Meeting California's Climate Goals: Advancing Equitable Building Decarbonization
The California Public Utilities Commission (CPUC) supports policies and programs that reduce greenhouse gas (GHG) emissions from buildings, helping the state realize its goal of eliminating climate-warming emissions, with an eye on affordability and equity. Residential and commercial buildings contribute approximately 24 percent of GHG emissions in the state, so transitioning to a carbon-free buildings sector is an important piece of the state’s broader climate goals of achieving 40 percent emissions reductions by 2030 and carbon neutrality by 2045.
The largest source of GHG emissions from residential and commercial buildings comes from the consumption of natural gas and electricity through building appliances. With California’s transition to cleaner electricity generation to power the grid, moving to electric appliances in buildings offers a way to reduce both indoor and outdoor air pollution. As the economic regulator of the state’s investor-owned utilities (IOUs), the CPUC has numerous levers to encourage electrification in existing buildings, while also seizing on the opportunity to ensure new construction in the state is carbon-free.
Through its Building Decarbonization proceeding, the CPUC oversees the implementation of utility programs that provide funding and support for building decarbonization, positioning the state to deliver on its climate goals while ensuring that no one is left behind. “Through its building decarbonization programs, the CPUC is showing what’s possible for the future of buildings in the state, while ensuring a large share of the benefits are directed to disadvantaged communities, who disproportionately face the harms of fossil fuel technologies and barriers to electrification,” says Bruce Kaneshiro, a CPUC Energy Division Program Manager.
Accelerating Heat Pump Adoption
Eighty-five percent of on-site building emissions come from space and water heating and cooling. Heat pumps offer an efficient, all-electric solution. Heat pumps can provide space heating, air conditioning, and water heating without relying on natural gas. Instead, heat pump technologies use power from California’s grid, which runs on clean electricity for much of the day. At scale, heat pumps are key to realizing state building carbonization goals, but they also offer significant benefits to California residents, including better indoor air quality, greater comfort, and temperature control. Not only do heat pumps replace traditional natural gas heaters, the technology can also cool a home, bringing a form of climate adaptation to customers who may not have had air conditioning previously.
The CPUC has approved a multitude of heat pump incentives that are now offered by the state’s IOUs and community choice aggregators. It also oversees a statewide heat pump incentive program to accelerate the adoption of clean space and water heating technology across California homes called TECH Clean California.
The TECH program has resulted in 75,800 heat pump HVAC and heat pump water heater units installations, including 10,000 units in multifamily residences. Beyond providing incentives, the TECH program has also helped develop the market for heat pump technologies to bring down prices and scale adoption of the technologies through workforce education and training to make it easier for distributors and contractors to stock, sell, and install low-emissions heat pump technology for residential replacement projects. Over 1,500 contractors across the state have enrolled in TECH to become experts in the heat pump sales and installation process, helping to grow good jobs in the California economy.
Equity is Key
An important focus of the CPUC’s Building Decarbonization strategy is eliminating the barriers to electrification in disadvantaged communities and creating equitable access to clean technologies. In alignment with the state’s environmental justice goals, the TECH program dedicates 40 percent of funding to equity incentives, training, and pilots and grants to prioritize customers and contractors in disadvantaged communities who are disproportionately impacted by the impacts of climate change. Clean Energy Access: LA County TECH (CEA-LAT) grant funding supports community-based organizations in the Los Angeles area in delivering multilingual workshops, grassroots outreach, educational materials, and technical assistance to increase awareness of the benefits of decarbonization and facilitate access to TECH Clean California incentives.
All-Electric & Affordable: Carbon-Free New Construction
As California’s housing needs grow, the state has an opportunity to encourage low-emissions and all-electric new construction. Across California, CPUC-approved incentives have helped all-electric, affordable housing projects break ground. The BUILD Program, which is administered in collaboration with the California Energy Commission, provides incentives and no-cost technical assistance to develop new all-electric, low-income residential buildings that reduce California's GHG emissions while giving low-income customers access to efficient, zero-emission appliances with benefits to their energy bills and indoor air quality. Completed affordable housing projects have shown how BUILD incentives can help developers overcome unexpected project delays and costs, provide a healthier, more comfortable living environment for low-income and senior communities, and can reduce utility bills for residents. Many more projects are planned or underway. As of 2025, 374 technical assistance applications and 143 incentive applications from low-income housing developers were received in the program. Over $40 million of $60 million incentives have been approved to help Californians.
A Holistic Approach
The CPUC has authorized over $435 million in incentives through building decarbonization programs, including many that support heat pump HVAC and heat pump water heating technologies and related devices, as well as millions more for fuel substitution and fuel switching efforts across multiple additional programs. The CPUC has adopted non-binding guiding principles for incentive layering, so builders and residents can make best use of the variety of programs with complimentary goals, including TECH and BUILD. These non-binding guiding principles provide a holistic vision to help maximize the impact of these programs and make it easier for program participants navigate the opportunities.
Through these initiatives, the CPUC is helping drive the state’s transition to a low-carbon buildings sector and ensuring that disadvantaged communities, who have been disproportionately burdened by climate pollution, are some of the first to realize the benefits. With new heat pump installations and all-electric new construction projects taking advantage of CPUC incentives, the CPUC is paving a path to a healthier, low-carbon future.
Rebuilding California Together
Across California, an estimated 37,000 homeowners and rental property owners have been impacted by natural disasters since 2017. In order to support these Californians in disaster recovery the CPUC authorized the Rebuilding Incentives for Sustainable Electric Homes program (RISE Homes). RISE Homes is a statewide CPUC initiative administered by the IOUs that provides financial incentives, assistance, and support to rebuild all-electric, energy-efficient homes across areas of California impacted by natural disasters. Property owners whose buildings have been destroyed or red-tagged due to natural disasters like wildfires, storms, floods, and earthquakes since the beginning of 2017 are eligible for support through RISE Homes. In addition to incentivizing all-electric reconstruction and appliances that add efficiency and resiliency, the program also incentivizes Passive House design, an innovative building method that has been shown to dramatically improve energy efficiency and reduce energy bills.This is the second article in the CPUC’s “Meeting California’s Climate Goals Series,” exploring the agency’s role in the statewide transition to a carbon-free economy. We highlight the regulatory levers and programs that help position the state on the least-cost path to net zero emissions across the electric, buildings, transportation, and industrial sectors.
By Liza Martin, Public Information Officer