What Happens When Cities Ban Natural Gas?

An increasing number of West Coast cities are banning natural gas, citing environmental concerns. Natural gas is a contributor to carbon emissions, and proponents of natural gas bans say that requiring electricity in buildings offers a green solution that can reduce emissions over the long term. While natural gas can be used to fuel an electric supply, renewable sources such as solar and wind are also increasingly used.

A Push Toward Renewable Energy in Cities

The most recent entrant is San Jose, CA, which banned natural gas infrastructure in new homes. Approximately 12% of all greenhouse gases come from buildings, including homes.

According to industry publication Smart Cities Dive, the buildings themselves have to contain electrical infrastructure. The residential parking spaces within the San Jose city limits must also have the capacity for electric vehicles (EVs). They are mandated to have 20% EV-ready parking spaces and a minimum of 10% of the space reserved for EV supply equipment (to charge and service the EVs).

Proponents of EVs argue that driving them, rather than conventional gas-fueled cars, also cuts down on carbon emissions. Electricity can also eventually be obtained from solar, wind, and other clean energy sources.

San Jose, at the heart of Silicon Valley, is the largest U.S. city to ban natural gas, but it’s not the only one. Berkeley, CA, has also passed a ban, and many larger cities are transitioning away from fossil fuel heat such as oil. Seattle has a proposed tax on providers of heating oil.

Other larger cities, such as San Francisco and Chicago, have ambitious plans to transition to renewable energy sources. In San Francisco, the mayor has proposed a measure that would require buildings of more than 50,000 square feet to get all their energy from renewable sources by 2030. Chicago has committed to all-renewable sources, citywide, by 2035.

Implications for Businesses Vary

What are the implications for businesses?

First, the mandate to ban natural gas does not apply to all businesses at this point. The San Jose move, for example, applies to residential construction. The San Francisco move would apply only to large office buildings.

Still, the bans do illustrate a growing move to 1) cut down on energy sources viewed as contributing toward carbon emissions and 2) transition to renewable sources such as solar and wind. For businesses already embracing these moves or engaged in them, these measures are good news. For other businesses, it may be a harbinger of future transitions in energy supply.

Second, if the trends the bans illustrate continue to gain support, the energy costs of doing business may go up, at least in the short term. Natural gas carries a lower price than electricity, and proponents argue that it delivers energy more efficiently.

Because of the relatively low costs of natural gas, major energy companies such as ExxonMobil, BP, and Shell have put considerable resources toward producing more. Industry proponents argue that new methods of production have reduced emissions.

Currently, utility companies around the country obtain roughly 35% of their energy from natural gas.