Friday, May 26, 2023

New York bans fossil fuels in new builds beginning in 2026: Implications for hearth retailers are still unfolding

By: Darian Dyer

On May 2nd, New York State lawmakers approved their FY 2024 New York State Budget. Embedded in this budget is a historic provision to electrify buildings and homes on a state-wide basis. The provision designates New York as the first state to pass legislation banning the installation of fossil fuel equipment in new buildings. The mandate comes into effect in 2026, initially applying to shorter buildings and then expands to encompass all new construction by 2028. Prohibited appliances in new buildings include gas, oil and propane space heating systems, gas dryers and gas water heaters, among others.

The New York law will require its building code to implement the fossil fuel equipment ban starting in 2026.

The hearth industry in New York, and especially hearth retailers, will experience little impact until 2030, when a ban on fossil fuel equipment includes installations in existing homes. Until then, they will likely experience more demand for gas appliances and have time to diversify into heat pumps or other products and services. Gas installers and technicians will have work maintaining existing equipment after 2030, but that will gradually contract over the ensuing decades, while other types of hearth installations grow.

The hearth industry, represented by the Hearth, Patio and Barbecue Association (HPBA), sells appliances that use any and all fuel— gas, propane, electric, wood, and pellets. However, they are now doubling down in defense of gas, aligning with major oil and gas lobbies. HPBA’s position statement on its website says they believe, “it is critical to lower carbon emissions based on solid science and technology. Requiring communities to be all-electric does not achieve the intended reduction due to inefficiencies with generation, distribution, and lack of storage.” However, many HPBA members, including the Alliance for Green Heat, strongly support electrification and the increased use of modern wood and pellet heating as a proven pathway to reduce fossil fuel heat. AGH’s President, John Ackerly, said, “We urge the new CEO of HPBA to provide the leadership for the hearth industry to evolve and attract and retain a younger and more diverse workforce who can thrive in the future.”

Wood and pellet stoves are not impacted by the NY policy other than possibly benefitting retailers with greater wood and pellet appliances sales, as gas fireplaces are phased out. Indoor gas fireplaces appear to be the hearth product that will be most impacted, and it is still unclear if piped natural gas to outdoor barbecues, pool heaters, and hot tubs, for example, will face restrictions after 2030. Most experts think appliances using outdoor portable propane tanks, like barbecues, firepits, and outdoor fireplaces will not be impacted after 2030. Karen Arpino, Executive Director for the Northeast Hearth, Patio, and Barbecue Association’s Board of Directors, expressed reservations in that the law stands more as a symbolic rule rather than a law to really impact New York’s GHG emissions.

Almost all stove retailers sell to the existing home market. The industries to be affected by this law are new home builders and smaller retail businesses focused on supplying appliances to new construction. These will likely be the hardest hit if they don’t diversify their business to include heat pumps, for example. A stove retailer in Rochester, New York, was more concerned about the precedent for other states than the impact on their own business. They, like others interviewed for this article, are planning on “just riding it out.”

Hearth retailers have steadily expanded their product lines and many now focus more on outdoor patio items, most of which will not be impacted at all by the New York law.

The New York law, as in many states, relies on changes to building codes to be implemented. Thus, it will be the state fire prevention and building code council that will provide clarification and exemptions that determine some of the critical gray areas for outdoor hearth gas and propane uses, as well as what kind of electrical appliances could be installed. The Alliance for Green Heat is urging jurisdictions to put guardrails on baseboard electrical heating, especially in lower income homes and apartments, as it is less expensive to install compared to heat pumps, but far more expensive to run.

The Alliance for Green Heat reached out to some of the primary advocates of the ban to see whether they knew how it would impact specific indoor and outdoor hearth appliances. The Alliance for a Green Economy’s Executive Director, Jessica Azulay, said that the gradual phasing out process of fossil fuels allows time for the industry to familiarize itself with the required technology, educate installers, and ramp up the production of electric appliances. Patrick McClellan, the Policy Director for the New York League of Conservation Voters, underscored the importance of the phased approach, but neither were sure how outdoor gas and propane appliances would be treated. However, they did suggest that outdoor appliances are not the target.

Hearth industry ramifications in other electrification


While New York is the first state to put electrification of new buildings into law, several other municipalities, most notably in California, have approved pro-electric energy and building codes. For instance, Brisbane’s city council voted to amend their building code to require new residential buildings to be all electric in 2019. Notable exceptions to the code include the ability for residences to still incorporate non-electric cooking appliances and fireplaces in new buildings. Oakland, CA, amended their municipal code in 2020 to require “all-electric construction in newly constructed buildings.” This ordinance did not restrict portable propane appliances for use outside of the building envelope, including outdoor cooking and heating appliances. Marin County, CA, passed a similar ordinance amending their building code in 2022, making an exception for portable propane appliances outside of the building envelope. These are only three examples from over 50 cities in California that have similar electrification requirements in their building and energy codes.

California and New York, leaders in the electrification movement, account for 17% of the total US population, more than the 25 least populated states combined.

Low carbon electric heat and the grid

Much of New York’s ban on fossil fuel equipment installation has to do with space and water heating, even though gas stoves often get more attention. The shift to heat pumps and heat pump water heaters will initially run mostly on electricity made by fossil fuel, but their extremely high efficiencies still significantly reduce carbon impacts. Currently, nearly 60% of the state’s electricity is generated from natural gas, accounting for 46% of its utility-scale in-state generation. Achieving lower carbon emissions in New York relies heavily on rapidly decarbonizing the energy grid. New York has developed a plan to address this challenge. By 2030, 70% of the grid load will be met with renewables, with the goal of 100% of the grid being powered by renewables and zero-emission sources by 2040.

New York’s restrictions on fossil fuel installations target buildings, the largest source of greenhouse gasses in the state.

New York will face scrutiny on whether an unjust energy burden materializes for low-to-moderate income (LMI) households living in existing buildings and whether all-electricity stands as an affordable option for everyday consumers. To support LMI households during this transition, the New York legislature has approved $200 million to help weatherize and electrify low-income homes. In addition to this, the NY Home Energy Affordable Transition (HEAT) Act is in the works, hoping to lead an equitable, neighborhood-scale decarbonization effort. It is currently sitting in the Senate Energy and Telecommunications Committee. Still, some construction companies say that mandating electrification in new builds will increase construction prices, further pushing LMI families off of the housing market.

Opportunity for wood and pellet stoves 

For those producing wood and pellet stoves though, there doesn’t seem to be an obvious downside. NEHPBA’s Karen Arpino had discussions with New York legislators and many were eager to work on legislation to promote wood stove change-out programs in the state. NYSERDA used to offer rebates for pellet stoves if a household turned in an old wood stove. 

While 108,202 households heat primarily with wood (1.4%) in the state of New York, its use in rural counties is substantial, providing a significant level of low carbon energy resilience and diversification without adding further stress to the grid. For example, in Schoharie county, 15% of homes use wood as a primary heat source and 20% in Hamilton, with far more homes using it as a secondary heat source. Wood stoves provide homeowners more confidence to electrify, and they are likely to become more popular in electrified homes if it is cheaper than using a heat pump in the coldest weeks or months of the year. If the grid becomes even more unreliable in rural areas, wood stoves are an obvious back-up option and as solar and battery options grow, pellet stoves could also be a back-up heat source.