California is Establishing Neighborhood Decarbonization Zones: How Program Design Can Make or Break Their Success.
One year into implementing one of California’s flagship climate programs, we found ourselves still grappling with basic questions: What exactly did we mean by equity, resilience, or job creation? Could we afford the time to run a competitive grant process without cutting into the time we had to give grantees to get their work done? These uncertainties caused confusion among our team and stakeholders and weakened the trust, which was essential for our complex program to succeed.
Stories like this are pretty common, unfortunately. And, they happen for various reasons that are out of the scope of this article.
Without clear program design that walks stakeholders toward an outcome, even the most well-intentioned initiatives fall short.
In this article, I’ll look at SB 1221, a freshly signed bill in California, which aims to create Neighborhood Decarbonization Zones. The legislation, and similar place-based interventions, has great potentials if implemented right.
What are Neighborhood Decarbonization Zones supposed to do?
California’s SB 1221 could greatly support the state’s energy transition by creating pilot Neighborhood Decarbonization Zones. These zones aim to replace natural gas infrastructure with electric alternatives like heat pumps and electric stoves, offering cleaner energy at the neighborhood level. The bill outlines a series of pilot projects, designed to help low-income and disadvantaged communities, providing free electrification upgrades and ultimately cutting energy costs while reducing emissions.
Here’s the breakdown of SB 1221:
Scope: The California Public Utilities Commission (CPUC) will oversee up to 30 neighborhood-scale electrification projects, replacing gas infrastructure and reducing the need for expensive pipeline maintenance.
The Carrot: Electrification upgrades come free of charge to the communities involved.
Priority Communities: These projects target low-income and disadvantaged areas, with the aim of reducing utility costs and improving air quality.
Community Approval: Affected neighborhoods must approve any project before it can move forward.
Regulatory Oversight: CPUC will evaluate the cost-effectiveness and scalability of these projects, determining their feasibility for broader implementation.
Deployment: The focus will be on creating high-road jobs and ensuring tenant protections.
Learning: The pilot projects are expected to generate insights into the costs and challenges of transitioning off natural gas, informing future policy.
Why Program Design can Save or Break Neighborhood Decarbonization Zones
SB 1221 is promising. It’s ambitious. But without a clear, well-designed implementation plan, it will be another well-intentioned idea that struggles in execution.
CPUC (the commission) must now unpack the bill and turn it into a structured program that can deliver real, measurable results. Here’s what a strong program design would need to address: the what, how, who, and when for both procedural and outcome-driven elements.
How to Design the Program?
Let’s take the bill’s goals and break them down. Some of these goals are creating high-road jobs, supporting frontline communities, and ensuring tenant protection.
A well-designed program should answer several critical questions before designing metrics, a theory of change, etc.
The program should clarify the What, How, Who, and When for both outcome-driven Components (e.g. create highroad jobs) and procedural components (e.g. procurement process) of the program.
As Kate Gordon, the CEO of California Forward and former Senior Advisor to the DEO Secretary, notes in this great article, “All Energy (and Climate) Is Local”. Program design should address local needs, goals, and aspirations to drive implementation.
Outcome-Driven Elements
Outcome-driven components are, or contribute to the program outcomes.
Ultimate Goal:
What: What’s the primary objective of this pilot program? Are we testing strategies for a full neighborhood-scale transition from gas to electric while creating jobs and supporting disadvantaged communities?
How: How realistic is this goal? Should the program focus on smaller neighborhoods, say 2,000 people or fewer, to make it feasible? How will CPUC define these zones?
Who: Which stakeholders and communities should be involved in defining these goals? Who sets the learning objectives for the pilot program?
When: By when does CPUC need to have these elements clarified to stay on track?
The answers to these questions will shape the program’s north star—the guiding vision that will define its success.
Disadvantaged Communities:
What does prioritizing disadvantaged communities really mean in practice? Are we serving neighborhoods where 100% of residents are considered underserved? Or is 40% enough?
This is where a lot of well-meaning equity initiatives go wrong—by not clearly defining what equity means in practice.
Workforce Development:
What entities should be tapped to support workforce development? Local unions? Workforce boards? How does CPUC ensure that workers are properly trained for these projects?
Grid and Infrastructure Resilience:
Electrification means more demand on the grid. What’s the current energy demand in these neighborhoods, and how can utilities prepare for the increased load?
Community Buy-In:
Community approval is non-negotiable for these projects. But how should we measure "community approval"? What if a large corporation owns half the homes? What engagement methods will ensure that residents—not just property owners—are fully on board?
Tenant Protections:
How will CPUC ensure that decarbonization projects don’t accelerate gentrification? What metrics will be used to monitor the impact on tenants?
These are just a few of the essential questions that CPUC will need to address related to the outcome-driven components of program design.
2. Procedural Elements
A program isn’t just about outcomes—it’s also about how you get there. The procedural elements of SB 1221 are just as critical to its goals and outcomes. And often, poor navigation of the procedural elements of a program result in program failure.
Procurement:
Will CPUC require a formal procurement process to hire contractors? If so, what’s the timeline? What are the criteria for selecting contractors, and how can the process be expedited?
Staffing:
Does CPUC have the staff needed to run this program? What kind of expertise is required, and how long will it take to hire the right people? Is the budget for staff hiring sufficient? If not, what options exist?
Regulations and Strategies:
If local jurisdictions need to establish tenant protections or zoning laws, how much time will that take? Should CPUC create contractual obligations or MOUs to make sure protections are in place before work begins?
Learning Methods:
How will CPUC share insights from the pilot programs in a timely manner? What platforms or tools will be used to create a continuous learning loops, ensuring that what’s working—and what’s not—is quickly communicated and course corrections are made?
What’s Next for the Commission?
For SB 1221 to succeed, CPUC must focus on designing the program in partnership with the right partners. Bringing stakeholders together to agree on a common vision, while building trust and cooperation, will be key. This doesn’t have to be complicated—it can happen through a series of workshops or roundtables, with a focus on the what, how, who, and when. It’ll take time, but, there is no way around it. So, the commission should find resources to start now.
SB 1221 has the potential to be a game-changer for California and nation’s energy transition. But its ambitious goals will only be realized if we design and implement a robust program that tackled both outcome-driven elements and the procedural ones.
Design for Success
The success of the Neighborhood Decarbonization Zones (SB 1221), like all other policy initiatives, lies in the details. Program design that clearly addresses the what, how, who, and when will be the difference between an idea that works and one that fails. The devil is in the details—not the intentions, ambitious policies, or the politics.
