It has been estimated that fossil fuels from home heating, hot water, and cooking account for 11% of U.S. carbon pollution and one-third of New York State greenhouse gas emissions, making the building sector the largest contributor of emissions in the state. Household appliances like stoves that burn methane, commonly known as natural gas,  also have a negative impact on indoor air quality, contributing to asthma and other respiratory diseases. At the same time, New York’s climate law, which passed in 2019, requires that the state cut greenhouse gas emissions to 40% below 1990 levels by 2030 and 85% below 1990 levels by 2050.  The climate law Scoping Plan, developed by the state’s Climate Action Council, identifies the adoption of zero emissions building codes and standards as critical to meeting those mandates.

Accordingly, on May 2, 2023, the New York legislature approved a $229 billion state budget which includes the All Electric Buildings Act (AEBA) that will ban fossil fuels—including natural gas hookups—in most new homes and other buildings. Specifically:

• Municipalities are prohibited from issuing building permits for new buildings under seven stories that are not all-electric if the initial application for a permit is submitted after December 31, 2025.
• Municipalities are prohibited from issuing building permits for new buildings over seven stories that are not all-electric if the initial application for a permit is submitted after December 31, 2028.

Essentially, under-seven-story buildings need to be all-electric by 2026, and over-seven-story buildings by 2029. (New York City adopted their ban on fossil fuel combustion in new buildings in 2021 but the implementation  applies to new buildings with fewer than seven stories by 2024, extending to July 2027 for buildings with seven or more stories.)

And it’s not just natural gas: the law also applies to heating oil and propane.

Exemptions are allowed for certain types of businesses or other large facilities, such as manufacturing plants, restaurants, hospitals, and—bizarrely—car washes, and there are also exemptions if a construction is located in a region where electrification is not feasible. The AEBA does not apply to existing buildings or renovations, the latter of which seems like a missed opportunity, but could help ease the transition.

Cities here in New York and elsewhere in the country have already started imposing bans on fossil fuel combustion in new buildings, and last year Massachusetts passed a law that allowed 10 cities and towns to ban gas stoves and furnaces from new buildings. In New York, New York City adopted a fossil fuel ban in buildings in 2021 and Ithaca recently unveiled a plan to decarbonize all of its buildings, new and existing, but New York has become the first to implement this ban state-wide—and the legislation also prevents individual counties and cities in the state from opting out.

As for the impact on utility bills, one recent analysis found that residents of new all-electric homes could save an average of $904 on home energy bills annually, and residents could start saving from day one. At the same time, the bill, as well as other state programs, include protections for electricity affordability. And a gradual transition to electrification will take place alongside New York’s push to shift more electricity production to greener—and cheaper—sources such as solar, wind, and geothermal.

All-electric buildings could be a strong selling point for real estate going forward, especially as younger Millennials and Gen Z start buying property and starting families, generations for whom climate change is a top-of-mind issue.

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For more information about green energy, see our Climate & Energy pages