Comparison of E3 Reports on Use of Combustible Gases in Buildings

by Martyn Roetter, D.Phil (Physics) Oxon

Analyses of the carbon impact or GHG intensity of various forms of methane are complex. They depend on and vary according to the details of the lifecycles of these gases from  their sources and production methods  through their delivery and storage, then the location and type of their use ( for example, direct end use through combustion or to generate electricity).

One example of the complexity of analyzing the GHG intensity of these gases can be found in the white paper, “Life-cycle greenhouse gas emissions of biomethane and hydrogen pathways in the European Union,” October 2021. This paper considers the significant resulting impact on GHG emissions from changes in land use as a result of biomethane pathways that involve large volumetric increases required to meet heating demand. Another concern about the use of biomass as a source of biofuels is whether the productivity or carbon sequestration capacity of forests will be reduced by the volume of bioenergy production and hence the rate at which this biomass will be removed compared to the rate at which it can be replenished. [1]  

The blanket statement in E3’s Future of Gas DPU Proceeding 20-80 Report—also found in some of its earlier reports reviewed below—that the various gases proposed apart from natural gas are carbon-neutral is not justified by credible analyses or empirical evidence. Yet the findings and recommendations of the Massachusetts E3 Report and the accompanying utility reports rest upon this one assertion.

This analysis covers the following E3 reports: 

1.     Pacific Northwest Pathways to 2050, November 2018

2.     The Challenge of Retail Gas in California’s Low Carbon Future, April 2020

3.    Opportunities for Low-Carbon Hydrogen in Colorado: A Roadmap, October 2021   

4.    Philadelphia Gas Works Business Diversification Study – Identifying Opportunities for Philadelphia Gas Works to Thrive in a Lower-Carbon Future, December 2021

5.    Farther. Faster. Together.  MEETING THE CLIMATE CHALLENGE WITH BOLD, STATE-LED ACTION AND COLLABORATION, US Climate Alliance Annual Report, December 2021

6.     A. Quantifying the Air Quality Impacts of Decarbonization and Distributed Energy Programs in California, and B. Societal Cost Test Impact Evaluation, January 2022

7.     The Economics of All-Electric New Construction in Utah—An evaluation of residential new construction costs and energy bill impacts for single-family and low-rise multifamily properties across the state, February 2022

Analysis and Comparison of Earlier E3 Reports to the Future of Gas DPU 20-80 Report

Referring to reports as listed above

Pacific Northwest Pathways to 2050

P.5: “Four scenarios to 2050 are evaluated, which differ in their consideration of technology pathways to serve space heating needs in buildings. Two of the scenarios maintain the direct use of natural gas in buildings (relying on gas furnaces or natural gas powered heat pumps), while two of the scenarios assume a large-scale transition and retrofitting of buildings to electric end-uses (relying on electric air source heat pumps or cold-climate electric air source heat pumps). All scenarios are constrained to achieve an 80 percent reduction in GHGs by 2050 for the Pacific Northwest regional economy, while assuming continued economic and population growth.”

 P.9-10: “We find that all scenarios that achieve deep decarbonization face significant challenges, but the types of challenges are different. Scenarios that maintain gas heat in buildings require:

Reducing the carbon intensity of natural gas use in buildings by blending in low-carbon alternatives, including up to 30% carbon-neutral renewable natural gas and hydrogen. While all of the scenarios evaluated here rely on carbon-neutral biofuels to meet the 2050 GHG goal, the use of renewable natural gas is of higher importance in the scenarios that maintain gas in buildings. Renewably-produced hydrogen or synthetic methane blended in the gas pipeline are also options to displace fossil natural gas.”

Analysis: The characterization of biofuels and renewable natural gas as carbon-neutral is stated here and repeated several times without any evidence to justify it, in contrast to the Future of Gas 20-80 Report that refers to the Massachusetts GHG Inventory. There are no atmospheric measurements of methane in the inventory, rather methane levels are estimated based on a discredited algorithm.

Also on P.10: “Additional reductions in other sectors to offset higher emissions in the building sector. In these scenarios, additional reductions are achieved primarily through electrifying 30 percent of industrial sector energy.”

Analysis: This statement is a different twist on the future of gas. We have been saying that future uses of gas should prioritize or focus on applications that are hard or even impossible to electrify, including industrial processes. In this case, E3 is saying that in order to meet overall emissions goals and continue to use gas in buildings, some industrial applications will have to switch to electricity.

This report also includes considerable discussion of the electricity sector, which is presented as key to deep decarbonization. A forecast of a requirement for substantial additional peaking capacity from natural gas plants is included.

 P. 64 (emphasis added) “For this analysis, we simulate the electricity sector under a carbon budget. The carbon budget defines a maximum amount of carbon that the electricity sector can emit. The greenhouse gas accounting convention reflects a consumption-based approach, in which the emissions attributed to the region includes in-region generation, external resources owned by utilities which serve load within the region, and unspecified imports to the region, based on a deemed emissions rate of 0.43 tons/MWh.”

Analysis: This consumption-based approach to greenhouse gas accounting is not applied to the renewable gases that are forecast to have to be imported from outside Massachusetts in the Future of Gas 20-80 Report. According to Eversource’s LDC Report considerable power from renewable energy sources will be required to produce green gases in other states. A major concern or fear being stoked by the LDCs is whether it will be possible to install enough renewable energy capacity over time to replace fossil fuel plants and increase total electric power generation capacity, given solar panels’ and wind turbines’ requirements for land or ocean space, along with additional grid infrastructure, as well as delays and potential rejections during lengthy permitting processes.

Yet at the same time the LDCs and E3 are arguing for the manufacture of large volumes of gas that will make the siting challenge even more formidable. Moreover, burning gases in buildings has a lower overall energy efficiency for providing heat compared to heat pumps, a point that E3 acknowledges in its 20-80 Report. In the overall scheme of things continued use of combustible gases will limit or reduce the benefits of reducing demand for energy in buildings through improved building envelopes. In general, the LDCs are fond of emphasizing factors that may appear superficially favorable for gas while ignoring those that are not. They fail to analyze their pro-gas factors further by delving into their second- and higher-order consequences or considering their interactions with or implications for other factors in the complex ecosystem of energy supply and demand.

The Challenge of Retail Gas in California's Low-Carbon Future

The Abstract of this E3 Report on p. iii summarizes the purpose of this work for the California Energy Commission. It describes the same challenge that Docket 20-80 is seeking to resolve for Massachusetts.

ABSTRACT

This study evaluates scenarios that achieve an 80 percent reduction in California’s greenhouse gas emissions by 2050 from 1990 levels, focusing on the implications of achieving these climate goals for gas customers and the gas system. Achieving these goals is not guaranteed and will require large-scale transformations of the state’s energy economy in any scenario.

These scenarios suggest that building electrification is likely to be a lower-cost, lower-risk long-term strategy compared to renewable natural gas (RNG, defined as biomethane, hydrogen and synthetic natural gas, methane produced by combining hydrogen and carbon). Furthermore, electrification across all sectors, including in buildings, leads to significant improvements in outdoor air quality and public health. A key uncertainty is whether consumers will adopt electrification technologies at scale, regardless of their cost effectiveness.

In any low-carbon future, gas demand in buildings is likely to fall because of building electrification or the cost of RNG. In the High Building Electrification scenario, gas demand in buildings falls 90 percent by 2050 relative to today. In the No Building Electrification scenario, a higher quantity of RNG is needed to meet the state’s climate goals, leading to higher gas commodity costs, which, in turn, improves the cost-effectiveness of building electrification.

The potential for large reductions in gas demand creates a new planning imperative for the state. Without a gas transition strategy, unsustainable increases in gas rates and customer energy bills could be seen after 2030, negatively affecting customers who are least able to switch away from gas, including renters and low-income residents.

Even in the High Building Electrification scenario, millions of gas customers remain on the gas system through 2050. Thus, this research evaluates potential gas transition strategies that aim to maintain reasonable gas rates, as well as the financial viability of gas utilities, through the study period.

Analysis: Although California is a much larger and very different state from Massachusetts along multiple dimensions, it is striking how similar the two state’s goals are as well as the challenges they will confront in seeking to achieve climate goals through changes in their energy economies. The laws of chemistry and materials science, and the impact of emissions on humans, are the same on the West as the East Coast.

It is therefore equally striking how different are the tone and emphasis of this E3 work in California compared to its reports in Docket 20-80. In the latter, major continuing roles for methane are presented as serious possible transition paths to a new energy economy, while in California the problems and limitations of these alternative sources of methane are delineated. They are magnified by the finding of the long-term, lower risk of building electrification, which will lead to large reductions in gas demand that must be reflected in transition strategies to protect customers least able to switch from gas and the financial viability of gas utilities during the transition. In short, in California the core problem is seen as how to move away from gas, while in Massachusetts the solution to the same problem emerging from Docket 20-80 includes maintaining a sizable gas sector by changing the gases LDCs deliver. E3 should be asked how it reconciles these two very different outcomes or on what basis, with respect to evaluations of the long-term costs and relative risks of building electrification and combustible gases in buildings. 

Opportunities for Low-Carbon Hydrogen in Colorado: A Roadmap

Below is a chart of this Report’s Findings: They align with our position that there are uses of green hydrogen of potential value in heavy transportation, long duration energy storage and industrial processes but not in residential and commercial heating

P. 4: From Executive Summary

P.20: “Buildings: In colder climates, building energy demands are dominated by seasonal space heating loads, with peak heating demands coinciding with cold-snaps. To meet these peak space heating demands, there is a plausible role for hydrogen combustion in furnaces, complementary to electrification in buildings. However, electrification still provides a more economic and efficient alternative for most of the year. To eliminate the use of natural gas in buildings and replace it with 100% hydrogen, entire segments of the gas system and end-use burner tips would need to be converted to be compatible with hydrogen. Alternatively, hydrogen could be transformed into synthetic methane for blending into existing pipelines by combining hydrogen with a carbon-neutral source of CO2. This option avoids the blend-wall limitations of hydrogen, or the need to convert pipelines and end uses to support 100% hydrogen. The use of dedicated pipelines that would fully supply building demands by hydrogen has not been demonstrated in the buildings sector worldwide. However, the H21 North of England project in the United Kingdom is investigating and developing such a system.”

Analysis: This Report includes the idea of blending H2 with fossil methane to pipe to buildings to achieve some reduction (allegedly) in GHGs in the shorter term. But it clearly does not support the idea that 100% hydrogen to buildings will make sense as a long-term solution.  

Philadelphia Gas Works Business Diversification Study

Footnote p. 18: “Although biomethane and SNG still release CO2 into the atmosphere at the point of combustion, they release the same amount of CO2 that has been captured by the organic matter throughout its growth or, in the case of SNG, by technology that captures CO2 from the air. These sources are therefore commonly referred to as carbon neutral under IPCC GHG accounting standards. Some jurisdictions, such as New York State, instead account for the lifecycle carbon emissions of fuels, and therefore do not treat these fuels as net carbon neutral. However, for the purposes of this Study, they are treated as carbon neutral fuels.” 

Analysis: So far E3 has chosen, without explanation, to characterize renewable gases or biofuels as carbon neutral, when there is a choice to be made about whether they are carbon-positive or not, or they may have to determine their actual GHG emissions intensity. Why? Are they biased in favor of gases and this choice makes it more likely that they will then be able to demonstrate that these gases can help economies and gas utilities achieve their GHG reduction goals?

P. 19: “The use of decarbonized gas in Philadelphia has both advantages and drawbacks. First, the use of decarbonized gas repurposes existing infrastructure, causes minimal consumer disruption as customers keep their existing gas furnace and other gas appliances, and allows for a diverse range of fuels to be procured. However, decarbonized gases are generally more expensive to produce than natural gas, do not contribute to air quality improvements, and are limited in terms of commercialization or total availability as investigated by several studies across the U.S. For example, in a study for the American Gas Foundation, ICF estimated that between 1,660 and 3,780 trillion Btu (Tbtu) of biomethane resources could be produced in the U.S. annually for pipeline injection by 2040. Using Philadelphia’s share of population within the U.S. that amount would be equivalent to around 10-23% of total gas consumed in Philadelphia today, considering competing needs in other sectors of the economy. Although it is unclear how much biomethane supply would be available in the region, a full transition to decarbonized gases in Philadelphia would likely require significant amounts of synthetic natural gas, a source of methane that is not yet commercialized, but is not resource constrained if available. However, decarbonized gases do provide a potentially important piece of the puzzle to transition to net zero by 2050 and would make use of PGW’s current assets and expertise.”

Analysis: This discussion is relevant to the Future of Gas 20-80’s emphasis on the future essential role of so-called decarbonized gases, which as we know are still predominantly methane. The 20-80 documents do not seriously address questions of the availability of the volume of these gases necessary to replace current natural gas or their costs. Even if they were carbon-neutral through some miraculous change in the laws of chemistry and the properties of a gas, analogous to the miracle of water into wine, they would be insufficient to meet the need and their costs would probably be uncompetitive. The reference to the use of PGW’s current assets and expertise is a giveaway that ignores new assets and expertise in the energy sector that for the sake of the broader society and economy must be expanded and improved. Existing assets and expertise can be repurposed to some extent (e.g., to support networked geothermal) while utilities develop new business models for themselves within the new, more complex and diverse energy sector.

Farther. Faster. Together.  MEETING THE CLIMATE CHALLENGE WITH BOLD, STATE-LED ACTION AND COLLABORATION

The USCA is a bipartisan coalition of 25 governors, including Massachusetts, working together to achieve the goals of the Paris Agreement and keep temperature increases below 1.5 degrees Celsius. It covers 43 percent of U.S. gross greenhouse gas (GHG) emissions, 56 percent of the U.S. population, and 62 percent of the U.S. gross domestic product (GDP). This report refers to independent analysis commissioned from E3 which assesses where their collective GHG emissions are headed through 2050 under four scenarios. Key takeaways from E3’s analysis (p.16) are that Alliance members, working in coordination with the federal government, can meet collective emissions-reduction goals of overall net-zero GHG emissions as soon as practicable and no later than 2050, and reduce collective net GHG emissions to at least 50–52 percent below 2005 levels by 2030.

According to E3’s analysis, if all Alliance members put into place policies and programs to meet their individual GHG targets, Alliance members would collectively reduce their emissions by 43 percent below 2005 levels by 2030 and 84 percent by 2050, putting our climate goals within reach. With additional actions by the executive branch and Congress, E3’s analysis shows that there is a pathway to achieve these ambitious goals.

The key points from this E3 analysis relevant to Docket 20-80 are presented in Appendix 1: Decarbonization Scenario Analysis, with its assumptions for the building sector in the 4 scenarios considered by the USCA:

“1. Reference Scenario: Includes existing and final statutory/regulatory measures in Alliance states as of July 1, 2021, but no new policies.

2. Federal Action Scenario: Includes proposed and feasible federal actions such as those signaled in the AJP and other executive actions.

3. Collective Action Scenario: Alliance states and/or the federal government take a suite of ambitious actions to achieve 50–52 percent below 2005 levels by 2030 and net-zero GHG emissions by 2050.

4. Existing GHG Targets Scenario: Alliance states put additional policies and actions into place to achieve their individual GHG emissions reduction goals.”

The input assumptions for buildings in these scenarios are:

1.     State building code updates, building performance standards, funded energy efficiency measures.

2.     29 percent heat pump sales by 2030, 60 percent by 2050 (based on output from E3 residential heat pump adoption model without additional incentives) by 2035, along with widespread building shell retrofits.

3.     This scenario calculates the impact of states achieving the collective Alliance target (26 percent by 2025) and their individual targets and does not present Alliance-wide assumptions for buildings.

The E3 analysis maps out one pathway for achieving the USCA’s GHG reduction targets which is summarized in the figure on p.19:

Analysis: There is no direct or easily explicable comparison I can see (others may be more astute) between E3’s contribution to this report and its 20-80 Report. I do note however that E3 also includes a significant role for NWL (natural and working lands) in the actions that should be taken (p.19 in the USCA Annual report), stating: “Enhance our natural and working lands (NWL) to sequester an increasing amount of GHG emissions”. The 20-80 Report recommends use of a substantial volume of biogas or biofuels in future, recycling GHG sequestered in NWL. The question is how or whether increasing volumes of use and more rapid recycling of NWL-sequestered GHG can be compatible with a goal of sequestering increasing amounts of GHG in NWL in future.

Quantifying the Air Quality Impacts of Decarbonization and Distributed Energy Programs in California, and B. Societal Cost Test Impact Evaluation    

These reports for the California Public Utilities Commission (CPUC) demonstrate that E3 can develop quantified estimates of the costs of externalities caused by air pollutants produced by the combustion of gases in buildings for heating and other purposes. The second report (Societal Cost Evaluation) was developed in collaboration with CPUC staff.

The first report on “Air Quality Impacts of Decarbonization” covers multiple sectors, including buildings, in analyzing the health savings achievable through decarbonization. The Summary of Key Conclusions and Discussion is found on p.44:

“Key Conclusions and Discussion

This study has several key conclusions: The electrification of on-road transportation, off-road transportation, and natural gas combustion in buildings would achieve monetized human health benefits of about $44 billion per year in total, reflecting the avoidance of 4,843 premature deaths per year as well as other health benefits such as reduced hospital visits. These impacts can also be expressed as per-unit-energy impacts, highlighting the particularly high air quality impact of heavy-duty vehicles (all values in 2020$):

 END OF REPORT EXTRACT (gge= gasoline gallon equivalent, a measure to compare the energy content of fuels – for example diesel has a higher energy content than gasoline)

 Annual health savings from decarbonizing so-called NG (Natural Gas) buildings are estimated at $7.35 billion (in 2020$) – see Table7, p. 40.

These figures for California would need to be translated to the different demographic, climatic, geographic, and economic circumstances of the Commonwealth. Nevertheless, in conjunction with E3’s findings with respect to the Social Cost of Carbon (p.13 in the second Social Cost report) they suggest that incorporation of these externalities would have a significant impact on the outcomes of the economic analyses presented by E3 in its 20-80 Report.

Analysis: One inference to be drawn with respect to E3’s 20-80 Report is that its terms of reference did not include assessments of these externalities in the Commonwealth. Consequently, from the outset the design of Docket 20-80 was fundamentally flawed as a vehicle for determining a transition path for gas and for LDCs to meet Massachusetts’ Climate Limits, which by law include consideration of impacts on safety and other social priorities. A second in inference is that the findings presented in 20-80 about the relative economic costs of the various scenarios for the Future of Gas are likely to be misleading and ranked incorrectly.

 The Economics of All-Electric New Construction in Utah 

E3 produced this report on new residential building construction in Utah in collaboration with the Building Electrification Institute and members of an advisory committee. Here are the conclusions starting on p.28, which explain its scope and present its findings.

“This study focused on the financial implications of building all-electric new single-family and low-rise multi-family homes in Utah relative to building mixed fuel properties that include both electric and gas appliances. The results revealed opportunities to construct residential buildings in Utah at a lower cost with efficient all-electric equipment relative to a mixed fuel building. In most cases, energy bills will also decline with all-electric equipment or will be competitive to the energy costs in a mixed fuel building. This is true because all-electric heat pump technology is significantly more energy efficient than gas heating equipment.

The results demonstrated opportunities across all three modeled climate zones in Utah to develop all-electric residential properties that have lower lifecycle financial costs, which consider both the upfront construction costs and ongoing utility bill impacts, compared to mixed fuel properties. These beneficial outcomes can be maximized through intentional selection of equipment that balances upfront costs alongside energy performance. Buildings with ductless ASHP systems resulted in the best lifecycle financial performance across all scenarios, with ductless cold climate ASHPs also proving to be important in colder parts of the state if the goal is to maximize energy bill savings and carbon emissions reductions. The lifecycle savings of every all-electric scenario can also be further improved if the avoided costs of gas infrastructure are fully accounted for.

In addition to the financial implications of all-electric new construction, there are other beneficial outcomes for all-electric developments in Utah. These include the potential for improved outdoor and indoor air quality, reduced carbon emissions, enhanced electric grid interactivity, and other energy system benefits such as avoided gas infrastructure and maintenance costs associated with new gas utility distribution pipelines. These benefits can be realized and scaled in Utah as more property developers and households recognize the technological and market readiness of electric technologies and begin to build more all-electric properties across the state.”

In addition, on p.5: “In terms of outdoor air pollution, RMI research has indicated that “because gas appliances lack effective emission controls, they emit more than twice as much NOx as gas power plants [in the U.S.], despite consuming less gas overall”. Drawing off peer-reviewed research from the Harvard T. Chan School of Public Health, RMI published a state-by-state summary that reflects annual public health impacts of $361 million per year in Utah from burning fuels such as gas, oil, biomass, and wood in buildings.”

For reference, the RMI study is “What is the health impact of Buildings in Your State”, RMI, 2021b. The RMI figures on the heath impact of building emissions in Massachusetts are at https://rmi.org/health-air-quality-impacts-of-buildings-emissions#MA.

Analysis: There are many differences between Utah and the Commonwealth with respect to geography, climate, demographics and social values, and the ages of their infrastructures and buildings, as well as the sectoral structures of their economies. Invoking this study may receive significant pushback along the lines that we are not paying attention to the specific environment of our own state. Nevertheless, this report does come down firmly in favor of all-electric residential buildings for new construction, not hybrid solutions. Moreover, some of the points raised by E3 in this study may be worth raising to mitigate fears being stoked by the LDCs about freezing on the coldest days, and overloading the grid, respectively the roles of cold climate ASHPs, and future grid interactivity.  

[1] “Carbon accounting of forest bioenergy,” - https://op.europa.eu/o/opportal-service/download-handler?identifier=e6c29d5b-2bef-4ec4-93f5-c3f672af0b47&format=pdf&language=en&productionSystem=cellar&part=