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Biden’s $2 Trillion 'American Jobs Plan': What does it mean for the future of Natural Gas?

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Charles Crews's picture
President | Principal Consultant, FPH Consulting Services, LLC

Charles Crews is the president and principal consultant of FPH Consulting Services and actively leads the firm's consulting engagements across a broad spectrum of operations management issues. ...

  • Member since 2021
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  • Apr 7, 2021

President Biden made his first visit to Pittsburgh as president this week to unveil the long-awaited physical infrastructure portion of his ‘Build Back Better’ plan now headlined the ‘American Jobs Plan’.  Many agree that the proposed plan will be the largest investment in infrastructure in at least a generation.  It is a plan that ambitiously supports robust clean energy upgrades, investments in EV charging stations, broad replacement of lead water pipes, and continued expansion of 5G telecommunication networks.  Yet during his remarks on Wednesday and in documented plans thus far, there is no specific endorsement for natural gas spending. 

This could be inspired by the new administration's bullish position on climate and clean energy reform with $46 billion earmarked for clean energy manufacturing and another $35 billion in climate-related R&D.  It follows an earlier position taken by the President on his first day in the White House when he revoked the Keystone XL Pipeline cross-border permit, which has flipped-flopped through the past two administrations beginning with President Obama in 2012 (see Keystone XL Pipeline Political Timeline).

Of course Biden’s swift executive overturn of Keystone was not surprising given that the general party consensus for the project and others like it (e.g., Dakota Access Pipeline) have Republican support and Democrat opposition.  But collectively disapproval of Keystone and the absence of natural gas in the AJP could underscore a commitment to address acute climate change needs by blocking advancement in all fossil fuels. 

So, the question remains what the future holds for natural gas.  The answer could signal challenges for the industry and it could be equally challenging for our energy future.

Can natural gas still be a gateway to a cleaner future?

The short answer: It already has been and is well-positioned to be for years to come.  The challenge: Will political leaders focus on what is good for the long run or just their election cycles?

Natural gas, the nation’s lowest-carbon fossil fuel, has been a key driver of cleaner energy over the past decade with domestic carbon emissions down 15% since 2005.  The International Energy Agency has credited natural gas with helping the U.S. become a global leader in reducing CO2 emissions.

The disruptive impact of greenhouse gas emissions is undeniable and became a global concern more than 30 years ago following severe drought, flooding, and vast fires in many parts of the world.  The United Nations Framework Convention on Climate Change set 1990 as a benchmark year to measure the world’s progress towards a cleaner energy future.

Between 1990 and 2007, U.S. energy-related CO2 emissions grew by an average 1.0% per year totaling 57 million metric tons which is equal to 12 million passenger vehicles driven for one year.

Since peaking in 2007, emissions have declined 1.3% per year and in 2019 the decline was 2.9% compared to 2018 – one of the largest reductions in the past three decades.  And since 2007, natural gas consumption has increased by an average of more than 2.5% per year with production increasing 5% over this same period.

So as gas production and consumption have increased, carbon emissions have actually decreased.  This has largely been driven by shifts in electricity fuel mix with natural gas becoming the predominate source for power generation in 2016.

Demand for natural gas is as high as it ever has been.

The need for natural gas was front and center this past February during a polar vortex that left more than 4.5 million Texas homes and businesses without power for several days.  The unprecedented energy crisis in the ERCOT region was seen around the world and while the cause of the crisis is multi-faceted, there is one thing that all energy experts agree and that is how critical the natural gas system is to the state’s energy reliability.

In broader terms, the demand for natural gas has steadily increased over the past two decades.  In 2019, zero-carbon and natural gas-fired power generation increased while coal continued to decline.  Just a few years ago (2018 to 2019), the share of natural gas generation jumped from 35% to 38%.  Conversely, coal-fired generation precipitously declined to 23% which is dramatically down from its 50% share of electricity from 1990 to the mid-2000s.  In 2020, coal, the once predominant U.S. electricity fuel source, was less than nuclear for the first time since 1949.

The reduction in carbon intensity of fossil fuel generation has played a substantial role in the energy-related CO2 emissions decline in the past 15 years.  As technological advancements continue in wind, solar, and hydro energy, emissions will continue to decrease.  The growth of renewable energy is exciting with wind reaching a significant milestone in the final months of 2020 when U.S. generation from wind turbines set daily and hourly records.

But will renewable energy growth be enough in the next 15 years to reliably power the nation’s grid?

Despite a remarkable achievement for wind power in 2020, construction of wind turbines is expected to slow with the Production Tax Credit (PTC) set to expire at the end of 2024.  Grid-scale solar investment will also feel an impact as the Investment Tax Credit (ITC) percentage rolls back from 30% to 10% in 2023.   Financial incentives, like these, are highly effective tools to inspire utility investments in grid decarbonization.  The changes in these policies create uncertainty during a time of heightened electric reliability concerns from state commissions and consumers.

Meanwhile, demand for natural gas is expected to intensify following recent record-breaking throughput and will remain constant from now until 2050.  This brings into clearer focus the nation’s energy portfolio over the next 10 to 15 years.  S&P Global Market Intelligence helps to put this into perspective.  According to the highly respected data, research, and analytics provider, in order to achieve 100% clean electricity by 2035 it is estimated that 4.8 billion MWh of natural gas, coal and oil generation would theoretically need to be replaced by then.  With less than 40% of U.S. power generation from carbon-free sources today, capacity additions from solar, wind, nuclear, and hydro would need to increase 200% from their all-time peak capacity of 1.6 billion MWh in 2020.

The potential suspension of natural gas investments coupled with policy-driven shortfalls in renewable energy investments could leave millions of American households susceptible to power outages during peak demands and significantly increased prices.  Nearly 70% of ERCOT customers lost power during the catastrophic winter storm in February and wholesale electric prices jumped as high as $9,000 per MWh compared to the more typical $50 per MWh.

“Success is a journey, not a destination.  The doing is often more important than the outcome” – Arthur Ashe

When the late tennis great and humanitarian Arthur Ashe shared these insightful words some 30 years ago, he wasn’t likely reflecting on climate change solutions.  However, his words are indeed relevant here because as the world fixates on 2050 it is important to consider the pathway to get there.

In 2020, natural gas prices were the lowest they had been in decades.  The U.S. Energy Information Administration (EIA) projects only 0.5% annual growth in the residential price of natural gas from now until 2050.  According to the American Gas Association, the low cost of natural gas has saved families a total of $143 billion over 10 years and has led to $121 billion in savings for American businesses since 2009.  Natural gas is abundant, accessible, and affordable for all Americans.

Affordability is important as history has shown us that communities in low-income zip codes carry the heaviest economic burden during times of national policy transitions.  As a percentage of income, households that are classified as “low-income” pay up to three times more than the average household on home energy costs.  The benefits of decarbonization must reach these vulnerable communities as the transition occurs rather than after it happens.  From urban inner-cities to hard-to-reach rural areas, utilities and governments must coalesce around a balanced energy plan that leaves no one behind particularly coming out of the COVID-19 economic downturn.

Investing in natural gas infrastructure should not be a competing priority but instead an enabler for renewable energy growth and a cleaner future.

A climate-aware infrastructure bill is the right thing for America and now is the right time.  The route taken to 2050 must interconnect a clean electricity standard with energy equity, skill trade job creation [and retention], grid reliability, and consumer affordability.  Those priorities should not be competing.

Significant progress has been made over the past 15 years to replace aging gas infrastructure.  Natural gas utilities have accelerated replacement efforts which have largely been driven by safety and as modernization programs continue, these investments also build infrastructure that can carry hydrogen and renewable natural gas (RNG)that will further help reduce greenhouse gas emissions.  These renewable energy sources are currently undervalued but companies like Northwest Natural, Dominion Energy, and DTE are bringing RNG onto their systems and there are at least seven U.S. hydrogen projects being piloted by utilities in 2021.

Governments, utilities, and clean energy interest groups must work together to embrace inclusive ideas to optimize natural gas rather than immediate shift away from it.  An agenda to address climate change that advances energy equity should include natural gas given its reliability, safety, and affordability.  Such an agenda may not explicitly exist today but with forward-thinking bipartisan leadership and science, such a plan is possible.

About the Author: Charles Crews is a utility executive and management consultant who helps clients develop operations management and continuous improvement strategies.  Charles has spent the past three decades working in the utility industry in engineering, front-line leadership, and executive management positions including his last role as vice president for one of the nation’s largest investor-owned utilities.  Follow him here at LinkedIn.

Matt Chester's picture
Matt Chester on Apr 7, 2021

The benefits of decarbonization must reach these vulnerable communities as the transition occurs rather than after it happens. 

This is an important point-- it's not a can to be kicked down the road. While there's much debate as to the best method to achieve this, it's great that the conversation has become very mainstream and it appears to be an important one to those creating the energy policies for today and tomorrow

Charles Crews's picture
Charles Crews on Apr 12, 2021

Thanks Matt.  There are certainly differing perspectives (which is good) on how to best address climate change (as seen in the comments below).  The good news is that it has indeed become mainstream.  As industry professionals, we need to discuss it in a way that is consumable for those outside the industry.  Energy literacy is so important and Energy Central can certainly help.

Bob Meinetz's picture
Bob Meinetz on Apr 7, 2021

"Investing in natural gas infrastructure should not be a competing priority but instead an enabler for renewable energy growth and a cleaner future."

Charles, natural gas is the largest source of emissions from generating electricity in the U.S. (57% more CO2 than coal), and consumption is rocketing skyward. Dependence on a fuel that is "better than coal" is not good enough - not even close - and renewable energy is only making us more dependent on it.

If we're serious about addressing climate change, the first step is to stop replacing nuclear plants with gas plants. As transportation and home heating become electrified, nuclear power has the potential to eliminate dependence on all fossil fuels - oil, coal, and gas.

Within the next 100 years, after irrational public fears from Fukushima and Chernobyl have subsided, the U.S. electrical grid will be powered by 100% clean nuclear electricity. The longer we postpone its adoption, the harder our job becomes.

If we're on a bus that's hurtling toward the edge of a cliff, our salvation lies not in transferring to a slower bus.

Charles Crews's picture
Charles Crews on Apr 8, 2021

Bob, first thank you for your comment.  I really appreciate your time and thoughtful perspective.  Provided here are a few responses to some of your key points.

“…natural gas is the largest source of emissions from generating electricity in the U.S. (57% more CO2 than coal)…”

In 2019, 46% of U.S. energy-related CO2 emissions came from burning petroleum fuels which was the largest source of emissions.  For power generation, coal was the dominant source accounting for 60% CO2 emissions.  In both cases, natural gas was not the largest source.

Let’s now put the 57% into more perspective.  In 2019, 33% of CO2 emissions came from consuming natural gas and 21% from coal (difference between the two percentages is indeed 57%).  If both fuels were equally consumed, the 57% difference would certainly be concerning.  However, natural gas represented 32% of U.S. energy consumption compared to coal at just 11%.  Nearly 200% more natural gas was consumed than coal so in fairness the 57% is somewhat out of context.

“…the first step is to stop replacing nuclear plants with gas plants… U.S. electrical grid will be powered by 100% clean energy…”

The nuclear versus natural gas discussion continues to be shaped by environmental and economic terms as well as risk.  I’ll concede that nuclear plants are cleaner than natural gas given they do not emit CO2.  That along with their high capacity factor make them a formidable energy of choice.  The challenge to entirely shifting to nuclear plants is cost and risk, which are pretty heavy.  The cost to build a new nuclear plant is ~$110+ per megawatt hour compared to natural gas at say ~$40.  The more difficult challenge is the very real existence of nuclear waste.  Despite the nuclear industry’s technological advancements in waste disposal, the concern of its prolonged radioactivity still remains.  Is it worse to have zero emissions with radioactive waste or have reduced emissions from natural gas that will be supplanted by renewable energy?

I’m not an absolutist when it comes to natural gas.  I’m more of a pragmatic and believe climate change will be much more difficult and expensive to solve without both natural gas and nuclear together.

Finally, I love the bus analogy.  I offer this… direction is so much more important than speed, you just need to slow down long enough to see the path that leads away from the edge of the cliff.

Thanks again for the comment.

Bob Meinetz's picture
Bob Meinetz on Apr 9, 2021

Charles, thanks for your response.

"The cost to build a new nuclear plant is ~$110+ per megawatt hour..."

What's the source of this figure? Based on historical data it's more than an order of magnitude too high. An example: the capital costs of Diablo Canyon Power Plant, built in 1985, were $5.4 billion. Since the plant came online, it has generated ~600 million MWh of energy:

$5,400,000,000 / 600,000,000 MWh = $9/MWh

and that's only for its first 40-year licensing period.  Plants built today have life expectancy of at least twice that.

"The more difficult challenge is the very real existence of nuclear waste..."

If you consider not a single human, animal, nor plant has been harmed by spent nuclear fuel, you'll understand its dangers to the public are more the product of fertile imagination than fact. Part of the reason for that is its compactness, a benefit I can best illustrate by another example: If all the electricity I consume during my lifetime was generated by nuclear power, its waste would fit inside an empty Coke can.

Though it's compact, spent fuel will indeed remain dangerous for hundreds of years. It could be buried in deep, stable geologic reservoirs, but it isn't - not because it's too expensive or impractical, but because spent fuel is too valuable. Only 5% of the fissile uranium it contains has been consumed, and the smart people who design and build nuclear reactors are optimistic about future generations. They hope our descendants might be smart enough to recycle spent fuel, and extend its life for centuries.

If you argue our descendants will be too stupid to recycle spent fuel, I'd have a hard time disagreeing with you. That may be humanity's biggest challenge.

Bob Meinetz's picture
Bob Meinetz on Apr 9, 2021

"Finally, I love the bus analogy. I offer this… direction is so much more important than speed..."

Because reducing CO2 emissions is our only option for fighting climate change, the steering column on our bus is broken - the only directions are Forward, Reverse, and Stop (apologies for tortured metaphor).

Mark Silverstone's picture
Mark Silverstone on Apr 7, 2021

Thanks very much for accurately describing the role for natural gas in providing affordable power during the energy transition. However, I do take some exception to this point:

"Despite a remarkable achievement for wind power in 2020, construction of wind turbines is expected to slow with the Production Tax Credit (PTC) set to expire at the end of 2024."

Once the first US offshore wind projects come on line in the  next couple of years, the affordable and more reliable power and sustainable jobs they generate will stimulate further investment, regardless of federal tax credit legislation.  If necessary, individual states will see to it that those industries get established and sustained through their own tax and other economic policies.

In addition, the cost and practicality of storage may well hasten a much reduced need for gas beyond the late 2020s.

I question the significance of the International Energy Agency´s figures for US "domestic carbon emissions". I am skeptical that greenhouse gas emissions, as opposed to carbon emissions, are "down 15% since 2005", or even close.  The very natural gas industry that is providing the alternative to coal has needlessly spewed out methane (pound for pound at least 25x more powerful greenhouse impact than CO2) at an unknown rate, both accidentally and purposely, none of which is well quantified, documented or included in these figures, especially over the last four years.  Add to that the release of HCFCs and other gases that are up to thousands of times more potent greenhouse gases and the 15% carbon gas reduction is substantially less meaningful.  See the spreadsheet here (under "Download our complete CO2 and Greenhouse Gas Emissions dataset".)  It is imperative that not only the calculated carbon, but the actual, greenhouse gas emissions are included in the calculations and that strict controls are put into place.  After all, the atmosphere knows perfectly well what has been going on.

The real challenge, it must be noted, is to get the rest of the world, especially lower income countries, to steer away from carbon intense buildup of power sources.  The technology that the higher income countries are developing and just beginning to deploy, must become available and affordable, to all.   It will do no one much good if the US, Japan and Europe, and even China, get to net zero while the rest of the world is left with only trees and coal to burn, not to mention the release of CO2 from rich carbon sinks now stored in peatland and rain forests.


Bob Meinetz's picture
Bob Meinetz on Apr 7, 2021

"In addition, the cost and practicality of storage may well hasten a much reduced need for gas beyond the late 2020s."

Mark, do you really think it's prudent to adopt a strategy of slowing or halting climate change that is completely dependent on "renewables + batteries" - a combination that has never powered a single grid, state, or municipality in the world?

Because right now, that farfetched dream is only increasing our dependence on natural gas, the fuel you (correctly) note is

"needlessly spew[ing] out methane (pound for pound at least 25x more powerful greenhouse impact than CO2) at an unknown rate, both accidentally and purposely, none of which is well quantified".


Mark Silverstone's picture
Mark Silverstone on Apr 9, 2021

My view of the oil & gas industry is not through the rose tinted glasses through which you view the nuclear industry.

I am in favor of holding the oil & gas industry accountable for the obvious abuses to which they subject their employees, customers and neighbors.   I realize that we have to live with the oil & gas industry for the immediate future,  regardless of anything you or anyone else can suggest.  After all, the oil age has been the very foundation of our society for a century.  Nothing less than rebuilding that foundation is necessary.  But, we can see the beginning of the end of the oil age already. I think we have not yet really taken on board, what with the pandemic, the tectonic shift in that direction that has occurred in the last few years.   There may always be a need for fossil carbon, though not to burn it!  

There may well be a place for nuclear, but not until it solves its problems, the first of which is that it does not recognize its own problems.    Regulatory and customer relations nightmares follow from that failure,  before we even consider the engineering ones. 

As the oil industry, the nuclear industry is populated with bright engineers who, at times, perform apparent magic.   Unfortunately, those very same people, perhaps not coincidentally mostly men, are victims, as are we, of their own hubris. All too often they  fail to sufficiently imagine what could possibly go wrong with their clever constructs, which then go wrong with regularity and, far too often, spectacularly.  

This is a very old story which will continue in one form or another unless, that is, Homo sapiens either learns to govern the magic or we revert to a version of our hunter-gatherer origins. 


Charles Crews's picture
Charles Crews on Apr 12, 2021

Mark, first thank you for your comment.  Energy Central is a great forum for thoughtful, respectful, and insightful industry discussion.  Here are a few thoughts in response to your comments.

Given the relatively recent development of offshore wind in the U.S., I appreciate your optimism over the next couple of years.  Certain provisions in the relief bill do allow greater tax credit flexibility for qualified offshore wind facilities and I actually think it is this that creates even a heavier reliance on either the PTC or ITC to keep momentum.  The 30% ITC created for offshore projects (through 2025) is a boost and given the history of tax credit dependencies so far, I just don’t see much wind development without it.

As for the IEA study, I don’t think it can be so easily marginalized when you consider the impact of fuel switching between coal and natural gas.  Without the coal-to-gas switch in just the last three years, emissions would have been 15% to 20% greater.  Moreover, GHG and CO2 emissions go hand-in-hand.  Between 2018 and 2019, the decrease in total GHG emissions was largely driven by the decrease in CO2 emissions from fossil fuel combustion, which was the result of a decrease in total energy use and a continued shift from coal to less carbon intensive natural gas and renewables.

Methane emissions from natural gas operations are concerning and minimizing them is a top priority for the industry.  That’s why natural gas transmission pipeline and underground storage operators have worked hard to drive down methane emissions from large compressor stations by 23% from 2011 to 2017 [during a time where the number of compressor stations reporting the data increased].  This contributed to a total transmission and storage related methane reduction of 44% since 1990.  Local distribution companies are doing their part as well spending replacing aging infrastructure that will enhance safety and further reduce fugitive methane emissions.

The release of HCFCs, as you also point out, has also been a concern and with most being phased out (100% HCFC phaseout targeted for 2030), there is some optimism on the horizon [pun intended].

Kent Knutson's picture
Kent Knutson on Apr 12, 2021

Charles, thanks for sharing this thought-provoking article.  The comments are very spirited and informative.  Thx again for sharing. 

Charles Crews's picture
Charles Crews on Apr 14, 2021

Thanks Kent.  Spirited discussion indeed which is so welcomed.  Discussions about the future of our energy are so vitally important.  We need rich and honest dialogue (less division) such as this.  We just have to dutifully listen and respectfully engage in it.  Good stuff and glad we connected on LinkedIn.

Charles Crews's picture
Thank Charles for the Post!
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