Even in the gray fog of a pandemic, news about the future of the U.S. power sector has been dominated by a sunny outlook on renewable energy.
In January, the U.S. Energy Information Administration reported that most new electric power generation in 2020 would come from wind and solar. A few months and a national crisis later, renewable prospects are perhaps shining even brighter, as government projections show that for the first time renewable sources are likely to produce more electricitythan coal in 2020.
But as coal plants are retired in droves and renewable energy becomes more practical and economical than ever before, many electric utilities are continuing to plan for and invest billions in power generation from natural gas. As pressure escalates for the industry to complete the switch to renewable sources by 2050 to stay below critical climate change thresholds, some projections indicate steady or even increasing usage of the fossil fuel decades into the future.
"The question about natural gas is really front and center," Nick Steckler, of the research firm Bloomberg New Energy Finance, said this month on a digital panel on the future of the electric sector. "We've come off of a very big boom in natural gas build."
Natural gas, which emits roughly half as much carbon dioxide as coal, has been called a "bridge fuel" since the 1980s, when the gas industry, followed by environmental groups, began popularizing the term. The label was meant to indicate that natural gas would be a temporary stop-gap until renewable energy was readily available and cost-effective. Though climate activists and many financial analysts agree that time has come, there has been no rush to get off the bridge.
According to a 2019 report from the energy research group Rocky Mountain Institute, 88 proposed natural gas generation projects are expected to come online by 2025. A July 2019 analysis by Moody's Investor's Service noted that while coal could power as little as 11 percent of U.S. electricity by 2030, "new natural gas-fired generation, and to a much lesser extent renewable energy, will replace most of the thermal-coal electric-generation capacity heading into retirement."
The low price of natural gas has triggered a gas "building spree'', according to the research firm S&P Global, noting that ''business models and regulatory structures reward many U.S. utilities for building new infrastructure, whether it is economically viable or not."
About 37 percent of U.S. electricity is currently produced by natural gas plants, according to the Energy Information Administration. The agency's most recent long-range projection that locks in current policies, predicts this figure will stay essentially the same by 2050. The U.S. Environmental Protection Agency's equivalent projection predicts a jump up to 47 percent natural gas.
Some experts argue that these government projections have historically been more bullish on coal and conservative on renewables. But other models with a more favorable renewables outlook also show a robust future for natural gas. S&P Global Platts Analytics reports growth to well over 40 percent power generation from natural gas even sooner, by 2040. Bloomberg New Energy Finance anticipates natural gas will reach 54 percent of generation by 2050.
Many factors could influence the actual fuel mix in the years ahead, including promising developments in battery storage capacity that will help ensure reliability from renewable energy sources. There are also shorter-term indications that low natural gas prices are expected to increase.
But to have a chance of remaining under 1.5 degrees Celsius of warming—the threshold for catastrophic climate change impacts according to the Intergovernmental Panel on Climate Change—"we need full decarbonization of electric power by 2050. Globally," said David Pomerantz, executive director at the Energy and Policy Institute, an advocacy group that promotes renewable energy. And many agree that the electric industry must move quickly to lead the way.
In recent years, often spurred by state standards, utilities have set renewable and clean energy goals. Leaders like PSEG in New Jersey and Xcel Energy in Minnesota, which supply power to multiple states, have plans to cut carbon emissions by 80 percent by 2045 and 2030, respectively, and to hit net-zero emissions by 2050. Even utilities most heavily invested in gas-fired power plants, like Duke Energy in North Carolina and Dominion Energy in Virginia, have set targets to reach net-zero emissions by 2050, though with less rigorous medium-term goals.
"There are some companies that are calling their 2050 goal 'aspirational,'" because they lack confidence that they operate a reliable grid with an all-renewable arsenal, said Emily Fisher, general counsel and clean energy policy lead at the Edison Electric Institute, a trade association for investor-owned utilities.
But some utilities that have made progress in cutting carbon emissions over the last fifteen years have more recently slowed down the rate of their emissions reductions just when they should be speeding up, according to 2019 research by Pomerantz of the Energy and Policy Institute.
Since then, he said, there are utilities "who have said basically 'we're not gonna add any new gas plants.' But there are also utilities that have really doubled down on a gas strategy. It's almost like the split has widened."
In 2015, the Union of Concerned Scientists warned that as coal plant retirements were beginning to pick up, power producers were "turning to natural gas to generate electricity at an unprecedented rate."
Since then, said Mark Specht, an energy analyst at UCS, "we are starting to see some really encouraging progress." But, he added, "on the actual planning front we're still not seeing the rubber hit the road. There are still a lot of utilities that are making plans for the future that are too reliant on natural gas."
Utility companies are most concerned with—and legally obligated to ensure—consistently reliable energy for customers, said Emily Fisher of the Edison Electric Institute. Natural gas is an energy source that can be turned on and off quickly—easily filling the gap when renewable sources like wind and solar aren't available. Many of the new gas projects, she added, are smaller facilities meant to help in such situations, and actually work in tandem with renewable energy commitments.
"They do see natural gas as something they've done a lot of and they see it as something they can do fairly easily," she said, with companies making the calculation that, "'in the near term in order to keep the system reliable, we're going to build some gas, and we don't see that as incompatible.'"
Absent clear federal guidance on emissions reductions, the transition to renewables over natural gas has largely been led by increasingly aggressive state targets and, in recent years, by investors worried about climate-related risks.
At the state level, renewable energy advocates are celebrating a major win in Virginia, where legislators passed a sweeping "Clean Economy Act" in April. As a result, gas-friendly utility company Dominion Energy released a statement concluding that "significant build-out of natural gas generation facilities is not currently viable."
In December 2019, investors in Southern Company, which distributes power through seven utilities in six states, filed a shareholder resolution over concern about continued natural gas investment that they saw as "incompatible with global and the company's own climate goals," said Lila Holzmann, energy program manager for As You Sow, a corporate accountability group. At its annual general meeting this week, Southern announced an official goal of net-zero emissions by 2050.
Many utilities "still see natural gas as the most straightforward way to ensure reliability as they decarbonize," said Dan Bakal, senior director of electric power programs at the sustainability group Ceres. "But there is still an open question of, is there an overreliance as they try to achieve these goals?"
Energy experts largely agree the answer is yes. At the levels of renewable energy required to begin making the transition now, said Pomerantz, existing natural gas infrastructure is more than enough to fill the gap. Ensuring total reliability only gets tough, he and others explained, when power companies start achieving very high levels of renewable energy.
"It's only 2020, we've got thirty years to solve these problems," Pomerantz said. "In the meantime, the last thing these utilities should be doing is building a natural gas plant."