California regulators are set to vote on a proposed three-year renewable natural gas (RNG) tariff pilot program for Southern California Gas (SoCalGas) and San Diego Gas & Electric (SDG&E), which, if approved, would be the first such tariff in the state.
The pilot would allow the utilities to offer their customers a voluntary tariff through which they could purchase renewable natural gas (RNG) — or biomethane, emitted from agricultural and waste products — as part of their gas service. It would aim to accelerate the use of low-carbon RNG and develop supplies of the gas in California and across the country.
- The biggest benefit to come out of the pilot would likely be experience, Michael Colvin, director of regulatory and legislative affairs at the Environmental Defense Fund's California energy program, said. "There's a lot of potential studies on RNG out there, there's a lot of hype and speculation — I think actually getting contracts executed and getting experience from really going through that process will be illuminating to a lot of stakeholders and customers themselves."
There are two important use cases for a voluntary tariff program like this, Colvin — a signatory of an eight-party settlement agreement that the proposal is based on — said: it helps customers who don't have site control, like renters, decarbonize their footprint, and it helps others who may have just installed a new gas appliance, but don't plan to switch to an electrified appliance until it dies, to reduce their carbon emissions as well.
"I think, frankly, part of why this pilot is interesting is so we can see what the uptake is," Colvin explained.
"Given the affordability concerns that are happening right now with COVID, I do not anticipate a massive rush of new customers signing up to make their energy bill more expensive. So I think you will self-select a certain number of early adopters into this program and it'll be up to the utilities to negotiate as hard as they can to get a good deal for those customers," he added.
The proposal stems from an application filed by SoCalGas and SDG&E in early 2019, requesting permission to offer customers the chance to purchase RNG, which they said would provide a market for the resource outside of the transportation sector. It was initially scheduled for a vote this Thursday, but has been postponed for consideration until Dec. 17.
If the decision is approved, the program will run for three years, after which the CPUC will review the pilot and consider whether to continue it. The utilities will need to prove that the program actually reduces emissions over a business-as-usual scenario. The proposed decision also includes guidelines for how the utilities can market the pilot, noting that they would need to specify that RNG usage still produces greenhouse gas emissions, and cannot try and promote it as an alternative to building electrification, or as a solution to the local environmental impacts.
SoCalGas is investing in RNG, hydrogen, fuel cells and carbon capture and storage, to "build California's 21st century energy system," the utility said in a statement, and the proposed RNG tariff is a part of that.
"The gas system complements and is a necessary facilitator of decarbonization. California's success in achieving its climate change goals depends in large measure on SoCalGas's success in decarbonizing the fuels flowing through our grid, a goal to which SoCalGas is fully committed," the utility said.
However, some stakeholders remain concerned about the proposal. April Rose Maurath Sommer, executive and legal director at Wild Tree Foundation, said the program would divert methane from its best use, which is on the site where it's produced.
"The best example of that is a landfill, [where] you use it to generate electricity to run the operations of the landfill," Maurath Sommer said.
Maurath Sommer also has concerns about the process through which the utilities will need to demonstrate that the program actually reduced greenhouse gases. The proposal envisions using a modified version of the methodology currently used for California's Low Carbon Fuel Standard to measure the carbon intensity of RNG in the pilot, and would task the utilities with working with the California Air Resources Board to develop this model.
"So at this point there's no way to verify that this program would decrease greenhouse gas emissions yet," Maurath Sommer said.
Colvin acknowledged that it's important to get the greenhouse gas accounting right, but added that a large part of the puzzle has already been figured out at CARB.
"I think it is mostly applying something into a new situation, and not figuring out the new rules themselves," he said.
One outcome of the pilot, if approved, is that it could help guide the emerging market around biofuels, Colvin said.
"Sempra is one of the largest gas utilities in the world and if they start holding a solicitation and saying, here are the standards that we're looking for — and all the California stakeholders continue to hold Sempra's feet to the fire in terms of what's a good and not good product to be buying — that will help set an informal understanding or informal standard between the various potential developers of biofuels that are out there," he said.