HomeWorldClimateClimate goals could make gas heating obsolete. So why do gas companies keep adding customers? | Building more gas infrastructure is like investing in video rental stores 15 years ago, says expert
Climate goals could make gas heating obsolete. So why do gas companies keep adding customers? | Building more gas infrastructure is like investing in video rental stores 15 years ago, says expert
June 23, 2024
Climate goals could make gas heating obsolete. So why do gas companies keep adding customers? | Building more gas infrastructure is like investing in video rental stores 15 years ago, says expert
>Every day, new gas pipes are being installed and connected to homes and businesses across Canada. > >That’s a bad idea for achieving the energy transition to tackle climate change, according to Jason Dion, senior research director at the Canadian Climate Institute, who says it’s also a bad deal for gas customers. > >”Expanding gas infrastructure to heat buildings today would be like investing heavily in a chain of video rental stores 15 years ago,” he said in a statement accompanying the release of a new report, which looks at the policies influencing Canada’s transition away from carbon-emitting fossil fuel heating. > >And yet, based on regulatory filings by the gas industry, Dion and his colleagues found that investment in gas infrastructure is growing and new customers are being added in every province or territory with a gas network (so, everywhere except Newfoundland and Labrador, P.E.I., Nunavut and Yukon). > >That’s consistent with reports from the gas industry, which has doubled its customers in the last 10 to 15 years, according to Paul Cheliak, vice president of strategy and delivery with the Canadian Gas Association. “The market is telling us that it really wants the product,” he said. > >… > >Currently, gas provides 53 per cent of home heating and 82 per cent of commercial heating across Canada, with the highest share in Ontario, Saskatchewan and Alberta. > >The gas industry was set up as an industry of monopolies many decades ago, when the world was transitioning from dirtier heating fuels like coal and heating oil. It was overseen by provincial and territorial regulators whose key goal was to ensure safe and reliable energy at fair rates for customers. > >Gas companies are not allowed to turn a profit on the gas they sell, so they make money by constructing new gas pipes and infrastructure. The costs are spread out across the customer base over decades, lowering the cost per customer over time as more customers are added. If utilities want to grow, they need to build more, said Cheliak. > >Dion said that model incentivizes gas companies to keep growing the gas network, even when its long-term use is uncertain. > >… > >Low-income renters and other vulnerable people who don’t have the money or authority to change their heating system are expected to be the last customers on the gas network, according to Audrey Schulman, co-founder of HEET, a U.S.-based group that helps companies transition their business from supplying gas to providing heating through thermal networks or district heating. > >By continuing to expand the gas network, “you’re exacerbating what the Germans call that ‘last grandma problem,’ where they imagine one last low-income grandma on an entire gas system struggling to pay for all of it,” said Schulman, who’s originally from Montreal. > >… > >Kate Harland, lead author of the Canadian Climate Institute report, said utility regulators’ mandates should be changed to include climate targets, as has been done in the U.K. And they could change “obligation to serve rules” in order to consider alternative technologies, such as electrification, energy efficiency measures or thermal networks to provide heating to customers. > >In the U.S., many states are passing laws to allow gas utilities to operate thermal networks — pipes that carry heating and cooling in water rather than gas, says Schulman. Those include Colorado, Maryland, Minnesota, New York and Washington. > >It is the perfect method to allow gas utilities to transition and keep or increase their annual profit, while at the same time reducing the customer’s energy bills, according to Schulman. > >… > >Harland says current incentives alone won’t drive down customer demand for gas quickly enough and energy policies need to change. “Stop treating gas system expansion as the default option,” she said.
Continuing to build out this kind of infrastructure isn’t just a problem from a long term business perspective but also works actively against any efforts to move beyond a fossil fuel-based system. There should be more deliberate efforts to wean ourselves off this energy source rather than rely on industry to make those changes proactively.
I mean, the gas companies are for-profit entities (at least, here in USA, presumably too in Canada?), they can’t/won’t/shouldn’t say “look, your best bet is to install heat pumps”, how’d they profit from that?
Where I am (Central Texas, USA) “heating” is mostly a weird foreign concept (we need that on maybe 3 days a year!), what we need is cooling (I mean of conditioned building space, sure we need water heated). In areas that need heating, they should all simply use the heat from data centres: Co-locate data centres where people need heat (massive data centres feeding into neighbourhood heat networks, or distributed data centres in residential areas (in car-garage-sized setups, etc.))
3 comments
Several points from this article:
>Every day, new gas pipes are being installed and connected to homes and businesses across Canada.
>
>That’s a bad idea for achieving the energy transition to tackle climate change, according to Jason Dion, senior research director at the Canadian Climate Institute, who says it’s also a bad deal for gas customers.
>
>”Expanding gas infrastructure to heat buildings today would be like investing heavily in a chain of video rental stores 15 years ago,” he said in a statement accompanying the release of a new report, which looks at the policies influencing Canada’s transition away from carbon-emitting fossil fuel heating.
>
>And yet, based on regulatory filings by the gas industry, Dion and his colleagues found that investment in gas infrastructure is growing and new customers are being added in every province or territory with a gas network (so, everywhere except Newfoundland and Labrador, P.E.I., Nunavut and Yukon).
>
>That’s consistent with reports from the gas industry, which has doubled its customers in the last 10 to 15 years, according to Paul Cheliak, vice president of strategy and delivery with the Canadian Gas Association. “The market is telling us that it really wants the product,” he said.
>
>…
>
>Currently, gas provides 53 per cent of home heating and 82 per cent of commercial heating across Canada, with the highest share in Ontario, Saskatchewan and Alberta.
>
>The gas industry was set up as an industry of monopolies many decades ago, when the world was transitioning from dirtier heating fuels like coal and heating oil. It was overseen by provincial and territorial regulators whose key goal was to ensure safe and reliable energy at fair rates for customers.
>
>Gas companies are not allowed to turn a profit on the gas they sell, so they make money by constructing new gas pipes and infrastructure. The costs are spread out across the customer base over decades, lowering the cost per customer over time as more customers are added. If utilities want to grow, they need to build more, said Cheliak.
>
>Dion said that model incentivizes gas companies to keep growing the gas network, even when its long-term use is uncertain.
>
>…
>
>Low-income renters and other vulnerable people who don’t have the money or authority to change their heating system are expected to be the last customers on the gas network, according to Audrey Schulman, co-founder of HEET, a U.S.-based group that helps companies transition their business from supplying gas to providing heating through thermal networks or district heating.
>
>By continuing to expand the gas network, “you’re exacerbating what the Germans call that ‘last grandma problem,’ where they imagine one last low-income grandma on an entire gas system struggling to pay for all of it,” said Schulman, who’s originally from Montreal.
>
>…
>
>Kate Harland, lead author of the Canadian Climate Institute report, said utility regulators’ mandates should be changed to include climate targets, as has been done in the U.K. And they could change “obligation to serve rules” in order to consider alternative technologies, such as electrification, energy efficiency measures or thermal networks to provide heating to customers.
>
>In the U.S., many states are passing laws to allow gas utilities to operate thermal networks — pipes that carry heating and cooling in water rather than gas, says Schulman. Those include Colorado, Maryland, Minnesota, New York and Washington.
>
>It is the perfect method to allow gas utilities to transition and keep or increase their annual profit, while at the same time reducing the customer’s energy bills, according to Schulman.
>
>…
>
>Harland says current incentives alone won’t drive down customer demand for gas quickly enough and energy policies need to change. “Stop treating gas system expansion as the default option,” she said.
Continuing to build out this kind of infrastructure isn’t just a problem from a long term business perspective but also works actively against any efforts to move beyond a fossil fuel-based system. There should be more deliberate efforts to wean ourselves off this energy source rather than rely on industry to make those changes proactively.
I mean, the gas companies are for-profit entities (at least, here in USA, presumably too in Canada?), they can’t/won’t/shouldn’t say “look, your best bet is to install heat pumps”, how’d they profit from that?
Where I am (Central Texas, USA) “heating” is mostly a weird foreign concept (we need that on maybe 3 days a year!), what we need is cooling (I mean of conditioned building space, sure we need water heated). In areas that need heating, they should all simply use the heat from data centres: Co-locate data centres where people need heat (massive data centres feeding into neighbourhood heat networks, or distributed data centres in residential areas (in car-garage-sized setups, etc.))