Pathway to a Low-Carbon Future

Our Proposed Pathway to a Low-Carbon Future

 


 

When the Climate Leadership and Community Protection Act (the Climate Act) was signed into law in 2019, it placed New York State at the forefront of one of the most ambitious greenhouse gas reduction commitments of any major economy. It also called for the formation of a Climate Action Council (CAC) to create a scoping plan to offer recommendations on how the state should achieve these commitments. There are several possible pathways New York State can take to achieve the Climate Act’s goals – but these pathways need to be carefully evaluated to develop a solution that reduces carbon emissions while minimizing impacts upon various sectors, regions, and consumer groups across the state.

We believe the best emissions reduction pathway is the one that provides both environmental and economic sustainability, achieving the Climate Act’s targets while providing energy delivery system resiliency, integrity, and reliability, and offering options for more affordable carbon reduction measures.

 

 

In March 2021, National Fuel formally announced targets for greenhouse gas (GHG) emissions reductions for its utility segment, National Fuel Gas Distribution Corporation (Distribution), and an expansive pathway for its New York utility business to achieve the emissions reduction targets outlined in the Climate Act.

Specifically, Distribution is targeting GHG emissions reductions of 75% by 2030, and 90% by 2050, from 1990 levels for its utility delivery system, driven by its ongoing modernization efforts, including continued replacement of older vintage mains and services.1. These targets surpass those set by New York State under the Climate Act, building upon the Company’s environmental initiatives detailed in its Corporate Responsibility Report.

Utilizing the Guidehouse study’s finding on the Selective Electrification approach to reduce GHG emissions within New York State by the year 2050, National Fuel’s proposed pathway centers on four key pillars:

  • Scale Energy Efficiency: Ample opportunities exist for efficiency in three sectors: transportation, buildings, and industry. To improve efficiencies, Distribution will continue to pursue existing and expanded building shell improvement programs that reduce consumption, while evaluating hydrogen and other low-carbon solutions, as well as hybrid-heating technology using a high-efficiency gas furnace in concert with an electric air source heat pump. Also, since its inception in 2008, the Company’s Conservation Incentive Program has helped more than 150,000 customers upgrade to higher-efficiency natural gas appliances achieving total emission reductions of approximately 1.3 million metric tons of carbon dioxide (CO2e).
  • Reduce Utility Emissions: To meet the Climate Act’s goals, Distribution must continue to reduce its GHG emissions. As of March 2021, modernization of Distribution’s pipeline network and other infrastructure investments have driven a significant reduction in its GHG emissions, lowering them by over 400,000 metric tons annually — or 62% — since 1990. These modernization efforts are expected to continue in the years ahead, driving additional GHG reductions.
  • Decarbonize the Energy Source: Increased reliance on low- and zero-carbon renewable sources is required to achieve the Climate Act’s goals. This includes solutions such as renewable natural gas and hydrogen-enhanced natural gas that would use Distribution’s existing infrastructure. Using 100% hydrogen systems would provide solutions for industrial processes that are difficult to fully decarbonize. To support its efforts, the Company is an anchor sponsor of the Low-Carbon Resources Initiative (LCRI), a unique collaboration of the Electric Power Research Institute (EPRI) and Gas Technology Institute (GTI) to accelerate the development and demonstration of low-carbon energy technologies. Distribution believes these tools will be critical in developing viable pathways for reducing GHG emissions.
  • Leverage the Existing Energy Delivery System: Leveraging our existing pipeline system for the delivery of low-carbon energy will be critical to reducing the emissions profile for hard-to-electrify end uses, such as high-temperature industrial processes and heavy-duty trucking to ensuring that residential customers are not disproportionately burdened with electrification requirements and related costs. Additionally, as natural gas presently provides approximately 94% of the energy used by a typical residence in Western New York on its coldest days, Distribution’s highly reliable and weather-hardened pipeline network is expected to serve an essential role in addressing reliability and energy delivery certainty challenges, particularly during severe climate events.

 

1. Baseline emissions and emissions reduction target for scope / emissions are calculated pursuant to the reporting methodology under the United States Environmental Protection Agency’s GHG reporting program (currently Subpart W), primarily distribution pipeline mains and services.

Disclosures Regarding Forward-Looking Statements

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “believes,” “will,” “may,” and similar expressions, and statements other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. While the Company’s expectations, beliefs, and projections are expressed in good faith and are believed to have a reasonable basis, actual results may differ materially from those projected in forward-looking statements. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: (1) the Company’s ability to estimate accurately the time and resources necessary to meet emissions targets; (2) disallowance by applicable regulatory bodies of appropriate rate recovery for system modernization; (3) moves to reduce or eliminate reliance on natural gas; and (4) the other risks and uncertainties described in (i) the Company’s Form 10-K at Item 7, MD&A, and Forms 10-Q at Item 2, MD&A, under the heading “Safe Harbor for Forward-Looking Statements,” and (ii) the “Risk Factors” included in the Company’s Form 10-K at Item 1A, as updated by the Company’s Forms 10-Q for subsequent quarters at Item 1A. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof. Because of these risks and uncertainties, readers should not place undue reliance on these forward-looking statements or use them for anything other than their intended purpose.