Two Coasts, Two Climates, Two Paths to an All-Electric Future: A Tale of New York and California

Two Coasts, Two Climates, Two Paths to an All-Electric Future

New York and California, the economic and political titans of their respective coasts, are locked in a high-stakes race to solve the same monumental challenge: how to unplug their economies from fossil fuels. Both states have identified the millions of buildings that burn gas and oil for heat and hot water as a primary target for decarbonization. Yet, as they push toward an all-electric future, they are pursuing starkly different strategies, shaped by unique political landscapes, legal battles, and policy philosophies.

New York has chosen the path of direct, top-down legislative command, enacting the nation's first statewide ban on fossil fuels in new construction. California, in contrast, has opted for a more decentralized, incentive-driven approach, encouraging electrification through building codes and a complex web of local and state programs. This divergence has created two distinct, real-world laboratories for climate policy, and the outcome of their respective experiments will offer critical lessons for the nation and the world.

The Core Strategy: Mandate vs. Encouragement for an All Electric New York and California

The fundamental difference between the two states' approaches can be seen in their foundational policies.

New York's Iron-Clad Mandate: New York's strategy is anchored by the All-Electric Buildings Act (AEBA), a direct and unambiguous law that makes it the first state to prohibit fossil fuel combustion in most new buildings.¹ Passed as part of the state budget, the law sets a clear timeline: starting in 2026, new buildings seven stories or shorter must be all-electric, with the mandate expanding to nearly all new construction by 2029.³ This act is the tactical enforcement arm of the state's broader Climate Leadership and Community Protection Act (CLCPA), which sets legally binding, economy-wide emissions reduction targets.⁴ The approach is centralized, aggressive, and leaves little room for interpretation.

California's Path of Persuasion: California has taken a less direct route. While the state has an ambitious goal of achieving carbon neutrality by 2045, it has not passed a statewide ban on gas in new construction.⁷ Instead, its primary tool is the state building code, Title 24, which

encourages builders to go all-electric by making it the most straightforward and cost-effective path to compliance.⁹ For years, the state relied on a bottom-up strategy, where dozens of progressive cities and counties passed their own local gas bans, known as "reach codes," to push the market forward.¹² This created a patchwork of regulations rather than a single, unified state mandate.

A Legal Showdown with Divergent Fates for an All Electric New York and California

The most dramatic point of divergence has come in the courtroom, where both states' policies have been challenged under the same federal law—with opposite results.

The central legal weapon used by opponents is the federal Energy Policy and Conservation Act (EPCA), which gives the U.S. government the sole authority to set energy efficiency standards for many common appliances. Industry groups have argued that by banning gas infrastructure, states and cities are effectively banning the use of gas appliances, thereby illegally creating their own appliance standards.

California's Setback: In a landmark 2023 case, California Restaurant Association v. City of Berkeley, the U.S. Ninth Circuit Court of Appeals sided with the industry challengers.¹⁴ The court struck down Berkeley's pioneering local gas ban, ruling that because the ordinance prohibited gas

piping, it indirectly but effectively regulated the "energy use" of federally covered appliances, and was therefore preempted by EPCA.¹⁵ The ruling was a major blow to California's bottom-up strategy, sending a chill through the 70-plus jurisdictions with similar local codes and ultimately forcing Berkeley to settle the lawsuit and agree to repeal its ordinance.¹⁹

New York's Victory: In stark contrast, when industry groups used the exact same legal argument to challenge New York's statewide All-Electric Buildings Act, they lost. In July 2025, a U.S. District Court in New York upheld the state law, explicitly stating that the Ninth Circuit's reasoning in the Berkeley case was "simply not persuasive".¹ The New York court affirmed the state's authority to regulate building construction codes to reduce emissions, creating a profound legal split between the circuits and allowing New York's first-in-the-nation mandate to proceed.²¹

Policy and Political Fallout for an All Electric New York and California

The conflicting court rulings have sent the two states down different political paths.

Reeling from the legal defeat and facing a severe housing affordability crisis, California has pulled back. In a move to make it easier to build new homes, the state passed AB 130, a law that pauses most updates to state and local building codes for the next six years.²² This represents a significant retreat from the state's previous strategy of using regular, aggressive code updates to drive decarbonization. California's focus has now pivoted heavily toward a vast ecosystem of financial incentives, rebates, and technical assistance programs designed to coax consumers and developers into voluntarily choosing electrification.¹²

Emboldened by its legal victory, New York is pressing forward with its mandate. However, it faces what can be described as an "implementation trap." The state is simultaneously being sued by industry groups for the ambition of its policies while also being sued by environmental groups for failing to implement its own climate laws fast enough.²¹ This highlights the immense administrative burden of trying to execute a top-down mandate on a legally mandated timeline.

The Shared Challenge: Grid Reliability and Equity

Despite their different paths, both states face the same daunting technical and social challenges.

• Grid Pressure: Both the New York Independent System Operator (NYISO) and the California Independent System Operator (CAISO) have warned about the immense strain electrification will place on their power grids.³¹ NYISO reports that the state's reliability margins are shrinking as fossil fuel plants retire faster than renewables are connected.³¹ California, while having made massive investments in battery storage (over 13,000 MW) that have improved short-term reliability, still faces risks from extreme weather and has had to cut funding for some grid support programs due to budget shortfalls.³⁴

• The Equity Imperative: Both states have strong legal mandates to ensure their climate policies benefit disadvantaged communities.⁶ New York's CLCPA dedicates at least 35% of climate investment benefits to these communities, funded by state-level programs like a proposed Cap-and-Invest system.⁴ California uses a patchwork of targeted programs like the Equitable Building Decarbonization Program and Solar on Multifamily Affordable Housing (SOMAH) to achieve similar goals.³⁹ However, both states face the risk of creating a "two-tiered" energy system, where affluent households electrify and lower-income residents are left behind on a shrinking and increasingly expensive gas system.²¹ The high upfront cost of retrofitting older, affordable housing—estimated at $30,000-$40,000 per unit in New York City—remains a massive barrier in both states.⁴³

Grid Strain, Equity, and the Role of Utilities Like New York State Electric & Gas Corp

As New York and California accelerate electrification, the role of local and regional utilities becomes increasingly important. In upstate New York, New York State Electric & Gas Corp (NYSEG) is one of the key providers tasked with modernizing infrastructure to handle increased loads from electric appliances, heat pumps, and EV chargers. Their ability to expand capacity, manage time-of-use rates, and support grid resilience will shape how successfully the state can implement mandates like the All-Electric Buildings Act.

The Price of Power: How Electrification Hits the Pocketbook

Beyond the policy debates and technical hurdles, the most pressing question for most residents and business owners is simple: "What will this cost me?" The financial implications of electrification are complex, with a stark difference between the high upfront costs of retrofitting existing buildings and the more manageable economics of building all-electric from the ground up.

The Upfront Investment: A Tale of Two Retrofits

For the vast majority of existing homes and businesses, going all-electric requires a significant upfront investment. This is the single largest financial barrier to mass adoption.

• In New York, a state-commissioned analysis estimated that retrofitting a typical gas-powered single-family home with an air source heat pump and other electric appliances costs between $17,400 and $31,700.⁴⁶ The challenge is even greater for affordable housing in New York City, where older building stock and deferred maintenance can push the funding gap for an electrification retrofit to between $30,000 and $40,000 per apartment unit.⁴³

• In California, the costs for a full retrofit are also substantial. A full suite of new electric appliances can easily exceed $27,000, combining the median costs for a whole-home heat pump (~$19,500), a heat pump water heater (~$5,400), an induction range ($1,000+), and a heat pump dryer ($1,300+).⁴⁷ This does not include a necessary electrical panel upgrade, which many older homes require. A standard 200-amp panel upgrade can add another $2,500 to $5,000, while more complex projects with underground service lines can push total retrofit costs for some homes past $100,000.⁴⁸

New Construction: A Brighter Financial Picture

The economic case for electrification is far stronger for new construction. By avoiding the cost of installing gas lines, meters, and piping, builders can often construct all-electric homes for less than comparable mixed-fuel homes.

• In California, multiple studies have shown that building all-electric is cheaper. Savings can range from a few thousand dollars to as much as $10,000 for a single-family home in Southern California by forgoing gas infrastructure.

• In New York, while some analyses show a modest incremental cost for building all-electric—ranging from $3,200 to $12,400 for a new home—other reports suggest it can be cheaper than building with gas.⁴⁶

The Monthly Bill: Solving the Savings Puzzle

A simple comparison of gas and electricity prices per unit of energy often shows electricity as the more expensive option for heating, especially in California. However, analyses that project annual savings are based on a more complex set of factors.

• The High Rate Hurdle: In California, the cost of full electrification is significant. Replacing all major appliances with electric models can exceed $27,000. That includes a heat pump for space heating and cooling ($19,500), a heat pump water heater ($5,400), an induction range ($1,000+), and a heat pump dryer ($1,300+). For many older homes, this does not include the cost of upgrading the main electrical panel. A standard 200-amp panel upgrade runs $2,500–$5,000, and for homes with underground service, total retrofit costs can reach $100,000 or more.

• The ongoing impact on utility bills is just as important. California’s residential electricity rates are nearly double the national average and continue to rise. This is a real barrier to electrification. A large share of these costs comes from fixed charges—like wildfire mitigation and public programs—which act as an “effective electricity tax.” For many single-family homes, this adds an electrification cost premium of $2,000 or more per year.

• In New York, switching from relatively inexpensive natural gas could increase a family's annual energy bill by $450 to $700 in the short term.

• Unlocking Savings with Smart Rates: The key to making electrification affordable is leveraging Time-of-Use (TOU) rates.⁵² By shifting heavy electricity use (like EV charging, running laundry, or pre-heating/cooling the home) to off-peak hours, households can offset some of the higher energy costs.

• The "Cooling Credit" and Maintenance: Savings are calculated on the total annual energy bill. Modern heat pumps are often more efficient at cooling than the older air conditioners they replace, generating some savings during hot California summers that help offset winter heating costs. On the other hand, because a single heat pump unit runs year-round for both heating and cooling, it may require more consistent upkeep, and some analyses factor in slightly higher annual maintenance costs compared to a furnace that runs only seasonally.⁵⁵

• The "Utility Death Spiral": A major concern in both states is that as more affluent customers electrify, the massive fixed costs of the natural gas system will be spread across fewer remaining customers, causing gas bills to soar for those who can least afford to switch. Paradoxically, this long-term risk of skyrocketing gas prices is one of the arguments for electrifying sooner.

Bridging the Gap with a Flood of Incentives

To overcome the high upfront cost barrier, both states are leveraging a massive influx of federal, state, and local funding to make electrification more affordable.

• The federal Inflation Reduction Act (IRA) is a game-changer for both states, providing billions in tax credits and rebates for heat pumps, electrical panel upgrades, and other efficiency measures.⁵¹

• New York is deploying programs like EmPower+, which provides no-cost retrofits for low-income families, and is designing a Cap-and-Invest Program intended to return a third of its proceeds directly to New Yorkers to offset energy costs.⁴⁰ The state has authorized $5 billion over five years for these types of programs.⁴⁴

• California has a vast and complex ecosystem of incentives. Programs like TECH Clean California, the California Electric Homes Program (CalEHP), and the Equitable Building Decarbonization Program offer tens of millions of dollars in rebates and technical assistance to homeowners and developers.⁵¹ For example, the CalEHP offers incentives starting at $3,500 for a new all-electric single-family home.

Final Thoughts : Two States, Two Grand Experiments

New York and California represent two distinct models for achieving the same goal. New York is testing the power of centralized state authority, wielding a direct legislative mandate to force a market transformation. Its success hinges on its ability to win the legal and administrative battles required to implement such a rigid plan. California is testing a more market-based, decentralized model, using a complex tapestry of incentives and codes to encourage a voluntary transition. Its success depends on whether this softer approach, now hampered by legal setbacks and political compromise, can deliver change at the speed and scale the climate crisis demands. The world is watching these two titans, as their divergent paths will ultimately reveal the most viable road to an electrified future for an All Electric New York and California

Works cited

1. U.S. Court Allows New York State Building Electrification to Begin ..., accessed August 6, 2025, https://earthjustice.org/press/2025/victory-new-york-court-allows-state-building-electrification-to-begin

2. New York becomes first state to commit to all-electric new buildings - Canary Media, accessed August 6, 2025, https://www.canarymedia.com/articles/carbon-free-buildings/new-york-finalizes-gas-ban

3. What the new all-electric buildings plan does - New York State Assembly, accessed August 6, 2025, https://nyassembly.gov/all-electric-buildings/?sec=what_it_does

4. Climate Leadership and Community Protection Act - Environmental ..., accessed August 6, 2025, https://eany.org/wp-content/uploads/2019/10/clcpa_fact_sheet_0.pdf

5. Climate Leadership and Community Protection Act - Wikipedia, accessed August 6, 2025, https://en.wikipedia.org/wiki/Climate_Leadership_and_Community_Protection_Act

6. Climate Leadership and Community Protection Act - NY Renews, accessed August 6, 2025, https://www.nyrenews.org/clcpa

7. Setting Priorities for Building Decarbonization - UC Berkeley Law, accessed August 6, 2025, https://www.law.berkeley.edu/research/clee/research/climate/climate-change-and-business-research-initiative/setting-priorities-for-building-decarbonization/

8. Building Decarbonization - California Air Resources Board - CA.gov, accessed August 6, 2025, https://ww2.arb.ca.gov/our-work/programs/building-decarbonization

9. California's new building code to boost all-electric homes starting in 2026, accessed August 6, 2025, https://www.californiaconstructionnews.com/2024/09/16/californias-new-building-code-to-boost-all-electric-homes-starting-in-2026/

10. New California building code encourages, but does not mandate ..., accessed August 6, 2025, https://www.bdcnetwork.com/home/news/55166335/new-california-building-code-encourages-but-does-not-mandate-heat-pumps

11. California Proposal Embraces All-Electric Buildings But Stops Short of Gas Ban, accessed August 6, 2025, https://insideclimatenews.org/news/08052021/california-electric-buildings-natural-gas-ban/

12. Building Electrification - California Energy Design Assistance (CEDA), accessed August 6, 2025, https://californiaeda.com/building-electrification/

13. NO MORE GAS—Los Angeles Mandates All Electric Buildings - Krueger Architects, accessed August 6, 2025, https://kruegerarchitects.com/no-more-gas-all-electric-buildings-in-los-angeles/

14. Implications of California Restaurant Association v. City of Berkeley Ninth Circuit Decision, accessed August 6, 2025, https://buildingdecarb.org/resource/implications-of-california-restaurant-association-v-city-of-berkeley-ninth-circuit-decision

15. It's a Gas! Federal and State Developments Continue to Light Up the Natural Gas Debate, accessed August 6, 2025, https://www.klgates.com/Its-a-Gas-Federal-and-State-Developments-Continue-to-Light-Up-the-Natural-Gas-Debate-2-26-2024

16. CRA V. CITY OF BERKELEY, No. 21-16278 (9th Cir. 2024) - Justia Law, accessed August 6, 2025, https://law.justia.com/cases/federal/appellate-courts/ca9/21-16278/21-16278-2024-01-02.html

17. Ninth Circuit Cans Berkeley Gas Ban Under Federal Law | HUB - K&L Gates, accessed August 6, 2025, https://www.klgates.com/Ninth-Circuit-Cans-Berkeley-Gas-Ban-Under-Federal-Law-4-21-2023

18. CRA V. CITY OF BERKELEY, No. 21-16278 (9th Cir. 2023) - Justia Law, accessed August 6, 2025, https://law.justia.com/cases/federal/appellate-courts/ca9/21-16278/21-16278-2023-04-17.html

19. California Restaurant Association and Berkeley Settle Gas Ban Lawsuit: Berkeley Will Not Enforce Its Ban, accessed August 6, 2025, https://www.calrest.org/news/california-restaurant-association-and-berkeley-settle-gas-ban-lawsuit-berkeley-will-not-enforce

20. Where We Go From Here: Local and State Efforts to Decarbonize Buildings After California Restaurant Association v. City of Berkeley - Shute, Mihaly & Weinberger LLP, accessed August 6, 2025, https://www.smwlaw.com/2024/11/22/where-we-go-from-here-local-and-state-efforts-to-decarbonize-buildings-after-california-restaurant-association-v-city-of-berkeley/

21. New Buildings in New York To Go All Electric - NYNOW.org - WMHT, accessed August 6, 2025, https://nynow.wmht.org/blogs/environment/new-buildings-in-new-york-to-go-all-electric/

22. California halts building code updates in a blow to… | Canary Media, accessed August 6, 2025, https://www.canarymedia.com/articles/carbon-free-buildings/ca-ab-130-code-housing

23. Building Electrification - PGE, accessed August 6, 2025, https://www.pge.com/en/clean-energy/building-electrification.html

24. Incentives - California Electric Homes Program, accessed August 6, 2025, https://caelectrichomes.com/incentives/

25. Rebates & Incentives - PGE, accessed August 6, 2025, https://www.pge.com/en/save-energy-and-money/rebates-and-incentives.html

26. Building Electrification Incentives and Rebates | City of Oakland, CA, accessed August 6, 2025, https://www.oaklandca.gov/Government/Oakland-Improvement-Projects/Building-Electrification/Building-Electrification-Incentives-and-Rebates

27. New Construction Electrification Program - Central Coast Community Energy, accessed August 6, 2025, https://3cenergy.org/rebates/new-construction-electrification-program-2/

28. State and Federal Clean Energy Incentives | RivCo Office of Economic Development, accessed August 6, 2025, https://rivcoed.org/state-and-federal-clean-energy-incentives

29. BUILD Incentives - California Energy Commission - CA.gov, accessed August 6, 2025, https://www.energy.ca.gov/programs-and-topics/programs/building-initiative-low-emissions-development-program-build/build

30. New York Law Journal: The State of New York Faces Legal ..., accessed August 6, 2025, https://www.nylpi.org/new-york-law-journal-the-state-of-new-york-faces-legal-challenges-regarding-clcpa/

31. 2024 Power Trends Report - NYISO, accessed August 6, 2025, https://www.nyiso.com/documents/20142/2223020/2024-Power-Trends.pdf

32. Managing the evolving grid - California ISO, accessed August 6, 2025, https://www.caiso.com/about/our-business/managing-the-evolving-grid

33. Building Electrification & the Electric Grid Explained: San Mateo County Analysis, accessed August 6, 2025, https://www.smcsustainability.org/wp-content/uploads/Grid-Reliability-Electrification-Explainer_FINAL.pdf

34. California budget leaves grid reliability programs in limbo, advocates say - Utility Dive, accessed August 6, 2025, https://www.utilitydive.com/news/california-budget-grid-reliability-program-dsgs/752237/

35. California Energy Leaders Report Progress on Grid Reliability Ahead of Summer 2025, accessed August 6, 2025, https://www.energy.ca.gov/news/2025-05/california-energy-leaders-report-progress-grid-reliability-ahead-summer-2025

36. California Energy Leaders Report Progress on Grid Reliability Ahead of Summer, accessed August 6, 2025, https://www.publicpower.org/periodical/article/california-energy-leaders-report-progress-grid-reliability-ahead-summer

37. Ensuring Equity Inlcusion - New York's Climate Leadership & Community Protection Act, accessed August 6, 2025, https://climate.ny.gov/Our-Impact/Ensuring-Equity-Inclusion

38. California - BDC - Building Decarbonization Coalition, accessed August 6, 2025, https://buildingdecarb.org/initiatives/california

39. Equitable Building Decarbonization Program - California Climate Investments - CA.gov, accessed August 6, 2025, https://www.caclimateinvestments.ca.gov/equitable-building-decarbonization

40. New York's Climate Act Implementation - nyserda, accessed August 6, 2025, https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Publications/Fact-Sheets/CLCPA-scoping-plan.pdf

41. Analyzing Affordability: Supporting Households under New York's Cap-Trade-and-Invest Policy - Resources for the Future, accessed August 6, 2025, https://www.rff.org/publications/reports/analyzing-affordability-supporting-households-under-new-yorks-cap-trade-and-invest-policy/

42. Clean Energy Services - California Housing Partnership, accessed August 6, 2025, https://chpc.net/ta/cleanenergy/

43. BUILDING ELECTRIFICATION: EXPLORING AND ADDRESSING AFFORDABILITY CHALLENGES, accessed August 6, 2025, https://climate.cityofnewyork.us/wp-content/uploads/2023/09/230914_PowerUp_ResearchandFindings-Memo_Building-Electrification.pdf

44. PSC Announces Approval of Energy Efficiency and Building Electrification Programs to Reduce Energy Costs for Consumers | Department of Public Service, accessed August 6, 2025, https://dps.ny.gov/news/psc-announces-approval-energy-efficiency-and-building-electrification-programs-reduce-energy

45. New York Electrifying - NYC.gov, accessed August 6, 2025, https://www.nyc.gov/html/dot/downloads/pdf/electrifying-new-york-report.pdf

46. New York Building Electrification and Decarbonization Costs - nyserda, accessed August 6, 2025, https://www.nyserda.ny.gov/-/media/Project/Climate/Files/2022-Comments/NY-Building-Electrification-Cost-Full-Report-June2022

47. New York Independent System Operator (NYISO) | Department of Public Service - NY.Gov, accessed August 6, 2025, https://dps.ny.gov/new-york-independent-system-operator-nyiso

48. New Law Could Cost Homeowner's Thousands - Tuscana Properties, accessed August 6, 2025, https://www.tuscanaproperties.com/blog/new-law-could-cost-homeowners-thousands/

49. Electrical Panel Installation & Upgrade Costs in the Bay Area | 100A to 400A Panel Replacements, Subpanels, Smart Panels & Permitting, accessed August 6, 2025, https://alphaomegaelectric.org/electrical-panel-installation-pricing/

50. California's clean energy leap: Easy electrification for most homes, accessed August 6, 2025, https://www.ioes.ucla.edu/article/californias-clean-energy-leap-easy-electrification-for-most-homes/

51. Inflation Reduction Act Residential Energy Rebate Programs, accessed August 6, 2025, https://www.energy.ca.gov/programs-and-topics/programs/inflation-reduction-act-residential-energy-rebate-programs

52. Time-of-Use Rates Explained | Ava Community Energy, accessed August 6, 2025, https://avaenergy.org/your-energy-options/plans-and-rates/rates/time-of-use-rates/

53. Time of Use - SVCE - Silicon Valley Clean Energy, accessed August 6, 2025, https://svcleanenergy.org/time-of-use/

54. Understanding Electricity Time of Use Rate Plans | Solana Beach, accessed August 6, 2025, http://www.cityofsolanabeach.org/en/news/understanding-electricity-time-use-rate-plans

Independent Project: The Rise of Electric Heat Pumps - Blog - Harvard Business School, accessed August 6, 2025, https://www.hbs.edu/environment/blog/post/IP-Talati