Quantifying the Financial and Climate Impacts of Greenhouse Gas Abatement Pathways in Residential Space Heating

New York State (NYS) has set strict greenhouse gas (GHG) emission reduction targets across all sectors of its economy, including the heating sector. This study examines the financial value and environmental impacts of the residential space heating sector in NYS under different GHG abatement options by comparing the existing natural gas heating pathway with three potential GHG abatement pathways: renewable natural gas (RNG), hydrogen blended into RNG, and air-source heat pumps (ASHPs). These pathways are analyzed via a comparative net present value (NPV) framework from 2022 to 2042 with the emission reduction represented as a revenue stream that serves as a function of the social cost of GHGs. The investment timing of each of these pathways is also accounted for to reflect the pathways’ varying deployment timelines. The ASHP pathway with a 10% financial discount rate and a 2% social cost of the GHG discount rate achieves the lowest NPV. The RNG pathway achieves the highest NPV. A sensitivity analysis determines the impact of key factors on the NPV results. This study aims to inform policymakers, homeowners, and stakeholders of the potential benefits and costs of each of the four pathways to aid them in their decision-making process.