By Erin Murphy and Christie Hicks, EDF
As the United States moves toward decarbonization, cities and states must use all means available to reduce climate pollution, and natural gas utilities should be at the forefront of this rapid energy transition. Gas utilities are the subject of increasing scrutiny because plans to expand and fortify their infrastructure could lock in greenhouse gas emissions and costs for decades. As the industry reckons with its role in a decarbonized future, advocates, utilities and regulators alike are calling for a carefully-managed transition that avoids costly long-term investments. New York has been at the forefront of this effort, seeking to balance ambitious climate goals with outdated natural gas investment planning processes.
To help utility planners align business decisions with environmental targets, EDF engaged MJ Bradley and Associates to develop the Gas Company Climate Planning Tool, an innovative new framework for New York and other states.
This first-of-its-kind tool has the power to transform natural gas utility investment decisions. It is pre-populated with publicly reported data on the life cycle greenhouse gas emissions associated with natural gas investments, including customizable options that reflect the myriad of options utilities have to expand service. It is free and available to the public, enabling utilities, regulators and stakeholders to compare emissions associated with numerous demand- and supply-side options to meet energy needs. For example, utilities can compare the impact of traditional pipeline capacity, using energy efficiency to reduce demand, or incorporating alternative fuels like biogas and hydrogen in their fuel mix. An accompanying report further assists state regulators in developing a framework for assessing life cycle greenhouse gas emissions of investment options.
There is more urgency than ever to chart a new path forward for natural gas investments
In addition to carbon dioxide emitted from combustion of natural gas, its production, transmission and distribution results in significant emissions from methane — a greenhouse gas 84 times more potent than carbon dioxide during the first 20 years after its release. Attention to this issue is more important than ever, since reducing methane emissions could result in more immediate benefits in the battle against global warming.
Most natural gas planning happens through piecemeal processes and often behind closed doors. It has been difficult, if not impossible, for utilities, regulators and the public to easily and accurately compare the climate impact of supply and demand management options. To address this need, the Gas Company Climate Planning Tool provides an independent, data-driven way to assess the long-term greenhouse gas emissions of various planning scenarios in a way that reduces both climate pollution and costs for the utility and the customer.
This tool could not come at a better time, as more states are adopting bold climate goals but gas utilities continue to operate under a business-as-usual paradigm — planning for year-over-year growth and expansion of the natural gas system.
The New York Public Service Commission, for example, acknowledged this tension and found that current gas utility planning in the state is not keeping pace with the energy system transformation. New York enacted the Climate Leadership and Community Protection Act in 2019 — requiring an 85% reduction in statewide greenhouse gas emissions by 2050. In 2020, the commission launched a proceeding to modernize the natural gas planning process. Recognizing that comprehensive, transparent, equitable long-term planning must be at the core of reforms, the PSC recommended that utilities calculate and report the greenhouse gas emissions associated with all supply and demand solutions. It also proposed that, rather than usual infrastructure investments, gas utilities consider retirement of leak-prone pipe and use of non-pipeline alternatives to meet customer needs. To help with these tasks, EDF submitted the Gas Company Climate Planning Tool, along with detailed recommendations to the PSC.
Aligning long-term gas planning with climate goals requires more than a quantitative tool
Transparent, unbiased and publicly available data will improve gas supply decision-making to align gas planning with the imperative to decarbonize. The Gas Company Climate Planning Tool not only meets the information needs of the commission, but also those of other regulators across the country facing similar issues who are grappling with how to improve their state’s long-term gas planning processes to align utility investments with climate goals.
There is more work to be done. The tool is purely quantitative, and other factors should be considered. Qualitative factors can be equally important in investment decisions, especially when considering disproportionately impacted and low-income communities. Equity must be at the core of policies and reform processes. The Gas Company Planning Tool is the first step for a more equitable, inclusive long-term gas planning process.
Utilities, regulators and stakeholders in New York and across the country can begin using this tool today. Every dollar spent by gas utilities either gets us closer to or further from our climate targets.
About the Authors
Erin Murphy is Senior Attorney, Energy Markets & Utility Regulation at the Environmental Defense Fund. Erin represents EDF in regulatory proceedings involving the design of wholesale and retail natural gas markets, seeking to facilitate the clean energy transformation. She advocates before state public utility commissions for gas supply planning mechanisms to prevent unneeded long-term investments in gas infrastructure, and for utility adoption of programs to reduce methane emissions from gas distribution networks. Erin also advocates before the Federal Energy Regulatory Commission for new and better ways to facilitate renewable energy integration and harmonize the wholesale natural gas and electricity markets.
Christie Hicks is Lead Counsel, Energy Markets & Utility Regulation at EDF. Christie’s work focuses on reducing our reliance on natural gas, fostering markets and regulatory structures that will allow clean energy resources to compete and flourish, avoiding over investment in long-lived natural gas infrastructure and reducing emissions from gas transmission and distribution systems by developing, advocating and defending EDF’s interests before FERC, RTOs, and PUCs.
Jolette Westbrook also contributed to this blog.