The world's evolving transition to low-carbon energy has challenged the global market, the U.S. natural gas industry and investors.

Gas utility operators are poised to become bigger players in the renewable natural gas market in 2022 as customers expand commitments to procure low-carbon fuels. Utility executives touted the volumes of renewable natural gas, or RNG, flowing through their distribution networks and promoted project portfolios during quarterly earnings conference calls.

For some gas distributors, new state policies promoting low-carbon fuel use presented opportunities to start or increase RNG purchases, executives said.

Amid dire warnings about climate change and a growing building electrification movement, RNG has become a critical decarbonization pathway for gas utilities. RNG facilities produce fuel from methane waste sources, such as farms and landfills, capturing and using planet-warming emissions that would otherwise escape into the atmosphere.

"We expect the momentum and demand for RNG to continue as many of our customers, including residential, commercial and industrial transport customers, look to reduce their emissions," One Gas Inc. COO Curtis Dinan said during a Feb. 24 conference call.

At the same time, natural gas utilities reassured investors that they are here to stay. "I'm here to tell you that those two ideas — affordable energy and a cleaner planet — are not in conflict," Southern Co. Gas Chair, President and CEO Kimberly Greene said during a March 4 virtual address. "We can achieve an equitable and sustainable energy future while maintaining resiliency and reliability. We will do that by harnessing the potential of America's natural gas utilities and the infrastructure that we operate."

As the electrification movement continues to expand, the American Gas Association, or AGA, has highlighted customer growth among the gas distributors that it represents. The trade group recently said the industry can grow its customer count by 25% through 2050 even as the industry and the broader U.S. economy take steps toward net-zero greenhouse gas emissions.

AGA President and CEO Karen Harbert said the gas ban movement had sparked a countermovement with at least 20 states passing laws to prohibit restrictions on gas hookups. Additionally, at least 15 states have passed laws that support the uptake of RNG among gas utilities, Harbert said.

Investors are paying attention. Billions of dollars are available for investment as the world tries to control greenhouse gas emissions from the energy sector, but finding the best bet is a challenge because the energy transition is moving so fast, private equity managers and investment bankers said at an energy industry conference.

RNG emerged as a particularly divisive option as panelists staked out their top choices for green investments March 9 at the CERAWeek by S&P Global energy conference in Houston. The fossil gas alternative offers the most immediate carbon reduction for the least cost, according to Steve Pattyn, founder and chief investment officer of Yaupon Capital Management LP. In contrast, BeyondNetZero Managing Director Rhea Hamilton saw energy efficiency as "the biggest bang for the buck," with additional potential in emerging investing in carbon markets.

Considerations beyond carbon cuts and cost will also come into play, HPS Investment Partners LLC Managing Director Don Dimitrievich said. There is not enough renewable gas to cover an appreciable portion of the demand market, nor do RNG producers have the ability to grow quickly, Dimitrievich said.

In another CERAWeek presentation, the head of the largest U.S. independent oil and gas producer said the war in Ukraine has emphasized the need for a careful transition to low-carbon energy.

ConocoPhillips Chairman and CEO Ryan Lance said the European crisis is a lesson that moving to cleaner forms of energy to control climate change cannot be a "cliff transition," suddenly eliminating high-carbon fossil fuels instead of keeping a robust portfolio that has enough energy to run the global economy and survive disruptions.

Lance said natural gas could be the key to immediate cuts in greenhouse gas emissions if methane leaks can be corrected. "Gas is going to be more than a bridge," Lance said. "It's going to start displacing some of the coal in the world today in order to meet some of the emissions and nationally determined commitments."

Climate change "is solvable, and we're making progress, and we're going to make more progress in the coming years," Lance said.

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