Shareholder advocacy group As You Sow and nonpartisan policy think-tank Energy Innovation have released a new report addressing the opportunities presented by the clean energy transition and the risk of overreliance on natural gas for utilities.
According to the report Natural Gas: A Bridge to Climate Breakdown, natural gas, which is largely replacing coal, is a growing source of climate concern.
Forming part of utilities’ initial response to demand for lower-carbon energy, natural gas infrastructure build-out continues to rapidly expand across the US, yet despite its reputation as the cleanest burning fossil fuel, natural gas generates considerable climate impacts through direct combustion and methane leaks across the supply chain. New reports continue to find that methane emissions are likely much worse than previously estimated.
As the window to address climate change narrows, investment in new natural gas infrastructure is increasingly incompatible with a climate-stable future. The natural gas bridge to a carbon-free future must have a clear end in sight. Natural Gas: A Bridge to Climate Breakdown raises critical questions about why utilities continue investing in gas infrastructure, and what is at stake if emissions and costs are locked into place through such investments.
“As climate change increases risk to investor portfolios, shareholders must scrutinize what role fossil gas can play in the inevitable transition to a clean-energy economy,” said Lila Holzman, energy programme manager at As You Sow. “Utilities clinging to business models that rely on fossil fuels are jeopardizing their ability to meet critical climate goals (including their own) and will miss out on opportunities to benefit from new technology advances.”
This timely report reveals how the proliferation of gas infrastructure contributes to distinct risks that threaten shareholder value. While progress in reducing utility sector greenhouse gas emissions is being made, as seen by the increasing number of utilities setting mid- and long-term decarbonisation targets, concerns remain as to what extent gas’ expansion may jeopardize those goals. The report reviews the current policy, economic, and technology landscape and the related opportunities and challenges utilities must navigate in the face of the ongoing clean-energy transition.
“Renewables like wind and solar, complemented by flexible zero-carbon resources like storage and demand response, are already providing the same reliability services and energy as new natural gas plants at lower cost,” stated Mike O’Boyle, director of electricity policy at Energy Innovation. “New gas infrastructure is increasingly likely to become stranded — the natural gas ‘bridge’ must end now if investors want to avoid massive stranded asset cost risk.”