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National Grid to make New York gas network fossil-fuel-free with hydrogen

21 April 2022 Cristina Brooks

A New York gas network operator aims to eliminate natural gas services by 2050 in line with both company and state net-zero targets.

UK-headquartered National Grid, New York's main gas and power supplier alongside Con Edison, announced it will stop supplying fossil fuels from its gas networks in two US states in its 19 April Clean Energy Vision strategy.

It foresees supplying biogas or green hydrogen instead of fossil fuel gas to customers of the New York and Massachusetts gas networks it operates by 2050 or sooner. It also operates a gas network in Rhode Island.

"Just as we are investing in renewables like wind and solar to decarbonize the energy running through our electric network, we are committing to decarbonize our gas network by transitioning it completely to renewable natural gas and hydrogen," said National Grid CEO John Pettigrew.

The strategy published this week aligns with National Grid's 2050 net-zero goal for its global operations, including the products it sells to customers, published in 2019.

National Grid's strategy, however, may be changed to align with future New York laws. New York launched a December consultation on policies that will allow it to reach its 2050 net-zero goal, expanding on those enacted in 2019 under the Climate Leadership and Community Protection Act (CLCPA).

The CLCPA targets 70% renewable electricity by 2030 alongside higher offshore wind, energy storage, and solar capacity, for which it is already targeting 10 GW in added capacity. The state is aiming for 100% carbon-free electricity by 2040.

Potential paths to reaching this goal in the policies include requiring utilities, consumers, businesses, and building owners to ramp up the use of electric heat pumps, EVs, low-carbon fuel, and carbon capture, utilization, and storage (CCUS). But regulations aren't due to be enacted until 2024, according to New York law firm Sive, Paget & Riesel.

Similarly, last year Massachusetts signed into law commitments to reach net-zero emissions in 2050, including electric power and heating-specific decarbonization targets, in Senate Bill 9.

Last month National Grid demonstrated its "strategic pivot to electricity" when it announced the sale of a majority stake in the UK National Transmission System (NTS) for £9.6 billion ($12.5 billion). It had sold its stake in a London gas distribution network in 2017.

Push for hydrogen over heat pumps

National Grid's strategy proposes switching from natural gas boilers to newer technologies to align with states' climate action plans.

Household and commercial heating—including for hot water, cooking, dryers, fireplaces, outdoor grills, and industrial processes—accounts for 39% of emissions in Massachusetts and New York, National Grid said.

About 57% of households in these states have a gas furnace or boiler system as opposed to electric, oil, or propone boilers, and 1% use a heat pump.

Heating technology could shift to zero-emissions in one of two ways, according to National Grid. Either policymakers could opt for a 90% electrification using heat pumps or they could opt for 50% electrification using heat pumps alongside hybrid boilers that run off fossil fuel-free gases like biogas and green hydrogen.

The biogas would be the kind produced from landfills, farms, and sewage which National Grid has been using in its gas system since 1981.

National Grid said continuing to heat homes with different gases, which keeps its existing gas grid service operational, also offers customers the choice between heating technologies.

Consumers, it implied, are unlikely to choose to install an electric heat pump in Massachusetts or New York, where it costs roughly $20,000-$60,000, and tariffs would be needed to finance the shift. It estimated that installing gas-fired hybrid boilers as well as heat pumps in Massachusetts and New York would save $110 billion-$200 billion economy-wide.

What's more, the land on which to build heat pumps is scarce, making it "difficult to electrify 30-70% of building space in the urban areas of New York City and Boston."

But the push to heat homes with green hydrogen is not without cost barriers.

Existing gas networks can only accept flows including a maximum 20% of hydrogen or biogas. The operator wants to blend 10-20% biogas in grids by 2030, then modify grids to enable a scaling up to 20% green hydrogen and 30% biogas in networks by 2040.

For areas with higher demand, the grid operator foresees 100% hydrogen networks being built, using the $9.5 billion for hydrogen hubs proposed by the US Department of Energy (DOE) in February.

Last year, the DOE also announced its "Hydrogen Shot" target to reduce the cost of green hydrogen by 80% over the next 10 years.

It says hydrogen is key to meeting President Joe Biden's goal of a 100% clean electrical grid by 2035 and net-zero carbon emissions by 2050.

National Grid said it would launch discussions on partnering with state authorities to propose a joined-up regional Hydrogen (H2) Hub and said it would research ways to make heat pumps cheaper, such as by using geothermal networks.

UK hydrogen network plans

The UK is racing towards green hydrogen markets more quickly than the US. At the start of April, the UK boosted green hydrogen production targets in its Energy Security Strategy, intended to combat rising natural gas prices across Europe.

For example, the UK's largest power generator, EDF, has a target of 3 GW of green hydrogen projects worldwide, and UK-headquartered Shell has pledged to invest £25 billion [$33 billion] in the country, including for hydrogen, offshore wind, and CCUS projects.

National Grid, which started out as a state-owned UK networks operator, was the principal partner for the UK's Presidency of the UN's COP26 climate change conference in November, and is currently testing hydrogen transmission in the UK.

Last year, National Grid outlined scenarios for using hydrogen in natural gas networks to help reach the UK's net-zero goal.

In one scenario, it would begin repurposing gas networks and building new ones by 2035, aiming for its hydrogen networks to have national reach by 2038.

Either industrial, power generation, or domestic heating clusters could launch the transition to using fossil-fuel-sourced blue hydrogen by 2030, acting as "anchor customers" for either blue or green fuel distributed via networks, National Grid noted in its scenarios.

Green hydrogen is currently available at vehicle refueling stations, but the UK's green hydrogen production is low (at 1 TWh), and neither commercial CCUS nor blue hydrogen production facilities exist, National Grid explained.

It said that UK hydrogen trials continue to gather the safety and technical evidence needed to enable existing networks to transport up to 100% hydrogen, should the UK decide to require hydrogen-ready boilers for heating homes in 2026.

The idea was mooted in the UK's national strategy to use hydrogen in industry, transportation, and potentially, heating.

Posted 21 April 2022 by Cristina Brooks, Senior Journalist, Climate and Sustainability



This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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