Avoiding a ‘clean power divide’ — creating national electrification co-ops for a just energy transition

March 28, 2023 Utility Dive: If all Americans can participate, we can achieve the speed and scale required to decarbonize electricity and transportation and save the planet. By Audrey Zibelman and Victoria Harmon https://www.utilitydive.com/news/avoiding-a-clean-power-divide-creating-national-electrification-co-ops/646154/

The sun sets behind some transmission lines.
sunset2” by Barbara Eckstein is licensed under CC BY 2.0

Audrey Zibelman is the former CEO of AEMO, the national grid operator of Australia, and former chairwoman of the New York Public Service Commission. Victoria Harmon is principal of VL Harmon Advisors, a New York based-clean energy strategic communications firm.

Electrification is essential to the energy transition and combating climate change. We have a better chance to clean our air, protect our climate, lower costs, improve our health and advance the grid’s capabilities by adopting cleaner and energy-efficient technologies, like rooftop solar, energy storage and electric hot water heaters and cooling devices into our lives.

The progress we’ve already made to electrify has mostly been available to those who can afford the cash outlay — a small percentage of the 120 million plus U.S. households. Unless we are proactive and do something different, the energy transition will create a “clean power divide” making the “digital divide” of the Internet look innocuous by comparison. 

Some good news. Ensuring a “just transition” is embedded in the philosophy of the Inflation Reduction Act. However, unless we vigorously target the estimated $1.7 trillion of funding expected to be unleashed over the next 10 years to where it is most needed, there is a risk local communities, particularly those in underserved, historically marginalized areas, will be left on the sidelines and continue to be harmed disproportionately.

Fortunately, we can turn to history to solve this accessibility gap.

Almost a century ago, President Franklin D. Roosevelt had a similar equity and investment problem. The introduction of electricity in American cities increased productivity and improved human well-being overall. But while large for-profit utilities were happy to build the systems and sell electricity to households living in more urban areas, less than 10% of rural Americans had the same access due to economic constraints.

In response, in 1935, President Roosevelt applied the Emergency Relief Appropriation Act to establish the Rural Electrification Administration, or REA. The purpose of the REA was to provide “generation, transmission and distribution of electrical energy in rural areas.” One year later, bipartisan companion bills introduced by Senator George Norris of Nebraska and Rep. Sam Rayburn of Texas were enacted and the REA became a permanent institution of government. 

Sometimes the best solutions to a problem are found in history. The cooperative ownership model has proven to be an enduring solution to increasing access to electrical services in rural America. 

Inspired by the REA, we suggest investing a portion of federal energy transition funding, jointly with private capital to support the creation of not-for-profit electrification cooperatives nationally. These co-ops would have the responsibility and platform to work directly with individual owners and representative communities wishing to electrify and use clean technology and resources to make their homes and businesses more efficient, healthier, and affordable, while providing equitable access.

Like solar, now widely adopted across much of the country, the co-ops will help drive down costs, support better standardization and enable more efficient manufacturing and delivery. The co-ops will create family-sustaining jobs and all the picks and shovels we need for a just energy transition. 

A not-for-profit electrical cooperative can turn individual electric consumers into clean energy “prosumers” who receive health and economic benefits from the energy transition. The “owners” of electrification co-ops will in effect be the co-op’s customers they serve and every time the cooperative “sells” the flexible demand it can offer a dividend to the individual electric bill payer. If all Americans can participate, we can achieve the speed and scale required to decarbonize electricity and transportation and save the planet.      

By delivering the energy, financial and deployment expertise each community wants, with flexibility, and at scale, the idea of a national electrification cooperative model deployed locally can create a timely and just outcome to the energy transition by giving all electric consumers access to these clean technologies bringing health and comfort, affordably.

To be sure, there remain challenges to implementing this co-op proposal — much like the Inflation Reduction Act itself. The program must be designed with an array of diverse community views and input combined with a program that will account for the particularities of state and local rules, tariff structures, and laws and, of course, political intransigence in some of the states with elected leaders and regulators who firmly believe the private sector is the only actor to administer electrification programs. Demonstration, pilot programs in willing municipalities and communities could be the answer to overcome these barriers showing the pathway. In addition to the promise of jobs, there is the potential for lower electricity bills and economic development.

The energy transition is one of the most complex technological, economic, and societal shifts we’ve encountered in nearly 100 years. We have a moral obligation to support a transition that is economically efficient and universally beneficial. This will not occur just because we have the desire, technology, and money. It must be structural and one great structural change may be one we can borrow from Roosevelt and history.

Filed Under: Building & Transportation Electrification, Regulation & Policy


House members, led by Jamaal Bowman, are pushing the governor to support a climate policy proposed by the left-leaning Legislature.

Gov. Kathy Hochul, wearing a crimson red blazer and blouse, stands behind a lectern adorned with New York State’s seal.
Gov. Kathy Hochul released a budget proposal that backed some, but not all, of the elements in a climate bill supported by the New York State Legislature.Credit…Hans Pennink/Associated Press

By Grace Ashford March 29, 2023 https://www.nytimes.com/2023/03/29/nyregion/hochul-renewable-energy-aoc.html

ALBANY, N.Y. — Several influential members of New York’s congressional delegation are pressuring Gov. Kathy Hochul to embrace a climate bill that would compel the state to build wind and solar energy projects when private industry falls short of state environmental goals.

The effort — an unusual show of force by Washington into Albany’s affairs — was made public on Wednesday in a letter sent to the governor that “strongly” encouraged Ms. Hochul, a Democrat, to fall in line with the state’s left-leaning Legislature and support the bill, known as the Build Public Renewables Act.

Nine of New York’s Democratic members of Congress have signed on: Representatives Jerrold Nadler, Alexandria Ocasio-Cortez, Yvette Clarke, Grace Meng, Adriano Espaillat, Daniel Goldman, Nydia Velázquez, Patrick Ryan and the effort’s leader, Jamaal Bowman.

The measure would lay the groundwork for a publicly owned renewable energy system by allowing the New York Power Authority to build, own and operate renewable energy generation. Each year, the Power Authority would assess the progress made by private industry on the goals set out by New York’s 2019 climate law and would launch its own projects when the private sector falls short.

The proposal has been a top priority for the progressive wing in Albany and was included in the Senate’s one-house budget resolution. The Assembly included a similar version, but omitted a provision that would impose accountability measures on the board of the Power Authority.

Ms. Hochul, a Democrat, has signaled her support for allowing the power authority to own and operate renewable energy projects and included the measure in her own budget proposal. But she fell short of agreeing to mandates that the power authority build to meet climate benchmarks, or the inclusion of labor protections, which proponents say are crucial to ensuring the measure delivers on economic and environmental justice goals.

“When New York leads, the nation follows,” the letter says, crediting the state’s landmark 2019 climate act as a partial inspiration for the Inflation Reduction Act of 2022, the largest climate investment in United States history, which made available hundreds of billions of dollars to transform energy use and consumption. The letter urges the governor to include additional labor protections and mandate that the power authority build to meet renewable energy shortfalls.

“The more the governor moves forward and is aggressive in these areas, the more money’s going to come in” from the inflation act, said Mr. Bowman, who represents parts of Westchester County and the Bronx.

Representative Jamaal Bowman, wearing a charcoal jacket over a light-colored shirt and skinny tie, appears outside the U.S. Capitol.
Representative Jamaal Bowman is leading a rare effort by New York House Democrats to exert their influence on Ms. Hochul, a fellow Democrat.Credit…Kenny Holston/The New York Times

But a spokeswoman for the governor, Hazel Crampton-Hays, questioned whether the labor standards in the Senate’s bill were truly necessary, noting that existing labor law would seem to cover many prospective projects.

She pointed to Ms. Hochul’s past climate achievements and a raft of budget proposals aimed at addressing energy affordability and spurring job creation, including hundreds of millions to help New Yorkers with energy bills and to prepare workers for new green jobs.Sign up for the New York Today Newsletter  Each morning, get the latest on New York businesses, arts, sports, dining, style and more. Get it sent to your inbox.

“Governor Hochul’s executive budget makes transformative investments to make New York more affordable, more livable and safer,” she said.

The pressure from the Washington politicians arrives just three days before the state’s April 1 budget deadline, as the governor and Legislature attempt to sort through a panoply of issues and priorities in the state’s annual budget battle royale.

The environmental legislation is just one of the areas in which Ms. Hochul has found herself at odds with her party’s left flank, which also opposes her efforts to again strengthen the state’s bail laws.

In New York, the governor wields a disproportionate amount of power over the budgetary process. But in this conflict, Ms. Hochul faces a largely united Legislature, whose efforts are backed by powerful labor groups.

The landmark 2019 act required that 70 percent of energy be renewably generated by 2030 and entirely carbon-free by 2040. But environmentalists believe that in order to meet the electricity needs of the state, projects will need to be undertaken in locations that are unattractive or unprofitable for private industry.

Those opposing the measure include a coalition of industry groups, including the Independent Power Producers of New York, which contends that it would do little to solve the siting and approval obstacles delaying renewable energy production in New York. They also say that New Yorkers would potentially be on the hook for cost overruns and other liabilities that the Power Authority might incur.

And they fear that the measure would give the state an unfair advantage in the marketplace over the private sector.

“To meet its renewable energy mandates, we need the private sector to remain acutely interested in New York and aggressively develop, invest in, and build wind, solar, and battery storage energy projects,” the groups wrote in a legislative memo opposing all three versions of the law.

Mr. Bowman is hoping the letter persuades Ms. Hochul to support the Legislature’s measure. But if the carrot doesn’t work, he said, there’s always the stick.

“The stick comes from constituents, right? It comes from voters,” Mr. Bowman said. “Everywhere I go, throughout my district, all I hear is energy costs.”

Grace Ashford is a reporter on the Metro desk covering New York State politics and government from the Albany bureau. She previously worked on the Investigations team. @gr_ashford

Inside a $110M plan to turn NYC apartments into virtual power plants

Logical Buildings and Keyframe Capital are behind the push to help multifamily buildings earn money from cutting energy use and curbing CO2 emissions.

28 March 2023

a tall apartment building on a city street
(Mike Petrucci/Unsplash)

Jeff St. John. Canary Media

In New York City, the path to decarbonization runs through apartments. The city has more than 2 million rental housing units, most in high-rise or multistory buildings. Buildings at large account for nearly three-quarters of citywide emissions, and many building owners face potential fines if they don’t comply with tough carbon-cutting targets starting next year.

But even with these fines looming, apartment owners face a ​“classic split incentive” challenge for carbon-cutting and energy-saving investments, said David Klatt, chief operations officer for Logical Buildings. Simply put, building owners bear the costs of efficiency investments, but tenants reap most of the rewards in the form of lower energy bills. ​“Why should the owner of the building invest in making your apartment more energy efficient if all the benefit [goes] to the resident?”Subscribe to receive Canary’s latest news

On Tuesday, Logical Buildings and financing partner Keyframe Capital announced their plan to help overcome this challenge — a $110 million financing vehicle to install and operate smart thermostats in thousands of rental units at low to no upfront cost for building owners in New York and New Jersey.

The plan represents one of a growing number of energy infrastructure investments targeting the split-incentive problem in multifamily buildings. Similar structures are putting money into shared solar and backup battery installations and electric vehicle chargers in multifamily building garages and parking lots.

“The energy transition is going to be a very capital-intensive transition,” said Alex Brown, a partner at Keyframe Capital. ​“Different forms of capital fit different forms of risk.” 

Logical Buildings’ smart thermostats will link up with the company’s virtual power plant, or VPP, platform that controls their temperature settings in real time to reduce electricity and heating energy demand. Simply going from ​“dumb” to smart, cloud-connected thermostats can reduce overall energy use by up to 10 percent.

But real-time control also allows Logical Buildings to target times when cutting energy use is most valuable — say by reducing air-conditioning electricity demand during hot summer evenings. Con Edison, the utility serving New York City and its environs, has been asking residents to cut power use during summer heat waves, and it offers generous payments to those willing to commit to shaving power demand at critical times.

The partners’ first $25 million tranche of investments is aimed at outfitting several multifamily buildings, which Klatt said will enable about 100 megawatts of peak load-reduction capacity. For context, citywide electricity demand topped 12,000 megawatts during last summer’s heat wave.

Logical Buildings has already been tapping this ​“demand-response” capability over the past two years, starting in single-family homes and moving into some multifamily units last year. Last summer, it paid more than 9,000 participating customers an average of $80 each through the utility rewards program, with some heavy power-cutters earning up to $500.

This course from single-family to multifamily properties has been dictated by Con Edison’s schedule for deploying about 5.3 million smart electricity and gas meters over the past six years, which started in less dense areas and recently finished up with the city’s largest buildings, Klatt explained. Smart meters are a prerequisite for accurately measuring and rewarding energy-use changes in 15-minute increments, and Con Edison’s investment in them is one of the two ​“multibillion-dollar paradigm shifts” that enable Logical Buildings’ and Keyframe Capital’s new business model, he said.

The other paradigm shift is the state and city governments’ response to the climate crisis, he said. Specifically, New York City’s Climate Mobilization Act, aka Local Law 97, passed in 2019, calls for buildings over 25,000 square feet to cut carbon emissions by 40 percent by 2030 and by 80 percent by 2050, and assesses financial penalties for those that fail to meet targets starting in 2024.

Residential buildings make up about 60 percent of those subject to the new law. Many of them are older buildings that use oil or fossil gas heating, systems that can be very expensive to upgrade to lower carbon-emitting options such as electric heat pumps. Fear of high costs is driving some multifamily property owners and managers to seek to defer upgrades or loosen the law’s decarbonization targets.

Putting smart thermostats in every unit isn’t a complete solution to these challenges. But they’re much less expensive than whole-building efficiency upgrades or heating system retrofits, Klatt said. They also provide a way to track and manage central heating costs — one of the few utility costs that are typically borne by building owners rather than tenants.

Cooling, by contrast, tends to be a cost that tenants pay through electricity bills for air conditioning, which in New York City apartments is typically delivered via individual window-mounted or packaged terminal systems. Smart thermostats give tenants access to smartphone apps that they can use to adjust temperature settings for everyday savings or get paid to respond to grid emergencies.

This makes smart thermostats important tools for cutting summer demand for peak electricity that’s driven by air-conditioning loads. In and around New York City, that peak power supply most often comes from fossil-fueled peaker plants, which makes the thermostats potential air-quality improvement tools as well.

Last summer, Con Edison relied on customers responding to emergency text messages begging them to reduce power use to ride through heat-wave-driven grid strains. Similar emergency texts and consumer responses helped save the California grid from heat-wave emergencies last fall, but such emergency programs have been criticized because they don’t usually compensate residents.

Large commercial buildings have been providing these peak-reduction services for decades, but apartment buildings have played a much less significant role, largely due to the difficulty of getting tenants involved, Klatt said.

The energy infrastructure investor play in multifamily buildings

This isn’t Keyframe’s first foray into electrification investments. It has invested in companies including fleet EV charging developer Terawatt Infrastructure and residential energy-efficiency project developer Sealed, and it also led a $10 million equity investment in Logical Buildings in late 2021.

But the $110 million it’s putting to work with Logical Buildings today will be invested in the underlying infrastructure — the smart thermostats themselves, plus the communications networks needed to connect them to the cloud if buildings don’t already have them — based on an expectation of steady, ongoing revenue.

Brown wouldn’t share details on those financial expectations. But ​“these are projects that are very economical,” he said. ​“There’s a lot of money to go around” from utility demand-response payments and reduced energy costs for tenants and building owners, with enough left over to allow Logical Buildings and Keyframe Capital to earn back their upfront installation and long-term operations and maintenance costs.

Multifamily buildings also offer an avenue for increasing the scope of these kinds of investments in ways that single-family homes — the primary target for smart thermostats, rooftop solar, batteries and other virtual power plant investments to date — does not, he added.

“What’s always been challenging about these business models is customer acquisition,” he said. Logical Buildings ​“can get five buildings on the platform in one conversation,” representing thousands of individual tenants, he added. ​“That scales in a way that VPPs historically have had trouble scaling.”

All of these factors help promote private-sector investment in ​“things that we should be doing as a society,” Brown said. Energy efficiency remains the cheapest way to combat climate change, but current spending on it represents just a fraction of the trillions of dollars of investment potential in U.S. buildings, according to Donnel Baird, CEO of BlocPower, another startup tackling multifamily building efficiency and electrification in New York and other cities.

As New York City and the state as a whole continue to press ahead on policies to improve efficiency and reduce fossil fuel use in buildings, the demand for technology that can both reduce energy use and shift that use in ways that match the ups and downs of clean electricity supplies is expected to grow dramatically.

New York–based nonprofit group Urban Green Council estimates that Local Law 97 will drive demand for $18.2 billion in efficiency retrofits from 2024–2030, 13 times current spending trends. And a study by consultancy ICF found that electrifying building heating and vehicles to meet New York City’s carbon-neutral-by-2050 target will nearly double current winter peaks in electricity demand.

“It’s a screaming investment need,” Brown said. ​“The question is, how do we funnel that capital?” 



Governor Kathy Hochul today announced the completion of La Plaza de Virginia, a $17 million mixed-use housing development that provides 46 affordable and supportive homes for seniors in Buffalo. The newly constructed development on the city’s west side also features a restaurant and a community service facility that will house a recreational adult day program open to the public.

“La Plaza de Virginia provides seniors a safe, stable and affordable home with access to an array of resources that will help them live healthy and independent lives,” Governor Hochul said. “This development is another important investment by the State to help strengthen Buffalo’s neighborhoods, support the city’s ongoing revitalization efforts and provide our most vulnerable residents with the housing options they need to thrive.”

Today’s announcement complements Governor. Hochul’s Housing Compact, a multi-faceted strategy designed to address New York’s historic housing shortage by building 800,000 new homes over the next decade. The Housing Compact will encourage growth by removing barriers to housing production, incentivizing new construction, and setting local housing targets across every community. The Housing Compact follows last year’s launch of the Governor’s $25 billion comprehensive Housing Plan that will create or preserve 100,000 affordable homes across New York including 10,000 with support services for vulnerable populations, plus the electrification of an additional 50,000 homes.

Located at 254 Virginia Street, La Plaza de Virginia fills a long vacant, dilapidated site with a three-story building which includes 46 one-bedroom apartments, all affordable for senior households with incomes at or below 60 percent of the Area Median Income.

Fourteen apartments are set aside for formerly homeless seniors who will receive onsite supportive services funded through the Empire State Supportive Housing Initiative (ESSHI) and administered by the New York State Department of Health. Support services include comprehensive care management, substance use and mental health support, counseling, medication self-management, health care coordination, advocacy, recreation, educational and training workshops, as well as referrals and linkage to community-based services.

In addition to the site’s restaurant, which will serve Puerto Rican food, residents can enjoy a 4,000 square foot communal courtyard, lounge, and laundry rooms on each floor. La Plaza de Virginia has been constructed to meet Enterprise Green Communities standards and all apartments will utilize Energy Star appliances. La Plaza de Virginia’s developer is Hispanos Unidos de Buffalo (HUB), a Buffalo-based multi-service nonprofit that is an affiliate of the Acacia Network. Supportive services will be provided through Acacia Network.

State financing for La Plaza de Virginia included federal and state Low-Income Housing Tax Credits that will generate $10.6 million in equity and $3.1 million in subsidy from HCR. Empire State Development provided a $1.9 million loan through the Better Buffalo Fund. The New York State Energy Research and Development Authority also provided $46,000 through its Low-Rise Residential New Construction Program. The city of Buffalo’s Urban Renewal Agency is providing $950,000. The New York State Assembly provided $600,000 in capital funding through the Dormitory Authority of the State of New York (DASNY).

In the last five years, New York State Homes and Community Renewal has invested nearly $250 million in the city of Buffalo that has created or preserved nearly 2,500 affordable homes.

New York State Division of Homes and Community Renewal Commissioner RuthAnne Visnauskas said, “Guided by Governor Hochul’s leadership and focus on improving affordability and enhancing communities, HCR is investing in neighborhood revitalization efforts across Buffalo through the development of affordable housing. The opening of La Plaza de Virginia has replaced a vacant, dilapidated building with a newly constructed mixed-use complex that will serve as a safe, stable home for 46 seniors, with supportive services for those who need them. We are grateful to our partners at the Empire State Development, NYSERDA, the New York State Department of Health, Acacia, and HUB for their work in completing this remarkable development.”

Empire State Development CEO, President and Commissioner Hope Knight said, “La Plaza de Virginia, which will help address the growing need for low-income senior housing, supports Governor Hochul’s strong commitment to making New York State a more equitable place to live. We’re proud to support this exciting project, with a $1.9 million loan from the Better Buffalo Fund program, and to further that program’s goals to improve quality of life and transform Buffalo’s neighborhoods.”

New York State Energy Research and Development President and CEO Doreen M. Harris said, “The completion of La Plaza de Virginia means Buffalo seniors have expanded access to affordable, energy-efficient housing which includes high-performance appliances. Climate-friendly projects like this are creating a healthier building stock while including the most vulnerable New Yorkers in the clean-energy transition.”

Acting New York State Health Commissioner Dr. James McDonald said, “The La Plaza de Virginia Senior Apartments is another example of how all New Yorkers should have access to safe and affordable housing, and these senior supportive housing apartments will not only improve residents’ overall health, but will allow them to remain in and active with their community. I thank Governor Hochul for her steadfast dedication to the Empire State Supportive Housing Initiative which has enabled people to move from homelessness to safe housing in their neighborhood.”

New York State Secretary of State Robert J. Rodriguez said, “Creating more affordable housing opportunities is critical to helping New York’s residents and communities thrive. The completion of La Plaza de Virginia is years in the making and a huge win for our older adults in the City of Buffalo. In addition to the creation of 46 new affordable and sustainable homes, La Plaza de Virginia provides a community where seniors can age in place with independence, dignity and the opportunity to access educational and wellness services. Collectively, this strengthens and enhances the Buffalo community for decades to come.”

Representative Brian Higgins said, “This project, led by Hispanos Unidos de Buffalo, demonstrates the importance of federal low income housing tax credits and brings new affordable senior living and a community gathering destination to the West Side. This new home for Buffalo residents is ideally situated in a neighborhood undergoing a vibrant renewal thanks to a $42 million federal investment in nearby Niagara Street and is blocks away from Ralph Wilson Centennial Park, which undergoing a transformation thanks to foundation and federal investments.”

State Senator Tim Kennedy said, “By investing in affordable housing, especially for our seniors, New York is continuing to create new opportunities for accessibility, supportive services, and community-centered spaces. This project was a true collaboration between Hispanos Unidos de Buffalo and federal, state, and city partners, and I’m thrilled to see La Plaza de Virginia open its doors to the community.”

Assemblymember Jon D. Rivera said, “La Plaza de Virginia’s 46-unit mixed-use housing complex on Virginia St., will represent a much-needed investment in our area’s senior population. At this location, HUB will continue its long legacy of providing an array of services and amenities dedicated to our aging community. I’m proud that this project will demonstrate further proof of New York State’s commitment to providing modern, affordable housing for the most vulnerable within our communities.”

Erie County Executive Mark C. Poloncarz said, “This project helped capture the vision of what current residents of the neighborhood were seeking with an attractive structure that fills a need in the community. Providing affordable and supportive housing for senior citizens is the latest in the series of investments the state has made in helping to create a vibrant living space for some of our most vulnerable residents in the City of Buffalo.”

President of Acacia Network Raul Russi said, “Acacia Network is proud of the amazing team effort and tenacity that was required to bring this project to fruition in the heart of Buffalo near the main campus of our affiliate, Hispanos Unidos de Buffalo (HUB). As a Puerto Rican-born Buffalonian who served the City of Buffalo and the State of New York for many decades prior to my nonprofit services career, La Plaza de Virginia is a reflection of our commitment to creating pathways to opportunity and stability for our most vulnerable neighbors, so they can remain in the communities they call home.”

CEO of Acacia Network Lymaris Albors said, “Through La Plaza de Virginia, Acacia Network is thrilled to add 46 units of much-needed housing to our robust portfolio, which already consists of more than 4,000 units of affordable and supportive housing throughout New York State. This project serves as a testament to the incredible results that can be accomplished when minority, nonprofit affordable housing developers come together with public and private partners to develop mission-driven projects that respond to the needs of our communities.”

Executive Director of HUB Eugenio “Geno” Russi said, “La Plaza de Virginia will fill a tremendous need for affordable senior housing within a neighborhood that has long served as the main campus for Hispanos Unidos de Buffalo, which already offers robust programming for vulnerable older adults in this community. We thank our staff, our board, and our partners and funders -including Governor Hochul and the State of New York, the City of Buffalo and Mayor Byron Brown, as well as former Assembly Members Sean Ryan and Jonathan Rivera- for making this project possible, and look forward to continuing to serve our communities for decades to come.”


German governing parties agree on energy, climate measures

By FRANK JORDANS March 28, 2023

BERLIN (AP) — Germany’s three ruling parties announced Tuesday that they have an agreement on a series of energy and climate policies following weeks of infighting that threatened to paralyze the government.

Senior members of Chancellor Olaf Scholz’s center-left Social Democrats and two smaller parties, the environmentalist Greens and pro-business Free Democrats, said three days of closed-doors talks had resulted in a deal to ensure “nobody is left behind” in the drive to replace home heating systems with greener alternatives.

The issue had prompted fierce bickering among the parties last week when draft plans were leaked that would have effectively banned the installation of conventional oil and gas heaters starting next year.

The Green party argues that fossil fuel furnaces need to be phased out as soon as possible because they contribute to climate change and cement Germany’s dependence on foreign energy imports. The Free Democrats and Scholz’s Social Democrats objected, worrying such a change would anger voters because installing heat pumps requires a much bigger initial investment, though the operating costs are lower.

Finance Minister Christian Lindner, who leads the Free Democrats, said parties had agreed to provide subsidies for the heater replacements and continue to permit the installation of fossil fuel furnaces provided they are capable of later switching to cleaner alternatives such as hydrogen or biomass. Low-income groups and elderly homeowners will get additional support, he said.

Lindner also touted a major reform of the way Germany requires different sectors of the economy to contribute to the country’s binding climate goals. In future the targets will be reviewed over a longer period and lagging sectors, such as transport and housing, will be able to emit more greenhouse gas if the overall pace of cuts is maintained.

A similar approach will be taken when it comes to major construction projects, allowing ecological compensation in the form of money rather than land, as is currently the case.

In return, the Greens secured a commitment that solar panels will be built along all new highways. The party’s co-leader, Ricarda Lang, also announced an increase in highway tolls for heavy goods vehicles, with 80% of the revenue going toward improving Germany’s rail network.

Earlier Tuesday, lawmaker Alexander Dobrindt of the opposition Christian Social Union had mocked the government’s disunity, telling reporters: “It’s quite possible that this government continues to exist, but it’s not able to govern.”

Scholz dismissed such criticism, insisting the talks at his chancellery would produce “very, very, very good results.”

The 64-year-old said the overarching goal was to fulfill the government’s 2021 pledge to accelerate Germany’s transformation toward a greener, more digital economy.