By Michael Brooks

WASHINGTON — In the context of decarbonization and climate change, natural gas has often been talked about as a “transition” or “bridge” fuel: a temporary, imperfect (and cheap) way to wean the power sector off carbon-intensive coal while renewables and storage catch up to scale.

But panelists at the National Association of Regulatory Utility Commissioners’ Winter Policy Summit last week instead spoke about how soon the industry, along with other sectors, will wean off gas.

Extra chairs were needed for the standing-room-only audience listening to former FERC Commissioner Cheryl LaFleur moderate the panel about the future of natural gas “in a carbon-constrained world” on Feb. 10. It was one of the first panels of the summit, and it was difficult to say whether there was an intense interest in the subject or, as fellow moderator and New York Public Service Commissioner Diane Burman joked, everyone was there just to see LaFleur.

Panelists seemed to generally agree that while demand for gas worldwide would remain steady, its use as a power and heating source will decline in the U.S. as renewables continue to penetrate the grid faster than anticipated, more states look to electrify buildings and the cost of alternative fuels comes down. Gas is here to stay, but its usage will change.

“Natural gas has a really complicated relationship with climate change,” LaFleur said. “On the one hand, natural gas has been lauded as an environmental hero,” not only because of lower emissions but also lower waste and particulate matter than coal. “On the other hand — increasingly, I think — gas is being characterized by many as an environmental villain. …

“I used to say … over the last 10 years, the zeitgeist has changed, where it went from gas as a hero to hearing more about the negatives of gas. But … both views of gas are very much alive and well today.”

Neither Villain nor Savior

Unsurprisingly, representatives of Shell Oil and Southern California Gas cautioned against the villain narrative.

Jason Klein, Shell’s vice president of U.S. energy transition strategy, pointed out that while coal is on its way out as a power source in the U.S., coal-fired power plants are still being built in many developing countries. Klein, also vice president of his company’s LNG team, said the U.S. needs “to help the rest of the world with our LNG exports to reduce their coal consumption.” LNG is also a cleaner fuel for shipping than fuel oil, he said.

“I find it increasingly not useful to talk about gas as a ‘transition fuel’ if you’re not talking very specifically about where you need it,” said Sarah Ladislaw, senior vice president for the Center for Strategic and International Studies’ Energy Security and Climate Change Program. “Where in the world are we talking about gas having a greater role in the energy mix going forward? Because every country around the world uses gas differently.” She pointed to a report written by her colleague, Nikos Tsafos, that discussed the complexity of global gas usage, concluding that it’s only environmentally useful in certain markets, mainly those in Asia.

“Gas is not a climate savior, but it also is not going anywhere any time soon,” Tsafos concluded. “This is not the golden age for gas, but it is not the dark age either.”

“Right now, the United States in the Permian Basin is flaring as much gas as the country of Libya,” Ladislaw said. “Now, we’re probably producing four times as much oil as Libya on a good day, but that’s probably not the environmental track record that we want for gas that we’re exporting from the United States.” She questioned the wisdom of long-term investments in gas infrastructure when the generation mix in 10 years is unknown.

“In my view, we’re moving in one direction only, which is the momentum is spinning away from natural gas,” said Humayun Tai, senior partner at management consulting firm McKinsey & Company. He said the discussion about gas’ future feels like the discussion in the late 2000s about whether wind power would be viable. “The question is, more fundamentally, what is going to replace gas and in what time frame?”

Whether local distribution companies and non-power sectors will transition off of gas to electrification is a question of when, not if, he said. “Is this to a 10- to 20-year transition, or is it a 30- to 40-year transition? And that makes a big difference: in the investments that you make; in the policies you think about; in the programs you want to enact.”

A Role for RNG?

Companies in Europe and Japan are increasing their funding into research and development of renewable natural gas (RNG) and hydrogen fuel as alternative fuels, Tai said. “We are looking at a breakneck speed of cost reductions and technology innovation that’s going to happen.”

Andy Carrasco, director of regional public affairs for SoCalGas, said RNG already plays a key role in his company meeting California’s many stringent environmental targets.

The “renewable” in RNG is a bit of a misnomer: It refers to methane recycled from other processes, such as waste disposal and agriculture, rather than that extracted from the ground. It and other alternative fuels became more of a focus when LaFleur asked the panelists what questions state regulators should be asking when considering gas infrastructure proposals. “Because [regulators are] mostly dependent on the people who come before them saying, ‘This is a great project,’ and then the people saying, ‘This is horrible, you should never do this.’ And that’s the record most of the time.”

It depends on the state’s stance on climate change, Tai responded. “What is your state’s view [and] the political view on what you will do about [greenhouse gas] emissions … related to gas,” especially carbon? “Until you have a defined view of that, it’s very hard to shift anywhere else.”

Tai also urged regulators to remember that the costs of RNG and other alternative fuels will come down, eventually making them more affordable than traditional gas. “That factors into the investment decisions you decide as regulators and staff on whether you allow pipelines to be approved and allow upgrades to happen.”

Given the abundance of fracked gas, LaFleur asked “what are going to be the drivers that make somebody invest in renewable natural gas?”

Klein said almost all of Shell’s RNG production is sold in California because of the state’s low-carbon fuel standard. Carrasco suggested that states should consider RNG standards similar to those for renewable generation resources.

Tai suggested that states analyze what it would take — the policies needed and the cost — for them to take gas out of the system in 15 years versus 35 years. “Of course, 15 will be trickier. But laying that out and having that discussion, rather than just focusing on the fact that there are emission reductions … could inform a lot of views [and] change a lot of views,” he said.