil use rates, the counties with the highest use rates all have low population densities.

 

Endnotes

  1. Most sources combine heating oil and kerosene in one category. As heating oil is the majority of that category, it alone will be reference subsequently.
  2. New York State Climate Action Council. 2022. “Scoping Plan: Full Report.” https://climate.ny.gov/-/media/Project/Climate/Files/NYS-Climate-Action-Council-Final-Scoping-Plan-2022.pdf.
  3. [iii] Ibid
  4. [iv] Ibid.
  5. [v] Direct communication with author on promise of anonymity.
  6. [vi] Lacertosa, Rocco. 2023. Interview with author.
  7. [vii] United States Energy Information Agency. 2023. “Highlights for Water Heating in U.S. Homes by State, 2020.” https://www.eia.gov/consumption/residential/data/2020/state/pdf/State%20Water%20Heating.pdf.
  8. [viii] United States Census Bureau. American Community Survey.
  9. [ix] United States Energy Information Agency. 2023. “Highlights for Water Heating in U.S. Homes by State, 2020.” https://www.eia.gov/consumption/residential/data/2020/state/pdf/State%20Water%20Heating.pdf.
  10. [x] Hearth, Patio & Barbecue Association. 2022. ”2022 State of the Barbecue Industry.”  https://www.hpba.org/Resources/PressRoom/ID/2140/2022-STATE-OF-THE-BARBECUE-INDUSTRY.
  11. [xi] MET Group. n.d. “What is the Difference Between Natural Gas and Propane?” https://group.met.com/en/media/energy-insight/difference-between-natural-gas-and-propane.
  12. [xii] United States Environmental Protection Agency. 2007. ”The Plain English Guide to the Clean Air Act.” https://www.epa.gov/sites/default/files/2015-08/documents/peg.pdf.
  13. [xiii] United States Department of Energy. Alternative Fuels Data Center. n.d. “Propane Vehicle Emissions.” https://afdc.energy.gov/vehicles/propane_emissions.html.
  14. [xiv] U.S. Department of Energy. Alternative Fuels Data Center. n.d. ”Propane Fuel Basics.” https://afdc.energy.gov/fuels/propane_basics.html.
  15. [xv] Guidehouse and Leidos. 2023.“EIA – Technology Forecast Updates – Residential and Commercial Building Technologies – Reference Case Presented to: U.S. Energy Information Administration.“ https://www.eia.gov/analysis/studies/buildings/equipcosts/pdf/appendix-a.pdf.
  16. [xvi] Carmela Violante, Anna, Filippo Donato, Giambattista Guidi and Marco Proposito. 2022. ”Comparative Life Cycle Assessment of the Ground Source Heat Pump vs Air Source Heat Pump.” Renewable Energy 188(April): 1029-1037. https://www.sciencedirect.com/science/article/abs/pii/S0960148122002233?via%3Dihub.
  17. [xvii]  Gibb, Duncan Jan Rosenow, Richard Lowes and Neil J. Hewitt. 2023. ”Coming in from the cold: Heat pump efficiency at low temperatures.” Joule 7(9):1939-1942. https://www.sciencedirect.com/science/article/pii/S2542435123003513.
  18. [xviii] Guidehouse and Leidos. 2023.“EIA – Technology Forecast Updates – Residential and Commercial Building Technologies – Reference Case Presented to: U.S. Energy Information Administration.“ https://www.eia.gov/analysis/studies/buildings/equipcosts/pdf/appendix-a.pdf.
  19. [xix] Guidehouse and Leidos. 2023.“EIA – Technology Forecast Updates – Residential and Commercial Building Technologies – Reference Case Presented to: U.S. Energy Information Administration.“ https://www.eia.gov/analysis/studies/buildings/equipcosts/pdf/appendix-a.pdf.
  20. [xx] Guidehouse and Leidos. 2023.“EIA – Technology Forecast Updates – Residential and Commercial Building Technologies – Reference Case Presented to: U.S. Energy Information Administration.“ https://www.eia.gov/analysis/studies/buildings/equipcosts/pdf/appendix-a.pdf.
  21. [xxi] New York State Energy Research and Development Authority. 2022. ”The Future of Buildings: New York’s Carbon Neutral Buildings Roadmap.” https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Programs/Carbon-Neutral-Buildings/carbon-neutral-buildings-roadmap.pdf. 
  22. [xxii] New York State Energy Research and Development Authority. 2022. ”The Future of Buildings: New York’s Carbon Neutral Buildings Roadmap.” https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Programs/Carbon-Neutral-Buildings/carbon-neutral-buildings-roadmap.pdf. 
  23. [xxiii] United States Census Bureau. 2021 American Housing Survey.
  24. [xxiv] Estimates are based on the New York Energy Research and Development Authority’s (NYSERDA’s) incremental cost estimates with an adjustment for their overly high estimate of the cost of a replacement oil furnace. NYSERDA’s incremental cost estimate is the cost of a heat pump, installation and building shell upgrade minus the cost homeowners would have paid for an oil furnace replacement if they had not installed a heat pump. NYSERDA estimates the installed cost of an oil furnace at around $10,000, which is the highest end estimate in the below-cited Guidehouse and Leidos study, and is between $3,290 and $6,630 higher than the typical cost. It is also around $4,000 higher than the high-end estimated price of a propane furnace replacement. The combined average furnace replacement cost for propane and oil furnaces is around $4,000 as a high-end estimate. This amount is therefore added to the NYSERDA cost estimates. Additionally, NYSERDA did not provide an estimate for installation of a ground source heat pump with a code shell upgrade. The amount shown in that cell was estimated from the price difference between an air source heat pump installation with comfort shell upgrade and one with code upgrade. See:
    New York State Energy Research and Development Agency. 2023. ”Comfort Home Program.” https://www.nyserda.ny.gov/All-Programs/Comfort-Home-Program; Rosen, Kenneth T., David Bank, Max Hall, Irina Chernikova and Scott Reed. 2022. “New York Building Electrification and Decarbonization Costs.” https://www.nyserda.ny.gov/-/media/Project/Climate/Files/2022-Comments/NY-Building-Electrification-Cost-Full-Report-June2022; Guidehouse and Leidos. 2023.“EIA – Technology Forecast Updates – Residential and Commercial Building Technologies – Reference Case Presented to: U.S. Energy Information Administration.“   https://www.eia.gov/analysis/studies/buildings/equipcosts/pdf/appendix-a.pdf.
  25. [xxv] United States Internal Revenue Service. 2023. ”Energy Efficient Home Improvement Credit.” https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit.
  26. [xxvi] New York State Energy Research and Development Agency. 2023. ”Comfort Home Program.” https://www.nyserda.ny.gov/All-Programs/Comfort-Home-Program.
  27. New York Energy Research and Development Authority. 2023. ”EmPower+.” https://www.nyserda.ny.gov/All-Programs/EmPower-New-York-Program. 
  28. Weiss, Lois. 2023. Too much green to go green: Complexes face crushing costs.” The Real Deal. June 5. therealdeal.com/new-york/2023/06/05/too-much-green-to-go-green-complexes-face-crushing-costs
  29. Katzive, Daniel. 2023. “Heat Pump Project in Frederick Douglass Houses Nears Completion; ’Powered by Electricity.’” West Side Rag. October 28. https://www.westsiderag.com/2023/10/28/heat-pump-project-in-frederick-douglass-houses-nears-completion-powered-by-electricity.
  30. New York State Climate Action Council. 2022. Scoping Plan. https://climate.ny.gov/-/media/Project/Climate/Files/NYS-Climate-Action-Council-Final-Scoping-Plan-2022.pdf.
  31. [xxviii] HomeGuide. 2023. ”Wood Stove Installation Cost.” https://homeguide.com/costs/wood-stove-installation-cost.
  32. [xxix] HomeGuide. 2023. ”Outdoor Wood Furnace Boiler Prices.” https://homeguide.com/costs/outdoor-wood-furnace-boiler-prices.
  33. [xxx] Rosen, Kenneth T., David Bank, Max Hall, Irina Chernikova and Scott Reed. 2022. “New York Building Electrification and Decarbonization Costs.” Rosen Consulting Group. https://www.nyserda.ny.gov/-/media/Project/Climate/Files/2022-Comments/NY-Building-Electrification-Cost-Full-Report-June2022.
  34. [xxxi] Northeast Energy Efficiency Partnerships. 2014. “Northeast/Mid-Atlantic Air-Source Heat Pump Market Strategies Report.” https://neep.org/sites/default/files/resources/NortheastMid-Atlantic%20Air-Source%20Heat%20Pump%20Market%20Strategies%20Report_0.pdf. The figure has been adjusted for inflation using the Bureau of Labor Statistics’ Consumer Price Index Inflation Calculator.
  35. [xxxii]United States Department of Energy. n.d. ”Air Source Heat Pumps.” https://www.energy.gov/energysaver/air-source-heat-pumps.
  36. [xxxiii] United States Energy Information Administration. 2022. ”U.S. Electricity Profile 2021.” https://www.eia.gov/electricity/state/.
  37. [xxxiv] United States Energy Information Administration. 2017. ”U.S. Households’ Heating Equipment Choices Are Diverse and Vary by Climate Region.” https://www.eia.gov/todayinenergy/detail.php?id=30672.
  38. [xxxv] New York Independent System Operator. 2021. “Power Trends 2021. New York’s Green Energy Grid of the Future.” https://www.nyiso.com/documents/20142/2223020/2021-Power-Trends-Report.pdf/471a65f8-4f3a-59f9-4f8c-3d9f2754d7de.
  39. [xxxvi] The number of annual replacements is estimated by dividing the total number of each type of furnace (gas, oil and propane) by that type’s average lifespan, then summing the results. Sources for lifespans of different types of furnaces: Guidehouse and Leidos. 2023.“EIA – Technology Forecast Updates – Residential and Commercial Building Technologies – Reference Case Presented to: U.S. Energy Information Administration.“   https://www.eia.gov/analysis/studies/buildings/equipcosts/pdf/appendix-a.pdf; HomeGuide. 2023.  “Propane Furnace Cost” https://homeguide.com/costs/propane-furnace-cost
  40. [xxxvii] The estimates assume the rate of heat pump installations continues to increase at a rate of 13,000 more each year through 2029 (following an average of ~12,000 unit per year increase in heat pump installations between 2020 through 2022), with installations distributed across all fossil fuel furnace types according to their share of the total population of fuel furnaces. Beginning in 2030, the total number of each type of furnace is predicted to decrease by the estimated annual number of furnaces reaching the end of their operational life.
  41. [xxxviii] International Energy Administration. 2022. “The Future of Heat Pumps.” https://www.iea.org/reports/the-future-of-heat-pumps.
  42. [xxxix] Xu, Hui, Longwen Ou, Yuan Li, Troy R. Hawkins and Michael Wang. 2022. ”Life Cycle Greenhouse Gas Emissions of Biodiesel and Renewable Diesel Production in the United States.” Environmental Science and Technology 56(12): 7512–7521. https://pubs.acs.org/doi/10.1021/acs.est.2c00289.
  43. [xl] Ibid.
  44. [xli] Lacertosa, Rocco. 2023. Interview with author.
  45. [xlii] Bennett, Stephen. 2021. ”NY Governor Signs Biodiesel Blending Law.” https://fueloilnews.com/2021/12/23/ny-governor-signs-biodiesel-blending-law/.
  46. [xliii] Lacertosa, Rocco. 2023. Interview with author.
  47. [xliv] U.S. Department of Energy Alternative Fuels Data Center. n.d. “Renewable Propane.” https://afdc.energy.gov/fuels/propane_renewable.html.
  48. [xlv] California Air Resources Board. “Low Carbon Fuel Standard Proposed New Temporary Fuel Pathway: Renewable Propane. https://ww2.arb.ca.gov/sites/default/files/classic/fuels/lcfs/fuelpathways/comments/newtemp_rpropane21.pdf.
  49. [xlvi] Bates White Economic Consulting. 2023. ” Clean Heat Policy Efficacy in the U.S. Northeast.” https://www.bateswhite.com/media/casestudy/239_Clean_Heat_Policy_Efficacy_2023.07.21.pdf.
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