The gas war part 1: The American electrification battlegrounds
By: Ketan Joshi
Tags: Fossil Fuels, Biden, Climate, Gas, Electrification

Every attempt to weave a narrative of our different possible climate futures share this single and extremely important commonality: the best-case outcomes involve eliminating fossil fuels. Coal, oil and gas.

As coal and oil suffer their own setbacks, gas has quickly become the last great hope for fossil fuel companies. Of the trifecta, it’s often seen as the best chance for extending the lifespan of a dying industry.

The gas industry is not starting in a strong position. The old forecasts of perpetual fossil growth are long gone. And the old idea that we must ‘bridge’ the transition using fossil gas is in its death throes. The latest report from the International Energy Agency (IEA), highlights the fact that far more emissions reductions occur switching from fossil fuels to renewables, than from switching from coal to gas:

The debate about how to generate electricity is close to done: gas has no place as a transition fuel, and even existing gas-fired generation is looking like a terrible bet, as other forms of integrating renewables become cheaper, safer and more readily deployable.

Bloomberg New Energy Finance’s latest outlook predicts a tipping point in five years, when it becomes more expensive to run coal or gas instead of building new unsubsidised renewable energy instead. Analysts suspect America’s gas peak is here right now, and that renewables will overtake it in 2028. The EU just announced the revocation of ‘green investment’ and ‘transition fuel’ labels for gas. Things are not looking up for the industry.

As the power fight winds down, a new battleground has emerged: the burning of gas in buildings. It will definitely be the thing, this decade, just as power generation was in the 2010s

Our homes, our cars, industry and businesses all burn fossil gas. The negative impacts of this reliance occur at many levels: extracting gas is harmful and transporting gas is harmful. Burning gas hurts us immediately, through air pollution impacts, and over time, through greenhouse impacts.

People still want to cook, be warm, manufacture things and move from one place to another: this means finding non-harmful alternatives to power life. Replacing gas-fired machines with electric alternatives (like an induction stove or a heat pump), and powering it using renewables is the simplest, cleanest options. In fact, a recent analysis from the US-based Rocky Mountain Institute (RMI) found that in 7 US regions, all-electric homes are cheaper to build in every instance, and that’s only set to increase.

These shifting price dynamics make electrification the mortal enemy of the gas industry.

Unlike the big, distant power plant debates of the past decade, this one is right in our homes. It is broadcast on our televisions and it is butting into our Instagram feeds. It is about our decisions as home owners, renters and citizens, and what we can and cannot due to the systems we are stuck within. It is new, and scary, and there is no reason to assume that the fossil fuel industry won’t be extremely effective at delaying decarbonisation.

The prototypes of the industry’s lobbying in this very unique and new type of climate fight are emerging in the United States — a country that is still struggling through the tail end of an election that saw a strong supporter of climate action rise to power, but in a stunted and limited way. It is going to be proto-typical battleground for this new gas war, and we can already see the fights breaking out.

America’s household gas fights

California is ground zero of the battle for electrification. It is the state with one of the most ambitious decarbonisation policies — getting fossil gas out of buildings and replacing it with something that’s zero carbon is very much on the cards right now. The fight is red hot — environmental groups, justice groups, the fossil gas industry and political players are running at full tilt.

There is a reason these local, city-level fights around fossil gas connections to buildings is so intense. A group representing gas fireplace and stoves said, in documents leaked to The Guardian, that:

“It has become clear in the last six months that electrification is an existential issue that will be with the industry for a long time, often playing out in smaller communities and with very little advance warning”.

In that investigative piece, a collection of leaked documents reveal plans to strike pre-emptively against the removal of fossil fuel infrastructure attached to the places we live. Gas lobby groups are pre-emptively attempting to push legislation that stifles attempts to ban or dis-incentivise gas hookups for new buildings. And because this fight is existential, the industry is behaving like a wild cornered animal:

It is a patchy, scrappy fight — in some places, the gas industry has been successful in fending off bans. Only a few days ago, San Francisco managed to successfully implement a ban on connections to fossil fuel supply for new buildings. The response from the American Petroleum Institute was immediate. In Palo Alto, another region that enacted an ‘all electric’ building mandate, the city is still paying a pro-fossil-gas lobby group, despite the new policy.

In New York, change is happening at a local, building level, with residents of one block fighting to have heat pumps and solar panels installed to replace the existing gas connections. Heat pumps in particular are proving extremely beneficial, with one recent study showing that they tend to increase the price premium of households in the US by around $USD10,400 to $17,000.

Unlike previous fights about grid-scale renewables and carbon prices, the electrification fight comes right down to the personal, household level. Consequently, fossil gas companies are increasing lobbying that targets people.

These usually involve big, expensive public relations and advertising firms targeting young potential home-owners. An incredible (and must-read) investigation by MotherJones earlier this year outlines how the gas industry is paying influencers eye-watering sums to promote fossil gas to their audiences.

Fun fact: the PR firm Porter Novelli frequently brags about its climate credentials on its Twitter feed.

California has become the centre of gravity for this fight because it is now subject to an ‘executive order’ from its political leadership to achieve net zero emissions across the economy by the year 2045. California’s ‘Energy Commission’, a government research agency, said that “there is a growing consensus that building electrification is the most viable and predictable path to zero-emission buildings,”. Another Energy Commission warned that this must be done equitably, to ensure those left on the gas network — those who cannot afford to electrify, or renters — are not burdened with sky-rocketing costs as gas networks are saddled with expensive but under-utilised assets.

Maintaining the bits and pieces of the gas network is expensive, whether they have 10 million customers, or 10 customers. If people left the gas network in droves, their revenues would drop, but their costs would stay the same. As they charge the few remaining customers through the roof to try to make up the gap, those customers leave, faced with the cheaper electrification option. “The gas utilities would face a budget shortfall of approximately $8 billion per year by 2050 if buildings were to electrify rapidly”, writes Inside Climate News.

That is what we commonly understand as a ‘death spiral’, and those numbers very neatly explain the existential dread that is driving the intensity of the electrons vs molecules war in California and, very soon, most of the United States.

California Energy Commission — “The Challenge of Retail Gas in California’s Low-Carbon Future”. The residential increases in gas rates are higher because the industry makes more money from charging for delivery in residential sectors, and makes more money from selling the gas itself in industrial and transport sectors.

Policies to ban the connection of gas in new building have been particularly incendiary, in California. In addition to San Francisco’s recent decision, Berkeley implemented one of these bans, along with several other cities in the state, and these decisions sparked incredible fights with gas companies along with various other industries.

Policies have shifted towards to encouraging electrification instead of banning gas, but various states in America have implemented laws that prohibit the banning of gas connections (yes, you read that right: it’s illegal to ban fossil fuel connections to homes, in these states):

“Arizona, Tennessee, Oklahoma and Louisiana all passed laws prohibiting local governments from adopting California-style building electrification measures in 2020” — S&P Global

Australia’s gas industry is watching closely

Remember the report finding that for some regions in America, all-electric is already cheaper than gas? Australia’s already there — every single region in the country is significantly better off with electric rather than fossil-fuelled homes.

As a consequence, a drumbeat of advertising and public relations efforts are ramping up in scale, just like in the US. It does not take long at all to find range of live ads running on Facebook and Instagram targeting specific Australian postcodes with content urging connection to the gas network, such as these ones, from Australian Gas Networks: