As momentum accelerates for energy decarbonization, the future for natural gas is drawing more scrutiny, even as the fuel maintains a central role in electric generation, homes and buildings, and industrial processes.

Natural gas prospects were prominently discussed at the Northwest Gas Association and Alliance of Western Energy Consumers Annual Energy Conference June 5-6 at Skamania Lodge east of Portland.

Last week’s column (CU No. 1913 [12]) explored ­challenges facing natural gas in an era of decarbonization and increasingly dire climate change projections, along with its strong underlying fundamentals (abundant, affordable, domestic) and its many benefits, including historical.

This week’s column looks at some analytical, regulatory and policy matters expressed at the conference.

Gas in Deep-Decarbonization Northwest

“The Role of Natural Gas in a Deeply Decarbonized Northwest” was the title of a presentation by Ryan Bracken, principal economist at NW Natural.

His presentation described NW Natural’s belief in “a climate imperative” and the company’s “important role to play in a smart and affordable Northwest climate strategy.”

NW Natural has three key objectives, he said:

  • Long-term goal of deep decarbonization that leaves no one behind.
  • Reduction opportunities take advantage of the infrastructure in place.
  • Lead the way on natural gas innovations and share broadly for larger impact.

Bracken focused his talk on a November 2018 study by Energy and Environmental Economics, in which NW Natural asked E3 to evaluate strategies to reach an 80 percent reduction in greenhouse gases in Oregon and Washington by 2050, from a 1990 baseline.

(For perspective, in 2015, electricity—including natural gas generation—created 30 percent of Oregon GHG emissions. Direct use of natural gas was 12 percent, mainly for space and water heating and industrial processes.)

Among the study’s conclusions:

  • Peak electricity demand would rise substantially, as much as 32 percent in 2050, with electrification of space heating through heat pumps. It would take 17 GW to 37 GW of new natural gas-fired capacity by 2050 to serve winter space-heating peaks. (Bracken noted that Northwest electric and natural gas utility peaks are concurrent, and happen in winter.)
  • If new natural gas power is forbidden, the analysis model incorporates 21 GW of storage.
  • Incremental economywide costs to reach the 2050 GHG reduction target range from $3 billion to $16 ­billion annually in 2050, with the higher end of the range occupied by electric heat pumps, and the lower end by gas furnaces and heat pumps, and cold-climate electric heat pumps.
  • Deep decarbonization in buildings with continuing gas heating requires advanced renewable natural gas, natural gas heat pumps or hydrogen blended into the pipeline, and more GHG mitigation in other sectors, such as industrial. Electric-heat retrofitting, meanwhile, needs a substantial market transformation and an expanded power system to meet peak demands.

In all scenarios, natural gas would remain the biggest source of 2050 energy-sector emissions.

By 2050, Bracken concluded, it would “be cheaper and a lot less risky to keep a reduced gas sector as the primary source of meeting space-heating needs.”

Gas Matters in a Lower-Carbon Energy Future

The next speaker, President/CEO Dena Wiggins of the Natural Gas Supply Association, robustly defended the fuel NGSA members produce. Her presentation title was “­Natural Gas: Essential to a Lower Carbon Energy Future.”

She noted natural gas supplied 34 percent of U.S. electricity in 2018, more than any other single source, per the U.S. Energy Information Administration. And EIA projects natural gas to have a 39 percent share in 2040.

“Those are the facts that we’re dealing with right now,” Wiggins said. “Looking ahead to a lower-carbon energy future, we need to be cognizant of those facts.”

With renewables (including hydro) now producing slightly less than 20 percent of U.S. power, and with numerous states moving toward renewables portfolio standards of up to 50 to 100 percent, “How do we get there from here and pay for it?” she asked. “None of us are willing to give up cars, cellphones, [air conditioning] in summer, heat in winter, our standard of living. I do think the question is: How do we fuel this country?”

Wiggins also cited EIA data in a slide that showed CO2 emissions reductions from shifts to natural gas-fired generation substantially exceeded emissions reductions from increasing noncarbon generation, from 2005-2017. EIA data also show methane emissions from natural gas systems dropped 14 percent from 1990-2017, while gas production rose more than 50 percent.

Natural gas attributes also include far less land ­occupied than solar or wind, per 1,000 households served, as well as less water use (on a megawatt-hour basis) than geothermal, coal, nuclear and concentrated solar, according to Wiggins’ presentation.

“We think that natural gas is a perfect partner with wind and solar, that we can back up the intermittency . . . That’s why we think natural gas has a role in a lower-carbon energy future,” she said.

During the question/answer session, Wiggins mentioned the “incredibly well-organized” and “incredibly well-funded” opposition to natural gas. “They can’t keep gas in the ground by attacking the drilling of wells,” she said. “They’ve moved their fight to the infrastructure . . . It is a pitched battle.”

I posed a written question (per the conference format) about any common ground between the natural gas industry and those pushing for deep decarbonization. “I don’t know,” she replied. “There are some groups that are so far opposed to us that sitting down and talking to them is not going to go anywhere . . . We say, renewables need us. We’re out there testing the extent to which renewables will say they need gas.”

Regulatory, Policy Dialogues

The conference concluded with two panels, one ­featuring regulators and the other energy executives.

In the regulatory panel, Washington UTC Chairman David Danner noted the decarbonization agenda of Gov. Jay Inslee and the Legislature culminated in 2019 with the Clean Energy Transformation Act committing the state to GHG-free electricity by 2045.

“Legislators were talking about limits on natural gas” as part of “the new world” of decarbonization, Danner said, but noted that no 2019 legislation addressed limits on natural gas use in homes. (That contrasts with the July passage by the Berkeley, Calif., City Council of an ordinance to ban natural gas infrastructure from new construction starting in 2020, with a few exemptions—reportedly the first such action of its kind by a city nationwide.)

The regulatory panelists—Danner, Oregon PUC Chair Megan Decker and British Columbia Utilities ­Commission Chair David Morton—also touched on the interdependence of electricity and gas, particularly highlighted in the wake of the October 2018 explosion and rupture of a major B.C. pipeline known as T-South, the primary artery for delivering natural gas from the province to the U.S. Pacific Northwest (CU No. 1883 [8]).

“As the electricity sector looks at planning toward resource adequacy and looking at the ways capacity needs can be met within the decarbonization framework or not, a significant amount of interdependencies and conversations are going to have to involve the gas sector,” Decker said.

Morton said the prospect of reduced natural gas use in buildings raises a concern about stranded assets, with financial implications for gas utilities and their customers, particularly “lower-income and other vulnerable communities.”

He also referenced a FortisBC program from several years ago that offered customers an opportunity to voluntarily purchase some amount of renewable natural gas. It didn’t get much play. “Customers talk a lot about wanting to reduce greenhouse gas emissions. At the end of the day, not a lot will step up on a voluntary basis and are willing to pay for that reduction,” which he said “raises all sorts of issues of equity.”

The concluding panel featured Ed Finklea, AWEC natural gas director; Scott Madison, executive VP, ­business development and gas supply, MDU Utilities Group; and Dave Robertson, public policy VP for Portland General Electric.

They touched on themes explored elsewhere in the conference, including the decarbonization march and the role of natural gas, as well as electric-gas interdependence.

The October 2018 B.C. pipeline rupture served as “a big wakeup call” for PGE as a major customer of the ­Williams Northwest Pipeline system, said Robertson.

“For us, electric transmission on the [Interstate] 5 ­corridor is just as critical as the gas transmission on the I-5 corridor,” he said, citing PGE’s three gas-fired plants at Clatskanie, Ore., including the two Port Westward units, with 636 MW total capacity.

Later in the panel, Finklea asked Robertson whether Port Westward would be “the last of those marriages we’ll see” between natural gas-fired resources and renewables. Robertson said the Clatskanie plants have considerable flexibility, according to plant operators. “That flexibility has got to come in across the board,” given the rise of centralized markets, such as the Western EIM, and more renewables. “Flexibility will be the name of the game, even down to the distributed resources level, even at the bulk level.”

PGE now dispatches its low-emission resources first and “fills in the gaps with gas,” including Port Westward, which “­follows the wind and follows load as well,” said Robertson.

Finklea alluded to natural gas as a bridge fuel now facing doubts about the length of the bridge, and asked how the gas industry can tell its story in a positive way.

Gas companies need to operate with a decarbonizing future in mind, said Madison. “We have to look and say, ‘What do we have to do in the future to be relevant?’ We provide an essential service. What do policymakers and our customers want from our service? If we don’t do that, we’re going to be in trouble,” he said.

However this transition unfolds, he raised a central question: “What does that cost and how do we get there?”

Later in the panel, he emphasized system reliability, resilience and safety as imperatives for the gas industry over the next five years.

“I don’t think customers expect to make this system less reliable as we decarbonize and move toward a more integrated electric grid,” said Robertson, also noting affordability as an expectation.

He referenced an earlier conference presentation from Amy Snover, director of the University of Washington’s Climate Impacts Group, indicating global warming, at current rates, could reach a dangerous 1.5 degrees Celsius increase by 2030. “We can’t build a transmission line in 11 years,” said Robertson.

He acknowledged decarbonization is now “our job . . . We can get there. We just can’t snap our fingers and make it happen overnight.”