Fuel switching is when inefficient and higher polluting fuels are switched out for clean, efficient alternatives. If done correctly, fuel switching can reduce energy consumption, lower costs for users, and potentially lower emissions. Fuel switching may be used in refrigeration, air conditioning, and power generation. Fuel switching is an issue that comes up often in the Midwest, Northeast, and the Mid-atlantic. Fuel switching for heating and cooling must be addressed in 100% plans because so much of our energy system is based on oil and gas.
Certain communities are developing policies favoring the burning of natural gas in place of fuel oil and diesel because of the potential for ozone reduction and improved air quality. For example, in Philadelphia, the transition of heating sources and infrastructure was found to be cost prohibitive, so local utilities used “affordability” as a reason to expand liquified natural gas and gas, rather than renewables. Moreover, because many rural and Tribal communities are not connected to the grid, they prefer to add back up propane for reliability, especially for those with medical needs. Advocates must be aware of these challenges.
Low-income households are at a disadvantage. For instance, in Maryland, one major obstacle is Low-Income Energy Efficiency Program (LIEEP) funds may not be used to replace a fossil fuel heating system with an electric one. “A prohibition against using LIEEP funds for switching away from fuel oil and propane is akin to a food assistance policy that would force low-income households to purchase only carbohydrates. It is poor policy and creates a variety of costs that can and should be avoided. It serves no public interest to leverage public funds for weatherization and HVAC system replacement and then oblige low-income people to stay stuck with expensive fuel oil and propane. It perpetuates the need for assistance. It is also contrary to energy dignity: low-income households are not offered a rational and economical choice of heating systems, which all other individuals are free to make, for the sole reason that they need assistance. We strongly recommend that the prohibition against the use of LIEEP funds for fuel switching be repealed.”
Another problem is that renters usually have no control over heating system decisions. Low-income households are far more likely to be renters than non-low income households. States should consider the special sets of policies that will be needed to ensure practical, equitable access to efficient space and water heating electric systems.
Incentives for electric systems. Conversion of fossil fuel space and water heating systems to efficient electric ones (like highly efficient heat pumps) is an essential part of the transition to a renewable energy system. However, many utilities offer incentives and rebates for customers who purchase new fossil gas heating systems if the new system meets certain efficiency thresholds. Such policies lock in fossil fuel use for many years. States should consider restricting incentives to efficient electric systems, with the amount of the incentive calibrated to the efficiency of the system.
Pilot heat pump programs. Advocates should push IOUs and other entities toward creating heat pump programs for homes and buildings.
The Emera Maine Heat Pump Pilot Program “provided $600 rebates and optional on-bill financing for qualifying ductless heat pumps installed in residential homes and small commercial buildings of Emera Maine customers.”
In the San Joaquin Valley Proceeding in California, the California Public Utilities Commission “approved a $56 million investment for pilot projects in 11 San Joaquin Valley communities that lack natural gas in an effort to increase access to clean affordable energy in disadvantaged communities and reduce the use of propane and wood burning... The pilot projects provide an opportunity to eligible San Joaquin Valley households who choose to participate with no-cost replacement of their propane and wood burning appliances with energy efficient appliance upgrades including limited upgrades to the home in some cases.”