Natural gas tarred as ‘the new coal’

Regulators ponder future of resource

Panellists (from left) Doug Stout, FortisBC’s vice-president of marketing, development and external relations; Meghan Harris-Ngae, EY’s energy market leader; and Paul Cheliak, Canadian Gas Association’s vice-president of government and regulatory affairs, discuss the future of natural gas | Rob Kruyt

If British Columbians think their power bills are high now, and that $8.8 billion is a lot to pay for the new Site C dam, consider this: natural gas meets 35% of Canada’s energy needs, and phasing it out will require a 200% increase in electricity generation, according to Paul Cheliak, vice-president of government and regulatory affairs for the Canadian Gas Association.

And the cost of that new power? About eight to 12 times higher than natural gas, per unit of energy, if wind power is used, 15 times higher for solar power, and four to nine times higher for renewable natural gas such as landfill gas.

Cheliak was among the speakers at a panel discussion on the future of natural gas at a Canadian Association of Members of Public Utility Tribunals conference held last week in Vancouver.

The discussion focused on whether natural gas will be an important bridge fuel in the shift to a lower-carbon world – or the new coal.

There was perhaps no better city in which to ask that question than Vancouver, where a provincial government has been trying to develop an export market for B.C.’s gas in the form of liquefied natural gas (LNG), while the City of Vancouver has been moving to ban it in new developments.

“Natural gas has been – you’ve probably seen this quoted – the bridging fuel to a low-carbon future,” said Meghan Harris-Ngae, energy market leader for EY.

If used to replace coal power or even Russian pipeline gas in China, North American LNG exports would have a net benefit in terms of reduced greenhouse gases, according to a study published in Environmental Science & Technology in 2015.

It would also have a net benefit when used to backstop new renewable energy, or to displace transportation fuels like diesel, bunker fuel and gasoline.

But as a source for heating, it is fast becoming a pariah fuel, which poses a challenge for natural gas utility companies like FortisBC.

There have already been moves in Canada, including Ontario, to phase it out as a heating source. The City of Vancouver is the latest jurisdiction to enact policies that would phase it out.

At the beginning of May, the city passed a new zoning bylaw that places emissions limits on new buildings during rezoning. By 2050, the city wants to have 100% of the energy used in Vancouver to be renewable.

The new policy is considered a de facto ban on natural gas, because the amount of available renewable natural gas (methane captured from landfills and dairy farms) is so minuscule it is virtually non-existent.

The move highlights a wide gulf between various levels of government and regulators. The BC Utilities Commission had no say on the city’s policy, even though it has the potential to affect homeowners’ heating costs.

Those attending last week’s conference heard that there is also a disconnect between federal, provincial and municipal governments on energy and climate change policies that could leave utility companies like FortisBC with stranded assets.

Cheliak said that, after it was elected, the new federal Liberal government came out with a de facto energy plan as part of its climate change strategy that is effectively an “electrification agenda.”

“That was done well in advance of the consultation even starting,” he said. “Our issue is it’s hard to have a consultation that’s fruitful when, in our view, you have already published the results of your consultation.”

Asked if natural gas will soon be considered in the same light as coal, Doug Stout, vice-president of marketing, development and external relations for FortisBC, said it already is in some quarters.

“In Canada I think there is a target on gas – that it is the new coal,” Stout said.

There are uses for natural gas other than heating, including as a transportation fuel – a market FortisBC is already pursuing. But its main business is supplying Canadians with natural gas for heating.

Cheliak said he thinks a transition away from natural gas for heating is something that is still some way off.

He said coal’s demise in North America is not just the result of government policies on climate change, but has also been brought about by competition from natural gas, which not only is lower in carbon content but – in North America at least – is also plentiful and cheap.