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Reprinted from E&E News with permission from POLITICO, LLC. Copyright 2021. E&E News provides essential news for energy and environment professionals.
A fight over the future of natural gas is simmering in Nevada, highlighting questions about equity and energy costs that could cloud efforts to decarbonize the buildings sector.
Nevada is one of at least seven states this year where lawmakers are considering proposals to phase out or reduce the use of natural gas in homes and businesses, according to a tally by the American Gas Association. A state lawmaker, Assemblywoman Lesley Cohen (D), is set to introduce legislation that would set emissions reduction targets for buildings over the next 30 years, to ultimately achieve a 95% decrease in emissions from buildings by 2050. Under the plan, energy efficiency measures and electrification would be the primary means for decarbonization.
While it’s unclear if the bill will pass, Gov. Steve Sisolak (D) backed a climate strategy last year that called for switching from gas-powered to all-electric buildings. The Nevada debate is also showcasing how gas ban proposals nationally can face resistance not just from gas utilities, but from business and union groups in states with Democratic-controlled legislatures.
Supporters say the measure provides a framework for the state to plan a gradual, cost-effective transition away from natural gas that protects ratepayers from potential so-called stranded assets — such as new gas infrastructure that could be of little value in the future. They say the proposal is a natural step for Nevada to move toward its commitment to “zero or near-zero” greenhouse gas emissions economywide by 2050, as the state pledged to do under a bill passed in 2019.
“Responsible energy planning isn’t just a necessity, it’s an unparalleled opportunity to create good jobs, diversify our economy, and lead the nation in renewable energy innovation,” Cohen said in a statement. “In a legislative session full of economic challenges and tough choices, this one is easy: let’s make sure we’re getting the best returns on our energy investments in the years to come.”
But Southwest Gas, the utility that services the majority of homes and businesses in the state, plans to oppose the bill, and real estate and minority business groups are also raising concerns. Echoing arguments made in statehouses and cities around the country that have considered similar gas transition measures, opponents say that limiting the ability of new businesses and homes to connect to the gas system will drive up energy costs and hurt small businesses.
Under the plan, gas providers would need to decrease emissions 2.5% by the end of 2022 relative to 2016 levels and continue reducing emissions every two years thereafter. To achieve the initial 2.5% reduction, Southwest Gas estimates that it would need to electrify over 120,000 homes and businesses by the end of next year, which could drive up rates for customers still in the system, said Scott Leedom, the utility’s director of public affairs.
“The legislation would eliminate consumer energy choice and eliminate the smallest utility bill to replace it with an all-electric bill that would typically be the highest,” Leedom said.
The Natural Resources Defense Council — which helped craft the bill along with the Nevada Conservation League and Cohen — argues that the measure would actually lower energy costs by ensuring that ratepayers don’t foot the bill for new, costly gas projects.
The bill also directs the state Public Utilities Commission to assess strategies for minimizing impacts on low-income customers and managing workforce changes that could result from reduced gas use. The PUC would prepare a report in 2022 recommending policies for easing the transition, the bill states.
“What this bill does is give the commission more tools to scrutinize gas investments,” said Dylan Sullivan, a senior scientist with NRDC in Reno, Nev. “We’re at risk of gas utilities wasting ratepayer money and making the transition problem more difficult.”
A ‘job killer’?
Backers of the Nevada bill say the evidence in favor of all-electric buildings is significant and is supported by state reports.
Last year, the Nevada Climate Initiative — a division of the Department of Conservation and Natural Resources — released a report supported by the governor on potential policies the state could pursue to meet its climate goals, which included a transition from gas to all-electric buildings (Energywire, Dec. 3, 2020).
A separate report from the Nevada Division of Environmental Protection also said last year that the state could provide incentives for new construction and existing buildings “to switch from fossil fuels to all electric,” to reduce emissions from buildings.
“The fact that [electrification] is prevalent in each of those reports shows a real commitment from the governor to invest in those proposals to make sure we’re moving forward and reaching our greenhouse gas emissions reduction goals,” said Paul Selberg, executive director of the Nevada Conservation League.
Some national studies have also found that connecting heating systems and appliances to the electric grid could be a cost-effective way to decarbonize buildings. A major report released in December from Princeton University, for example, said that electrification of buildings must increase dramatically this decade if the United States is to achieve net-zero emissions by 2050 (Energywire, Dec. 16, 2020).
Others who support the bill say it could boost jobs and the economy. Unlike some other states considering building electrification, such as Colorado and California, Nevada has no significant gas reserves, but it does have solar and geothermal resources and a growing clean energy economy.
The gas industry counters that electrification is prohibitively expensive. It has instead promoted low-carbon fuels such as renewable natural gas and “green” hydrogen. But it’s not clear whether large quantities of those fuels could be safely mixed into gas pipelines at a reasonable cost, and few utilities are currently planning RNG or hydrogen investments that would substantially reduce emissions.
Other skeptics, like the local chapter of the International Brotherhood of Electrical Workers, disagree that the plan would create jobs. The bill could effectively end the gas industry in the state and drive up energy costs in the process, said Danny Thompson, a consultant for IBEW Local 1245 and two local chapters of the International Union of Operating Engineers, a union within the AFL-CIO.
“We’re looking at this as a job killer,” Thompson said.
Some Democrats in the Legislature may oppose the measure, as well. During a recent committee meeting on the state’s climate change strategy, Democratic Assemblywoman Daniele Monroe-Moreno questioned the idea of getting rid of gas stoves, saying she wasn’t ready to give hers up “just yet.”
For now, the NRDC and other groups supporting the bill are meeting with different groups and individuals about the proposal, Sullivan said.
Cohen, the bill sponsor, said she is hopeful that lawmakers will support the bill, given that the Legislature unanimously approved a 50% renewable energy standard during the last session.
“I’m working hard to do that outreach and listen to all perspectives about this energy transition,” Cohen said in a statement.