Utilities prioritize natural gas in sustainability plans
ORLANDO — Utilities are advancing their existing voluntary sustainability programs for natural gas, said executives at the Edison Electric Institute (EEI) Financial Conference held here on Nov. 10-12.
“Really, we’re a pipes and wires company but we call ourselves a clean energy transition company because everything we’re doing is pushing toward a cleaner energy future,” said Marcy Reed, president of National Grid Massachusetts and executive vice president of U.S. policy and social impact. “We see our natural gas network as being an integral part of National Grid’s clean energy future. We need to reduce methane emissions within the pipe and then we need to decarbonize what’s in the pipe in the first place.”
National Grid is one of the largest investor-owned utilities in the world serving 20 million customers — half with gas and half with electric, Reed said — through its networks in New York, Massachusetts, and Rhode Island.
The company aims to transform both its electricity and natural gas networks with smarter, cleaner and more resilient energy solutions to meet the goal of reducing greenhouse gas emissions.
“We do definitely believe in climate change. We believe that we as a utility has something important to do about it and to help our customers advance how they live their lives,” said Reed during Monday’s EEI conference session entitled “Natural Gas Sustainability Initiative.”
The session’s title, in fact, is actually the name of the industry-wide Natural Gas Sustainability Initiative (NGSI) launched by EEI and the American Gas Association (AGA), which jointly developed an environmental, social, governance, and sustainability (ESG/sustainability) reporting template to help electric and gas companies provide the financial sector with more uniform and consistent ESG/sustainability data and information.
In December 2017, EEI’s pilot ESG/sustainability reporting template was launched to encourage voluntary reporting of ESG/sustainability information in both quantitative and qualitative formats. Version 1 of the template was released in August 2018, and the updated version was announced in November 2018 when EEI and AGA partnered to incorporate natural gas metrics into the reporting framework.
Version 2 of the ESG/sustainability reporting template integrates AGA’s quantitative metrics for natural gas distribution companies into the spreadsheet, and qualitative reporting elements were added for cybersecurity governance and natural gas sustainability.
Released in August, Version 2 will be used by nearly all of EEI’s member companies and most of AGA’s member companies by year’s end, according to EEI President Tom Kuhn, who said it will “allow electric and natural gas companies to deliver the most reliable and transparent ESG/sustainability data.”
Robert LaCourt, executive vice president at M.J. Bradley & Associates LLC, which provides consulting services to address energy and environmental issues for the private, public and nonprofit sectors, worked with EEI and AGA on the ESG/sustainability reporting template, which he said builds upon many of the metrics that already were available in the electric industry.
At first, LaCourt explained to conference session attendees on Monday, the focus of the NGSI was on understanding the challenges and needs of stakeholders.
“Through this process, we have an extensive outreach effort through investor meetings in New York, through NGO meetings, through a variety of public meetings held by EEI to understand the questions and challenges that stakeholders have concerning natural gas,” said LaCourt. “EEI played a very critical role in working with state boards and investors in understanding these critical questions and how to bring that information and data in a very precise way and make it valuable for stakeholders.”
The NGSI now also focuses on steps that the industry can take to work collectively to address the challenges.
“That’s really the focus: to build upon voluntary efforts that are in place, but to drive a more collective response so that we can support companies in terms of understanding how best to manage their operations around ESG issues, but also to be able to provide more comprehensive response to stakeholders when they ask those questions,” LaCourt said.
“It’s a really exciting time with gas and electric converging as deeply as they are,” said Reed, who has been involved with NGSI, along with Jerry Norcia, president and chief executive officer of DTE Energy.
The Detroit-based diversified energy company has operating units that include an electric company serving 2.2 million customers in southeast Michigan and a natural gas company serving 1.3 million customers in Michigan. Norcia said during the conference that the company plans to reduce carbon dioxide and methane emissions by more than 80 percent by 2040 to produce cleaner energy, while DTE Electric plans to achieve net-zero carbon by 2050.
“In order to achieve our net-zero carbon emissions goal for our electric company, we are rapidly expanding our regulated renewable energy business and associated investments,” said Norcia, noting that when DTE Energy first started to look at what its contribution could be to reduce carbon emissions, the company studied what it saw as the two largest emitters of carbon in the industry: electric generation and transportation.
“When we began looking at how we would do that, it was really a series of actions, including converting a large coal fleet to natural gas, which created a significant amount of reduction in carbon,” said Norcia.
DTE Energy does required baseload generation 24/7 year-round to provide reliable power and then layers renewables on top of that to drive utilization down to the plants and drag carbon out of the system, he explained, adding that to get to net zero, the company is going to need other technologies to come into play.
“And that would be things like biosequestration, which is a fancy way of saying ‘planting a lot of trees that absorb carbon,’” Norcia said.
He also thinks that a lot of conversation and a lot of policy needs to be developed on Capitol Hill to make such options viable for utilities and other developers to sequester carbon from existing sources.
“Energy efficiency is also part of the plan because, obviously, the less energy you use, the less carbon you produce,” added Norcia.
Additionally, what’s fundamental in DTE Energy’s plan to get to 80 percent carbon reduction includes natural gas, so he said that’s what got him engaged with the NGSI work being led by EEI and AGA.
“Natural gas is going to be fundamental in our future,” Norcia said, so using the ESG/sustainability template will help DTE Energy figure out how to position it in the most sustainable way and adopt sustainable practices throughout the company’s operations.
