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Utility CEOs see natural gas, transmission as essential to energy transition


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Utility CEOs see natural gas, transmission as essential to energy transition

The leaders of some of the nation's largest investor-owned utilities agree that natural gas will play an evolving yet essential role in decarbonizing the economy.

"There's no question that natural gas is going to have to be a key part of the transition, especially in the near term," Gerard Anderson, executive chairman of Detroit-headquartered DTE Energy Co., said June 9 at the Edison Electric Institute's 2021 annual conference.

The theme of the conference, held virtually this year, is "The Road to Net Zero," and utility executives highlighted the importance of gas generation, transmission investments and new technologies to hitting emission reduction goals.

"One of the things we need to realize as we talk to policymakers, they have a fixed view as to how natural gas assets will be run over time," Anderson said. "These gas assets are going to go through transitions in the way they are used. As they come in to backfill for coal and support renewables, they'll be used pretty heavily. But as we increase our investment in renewables, their use and capacity factors will decline ... then eventually, we're going to need to transition them either to carbon capture or to a different fuel, some mix of renewable and carbon capture or hydrogen."

Anderson said utilities need to inform policymakers of the importance and capability of natural gas in the energy transition.

"There is no way to get to net-zero without gas transitioning and eventually being either fully captured in terms of carbon or replaced with a different fuel," Anderson said.

Even in California, which has an ambitious goal to reach carbon neutrality by 2045, there is a need for natural gas to be part of the generation mix, Edison International President and CEO Pedro Pizarro said on the CEO Leadership Roundtable at EEI.

"We still see something like 6% of the electrons serving California in 2045 being produced by natural gas," Pizarro said. "Now, 40% of that natural gas will be renewable natural gas, and there is a significant amount of carbon capture that is part of the overall economywide equation."

Warner Baxter, chairman, president and CEO of St. Louis-headquartered Ameren Corp., said, "There has to be a clear understanding that there is a role for natural gas and it isn't just a five-year role or an eight-year role."

Investments in the grid and supportive policies and regulations for project permitting also are seen as essential.

"I will tell you the investments we have made in the transmission grid, I would say, are really just scratching the surface in terms of what we're going to need to do to achieve net-zero carbon emissions by 2050," Baxter said. "We all have our horror stories [when it comes to permitting], but we also have success stories. And so we shouldn't sit there and say this is an impossible lift."

While defending the role of gas and transmission, utility executives also touted the industry's 40% reduction in carbon emissions between 2005 and 2020.

"So many of us are moving to retire coal and to backfill with renewables and as much gas as we need to for reliability that these drops are certain to continue in the decade ahead," Anderson said.

U.S. President Joe Biden, meanwhile, wants to produce 100% carbon-free electricity by 2035 and achieve economywide net-zero emissions by 2050.

Utility executives said Biden's legislative priorities on infrastructure, renewable and nuclear tax credits as well as research and development funding for new technologies will support their push to reduce emissions.

"Now what do we need to get to net-zero? I think the next step after those are locked down would be to try to pursue a bipartisan clean energy standard," Anderson said.

Ameren's CEO pointed out that many utilities in the industry have so far committed to net-zero carbon emissions by 2050 and have "robust plans" to hit 80% to 85% carbon emission reductions by 2040.

"But we still have to get that last 15[%] to 20%, and that's where these new clean energy technologies are going to have to come in," Baxter said. "The good news is, I think our message is being heard. I do think we can see some important and immediate funding."

Still, utilities have not yet committed to carbon-free generation by 2035.

Pizarro noted that to achieve a significant reduction in carbon, the sector needs to advance the economywide approach.

"While a lot of the focus is on the power sector and appropriately so ... we think this really needs to be something that cuts across all sectors of the economy, particularly across the transportation sector," Pizarro said, noting that the transportation sector is tied to a significant amount of greenhouse gas emissions in the U.S.

"It's going to take a pretty darn big village to make this all work and to make it work within the time frame that we need," Pizarro said.