Study Identifies Opportunities for Gas Utilities to Advance Low-Carbon Gas Resources
Washington, DC – The American Gas Foundation recently engaged Concentric to assess enabling policies that could be used to establish regulatory frameworks for incentivizing the production and use of low-carbon gas resources at scale to achieve environmental, waste management, economic development, and other objectives. The study also examines the impact of such policies on the gas utility business model and on the gas utilities’ ability to assist in achieving public policy objectives.
“This study leaves no doubt that low-carbon gas resources and natural gas infrastructure can be a powerful tool in lowering carbon emissions while keeping energy affordable for customers” said Karen Harbert, President and CEO of the American Gas Association. “Taking full advantage of these promising fuels will require clarifying regulatory authority and aligning incentives for utilities with policy objectives. AGA will work with policymakers to ensure that these barriers do not prevent utilities from providing customers with all benefits that these fuels can provide.”
The focus of the study is to address:
- What barriers/obstacles exist in the current regulatory landscape at the state level for natural gas utilities to advance low-carbon resources at scale?
- What are the best regulatory practices to enable gas utilities to pursue carbon reduction strategies?
- What rate design characteristics could allow utilities to recover costs and earn an adequate rate of return while pursuing a long-term sustainable energy future?
- What policy changes could allow utilities to introduce higher-priced gases like RNG and hydrogen at scale into the distribution system?
The study had six key findings.
- Decarbonization policies do not have to be limited to just advancing renewable electricity.
- Legislative support and clear regulatory authorities are needed to expand the supply and demand of low-carbon gas resources at scale using gas utility systems.
- Gas utilities must educate stakeholders, including legislators, regulators and the public, on the environmental, safety and economic benefits of LCR.
- The merits of LCR should be based on regulatory mechanisms that look beyond the cost of natural gas, assessing how effective they are in achieving environmental objectives compared to other options that could be deployed.
- Policies to advance LCR must consider their resource potential at both a regional and national level, as well as the connectedness of the gas delivery system.
- Regulatory requirements, public policy objectives and resource availability require different approaches in different jurisdictions.
AGA looks forward to working with policymakers and regulators to address these findings. America’s natural gas utilities have consistently been at the forefront of innovation in providing affordable, safe, and reliable energy to customers. This study is another step in advancing these goals.
Read the full study here.
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