Dive Brief:

• Natural gas will play a key role in the United States' transition to a net-zero carbon economy by 2050, and the number of gas customers will continue to grow in all scenarios to achieve that goal, according to a new report from the American Gas Association (AGA).
• Improved efficiency, hybrid gas-electric heating solutions, fuel-neutral building energy codes and renewable natural gas can all play a role in decarbonization, according to the "Net-Zero Emissions Opportunities for Gas Utilities" assessment.
• While some cities have been banning new gas hookups, AGA says the continued use of efficient, lower-cost natural gas appliances, in particular for heating, is important to ensure an equitable energy transition.   

Dive Insight:

Any rumors of the gas industry's demise have been exaggerated, AGA officials said Tuesday in a press briefing to unveil the study.

"The number of natural gas customers grows in all of the scenarios," AGA Vice President of Energy Markets, Analysis and Standards Richard Meyer said. "We don't have to make a choice between adding new customers and helping them achieve ambitious environmental goals. However, to achieve those goals will require significant actions."

The report considers the emissions reduction options available for gas utilities and their customers, and identifies potential pathways to combine those different options. The report does not look at liquefied natural gas exports or the power generation sector.

AGA concludes the U.S. "can achieve significant emissions reductions by accelerating the use of tools available today," including high-efficiency applications, renewable gases, and methane reduction technologies and enhanced energy efficiency.

"Large amounts of renewable and low-carbon electricity and gases, and negative emissions technologies, will be required to meet an economy-wide 2050 net-zero target," AGA said. But the actual mix of solutions will vary across the country, the group said.

The "optimal pathways for any given region or even utility-specific service territory will vary based on highly localized factors," including climate, energy prices, housing stock and the types of businesses using gas, Meyer said. The "makeup of the gas and electric system in any given area" will also play a role in determining the most efficient use of resources, he said.

According to the gas industry, greenhouse gas emissions associated with gas utilities made up about 13% of overall U.S. emissions in 2019, and the majority of that came from customer emissions — those associated with on-site consumption of gas, including residential, industrial, commercial and vehicle fuel applications.

The affordability of natural gas is a key feature, said AGA. Homeowners save more than $1,000 annually, relative to other energy sources, by using gas and the industry adds about one new customer every minute and 21,000 new business customers annually.

The U.S. gas industry added 900,000 new residential customers between 2019 and 2020, marking the largest increase since 2006, according to AGA. There are more than 76 million gas customers in the U.S. today, according to the group.

Some local governments have been banning new gas hookups in an effort to decarbonize. Berkeley, California, in 2019, became the first U.S. city to ban most new natural gas infrastructure. New York City enacted a similar ban last December.

These efforts run counter to calls for equity in the energy transition, AGA President and CEO Karen Harbert said.  

"Any type of mandate or regulation that would force customers, particularly those at the lower side of the income scale, to have to make new purchases of more expensive appliances, runs counter to the equitable transition that we are all pursuing," Harbert said. 

Equity and affordability are important issues, said Benjamin Longstreth, senior attorney for the Natural Resources Defense Council's Climate and Clean Energy Program. But that doesn't mean older systems are the solution. "Not solving the problem of climate change, obviously, imposes extraordinary costs as well," he said.

"We are glad to see that AGA is working to come to terms with the need to decarbonize and the implications for the gas system," Longstreth added in an email. "It is clear that the sector will have to change significantly to do so. We look forward to digging into their report."