Southern Co. Gas would rely heavily on renewable gas and high-efficiency natural gas heating equipment to maintain its natural gas distribution system and achieve net-zero greenhouse gas emissions, according to a report.
Conventional methods for reducing planet-warming methane emissions would only get the Southern Co. subsidiary part of the way to its goal. To achieve net-zero emissions from both its operations and its customers' gas consumption, the utility would need to scale up today's trickle of low-carbon gas flows and deploy a new generation of gas heating equipment that is not now in widespread use, according to the report by consulting firm ICF.
"The identified natural gas-focused pathways include a balanced approach addressing how our utility operations and gas supply practices can be leveraged to achieve important climate goals, and that natural gas solutions provide a practical and realistic pathway that is affordable for our customers," Southern Co. Gas Chair, President and CEO Kim Greene said in a March 25 news release.
The report's conclusions reflect a strategy common among gas utilities: reimagining vast pipeline networks as carriers of renewable natural gas, or RNG, an alternative fuel processed chiefly from methane waste at farms, landfills and other sites. The report also sees a role for methanated gas made from low-carbon hydrogen and waste carbon.
Importantly, RNG trades at a stiff premium to conventional gas, and regulatory frameworks for passing on its cost to ratepayers are developing but remain limited. The report identified several policy and regulatory changes needed to support the pathways.
Reaching net-zero in gas distribution operations
The ICF study projected that Southern Co. Gas — which operates in Illinois, Georgia, Virginia and Tennessee — could reduce its methane emissions by up to 33% from 2019 levels by 2030 by deploying readily available and cost-effective options. Those include replacing old leak-prone pipe, expanding meter leak detection and repair programs, and reducing emissions during accidents and planned maintenance.
The report further concluded that the company could reduce overall greenhouse gas emissions by 28% by 2050. In addition to reducing its methane emissions, Southern Co. Gas would need to tackle its vehicle fleet emissions and run its compressors on RNG or electric power.
From there, low-carbon fuels would have to do the heavy lifting. The company would close the gap and achieve net-zero methane emissions by 2030 by producing RNG, most likely from dairy and swine farms. That would allow the company to offset its remaining methane emissions through an emissions reduction credit program.
Southern Co. Gas would also rely on RNG, hydrogen and methane offsets to achieve net-zero greenhouse gas emissions status by 2050.
The report found that subsidiaries Atlanta Gas Light Co. and Nicor Gas in Illinois would have the largest outstanding methane emissions after deploying conventional reduction strategies. However, they also have the largest potential for methane offsets within their service territories. Chattanooga Gas Co. and Virginia Natural Gas Inc. would have relatively low outstanding methane emissions but would have to look beyond their small, urban service territories for offset opportunities.
Cleaning up customers' consumption
To tackle customer emissions, ICF created four scenarios, three of which rely on RNG uptake and improved home energy efficiency.
In the first, customers install conventional efficiency gas furnaces, while the second option sees customers go one step further in adopting gas-powered heat pumps beginning in 2025. In a third scenario, electric-powered air source heat pumps operate alongside gas furnaces to create hybrid heating systems, an option usually reserved for cold weather climates.
In a final scenario, policymakers mandate all-electric heating in new buildings and require homeowners and building managers to opt for electric systems when they replace fossil fuel furnaces and boilers. Those policies are not in effect in Southern Co. Gas' operating territories, though the South does have a growing percentage of all-electric homes, according to the U.S. Energy Information Administration.
According to ICF's analysis, the high-efficiency gas technology and hybrid pathways would reduce gas demand by 23% and 45%, respectively, from 2020 through 2050. The conventional pathway would leave gas consumption virtually unchanged, while the electrification scenario would result in a 76% drop in demand.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.