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This legislation would establish a state regulatory policy that encourages natural gas utilities to use clean energy resources and innovative technologies to help the state meet its renewable energy and greenhouse gas reduction goals.
In particular, this legislation would create the opportunity for a natural gas utility to submit an “alternative resource plan” to the Minnesota Public Utilities Commission. In the plan, a natural gas utility could propose to offer new clean energy options, such as renewable natural gas (RNG) and renewable hydrogen gas, as well as innovative energy-efficiency and carbon-capture technologies.
For example. RNG can be produced from agricultural manure and other farm waste, so it represents an important new economic opportunity for farmers and rural communities. In addition, converting farm waste into RNG can help reduce agriculture-related greenhouse gas emissions. (According to the Minnesota Pollution Control Agency, the agriculture sector accounts for about one-quarter of all greenhouse gas emissions in Minnesota, with animal agriculture responsible for the majority of methane emissions.)
The Natural Gas Innovation Act is policy legislation and does not request any appropriation from the Minnesota Legislature.
Under the legislation, the Public Utilities Commission would have to approve a natural gas utility’s “alternative resource plan.” To limit the potential impact on customers, the costs of the plan must be no more than five percent of the utility’s total annual revenue requirement. The actual cost for any specific customer would depend on their gas usage and the details of the alternative resource plan as reviewed and approved by the Commission. For a typical CenterPoint Energy residential customer, the maximum expected cost could be about one dollar extra on their monthly bill, based on current rates and the specific plan approved by the Commission.
Several states – including Oregon, Washington and Nevada – have passed recent laws specifically to promote renewable natural gas, including requirements for natural gas utilities to purchase RNG and voluntary RNG purchase programs for utility customers.
The Minnesota legislation is distinctive because it encompasses a broader range of potential clean energy resources and technologies.
The legislation would actually help to answer this question for Minnesota by directing the Minnesota Department of Commerce to prepare a statewide inventory of potential RNG resources, including a list of all potential sources in the state and estimated energy available from each source.
A recent study prepared for the American Gas Foundation analyzed the potential nationwide resource base for RNG. The study estimated that, by 2040, approximately 4,513 trillion Btu of RNG could be produced annually. Bringing those RNG resources online would be equivalent to a 95 percent reduction in greenhouse gas emissions from the natural gas residential sector.
Promising technologies that use electrolysis powered by renewable electricity to create zero-carbon hydrogen gas from water are not yet commercially available in the United States. However, the potential of these technologies has been proven with demonstration projects, and they are now being developed on a commercial scale in Europe.
Many analysts believe this type of technology is at an emerging stage of commercial deployment similar to where wind and solar were only a short time ago in the electricity sector.
CenterPoint Energy is currently exploring a potential pilot project in Minnesota that would produce hydrogen gas with solar power.
One exciting carbon capture option is innovative new technology developed in Canada that captures carbon dioxide emissions from natural gas at the customer’s point of use. The emissions are converted into a carbonate powder that can be reused in commercial products. This technology has the potential to reduce greenhouse gas emissions, save energy and generate revenue for utility customers from the sale of the carbonate powder.
CenterPoint Energy is currently preparing a pilot project to install 10 of these carbon-capture units with commercial and institutional customers in Minnesota.
Depending on how much low- and no-carbon energy is actually on the electric grid, electrification is one approach that may reduce emissions and serve as a cost-effective alternative energy source for uses such as electric vehicles or to replace propane for space and water heating.
However, electrification is not likely to be feasible or cost-effective for many uses currently served by natural gas in Minnesota.
For example, with the state’s cold winters, Minnesota’s electric grid would have to more than double its existing capacity to meet peak-level heating needs currently served by the natural gas system. (This is in addition to the expanded electric grid capacity that would also be needed to serve electric vehicles on a large scale.) In addition, the electric infrastructure can be vulnerable to weather-related service disruptions.
Electrification of natural gas end uses is also expensive. Currently, natural gas rates are significantly lower than electricity rates in Minnesota. Also, adding new electric heating equipment and appliances to replace natural gas in homes and businesses would be costly and may actually be less energy efficient. In fact, greater energy efficiency remains the most cost-effective approach to reducing greenhouse gas emissions, and CenterPoint Energy’s efficiency programs have long been recognized as a national leader in helping customers save both energy and money.
Recent research also indicates that the use of RNG could reduce emissions from buildings and industrial processes more cheaply and simply than electrification. With the deployment of innovative energy-efficiency and carbon-capture technologies, there is further potential for the natural gas system to reduce greenhouse gas emissions compared to electrification.
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