Category Archives: environment

Richard Meyer New DOE Rules Impose New Costs on Consumers for Little Benefit

AGA_2995 Furnace Standard Infographic_web_FINAL_Page_1On March 12, the U.S. Department of Energy (DOE) proposed a new rule that would raise minimum efficiency standard for natural gas fired furnaces. The rule, if finalized in its current form, would mandate the manufacture of furnaces that meet a 92 percent or higher specification for energy efficiency.

On the surface, the rule appears to be a positive step toward achieving greater energy efficiency. However, a closer examination reveals many problems that conflict with DOE’s stated goal of improved efficiency and reduced emissions. These counterproductive and unintended consequences include:

  • An economic burden on consumers required to bear the prohibitive costs of the expensive equipment and installation.
  • The undermining of efficiency programs and the financial incentives that enable consumers to purchase high-efficiency furnaces.
  • Wasted energy and higher emissions because customers are induced to switch to cheaper equipment, such as electric furnaces, which have a much higher full-fuel-cycle energy and emissions footprint.

Natural gas utilities have a demonstrated track record of supporting efficiency and reducing energy consumption, a fact validated by years of improvements in household natural gas use. This rule would impose new costs on consumers but add little in terms of energy or emissions benefits. Here we explore in more detail some of the consequences of DOE’s action.

AGA_2995 Furnace Standard Infographic_web_FINAL_Page_2Billions of Dollars in New Costs Imposed on Consumers

DOE’s proposed rule would lead to monthly bill reductions – for some homes and businesses. Under the rule customers would bear between $6 and $12 billion dollars in new costs associated with higher efficiency furnaces (a dollar amount that AGA believes DOE is underestimating). And these costs are distributed unevenly. According to DOE’s proposal, one out of every four households that currently have a furnace would pay more over the life of a new furnace, an inequity that can have a disproportionate effect on many low- and fixed-income households.

Despite the high costs of implementation, the rule would generate only modest energy and emissions savings. According to data in the proposal, the furnace standard would lead to only 1.1 percent in energy reduction relative to no action. In turn, the rule will achieve only 0.2 percent in carbon dioxide emissions reductions compared to a case without amended standards. For billions in upfront consumer costs, DOE’s proposed energy and emissions savings are scant.

By contrast, natural gas efficiency programs today already achieve 60 percent more annual emissions reductions at far lower cost than DOE’s proposed rule would accomplish after three decades of implementation. And these savings will only continue to grow as utilities continue to invest in their efficiency programs.

Furnace Standard Undermines Efficiency Program Gains and Emissions Targets

Why are DOE’s proposed energy reductions this small? Any declines come on top of a decades-long trend of energy efficiency that has already substantially reduced natural gas use in homes and businesses. The typical American household uses 50 percent less gas than it did in 1970, meaning the US uses the same amount of natural gas to serve 30 million additional residences. This is due in large part to natural gas utilities that promote energy efficiency in homes and businesses. Ignoring this track record of successful energy efficient approaches, DOE has proposed a costly mandate that achieves only modest savings.

Natural gas utilities across the country promote energy conservation measures, including efficient natural gas furnaces. Through 112 established programs in 39 states, the vast majority of utility efficiency programs offer homeowners financial incentives to purchase and install a high-efficiency gas furnace. These incentives include cash rebates, low-interest loans, and low or no-cost upgrades for low income customers. This proven, comprehensive, customer-focused, and cost-effective approach could be threatened by the proposed DOE rule.

State utility regulators evaluate efficiency programs based on the ratio of its costs to its benefit, such as energy savings. A higher minimum efficiency standard for furnaces would elevate the baseline from which all energy savings are calculated, thus reducing the savings that qualify as a direct benefit of the program. This, coupled with the higher costs of purchasing and installing a 92 percent efficient furnace, may disqualify many furnace replacement programs should they fail the cost-effectiveness threshold that state regulators require.

As mentioned, the energy savings from natural gas utility programs are already achieving more than the savings DOE is projecting in its proposed rule. In 2013 alone (based on the most recent AGA data), utility efficiency programs reduced gas usage in participating homes by 18 percent—the equivalence of twelve days of residential gas consumption.

Furnace Standard Will Cause Higher Emissions and Lower Efficiency for Many Households

What would the effect of the rule be on a typical household? Let’s say a home has a furnace at the end of its usable life, and it fails irreparably. A homeowner will be faced with one of two options:

  • Option 1: Purchase a new gas furnace, at DOE’s stricter efficiency standard, and pay the additional costs of the appliance and installation.
  • Option 2: Switch to less costly equipment such as an electric furnace or heat pump, resulting in increased energy use, higher emissions, and larger monthly energy bills in many areas of the country.

Some consumers that choose Option 1 will see lower overall costs, but not all homeowners or businesses will share in this benefit. Even DOE acknowledges that one in four consumers that replace their furnace will pay more over the life of the equipment because of higher installation costs. The energy savings are just too modest to counterbalance the costs.

In other words, homeowners that today could not justify the purchase of a 92 percent efficient furnace (at least not without gas utility and other incentives) would be forced under DOE’s proposal to make the purchase and eat the costs.

Looking at Option 2, DOE says that 10 percent of consumers will instead switch to an electric furnace or heat pump, which increases emissions and energy use due to the inefficiencies of electricity generation and transmission.  To boot, AGA collected data from contractors that suggests that DOE’s estimate is likely too low – even more customers than DOE expects would be compelled to pull out their furnaces and install an inefficient though less expensive electric appliance. The furnace proposal ostensibly lowers energy use and emissions. This unintended outcome, fully acknowledged by DOE, runs counter to that intent.

Ultimately, DOE’s new standard will impose additional costs on consumers, induce some customers to increase their energy use and grow emissions, and negatively impact efficiency programs that already achieve greater savings than DOE’s proposed rule.

It’s time to re-examine this prescriptive approach and apply a comprehensive vision for furnace efficiency, which recognizes the proven gains from local utility efficiency programs and product choices.

Posted in environment, Natural Gas, people, technology | Leave a comment

Christina Nyquist New Data Shows Natural Gas Customers Saving More Money, More Energy and Reducing Environmental Footprint

Natural gas customers are saving more money, more energy and emitting less carbon than ever before.

That’s the takeaway from the latest data in the freshly updated 2015 American Gas Association Playbook, released today. The go-to guide for natural gas information shows that natural gas customers saved an average of $693 per year from 2012-2013 while reducing their carbon dioxide emissions by half a million metric tons. In addition, emissions from distribution pipelines dropped an additional six percent in 2014 as utilities continued to upgrade and modernize infrastructure to enhance safety.

The updated Playbook highlights several key national trends, including:

Natural gas customers are saving more money, more energy and emitting less carbon than ever before.

Average yearly savings for households using natural gas appliances increased $40 between 2012 and 2013. From 2012-2013, households using natural gas appliances saved an average of $693 per year compared to households using other energy choices. Utilities helped customers save 136 trillion Btu of energy and offset 7.1 million metric tons of carbon dioxide emissions in 2012, an increase of 11 trillion and 0.6 million from 2011 respectively.Nat Gas Means Savings for Consumers

Safety remains a core value for natural gas utilities.

Pipeline incidents have declined approximately 40 percent over the past three decades as natural gas utilities continue to work to enhance safety. Natural gas utilities spend $19 billion annually and take a number of voluntary actions to help enhance the safety of natural gas distribution and transmission systems.

Safest Energy Delivery System in the Nation

Emissions from natural gas distribution systems continue to decline.

Emissions from natural gas systems dropped another 6 percent from 2014. In total, emissions from natural gas distribution systems have dropped 22 percent since 1990, even as the industry has added more than 600,000 miles of pipeline to serve over 17 million more customers.Cleaner Air and Reduced Emissions

Natural gas utilities continue to increase investments in energy efficiency programs.

Utilities invested $1.1 billion in energy efficiency programs in 2012 and 2013, an increase of $100 million from 2011.

Residential Nat Ga Use - Efficiency Success Story

More states are pursuing strategies to expand and enhance natural gas infrastructure.

Eight additional states are pursuing natural gas growth through innovative expansion proposals, growing the number from 17 states in 2014 to a total of 25 today. Meanwhile, 38 states have adopted specific rate mechanisms that foster accelerated replacement of pipelines no longer fit for service, supporting enhanced safety, reliability and performance of natural gas delivery systems.

Expanding the Reach - 25 StatesCheck out the complete AGA Playbook for more facts and information, and visit http://www.aga.org/ to learn even more about all that goes into delivering affordable, reliable, efficient and safe energy solutions.

Posted in energy, environment, Natural Gas, people | Leave a comment

Pam Lacey Natural Gas Emissions Deserve Closer Study

The study by Harvard School of Engineering and Applied Sciences of methane emissions in the Boston area looked at only that area and confirms much of what we already know, that methane is being emitted from a variety of sources. Unfortunately, without identifying the specific source of the emission it is difficult to draw any conclusions from it.

Safety is a core value for natural gas utilities. AGA member companies in the Boston area and throughout the country are part of a concerted effort to upgrade and modernize our nation’s pipeline network to enhance safety that has contributed to a declining trend in emissions from natural gas distribution systems.

We believe that this issue deserves closer study to better understand emissions associated with the distribution and delivery of natural gas. AGA and thirteen of its member companies have been participating with the Environmental Defense Fund in a nationwide field study conducted by the Washington State University to measure emissions from natural gas distribution systems. The results should be more instructive because this study used direct source measurements and was able to isolate emissions specifically from distribution pipes and equipment.

More than 177 million Americans continue to use natural gas to cook a hot meal, heat their water or warm their houses. Our nation’s abundance of this clean energy resource has driven affordable and stable prices throughout the country.

The Obama Administration recently announced regulations on emissions from the natural gas industry which did not include recommendations for local distribution companies. Natural gas utilities are committed to systematically upgrading infrastructure, driven by risk-based integrity management programs, and there is a growing effort to accelerate the replacement of pipelines no longer fit for service. Proactive efforts from natural gas utilities, along with involvement in important programs like the EPA’s Natural Gas STAR program, have contributed to the fact that natural gas emissions from utility-owned distribution systems have dropped 22 percent since 1990, even as the industry added nearly 600,000 miles of distribution mains and service lines to serve 17.5 million more customers, an increase of 32 percent. Nearly 90 percent of the emissions declines from distribution systems since 1990 are due to pipeline replacements. According to the Environmental Protection Agency (EPA), only 0.24 percent of produced natural gas is emitted from systems operated by local natural gas utilities.

In 2014, AGA released a set of voluntary guidelines to serve as a resource for AGA members to assist in evaluating potential options that may lead to further emissions reductions for distribution systems, and AGA is working with EPA to develop a new voluntary Gold STAR certification for the natural gas distribution sector. The natural gas industry is actively engaged in this discussion along with rigorous, science-based analysis to ensure natural gas continues to be a leading solution for our nation’s clean and secure energy future. AGA members are committed to continuing this positive trend of declining emissions, and we look forward to continued collaboration with key stakeholders in this effort.

Posted in energy, environment, science | Leave a comment

Christina Nyquist AGA’s Incoming Chairman, Terry McCallister, WGL, Inc., to Hold Media Roundtable Breakfast

How can we provide safe, reliable energy at affordable costs for all Americans?

How can we balance our need for energy with the needs of the environment?

How can we gain secure our nation’s domestic abundance of natural gas for the future?

The American Gas Association (AGA) will address those questions and more at a media roundtable next Thursday December 11 beginning at 10 a.m. with incoming AGA Chairman Terry McCallister, chairman and CEO of WGL Holdings, Inc. and Washington Gas Light Company in Washington, D.C., and AGA President and CEO Dave McCurdy.

Incoming AGA Chairman Terry McCallister, Chairman and CEO, WGL Holdings, Inc.

Incoming AGA Chairman Terry McCallister, Chairman and CEO, WGL Holdings, Inc.

McCurdy and McCallister will discuss the vision for natural gas in 2015, and how we can secure natural gas as America’s new energy foundation, providing economic, environmental and energy security solutions for the nation. They will also address AGA’s legislative and regulatory priorities for 2015. Presentations will be followed by an open question and answer session.

AGA will be livetweeting from the roundtable on our Twitter account @aga_naturalgas. Follow the conversation or join us using hashtag #AGAChairman.

All media inquiries and RSVPs should be sent directly to Christina Nyquist at cnyquist@aga.org.

 

Posted in energy, environment, events, Natural Gas, safety | Leave a comment