Build Back Better’s Gift To The Gas Industry

Hidden in the reconciliation bill’s clean energy rebate program is a provision that could tether homeowners’ appliances to natural gas for a long time to come.
Build Back Better’s Gift To The Gas Industry
A repairman installs a new water heater. (AP Photo/Richard Vogel, File)

President Joe Biden has touted his administration’s Build Back Better Act as “the largest effort to combat climate change in American history.” While not untrue, the devil is in the details. And the devil buried in the climate section of the reconciliation bill text? A sizable gift to the natural gas industry in the form of rebates for Americans switching to appliances powered by burning natural gas.

Tucked into the section calling for residential efficiency and electrification rebates is a subtle six-year policy to make $5.9 billion available to establish the Home Owner Managing Energy Savings (HOMES) rebate program. The policy, which aims to reduce greenhouse gas emissions and increase household energy and cost savings, would help states establish rebate programs for energy-efficient retrofits.

According to the White House, “The consumer rebates and credits included in the Build Back Better framework will save the average American family hundreds of dollars per year in energy costs."

But when it comes to what types of appliances are eligible for the rebate program, the legislation notes the following: “In calculating total energy savings for single family or multifamily homes under this section, a program may include savings from the purchase of high-efficiency natural gas HVAC systems and water heaters certified under the Energy Star program.”

In other words, this rebate program would incentivize consumers to stay locked into natural gas systems to power their homes. And as Reuters reported last year, the natural gas industry’s rapidly increasing emissions, especially in the U.S., are likely making the sector the biggest barrier to tackling climate change.

“Provisions like this are really contradictory to the United States’ efforts to combat climate change,” Jean Su, energy justice program director and senior attorney at the Center for Biological Diversity, told The Daily Poster.

What’s more, the program allows homeowners to transfer the rebate to “a gas utility, electric utility, or commercial, nonprofit, or government entity” that is installing an energy-efficient appliance.

“If you're from a poor family and can’t afford an upgrade, you could sign up with a gas company to install it for you and they would get the rebate ultimately,” said Su. “We’re not at a point where gas companies need rebates to perpetuate fossil fuel instruments.”

“A Bridge To Nowhere”

According to the U.S. Energy Information Administration, nearly half of U.S. homes burn natural gas — a fossil fuel mainly made of methane, a notable contributor to global warming — for water and space heating. “Burning natural gas produces carbon dioxide that will warm the atmosphere for the next 300 to 1,000 years,” environmental journalist Sara Peach recently wrote.

Of added concern is “fracking,” or hydraulic fracturing, a process by which natural gas is often acquired. “Fracking spews methane directly from the mining sites, which offsets the nominal win from burning natural gas instead of coal,” Saul Griffith wrote in Rewiring America: A Field Manual for the Climate Fight. “It’s a huge distraction from the things that we know to be zero carbon like solar, wind, nuclear, pumped hydro, electric vehicles, and heat pumps.”

Fossil fuel companies have conveniently branded natural gas as “the earth’s cleanest fossil fuel” and a “bridge” fuel away from coal and oil — whose combustion yields more carbon dioxide — and toward less carbon-intensive energy sources.

But as Berlin-based journalist Paul Hockenos wrote in a January blog post titled “Natural Gas is a Bridge to Nowhere,” this thinking is outdated and invalid.

“The fast pace of renewables-based systems’ technical progress — and plummeting costs — has, together with new studies on gas’s toxic methane emissions, cast a new, much less sanguine light on natural gas,” Hockenos wrote.

And as Su said of the HOMES rebates in the Build Back Better Act, “This provision still treats gas as a bridge fuel, but we don’t have time for a bridge fuel. We only have until 2030 to make our entire electricity system renewable.”

Experts argue in favor of opting for heat pumps as a better solution to heating homes and water, since they instead use electricity to channel thermal energy from a source like the air outside into home appliances and HVAC systems.

“When old appliances retire, it’s ideal that they’re replaced with the least emissions-intensive option — especially for home heating systems, which have a relatively long lifespan,” Holly Caggiano, a postdoctoral fellow at Princeton University’s Andlinger Center for Energy and the Environment, told The Daily Poster. “Electrifying household appliances is crucial to rapidly reducing emissions.”

According to Caggiano, studies from groups like Sierra Club and Princeton Net Zero point to the importance of electric heat pumps in a clean energy transition.

Moving away from fossil fuels could lower consumer energy costs as well. According to the Center for American Progress, “Even before natural gas prices rose, there were more than 100 million households that would save hundreds of dollars every month after switching from a fossil fuel furnace or from an outdated resistance heater to an electric heat pump.”

The Gas Industry Keeps The Quiet Part Quiet

While the gas industry has poured millions into the fight against some of the better known climate provisions in the Build Back Better reconciliation legislation, it has been noticeably silent on the HOMES rebates proposal that would incentivize people to purchase natural gas appliances.

This year alone, the American Gas Association (AGA) — the top natural gas trade group in the U.S. — has spent more than a million dollars on lobbying, and has been working to secure “natural gas’s role in the clean energy future,” according to one filing.

The AGA has lobbied against a number of Build Back Better Act provisions, including a section incentivizing states and localities to adopt a zero-energy building energy code, and a methane fee on petroleum and natural gas emissions — the latter of which would account for 65 percent of the bill’s industrial greenhouse gas emissions reductions through 2050.

In a press release last month, AGA President and CEO Karen Harbert expressed the group’s commitment to fighting key climate measures in Democrats’ social spending bill. “The BBB Act still contains provisions that would negatively impact customers and communities, especially the costly natural gas tax and the misnamed Zero-Emissions Homes Act,” Harbert said.

The Zero-Emission Homes Act would provide rebates to consumers who electrify their home appliances and equipment. According to Rewiring America, if this measure were to pass, “At least 85 percent of households in the United States — 103 million — could save $37.3 billion a year on energy bills if they were using modern, electrified furnaces and water heaters instead of their current machines.”

The oil and gas lobbying group American Petroleum Institute (API) has also spent a massive amount of money lobbying on legislation in 2021 and fighting some of the most important climate provisions, including the methane fee, in the Build Back Better Act.

“We continue to work to defeat a punitive and duplicative natural gas tax and other misguided efforts to restrict the affordable, reliable energy needed to fuel America’s economic recovery,” an API spokesperson said in October.

But the gas industry hasn’t been saying much publicly about the HOMES rebate program, and it seems to have flown under the radar.

“A lot of us have been focused on the carbon capture and storage pieces, which have been the front line of the battle against gas companies,” said Su. “Something like this is subtle and it is very creative and there hasn’t been attention drawn to it — it’s totally purposeful the things that don’t get highlighted.”

Giving Americans A Dirty Option

The HOMES rebates in the Build Back Better Act are modeled on a clean energy rebate program outlined in the HOPE for HOMES Act of 2021, which was introduced in the House and Senate last July.

The original legislation said that in order to qualify for a rebate, “any HVAC system, heating component of an HVAC system, or cooling component of an HVAC system installed shall be Energy Star Most Efficient certified.” However, the HOPE for HOMES Act made no mention of Energy Star program-certified natural gas HVAC systems and water heaters being eligible for savings.

In other words, at some point during the rebate program’s transition from the HOPE for HOMES Act to the Build Back Better Act, Democratic lawmakers revised the language to specifically make natural gas HVAC systems and water heaters eligible.

They also nixed language saying the HVAC systems must be “Energy Star Most Efficient certified,” instead proposing that the systems be “certified under the Energy Star Program” to qualify.

That shift in language would help natural gas companies. As Grist recently reported, in 2022, gas-burning appliances will no longer be eligible for Energy Star’s “Most Efficient” list.

“It’s disappointing but not surprising that House leadership has included a series of enrichment vehicles for the fossil fuel industry,” said Su.

Although consumers’ stand to benefit financially from passage of the HOMES rebates provision in the reconciliation bill, in the process, the federal government could be further lining the pockets of fossil fuel companies — and forcing consumers to make a difficult choice.

“There’s this mirage that customers are free to choose, but they are actually being given a dirty option as opposed to putting in the right types of subsidies for renewable energy that people need,” said Su. “The government makes it seem like they are giving people a choice of what’s more affordable, but they are choosing what they want to sell more of, and that’s fossil fuels.”


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