Keeping Warm and Staying Cool

Our Climate Challenge and Opportunity Pt 2E

Keeping warm and staying cool - 7%

No clean homes without clean electricity

The International Energy Agency projects that worldwide electricity demand for cooling will triple by 2050, at which point air conditioners will consume as much electricity as all of China and India do today!1 The majority of that new demand will come from developing countries, which is why developing and deploying economically competitive clean energy systems will be so important. I covered the implications of clean electricity generation, transmission, and distribution for developing regions in Bringing Electricity to Net Zero so I won’t go into detail here. In this article, we’ll be exploring how we can use electricity along with other means to reduce emissions while using energy more efficiently when heating and cooling buildings.

Moving to efficient electric heating and cooling

A heat pump is an appliance that uses refrigerants and electricity to provide heating and cooling for buildings and other applications such as refrigerators. A refrigerant is a substance that can rapidly and efficiently phase change between solid, liquid, and gas forms, which helps it aggregate, transfer, and diffuse energy. To provide heat, a heat pump works by extracting heat from the air outside and transferring it to a refrigerant – the refrigerant is then compressed, which increases the temperature significantly, and is then moved to the indoor unit of the heat pump, which then passes air (or water) over the hot refrigerant and into a building. Heat pumps do a similar process in reverse to cool buildings. Geothermal heat pumps utilize similar principles, though exchange heat from underground, where temperatures are more stable, rather than from outside air. Although they are more expensive to install, geothermal heat pumps are often more efficient and can end up being the same price or cheaper when factoring in operating costs over a unit’s lifetime2. Dandelion Energy is one company leading the way in bringing geothermal heat pumps to homes. The energy efficiency gains from heat pumps in the right conditions are mind-boggling - for every unit of energy you put in, you get up 4 units of energy into the building; that 400% efficiency can be compared to ~98.5% for modern furnaces and boilers. And, if the grid is clean, it’s zero-emission3.

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Heat pumps have seen increased efficiency and cost reductions over the years. Fortunately, when developing new buildings in areas that are warm or temperate (regularly above 40℉/4.4℃) it’s now often cheaper to install and operate a heat pump as opposed to a gas furnace (that is not always true if the cost of electricity is high, which goes back to having a sound grid). According to the IEA, heat pumps could satisfy 90% of global heating needs. That’s great news for developing regions with sound electricity systems.

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It’s not so good for nations with large amounts of old infrastructure already in place, as electric heat pumps are used to heat only 5% of residential demand globally. Even though modern heat pumps can save owners money, the reason only 11% of Americans have them is that furnaces are typically replaced every decade or so, and people do not want to lay out the extra cash upfront for a new system6. This is where business model innovation and intelligent lending can play a big role. Companies like Bloc Power are paving the way to bring access and financing to underserved areas that would benefit immensely from heat pumps, insulation, and other energy/emissions-reducing deployments. This is good for the planet, good for consumers who save money long-term, and good for business. More on that in the next section.

It’s also where smart policy incentives come into play. In China, subsidies to replace coal-fired boilers with heat pumps through Northern China’s Coal-to-Electricity program have helped increase heat pump sales dramatically; the U.S. also implemented a federal tax credit which allowed homeowners to claim 30% of the amount they spent on purchasing and installing a geothermal heat pump from their federal taxes. That tax credit has stepped down to 26% and will be stepped down again to 22% in 20237.

Given that one-third of all building emissions globally come from furnaces and water heaters8, and the economic savings that can come from heat pumps, we should be aiming to get heat pumps deployed in all buildings that can house them.

Insulated and efficient buildings

As the world continues to build more (we will be building the equivalent of another New York City every month between 2020 and 2060!), we’ll want to keep insulation in mind. Insulation is one of the most practical and cost-effective ways to make buildings more energy-efficient, as they often lower energy operation costs more than the cost of installation. The range of insulating materials is wide including fiberglass, plastics, fibers, mineral wool, recycled newsprint; even natural fibers such as hemp, sheep’s wool, and straw all find themselves going into insulation. Innovation in insulation materials continues with the aim of improving their performance and producing them more sustainably. 

One exciting new piece of technology is electrochromic glass, which changes its opacity according to heat, sun, and the difference between indoor and outdoor temperature. This  “smart glass” has been shown to reduce energy use by 20% compared with traditional windows. They are also 50% more expensive (though you do save on curtains and blinds) so technology like this will need to go down before it is ready to be widely adopted9.

There’s also enormous innovation in the design of buildings to use flows of energy in dramatically more efficient ways. Net-zero buildings are becoming more common, utilizing the best of thermodynamics, material science, and creative design to create buildings that can be climate neutral or even positive by being net carbon sinks (plants on-site) or clean energy contributors to the grid. Hopefully, these designs can become templated and ubiquitous over time. 

In addition to buildings that use energy more efficiently, there’s also a push to make the construction of buildings less carbon-intensive. Remember that steel and cement, primary materials for buildings, make up 8% and 5% of global emissions respectively. Companies such as Katerra, and buildings like the Mjøstårnet (largest timber building in existence today at 280 feet) or the Ascent building (expected to be 284 feet tall and be complete in 2022), are rethinking how buildings can be constructed to use carbon neutral or negative materials, such as timber, rather than carbon positive materials10. Manufacturing steel beams requires 6-12 times more fossil fuel than producing laminated timber!11 New forms of processing wood make it much more fire-resistant and strong enough to be used in quite substantial buildings. We do need to be careful to ensure that at a building's end of life, the wood is recycled and reused in a way that doesn’t result in the captured carbon in the wood being released back into the atmosphere. If we can reuse wood effectively at a building’s end of life, that wood can find new life in other buildings, be composted, or be used as fuel. If we are able to do that well, the potential benefits are huge; according to a 2014 study out of Yale University, building with wood could reduce annual global emissions of carbon dioxide by over 14%12! Note, the 7% due to keeping warm and staying cool does not factor in building materials, but I wanted to highlight this while we are talking about buildings as it’s an important element of our decarbonization challenge.

Unfortunately, old buildings are being replaced at a rate of 1-3% per year, meaning we won't have all new buildings properly insulated or creatively designed anytime soon. In the meantime, there are many opportunities to retrofit buildings in a cost-effective way. The payback on retrofits from energy savings (ones that include not just purely insulation but also consider appliances, lighting, heating, and cooling), are five to seven years on average, depending on the building; given that buildings can last over 100 years, the ROI for such retrofits is obvious. Yet existing commercial buildings are being upgraded at a rate of just 2.2% per year due to the high upfront costs and friction in the process.

Once again, this is where creative business model innovation can come into play. There should be a big focus on the 8,000 big buildings over 500,000 square feet in the US, where you can concentrate the savings, such as the Empire State Building retrofitting project (which slashed emissions by 40%, is saving $4 million in energy per year, and is expected to be a net saver of costs overall) and The Willis Tower in Chicago. Then there’s the 139.5 million buildings that need retrofitting and would result in savings for consumers, lower emissions, and many jobs created along the way13.

Incentives and awareness matter

When it comes to a new building, the incentives of a construction developer can differ quite dramatically from the long-term owner of a building. The developer wants to make the building as cheaply as possible, whereas the long-term owner wants to save money through the entire duration of his or her proprietorship. When the cost of construction to insulate is high, but the net savings through energy efficiency over time are even greater, incentives can be at odds. Conflict of incentives is also at play between developers looking to minimize costs and governments who want to reduce emissions, where cheaper steel, insulation, and other materials result in greater emissions during construction and over a building’s lifetime.

Governments have the power to architect incentives such that their incentive to reduce emissions is in line with a developer's incentive of creating a building at the cheapest price. Subsidies/tax breaks on more efficient buildings are ways of doing that (taxing carbon inefficient buildings is also an option, though politically difficult).

Another way of changing behavior that doesn’t involve the governments of over-indebted western nations or cash-strapped developing nations footing the bill is to increase awareness such that long-term building owners are aware of the trade-offs they are making between cheap to buy vs cheap to operate. That way, the long-term owner can have a sense of how much they stand to save, and accordingly how much more they are willing to spend for those long-term savings. Awareness and access to smart financing options for building efficiency can align incentives even further, as owners don’t need to make a large tradeoff between a dollar now and a dollar later. A program like this requires governments, non-profits, or consortiums to develop informational campaigns and certification programs to facilitate informed decision making, much like the Leadership in Energy and Environmental Design (LEED) certification program, rolled out by the U.S Green Building Council, or the Living Building Challenge (LBC), owned and operated by the International Living Future Institute14. LEED certification results in tax benefits in the U.S., but other programs can be developed in regions where tax benefits don’t exist, and can still help consumers make more economically and environmentally rational decisions.

Minimize refrigerant leakage

Refrigerant reduction is the top solution on the Drawdown list, which is a large-scale project that evaluates the environmental and economic impact of the many different solutions to help get us down to net 0 emissions15. The resulting book that came from this project, Drawdown, is a must-read on the subject.

Chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) were once key culprits in depleting the stratospheric ozone layer, which is essential for absorbing the sun’s ultraviolet radiation. Modern CFCs and HCFCs replacements, primarily hydrofluorocarbons (HFCs) do not deplete the ozone layer, but their capacity to warm the atmosphere can be 1,000 to 9,000 times greater than that of carbon dioxide, depending on the chemical composition. 

Thanks to the 1987 Montreal Protocol on Substances That Deplete the Ozone Layer, CFCs and HCFCs have been phased out of use. HFC substitutes are already on the market, including natural refrigerants such as propane and ammonium and through an amendment to the Montreal Protocol, the world will begin phasing HFC out of use, starting with high-income countries in 2019 and then expanding to low-income countries – some in 2024, others in 2028. With that said, the adoption of air-conditioning is soaring, especially in rapidly developing economies. As a result, the number of HFCs (which are cheaper than clean alternatives) will grow substantially before all countries halt their use. 

Refrigerants currently cause emissions throughout their life cycles – in production, filling, service, and when they leak – but their damage is greatest at the point of disposal. 90% of refrigerant emissions happen at the end of life. When refrigerants are carefully removed and stored, they can be purified for reuse or transformed into other chemicals that do not cause warming. While Drawdown estimates the green premium on this process is quite high (~$900 billion over the next 30 years, or 30 billion a year compared to business as usual), the estimates also show it can reduce emissions by ~90 gigatons of CO2 equivalent. If amortized over the next 30 years, that’s 3 gigatons a year, or 5% of emissions per year!

Smart Buildings

In addition to changing building infrastructure to save energy while heating and cooling, software can play a big role in using energy in an efficient way. There are a few ways software can reduce energy consumption, a primary one being smart thermostats. Smart thermostats can heat or cool only when it benefits those inhabiting the building; by utilizing sensors and/or cell phone data to know when someone is in a building, or on certain floors, these smart thermostats can heat or cool only when it makes sense. Those smart thermostats can also learn a user’s preferences and nudge them to adopt more efficient energy patterns. Sidewalk Labs’ Mesa and products like Nest are built with that sort of functionality in mind. On a side note, Sidewalk Labs is exploring many interesting avenues in the smart and low carbon building/city space, including an offset construction company to deliver customizable mass timber buildings, among other products that could shape how our cityscapes function. Smart thermostats can also optimize when it draws electricity from the grid, doing so at a time when grid demand is low; this results in lower utility bills, but it also reduces emissions as it can avoid adding load on the grid when dirty peaker plants are in use due to high demand. Minor efficiency tweaks that software can leverage without human intervention can result in major energy reductions and large savings.

If we go from .4% of households that use smart thermostats today to 46% of households by 2050 (as Drawdown projects), the reduced energy could avoid 2.6 gigatons of CO2 and $640 billion on utility bills, and that’s not including commercial buildings16.

Closing

While we have a long way to go in bringing down the 7% of emissions from heating and cooling buildings down, the technology already exists today to make a drastic dent in those emissions and will save money for consumers. In many ways, this is a deployment challenge. Thoughtful business models, more focus on access (both making sure people are informed and making sure there are organizations that can serve various demographics), as well as the right government incentives can go a long way here.

We’ve now covered the five primary emissions categories that comprise our climate challenge and opportunity (electricity, agriculture, how we make things, transportation, and buildings). Next, we’ll look at hydrogen and carbon capture technologies more closely, then how we can mitigate the negative effects of climate change that will occur as we strive to decarbonize, and finally discuss what role different stakeholders (governments, companies, individuals, etc) can play in our climate challenge and opportunity.

1

Gates, Bill. How to Avoid a Climate Disaster (p. 150). 

2

energy.gov/energysaver/heat-and-cool/heat-pump-systems/geothermal-heat-pumps

3

MacKay, David. Sustainability without the Hot Air (p. 147) // energy.gov/energysaver/home-heating-systems/furnaces-and-boilers#:~:text=Although%20older%20furnace%20and%20boiler,useful%20heat%20for%20your%20home.

4

acjupiter.com/blog-news/heat-pumps-operate/

5

iea.org/reports/heat-pumps // https://www.hvac.com/blog/heat-pump-vs-gas-furnace/

6

Gates, Bill. How to Avoid a Climate Disaster (p. 154). // https://www.iea.org/reports/heat-pumps

8

 Gates, Bill. How to Avoid a Climate Disaster (p. 157). 

9

 Hawken, Paul. Drawdown (p. 95-96).

10

architecturaldigest.com/story/worlds-tallest-timber-framed-building-finally-opens-doors // woodworkingnetwork.com/news/woodworking-industry-news/worlds-tallest-timber-tower-begins-overtaking-nearby-buildings

11

 Hawken, Paul. Drawdown (pp. 210-211)

12

 Hawken, Paul. Drawdown (pp. 210-211)

13

 Hawken, Paul. Drawdown (p. 101-103).

cleantechnica.com/2020/05/31/empire-state-building-slashes-carbon-emissions-by-40-with-energy-saving-upgrades/#:~:text=Empire%20State%20Building%20Slashes%20Carbon%20Emissions%20By%2040%25%20With%20Energy%20Saving%20Upgrades,-In%201931%2C%20the&text=When%20the%20building%20was%20finished,message%20of%20hope%20to%20all.

14

 Hawken, Paul. Drawdown (p. 188).

15

drawdown.org/solutions/table-of-solutions

16

 Hawken, Paul. Drawdown (p. 98).