- Mar 09, 2019
On Feb. 28, two California energy companies — Southern California Gas (SoCalGas) and San Diego Gas & Electric (SDE&G) — filed an application (PDF) with the California Public Utilities Commission to offer a new product to their customers: renewable natural gas (RNG).
The idea is the two companies will offer climate-conscious customers the option to pay extra each month to swap out fossil natural gas for RNG using what they call a "renewable natural gas tariff." Think community choice aggregation, but not through a utility, and for gas, not electricity.
There's already a lot of confusion about natural gas, not to mention renewable natural gas. To clarify:
RNG — sometimes referred to as biomethane or biomass — is the result of processing the gaseous product from decomposed organic matter, which can be used interchangeably with fossil natural gas. The gas can be collected from landfills, animal manure or wastewater treatment plants.
RNG does something very cool: It diverts methane, an incredibly potent greenhouse gas, from entering the atmosphere and turns it into a usable energy source. California already has a law designed to capture 40 percent of this methane by 2030 as part of its climate goals. California's waste streams are the state’s largest methane source (PDF), and harvesting that gas means we get another bite of the apple before emitting GHGs.
Nope. Building experts see no way for SoCalGas and SDG&E to meet natural gas demand through their proposed program. Analysis from Redwood Energy finds that even if California were to import all of the United States’ RNG resources and factor in the effects of energy efficiency, it could deliver only about a third of the state’s current gas demand.
SoCalGas and SDG&E write that there is enough RNG to meet California’s 2030 climate goals (although not 2045’s goal). But its analysis of the feasibility is based on a California Air Resources Board report that addresses transportation fuel, not home energy consumption.
Natural gas providers are in a tough spot: methane leaks during extraction, transportation and storage mean the climate impact from this sector is higher than initially thought. What’s more, the infrastructure is expensive to maintain, needing massive safety upgrades and leak mitigation investments. Rising infrastructure costs are already leading to higher gas rates in California, where gas prices have increased three times faster than electric rates over the past five years, according to an NRDC analysis (automatic PDF download).
If infrastructure costs continue to rise, natural gas may appear increasingly less economical.
What the RNG tariff does, according to Panama Bartholomy, director of the Building Decarbonization Coalition, is delay the wind-down of the gas network. "It allows for the increased expansion and upgrade of lines, extending costs to consumers and communities," Bartholomy said via email. "Therefore, we’d pay down an even higher level of financing than if we start the wind-down now."
Meanwhile, a movement is gaining momentum: building electrification. In order for California to meet its climate goal, it must decarbonize the building sector, which accounts for 26 percent of statewide emissions. That means getting natural gas out of buildings — no small task with so many homes, business and appliances burning gas onsite.
Groups are working on how to decarbonize buildings. The Building Decarbonization Coalition recently released "A Roadmap to Decarbonize California's Buildings" and the Rocky Mountain Institute is working on the "Economics of Electrifying Buildings." California policy could help, such as SB 1477, which establishes an incentive program for electric appliances; or a plan approved in late February by the California Energy Commission that could encourage electric appliances over gas ones.
Gas interests are forming their own coalition — Californians for Balanced Energy Solutions — to defend natural gas, which formally will be announced in the coming weeks.
Natural gas, once considered a bridge fuel to a cleaner future, is a major contributor to the carbon footprints of industry and states, and is on its way to becoming more prevalent. Natural gas distribution expenditures tripled between 2009 and 2017 (to $14.9 billion per year) and oil supermajors Chevron and Exxon are doubling down, planning to increase production by 80 percent by 2024.
California, the second-highest consumer of natural gas in the United States, is ground zero for the electrification-versus-gas war, and the battle fought here is a case study of the potential issues coming to states and companies across the nation.
Companies with climate goals have so many decisions to make, and the choices made now will shape the energy infrastructure to come. As a fuel source, RNG is well worth exploring, especially where electrification is hardest, such as with industry, flexible capacity and heavy-duty transportation.
With any technological innovation, the question I ask: Does this solution solve a problem or create a new one? In this case, it may be a little of both.