NEWS: Energy and environmental policy
E3 Highlights Need for Gas Transition Strategy in California

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April 17, 2020

A new E3 study for the California Energy Commission demonstrates why the state needs a transition strategy for its retail natural gas distribution system, as it aims to achieve its ambitious climate goals by midcentury.

Natural gas is an integral part of the energy system in California, with more than 80 percent of all homes connected to the natural gas grid. The question of how to reduce carbon emissions from natural gas use in buildings is thus a crucial one as California looks toward strategies for meeting its climate goals.

In this study, E3 evaluated two strategies for reducing carbon emissions from California buildings: building electrification and renewable natural gas. E3 found that building electrification is likely to be a lower-cost and lower-risk strategy for reducing carbon emissions from buildings in California. E3 also found that, particularly under a high building electrification future, customers remaining on the natural gas system could face disproportionately high costs in the absence of a gas transition strategy.

Customer utility bills over time in the High Building Electrification scenario with no gas transition strategy. As more and more customers exit the gas grid in this scenario, the relatively few remaining customers would have to pay higher utility bills to cover the fixed costs of the natural gas system. This issue could be mitigated with a gas transition strategy. (Bills include all electric and gas end-uses in the home, not electric vehicle charging.)

The study, which builds on E3’s 2018 deep decarbonization report for the CEC, used E3’s PATHWAYS model to evaluate economy-wide deep decarbonization scenarios and examine possible futures for the natural gas system. E3 also partnered with co-authors from the Advanced Power and Energy Program at the University of California, Irvine, to examine the costs of renewable natural gas and to evaluate the impact of these deep decarbonization scenarios on air quality.

The draft study results were first presented in June 2019 at a California Energy Commission public workshop and were subsequently finalized after incorporating feedback from stakeholders. E3 experts Dan Aas, Amber Mahone, Zack Subin, and Snuller Price contributed to this study.

In September 2019, the nonprofit Gridworks published policy recommendations in a related report, “California’s Gas System in Transition: Equitable, Affordable, Decarbonized and Smaller,” which draws from E3’s analysis of the PG&E system.

The final report for this study can be downloaded here, and the appendices can be downloaded here.


UtilityDive, “California natural gas costs could spike as state decarbonizes: E3, UC Irvine

Los Angeles Times, “Cow poop could fuel California’s clean energy future. But not everyone’s on board

S&P Global Market Intelligence, “Calif. decarbonization may create thorny cost issues for gas systems” (paywall)

NRDC Expert Blog (Pierre Delforge & Merrian Borgeson), “Study: CA Needs a Safe, Managed Transition Away from Gas

NRDC Expert Blog (Merrian Borgeson), “Protecting Workers and Communities Requires Gas Planning

Environmental Defense Fund Energy Exchange Blog (Michael Colvin), “How to decarbonize California’s economy without breaking the bank

Environmental Defense Fund Energy Exchange Blog (Michael Colvin), “Strategies for smarter, cleaner buildings in California

filed under: Energy and environmental policy