The U.S. climate movement is weathering a major storm. The Trump administration has ended the tax credits for electric vehicles, solar panels, and heat pumps that were made available under Biden’s Inflation Reduction Act, and the Environmental Protection Agency rescinded its scientific basis for greenhouse gas regulation. Princeton University’s ZERO Lab expects federal climate policy rollbacks to halve federal emissions reduction goals.
Even California is moving backward. The Newsom administration has put climate programs on the budget chopping block, for example cutting funding for the Equitable Building Decarbonization program by more than half. Adding insult to injury, the California Air Resources Board recently handed $118 million in pollution allowances back to the oil and gas industry and drained $2 billion from the Greenhouse Gas Reduction Fund.
But these dark clouds begin to lighten once you enter the Bay Area. Five of the region’s counties are in the nation’s top five in percentage of electric vehicle sales, and PG&E says it’s massively outpacing the rest of the country in home and business battery storage. (The utility uses lithium-ion battery arrays to store electricity during the day, when solar energy is abundant and cheap, and discharges it in the early evening, when demand peaks and electricity prices spike.) According to the Bay Area Air District, nearly all of the region’s cities and counties have adopted climate plans, with about half setting emissions targets that match or exceed the state’s and many adopting energy codes for emissions reductions and buildings retrofits that go beyond state standards.
Perhaps most impressive, the Bay Area is implementing the Air District’s zero-emission appliance rules, which would phase out the sale of gas furnaces and water heaters. The rules, which ease the transition by providing exemptions for low-income households, would eliminate most on-site gas burning in buildings, eventually cutting about 10% of the region’s greenhouse gas emissions.
The Bay Area is resilient against anti-climate headwinds in part because residents overwhelmingly view strong climate regulations as an investment in their quality of life. A 2024 Yale study found that 82.3% of adults in San Francisco have concerns about global warming, compared with 63.3% of all Americans. Moreover, the Bay Area is the global epicenter for climate tech and green energy startups and a hub for the environmental justice movement where historically black neighborhoods in Richmond, Oakland, and Bayview Hunters Point have fought heavy industrial contamination and air pollution.
Getting Off Gas
The Bay Area is betting big on electric energy because it’s more efficient and cheaper than natural gas. Heat pumps — an electric, zero-emission alternative to fossil-fuel-burning furnaces and water heaters — reduce strain on the electric grid, as the U.S. Department of Energy has noted, and they save households hundreds of dollars a year on energy bills through energy efficiency, according to nonpartisan energy and climate policy think tank Energy Innovation. Electric vehicles are cheaper to fuel than gas vehicles, and per-kilowatt-hour charging costs continue to fall.
A January 2026 PG&E study found that replacing fossil fuel-powered systems with high-efficiency, electric alternatives will reduce electricity rates as more all-electric homes, vehicles, and businesses share the fixed costs of a grid that has already largely been built and paid for. SPUR’s 2024 Solving the Panel Puzzle policy brief found that power-efficient design (strategies that maximize use of existing electrical infrastructure) can help avoid expensive grid upgrades that are passed on to ratepayers. When combined with demand flexibility (using smart devices and smart decisions to shift electric use to cheaper off-peak hours), households can save even more.
Meanwhile, gas customers face mounting costs from aging pipeline replacement and volatile fuel prices. Californians are paying nearly 50% more per unit of gas than they did five years ago, according to the U.S. Energy Information Administration, even as the average household uses 12% less gas. The majority of customers’ gas bills go toward delivery — maintaining the pipeline infrastructure and operations — and toward utility shareholder returns.
Despite its climate investment rollbacks, California is tackling the messy stage of the energy transition when electric and fossil fuel systems coexist. Senate Bill 1221, passed in 2024, authorized 30 pilot projects that allow utilities to electrify clusters of homes rather than replace aging gas pipelines in those neighborhoods. SPUR recently testified as an expert witness in support of Assembly Bill 2313, which, if passed, would require gas utilities to offer households an electrification buyout when their gas service line is due for replacement. The buyout would take the form of a flexible monetary incentive for households to permanently discontinue gas service and electrify their homes, funded by the money the utility would otherwise spend to dig up and replace or repair an aging gas line, a process that can cost up to $20,000.
The path forward is clear: electrify smart and electrify together.
Holding the Line on Clean Appliance Incentives
Thanks in part to the Community Choice Aggregation (CCA) revolution, in which local public entities have taken over electricity sales and procurement, much of the Bay Area has access to incentives to affordably comply with the Air District’s zero-pollution equipment rules. SPUR found that while state and federal home energy efficiency programs direct only 33% of funds to heat pump incentives, the Bay Area spends 60% of funds from similar programs on these incentives, and localities are outspending state and federal programs on upfront rebates by 2.5 times, according to the Natural Resources Defense Council.1 The majority of these funds are provided by local CCAs, which are uniquely positioned to respond to state and federal funding gaps.
Incentives are just part of the story. Since the Air District rules were passed in 2023, innovation and local policies have reduced heat pump costs. CleanTechnica reported that plug-in 120-volt heat pump water heaters — now a fifth of the state’s installations — cut total project costs by 22% and almost never require electrical work. Power-efficient design strategies have made it increasingly rare for homes to need to upgrade their electrical panels: according to TECH Clean California, just 3% of its incentivized heat pump projects statewide required an upgrade. SPUR’s own efforts are part of that story. We sponsored SB 222 (Weiner) and AB 1738 (Carillo) to streamline and standardize permitting and inspections for heat pumps, and we have intervened in California Public Utilities Commission proceedings to support decisions to advance cost-saving power efficient design measures. Without the Air District rules, attention to solving this problem would likely be insufficient. Regulations set the expectation, and the region is building the market to meet it.
Cheap Energy Will Be Electric
The transition to an electric future is a core affordability goal. Inexpensive energy is a critical policy path to obtaining more of the goods and services we collectively want. However, affordability politics has at times been weaponized against that path, as evidenced by the California Air Resources Board’s vote to gut the state’s Cap-and-Invest program, which sets a declining statewide limit on greenhouse gas emissions. KQED reported that the action was in part due to concerns about rising gas prices. The Bay Area, so far, is largely holding the course toward a cheap, abundant, clean, and homegrown electric future. The region can realize this future if our elected leaders avoid falling into the short-term thinking that keeps much of the country stuck with legacy fossil fuel systems.
