North American natural gas has a “bright future”: AGA head [Gas in Transition]
There is a “bright future” for natural gas and LNG – both in North America and globally, despite recent efforts in the US to ban its use and some “frustration” about permitting for pipeline construction, Karen Harbert, the president of the American Gas Association (AGA), told NGW on the sidelines of the LNG2023 conference in Vancouver in mid-July.
Over the past few years, a number of municipal authorities have banned the use of natural gas in new buildings, by preventing gas pipes from being installed and setting deadlines for restrictions on gas boiler sales. Berkeley in California was notably the first US city to announce a ban on natural gas in new buildings back in 2019. But that decision was overturned by a federal appeals court earlier this year – a decision that is reverberating across the country. In Oregon, the Eugene city council in July revoked a measure to ban gas hook-ups in new low-rise residential buildings.
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So while this recent legislatory push to force out gas is still a source of concern, Harbert is confident that natural gas continues to enjoy the backing of the US public, and that authorities are taking note of this support.
A recent poll undertaken by the AGA found that 76% of the population had a favourable view of natural gas, while only 5% were against it and 12% had no opinion.
“Any politician would kill for that approval rating,” Harbert said. “Average Americans prefer it because it’s more affordable and more reliable, and they’ve grown accustomed to it because of those attributes. We’re more efficient than electric heating.”
Consumers ultimately want choice and a fuel that can reliably keep their air conditioning running in the hottest days of summer and heat their homes during the coldest days of winter, she said.
The natural gas service providers that the AGA represents are working to reduce not only emissions from their own systems but also help customers reduce theirs through use of more efficient appliances, according to the president.
“Twenty-five states have passed legislation prohibiting the banning of natural gas,” she said. “So that’s half of the country and more than half the throughput of natural gas. Policymakers, based on input from their constituents and voters, have spoken. There’s other states that are considering the same thing.”
Still, she concedes that natural gas has become a more political divisive issue. “But it shouldn’t be because every American needs energy. We’re all on a path to a cleaner energy future. And by eliminating our industry you don’t get there faster, you actually make it harder and more expensive, she said.
For energy to be considered sustainable it has to be cleaner, but it also has to be affordable, according to Harbert. And energy systems also need to modernise over time, keeping up with the pace of technological progress.
North American LNG going global
Also important is the role that North American LNG can play on the global stage, Harbert said, helping developing nations increase their energy access and phase out coal, and assist Europe in replacing Russian gas in the wake of Moscow’s invasion of Ukraine.
“If you don’t address energy poverty, they’re going to continue to use the most affordable, dirtiest fuel possible, and we have to figure out how to address that,” she said. “LNG could be the best green solution to climate change ever. And it’s going to do a lot for the competitiveness of the US – it’s the right thing to support.”
“I think back to different global pinch points in global tension and global crises,” she continued. “American industry has always stepped up to the plate in one way or another. We had the Marshall Plan. We marshalled all the things we needed to do to actually expedite the production of weapons, and we know what to do. This is another inflection point. This time, it's the energy industry that has stepped up to prove that it can be a big part of calming global tensions, and doing good service to our allies. And, I think that is changing the conversation.”
President Joe Biden could be more supportive of LNG, according to Harbert, but his administration has recognised its value in responding to the crisis in Ukraine.
“I don't think you're going to see the Biden administration come out with a full-throated embrace of natural gas,” said Harbert. “That is not what the president ran on. He ran on a very climate-focused agenda. Sure, but things change, right? He didn't anticipate a war in Ukraine. He didn't anticipate a pandemic, where we came through for everybody in America, to be able to stay at home and change the energy dynamic completely. Suddenly we weren’t supplying energy to buildings downtown because [the office workers] weren’t there. It became 24/7 at home, and we figured that out.”
Regarding methane emissions there are no stringent regulatory targets in the US, she said. Instead, the industry has taken the initiative on its own and tackled emissions, because of customer interests, the need to maintain the social licence of natural gas and to meet investor expectations.
“I would like to see the industry get more credit, but that’s not what they’re looking for,” Harbert said. “They’re looking to stay in business and supply their customers.”
LNG and natural gas producers are maintaining capital discipline and this is not a bad thing, but there was a drop-off in investment as a result of the COVID-19 pandemic and now the industry is playing catch-up, she continued.
“We’re less balanced in terms of demand and supply than we would like, but we’re not out of balance – that’s important,” the president said. “The other side of the equation is, the LNG facilities are becoming more modern and modularised, which means they’re going to be more effective and cost-effective to produce and they’ll be built faster. And that will draw demand, which will obviously draw production. So, it’s a cycle there.”
As such, Harbert does not see efforts to secure project financing being impeded by investor concerns about support for fossil fuels, nor forecasts by the International Energy Agency (IEA) and others that predict significant decline in natural gas demand in the years to come – forecasts which she disagrees with.