Contact Patrick McIlheran, policy director: pat@badgerinstitute.org or (414) 393-7077
MILWAUKEE — The Badger Institute today released a report quantifying the cost of a potential ban on using fossil fuels to heat our homes.
Economists Andrew Hanson, a Badger Institute visiting fellow, and Zackary Hawley teamed up to build a model that takes into account winter temperatures that make the use of heat pumps — the likely alternative to natural gas-operated furnaces — more expensive to operate.
Their bottom line: The net present value estimate of the added costs to an average Wisconsin homeowner over the 15-year life of a heat pump would be $19,976.
While operating a conventional gas furnace for 15 years costs just over $20,000, operating a heat pump will cost just over $40,000, according to Hanson and Hawley.
The report analyzes six housing markets: Milwaukee, Madison, Green Bay, La Crosse, Eau Claire and Superior. The farther north the market, the higher the cost. The net present value added cost of moving to a heat pump in Superior, for instance, would be almost $30,000.
A mandate to, in essence, switch to heat pumps would be economically difficult in other ways as well:
- A typical new homeowner would see a reduction in the value of her new house of $7,833.
- Approximately 5% fewer homes would be built statewide.
At least 147 local governments nationwide have some kind of “decarbonization” ordinance or rule. One state, New York, has banned outright any gas and oil hookups in new homes. And while gas isn’t banned anywhere in Wisconsin now, Gov. Tony Evers has committed the state to decarbonization. When the Legislature in 2023 passed bills prohibiting such restrictions on homeowners’ freedom, Evers vetoed the measures, saying they would “diminish our collective ability to help combat climate change.”
Almost two-thirds of Wisconsinites heat their homes with furnaces that use natural gas. Almost four out of five use some sort of fossil fuels, including natural gas, propane and oil. Only 1% use heat pumps, which are much more common in warmer states.
“Wisconsin presents far different trade-offs when it comes to the adoption of all-electric heat, given its climate and the economic particulars,” said Hanson. “We found the cost disadvantage strikingly large, and it was remarkable how robust the difference was. We hope this helps policymakers.”
As noted in the Badger Institute’s guiding principles on energy research, Wisconsinites cannot flourish without reliable, affordable, environmentally responsible energy sources necessary for prosperity, quality of life and technological advancement. A transition to new energy sources should include a pragmatic balancing of costs and benefits to the economy and individuals both now and long-term.
“Mandating elimination of natural gas furnaces and switching to heat pumps would be far too expensive for most Wisconsinites, especially up north,” said Mike Nichols, the Badger Institute’s president. “There are better ways to address climate concerns and not drive everyone into the poorhouse — and the cold poorhouse at that.”
The Badger Institute is a nonpartisan, not-for-profit institute established in 1987 working to engage and energize Wisconsinites and others in discussions and timely action on key public policy issues critical to the state’s future, growth and prosperity.
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