REPORT TO COUNCIL
SUBJECT
Title
Update on Approaches to Replace the Reach Code Gas Ban and Meet the Climate Action Playbook Gameplan 2028, Move 2.N (Information Only)
Report
BACKGROUND
In 2006, the State Legislature passed the California Global Warming Solutions Act of 2006, which created a comprehensive, multi-year program to reduce greenhouse gas emissions in California. It was updated in 2022 (AB1279) and encourages local governments to adopt goals to reduce greenhouse gas (GHG) emissions by:
• 15% below 1990 levels by 2020,
• 40% below 1990 levels in 2030, and
• 85% below 1990 levels by 2045.
Sunnyvale adopted its first Climate Action Plan in 2014 to provide strategies to reduce greenhouse gas (GHG) emissions; achieved its 2020 GHG emissions reduction target. The plan was comprehensively updated and renamed the Climate Action Playbook (Playbook) in 2019 with updated goals to reduce greenhouse emissions by 56% by 2030 and 80% by 2050 in alignment with State goals in place at the time.
The Playbook was updated and the short-term workplan, Game Plan 2028, was adopted in June 2024. One Playbook update was to align the Playbook’s carbon neutrality target with the State’s new target.
To support the 2019 Playbook goals of reducing GHG emissions by minimizing the use of natural gas, the Council adopted an ordinance, sometimes referred to as the Reach Codes, on December 1, 2020, to require all-electric construction for new and substantially reconstructed buildings. While there are limited exceptions to the all-electric requirement for non-residential projects, there are no exceptions for new or substantially reconstructed residential projects.
In November 2019, the California Restaurant Association (CRA) filed a lawsuit in the United States District Court for the Northern District of California contesting the City of Berkeley’s natural gas ban for most new buildings, arguing that the Federal Energy Policy and Conservation Act (EPCA), a federal statute that regulates the energy efficiency of several consumer products including water heaters, furnaces, stoves, and HVAC systems, preempted the ordinance. The District Court upheld Berkeley’s ordinance, but the CRA appealed the decision to the US Court of Appeals for the Ninth Circuit. In early 2024, the Court of Appeals reversed the lower court’s decision. It invalidated the Berkeley ordinance, holding that the EPCA preempts state and local regulations, including building codes, concerning the energy use of natural gas appliances covered by the EPCA and that the EPCA preemption applies to regulations addressing the appliances themselves and building codes that concern the use of natural gas (California Rest. Ass'n v. City of Berkeley, 89 F.4th 1094, 1098-1103 (9th Cir. 2024)). The City of Berkeley did not appeal the decision and subsequently rescinded its gas ban ordinance.
The provisions of Sunnyvale’s all-electric ordinance were substantially similar to the ordinance at issue in the City of Berkeley case. SMC sections 16.42.030 through 16.42.080 directly regulated the use of gas appliances covered by the EPCA in homes, kitchens, and businesses by expressly prohibiting several covered gas appliances in newly constructed and renovated structures. Therefore, under the Ninth Circuit Court of Appeals’ decision in the Berkeley case, the EPCA preempts these sections of the Sunnyvale ordinance. In response to the court decision, on May 21, 2024, the City Council adopted a Resolution (see Attachment 1) to suspend enforcement of the all-electric construction requirement. Council action was to:
• Adopt a Resolution to suspend enforcement of Sunnyvale Municipal Code Sections 16.42.030 through 16.42.080 related to all-electric requirements for new and substantially reconstructed buildings;
• Direct staff to investigate alternatives to achieve building electrification;
• Direct staff to return to Council in 6 months with an update on their investigation of alternatives to achieving building electrification; and,
• Add a legislative advocacy position that advocates to the federal government for legislative relief in re-imposing the all-electric requirements.
EXISTING POLICY
Climate Action Playbook Update and Game Plan 2028
The Playbook was updated to exceed state carbon neutrality goals by reducing GHG emissions to 56% of 1990 levels by 2030 and to 85% of 1990 levels by 2045. Implementing the new (2024-2028) goals is expected to move forward by the end of FY24/25.
• Move 2.N - Continue implementing and augmenting Reach Codes through a phased approach.
GENERAL PLAN
COMMUNITY VISION
VISION STATEMENT
The people of Sunnyvale aspire to build upon the attributes which the City currently enjoys so that Sunnyvale of the future will become:
• A regional leader in environmental sustainability - Advocating to reduce dependence on non-renewable resources by providing greater transportation options, reducing waste, protecting our natural resources, and promoting alternative energy usage and research. We take environmental preservation and protection seriously and consider how each action will affect Sunnyvale for future generations.
GOAL: III. Environmental Sustainability - To promote environmental sustainability and remediation in the planning and development of the City, in the design and operation of public and private buildings, in the transportation system, in the use of potable water and in the recycling of waste.
LAND USE AND TRANSPORTATION
GOAL LT-2: ENVIRONMENTALLY SUSTAINABLE LAND USE AND TRANSPORTATION PLANNING AND DEVELOPMENT - Support the sustainable vision by incorporating sustainable features into land use and transportation decisions and practices.
Green Development
Policy LT-2.1 Enhance the public’s health and welfare by promoting the City’s environmental and economic health through sustainable practices for the design, construction, maintenance, operation, and deconstruction of buildings, including measures in the Climate Action Plan.
• LT-2.1a - Maintain and regularly review and update green building standards for new construction and additions to buildings, including additional incentives where feasible.
• LT-2.1b - Encourage green features such as living roofs, passive solar design, natural ventilation, and building orientation, and apply flexibility when conducting development review .
• LT-2.1c - Establish incentives that encourage green building practices, including conservation, beyond mandated requirements.
Greenhouse Gas Reduction
Policy LT-2.2 - Reduce greenhouse gas emissions that affect climate and the environment though land use and transportation planning and development.
• LT-2.2a - Actively maintain and implement the Climate Action Plan, which outlines impacts, policies, and reduction measures related to public and private land use and transportation.
AIR QUALITY
GOAL EM-11 IMPROVED AIR QUALITY - Improve Sunnyvale’s air quality and reduce the exposure of its citizens to air pollutants.
Policy EM-11.10 - Require development projects to comply with construction best management practices, such as those in BAAQMD’s basic construction mitigation measures.
Policy EM-11.13 - Reduce automobile emissions through transportation improvements and electrification.
• EM-11.3a - Encourage a shift to electric vehicles citywide.
• EM-11.3b - Expand requirements to install electric vehicle charging stations citywide, including adjusting minimum requirements for new construction through the City’s adopted Reach Codes.
• EM-11.3c - Increase electric vehicle infrastructure requirements for existing buildings.
GREEN BUILDING REGULATIONS - ZONING
Title 19 Zoning of the Sunnyvale Municipal Code states:
§ 19.39.010 Purpose. <https://ecode360.com/42730867> (a portion of this section)
The purpose of this chapter is to implement sustainable development with development and construction practices designed to use natural resources in a manner that does not eliminate, degrade or diminish their usefulness for future generations, to enhance the public health and welfare by promoting the environmental and economic health of the city through the design, construction, maintenance, operation and deconstruction of buildings and other site development, and to incorporate green building practices into all development projects.
Minimum standards (either the LEED or GreenPoint Rate systems) are established for new development and certain types of alterations to existing buildings. In addition, the program offers voluntary incentives for higher levels of “green” development. All of the incentives require the provision of an all-electric building (except for single-family which includes an all-electric as an option).
The Zoning Code Green Building Regulations are distinct from the Green Building Code chapter of Title 16 Buildings and Construction (although there is some overlap). Title 16 references the California Green Building Standards Code, typically referred to as the CalGreen standards.
REACH CODES
The Reach Codes, adopted per Ordinance 3168-20 (Attachment 2), set standards requiring the installation of all-electric appliances, photovoltaic systems, and electric vehicle chargers and infrastructure. The Reach Codes were adopted to further the City’s commitment to reduce greenhouse gases and are found in Title 16 Buildings and Construction of the Sunnyvale Municipal Code, §16.42.030 through §16.42.090 and §16.43.040 through §16.43.060.
Based on the federal court ruling against the City of Berkeley’s gas ban, the Council adopted Resolution 1238-24, found in Attachment 1, to suspend the enforcement of §16.42.030 through §16.42.080.
The City continues to enforce the Reach Code sections §16.42.090 (Solar Requirements) and §16.43.040 through 16.43.060 (Green Building Code) to implement photovoltaic and electric vehicle chargers and infrastructure requirements.
DISCUSSION
The Playbook is a plan to reduce greenhouse gas emissions and address climate change.
Greenhouse gases are a natural barrier of the earth to provide the environment stable protection from large fluctuations in the earth’s temperature. However, increasing greenhouse gases from vehicles and the built environment offsets the natural barrier and creates extreme weather conditions such as we are experiencing now. To reduce greenhouse gases from the building environment, a reduction of natural gas-burning appliances is required. This desire to reduce greenhouse gas emissions was the impetus behind the movement to require all-electric appliance construction.
Greenhouse gases also produce air particles that create damaging air-quality conditions that can increase asthma and other public health issues related to GHG emissions. The Bay Area Air Quality Management District (BAAQMD) indicates, “scientific research has demonstrated the negative impact of air pollution on health. Air pollution has been linked with disease or damage to the lungs in the form of asthma, bronchitis, and emphysema. There is also increasing evidence that air pollution contributes to heart attacks and strokes, diabetes, and dementia.”
The Playbook 2024 Update and Game Plan 2028 set carbon reduction goals to meet or exceed the State’s targets. Use of fossil fuels in buildings remains a major source of community GHG emissions. One action that contributes significantly to the reduction of GHG is Move 2.N - Continue implementing and augmenting Reach Codes through a phased approach.
When the City suspended enforcement of the all-electric requirements in the Reach Codes, the City Council directed staff to return with an update on their investigation of alternatives to achieving building electrification and approaches to offset GHG similar to an all-electric construction requirement. Staff has tracked the activity of other agencies and determined that three basic approaches exist for replacing the all-electric construction requirement for new and significantly modified buildings. The all-electric requirement was integral to GHG reductions in the built environment. While the focus of the current Reach Codes is new buildings, the selected approach will also impact the City’s options to address emissions from existing buildings. The three approaches are:
1) Continue enforcement of the City’s Green Building Program (in the Zoning Code) and take advantage of the movement of other state and regulatory agencies in the direction of GHG reduction and energy efficiency resulting in reaching the same goals;
2) Modify a state requirement to tighten energy efficiency requirements which results in the significant reduction (not elimination) of gas appliances;
3) Create an ordinance that bans nitrogen oxides from heating appliances, clothes dryers, stoves, etc.
APPROACH ONE - MAINTAIN EXISTING CITY PROGRAMS AND COORDINATE EFFORTS WITH THE STATE OF CALIFORNIA AND BAY AREA AIR QUALITY MANAGEMENT DISTRICT
The four components of Option One are described below. Emphasis is added to note all electric requirements.
1. Green Building PROGRAM
Zoning Code Chapter 19.39 establishes the purpose, covered projects, standards and procedures for Green Buildings. This chapter is implemented by Council Resolution; the most recent update is Resolution No. 1199-23 (see Attachment 3 for handout of the current minimum requirements and optional incentives). The Resolution provides minimum green building requirements; incentives are offered for projects that exceed the minimum green building standards to encourage project applicants and developers to provide additional green building features. The Zoning Code Green Building Program enhances the State Building Code requirements generally called CalGreen and found in Chapter 16.43 of the Sunnyvale Municipal Code.
Incentives
a. Single Family and Duplex Buildings - Projects may choose to increase lot coverage by 5% or qualify for staff-level design review with a Floor Area Ratio up to 50% or 4,000 sq. ft. (whichever is less) if:
i. the project achieves 120 points, with Build It Green Certification; or
ii. Provide all electric appliances for the entire home.
b. Multifamily Buildings - Projects may choose to increase building height by 5’, lot coverage by 5%, or receive a 5% density bonus if the project achieves:
i. 120 points with Build It Green Certification; and
ii. All electric appliances in every unit; and
iii. Provides/installs one or more of the following items:
i. A “cool roof” or “green roof; or
ii. Electric Vehicle Chargers; or
iii. Greywater, recycled water, and/or rainwater catchment system(s).
c. Nonresidential Buildings - Projects can increase Floor Area Ratios by 10% or height by 10’ by:
i. achieving LEED Gold Level with U.S. Green Building Council (USGBC) Certification that achieves at least 75 total points with Design Phase Credits reviewed and approved by USGBC and All electric appliances within the building.
d. Mixed Use Projects - These developments are required to meet the residential and non-residential standards for the respective portions of the project.
2. 2025 ADOPTION CALIFORNIA ENERGY CODE (not yet approved) - Effective January 2026
The California Building Standards Commission is still reviewing the proposed changes to the State’s 2025 Energy Code, which the Commission is scheduled to take action on in December. The proposed changes include these updates:
a. Efficient electric space and water heating appliances are required in new Single-Family Homes, Duplexes, and Townhomes. These electric appliances, known as “heat pumps,” are devices that provide heating, cooling, and hot water by taking energy from the air, ground, and water and turning it into heat or cool air instead of generating energy to provide the heating and cooling.
b. Space and water heating heat pumps are required for Single Family Homes, Duplexes, and Townhome additions and alterations.
c. Electric readiness for new Multifamily in-unit space conditioner and central hot water systems is required.
d. Gas instant water heaters are not allowed in new Multifamily structures.
e. Heat pump heaters are required in Nonresidential structures.
f. Electric readiness is required in commercial kitchens.
g. Heat pumps are prescriptively required for small Nonresidential projects.
3. BAY AREA AIR QUALITY MANAGEMENT DISTRICT
The Bay Area Air Quality Management District (BAAQMD) has adopted amendments to Regulation 9, Rules 4 and 6, to eliminate emissions of nitrogen oxides, or NOx, from residential and commercial natural gas furnaces and water heaters in the Bay Area by requiring new appliances to be zero-NOx. As a group, gas furnaces and water heaters are among the largest emitters of nitrogen oxides of all stationary sources of air pollution, which the Air District regulates.
2027 - only zero NOx water heaters can be sold or installed in the Bay Area.
2029 - only zero NOx furnaces can be sold or installed in the Bay Area.
2031 - only zero NOx large commercial water heaters can be sold or installed in the Bay Area.
4. CALGREEN BUILDING STANDARDS
The State has adopted the California Green Building Standards Code known as CalGreen. Chapters 4 and 5 address Environmental Quality pertaining to pollutant control during construction. The CalGreen standards are adopted by reference in SMC Chapter 16.43. Volatile Organic Compounds (VOC) are regulated at the time of rough installation, during storage on the construction site, and until the final startup of the heating, cooling, and ventilating equipment. These VOCs affect the air quality during the construction of new and altered buildings.
Chapters 4 and 5 also address the installation of EV chargers and/or EV charger infrastructure. The current California Green Building Standards edition has similar requirements for multifamily buildings, hotels, and motels. Still, the City’s Reach Codes continue to exceed the State’s requirements for other types of development.
APPROACH TWO - ENERGY PERFORMANCE APPROACH
The current California Energy Code (CEC) regulates energy use using several metrics in many ways. One of those metrics is called the Hourly Source Energy metric and is a proxy for carbon emissions. Making this metric stricter is the focus of the reach code known as the Energy Performance Approach. The Energy Performance Approach differs from an all-electric ordinance because it allows options for mixed-fuel buildings to comply with the Approach. The Energy Performance Approach provides various construction options that achieve a shared energy efficiency goal. Each option gains points toward a goal determined by building type based on the cost-effectiveness studies. An ordinance could revise the point goal compared to the 2022 Energy Code by installing electric appliances (water heating and space heating equipment). However, achieving the increased points goals would also be attainable by installing mixed-fuel appliances along with more efficient home features, such as windows, insulation, air sealing, photovoltaic systems, and a battery storage system. Note that this approach does not regulate cooking equipment, laundry dryers, or other energy uses not addressed in the CEC.
Because a City-adopted Energy Performance Approach locally amends the Energy Code, the City must justify to the California Energy Commission that the ordinance would be cost-effective and require buildings to consume less energy than permitted by the CEC. In addition, the risk of having a legal challenge is greatly reduced because the proposed ordinance does not completely ban gas appliances. Instead, it encourages the installation of electric appliances.
APPROACH THREE - NOx ELIMINATION
The Bay Area is in violation of federal and/or state requirements to reduce ozone and particulate matter. This has resulted in the BAAQMD passing resolutions and standards to gradually reduce the use of gas appliances (identified above). Adopting a zero-NOx ordinance would bring these BAAQMD rules into effect earlier, plus implement a stricter requirement. The BAAQMD resolutions impact water heater and air conditioning units. However, a NOx elimination ordinance would include other gas appliances such as gas ranges, stoves, and clothes dryers. Implementation will result in a higher impact on reducing emissions (GHGs, ozone, and particulate matter) because there is no commercially available gas equipment that can operate at zero NOx today.
State of California Energy Commission approval would not be required to implement this ordinance since it does not affect appliance efficiency standards outlined by the federal Energy Policy and Conservation Act, a law that sets national energy-efficiency standards for gas appliances. However, the City may be subject to lawsuits if the ordinance included a complete ban on gas appliances.
SUMMARY AND NEXT STEPS
Each of the three approaches has its own benefits and associated risks.
Approach One is the most conservative. Approach One uses State laws and regulations combined with the City’s Green Building Program. This approach exceeds State goals by a small margin and does not meet the City’s goals.
Approach Two, which many cities have implemented, may be the most viable option. Although it will not achieve the goal of all-electric construction, it is a pathway to reducing as many greenhouse gases as possible without violating the court’s decision in the Berkeley case. Additionally, the City can continue to offer incentives from the Green Building Program to choose all-electric construction.
Approach Three may be more impactful but at the same time may result in greater legal uncertainty. Eliminating NOx (zero-NOx) emissions will reduce air-suspended particles linked to many documented health issues. Since gas-burning appliances release NOx during combustion, gas appliances would be banned to eliminate NOx emissions. It is possible that such an approach could be challenged as inconsistent with the Berkeley decision.
What Other California Cities are Doing
The cities of San Jose, Palo Alto, Cupertino, East Palo Alto, Brisbane, San Luis Obispo, Santa Cruz, Encinitas, and Santa Monica have adopted Approach Two.
The City of Los Altos has adopted a residential zero-NOx ordinance with exceptions for outdoor appliances and indoor cooking facilities. There are other exemption items regarding PG&E services and technical infeasibility.
The City of Campbell has adopted a zero-NOx ordinance with exceptions for commercial cooking and gas-dependent appliances (such as a kiln). Outdoor appliances with small tank supplies are exempt.
The Town of Los Gatos is considering replacing the all-electric requirements with a zero-NOx ordinance to maintain the environmental air quality within the town. Further Council action is expected in December 2024.
Next Steps
Staff research is nearly complete. A comparison of GHG impacts of each approach will be researched and provided with the recommendation phase. Community outreach (including general public, developers, contractors, advocates, etc.) will be conducted prior to staff identifying a recommended approach. Staff anticipates public hearings with the Sustainability Commission, Planning Commission, and City Council in the next six months. Outreach will emphasize finding an approach that will move the City toward meeting the Game Plan 2028 goal of Move 2.N - Continue implementing and augmenting Reach Codes through a phased approach.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $250 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
A check in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Suzanne Park, Chief Building Official
Reviewed by: Trudi Ryan, Director, Community Development
Reviewed by: Melody Tovar, Regulatory Programs Division Manager
Reviewed by: Ramana Chinnakotla, Director, Environmental Services
Reviewed by: Connie Verceles, Deputy City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Resolution 1238-24 Suspending Enforcement of All Electric Building Construction
2. Ordinance 3168-20 Establishing Reach Codes
3. Green Building Program