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Report: Electrifying Heating in Existing Commercial Buildings Could Cut Their Emissions 44%

October 28, 2020
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Washington, DC—Replacing gas-burning heating systems in commercial buildings with efficient electrified heat-pumps could reduce these buildings’ total greenhouse gas (GHG) emissions by 44%, according to a new report by the American Council for an Energy-Efficient Economy (ACEEE). The conversions would help enable the buildings to ultimately become “zero carbon” as the electric grid moves toward renewable energy sources. But policymakers will need to act to spur a widespread shift to heat pumps.

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Buildings are responsible for nearly one-third of GHG emissions in the United States, both from fuel burning on site and the emissions from power plants serving the buildings. The new report models the impacts of replacing several types of gas-based heating systems in existing commercial buildings with various electric heat pump systems.

In some cases, electrifying heating already pays back for building owners. ACEEE found that about 27% of commercial floor space heated with fossil fuel systems can be electrified today with a simple payback of less than 10 years. If policymakers enacted a package of public investments, incentives, and carbon pricing policies, the proportion of commercial building space that can be electrified with this payback would increase to 60%. But electrification of remaining buildings would likely require more-aggressive policies or government investments.

“Ultimately, we’re going to need to upgrade most building heating systems to electric heat pumps, running on renewable energy, to get to zero emissions,” said Steven Nadel, ACEEE executive director and co-author of the report. “Heat pumps use less energy and reduce building operating costs, but the upgrade is often a tough sell for building owners when payback periods are long. Policymakers are going to need to make major investments in incentivizing the technology to get it adopted widely.”

ACEEE analyzed converting packaged heat systems, furnaces, boilers, and space heaters for a range of actual buildings across all regions. Researchers found that the economics of switching to heat pumps vary widely. Buildings with the shortest paybacks are more likely to be located in the southern United States and the Pacific region, where space-heating needs are modest, and in building types across the country that often have medium-to-long operating hours, such as healthcare, food, retail, and offices.

The report says that the economic case for upgrading to heat pumps can improve for building owners if:

  • Policymakers improve incentives and institute a fee on GHG emissions
  • Building owners institute other energy efficiency measures to reduce heating load at the same time as installing heat pumps
  • Policymakers invest in research and development that could reduce the initial cost of heat pumps.

The report also recommends that policymakers encourage or require building owners to get a heat pump bid whenever an existing fossil fuel heating system needs to be replaced.

Even with the proposed policy support and incentives, electrifying space heating in some types of buildings, such as those with complex heating, ventilation, and air-conditioning systems or in cold climates, may still prove challenging. The report says that for many buildings, a viable strategy in many cases may be to electrify most of the heating load but continue to have a fuel-based backup for use on very cold days.

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Building Policies Office Buildings Retrofits

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