Infrastructure bill

Even the most ardent supporters of natural gas generation acknowledge that curbing emissions is a good thing. Many main­stream power and oil & gas executives are some of the loudest voices calling for improve­ments. And they have been joined by U.S. President, Joe Biden.

The Administration unveiled a several tril­lion-dollar infrastructure plan that set the goal of net-zero carbon emissions by 2050. The plan would require major changes in the energy sector. (At this time of writing, the bill has yet to nego­tiate its way through Congress, and the overall amount is being trimmed down).

At an Earth Day climate summit, Biden called for cutting U.S. greenhouse gas emissions by 50% to 52% from the baseline year of 2005. In compar­ison, Obama’s target was 26% to 28%. The power industry is under the microscope as part of these plans as electricity generation accounts for 25% of U.S. emissions. That said, the sector has a much better record of curtailing emissions over the past twenty years than the transportation, commercial, or agriculture sectors. This is largely due to the switch from coal to natural gas, increasing adop­tion of renewables, and the implementation of effi­ciency and emissions reduction measures.

The administration’s plan would establish an Energy Efficiency and Clean Electricity Standard (EECES) to incentivize “more efficient use of existing infrastructure and continuing to leverage the carbon pollution-free energy provided by existing sources like nuclear and hydropower.” What his ultimately means to natural gas genera­tion is anyone’s guess. Opinions vary from it being a benign approach that will gradually phase out natural gas generation over many decades to a ploy to outlaw natural gas via extreme emissions requirements.

SUBSIDIES BEGONE!

A tax reform proposal is included that would eliminate billions of dollars’ worth of “subsidies, loopholes, and special foreign tax credits for the fossil fuel industry,” according to the White House website. It intends to reinstitute financial penalties for companies contributing to pollution.

The American Petroleum Institute (API) believes that ending the tax breaks would have a catastrophic effect on the economy. “Targeting specific industries with new taxes would only undermine the nation’s economic recovery and jeopardize good-paying jobs, including union jobs,” the API.

The American Gas Association (AGA) expressed support for the U.S. Department of Energy’s initiative to fund technologies designed to reduce methane emissions. “We continuously examine our 2.6 million miles of infrastructure for methane reduction opportunities and are investing in ways to help other industries reduce emissions by injecting their methane into our delivery system,” said AGA Pres ident and CEO Karen Harbert.

American natural gas utilities have delivered methane emission reductions of around 73%, according to the 2020 Inventory of U.S. Greenhouse Gas Emissions by the U.S. Environmental Protection Agency (EPA). Research recently published in the journal Environmental Research Letters calculated that existing technologies could cut methane emissions in half by 2030. These methods include reducing oil- and gas-related leaks and methane flaring, in addition to cleaning abandoned oil mines and expanding the use of feed supplements for cattle.

RESILIENT TRANSMISSION

While there are contrasting views on some proposed measures, one area receiving broad support is an investment tax credit to incentivize buildout of 20 GW of high-voltage capacity power lines. This will be overseen by a new Gr id Deployment Authority at the Department of Energy. One of its duties will be to fast track right-of-way approvals for new transmission lines. States have been advised to remove regulatory obstacles that may impede the progress of the network.

Hydrogen is also in the spotlight. The plan calls for pairing 15 hydrogen demonstration projects with a new renewable electricity production tax credit (PTC) to encourage carbon emis­sion reductions. Pioneer facilities would test carbon capture systems on steel, cement, and chemical production plants. Power plant s were omitted from this program.

Green hydrogen from renewable sources is the priority, but there is room for blue hydrogen, produced from natural gas and other fossil-fuel facilities. Such projects may be able to take advan­tage of a production tax credit.

The proposed Storing CO2 and Lowering Emissions (SCALE) Act addresses the development of large-scale carbon sequestration technology. The plan encourages carbon capture, utiliza­tion, and storage (CCUS) through the expansion of a tax credit, intended to make the technology “easier to use for hard-to-decarbonize industrial applica­tions, direct air capture, and retrofits of existing power plants.”

A10-year extension of the produc­t ion tax credit and investment tax credit for renewable energy generation, high voltage transmission, and energy storage is another element of the plan. Biden also appears to be betting on LNG as a smart way to lower the U.S. carbon footprint. This is to be achieved by lowering the emissions profile of LNG while addressing methane venting, fugitive emissions, and flaring.

American natural gas utilities have delivered methane emission reductions of around 73%, according to the 2020 Inventory of U.S. Greenhouse Gas Emissions by the U.S. Environmental Protection Agency (EPA). Research recently published in the journal Environmental Research Letters calculated that existing technologies could cut methane emissions in half by 2030. These methods include reducing oil- and gas-related leaks and methane flaring, in addition to cleaning abandoned oil mines and expanding the use of feed supplements for cattle.

RESILIENT TRANSMISSION

While there are contrasting views on some proposed measures, one area receiving broad support is an investment tax credit to incentivize buildout of 20 GW of high-voltage capacity power lines. This will be overseen by a new Gr id Deployment Authority at the Department of Energy. One of its duties will be to fast track right-of-way approvals for new transmission lines. States have been advised to remove regulatory obstacles that may impede the progress of the network.

Hydrogen is also in the spotlight. The plan calls for pairing 15 hydrogen demonstration projects with a new renewable electricity production tax credit (PTC) to encourage carbon emis­sion reductions. Pioneer facilities would test carbon capture systems on steel, cement, and chemical production plants. Power plant s were omitted from this program.

Green hydrogen from renewable sources is the priority, but there is room for blue hydrogen, produced from natural gas and other fossil-fuel facilities. Such projects may be able to take advan­tage of a production tax credit.

The proposed Storing CO2 and Lowering Emissions (SCALE) Act addresses the development of large-scale carbon sequestration technology. The plan encourages carbon capture, utiliza­tion, and storage (CCUS) through the expansion of a tax credit, intended to make the technology “easier to use for hard-to-decarbonize industrial applica­tions, direct air capture, and retrofits of existing power plants.”

A10-year extension of the produc­t ion tax credit and investment tax credit for renewable energy generation, high voltage transmission, and energy storage is another element of the plan. Biden also appears to be betting on LNG as a smart way to lower the U.S. carbon footprint. This is to be achieved by lowering the emissions profile of LNG while addressing methane venting, fugitive emissions, and flaring.