Many people spoke in support of a cleaner water heater standard at a BAAQMD meeting on December 10, 2025. Photo is a screenshot from the meeting.
More than sixty people lined up to speak at an air quality meeting a few weeks ago, nearly all to voice support for non-polluting water heaters. Doctors. Climate advocates. Grandparents. Environmental justice leaders. Green builders. All urged the Bay Area Air Quality Management District to move forward without delay with its planned 2027 ban of gas water heaters, with appropriate exemptions.
After the public comment, the commissioners in attendance confirmed their continued strong support for the measure as long as it’s not punitive for low-income households. They remain staunchly behind the ambitious zero-NOx ordinance they overwhelmingly approved in 2023.
So it is increasingly likely that, beginning in 2027, any new water heater you buy will be electric. But there will be exceptions.
Background
The Bay Area Air Quality Management District (BAAQMD) was formed in 1955 to improve outdoor air quality. Three years ago, the commissioners became concerned about the health effects of nitrogen oxides (NOx) from gas appliances that vent to the outdoors. After some study, the commissioners voted to transition our space and water heaters from low-NOx to zero-NOx. When a gas furnace or water heater needs to be replaced, the new one would need to be zero-NOx (which essentially means electric). This rule would take effect in 2027 for most residential water heaters and in 2029 for furnaces. (1, 2, 3, 4)
Doctors at the mid-December meeting reiterated their health concerns, citing the damage that air pollution is wreaking on low-income communities. Retired UCSF professor Dr. Mary Williams explained in detail why kids are especially vulnerable, and others talked about how parents struggle with school absences and with the costs of inhalers. Menlo Spark staff member Jocelyn Anaya Galvan related that she has spoken to dozens of families in the Menlo Park neighborhood of Belle Haven, where over 50% of the households have at least one person with asthma. “Many residents are new to heat pumps, or may not know about them. But no one is new to the reality that their air is unhealthy.”
The Bay Area Air Quality Management District has estimated that replacing all gas space and water heaters with zero-NOx appliances would save up to $890 million in health care costs every year. Source: BAAQMD presentation (2025)
Several speakers came from the Richmond area, where air quality is exceptionally poor due to local refineries. The refineries may seem remote to those of us living farther south, but across the Bay Area, gas appliances for space and water heating are a larger source of NOx pollution than refineries, and even than vehicles.
This graph shows tons of NOx emissions in the Bay Area as measured by BAAQMD in 2019. Source: BAAQMD presentation (2025)
Despite the well-established health issues that result from poor air quality, I was surprised when BAAQMD approved this regulation because it can be quite complicated and/or costly to electrify buildings. But the agency promised to evaluate cost and feasibility prior to the rules going into effect and to make adjustments as needed. The belief was that the ruling itself would lead to positive changes in the market (e.g., technology, workforce, costs). With the 2027 deadline for phasing out new gas-tank water heaters approaching, BAAQMD is taking a deep look at cost and feasibility.
They have hosted dozens of meetings with experts, advocates, and homeowners over the past two years. They commissioned reports on installation costs, challenging installations and emerging solutions, grid impacts, workforce readiness, renter protections, and more. (You can find a list of reports here.) In December 2024, BAAQMD staff issued a report summarizing their findings on the feasibility of banning gas water heaters in homes. The Board of Directors received hundreds of written comments on the report, and they held hours of well-attended meetings on December 4 and December 11 of that year to hear from people, synthesize observations, and discuss next steps.
As part of this process BAAQMD incorporated findings from heat pump water heater (HPWH) programs across the state, including Palo Alto’s. What has Palo Alto learned from its program?
Many residents are new to heat pumps, or may not know about them. But no one is new to the reality that their air is unhealthy.
Jocelyn Anaya Galvan, Outreach and Marketing Coordinator for Menlo Spark
Palo Alto’s Experience With Heat Pump Water Heater Installations
Palo Alto offers to do a “standard” installation for a fairly low price, taking care of everything including permitting and inspections. In this case, a “standard” installation is one with enough space and ventilation for a HPWH (e.g., a garage) and with easy access to drainage and adequate electric power (within 25 feet). What they found is that only 20% of projects met that standard. Some installations required electrical work, but that can be minimized with a variety of techniques including newer 120-volt appliances that plug into a standard outlet. (5) Space constraints were a bigger issue. Heat pump water heaters can be somewhat larger than gas water heaters, and they need adequate ventilation and access to drainage.
Palo Alto found that costs for space-related issues for installing electric water heaters ranged from almost nothing to over $4000. (This chart does not reflect any additional electric costs such as for running conduit.) Source: BAAQMD Staff Report (2024)
Many of the “non-standard” installations had just modest additional costs (e.g., adding some louvres to a door for extra ventilation). But still, about half the projects had $800 or more in additional costs, and about one third had more than $1500, for example for moving the water heater. Those costs are in addition to thousands of dollars in subsidies the city contributes for each installation.
How Do Total Costs Compare with Gas Water Heaters?
A study that BAAQMD commissioned on installation charges reports that the median cost of replacing a gas-tank water heater with another (gas) one is $2,200 for a single-family Bay Area home. In contrast, replacing it with a heat pump water heater is $6,605 without incentives. (6) That is a whopping $4,400 difference, though equipment and installation costs will likely come down as the market matures.
The operating costs (bills) are generally lower for HPWH’s, especially for households that use a lot of hot water. But bill savings at this point do not make up for the higher up front costs. (A household would need to save $37/month over ten years to make up a $4400 difference.) Incentives can help to bridge the gap while costs are coming down, but they are expensive to scale.
Bills tend to go down when people adopt heat pump water heaters, particularly for households that use a lot of hot water. But there is some variation. Source: BAAQMD Staff Report (2024)
What Flexibility is BAAQMD Considering?
In response to their findings on cost and feasibility, BAAQMD issued a “Concepts Paper” in October 2025 that outlines situations where they would want to continue to make gas water heaters available.
Where technology is lagging. BAAQMD would allow small gas water heaters (35 gallons or less) and high temperature heaters (e.g., some hydronic systems), as well as tankless gas water heaters, since efficient electric equivalents are not yet readily available.
Where installations are especially costly. This includes installations with complex space or electrical requirements.
For emergency use. Gas tank heaters would be made available for temporary use to address emergency situations that require lengthy electrical or other work.
For low-income households. Low-income homeowners would be exempted as necessary beyond the above.
The idea is to offer generous exemptions at the start to avoid unnecessary friction, and to grant them “instantaneously”. BAAQMD would use the exemption process to make sure homeowners and contractors are aware of their options, and would use data from the applications to determine where the market has gaps. BAAQMD is still considering what data to ask for when an exemption is requested, and whether a contractor needs to sign off on it. But the goal is to keep the process fast and simple in the beginning, and then to tighten up as the technology, workforce, and consumer preference continues to mature.
If they get an exemption and they are high-income, it’s appropriate for them to pay something.
Brian Schmidt, Executive Director of Menlo Spark
Feedback to BAAQMD
BAAQMD held a discussion on December 10 on their flexibility proposal, and many considered the suggested exemptions to be “comprehensive” and “generous”. There was some acknowledgement of the extra costs that many homeowners will see. Tom Kabat of Menlo Park wondered if we could somehow leverage the projected $890 million in annual savings in health-care costs to help fund the transition. (7) Bruce Hodge of Carbon Free Palo Alto suggested zero-cost financing to help homeowners cover any additional costs. Brian Schmidt, Executive Director of Menlo Spark, suggested that wealthy households filing for exemptions be asked to pay a mitigation fee that could be used to fund electrification for lower-income households. “If [they get an exemption and] they are high-income, it’s appropriate for them to pay something [for the privilege of continuing to pollute the air].”
A handful of speakers, however, were quite concerned. Meina Young, President of the Business and Housing Network, was alarmed about the cost implications for her fellow landlords and tenants, citing tenants who have to decide between paying rent or affording their painkillers. She called this “Another nail in the coffin in reducing the housing availability” and pleaded “Please do not keep hammering on our owners. We are already having a lot of trouble to stay afloat, to provide housing.” Lisa Badenfort, CEO of the North Bay Association of Realtors, stressed (among other things) that power is often shut off in the Napa and Sonoma areas, which could be a problem for electrified heat. Other realtors and some contractors voiced worry about permitting delays and supply gaps, and the additional costs consumers would incur as a result.
This is another nail in the coffin in reducing housing availability.
Meina Young, President of the Business and Housing Network
Andy McNamara, Co-Founder and Principal of Carbon Zero Buildings, pushed back on some of this, citing the installations they have done. “Our team continues to prove that this transition is feasible…. Our experience on the ground confirms that the supply chain is robust, the technology is ready, and contractors are prepared.” He did concede, though, that “incentive programs play a strong role.”
What Are Your Thoughts?
BAAQMD has had no shortage of input on the water heater proposal, as outlined in this graphic they shared last month.
BAAQMD received considerable input during the 30-day comment period for the Concepts Paper. Source: BAAQMD presentation (2025)
I would love to hear your thoughts on BAAQMD’s proposal to switch to less-polluting water heaters. Does the proposal, a ban with generous exemptions but additional costs for those who can afford it, make sense? Is there enough flexibility? Or would you rather see something else entirely?
Bill Gates has talked about the importance of reducing the green premium. This regulation will certainly do that for electric water heaters as it accelerates the market. But Tom Steyer, a long-time environmental champion and now candidate for governor of California, recently wrote on Facebook that “If we want to win, we need a fundamental recalibration. Climate can no longer be a separate cause. It must be the context for making people’s lives better. It has to feel like relief. Like opportunity. If a solution doesn’t make everyday life better, it’s not the right place to lead.” Is this a good example of that? Or is there a better way?
Our experience on the ground confirms that the supply chain is robust, the technology is ready, and contractors are prepared.
Andy McNamara, Co-Founder and Principal of Carbon Zero Buildings
I’ve written before about markets vs mandates. The California Air Resources Board was initially considering a state-wide mandate for space and water heaters, similar to BAAQMD’s, but has now pivoted to a market solution that looks more like cap-and-trade. (I will talk more about that in my next blog post.) The South Coast Air Quality Management District proposed a surcharge on polluting gas water heaters, rather than a mandate, to drive electrification.
What I learned from my brief study of markets vs .mandates is that politically palatable markets are most effective at creating change when there is an underlying mandate that supports the market. The market is the mechanism for finding efficient solutions, but the solutions are motivated by the underlying mandate. My sense is that the long list of exemptions we are contemplating might be cheaper and easier to administer, and to tighten up over time, via a market solution. But practically that ship may have sailed.
Please share your (thoughtful, respectful) comments on BAAQMD’s proposal to improve our air quality.
Notes
1. There is no requirement to proactively replace gas heaters. It is fine to keep and repair them. But when they do need replacing, the idea is to replace them with less polluting appliances. BAAQMD has provided a short “Myths vs Facts” explainer on this and related questions. And if you aren’t sure what a heat pump water heater is, read this.
2. The 2027 deadline does not apply to large (e.g., commercial and some multi-family) water heaters. It also does not apply to tankless water heaters, which are very polluting but lack a comparable efficient electric equivalent.
3. Old-style electric resistance water heaters are also zero-NOx. In some cases they may be cheaper to install, but the electric bills can be 3-4 times higher than for a heat pump water heater. So they are best for households that don’t use much hot water.
4. The BAAQMD ruling targets space heating and water heating only because those are the biggest sources from buildings. Appliances like stoves and driers are not affected.
Almost all of the nitrogen oxide emitted from residential appliances comes from space and water heating. That is why stoves, dryers, and other gas appliances are not affected by this regulation. Source: BAAQMD presentation (2025)
5. The 120-volt heat pump water heaters are simple and inexpensive to install but bills may be a little higher than the 240-volt models. (They are less efficient because they heat the water to a higher temperature in order to increase their effective capacity, and then use a built-in mixing valve to deliver the requested lower temperature to the user.)
6. The report on costs has more information on the source of the cost data. They drew from many sources (e.g., the state-wide TECH Clean California program as well as pilot programs at utilities around the state), and tried to make it accurate and specific to the Bay Area. But the data was not perfect. Some of the HPWH cost data they collected included unspecified incentives, so they omitted that set of data from their totals. In addition, some of the gas tank installation data they collected included unspecified additional work like insulation. They could not omit that data, so they suggest using the median rather than average. That is what I report here.
Another set of data for gas heaters combined both tank and tankless installations, and they could not differentiate the two. So I report only the small sample of installations known to be for gas tank water heaters.
7. Tom Kabat calculated the pollution health care costs per gas heating appliance in the Bay Area (from the $890 million/year figure) and found it is $1,140 for each water heater and $5,680 for each furnace, assuming the health costs are proportional to the lifetime gas usage of each device. Those amounts do not include the costs associated with their greenhouse gas emissions (the cost of removing the carbon dioxide or adapting to the warmer environment and mitigating the net damage).
It slashed funding and staffing for the National Climate Assessment, the federal government’s premier report on how global warming is affecting the country. Instead, Chris Wright, the energy secretary, selected five skeptics of climate science to write their own assessment of global warming. Their conclusion, that worries are overblown, was criticized by dozens of climate researchers who accused them of mischaracterizing scientific findings.
The administration also said it would break up the National Center for Atmospheric Research in Colorado, a world-leading Earth science research institutions.
“I would say one of the less well understood aspects of the damage Trump is doing is how long it will take to repair it after he’s gone, assuming that he is not succeeded by an equally anti-fact president,” said John Holdren, a Harvard University physicist who served as the White House scientific adviser in the Obama administration. “You can’t entirely recover from it.”
Want to be Notified of New “A New Shade of Green” Blog Posts?
If you would like to be notified of new blog posts, please send an email to notify@newshadeofgreen.com with “Subscribe” in the subject.
Comment Guidelines
I hope that your contributions will be an important part of this blog. To keep the discussion productive, please adhere to these guidelines or your comment may be edited or removed.
Avoid disrespectful, disparaging, snide, angry, or ad hominem comments.
Stay fact-based and refer to reputable sources.
Stay on topic.
In general, maintain this as a welcoming space for all readers.
Climate change, despite its outsized impact on the planet, is still an abstract concept to many of us. That needs to change. My hope is that readers of this blog will develop a better understanding of...
More by Sherry Listgarten
Facing budget crunch, Mountain View Whisman offers teachers $1K to give early exit noticeDecember 30, 2025 8:00 am
