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Why CenterPoint Energy is pushing to test ‘renewable’ natural gas. And why some environmental groups are so skeptical of it.

As environmentalists call to replace the fossil fuel with electricity in buildings, CenterPoint Energy, the largest gas utility operating in Minnesota, has been pushing to test “renewable natural gas” (RNG) and other alternative fuels to bring down emissions.

Calgren's renewable fuels facility
Calgren's renewable fuels facility that cleans dairy methane into natural gas is shown in Pixley, California.
REUTERS/Mike Blake

Electricity and vehicles powered by fossil fuels have faced scrutiny from clean power advocates and state officials looking to slash carbon emissions in Minnesota. But the future of natural gas used to heat two-thirds of homes and power appliances has also become a growing subject of debate.

As environmentalists call to replace the fossil fuel with electricity in buildings, CenterPoint Energy, the largest gas utility operating in Minnesota, has been pushing to test “renewable natural gas” (RNG) and other alternative fuels to bring down emissions.

The Houston-based company’s newest effort to use cleaner gas — created primarily by capturing methane from food waste and other organic matter or using electricity to create hydrogen that can be mixed with traditional natural gas — comes in the form of a bill that could help CenterPoint launch a new RNG program. The measure has support from several Republican and Democratic state lawmakers.

“On the electric side, we’ve had a strong history of reducing carbon and we believe that there is potential to serve our customers’ energy demands with lower carbon resources on the gas side,” Amber Lee, CenterPoint’s director of regulatory affairs, said during a Senate committee hearing in February.

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The bill is not CenterPoint’s first attempt to use RNG. One proposal for a trial program was turned down by the Minnesota Public Utilities Commission last year, in part because regulators worried CenterPoint could not accurately measure carbon emissions from RNG or find local sources for the gas.

But the utility is taking another crack at RNG through the new bill, bringing debate to the Legislature over whether RNG is a climate-friendly alternative to fossil natural gas worth pursuing or an expensive hurdle to converting buildings to run on an electric grid that is increasingly emitting less carbon.

On Monday, CenterPoint announced a plan to reduce carbon emissions over 2005 levels by 70 percent by 2035, primarily through alternative fuels like RNG, better prevention of methane leaks and energy-efficiency programs. The utility has more than 860,000 residential and business customers in Minnesota.

“There are less expensive alternatives (than RNG) to reducing climate pollution from our homes and businesses,” said Jessica Tritsch, who represents the Sierra Club’s Beyond Coal to Clean Energy Campaign in Minnesota. ”Electrification is more cost-effective and doesn’t have the same health impacts of burning gas in our homes.”

Why the pilot plan was grounded

The five-year pilot program that CenterPoint brought to the PUC last year would have let customers pay extra to support the use of RNG. It would have been among the first “green tariffs” for RNG of its kind in the country, according to commission staff.

The utility wanted to contract with gas suppliers to secure RNG from outside Minnesota, at least initially, because of challenges sourcing it inside the state.

RNG, which is sometimes called biomethane, can be made from the organic waste of a landfill, livestock operation or a wastewater treatment plant. The waste is run through an anaerobic digester to produce a mixture primarily of methane, carbon dioxide and moisture that is refined into RNG and transported through pipelines.

Erica Larson, a regulatory analyst for CenterPoint, told the Senate committee that electricity can also be used to split water into hydrogen and oxygen, and some of that carbon-free hydrogen can mix into pipelines with gas and serve as fuel. The hydrogen could be created by renewable sources that are producing energy when the power is not needed on the grid, Larson noted.

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PUC documents say RNG emits between 50 to 100 percent less greenhouse gases than conventional natural gas, depending on the source. For example, RNG made from wastewater sludge is 77 percent less “carbon-intensive” than traditional natural gas, according to the PUC research. And regulators say RNG made from food or livestock waste is considered to have a “net carbon negative” impact since it avoids methane emissions that happen when the waste is left to decompose. When methane is burned to create RNG, it emits carbon dioxide, which is a weaker form of greenhouse gas than methane released directly into the atmosphere.

Fossil natural gas is used to create electricity as well as heat buildings and power appliances like stoves, though CenterPoint does not use natural gas to generate electricity in Minnesota. In the U.S., traditional natural gas is extracted by drilling wells in rock, oil deposits and coal beds. In one method known as hydraulic fracturing, or fracking, the gas is released by forcing water, chemicals and sand down a well under high pressure to break up rock.

Between 77 percent and 85 percent of homes in the seven-county Twin Cities metro use natural gas to heat their homes, according to a 2018 state House report that says natural gas is the least expensive home heating fuel in Minnesota. The PUC documents say RNG is roughly 10 times more expensive than traditional natural gas.

Supporters of CenterPoint’s pilot program, including the City of Minneapolis and the American Biogas Council, said RNG can create new positive uses for waste and could result in money for farmers. New investment could also lead to better technology and cheaper RNG in the future.

But opponents like the Sierra Club, the state Department of Commerce and Attorney General Keith Ellison’s office questioned the price, CenterPoint’s lack of in-state supply and weak verification systems.

Comments submitted on the pilot plan by Sierra Club and the nonprofits Fresh Energy and Minnesota Center for Environmental Advocacy, said the potential for RNG to fully replace natural gas is low and a switch to electric heating and appliances can make use of an power grid that is becoming cleaner.

The organizations cited research by the American Gas Foundation that found America’s supply of RNG could meet up to 10 percent of 2015 natural gas demand, though that amount could vary regionally. Lee, CenterPoint’s regulatory affairs director, said hydrogen could replace 5 percent of natural gas, though she said that could rise to as much as 15 percent in the next decade with advances in technology.

“Developing a stronger renewable natural gas market … risks slowing the pace of building electrification and the reduction of greenhouse gas emissions from Minnesota’s building sector,” says the filing written by environmental groups for the PUC.

Similar debates over RNG are playing out across the country, but they have been particularly fierce in California, where research commissioned by the state concluded using electricity to heat buildings and power appliances rather than RNG is likely a “lower-cost, lower-risk long term strategy” that would also improve outdoor air quality and public health.

In Minnesota, the PUC denied CenterPoint’s plan, but said it hopes the company will continue to develop “tracking and verification systems” for RNG and find local sources. The commission’s order says the alternative gas could be a beneficial use for waste.

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Latest bill renews debate

After the ruling, CenterPoint brought a bill to the Legislature that guides how the PUC should evaluate and vote on programs for alternative fuels. It explicitly promotes RNG, hydrogen and energy efficiency upgrades as ways to help meet state greenhouse gas reduction goals — and sets rules for costs that could give the utility more wiggle room with the PUC to run trial programs.  

The measure would also require the state to develop an inventory of potential RNG sources in Minnesota by June of 2021, which could help CenterPoint build a project that can be approved. The bill is sponsored by Sen. Bill Weber, R-Luverne, Rep. Zack Stephenson, DFL-Coon Rapids, and has several other cosponsors from both parties.

Rep. Zack Stephenson
Rep. Zack Stephenson
While the bill isn’t necessary for the PUC to approve an RNG tariff program in the future, Weber said it could help CenterPoint start using fuel that has potential to reduce greenhouse gas emissions, give farmers a new business option and cut Minnesota’s reliance on fossil fuels from out of state. “We have here a plan that the industry itself is willing to step forward and help us produce clean air solutions,” Weber said.

John Jaimez, an organics and recycling specialist at Hennepin County, urged lawmakers to approve the bill because it could help create a market for a facility that creates RNG, known as an anaerobic digester, the county is considering building. To meet state recycling laws — which set a goal of recycling 75 percent of waste by 2030 for Hennepin and other Twin Cities metro counties — Jaimez said they need ways to process organic waste, particularly from food.

Anaerobic digestion is a better way to use that waste than composting because it can create “clean, renewable energy,” Jaimez said. Capacity at composting sites is also strained. But a lack of infrastructure limits the RNG industry, he said. Weber’s bill would help increase demand for RNG and spur investment to advance the industry, Jaimez said.

The measure has gained momentum in the Republican-led Senate, but it’s unclear if leaders in the majority DFL House will support it. Minneapolis Reps. Jean Wagenius and Jamie Long, who lead the House’s Energy and Climate Finance and Policy Division, declined to comment on the measure, which has not received a hearing in the House.

State Sen. Bill Weber
State Sen. Bill Weber
The Sierra Club said it has no stance on the bill, though Tritsch, from the group’s Beyond Coal campaign, said “given the supply limits of renewable natural gas, continuing to build new gas infrastructure is not the right investment for decarbonization.”

Gov. Tim Walz’s administration has no position on the bill, either, though his Department of Commerce may be a roadblock for the measure anyway. Agency officials requested two full-time staffers to handle the new regulations plus $150,000 to complete the study, which frustrated GOPers even though the state would eventually recoup the costs from CenterPoint. Weber accused Commerce of inflating the bill’s price to sink it because staffers support electrification.

In an interview, Commerce commissioner Steve Kelley said his agency would never hike up the price of a bill to kill it, and said he personally believes RNG is “a potential part of the energy future.”

“I certainly don’t favor electrification over other options,” Kelley said. His office generally supports electrification when it saves energy and money for consumers, he said. The opposition to CenterPoint’s pilot project came out of concern the RNG program would cost consumers too much.

While Weber’s bill may have an uphill battle in the House, he has support from some Democrats and the influential clean energy nonprofit Center for Energy and Environment. 

Stephenson, the DFLer from Coon Rapids, said he understands support for electrification, but said RNG represents an opportunity to harness Minnesota’s agriculture sector in a way that reduces emissions. The political backing of the GOP helps, too, he said. “I’m interested in anything that Republicans are willing to do that’s going to cut carbon.”