Burning gas to heat homes, generate electricity, and power industry bears responsibility for about a quarter of Washington’s climate pollution. Washington State—and its cities–have enacted a suite of laws to help homes and businesses make the transition from gas to all-electric appliances such as heat pumps. Initiative Measure No. 2066 on Washington’s November 2024 ballot would directly repeal some of the state’s gas transition policies and could impact others.
Below we explain four policies and regulations in Washington that the initiative could impact.
1. Washington’s 2021 Energy Code
Initiative 2066 reverses a requirement that Washington’s energy code work toward emissions-free new construction by 2031 and prohibits the energy code from limiting gas in buildings. This change could affect Washington’s latest energy code, which incentivizes electric heat pumps over gas appliances in new buildings.
Buildings make up a quarter of Washington’s carbon emissions, polluting more than any other sector except transportation. Almost half of that pollution comes from burning fossil fuels, mostly gas, for space and water heating.
Fifteen years ago, Washington legislators recognized that constructing more and more buildings that burn fossil fuels would catapult the state’s carbon pollution problem from bad to worse. In 2009 policymakers passed Senate Bill 5854, establishing new requirements for the state’s energy code, which regulates the design and construction of new buildings. The law mandated that the energy code help achieve a statewide goal of constructing emissions-free homes and buildings by 2031.
Buildings make up a quarter of Washington’s carbon emissions, polluting more than any other sector except transportation. Almost half of that pollution comes from burning fossil fuels, mostly gas, for space and water heating.
In 2024 Washington’s State Building Code Council (SBCC) finalized the state’s latest residential and commercial energy code. In its initial draft of the 2021 code, SBCC required electric heat pumps in all new commercial and residential buildings.1 However, after the United States Court of Appeals for the Ninth Circuit overturned Berkeley, Califonia’s prohibition on gas hookups in new buildings, SBCC voluntarily revised its draft code to bolster it against potential lawsuits from the gas industry.
Washington’s final 2021 energy code does not require heat pumps or ban gas hookups, but it strongly incentivizes electric heat pumps. If builders choose to install a gas furnace or boiler, they will need to compensate with a slew of other (likely more expensive) efficiency measures. It’s worth noting that building new all-electric homes is cheaper than building new homes that use both gas and electricity. Further, heat pumps can reduce people’s energy bills and are a cooling solution as well as a heating one. Today nearly half of Washington homes lack air conditioning.
Initiative 2066 would repeal the state’s longstanding requirement that the energy code work toward emissions-free new construction by 2031, and it would bar the code from “prohibiting, penalizing, or discouraging” gas appliances in buildings. This new prohibition might be used to challenge the 2021 energy code for incentivizing electric heat pumps over gas appliances.
Initiative 2066 strike-through: “The Washington state energy code shall be designed to: Construct increasingly energy efficient homes and buildings
that help achieve the broader goal of building zero fossil-fuel greenhouse gas emission homes and buildingsby the year 2031.”Initiative 2066 addition: “The Washington state energy code may not in any way prohibit, penalize, or discourage the use of gas for any form of heating, or for uses related to any appliance or equipment, in any building.”
2. Seattle’s 2023 Building Emissions Performance Standard
Initiative 2066 prohibits cities and towns from actions that “prohibit, penalize, or discourage” the use of gas in buildings. This could affect Seattle’s new Building Emissions Performance Standard, which requires large buildings to reach net zero emissions by 2050—a goal that’s difficult to achieve without transitioning from gas to clean electricity.
Buildings make up more than a third of Seattle’s carbon emissions. In December 2023, Mayor Bruce Harrell signed the Building Emissions Performance Standard (BEPS) into law. BEPS requires Seattle’s existing buildings larger than 20,000 square feet to meet progressively declining greenhouse gas emissions targets until they achieve net-zero emissions in 2050. (Seattle maintains a map of the energy profiles of all the city’s buildings larger than 20,000 square feet; these buildings include high-rises, shopping centers, hospitals, grocery stores, and hotels.) The city expects BEPS to reduce Seattle’s building emissions by 27 percent by 2050.
Initiative 2066 would ban cities and towns in Washington from prohibiting, penalizing, or discouraging gas for heating or other uses in buildings. Like Washington’s 2021 energy code, Seattle’s BEPS does not ban gas. However, BEP’s standards will be difficult to achieve unless buildings transition from burning gas to using clean electricity. Almost 90 percent of the city’s buildings sector emissions come from burning gas. (That’s a much higher percentage than Washington writ large, where about half of the pollution from buildings comes from burning fossil fuels [namely gas]; the other half comes from using not-yet-decarbonized electricity. Seattle’s electricity sources are almost entirely carbon-free.) Initiative 2066 could thus potentially be used to challenge BEPS on the grounds that it discourages the use of gas.
Initiative 2066 addition: “A city or town shall not in any way prohibit, penalize, or discourage the use of gas for any form of heating, or for uses related to any appliance or equipment, in any building.”
3. Washington’s 2024 thermal energy networks law
Initiative 2066 expands the state’s “obligation to serve” law, requiring gas utilities to provide gas to anyone in their service territories who demands it, even if other options are available. This could affect gas utilities’ ability to deploy thermal energy networks as a climate-friendly alternative to gas-fired heating systems.
Washington, like all 50 US states, has long required gas utilities to provide gas to any customer in their service areas who wants it. Known as the “obligation to serve,” these laws used to make sense. They prevented monopoly utilities from discriminating against customers who were not profitable to serve, such as people in low-density areas or those who use only small amounts of gas. And they helped lower customers’ bills by spreading fixed infrastructure costs over more households over decades—a model possible for a gas system that exists in perpetuity.
But lately the obligation to serve has become a barrier to the clean energy transition. If just one household on the block refuses to drop its gas connection, the obligation to serve forces a utility to keep operating all the gas pipes necessary to deliver gas to that neighborhood. Without reducing the gas infrastructure footprint in tandem with electrification, an ever-shrinking number of gas customers will face ever-ratcheting costs. Renters and low-income people who face the greatest hurdles to electrify are at the most risk of this so-called death spiral.
In 2024 the Washington legislature adjusted the gas utility’s obligation to serve with the passage of House Bill 2131. The law, the first of its kind in the United States, does not eliminate the obligation to serve. Instead, it allows the state’s gas utilities to meet this obligation by deploying thermal energy networks.
Thermal energy networks use connected water pipes and ground-source heat pumps to transfer heat in and out of buildings to provide heating, cooling, and often domestic hot water. (See Sightline’s 2023 research on thermal energy networks, also known as GeoNetworks.) They are highly efficient and could be a viable climate-friendly alternative business model for gas utilities and their workforce. Some unusual bedfellows (building and construction unions, environmental nonprofits, gas utilities, and grassroots activists) all advocated for advancing HB 2131 in Olympia this year. It passed unanimously, with bipartisan support.
Initiative 2066 might affect Washington’s nascent efforts to deploy thermal energy networks. It would not directly repeal HB 2131. However, it would require gas utilities to offer gas to anyone who wants it even when other energy services are available. If voters pass Initiative 2066, it’s unclear how regulators and courts will interpret these two seemingly conflicting statutes—one that states that gas companies must provide gas to anyone who wants it, and one that states that those utilities can provide thermal energy networks instead.
Initiative 2066 addition: “Every gas company or large combination utility shall provide natural gas to all persons and corporations in their service area or territory that demand, apply for, and are reasonably entitled to receive, natural gas under this section, even if other energy services or energy sources may be available.”2
4. Washington’s 2024 utility decarbonization law
Initiative 2066 would repeal the parts of HB 1589 that require Washington’s largest utility, Puget Sound Energy, to evaluate alternatives to spending money on new gas pipes, like energy efficiency or neighborhood electrification.
Gas utilities in Washington continue to pour money into new gas infrastructure. Every time utilities lay down new gas pipes, which can last for 50 years or more, they increase the stranded asset risk that could fall on ratepayers.3
One way to understand just how much utilities are expanding the gas system is by examining the value of their undepreciated assets. When a utility installs new infrastructure (e.g., pipes), the value of the company’s undepreciated assets grows, since that infrastructure is at the beginning of its useful life. Over the past decade, Washington gas utilities’ undepreciated assets have ballooned. Puget Sound Energy’s (PSE) undepreciated gas distribution assets swelled from roughly $3 billion in 2013 to more than $4.9 billion in 2023.4
But utilities can deploy alternatives to continued investment in the gas system, such as geographically targeted electrification, energy efficiency, and demand response.5 Known collectively as non-pipeline alternatives, these solutions can mitigate the need for gas utilities to (1) replace aging pipes, (2) expand pipes to meet additional demand, and/or (3) extend the gas system to new areas. (Sightline has written about the opportunity for geographically targeted electrification, or neighborhood electrification.)
Before 2024, Washington did not require utilities to analyze non-pipeline alternatives. That changed when lawmakers passed House Bill 1589. Among many other provisions, the law requires PSE to assess alternatives to replacing or expanding gas pipes. It broadens and enshrines into statute work PSE started with its targeted electrification pilot; phase 2 of the pilot, which the company plans to kick off in 2025, intends to convert gas customers in gas-constrained areas to high-efficiency electric heat pumps to try to “avoid capacity expansions of the gas delivery system.”6
Washington is not the only state now requiring gas utilities to analyze non-pipeline alternatives. In 2022 regulators in Colorado and New York both adopted new gas planning rules requiring utilities to analyze non-pipeline alternatives. Massachusetts’s Department of Public Utilities has gone even further with a new regulatory framework for all gas utilities. Under the framework, Massachusetts utilities must “demonstrate the consideration of [non-pipeline alternatives] as a condition to recover additional investment in pipeline and distribution mains.” In other words, companies can’t profit from investment in more gas infrastructure if non-pipeline alternatives are viable.
Initiative 2066 repeals all requirements that PSE evaluate non-pipeline alternatives and geographically targeted electrification.
Initiative 2066 strike-through:
“By January 1, 2027…large combination utilities shall file an integrated system plan demonstrating how the large combination utilities’ plans are consistent with the requirements of this chapter and any rules and guidance adopted by the commission, and which:
“Assess nonpipeline alternatives, including geographically targeted electrification and demand response, as an alternative to replacing aging gas infrastructure or expanded gas capacity.”
