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Research & Commentary: Report Says San Fran’s Electrification Plan Could Mean Big Costs to City Residents

June 25, 2021

"Electrification" Program Could Cost City Residents Between $3. And $5.9 Billion

A report commissioned by the City of San Francisco and overseen by the Budget and Legislative Analyst’s Office (BLAO) of the Board of Supervisors on the “electrification” of each residence in the city in order to get the city “carbon neutral” by 2050 would result in serious cost issues.

“Electrification” entails replacing every single natural gas-powered appliance in the city’s housing stock—including ovens, water heaters, furnaces, dryers, etc.—with ones that run on electricity.

According to the report, the cost to do so would range from $3.5 to $5.9 billion, or between $14,363 and $34,790 for every single-family residence in the city and between $14,363 and $19,574 for every multi-family dwelling in the city. The Institute for Energy Research (IER) notes that costs would include the “disposal of old appliances, purchase of new appliances, [and] labor and electrical panel upgrades. In San Francisco, an estimated 61 percent of the total housing stock (240,231 housing units) use natural gas for some or all of the appliances. That total includes 76,470 single-family homes and 163,761 multi-family homes.”

“In addition to the cost of retrofitting,” the BLAO report says, “the unit cost of electricity is currently higher than the unit cost of natural gas, potentially placing an additional cost burden on property owners who retrofit. While electric appliances tend to be more energy efficient than gas appliances, at present the total annual energy cost tends to be greater for electric appliances than for gas appliances due to higher unit costs for electricity compared to natural gas.”

The report then goes on to list a number of taxes, fees, and schemes that could be used to pay for the program instead of making homeowners and landlords foot the entire costs themselves, but however the program is paid for, the end result still means serious costs to city residents, not just in retrofitting costs but in increased energy bills. Landlords, for example, could just pass along some of the costs to tenants in the form of increased rents.

Worse yet, even if San Francisco achieved its goal of “carbon neutrality” by 2050, the environmental effects of the effort would be so small as to barely even be measured, as the city’s total carbon-dioxide emissions are just 0.012 percent of the global total. If you ask the average San Franciscan if they would willingly pay $14,000 to $34,000 to reduce the world’s carbon footprint by 0.01 percent, chances are the answer would be a firm “no,” even in this most progressive of progressive cities.

Elected officials in San Francisco should refrain from pursuing these “electrification” schemes for the good of city residents. In the aftermath of the COVID-19 pandemic, when economic situations for many people and businesses are especially precarious, purposefully raising costs is extremely foolish and hard-hearted. 

The following documents provide more information on California’s energy and environmental policies.

Legislating Energy Prosperity
https://www.pacificresearch.org/wp-content/uploads/2020/05/CAEnergyOpportunities_New_final_web.pdf
This study from Wayne Winegarden of the Pacific Research Institute details how, if lawmakers acted to alleviate the unnecessary costs from state energy mandates, Californians living through these unprecedented times could save more than $2,000 annually – while still lowering emissions.

Legislating Energy Poverty: A Case Study of How California’s and New York’s Climate Change Policies Are Increasing Energy Costs and Hurting the Economy
https://www.pacificresearch.org/wp-content/uploads/2018/12/LegislatingEnergy_F_Web.pdf
This analysis from Wayne Winegarden of the Pacific Research Institute shows the big government approach to fighting climate change taken by California and New York hits working class and minority communities the hardest. The paper reviews the impact of global warming policies adopted in California and New York, such as unrealistic renewable energy goals, strict low carbon fuel standards, and costly subsidies for buying higher-priced electric cars and installing solar panels. The report’s authors found that collectively these expensive and burdensome policies are dramatically increasing the energy burdens of their respective state residents.

Less Carbon, Higher Prices: How California’s Climate Policies Affect Lower-Income Residents
https://www.heartland.org/publications-resources/publications/less-carbon-higher-prices-how-californias-climate-policies-affect-lower-income-residents
This study from Jonathan Lesser of the Manhattan Institute argues California’s clean power regulations, including the state’s renewable power mandate, is a regressive tax that harms impoverished Californians more than any other group. 

The 100 Percent Renewable Energy Myth
https://www.instituteforenergyresearch.org/wp-content/uploads/2019/02/Renewable-Myth-Policy-Brief219.pdf
This Policy Brief from the Institute for Energy Research argues that a countrywide 100 percent renewable plan would put the U.S. economy in jeopardy. The brief investigates the intermittency, land requirements, capacity factors, and cost of transition and construction materials that limit the ability of the U.S. to adapt to 100 percent renewable energy.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
https://files.texaspolicy.com/uploads/2018/11/27165514/2018-11-RR-US-Leads-the-World-in-Clean-Air-ACEE-White.pdf
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

The Social Benefits of Fossil Fuels
https://www.heartland.org/publications-resources/publications/the-social-benefits-of-fossil-fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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