Funding building decarbonization

The recent report of the Commonwealth’s Climate Chief does an important service by raising the issue of funding, calling for:

an economic analysis of the investment needed to achieve the greenhouse gas emissions reductions required by the [Commonwealth’s Clean Energy and Climate Plan], including the 2050 Net Zero mandate, and recommendations for necessary funding mechanisms


While climate change is an existential threat and “there is no Planet B,” it is possible that some aspects of our stated mitigation plans are simply beyond our reach. The sooner we can think clearly and talk honestly about costs and funding, the sooner we will be able come together around the measures that are actually achievable.

Focusing just on the challenge of decarbonizing buildings, our existing Decarbonization Roadmap radically underestimates costs. There are two basic strategies for cutting fossil emissions from buildings: (1) electrification of fossil heating systems; (2) improved efficiency of the building envelope to reduce heat loss and the need for heating. Improved efficiency cuts fossil fuel use directly and also supports electrification by reducing the need for grid upgrades to meet the anticipated new winter peak in electrical power demand.

As to electrification, the technical report underlying the Decarbonization Roadmap estimated a cost of only $7,500 for a single-family heat pump conversion fully eliminating fossil heat. Most whole-home heat pump installations raise unique challenges and they vary widely in costs. Currently, the installed average appears to be over $20,000 with a large share of those costs being labor costs that are unlikely to decline with increased scale. Many older homes are difficult to serve with heat pumps and owners turn away after getting high initial quotes, running into the high five figures in some cases — these cases are not reflected in the market averages.

The Decarbonization Roadmap also assumed that in most instances, homeowners would have a net cost of zero for heat pump conversion because electrification would occur at the time of heating system failure and would not cost more than a burner update. In fact, updating the fossil system is often cheaper. More importantly, at the time of a system failure, most homeowners have no choice but to update their fossil system, because heat pump conversions take too long to plan and implement in an emergency. Most heat-pump conversions occur as optional replacements of functioning systems. Instead of seeing a net cost of zero, homeowners have to make a decision to shoulder the full costs (net of available incentives).

As to building efficiency, the emissions reductions available through basic weatherization are well under 7% of state-wide total residential emissions. In order for building efficiency to make a material difference in statewide emissions, we would need go beyond basic weatherization and undertake “deep energy retrofits” in a large number of buildings. DERs involve rebuilding the building envelope to add insulation: for example, by removing siding, placing layers of foam against the building sheathing, and re-siding over the foam.

The Decarbonization Roadmap underestimates the costs of DERs. It assumes that the incremental DER cost would be be $20,000 because DERs would be done as part of necessary maintenance. The Roadmap estimates were published at the end of 2020. However, the average incremental DER costs in a Massachusetts’ DER pilot were $120,000 and that was in 2010. Further, the pilot found that retrofits were only viable in homes that were undergoing renovations that involved much greater cost — complete envelope renovations that do not ever occur for many homes. Nationwide, the experience with deep energy retrofits has been that they are boutique projects. See more discussion of weatherization and DERs here.

Yet, the Decarbonization Roadmap, based on its hopeful cost assumptions, assumes that they will be done in 2/3 of buildings to control electrical power demand and minimize the costs of grid upgrades. If 2/3 of our 3 million existing homes got deep energy retrofits at an incremental cost of $120,000 a piece, the cost would be approximately $240 billion, and that incremental DER spending would have to be supported by additional major renovation activity on the same scale or greater — altogether perhaps over $20 billion per year between now and 2050. And we are omitting the costs for commercial and industrial buildings, which by anecdotal account are harder to retrofit.

Putting aside questions of where the money and political will to spend it would come from, we have to ask where the people to do the work would come from. For a sense of scale, the annual $20 billion we would need to spend on retrofits is almost much as we are spending on all construction in the state: The total income of all people working in all types of construction and specialty construction trades in Massachusetts in 2022 was $26 billion. To achieve deep energy retrofits at scale while continuing road maintenance, new housing construction, and public transportation improvement, we would need to very roughly double the size of the construction industry. We are simultaneously trying to fill new construction jobs to strengthen the electrical grid and build wind farms. And of course, we are struggling to fill jobs in many occupations, from bus drivers to nurses.

Cost estimates are notoriously unreliable for huge projects. Decarbonizing all of our buildings is a vastly larger project than the Commonwealth has ever undertaken — think dozens of Big Digs. Also, retrofit projects are harder to accurately price than new construction projects, because one never knows what one is going to find behind the walls, up in the attic, under the floors, and in the ducts — each building is unique. And we have a few million owner-decision-makers to work with.

While every long-term cost projection is challenging, I am hopeful that the Climate Chief’s call for an economic analysis of our net zero plans will lead to a thorough, candid, and credible reassessment of the funding and labor force required to achieve our building decarbonization goals. We should not flinch from the possibility that an honest reassessment of the required resources may leave us no choice but to reassess our goals for retrofit of existing buildings, making it all the more important that we set high standards for new construction.

Return to heat pump outline

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

32 replies on “Funding building decarbonization”

  1. Switching to all-electric is a problem because electricity is still generated mostly by burning by fossil fuels.
    So what’s the sense?

    1. Not so simple. About 50% of our existing electric generating capacity is from non-fossil fuel sources (inc nuclear). The electric grid serving New England (ISO-NE) is generating electricity with a carbon emission factor of about 0.7 lbs. CO2 emissions/KWH generated. When powering a heat pump at a seasonal COP of 2.5, the CO2 emissions associated with the electricity powering the heat pump = 77 lbs CO2 per million BTU of heat supplied to the house. For gas, propane, and oil, the equivalent numbers are 130, 154, and 204 lbs carbon per million BTU assuming high efficiency fossil fuel systems. Thus TODAY, converting from fossil fuels to heat pumps reduces the carbon emissions by 40%-63%, depending on the fuel source. Thats TODAY. As our electric grid in New England adopts more renewable energy sources to supply the grid, the carbon emission % savings will increase. Once we are fully (or nearly fully) renewable with our grid, the emissions associated with a heat pump heating system will be 0. While any fossil fuel heated home will still be cranking out the same emissions as today. Thats the whole point of electrifying our home heating (and the rest of the economy).

    2. This is the “I don’t know what to do first, so I won’t do anything at all” strategy. It is exactly the same argument as the one that electric cars are useless as long as a single watt of electricity is generated from fossil fuel. It is not correct.

      Done one house, one car at a time, every conversion reduces carbon dioxide emission, even if the electric power is generated by a coal-fired power plant, because the electric replacements (heat pumps or electric vehicles) are so much more efficient. Converting the energy source to something carbon-neutral greatly multiplies the effect, and can be done in parallel and independently of the end-use conversion. It’s all a “plus-plus” situation, not a “useless unless and until everything is done” situation.

      1. At this moment electric cars are worse than useless. Especially in New England, where electricity is very expensive as it is mostly generated by burning natural gas.

      2. Literally no one spews the straw man argument that a single car powered by fossil fuels is the problem. The problem is that the engineering behind all your these proposals is a fantasy created by an effete pampered elite who literally cannot understand how the world works.

  2. Thanks Will, I don’t understand how the governor’s offices could quote a heat pump retrofit at $7k. Onwards, a neighbor of our’s who bought a home with an oil heating system is going through the absurd exercise of buying a gas boiler in order to become a gas customer in order to qualify for a Mass-Save heat pump grant. Most people don’t have that much commitment to decarbonization and won’t do that.

    How to solve that? The Globe published an article recently highlighting the Ipswich municipal utility paying upfront for heat pump installation and then recouping the installation cost over a series of years as a charge on the utility customer’s bill. I highly commend that article to you, not the least because it would cover renters as well as owners of dwellings. Is there any reason the Ipswich utility model couldn’t apply as a state policy across all utilities (Eversource, Nat Grid and MLPs?).

    Lastly, you point to the achilles heal of fossil-to-heat pump conversions: Timing and how do you get homeowners to NOT make a 30-year return to fossil decision in the middle of January when the old boiler blows? Isn’t there some way to install a temporary heating system to keep a house warm during a heat pump transition? We can’t just throw up our hands and turn our backs on this problem. IF left unresolved, that freezing transition moment will prevent a lot of those millions of homeowners from converting to heat pumps. Is the DOER engaged in this issue with the heat pump manufacturer industry?

    1. Homeowners need to be educated to understand that they need to replace their heating and AC systems as they approach the end of their useful life (typically 20 years). Dont start thinking about when the system has died. Otherwise, they replace like-for-like and nothing changes.

  3. Hi Will,
    Great summary.

    My two cents, or $20,000.

    (1) electrification of fossil heating systems. Since our home has gas / forced air, and is already ducted I was surprised at the retrofit of cost to $25,000. I reached out to a friend who is a national wholesaler for HVAC – he said most installers in the NE know about incentives and mark up the cost, a system down south is fully installed for about 2/3 the cost of New England. He also said most folks are not seeing the savings – what they spent on oil, in one example $200 / month is now close to $1,000 in the electric bill! Our system is over 25 years old so its days are numbered.

    (2) Improved efficiency of the building envelope. We have made 3 changes that are significant in savings but also costs:
    – We fully insulated our attic with spray foam – was expensive and hard to measure but had a significant impact on summer cooling and winter heating.
    – Solar power was very costly but effective – over ten years our net out-of-pocket will be essentially zero – tax incentives and SRECs, not to mention the negative electric bill in the summer.
    – Six new insulated windows to replace the really bad storm windows was $12k; don’t know the payback but can begin to feel ‘less draft’ in the few colder days so far.

    Overall investing in the home envelope investment has been positive. The e-pump needs more incentives, better pricing & more convincing.

    Thanks for all you do, Rui

    1. Rui….Im a retired HVAC engineer now doing energy coaching work in Needham helping owners convert to heat pumps. The $25,000 cost to convert that you mention sounds in line with what Ive seen for that type of conversion. Whether this is affected by incentives or not, I dont know. Regarding the cost of oil heat vs heat pump heat, at our current New England electric and oil costs, the 2 are about equal (cost to heat the house). If the numbers you are reporting ($200 vs $1,000/month) are correct, then something is terribly wrong with the installation. Regarding your potential conversion, don’t wait till the system fails. If the furnace and AC is at or approaching 20 years, it is time to convert. The cost to put in a replacement furnace and AC unit will probably run to around $20,000. When you factor in the $10,000 whole-house incentive and fed tax credit, you actually save money.

  4. Thank you for a very thorough and common-sense analysis. I am surprised to hear how significantly the cost estimates have missed the mark. We are about to start pricing heat pumps to replace a gas furnace and radiators for a first floor unit and I’m going to be reviewing your posts and research.

  5. Heat pumps are just the latest scam by the electric companies. With their lobbyists pulling the strings they are working with our government to lock you in to a technology where they can raise their rates at will and reap even more profits. National Grid made record breaking profits last year as the middle class saw their rates skyrocket. Now add electrical heat pumps to that already insane monthly bill. No thanks.

    Same with solar. I was the good citizen and went solar about 5 years ago. The first year was ok in that the energy I produced in the summer boom months generated enough $$$ credits to get through most of the winter low solar months. Recently the electric companies have started playing games by paying much less for solar production in the summer months and raising electric prices sky high in the winter consumption months. Now my six months of accumulated credits are burned up in about one winter month.. What they should do is provide credits in wattage not dollars to make it fair. Good luck getting any one to craft and pass that legislation.

  6. Electrification of everything is not the answer. This decarbonization craze truly is a cult….reminds me the Jonestown cult.

    1. Second that Mark,
      CO2 is a trace gas and is necessary for life itself, this “Net Zero” bs is a tool of the control freaks to further gimp our lives.

  7. Will,
    As usual, you nailed it. Based on my energy coaching here in Needham for about 75 homeowners (so far) who are thinking about heat pump conversions, the quotes they get that I review range anywhere from $20,000 – $50,000 (or more). And these are homes which either lend themselves to direct conversion using the existing ductwork or can incorporate ductless systems. Probably half the homes I’ve reviewed would require an even more costly installation. Retrofitting homes is HARD. The data I have seen on DER is consistent with what you report. When you consider the marginal gains in efficiency vs the cost, it just doesn’t usually make economic sense, especially when you consider the embodied carbon aspect. Homeowners (and Mass Save) need to do all they can to make houses better insulated and sealed, which is extremely cost effective. Then size the new heat pump for the reduced load and move on. Homeowners need to understand that they need to make the switch to heat pumps BEFORE their systems fail. If the heat/AC is approaching 20 years, start getting quotes to convert. Take the $20,000 they would soon spend on a new gas furnace and AC system and apply it to a heat pump installation. After the savings associated with incentives and tax credits, they will actually be saving money (negative net cost) on the cost to convert.

  8. “While climate change is an existential threat and “there is no Planet B,” it is possible that some aspects of our stated mitigation plans are simply beyond our reach.”
    No, it’s not an existential threat. Nowhere do you, or others who contend this nonsense, show us the numbers. Even the $trillions spent on modeling CO2, don’t make that case.
    Yes, mitigation plans are beyond our reach, because they reach for Zero utopia without examining the costs and benefits. The plans, like your rhetoric, simply notes the sky is falling.
    Very disappointing post, Will.

  9. The harsh reality that we will not reach anywhere near our goals with existing residential buildings not only puts muscle behind the Senator’s statement about this “making it all the more important that we set high standards for new construction.” It also makes it extremely important to deal with the challenges of retrofitting commercial buildings.

  10. Hi, Will.
    I agree that the current house-by-house homeowner funded heat pump installantion is not going to work. I think the utilities need to step up, as they are doing with the Geothermal Pilot Project in Framingham. Neighborhood electrification makes so much more sense, when do-able. Rather than spending billions of dollars installing entirely new gas pipes at a time when we want to be retiring the fossil fuel distribution system, Eversource and national Grid could be putting their money into geothermal energy, as well as training their workers to carry out this transition. I would love it if Watertown applied for one of these pilots. For that matter, since I live right down the street from the high school, which will have geothermal heat, is there a way that that initial investment in drilling can be extended to more household in the neighborhood? What we can’t do is wait. We need to be bold in stopping the utilities from calling the shots, which includes extending profits from gas, and get fossil fuels out of our present and future as soon as possible before it’s too late.

  11. While I agree on Heat Pump conversions especially with federal money mow available any state specific funding should go towards the T. Getting the T to be functional and electrified will do a lot right now to reduce carbon emissions. It is also in a way simpler as you have one agency under state control vs hundreds of thousands of different property owners to work with. In addition to this I’d love for state to set the example and electrify all state agencies vehicles and buildings and get local governments to do the same via funding.

  12. While I agree on Heat Pump conversions especially with federal money mow available any state specific funding should go towards the T. Getting the T to be functional and electrified will do a lot right now to reduce carbon emissions. It is also in a way simpler as you have one agency under state control vs hundreds of thousands of different property owners to work with. In addition to this I’d love for state to set the example and electrify all state agencies vehicles and buildings and get local governments to do the same via funding.

  13. Will, it might be helpful to reframe the question. If society devotes $X to decarbonization, what types of investments yield the greatest reduction in carbon emissions? Even though legacy building heating systems emit a lot of carbon, the greatest incremental effects of decarbonizing investment may lie elsewhere. This is still consistent with requiring new construction to be electrified because that is less costly than retrofitting systems in an old housing stock with other deficiencies from an energy consumption point of view. Identifying the strategic investments with the greatest impact needs to take a broad view, not limited just to single-family or two-family housing. Maybe the residential housing sector is not the best place to start. It might be, but we’d be better able to judge after a comprehensive review of energy use and energy reduction opportunities state-wide based on cost-engineering principles.

  14. We need to harness capitalism to address this problem. Years ago, there was a movement in the Legislature for a price on carbon. Basically a tax and rebate feedback loop where taxes would be levied on carbon based fuels. Everyone would get a rebate check from that levy. If they used more than “X” the would pay more than what they got back. What ever happened to this? Sets up incentives for de carbonizing then let the system run. Fossil fuels will get noncompetitive and the economic system will push them out. Early last century our home was heated by a coal furnace. Today it is impractical to operate. Capitalism is like a horse, You don’t kill it, but when it steps over the line it needs to be whipped back into line.

  15. I agree with the concept of going after the low hanging fruit that is the fastest to implement. Solar panels pay themselves off generally in less than 10 years and last for 20-30 years and displaces use of fossil fuels. I would push on this aspect along with making homes more energy efficient with less heat loss. The more homes that have solar panels the most cost effective heat pumps become. Then put resources into knocking down the high sources of fossil fuel consupmption that can be economically controlled.

  16. Why did we stop talking about carbon taxes? With a lot of the proceeds given back to low-income people? Give people a motive to figure out how to reduce their consumption.

  17. Will,
    I have been working on several public school and municipality contsruction projects in recent years and all have built electric. Leaving aside the value of an electric vehicle and the fossel fuel debate the bottom line is (in my opinion) THE GRID IS NOT READY FOR ALL OF THIS. I have witnessed building waiting multiple years from ribbon cutting to achieve a true “net zero” status due to waiting for services and equipment from the grid. In the mean time these communities are paying extrodinary monthly electric bills waiting for the grid to catch up.
    I think the utilitiy companies need to get their act together before we can make any “deadlines”.
    Thank you for the conversation, this is a great topic.

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