A Strategic Assessment of the Long-term Role of Natural Gas in a Carbon Constrained and Water-Efficient Future
Long-term Role of Retail Natural Gas in California's Low-Carbon Future
Energy & Environmental Economics, Inc.
Recipient
San Francisco, CA
Recipient Location
11th
Senate District
17th
Assembly District
$1,099,688
Amount Spent
Completed
Project Status
Project Result
The final report was published in April 2020, after a public workshop presented draft results in the summer of 2019, and a draft revised in response to public comment was posted for an additional public comment period in fall of 2019.
The Issue
The future of natural gas is an important question for ratepayers, as well as for policymakers charting California's clean energy transition. Natural gas is an integral part of California's current energy system. Nearly 80 percent of all homes in California are connected to the natural gas system, and Californians spend nearly $14 billion per year on gas. To meet California's climate goals, use of fossil fuels like natural gas will need to decrease by 80 percent or more by 2050. It is thus important to consider the future of natural gas in California and to understand implications of various strategies for meeting long-term goals on ratepayers and equity issues.
Project Innovation
This study evaluated scenarios that achieve an 80 percent reduction in California's greenhouse gas emissions by 2050, focusing on implications for gas customers and the gas system. These scenarios suggest that building electrification is likely to be a lower-cost, lower-risk long-term strategy compared to renewable natural gas. Furthermore, electrification leads to significant improvements in outdoor air quality and public health. In any low-carbon future, gas demand in buildings is likely to fall due to building electrification or the cost of renewable gas. 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. This research evaluated potential strategies that aim to maintain reasonable gas rates, as well as the financial viability of gas utilities.
Project Benefits
This project highlights the need for long-term planning for the natural gas system in the context of meeting the state's climate goals. This project's long-term, scenario-based analysis of how the natural gas system can help California meet long-term climate goals benefits California by providing: [br /]
[br /]
[li]Information to help lower the costs of meeting climate goals and to inform technology R&D. For example, the long-term scenarios provide information regarding potential future gas sector investments, the gas system rate base, wholesale and retail natural gas prices, ratepayer bills, emissions reduction costs, and capital and fuel costs by sector. This information can help decision-makers avoid stranded assets.[/li]
[li]Energy metrics to facilitate better planning.[/li]
[li]Environmental and public health metrics to inform policy. [/li]
Affordability
A long-term view of the future allows the industry to avoid potentially stranded assets in the gas system and will help policy-makers chart an equitable path that avoids over-burdening ratepayers as California moves toward its climate goals.
Environmental Sustainability
The results of the study provide estimates of air quality statewide at a (4km x 4km) resolution for all future scenarios; this allows assessment of the co-benefits of improved air quality along with the GHG reductions and other benefits.
Key Project Members
Snuller Price
Subrecipients
University of California, Irvine
Match Partners
Sacramento Municipal Utility District
Southern California Gas Company (SoCalGas)
University of California, Irvine
Energy &
Environmental Economics, Inc.
The Southern California Gas Company (SoCalGas)
