New Jersey could dramatically cut greenhouse gas emissions from buildings – the state’s second largest source of emissions – by replacing fossil-fueled boilers with heat pumps and other electric appliances and beefing up incentives for the equipment, according to a recent report from the New Jersey Conservation Foundation.

Heat pumps can replace furnaces or boilers, and “handle the heating needs of well-insulated homes in the Northeast without backup systems,” according to the report by the Acadia Center, a nonprofit environmental and policy group. Combining heat pumps with other electric appliances and weatherization can result in energy bill saving of almost 50%, the report says.

Often described as air-conditioners in reverse, heat pumps extract heat from outside air, concentrate it and push it into a home. Due to recent improvements in the technology, heat pumps can operate effectively even in sub-zero temperatures, according to the report.

Yet New Jersey’s incentive programs lag behind those of neighboring states, the foundation and other environmental groups said at a press conference Tuesday. They called on state government to develop policies that would offer building owners incentives big enough to reduce the cost of a heat pump, or other electric appliance, to the same cost as a fossil-fuel heater or boiler.

“Just like we have with wind, solar and electric vehicles, New Jersey must be ambitious,” said Eric Miller, New Jersey energy policy director for the Natural Resources Defense Council (NRDC). The state “must design and implement comprehensive building electrification programs that make technologies such as cold climate heat pumps, accessible to the residents and businesses of the state through a coordinated whole of government approach,” Miller said.

“Cold climate heat pumps can work in New Jersey’s climate even on the coldest days,” he said. Heat pumps “can decrease average energy bills for New Jersey’s residents [and] can significantly decrease pollution from New Jersey’s buildings.”

Savings, at a Cost

According to the report, data on New Jersey’s housing stock, weather and utility rates show that the average new home could save about $50 a 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 a year, and an older, less-efficient house could save $1,300 a year by weatherizing and switching from gas to electric heat and hot water, the report says.

With a typical heat pump costing $4,000 to $7,000, New Jersey previously offered a $2,000 incentive for the purchase of a 5-ton air source heat pump, the report says. But since 2021, the incentives, now handled by utilities, have been cut, with Atlantic City Electric and Jersey Central Power & Light offering rebates of $1,000, while the rebate from PSEG ranges from $390 to $600, according to the report.  

But Rebecca Mazzarella, a spokeswoman for PSEG, said that the company “has incorporated heat pumps for heating, cooling and water heating into our broad effort to help customers save money and energy.”

“Residential heat pumps qualify for rebates up to $750, and customers may be eligible for up to $15,000 in no-interest on-bill repayment to help offset the cost of energy efficient upgrades,” she said, adding that the utility also has  programs offering energy efficiency rebates for commercial customers.

Vermont offers incentives of up to $2,000 for heat pumps, while Connecticut offers between $2,500 and $7,500, according to the New Jersey Conservation Foundation report. New York offers up to $1,600, the report says.

Speakers at the press event dismissed the suggestion, floated by some opponents of electrification, that heat pumps don’t work in cold weather. In response, they cited data that shows annual heat pump sales have surged in New England ― aided by incentives ― from about 70,000 sold in 2016 to close to 180,000 sold in the region in 2020, according to the report.

Maine has set a target of installing 100,000 air source heat pumps by 2025, but had already installed 75,000 by 2021, according to the Efficiency Maine Trust, which is assisting with the installation of heat pumps. New York State is investing $700 million to encourage energy efficiency measures and building electrification, mainly with clean energy heat pump technology. (See NY Pushes Electrification with Heat Pumps.)

New Emissions Rules

Electrification is part of Gov. Phil Murphy’s plan to help New Jersey reach a goal of 100% clean energy by 2050. The state’s 2020 masterplan update sets an GHG emissions reduction goal of 80% by 2050, and on Nov. 10, 2021, Murphy signed an executive order committing the state to a 50% cut in emissions by 2030.

The plan does not suggest a mandate to electrify buildings but calls for the building sector to be “largely decarbonized and electrified” by 2050, with a focus on “new construction and the electrification of oil- and propane-fueled buildings.”

The New Jersey Conservation Foundation report comes as the state’s Department of Environmental Protection (DEP) is evaluating public response to proposed rules that would prohibit the installation of new commercial and industrial fossil fuel-fired boilers in certain circumstances. If the rules were to go into effect, the DEP would not issue a permit for a new fossil-fuel fired boiler of 1-5 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.”

Electrification of the state’s building stock, however, does not have universal support. In January, the state Senate voted 35 to 3 in favor of a bill, S4133, that would prevent state agencies from requiring buildings to use electric heating or hot water boilers as part of the state’s carbon reduction efforts. The bill did not advance in the Assembly before the legislative session ended a few days later.

The bill was similar to other “preemption” bills, which were passed in 20 states last year, with broad and active support from the natural gas industry.  (See NJ Legislators Back Alternatives to Electric Heat.) Proponents of the New Jersey bill argued that it is too soon to back electrification as the only solution when alternative fuels could also help cut emissions. Critics also say that heat pumps are expensive.

The New Jersey Conservation Foundation, however, said it is not looking for a mandate that requires the installation of electric appliances and boilers. The goal is to remove any barriers to the adoption of electrical products, provide incentives and advance a widespread understanding of the benefits of electrical heaters and boilers, said Barbara Blumenthal, research director for the foundation.

The incentives “are designed to help spur the innovation and growth and acceptance of the technology, so that as more people become aware, they see that there’s an opportunity and that opportunity becomes more accessible for everyone.”