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with Panama Bartholomy.
Founder and Executive Director of the Building Decarbonization Coalition, Panama Bartholomy, pops by to talk with Jeff about the shift to an all-electric future. Panama outlines why building electrification is inevitable, and argues that how we get there matters as much as whether we do. Drawing on his experience across government, utilities, and nonprofits, Panama emphasizes that the current property-by-property approach to decarbonizing buildings is too slow, too expensive, and inequitable to meet climate targets.
Founder and Executive Director of the Building Decarbonization Coalition, Panama Bartholomy, pops by to talk with Jeff about the shift to an all-electric future. Panama outlines why building electrification is inevitable, and argues that how we get there matters as much as whether we do. Drawing on his experience across government, utilities, and nonprofits, Panama emphasizes that the current property-by-property approach to decarbonizing buildings is too slow, too expensive, and inequitable to meet climate targets.
Instead, he advocates for a managed, neighborhood-scale transition, led by utilities and enabled by regulators, that systematically electrifies entire communities while winding down the gas system in a deliberate, cost-controlled way. The conversation reframes electrification not as an environmental sacrifice, but as a superior, more efficient, and ultimately cheaper energy system that benefits customers, businesses, and utilities alike.
A central theme of the episode is what Panama calls “militant incrementalism”: building broad coalitions around the 80% of solutions most stakeholders already agree on, creating market momentum and political durability, and then using that momentum to tackle harder issues like gas system retirement, equity, and labor transitions.
Despite political uncertainty, he remains optimistic, pointing to how rapidly markets, contractors, and consumers have embraced electrification. For Panama, the speed of this shift—and the clear benefits it delivers—offers real hope that the building sector can meet both climate and affordability goals if the transition is managed thoughtfully.
During the discussion, Panama makes some references and claims regarding energy markets, Including the US as the global leader in heat pump adoption.
Details and source info:
In 2024, the U.S. reported 4.1M heat pump shipments to distributors according to AHRI data (assumed to equal installations). Europe installed 2.3M in 2024, and 3M in both 2023 and 2022, according to the EHPA. China deployed 2.2M heat pumps in 2024, per IndexBox.
The Reframe podcast is hosted by Jeff Nichols and presented by Pilotlight. If you have questions or feedback for the Reframe team, please email us: reframe@pilotlight.ai
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What is Reframe?
Reframe is the podcast about building sustainability.
Commercial and public buildings are among the biggest producers of carbon emissions. It’s a problem of massive scale. But, for building owners, engineers and contractors, solving it may actually be more of an opportunity than a challenge. That’s what the “Reframe” podcast is all about. Join host Jeff Nichols on an exploration of the forces driving sustainability in our built environment. And meet the people who are leading the charge.
Reframe Podcast - Ep15 Panama Bartholomy
Transcript:
Panama: [00:00:00] Electric is the future. I think the question is how fast is it gonna come? That's where the friction is that everyone's kind of struggling with.
Jeff: Welcome to Reframe. I'm Jeff Nichols. On this episode of Reframe, I'm joined by Panama Bartholomy. Founder and executive director of the Building Decarbonization Coalition, Panama has spent his career working inside government policy and energy systems. Places where progress rarely comes from big declarations and almost always comes from understanding constraints.
We're talking about how large complex systems actually change using building electrification as the case study. Panama has spent years in the middle of these transitions. He's seen what actually works, what doesn't, and why the difference matters. Panama, welcome to Reframe.
Panama: Thanks. Really glad to be here.
Jeff: The Building Decarbonization Coalition has become one of the most influential voices on how we transition buildings off fossil fuels at scale. Today, I wanna unpack what that transition really looks like, the pace we're moving, the obstacles we're up against, and how we build an energy system that is affordable, reliable, and clean.
But before we do that, let's start with you. Tell us a little bit about your background and what ultimately led to your role as executive director of the Building Decarbonization Coalition.
Panama: For having me, Jeff. I'm really looking forward to the conversation and really appreciate the, the platform and what you guys do here.
Um, we need to be talking more about these issues, um, particularly in this day and age. So I appreciate, um, what you guys are doing. Uh. So for me, I've spent about half my career in government and [00:02:00] about half my career in the nonprofit sector. Um, right outta college. I started working for the state of California at a really fun time.
It was the, um, early aughts, right in 2001. We were coming out of, uh, three days of blackouts. In 2000 in California and the ripple effect of those blackouts had a long-term impact on policy around energy in California. And so I came in before California had a climate policy, before California had a renewable portfolio of standard.
Um, a whole bunch of really the kinds of energy policy that California's known for. Um, I was able to be there on the ground floor and either watch or take part in. And so it was great opportunity to be in a state that really wants to be a leader, um, and is trying to adopt these policies that is willing to be leading, if not bleeding edge, um, on this stuff.
Um, so I got a chance to work in a few different agencies. Spent a good part of my career at the California Energy Commission, and then went over to work in the legislature, uh, for a couple years in leadership over there on all issues, climate, energy, natural resources. Um, my, uh, then girlfriend, now wife took a job over in Europe.
In 2013 and I followed her over there. She's working in the energy industry also. And I spent about four years wandering around Europe, um, working on energy efficiency finance. And how do you find a way to be able to bundle building energy retrofits together into something that looks like portfolios, so that large capital would actually be able to finally, truly invest in building energy efficiency retrofits and I came back to the United States.
And there was this whole other conversation happening, um, suddenly, whereas for before that, for 40 years, all the conversations around buildings had been around energy efficiency and how do you continue to use less and less and less energy in buildings, and all of a sudden there was this conversation happening about.
How do you completely eliminate [00:04:00] pollution from buildings? And it was a, it was a fascinating time to come back and it could have been a career pivot, you know, it could have gone into cars or something else. But, um, I was just really taken by, uh, this new conversation happening in America around buildings.
Jeff: I'm kind of curious, was there a moment when you, that the pace of change, you know. Especially inside government just wasn't fast enough. Like I'm sure there was some level of frustration. So how did that fuel you or kind of shape your career, you know, direction?
Panama: Yeah, in my younger days it was plenty of frustration.
Um, and you realize you, you know, anybody that works in climate, you have to eventually go back to the science and about how fast we need to be moving in order to be able to meet our targets. And then you look at the pace of change actually happening in the market and the underlying policies that we've adopted to drive the market.
And you have to be frustrated by it. Um, what I've found over time though, and it's really become embedded in our organization, is that militant incrementalism, um, is the approach you have to take with humans. Um, humans, particularly as the size of the groups of humans get larger and larger. Um, just struggle with change.
They struggle with traumatic change. And so you have to find a way to be able to make enough incremental changes over time so that suddenly there's a tipping point. And then the really quick changes can happen because groups, whether they be the recipients of the technology or the delivery agents of the technology, they're finally more used to it enough that it just is able to take off.
And so we found that, you know, those solutions that are supported by a broader range of constituencies are gonna be ones that are gonna be easier to implement, but also be the ones that are gonna be more resilient to implement as well. 'cause they're supported by a broader range. But as soon as you broaden that range of interested parties, you start to pull [00:06:00] back on some of the ambition.
And so necessarily you have to be making those incremental gains.
Jeff: Which is a perfect segue into the Building Decarbonization Coalition. For those who aren't familiar, you know, what does the BDC do and what are your core kind of priorities or what are you pushing for?
Panama: So I came back from Europe and looked around and saw this new conversation happening.
This is about 20 17, 20 18, and through my time at the Energy Commission and the legislature, I'd met just a ton of folks in utilities and manufacturing, local governments, everything. So. It was just kind of a, a, a man with a PowerPoint for about six months wandering around California, talking to anybody that wanted to talk about building decarbonization to try to understand, um, like what do you believe is necessary to get this done?
Like, what's holding us back? Like what can you bring to the table? And what I found was there was about 80% agreement. Of everybody I talked to. And so in September of 2018, we brought together a grouping of 60 organizations that represented utilities, manufacturers of heating equipment, the design and construction community, government agencies, nonprofits, and we brought 'em all together to have a conversation about.
What do we need to do and are we all willing to work together and commit resources towards a joint set of solutions that we can agree on in order to be able to try to move the market in California? And so the first few years of the effort are really focused on California and we started to get pushed from other states about, hey.
We like this model. We like this collaborative model. We like being able to bring industry to the table. We like industry, government, and the civil society working together on solutions. And so we started to expand to other states. And so now we work in 10 states across the country that collectively represent about half of all gas demand and half of appliance sales.
And it's our belief that if we're able to flip [00:08:00] those states. And those states are able to adopt similar policies and similar programs on similar timelines that's gonna bifurcate the market enough that the market will take over on the advocacy to push the rest of the country, um, over towards a path towards electrification.
And so what we found is, like I said, there's about 80% agreement on what we need to get done and the solutions that we need to offer, and there's a belief within the coalition that if we can start to work on that 80%, that builds momentum and it builds faith in each other, that'll be able to work on that 20%.
The harder stuff that we don't all agree on yet, but if we create the right market conditions through the 80% work, that'll make the 20% work possible.
Jeff: Part of why I wanted to start this podcast was I feel like at times we get hijacked by the extremes on either side when I, I do think that most people are somewhere in the middle, right?
That 80%, and the more we can find that common ground, I mean, that's the only way I've, as I've studied change, you know, it actually happens. You know, you have probably the broadest coalition of folks that I've ever heard of, but how do you balance stakeholders that. At certain times may sit on opposite sides of the table from each other.
How do you, how do you do that and keep 'em happy.
Panama: Yeah, so, um, a lot of it, my, my, my hands, the back of my hands are really bruised from having it slapped a number of times by people on all sides. You generally have to be able to understand people and understand where they're coming from, and if you're gonna be a true broker for folks, you actually have to be able to be an empathetic listener.
And not put people in positions where they're going to have to be forced to consider compromising on core values or core beliefs. Um, and so what we try to do is we try to do is spend a lot of time with all of our members to understand what they're looking for, what they believe, what they're trying to get out of the [00:10:00] transition, what's holding them back.
Um, and it's through that, you know, at first we just, we called ourselves a big tent organization, and what we found is actually we're not a big tent organization where it's more like we're holding a party for a bunch of different groups and we're constantly shuttling back and forth between the different tables of groups and then coming together around a joint vision.
And so it's our role to help. Create that, but it's, it really comes down to listening, Jeff. And unfortunately we seem to have a, a deficiency of empathetic listening, um, in this country right now. I think if we had a bit more of it, we might be able to be, uh, getting some more stuff done.
Jeff: As we think about a more electric future, one of the things I was really taken by was some of the work you've done around looking at, you know, we, we can't just take this property by property approach to electrification.
Uh, we need to find a more scalable way, versus, it seems like, you know, a lot of, even the examples we hold up. It, it makes sense for like one really big institution, but it, it doesn't scale to kind of the broader marketplace. So I'd love to hear you kind of talk about that shift and how do we get beyond kind of these point solutions to thinking about a more systemic approach.
Panama: So, you know, the current approach to building electrification really relies upon natural turnover of, of appliances, right? You're focused on three main end uses of makeup, around 95% of gas use and building space heating, water, heating, cooking, ensure there's, you know, the occasional hot tub is thrown in there as well.
But you know, it's a small amount. You're focused on those three end uses and generally. Most people replace those things, whether it's commercial or residential. Um, when there is a failure of that system, right? Like the system breaks and then you replace it and you have a natural turnover of say [00:12:00] like every 15 to 20 years for say, a furnace or a heating system every 12 years, 12 to 15 years for a water heating system.
And if you just look at. The climate timeline that we have and our climate goals. And then you look at the natural turnover rate of all of these different technologies, um, from the building stock. It just leads you very quickly to understand that you can't rely upon natural turnover rate and hope to meet, um, any of our targets.
But in addition to that, there's other challenges of relying upon natural turnover rate and trying to transition the current way that we do HVAC and water heating, um, over to all electric. Um, it's also actually not the best way to manage rate payer impacts and the overall, uh, management of the gas grid.
'cause if you think about it, if we're successful and we're starting to electrify more and more buildings and more and more buildings are starting to leave the gas system. So what you have is you have a declining amount of customers on a gas system with fixed costs and starting to have escalating costs of that gas system.
Some people call this the downward spiral, um, of the gas system. And what happens is eventually you have a small subset. Of entities be they commercial, residential, left behind on the gas system, paying politically unpalatable rates for that gas system. And you eventually have to probably look at a public bailout, um, of that gas system.
And so relying upon an unmanaged transition is probably the most expensive way that we can do building decarbonization of the gas system. And lastly. It's not a very equitable way of doing this. I mean, when you think about it, the people that are going to electrify first are the people that have the means to be able to experiment with this and be able to make investments to be able to get themselves off the gas grid first, and who will be left behind will be a.
The industries or entities that [00:14:00] find it hard to electrify or the ones that can't afford it. And so from a climate perspective, from a rate payer protection perspective, or from an equity perspective, our current approach to building decarbonization can't stand alone. We have to have another market model in order to be able to meet those targets and meet the values of climate rate, air protection, and equity.
And so we've done a lot of work, Jeff, around what's called a neighborhood scale approach to building decarbonization. This concept that you don't replace the current way we've been doing HVAC and water heating for, you know, 75, a hundred years, but you need an adjacent market model that is allowing you to be able to protect communities, protect rate payers, and get us on a path.
Towards meeting our clean air and our climate targets. And so what this looks like is you have utilities really being led by utilities, but it could be local governments as well, taking entire neighborhoods, um, off of the gas grid at the same time, and electrifying all of those buildings at once. The way you do this is you look at those neighborhoods who are going to be having their gas pipeline replaced in the near term, say five to 10 years.
Um, about 35% of the gas pipeline in the United States is over 50 years old and in need of repair, already leaky. Um, right now in New York, it's about $10 million a mile. To replace gas distribution line in Illinois is $4 million a mile in California, $6 million a mile. That's a ton of millions. Per mile that could be used instead to electrify buildings.
And so what you're seeing is really leadership utilities right now actually, instead of investing back in a gas system that has a, these pipe has a seven year life and we're generally trying to get off gas in the next, say, 30 years instead of investing in future stranded assets. What they're doing is they're using savings from not investing in that and investing in totally electrifying neighborhoods, offering building owners in the [00:16:00] residential space 20 to $30,000 to fully electrify them homes, more so in the commercial industrial space, and being able to actually clip off whole branches, um, of the gas system.
We're seeing this roll out in just using, say, air source heat pumps, but we're also seeing this being done through thermal energy networks where you actually use, um, moderately heated water and be able to share heat, um, around the neighborhood and be able to use geothermal heat pumps for it as well. So it's an emerging but very exciting, um, area and building decarbonization.
Jeff: It makes so much sense to me, uh, that, you know, we're gonna approach this whole neighborhood. It allows us to bring different solutions to bear, versus if we deal with these each separately, then it really constrains you to a certain, you know, amount of solutions, which. May not be the most efficient or economical, or to your point, equitable.
I think the utilities have a huge role to play in that. What's kinda your perspective? You're just closer to it. Like what, what's your take on kind of the conversations or how are they thinking about this?
Panama: For me, I think it's a bit unfair to place a lot of blame on utilities and utilities. You know, they're like any group of entities of humans.
There are, you know, folks with um, kind of questionable behavior. Uh, but in general, these are businesses. And they need to act like businesses and they are regulated. And if we as a society don't regulate them in a way that leads towards the goals that we're trying to achieve, and if we don't set incentives for them in the right way to act and to carry out the, um, investment in infrastructure that we want.
How can we really expect them to go against their own interests? How can we expect them to not act like a business? And sometimes I feel like we put our hopes and dreams on businesses like utilities [00:18:00] without really being able to understand the framework under which they operate, or being able to set it up so that they can operate in the way that we want them to operate.
So for me. A lot of this future of this transition relies upon public utilities, commissions, public service commissions, commerce commissions, and are they setting up the right regulatory framework to be building out the market models that we need to be decarbonizing our buildings and our neighborhood.
I think utilities are some of the greatest examples of infrastructure, um, infrastructure deployment. Companies the history has ever made. What we need to do is we need to harness that ability to aggregate capital, get large scale deployment out very quickly, um, in the right direction.
Jeff: So let's unpack that kind of, you know, we have two energy systems today, right?
We've got natural gas and we've got the electric grid. So how does this dual system, you know, how, how do we think about that? Like, are, are we transitioning to one? Is it, is it all of one or all of the other? Like, how, how do you think about it? Or what's, what's your take?
Panama: Yeah, I think one of the good news is right now that a lot of the discourse you're finding that people are becoming very clear that electric is the future.
Um, I think the question is how fast is it gonna come? Um, is it gonna come in the next 15 years? Is it gonna come in the next 40 years? Is it gonna come somewhere in between? And that's, that's where the rub is. That's where the friction is that everyone's kind of struggling with. You know, the manufacturers that are a part of our coalition just wonder, they, they say it to us all the time.
Do we need to change one of the lines at one of our manufacturing plants? Like, do we need to change an entire manufacturing plant? Like, do we actually need to build a whole new manufacturing plant to transfer from our fossil fuel equipment to our electric equipment? So. The question [00:20:00] is just the speed at which this transition is gonna happen.
Um, right now though, Jeff, we are gold plating to energy systems. Um, we are investing a ton of money into safety improvements for the gas system. At the same time as we are desperately trying to upgrade an electric system, that in many parts of the country is creaky and in desperate need of investment, even without all of the climate impacts that are coming from hurricanes, storms.
And wildfires. And so the way we think about it is we know we need electric into the future. You know, we're having this podcast 'cause of electricity. Um, we're lighting our house 'cause of electricity, and there's so many things that we're gonna have to use electricity for. Everything that you do with gas in buildings can be done better with electric appliances.
We don't need the gas system for buildings. You may need some remnant of it for other uses, but for the building sector, you fundamentally don't need it. And so how quickly can we transition the building sector, um, off of this system and be able to start to have savings? From not investing in the gas system that we can then invest into the electric system so that we have that clean, reliable, affordable energy that you talked about in the very beginning.
Our opportunity for that is really the electric system moving forward, and every dollar we invest in a therm is a dollar not going over into the clean energy system that we actually need for the future.
Jeff: Can you give some, some examples? Because I, I'm not sure people actually, do they really know how more efficient, you know, electric is?
Like, maybe they've heard of heat pumps, but I, I think the average person really doesn't have a concrete sense of like, well, how much more efficient really is this?
Panama: Yeah, happy to. And I, I'm, and I'm just amazed by how much the conversation around this has changed, but your, your basic heat pump is gonna be two to four times more efficient than your best in class [00:22:00] furnace or air conditioner for feeding or cooling your building your.
Average heat pump for water heating is gonna be two to three times more efficient than your best, uh, gas water heater. And for induction stoves, we're talking two to three times more efficient than even the best gas stove. Most energy from a gas stove is actually escaping, um, out the side of your, uh, pan that you're using to cook in.
That's why your kitchen always heats up depending on the size of your kitchen. When you're using a gas stove, whereas an induction stove is 90% efficient on the conversion of energy and the delivery directly into the food that you're cooking. So the stuff is orders of magnitude more efficient than the best thing you could provide with gas.
And that's why I say anything you do in a building with gas, you can do much better with electric appliances.
Jeff: Oof. Okay, so utilities say we need both systems. And really forward looking ones are starting to really figure out, okay, how do we. You know, it's not a question of whether it's when and how quickly climate advocates say we've gotta maybe wind one of them down.
Probably the fossil fuel side. My question is like, who's right and who's dragging their feet and.
Panama: I mean, I'd, I'd have a hard time winding down the electric system at this point. It's gonna, um, I think it's, uh, that's one that we're gonna have to rely upon well into the future. You know, I mean, the big challenge is setting in place the right incentives for particularly utilities.
The folks that see building electrification as an existential threat. Um, our gas utilities and then the unions, um, of gas utilities that work on them primarily. You do see some secondary groups that are concerned, say some in the restaurant industry. Wonder about just the scale of the transition, um, as well as some industries.
That may have a hard time electrifying, and then landlord [00:24:00] groups that are afraid that they're gonna be on the hook for, um, upgrades. And so with the first group looking at utilities and unions, it, it really comes down to what I talked about earlier, about how can we set up the right incentives through regulatory structures so that.
These utilities can continue to provide energy to communities, to businesses. They continue to make money, um, but they're doing it, um, in line with what we need for clean air, for climate, and for affordability. And so for. The gas utilities, the ones that are just primarily only gas, um, increasingly we're seeing a lot of interest from them for something called thermal energy networks.
Um, and these thermal energy networks allow you to basically have a shared system of pipes with water. That, um, are fed into geothermal heat pumps in each building, um, within a neighborhood. Um, and then you're able to actually transfer heat throughout a neighborhood. And one of the big things we're seeing right now is a lot of excitement around data centers and the co-location of data centers around neighborhoods.
80% of energy that a data center, um, uses is actually expelled in waste heat. Um, in Scandinavia right now, if you build a data center, you have to have a waste heat plan, um, in order accompanying it to talk about how you're going to use that waste heat. And a lot of it's going into, uh, community heating systems.
And so these thermal energy networks, the really cool thing about them is instead of using steel pipe in the ground to move around, um, therms of natural gas, you're moving around water using basically the same pipes to move water around the same workers with the same experience doing the really similar work.
And you as a utility can continue to provide a service to your local community of. Heat transfer so that people can heat and cool their homes and heat their water, um, without having to provide, uh, natural gas. And [00:26:00] so there's a large effort with, um, utilities that represent just under two thirds of all gas customers in the country meeting regularly to figure out what are the regulatory and market structures that are necessary, uh, to put in place in order to really enable these thermal energy networks.
14 states have now adopted laws that, um, enable thermal energy networks and encourage them. Illinois just put aside $20 million per project that can be used to finance, um, thermal energy networks. So we're really excited about that opportunity. The second group I would say, Jeff, is those folks who are afraid they're gonna be on the hook.
Right? You like, every time I go into a restaurant now and like I fake, like I have to go to the bathroom so that I can go and look in the kitchen and just see like the immense amount of infrastructure that relies upon gas in a lot of restaurants. Um, and I think about. What is gonna be necessary to transfer this industry over?
You know what, um, a lot of times restaurants, they're some of the lowest margin businesses in our communities, but they have some of the highest energy use per square foot. And so they're ones that we're gonna have to be making investments in. We're gonna have to have public investments to help them transfer over.
And then landlords, particularly landlords of large buildings, um, how do we put in place the right financing mechanisms, the right incentives to be able to help them and not make this a crushing transition? And it's just, uh, it's the age that we're lucky. We're lucky to live in right now. You know, we're in, we're in the, we're in that middle period, um, where we're gonna have to figure this all out.
Jeff: The, the messy middle, I think was something you, uh, referred to. How can we speed it up? Like, if you could wave your magic wand, what is it? Is it the regulatory piece or kind of the policy public sector piece that's missing? Is it all gonna happen locally and then expand from there? I'm, I'm just kind of curious, like if the natural [00:28:00] transition isn't fast enough, what can we do to speed it up?
Panama: Well, the good news is we're not starting from scratch. Um, five years ago, America was in third place behind the European Union and China on heat pump deployment. We just finished up the third straight year at the end of 2024 of heat pumps, outselling furnaces, and by selling 4.2 million heat pumps in America last year, we're now the number one market for heat pumps in the world.
Um, there's not a lot. Of areas where America can stand up and say, we're the clean energy leader, uh, on a sector. Can't do it for cars, can't do it for manufacturing, um, buildings and heat pump deployment is one we can now be very proud of. And it's an American grown industry with American jobs right here.
Uh, employing people in both HVAC and plumbing to be able to make this possible. So we're not starting from scratch is the good news there.
Jeff: What was the change that enabled that?
Panama: So it's interesting, we, you know, when we all started this movement back in 20 18, 20 17, um, it was all about like, what's a heat pump?
Um, you know, what is an induction stove? And just in the past three months you've had both the Associated Press and the New York Times putting out articles about how to choose the right heat pump for your house. I mean, we have really jumped ahead in a dramatically short amount of time on this technology.
And so I think part of it is you have a lot of press around this. Um, the inflation reduction Act that was passed under the previous administration provided a modest amount of money, um, for this and, um, much of it being repealed now under this current administration. But we did some analysis of the 2023 tax year and found that even though we were selling more heat pumps than ever.
Less than 10% of all the heat pumps in this huge surge in that year actually took advantage of the federal tax credit at the [00:30:00] time. And from our early analysis of 2024, we think it's gonna be similar numbers. If you look at state-based and utility-based programs, they too only make a small amount of the market compared to the just sheer enormity of the size of sales that we're seeing in heat pumps.
And so what that tells us is the market has already gone through a transformation. And it's, yes, the incentives help to raise awareness and to get people excited, but actually the market transformation and the feeling of inevitability around this is what's bringing a lot of the industry players so that manufacturers are pushing this more customers are asking for this more, and contractors are delivering this more.
And so the market has really changed dramatically. Helped a little bit by incentives, but more so. The vibes have changed Yeah. Around Jeff and people know they need to ask. And there's this funny story about a year ago, um, this American Life, the radio, um, show did a short story about a guy trying to get a heat pump.
And the, uh, the guy talked about, I was excited about the, the inflation reduction Acts tax credit. And so. The whole five minutes is about what a pain in the ass it was to try to get this tax credit. And finally at the end, he just gave up on the tax credit and went ahead and put the heat pump in. 'cause he knew he was supposed to do it and he loved it.
And his contractor says, wow, this is really cool. I'm gonna get one of these from my house. And so the whole story was like the pain in the ass of incentive programs. But in the end, just the sheer beauty and functionality of a heat pump one over, not one, but two households.
Jeff: It's still early days to know the impact that the Inflation Reduction Act had.
I really wish they had named it differently. 'cause I, I feel like part of this, if, if the primary benefit was the awareness, uh, and certainly that was, you know, my shift from tech, uh, I was inspired by the Inflation reduction Act, you know, reading. Uh, a lot [00:32:00] about, you know, what it did and just the significant dollars that it was going to bring.
I don't think we had enough time to actually deploy those dollars. That was the challenge. But it certainly drove, I think, you know, headlines and awareness that. The prior decade there was, I don't think there's anything we could point to on a similar scale. So, um, going back to these two systems, I, I wanna understand more of the how 'cause you, you think about this every day.
How do we make that transition and how do we do it in such a way? That we aren't leaving the natural gas folks behind. I, I feel like that's oftentimes, again, we're just like, well, we expect 'em to just change overnight, or we, we don't even care actually. It's like, we know we're headed to an all electric future and good luck.
We don't know what you guys are gonna do. I, I just think it sets up this conflict where instead of. Getting on board and figuring out how do we make this transition smartly. It's like now we have to do battle on like, you know, we're, we're not gonna make any progress because we've alienated these, you know, this coalition.
So help, help us understand more of the how, like, how do you see this happening?
Panama: What we see is that a lot of the gas utilities just see it coming. I mean, they, they feel the inevitability as well. Um, Southern California Gas Company is the largest gas utility in the country and in 2021 they put out a big clean Fuels report and they very clearly said, we expect up to 90% of all the buildings in our service territory to be electrified, and we need to think about what is the role of our utility.
Out into the future. And I, as I mentioned earlier, you know, we're in meetings with gas companies who represent about two thirds of all gas customers across the country, meeting about how do you go through this transition? And so I think part of it is you have a lot of electrification and you make that electrification inevitable and that then, so everyone, no matter if you're the gas company or if you're others, you see [00:34:00] what's coming on the horizon and that allows you to start to really plan.
And 15 states have now started proceedings at their public service commissions that are called, um, generally future of gas proceedings. And these proceedings are ways where regulators of utilities are able to start to balance the climate and clean air goals of those states with. The long-term planning of the gas system and so that they're starting to develop ways to be able to say, okay, we know we're trying to phase out the gas system and we have this proposal from the gas company about these desperately needed upgrades.
Right now to be able to, um, fix up some leaky pipes. How do we balance that? How do we balance what our long-term goals are versus some very short-term needs? And so these future of gas proceedings are actually setting set up specifically to be able to develop mechanisms for the regulators to be able to manage the wind down of the gas system rather than leave it up to unmanaged electrification.
How do you systematically start clipping off branches of the gas system? And do it in a way that's gonna protect rate payers.
Jeff: Businesses want certainty, right? I, I love what you say. Utilities are businesses and the transition's happening, but if we don't manage it, it's gonna be far more costly. I, I think that that rings true the same. I think as you know, building performance standards. Um, I think building owners, asset owners know that, you know, buildings are a significant contributor.
So how we have a a process kinda manage existing buildings is, you know, while we don't love it, we don't love more regulation, it's better than the opposite, I think, which is just kind of chaos and all of a sudden, you know, people wanting to, to make really big shifts, uh, versus something that's more planned.
What. What is, um, [00:36:00] I love your concept of militant incrementalism. What's your favorite recent example of a small incremental win or shift that you're excited about? Kinda your thoughts on that.
Panama: So what I'm really enjoying is watching this neighborhood scale deployment start. Um, you have regulators and legislators that aren't willing just yet to full sail, jump into this, um, and allow utilities to cut off whole neighborhoods from the gas grid.
And so instead, what they're starting with is really pilot programs, and that's really important. Um, pilot programs prove the model, you know, they prove it to regulators and legislators that, yeah, this isn't a scary thing, like we can implement this. They prove to utilities that utilities can make money.
Off of this and they can actually deploy it and they prove it to, um, customers of the utilities of, yeah, we can trust this. Um, and so it's not the wholesale change immediately that so many people want, but it proves out and gives confidence, um, to all those different parties that this is a model that could actually work.
Jeff: Yeah. Where, where is this happening? Like are there a couple places you can point to?
Panama: Yeah, so we track these projects on our website, building decarb.org. Uh, we have a tracker of neighborhood scale projects all over the country. There's now well over a hundred, I think it's getting over 120, um, all over the country.
But, um, the real leaders are, uh, New York, Massachusetts, California, um, where regulators there and legislators have set up actual systems, um, or regulatory frameworks to be able to encourage these. And um, as I mentioned, there's now 14 states actually that have really tried to set up the legislative framework to be able to encourage, um, thermal energy networks, uh, in particular.
Jeff: I love what you had to say about, you know, we're, we're in the middle of [00:38:00] this transition and, and when sometimes you're in the middle of thing, you know, it's not always exactly clear, but I think it's important that you have to, you have to know where the end destination is. And what I appreciate about, you know, building Decarbonization Coalition is, you know, you've been unequivocal that, you know, our future really is an electric future, which I think.
Is clarifying because now we can start to manage, as you said, that transition. How would you say that today's kind of political landscape, the current administration's kind of climate, posture and, and what's been happening, kind of the current environment, how does that affect your work and this, this transition, you know, since we're right in the middle, does it, does it slow it down?
Does it speed it up? What's, what's your take on on the impact?
Panama: I think the biggest impact is what you said earlier, which is the uncertainty, and that's the most unfortunate thing here. Um, the truth of the matter is that, uh, building electrification, heat pump sales, heat pump water, air sales, induction, cooking, sales, um, everything is up into the right.
Um, it's going really well. And the one thing you do not wanna do is introduce uncertainty into any system, particularly an economic system. Um, and so the uncertainty of tariffs, the uncertainty of consumer confidence in this moment, um, is going to play a detrimental effect on deployment. Unfortunately, um, when there's uncertainty, uh, people hunker down, you know, they, they look for safety.
Um, they stop innovating. Um, they stop looking for new opportunities. They try to protect themselves, protect their businesses, protect their families. And so, unfortunately, and the uncertainty has been one of the biggest disappointing, uh, parts of, um, of the new, the new administration. Um, and, uh, we like to say that, you know, businesses are just like humans.
Um, they just want TLC, just transparency, longevity. Consistency, um, is all they're looking for. And that's what government [00:40:00] should be doing, uh, for industries. They should be able to provide that and be able to provide a vision for where we want to go, and then the underlying regulatory, uh, structures and laws in order to be able to get us there.
Jeff: What do you, what do you think the best way for building owners, contractors, policy makers, and, and really just everyday people, what, what can they do to meaningfully support the transition to an all electric future?
Panama: So planning is the best thing. Um, if you believe that the future is electric and it is inevitable, really understanding the systems within your building, understanding the life.
That they have left. And then seeking to take advantage of resources when they're available. There won't always be incentive programs to switch over to all electric. Um, those will go by the wayside within the next 10 years. And so if you have a system that's gonna be failing and the next few years, like take advantage of the systems, take advantage of the money and the programs that are here now, uh, to be able to help you make that transition earlier.
If you are a part of trade associations that are involved in political conversations, seek to make those trade associations be active in pushing for the types of programs and the types of certainty that you need for your business so that regulators and legislators are hearing from the business community, hearing from the building owner community that.
No, we don't wanna push back against the inevitable. What we want is we want a facilitation that's managed and affordable, um, towards the inevitable future that is electric.
Jeff: So what maybe as a way to wrap up, what gives you genuine hope that we can still hit our climate and affordability goals?
Panama: It's how fast the market's transitioned already, Jeff.
That's what's blown me away. You know, I, I grew up in a solar powered house in the late seventies and early eighties, and it, it took solar a good like 40 years [00:42:00] to reach cost parity. Um, I was on the board of the US Green Building Council and like our beloved lead system is still, you know, doesn't crack say 5% in any one market.
Um, what we're seeing with building electrification instead is all of a sudden the vaulting of what is a heat pump to, we're the number one market in the world for heat pumps in about six or seven short years. And that's yes, through the help of some underlying. Policy efforts, but largely because the market has seen this opportunity, has taken it and has started to transform.
I'm so encouraged by the surveys I see of contractors and installers saying that they're getting more questions than ever about heat pumps. They're installing more heat pumps than ever, and they have confidence. That this is only going to be accelerating out into the future. So what keeps me coming to work all the time is just seeing how fast this market has transitioned and where it's gonna take us.
Jeff: It, it's interesting that I think sometimes we get caught up in, um, you know, the, we have to do this 'cause this is just green. And I was talking to somebody about the, um, electric car transition and the stat that I heard that blew me away. 95% of people that buy electric cars that transition from internal combustion engine say they can't imagine even considering buying another internal combustion car.
And, and the reasons they give are not for like, well, it's the right thing to do for the environment. They're like, it's faster. I don't have to do oil change. It's all the other, you know, benefits that really. Translate. And I do see that in the building space, that it's, yes, um, people like the feel good, the vibes, as you said, kind of, you know, aspect to it.
But there's a lot of, like, the dollars and cents are starting to kind of, you know, add up. And so that, that gives me hope as well, that, you know, it's not just, uh. Hey, we, [00:44:00] we think this aligns with our value system. It's, uh, this is, this is the right business decision for a whole lot of other, you know, benefits or reasons.
But, um, well, thank you panel. This has been a phenomenal conversation. Uh, you've helped unpack not just why we need to transition buildings off fossil fuels. How we realistically get there. And you've given us some great examples, so I, I appreciate your time and also I just appreciate your leadership as someone who's new to the space, as I've gotten to see your background and kinda story, it's certainly been inspiration and uh, I just think the work that you're doing with the building decarbonization, you guys really are leading the way and building that, what did you say?
It's, uh. You're not the big tent, but you're the ones that are bringing everybody together to the party, and I think that is gonna be key to our success in the future. So thank you. Appreciate all that you do.
Panama: Thanks for having me. Jeff. Really enjoyed the conversation.
Jeff: Panama is such a rock star. He takes big ideas and he makes them easy to understand, which I certainly appreciate. So here are my three takeaways from our conversation. The first is that progress beats purity. One of the big takeaways for me is that real change doesn't come from demanding perfection. It comes from aligning on the 80% we can agree on and actually moving forward together, and that's what Panama meant by militant incrementalism progress.
That feels imperfect, but it adds up. The second is scale beats one-off wins. This was big for me. Electrifying one building at a time just isn't enough. When we wait for equipment to fail, everything slows down, costs go up, and we lock in bad outcomes. Real momentum comes when we plan and act at the neighborhood level.
My third takeaway is incentives. Beat [00:46:00] intention. Utilities are not the villain in the story. They're responding to the rules that we give them. So when incentives are misaligned, progress stalls, and when they're set up right, utilities can actually become the fastest way to scale solutions. Which leads me to the reframe.
Before this conversation, I honestly thought building electrification was mostly about getting better equipment and better choices. Just one building at a time. But after talking with Panama, I see it differently. Now, electrification isn't really a collection of individual upgrades. It's a system transition and waiting for equipment to fail turns out to be the slowest and most expensive way to change a system.
It also creates a death spiral where costs keep rising for the people who have the fewest options. So what really changed for me is this. The work isn't convincing every building owner to do something. It's about redesigning the system so whole neighborhoods can move together. That's why utilities and regulators matter so much.
Utilities aren't the obstacle. They're the delivery mechanism, and if we get the rules right, they can help manage a coordinated transition that's faster and fairer than letting it happen by accident. Thanks so much for listening to Reframe. Until next time,
Announcer: you've been listening to Reframe the show about building sustainability presented by Pilotlight. Opinions shared by the Reframe guests aren't necessarily the views of their companies.
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