In the coming decades, advancements in direct-use technologies and renewable natural gas can position the gas network as a significant and cost-effective pathway to reducing greenhouse gas emissions.
That’s the conclusion of two new reports that should help inform the debate on decarbonization policies. Sponsored by the American Gas Foundation, the studies create a fact-based case for adding gas utility innovations to the low-carbon-future energy mix.
One in-depth assessment reveals that technologies available now or within the next three years can dramatically reduce residential GHG emissions. The other demonstrates that RNG offers cost-competitive effectiveness and an ample supply of feedstocks to reduce carbon emissions.
“It has been critical for us to identify alternative pathways to decarbonization,” said Richard Murphy, the American Gas Association’s managing director, energy markets. “Natural gas can continue to be a contributor to reducing emissions on par with electrification, but in a more cost-effective and consumer-friendly manner.”
Back in 2017, AGA members engaging in debates on decarbonization policies heard frequent calls for electrifying all sectors of the economy and eliminating natural gas.
In response to members’ requests, AGA commissioned ICF to conduct a study that examined the implications of policy-driven residential electrification, which found that it would be burdensome and costly for consumers and the economy. It would also result in relatively small reductions in emissions.
The next step was to identify how the gas network can be a solution for achieving future emissions reductions, which became the origin of the AGF studies released in December 2019: Opportunities for Reducing Greenhouse Gas Emissions Through Emerging Natural Gas Direct-use Technologies and Renewable Sources of Natural Gas: Supply and Emissions Reduction Assessment.
The direct-use study examines how emerging natural gas technologies, if they achieve market penetration, compare to electrification in costs and GHG emissions reductions. The RNG study projects potential RNG supplies, the associated potential emissions reductions, and the cost per ton of these emissions reductions.
The two studies were conducted by independent research firms that utilized the industry expertise of representatives from AGA member companies. Both studies established baseline scenarios that did not consider the adoption of RNG and emerging natural gas direct-use technologies. Each study developed two additional scenarios based on varying adoption rates of RNG and emerging direct-use technologies, which were compared against the baseline scenarios with timelines out to the years 2040 and 2050.
The direct-use study, conducted by Enovation Partners, reveals that today’s efficiencies nearing 100% in space heating and water heating are not a ceiling. The study found emerging natural gas technologies in the research and development cycle that could achieve sizeable leaps in efficiency. Among those 100 technologies, natural gas heat pumps rise to the top, with potential efficiency ratings of 130% to 140%.
Topline findings include:
The findings build a case for incentivizing forward-looking innovations that contribute to emissions-reduction goals, in addition to customary end-use efficiency programs that leverage the low price and abundance of natural gas, said Carl Garofalo, director, customer solutions and sales, Southern Company Gas,
in Atlanta.
“There are several technically feasible pathways available to reduce carbon [emissions], and some of these pathways are extremely expensive,” said Garofalo. “The key is finding the most efficient ways of spending money to reach decarbonization goals—and building an evidence base to back them up.”
Gas for direct use is “compatible with a world that is deeply decarbonized,” said Ryan Bracken, principal economist for Oregon-based NW Natural. “One of the big ways to achieve that decarbonization is to reduce how much gas people need for the important role that gas usually provides—heating their houses and water. It’s a big part of the story of keeping costs as low as possible as decarbonization occurs.”
RNG, as defined by AGA, is any pipeline-compatible gaseous fuel derived from biogenic or other renewable sources that has lower lifecycle carbon dioxide emissions than geological natural gas. The RNG study, conducted by ICF, focused on:
Topline results found that RNG can play a substantial role in lowering emissions, with costs that are lower or competitive with other emission-reduction pathways. Presented in low- and high-resource potential scenarios, these results include:
“The research demonstrates there is signification potential for RNG resources when you look across all nine feedstock options and all three production technologies,” said AGA’s Emily O’Connell, director, energy markets policy. “This is unique in itself, compared to other renewable energies, where you don’t have this diversity of feedstock and diversity of technology to produce the renewable fuel. With the right policy support and market demand, we have a substantial amount of RNG out there.”
The study also evaluated the resource potential of P2G, which uses dedicated renewables to generate hydrogen through electrolysis. The hydrogen can then be used or converted into methane and integrated into the gas stream. “This portion of the study was meant to be a starting point for the discussion, to give interested parties a better understanding of the possibilities out there around P2G, the cost trajectory out to 2040, and a sense of how this could add to and supplement renewable energy in this country and as a feedstock for RNG or renewable hydrogen,” said O’Connell.
For example, in New York state, National Grid is filing “future of heat” rate-case proceedings, including a voluntary “green gas tariff” and pilot tests of the economic and technical viability of P2G. But RNG isn’t the only emissions-reduction strategy on the company’s agenda.
“We’re not saying there is a single solution to decarbonized heat,” said National Grid’s Donald Chahbazpour, director, gas utility of the future. “We believe the future will require several options—geothermal, electrification where it makes sense, and RNG.”
In all circumstances, Chahbazpour added, regulators and stakeholders will have questions. How much RNG is available? What does it cost? How much can it reduce emissions? How quickly can it come to scale? In these early days of RNG, the report provides a preliminary, factual framework for answering those questions.
For both reports, natural gas utility leaders served on steering committees to guide research and provide input. Members urged the development of numbers showing not just expectations, but possibilities.
In today’s world, data drives decisions, noted Garofalo. And data compiled by credible third parties can bolster the prospect of natural gas as a cost-effective contributor to emissions reductions, committee members agreed.
“You have to show those numbers and make sure everybody understands how powerful some of these initiatives can be,” he said. “There are a lot of different options on the table for carbon reduction. You show one that more than pays for itself, like direct use, and that becomes a powerful option to implement.”
The natural gas sector “would be remiss” if it doesn’t use the compelling findings to accelerate research into promising technologies, especially against the headwinds of policy-driven electrification, Garofalo added.
“Looking at all the advantages and all the people that are relying on this very important, low-cost fuel and denying the customer access to natural gas is a great disservice,” he said. “This report gives us an even clearer picture of what they’re losing when those policies are enacted.”
As the reports point out, natural gas’s existing infrastructure is a significant factor in cost-effectiveness.
“This country has a 2.6-million-mile distribution pipeline delivery system that is a tremendous asset,” said Murphy. “The fact that you can continue to utilize this investment to achieve similar emissions reductions that electrification could provide is a powerful statement.”
As Jerry Ryan, energy-efficient technology and operations manager for New Jersey Natural Gas, noted, “We can achieve lower greenhouse gas reductions by utilizing the existing natural gas grid, which benefits our existing customers rather than causing a lot of disruption and a lot of transition. Natural gas can be used in concert with additional renewable generation on the electric side. It’s another tool in the box.”
Both reports provide relevant proof that natural gas is a solution worthy of capital and technology development funding to advance “new technologies and innovation across the value chain,” said Murphy.
The first objective in leveraging the studies, Murphy said, is educating anyone who wants to learn more—especially policymakers considering limitations on natural gas while overlooking its power to help achieve their climate-change goals.
The second is reinforcing the credibility of natural-gas pathways toward emissions reductions. For example: “Opponents are trying to say that RNG is a pipe dream,” said Murphy. “It’s important to get credible information out there to identify opportunities.”
Added O’Connell, “We’re not explicit about policies to drive adoption. We recognize there have to be changes in market demand, which would most likely come from policies in order to develop the resource base as we have laid it out, in order to get those emissions reductions and in order to get these low costs that we’re projecting. We certainly have to see more development. The status quo is not going to get us there.”
On the direct-use side, market acceptance remains a challenge, said Ryan. NJNG’s longtime emphasis on energy efficiency requires constant diligence. Customers continue to learn the benefits of higher-efficiency appliances, while contractors are educated on installation and testing for maximum performance. Contractors are powerful partners in purveying the advantages of replacing old units with higher-efficiency equipment.
Now, policymakers and regulators need to hear the same messages on the positive effects of natural gas.
“That was part of the drive for the report, so we could start to have these conversations with regulators and inform not only the gas industry but the consumer public about opportunities to save money and reduce emissions,” said Ryan.
The reports’ findings could convince regulators to incentivize purchases of higher-efficiency equipment, which could then encourage manufacturers to scale up production, said Bracken. “We can show our regulatory stakeholders and our customers that these systems save money,” he said. “They help society decarbonize, so let’s get the incentives out there that will help manufacturers build them. The question is, how. It’s not likely to happen without policy support.”
State and federal policies have been driving RNG investment dollars toward the transportation sector, but “heat is not a federal jurisdiction,” noted Chahbazpour. As demonstration projects prove RNG viability, the next step is working with regulators and lawmakers to create policy frameworks that allow utilities to use RNG for heating purposes, he said.
AGA and the American Gas Foundation are also implementing strategies to broadly communicate the findings of the reports.
“We are building credible, fact-based analysis that demonstrates there is a pathway where natural gas can significantly contribute to achieving emissions reductions,” said Murphy. “The general public may not be aware of that fact. We are filling that gap.”
With the two reports in hand, industry members can educate not only policymakers and regulators but also investors and customers about the role of natural gas in a sustainable future. No options should be excluded, said Chahbazpour.
The studies demonstrate “how we will continue to use our vast, reliable and safe natural gas infrastructure to deliver affordable energy and drive down emissions,” said AGA President and CEO Karen Harbert. “By incorporating new, highly efficient natural gas appliances and using renewable natural gas, America’s natural gas utilities will reduce emissions along their systems, and American homes can drastically cut emissions while maintaining the warmth and comfort they have grown to love from natural gas.”