Preparing for Transition from Natural Gas

Preparing for the Transition Away from Natural Gas in Commercial Buildings

by David Harrison, BOMA SF Manager of Government and Public Affairs

In the midst of an uncertain time for commercial real estate, BOMA San Francisco’s advocacy is focused on providing certainty to members about their assets in the coming years. In this space, the City of San Francisco’s Climate Action Plan will likely be the single largest challenge our industry faces in the coming years. As our city seeks to move towards net zero carbon emissions by 2040, commercial buildings will continue to be the target of new mandates that seek to prioritize a transition away from the usage of natural gas.

The City’s Climate Action Plan was finalized in December 2021 and sets a number of goals. For now they remain goals and not mandates, to get San Francisco to net zero by 2040.

With regard to BOMA member buildings, the most impactful goal will be the target of eliminating onsite fossil fuel emissions by 2035. This electrification process will be difficult, costly and leaves our industry with a lot of unanswered questions. What do you do if you have natural gas equipment that needs to be repaired or replaced now? Who is going to shoulder the costs of these capital investments? What will the penalties be for non-compliance? Does PG&E have the capacity to deliver the amount of energy the grid would need for full electrification?

In the coming years, the San Francisco Board of Supervisors will work on implementing legislation, essentially the enforceable rules that will turn these targets to mandates. The development of delivery processes, tracking, and finalization of the Climate Action Plan metrics are already underway. BOMA SF is beginning its outreach to legislators to speak with them about some of the challenges for buildings to transition away from natural gas infrastructure. BOMA will push for certainty in future costs relating to transitioning buildings away from natural gas. We will seek exemptions for buildings with ENERGY STAR scores of 90 or above in the compliance year, buildings with no feasible path to electrification other than electric resistance heat, or no economic path to electrification with a project simple payback.

In the meantime, it’s essential that property management professionals begin the discussions with ownership about the necessity for long-term capital planning. Every tenant improvement, maintenance decision, and new lease agreement should consider this long-term reality too. Because even though we don’t yet know how it will be enforced, we do know that starting in 2035 buildings will not be able to run on natural gas.

BOMA’s Government Affairs and Policy Advisory Committee (GAPAC) and the Energy and Environment Committee will be monitoring these issues closely. To lead our efforts, we’ve welcomed new committee chairs. Ana Duffy, Sustainability Analyst for Hudson Pacific Properties, is chairing the GAPAC. Bill Whitfield, Shorenstein Realty Services General Manager and Sustainability Program Manager, is leading the Energy and Environment Committee. To learn more, visit the BOMA website for committee meeting announcements or email David Harrison at davidh@boma.com.

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