Regulatory Solutions for Building Decarbonization

This report by the Rocky Mountain Institute (RMI) provides a comprehensive regulatory framework for decarbonizing the US building sector, primarily through electrification. It outlines ten key strategies for public utilities commissions (PUCs) and government agencies to transition away from fossil fuel infrastructure, emphasizing equity, market transformation, and the management of stranded asset risks.

• Fossil fuels used in US buildings generate approximately 600 million metric tons of carbon dioxide emissions annually, primarily from space and water heating. These emissions have not declined, contrasting with climate targets that require a 50% reduction by 2030 and net zero by 2050.
• Building electrification is identified as the most cost-effective pathway to decarbonization across various US geographies, including California and New Jersey. Alternative fuels like biomethane and synthetic gas are viewed as high-cost options with limited scalability and continued health and environmental risks.
• The current US gas delivery system expands by nearly 10,000 miles annually. This continued investment in fossil fuel infrastructure creates financial risk for ratepayers, as these assets may become underutilized or stranded before their typical 30- to 60-year depreciation periods end.
• To support the transition, the report recommends updating energy efficiency resource standards (EERS) to be based on total energy across fuels or greenhouse gas emissions, rather than separate electricity and gas targets, and incorporating the social cost of carbon into cost-effectiveness tests.
• Equity and inclusion are central to the framework to prevent low- and moderate-income (LMI) customers from bearing the rising costs of a shrinking gas system. Recommendations include dedicated funding carve-outs, community-led decision-making, and adapting existing bill assistance programs like LIHEAP and WAP to support electrification.
• The report suggests several pathways for gas utilities to survive in a carbon-free future, including transitioning to 'heat as a service' models, developing carbon-free district heat systems, or distributing green hydrogen for industrial use.
• Market transformation for heat pumps can be accelerated through midstream incentives targeted at wholesale distributors and contractors, as demonstrated in Vermont and New York, rather than focusing solely on individual customer incentives.
• Electricity rate designs need reform to support electrification, specifically by reducing or eliminating inclining block (tiered) rates, expanding time-varying pricing with high peak-to-off-peak ratios, and reevaluating fixed charges.
• A significant workforce gap exists for the transition; over 100,000 new HVAC contractors and workers will be needed by 2022 to meet the demand for heat pump installations and building efficiency upgrades.
• To manage the wind-down of gas systems, the report recommends that PUCs eliminate gas line extension allowances, require the evaluation of 'non-pipes' solutions for capacity expansion, and establish a gas system transition fund to cover stranded costs and decommissioning.

APA

Billimoria, S., & Henchen, M. (2020). Regulatory Solutions for Building Decarbonization. RMI. https://rmi.org/app/uploads/2020/07/Regulatory-Solutions-Framework-Report-070820.pdf

Chicago

Billimoria, Sherri, and Mike Henchen. Regulatory Solutions for Building Decarbonization. RMI, 2020. https://rmi.org/app/uploads/2020/07/Regulatory-Solutions-Framework-Report-070820.pdf.

Wikipedia

{{cite report |last1=Billimoria |first1=Sherri |last2=Henchen |first2=Mike |title=Regulatory Solutions for Building Decarbonization |publisher=RMI |date=July 2020 |url=https://rmi.org/app/uploads/2020/07/Regulatory-Solutions-Framework-Report-070820.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{billimoria2020regulatory, author = {Billimoria, Sherri and Henchen, Mike}, title = {{Regulatory Solutions for Building Decarbonization}}, institution = {RMI}, year = {2020}, month = jul, url = {https://rmi.org/app/uploads/2020/07/Regulatory-Solutions-Framework-Report-070820.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }