'How long is the bridge?' Experts mull place for gas in a low-carbon world

New York — The natural gas sector faces growing uncertainty about its role in a decarbonizing economy, but ensuring a place for the fuel in the energy transition will require grappling with a patchwork of decarbonization strategies in different parts of the country and aggressively curbing greenhouse gas emissions.

That was the consensus among market participants and regulators speaking on a panel about the future of gas at the National Association of Regulatory Utility Commissioners' annual winter meeting in Washington. But a critical question that panelists flagged is whether it will be policymakers or markets that take the lead role in addressing the issue.

"Where are we going in the future?" Cheryl LaFleur, one of the panel's moderators and former Federal Energy Regulatory Commission chair, said Monday. "If gas is a bridge fuel, how long is the bridge? How should we decide that and how should that affect our planning? The answers to these questions have implications for wholesale market design, for integrated resource planning in all of the states that do that, as well as for the permitting of natural gas infrastructure: pipelines and LNG terminals."

The natural gas sector has been unsettled by a wave of pipeline opposition in liberal states, spreading municipal bans on new natural gas hookups and pledges to ban hydraulic fracturing by some of the Democratic presidential contenders. In recent weeks, energy trade groups have come out with climate initiatives aimed at lowering emissions and shoring up support for gas.

"The United States is not experiencing one energy transition," said Jason Klein, vice president of Energy Transition Strategy at Shell. "We are experiencing at least 50 different energy transitions. The right answer for California is not going to be the right answer for Texas. You need to understand where your state is in the journey and where you are trying to get to."

Overarching federal guidance on the role of natural gas in the energy transition appears unlikely, according to Sarah Ladislaw, senior vice president and director of the Center for Strategic and International Studies' Energy Security and Climate Change Program.

"Every company out there, every municipality out there, every bank out there, has to answer this question: How resilient are you to the unpredictable directions that the energy transition could take us?" Ladislaw said.

Ladislaw predicted it will get "extremely messy" in states without clear climate goals as regulators try to navigate the pathway forward and said greater regional negotiations over natural gas infrastructure projects that consider economic development and climate goals. But even in states that do, such as New York, regulators are grappling with significant uncertainty.

"What concerns me is if we are also talking about picking the technologies that may work, whose role is that?" Commissioner Diane Burman of the New York State Public Service Commission said.

"Is it the role of the regulator? Is it the role of the market?" Burman, who is also chair of NARUC's gas committee, said. "How would we help in this future ... without being disruptive in a negative way and without forgetting the bare bones of what it means to be an economic regulator? We know that there is going to continue to be growth in gas. And we know that as we move forward, we need to be focused on how we do this in a way that pairs renewables and other things together."

For gas, shoring up that resilience requires steps including better management of fugitive methane emissions and deployment of carbon capture utilization and storage technology, panelists said.

In California, a state with ambitious emissions reduction goals and renewable portfolio standards that has put pressure on the gas industry to demonstrate its ability to decrease emissions, Southern California Gas has emphasized work to expand supplies of renewable natural gas, a form of the fuel processed from waste, according to Andy Carrasco, director of regional public affairs at the company. Carrasco also highlighted the potential for hydrogen gas to be delivered through the pipeline system.

"Infrastructure definitely deserves to be repurposed," Carrasco said. "To abandon it doesn't make sense."

Shell considers gas a transition fuel that supports the intermittency of renewables until longer-term storage can be developed, Klein said. The energy giant also anticipates gas playing an important role in coal-to-gas switching abroad with the rising LNG trade and offering a lower-emissions alternative in sectors such as marine shipping and trucking.

"But all of these things require that we are good stewards of natural gas, and we have to address the fugitive methane emissions issue across the chain," Klein said."We need good policy. We need good operations. Because if we are not good stewards of natural gas then we lose that balance of: Is it evil or is it good?"