ENERGY TRANSITIONS

Emails: Utilities drafted talking points against gas bans

Lawmakers in roughly a dozen states are using strikingly similar talking points as they unleash a wave of legislation aimed at forbidding municipalities from banning natural gas in buildings.

A Pennsylvania legislator wants to forbid municipalities from restricting gas hookups because he says it's fossil fuel discrimination. In Georgia, the sponsor of similar legislation said it would protect "freedom of choice." The leader of a Texas bill says, "If a citizen wants to have gas in their home they can."

That's no coincidence.

Documents obtained by E&E News show how the natural gas industry has honed a unified message as it rushes to block efforts in a small but growing number of cities that seek to limit gas consumption in buildings.

Talking points, crafted by a consortium of gas utilities, encourage energy companies and their allies to extol the dangers of limiting gas hookups. They argue such measures threaten to lock homeowners and businesses into costly energy options and stress the importance of fuel diversity. They also tout the environmental benefits of gas, which has elbowed out coal in the power sector and helped reduce carbon emissions.

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The industry has even coined a term for the pro-gas fight: "energy choice."

The gas industry's message has been echoed in statehouses across America since the start of 2020. Eighteen states have passed laws prohibiting municipalities from restricting gas hookups on new construction. A handful of others, including North Carolina, Ohio and Pennsylvania, are weighing similar plans. Industry representatives have often partnered with builders' associations, restaurant groups and real estate agents to make their case.

The race to enact legislation is a response to local mandates restricting gas hookups in new buildings. These energy entry points at new residential structures can dictate which fuels will be used to heat rooms and water and for cooking over the lifetime of a home.

More than 40 California cities have adopted measures restricting gas hookups, and cities in other parts of the country have started to mimic those policies as a way to address climate change. Seattle enacted similar restrictions earlier this year, and the New York City Council introduced a proposal to limit new gas hookups last week.

The stakes for the gas industry are enormous.

Residential and commercial buildings represent a quarter of total U.S. gas demand. Roughly half of U.S. households rely on gas for space heating. But as policymakers in cities and towns have ramped up their climate ambitions, they have zeroed in on the emissions associated with burning gas to heat buildings and water and to power cooktops.

Fossil fuel consumption associated with residential and commercial buildings accounted for almost 9% of U.S. emissions in 2019, according to EPA figures.

The risks to the gas industry were underscored last month when the International Energy Agency outlined a pathway to net-zero emissions by 2050. It forecast that gas consumption in buildings worldwide would plummet from 30% for home heat now to 0.5% in 30 years.

"To me, this is a clear battle over market share," said Morgan Bazilian, who leads the Payne Institute at the Colorado School of Mines. "I don't see how anyone could describe it any other way."

Documents obtained by E&E News show how the industry is waging the fight.

'Show of force'

Last November, a group of gas utilities associated with the Energy Solutions Center (ESC), a trade group, workshopped a series of talking points with the goal of educating consumers about "the benefits of natural gas and the consequences of mandated electrification."

The talking points describe gas restrictions as an affront to free choice. They raise doubts about the costs of substituting natural gas for electricity. And they argue the gas industry can reduce its emissions by cutting down on methane leaks while expanding the production of renewable natural gas — methane produced from sources like animal waste and landfills.

"What we're seeing is a well-organized, coordinated campaign to demonstrate a show of force," said Alejandra Mejia Cunningham, a building decarbonization advocate at the Natural Resources Defense Council. "They are certainly prioritizing their bottom line at the expense of local communities who have the clear mandate to take action against climate change, indoor air pollution and the health of the buildings their residents live in."

The industry's talking points are careful not to cast gas companies as an opponent of renewable energy or climate policy. They stress the "greater good" of diverse energy supplies, note a role for wind and solar in the power mix, and encourage companies to highlight the historical emissions reductions in the power sector.

Industry representatives argue they are not opposed to electrification — just to electrification mandates. They acknowledge companies are communicating about local gas restrictions but contest notions that the industry is waging a coordinated political campaign.

ESC, for instance, does not employ lobbyists.

"We are not a policy or advocacy group and, as such, are not involved in the effort in Pennsylvania or any other state," David Weiss, the center's executive director, wrote in an email.

But if ESC is not an advocacy organization in a traditional sense, internal documents show how it has worked to shape the debate around gas restrictions and electrification. The center's board of directors issued a report in January that offers "options and alternatives to electrification."

"Engage trade allies, builders, and others, resulting in a cohesive message regarding consumer choice," read one bullet point, describing the group's strategy.

"Address the necessity of reliability resilience, and backup generation resulting in a better educated consumer," said another.

"Participate in industry coalitions supporting local, state, and federal efforts to keep natural gas as an energy option for consumers," a third stated.

The documents were obtained in a public records request by the Energy and Policy Institute, a think tank that describes its mission as exposing attacks on renewable energy, and shared with E&E News.

Several gas industry representatives acknowledged the industry faces a fight.

"There is no doubt there is a national activist campaign that is taking on these guys wherever they can," said Frank Maisano, a media specialist who represents several gas utilities at Bracewell LLP, a Washington-based law firm. "The same talking points that appear in Santa Barbara appear in San Francisco that appear in Seattle."

Gas utilities, he added, are providing a product people want.

"You're looking at people who have to deliver a reliable and affordable product to consumers who are demanding it," Maisano said. "Consumers aren't demanding that they don't deliver that gas."

'Existential threat'

It's unclear what a decarbonized market for heating and cooking fuels actually looks like.

Greens argue electricity generated from carbon-free sources should increasingly power space heaters, water heaters and cooktops. The gas industry has pegged much of its hope on renewable natural gas and hydrogen, two fuels with low-carbon content that could be sent through pipelines to heat homes and buildings.

A recent paper from researchers at Columbia University argued electrification and cleaner fuels could work together. It recommended that policymakers consider renewable gas standards to encourage the use of more renewable natural gas and hydrogen.

But some experts are skeptical about using those fuels residentially.

Eric Fournier, research director at the California Center for Sustainable Communities at UCLA, reckons renewable natural gas and hydrogen would be better used to decarbonize heavy industry. But renewable gas standards might be the industry's best option in a decarbonizing world, he said.

"An [renewable portfolio standard] for gas would provide a guaranteed market for the resource going forward," Fournier wrote in an email. "Right now, the alternative which the gas companies presently face — full electrification of all end-uses — represents an existential threat to their business model."

The high stakes help explain the efforts of industry groups to fight electrification mandates.

An investigation by NPR earlier this year showed how the American Gas Association helped coordinate efforts to oppose local gas restrictions. A spokesman for the industry group said the gas association "will absolutely oppose any effort to ban natural gas or sideline our infrastructure anywhere the effort materializes, statehouse or city steps." But he argued the effort was not intended to fight climate policy.

"Natural gas is key to achieving the cleaner energy future we all want," the spokesman wrote in an email to E&E News.

ESC is a small player by comparison. Still, there are links between the two groups: AGA houses ESC at its offices and pays the salary of the center's executive director.

The center has traditionally focused on selling natural gas equipment to large gas consumers. Utility representatives that participate in the group generally hail from customer outreach teams. The center waded into the electrification debate last year, forming a consortium to study the issue as more municipalities adopted restrictions on gas use.

A representative of Eversource Energy, a New England utility, described the group as an anti-electrification consortium. Other members disputed that characterization after E&E News reported on the group's existence last month (Climatewire, May 3).

"ESC educates utility account representatives through conferences and webinars regarding natural gas equipment," said Weiss, the center's executive director. "Part of that education has recently included a review of the impact of various electrification policy efforts."

Documents show the group has been a forum for utilities to discuss state bills meant to preempt gas bans. In December, utilities belonging to ESC provided updates to each other on the progress of legislative measures in their respective state capitals, according to meeting minutes from the gathering.

CenterPoint Energy Inc., a Texas gas utility, reported it had seen no efforts to ban gas in its area but said it was "trying to stay ahead of the curve and be proactive rather than reactive." When one attendee said Arizona had recently passed a law preempting local gas restrictions, an official from the Municipal Gas Authority of Georgia reported its state was looking into a similar measure. A Southern Co. representative reported Alabama and Tennessee had passed similar restrictions.

"It is refreshing to hear that some states are allowing freedom of choice," the minutes read.

When a representative of Southeast Gas noted her company was working on talking points for its employees regarding the risks of electrification, it galvanized a consensus among members.

"It would be good for the consortium to work on the same," the minutes said. One attendee committed to "draft some items for the group to review."

Those talking points have echoed in statehouses.

'Highly offensive'

In Texas, a lobbyist representing CenterPoint and Atmos Energy Corp., a member of ESC's electrification consortium, testified with a board member of the South Central Hearth, Patio and Barbecue Association, who lambasted electrification mandates as imposing a costly lifestyle choice upon consumers.

"We think it's highly offensive not to allow Texas homeowners the right to choose how they spend quality time with their family and be able to have as many heat sources available to them as possible," Todd Harkrider, the South Central Hearth, Patio and Barbecue Association board member, told lawmakers.

A legislative hearing on Georgia's bill to preempt a potential gas ban unfolded in a similar way.

"What we're interested in is freedom of choice for homeowners and future homeowners," said Brad Mock, director of governmental affairs for the Georgia Association of Realtors. "If they know their budget, their household budget, then they should be able to make the best choices for that budget, whether it be solar or natural gas. If there was an effort to ban solar, we would be here having the same conversation."

The bills sailed through the Texas and Georgia legislatures.

The fate of such measures in purple states like Pennsylvania is less clear. Gov. Tom Wolf, a Democrat, could veto the bill if Republican lawmakers advance it as a stand-alone piece of legislation. But the governor may allow it to pass if Republicans insist on including it as an amendment to the state's budget package, political observers said.

Thus far, the debate over preempting gas bans in Pennsylvania has mirrored the discourse in other states. Municipal organizations and environmentalists lined up to oppose the bill, casting it as an attack on local authority and an attempt to tie the hands of communities seeking to implement climate proposals.

The Consumer Energy Alliance, a trade group counting oil and gas producers and gas utilities among its members, claimed gas restrictions could lead to skyrocketing energy costs. The Energy Association of Pennsylvania, a utility lobby, highlighted emissions reductions in the power sector, stemming in part from an increase of gas over coal.

The push against electrification comes as some utilities are expanding their gas business.

Two utilities, National Fuel Gas Co. and UGI Corp., belong to the Consumer Energy Alliance, the Energy Association of Pennsylvania and ESC's electrification consortium. Both have expanded their gas business in the past year. National Fuel acquired Royal Dutch Shell PLC's production and pipeline assets in Tioga County, Pa., for $500 million. And UGI bought Mountaineer Energy Holdings LLC, a West Virginia-based gas utility, for $540 million.

Those companies have also pledged to reduce their contribution to climate change. In March, UGI said it would cut emissions directly associated with its operations 55% by 2025. National Fuel committed to reducing emissions from its utility division 75% of 1990 levels by 2030 and 90% by 2050. The pledge, made in March, does not cover the company's gas production division.

In an email, a National Fuel spokeswoman said the company is not opposed to electrification but believes energy providers and consumers can purchase energy based on their specific needs.

"The company believes legislation preserving the rights of customers to choose among currently available and state-approved energy sources is necessary," wrote Karen Merkel, the National Fuel spokeswoman.

Sponsors of the bills to preempt gas bans in Georgia, Texas and Pennsylvania did not respond to requests for comment.

Some industry officials acknowledge that utilities are talking among themselves about the growing movement to replace gas with electricity. They see it as a life-or-death business situation. But they disagree that it's a coordinated national campaign to undermine electrification — a move that many cities see as a pillar of their climate policy.

"There is a lot of communication. I wouldn't call it coordination," said Terrance Fitzpatrick, president and CEO of the Energy Association of Pennsylvania. "For a gas utility, banning new hookups of gas service is an existential threat."

Twitter: @bstorrowEmail: bstorrow@eenews.net

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