The “Wicked Problem” of Transitioning Off of Natural Gas
Global cities that are committed to some version of carbon neutrality by 2050 have a daunting set of challenges to figure out. Chief among these is how to eliminate the use of natural gas as a fuel for electricity generation and building heating.
In most cities, buildings are the main source of Scope 1 and Scope 2 greenhouse gas emissions. In dense cities, the building share of emissions can easily exceed 75%. These emissions typically come from three sources:
- The electricity consumed by buildings for lighting, HVAC, plug loads, etc. The fuel source of the emissions depends on the emissions factors in the regional electrical grid. In New England, this is mostly natural gas. In other regions, there will be more emissions from coal and fuel oil.
- Space and hot water heating. Most of these emissions are typically from natural gas, which is the dominant urban thermal fuel. Fuel oil is a larger factor in residential buildings with older oil furnaces.
- Cogeneration. Many larger buildings and campus-style operations (health care, higher education) use on-site combined heat and power (CHP) systems to provide a combination of cooling, steam heat, and electricity generation. Most of these systems are powered by natural gas.
There are several basic strategies for eliminating building-based carbon emissions.
- Reduce consumption – implement energy efficiency measures to radically reduce the amount of energy used.
- Clean the grid – take carbon out of the generation sources for the regional electricity grid by substituting renewable energy for coal, oil and natural gas. (Unless a city has its own utility, this process will take place through state-level policy and market changes.)
- Make or buy your own clean energy – generate renewable energy on-site or purchase it through Power Purchase Agreements.
- Renewable thermal – convert from fossil fuel heating sources to non-carbon sources of heating, such as heat pumps powered by renewables, or sustainable biogases.
When taken to their logical conclusion at scale in a “2 degree world,” these strategies sum to an elimination (or at least a radical downsizing) of the natural gas industry over the next three decades. (Yes – 2050 is not that far away!)
So far, though, there is no clear roadmap for this transition in the US, and it presents a set of “wicked” challenges.
- Limited city control. Most cities have little or no control over natural gas supply systems. Decisions about building new pipelines are mostly made at the federal level through the Federal Energy Regulatory Commission. The only thing cities control is the demand side. They can reduce/eliminate demand for natural gas, but they cannot affect its availability as a fuel source. How do cities support a natural gas transition strategy when they have so little influence on supply? In addition, cities have little control over the cleaning of the grid. But a building electrification strategy only makes sense if the buildings are using clean electricity. How do cities synchronize these two strategies to make sure that you get the desired GHG reductions?
- No clear incumbent business model. In most of the other sectors involved in deep decarbonization, there is some kind of successor business model that allows incumbents to adapt to the market and re-purpose their old assets in a new way. Distribution utilities can still make money by moving electrons, even if those electrons now come from renewable sources. Generators can plan a transition of their generation assets from fossil sources to renewables over successive asset replacement cycles, and still stay in the generation business. Automotive manufacturers can replace internal combustion engine powertrains with hybrid and battery powertrains. But natural gas is different. There is no obvious way to reuse natural gas production and distribution assets. Some very small portion of distribution pipelines might be re-purposed to move “green steam” or “green gas” but that will be a miniscule fraction of the existing market. What happens to these “stranded assets”? How do cities enforce their retirement and who pays for it?
- Long asset lifecycles. Natural gas distribution assets have very long useful lives – often in the 30-50 year time scales. So a pipeline that is built today will still be alive and well in 2050. How do we create short-term continuity of supply without locking ourselves into long-term carbon assets? And again, who pays for any stranded assets in the future? A similar dilemma exists for individual buildings – what is the asset replacement cycle of heating systems and how do you set up the economics so that it makes sense to replace a fossil-fuel based system with a renewable fuel-based system?
- Improve or transition? Some natural gas powered energy systems represent large improvements over legacy systems. Natural gas residential furnaces are far less polluting than oil furnaces. And CHP systems powered by natural gas can in the short term bring large efficiency improvements. But at some point in the asset replacement cycle, you are locking yourself into a carbon source that will be functioning well beyond your target date for carbon neutrality. When do you stop improving the old system and transition to new technologies?
Many of the world’s “climate innovation lab” cities are deep in the details of working out the answers to these dilemmas. But so far, there is no clear “pathway” for managing the natural gas transition that does not result in serious economic and political stress. Figuring this out is one of the big climate mitigation challenges.
