A coalition of 24 New Jersey business and union interests are lobbying to halt a state plan that would prevent the installation of most fossil-fueled heating and hot-water systems in new buildings.

A letter sent by the group to the heads of the state Senate and General Assembly on Sept. 12 says the electrification program supported by Gov. Phil Murphy should be stopped because it will “dramatically increase costs for New Jersey residents and businesses at a time when the Legislature is focused on affordability.”

The coalition wants to stop rules crafted by the New Jersey Department of Environmental Protection (DEP) to help cut building emissions, the state’s second largest emitting sector, as the state reaches for Murphy’s goal of zero emissions by 2050. The rules are scheduled to be posted on Dec. 6 in the New Jersey Register, which could also trigger their enactment if no major changes are made from the last draft.

The groups said more than 5,500 buildings around the state would come under the boiler rules. They urged legislators to pass a bill, S-2671, that would prohibit any state agency from adopting rules and regulations that “mandate the use of electric heating systems or electric water heating systems as the sole or primary means of heating buildings or providing hot water to buildings, including, but not limited to, residences or commercial buildings.”

As drafted, beginning in 2025, the rules would prevent the DEP from issuing permits for new fossil fuel-fired boilers of 1 to 5 MMBtu unless it is “technically infeasible” to use a non-fossil fuel boiler because of “physical, chemical or engineering principles” or because the interruption of the operation of an existing boiler could “jeopardize public health, life or safety.” The “most commonly available fossil fuel-free heating mechanism” for hot water and steam is an electric boiler. Elsewhere, the rules would lower the limits for CO₂ from fossil-fired electric generating units (EGU) and ban the use of two fuel oils that have high CO₂ emissions.

“Compliance with this regulation will lead to significant increases in rents, property taxes and grocery bills, at a time when the Legislature is focused on reducing these costs,” the coalition said in its letter.

The coalition supported its case by citing a DEP estimate that the cost of operating electric appliances would be 4.2 to 4.9 times higher than for a fossil-fueled boiler or water heater. The coalition said the DEP did not estimate the cost of converting a building to electric heat and hot water, but it estimated a single boiler could cost $2 million.

The impacted buildings, the letter said, would include approximately 1,500 apartment buildings, 1,500 K-12 public schools, and 1,200 commercial, industrial and manufacturing facilities, as well as grocery stores, religious facilities and auto-body shops.

Eric Miller, New Jersey energy policy director of climate and clean energy for the Natural Resources Defense League, said the coalition “distorts” the position of the state, which is not mandating electrification, and is seeking to “stifle the move toward electrification.” Miller said the rules don’t favor electrification but simply prevent the installation of new fossil-fired boilers and heaters in favor of similar appliances that operate on any alternative fuel.

“Buildings are the second largest source of emissions in New Jersey, [and] there is no conceivable future where we achieve our climate goals if we do not decarbonize buildings,” Miller said.

Pre-empting Electrification?

Signers of the coalition letter include the state’s largest business groups — including the New Jersey Business and Industry Association and New Jersey Chamber of Commerce — and the New Jersey Builders Association, the New Jersey Apartment Association, the Chemistry Council of New Jersey and the Fuel Merchants Association of New Jersey. The union signers include locals of the International Brotherhood of Boilermakers, the International Union of Operating Engineers and eight locals of the New Jersey Pipe Trades.

The bill favored by the coalition is similar to so called “pre-emption bills” that have sought to prevent electrification requirements nationwide. The bills to prevent building electrification are often back by the fossil industry. In total, 21 states have adopted pre-emption laws, and another four have introduced but not yet enacted them, said Rita Yelda, eastern regional communications manager for Natural Resources Defense Council.

Miller said the coalition’s initiative is “is exactly in line with what we’ve seen in other states, probably for the past five years, to slow the switch to electrification, by — in most states — pre-empting local governments from banning gas hookups.” In New Jersey, he said, the law is “a solution in search of a problem” because the state has not mandated electrification, he said.

Neither S2671 nor its companion Assembly bill, A3935, have advanced since they were introduced in May. However, the legislature was out of session for most of the summer. A similar bill, introduced in the last legislative session, secured Senate approval in January but was not introduced in the Assembly before the session ended the same month.

S2671 would prohibit any state government department from mandating the use of electric building energy systems “until the DCA [Department of Community Affairs] issues a report on the costs and benefits of electric heating, as required by the bill.” The bill would not stop any agency from offering incentives to encourage the installation of such appliances; nor would it stop anyone from voluntarily installing them.

Fossil vs. Electricity Costs

The coalition’s letter is part of an ongoing debate in New Jersey over the initial investment costs and subsequent operating expenses resulting from the pursuit of clean energy strategies.

Business leaders and clean energy foes decry the potential cost of the state’s clean energy projects and the fact that state officials have not provided an estimate for what the state’s expansive passel of projects to fight climate change, laid out in the Energy Master Plan, would cost taxpayers.

A study commissioned by the BPU to determine the cost to ratepayers of pursuing the recommendations in the state’s plan, released Aug. 17, concluded that that clean energy-conscious residents could see a 16% cost reduction by 2030. However, the study did not factor in the investment and other costs of clean energy initiatives, such as switching to electric vehicles or electrifying buildings. (See NJ BPU Approves Report on Costs of Energy Master Plan.)

The coalition letter said that the cost of replacing a single 1.5-MMBtu natural gas boiler with an electricity-powered boiler, and installing a 480-V switchgear and transformers to support it, would cost about $2 million.

But Miller said that operating and technology costs are declining. Since the DEP study concluded that, based on 2018 information, operating an electricity boiler would be nearly five times as expensive as a gas boiler, gas prices have risen, he said. Moreover, the advance of technology has further reduced the gap between fossil fuel and electric boiler operating costs, he said.

A report by the Acadia Center, a nonprofit environmental and policy group, found that a residential heat pump would cost $4,000 to $7,000. And the average new home could save about $50/year if it installed new “efficient” cold climate heat pumps and heat pump water heaters.  If the homeowner also weatherized the house, it would save about $180/year, and an older, less efficient house could save $1,300/year by weatherizing and switching from gas to electric heat and hot water, the report said. (See NJ Enviros: Heat Pumps Can Cut Building Emissions, Costs.)