Regulatory Solutions for Building Decarbonization

The report argues that current utility regulation is incompatible with an all-electric future and proposes ten strategies to decarbonize US buildings. It emphasizes electrification via heat pumps as the primary solution, warning that alternative fuels like biomethane are costly and limited in scale. Key recommendations include reforming electricity rate designs, updating energy efficiency standards to account for total emissions, and proactively managing the retirement of gas infrastructure to avoid stranded asset risks and inequitable cost burdens on low-income customers.

• Fossil fuels burned in US buildings emit 600 million metric tons of CO2 annually, primarily from space and water heating, and these emissions have not declined despite reductions in the electric grid's carbon intensity.
• Building electrification is identified as the least-cost pathway to decarbonization compared to alternative fuels. Renewable natural gas (RNG), biomethane, and synthetic methane are viewed as limited by high costs, low technical maturity, and insufficient supply to fully decarbonize the pipeline system.
• Current utility business models and regulations often hinder electrification; for example, some states explicitly prohibit fuel-switching in efficiency programs, and traditional cost-of-service regulation incentivizes long-lived fossil fuel infrastructure.
• To support decarbonization, energy efficiency resource standards (EERS) should be updated to measure total energy across fuels or greenhouse gas emissions rather than separate electricity and gas targets.
• Electricity rate designs need reform to encourage electrification, specifically by reducing or eliminating inclining block rates and expanding time-varying pricing with high peak-to-off-peak ratios.
• The US gas distribution system expands by nearly 10,000 miles annually, creating a significant financial risk of stranded assets for ratepayers as the transition to clean energy accelerates.
• A managed transition of the gas system is necessary to prevent a 'death spiral' and to ensure that the costs of maintaining a shrinking system do not fall disproportionately on low-income customers and renters.
• Equity and inclusion must be central to the transition to ensure disadvantaged communities benefit from electrification and are not left paying for legacy gas infrastructure.
• The transition to all-electric buildings will require a significant workforce expansion, with an estimated need for over 100,000 new HVAC contractors and workers by 2022.

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} }