States that want to effectively adopt rules to encourage industry to reduce carbon emissions would fare well by adopting a holistic approach, according to an executive with the Coalition for Renewable Natural Gas.
NGI’s Leticia Gonzales, Price and Markets Editor, recently shared a microphone with Dana Adams, the legislative policy manager for the Coalition for Renewable Natural Gas, aka the RNG Coalition.
Adams offered insight in NGI’s Hub & Flow podcast into what legislative work is underway across the nation as states adopt “clean heat” policies.
“A clean heat standard, or a CHS, is a policy framework that reduces and regulates emissions from the thermal sector by incentivizing the adoption of several types of measures,” Adams said.
“This may include incorporating cleaner fuels, such as RNG, into the gas system, or incentivizing carbon capture and storage. It really depends on the policy and the location, but they usually include several different pathways to achieve emissions reductions in the thermal sector.”
All-Of-The-Above
The states “where these policies really excel is…an all-of-the-above approach,” Adams said. “We think that all of the tools in the toolbox, or a holistic approach, to decarbonization is the best method because we have to think about decarbonization and emissions reductions in the near and long term…
“There are certain infrastructure changes that will be required to achieve these goals. But there is technology that we can roll out today, such as RNG, by injecting it straight into the gas system.”
States that are leading on some clean heat initiatives include Minnesota and Vermont, according to Adams.
Minnesota in 2021 passed the Natural Gas Innovation Act, which has since been “fully implemented,” Adams noted. The law “provided incentives for gas utilities to innovate their gas mix, basically.”
Specifically, the Natural Gas Innovation Act allows a gas utility to submit an “innovation plan” to the Minnesota Public Utilities Commission for approval. The plan may propose the use of biogas, RNG, power-to-hydrogen, power-to-ammonia, carbon capture and utilization, strategic electrification, district energy and energy efficiency.
Minnesota provides “incentives to incorporate innovation, such as procuring RNG or utilizing carbon capture technologies as a part of their infrastructure,” Adams noted. “It also provided the benefit of requiring a certain amount of ratepayer dollars to be invested back into these sorts of clean technologies.”
Minnesota-based Xcel Energy, for example, has tasked Worley Ltd. with determining whether its U.S. natural gas pipeline network could inject and blend hydrogen into its system. Xcel also has natural gas infrastructure in Colorado, Michigan, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. It serves 3.7 million electricity customers and 2.1 million natural gas customers.
Meanwhile, Vermont in May implemented The Affordable Heat Act S.5. The policy establishes a CHS, with utilities receiving credits for energy efficient technologies. The utilities have to pay if they don’t meet certain goals.
“This one is really interesting because it's not only among the first in the Northeast, but it also incorporates several different clean heat measures to achieve decarbonization,” Adams said. These include “measures such as procuring clean energy like RNG, weatherization practices. and even advanced wood-burning technologies, for example.”
Vermont uses an “all-of-the-above approach, and you can mix and match these approaches. Utilities participating in this program can generate credits, so it also creates an incentive for participants to continue to decarbonize.”
The policy’s enactment in Vermont has set off a two-year process to design the program, including opportunities for public engagement, as well as studies to better understand the associated costs. In 2025, the Minnesota Legislature could vote again to authorize the program to be implemented. If approved, it could be implemented in 2026.
Colorado adopted a CHS in 2021. To show that they are meeting targets, the state’s natural gas utilities are required to file clean heat plans, or CHPs, beginning this year. According to regulators, the CHP “may include a mix of supply-side resources, which replace traditional gas and demand-side resources, which reduce the gas customers use.”
Maryland is working on a CHS as part of its move to reduce emissions. The clean heat choices to be used by utilities would include weatherization, electric heat pumps and low-emission fuels.Where a state is located may determine what energy resources could be made available, Gonzales noted. Vermont may have abundant wood-burning resources but no natural gas. Other states, like Texas, have an overabundance of available energy resources, such as natural gas, oil, coal and alternative energies like solar and wind. In Massachusetts, there are a “couple different active proposals for CHS in legislation,” Adams said.
Challenging CHS Policies
Broader challenges face supporters of incorporating clean heat resources.
“There’s a debate over whether we should electrify or electrify some and maintain the natural gas infrastructure,” Adams said of the various opportunities facing clean heat supporters. “There’s a misconception that it has to be an all-or-nothing approach…This is something that we see in certain states, such as New York, where there is a stronger preference for electrification.”
New York is set to ban natural gas hookups in new residential buildings by the end of 2025. A similar ban was enacted in New York City that is set to begin in 2027. California also is working to phase out natural gas use.
RNG Is One Path
Some of the CHS standards implemented or proposed by states include RNG. Some don’t. Educating the public about the options is valuable, the RNG Coalition executive noted.
“You have to get to the education piece…to really point out what these policies are and how best to achieve overall decarbonization, because you can…
“For example, you can electrify buildings, but you have to build out that infrastructure, and that takes time. There are options that we can use in the near term, such as using renewable fuels in the gas system to decarbonize today.”
The RNG Coalition has educational resources available to help advance various approaches too.
Asked how RNG fits into the CHS approach, Adams said all of it boils down to reducing emissions. And reducing carbon emissions can rely on myriad approaches.
“There’s definitely no question that we need to reduce emissions…There’s also going to be a cost to doing this as well. So one way is to bring developers and pipeline operators to the table to discuss how we can achieve these goals.”
The end game should be to “create cooperative policies that provide mechanisms for cost recovery or even tax-based incentives that defray the cost of implementing or procuring RNG, either itself or the infrastructure,” Adams said.
“These are policies that many states are currently considering because they recognize that. This is something that has to happen as a part of the energy transition. But there is a real cost. And how can we best defray those costs to meet those goals?
“You will have a much greater buy-in to these programs if you use incentives instead of mandates,” Adams noted.
While U.S. states are implementing policies individually, Adams said it was “really fascinating to see what other countries are doing.”
“We like to point out Denmark as…a leader in the energy transition.” RNG is in the country’s “green gas roadmap” to “show that there is a long-term place for these gasses in the clean energy transition.”
In Denmark today, an estimated 37-40% of its gas mix is biogas.
“Their landfill rate is only about 5%,” Adams noted. “So they are utilizing their waste streams to create RNG to offset their fuels. And they’re decreasing it over time…They project that they’re going to achieve about 100% RNG in their mix by about 2030.”
