A new Minnesota law aims to help natural gas utilities innovate and diversify their businesses as the state strives to eliminate carbon emissions.
The Natural Gas Innovation Act encourages gas companies to file with regulators “innovation plans” that decarbonize their operations. Utilities can recover the costs of pilot projects and use the results to achieve their goals as part of the state’s conservation improvement program.
The legislation aims to help gas utilities introduce renewable natural gas, develop hydrogen fuels from renewable energies, finance energy efficiency projects and encourage urban energy, carbon capture and geothermal heating.
The law received broad support from unions, utilities, clean energy groups and both parties in the country’s only divided state legislature. It became one of three major energy bills to reach Governor Tim Walz’s office this year.
Minnesota’s natural gas utilities can now help customers switch to electric heat and adopt a host of other energy solutions related to decarbonization.
“Natural gas is essential to meet Minnesota’s energy needs,” said Brad Tutunjian, vice president of CenterPoint Energy in Minnesota, in a prepared statement. “This new law will help promote new low-carbon or low-carbon gas resources produced in Minnesota that can diversify the state’s energy supply, improve waste management, and support new economic development. “
From 2005 to 2018, Minnesota experienced a significant increase in natural gas emissions and a drop in pollution from power generation. In 2018, the production of natural gas and electricity produced roughly the same level of emissions, but pollution of the electricity system continues to decrease as pollution from natural gas increases.
Natural gas emissions from residential buildings have increased 32% since 2005, with the industrial sector increasing by 18% and commercial properties by 15%. Additionally, pipeline and production leaks cause methane to leak into the atmosphere, causing eight times the warming power of carbon dioxide in the first 20 years of emissions.
Still, natural gas will be difficult to replace, heating two out of three homes in Minnesota and playing an important role as a fuel to power heavy industrial processing and transportation. Yet gas companies hoping to expand their product offering and production mix have been constrained by regulatory oversight.
State regulations have limited the ability of gas companies to propose electrification strategies and to integrate green fuels such as renewable natural gas. Great Plains Institute vice president Brendan Jordan said natural gas companies in Minnesota are only allowed to sell natural gas at cost price and earn a regulated rate of return on the distribution infrastructure of the Minnesota. gas pipeline.
“The structure is not as flexible as it should be and does not allow for the kind of experimentation and innovation that we will need to figure out how to decarbonize this sector,” he said. A new e21 initiative report organized by the Great Plains Institute and the Center for Energy and Environment outlines several approaches to decarbonizing natural gas, he said, and gas companies can now act on his recommendations.
The legislative change comes after CenterPoint Energy tried unsuccessfully in 2019 to introduce a five-year pilot project to allow a limited number of commercial and residential customers to purchase renewable natural gas, or biomethane, through a tariff program. green. Minnesota regulators subsequently agreed to allow CenterPoint to open its network of pipelines to RNG produced in Minnesota.
CenterPoint Senior Communications Specialist Ross Corson said the Innovation Act enables the company to better “help our customers meet their energy needs in a reliable, affordable and sustainable manner” and “to support Minnesota’s renewable energy and climate goals “. The company now has more options for providing energy solutions than natural gas, he said.
The law allows natural gas companies to sell electric heating technologies such as aerothermal heat pumps and geothermal or aquifer thermal applications, said Margaret Cherne-Hendrick, director of energy transition for Fresh Energy, which also publishes Energy. News Network. It rewards “strategic electrification” that maintains gas back-up for dual heating solutions by allowing CenterPoint to sell electric heaters and electric water heaters.
“I think it’s notable that we will potentially see a gas utility move forward with electrification plans,” she said. “I think this really signals an appetite, and a recognition, that the business model as it stands today is going to have to change and adapt in order to be able to serve customers in a low-carbon economy.”
Cherne-Hendrick said the bill recognizes that some industrial processes will be difficult to electrify. Companies will continue to use natural gas for production, while its use may decline for space heating as electrical solutions take hold. Less carbon-intensive approaches such as renewable natural gas and hydrogen present their own set of problems, she added, primarily the need to dramatically increase energy production for their production.
“There are people who think we should just replace the fossil gas in the pipes we use today with renewable natural gas and green hydrogen,” Cherne-Henrick said. “But it is a huge additional volume of gas to be produced that will be energy intensive. We think it costs too much and doesn’t really “decarbonize” the gas system.
The bill also requires utilities to submit a “utility system report and forecast” document along with their innovation plans outlining capital and fuel investments, incentive programs and incentives. carbon emissions in pilot projects, a measure that will protect taxpayers who pay for anything unrelated to decarbonization. The Utilities Commission will also open a “The Future of Gas” dossier, she said, joining only a handful of states that have similar initiatives.
Typical approaches to reducing natural gas consumption have encountered limits that the bill can address. Audrey Partridge, head of regulatory policy at the Center for Energy and the Environment, said utilities didn’t have many tools to tackle natural gas emissions outside of energy efficiency.
“Obviously, as we observe the increase in natural gas emissions in buildings and businesses, we can see that our energy efficiency efforts are not enough to truly reduce natural gas emissions,” she declared. She believes geothermal heating could become more popular in Minnesota, when even the best cold-air heat pumps could suffer from the freezing conditions of the polar vortex.
The International Union of Workers of North America, Minnesota and North Dakota has more than 800 members working in the natural gas industry, according to marketing director Kevin Pranis. The law will help preserve jobs and potentially create new jobs in hydrogen, renewable natural gas and other areas related to the gas industry.
“The idea that we were just going to get rid of the gas system was baffling,” Pranis said. “We worked on this with the pipefitters and plumbers unions. They would all want to put their skills to work rather than being told, “Well, your skills are learned; they are no longer needed. Our people wanted a chance to put our skills to work.
Pranis said union members remain unstable as the state’s power generation shifts to a cleaner system. The bill, however, went beyond polarized natural gas camps by finding commonalities between utilities, clean energy groups and unions. It also recognizes “the need for a diverse solution” rather than one based on electrification, he said.
“This was one of the few legislative experiences where it seemed like there was as much enthusiasm from our side and utilities as from the clean energy side,” Pranis said. “I can’t think of another bill where each party proudly claimed ownership. “
It remains to be seen what innovation the natural gas companies come up with, but CenterPoint Energy is not waiting to take advantage of the new law. He said he would submit his first innovation plan to regulators later this year.
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