Natural gas utility operator and midstream company AltaGas Ltd. set new emissions reduction targets and outlined plans to incorporate low-carbon fuels into its gas distribution networks in the coming years.
AltaGas on Dec. 15 announced a goal to reduce Scope 1 and 2 emissions tied to its gas utility business by at least 30% from 2008 levels by 2030. It will also seek to lower Scope 3 emissions — those tied to customer gas use — by seeking to deliver 10% of its gas supplies as low-carbon fuels by 2030. The company said those efforts would depend on regulatory support and customer demand.
To meet the goal, AltaGas plans to increase purchases of certified responsibly sourced gas, following an initial purchase in 2021, according to AltaGas Executive Vice President and President of Utilities Blue Jenkins. Gas that is certified as responsibly sourced meets certain emission intensity thresholds and other environmental, social and governance standards.
The utilities will also seek to build on its first renewable natural gas project by exploring opportunities for additional interconnections with RNG facilities in its service territories, Jenkins said during AltaGas' investor day event. RNG is processed from methane waste sources like farms and landfills into pipeline-quality gas.
Washington Gas Light Co. represents the biggest decarbonization opportunity within the utilities business, according to AltaGas Executive Vice President and Chief External Affairs and Sustainability Officer Shaheen Amirali. The company accounts for more than 80% of total Scope 1 and 2 emissions in the utilities business, and boasts the largest pipe modernization program among its gas utilities, she said.
The company will continue to tighten its distribution system by replacing leak-prone pipe to drive down emissions and prepare its system to flow low-carbon fuels, executives said.
Capturing hydrogen opportunity
AltaGas President and CEO Randy Crawford said the company's gas utilities are well-positioned to blend hydrogen into the gas grid, and AltaGas has the potential to develop dedicated hydrogen systems in the longer term. Hydrogen does not release carbon dioxide when burned, and it is considered a low-carbon fuel when produced using renewable electric power or paired with carbon capture technology.
"We firmly believe that natural gas and [liquefied petroleum gases] will continue to be part of the energy evolution for a long time," Crawford said. "We also believe, though, that hydrogen will play a significant role, and we want to be part of that conversation."
In its midstream business, AltaGas will seek to reduce its emissions intensity by 40% from 2019 levels by 2030. It will additionally target a 15% reduction in absolute greenhouse gas emissions at its Harmattan gas processing complex in Alberta, its largest-emitting midstream facility.
The company's West Coast propane and LPG export platform and its Western Canadian LPG logistics hub position AltaGas for hydrogen exports to Asia, Crawford said.
The company previously said land purchased near the Ferndale LPG export facility in Washington state could serve as a launching pad for its hydrogen business. During the investor day, Executive Vice President and President of Midstream Randy Toone said the company is considering ways to help the state advance its goal of participating in emerging hydrogen and low-carbon ammonia markets.
2022 guidance
The company on Dec. 15 issued 2022 normalized EPS guidance of C$1.80-C$1.95, up about 9% from the midpoint of its 2021 EPS guidance. AltaGas expected the utilities segment to drive 56% of projected 2022 EBITDA of C$1.5 billion-C$1.55 billion.
AltaGas set its 2022 capital spending plan at C$995 million, with 78% allocated to the utilities segment. It anticipated a compounded annual growth rate of 8%-10% through 2026 for its utility rate base.
