Building Decarbonization has a Natural Gas Pipeline Problem

Key Takeaways

In current policy and investment strategy, building decarbonization is treated primarily as an appliance swapping project. This micro-approach misses systemic nature of the reduction of natural gas demand explicit in the swap: drawing down demand is ultimately a natural gas pipeline network decommissioning project.
Entrusting private firms to carry out treatment of building appliances at a household level may work, but is mismatched with the requirements for decommissioning a large, linked infrastructure system with dozens of competing incentives and regulations. We can learn from the systemic risks and failures evident in the coal industry’s collapse.
Opportunities are already arising for public ownership of gas infrastructure. Public ownership must develop a system-wide plan for decommissioning 3 million miles of interconnected pipelines that can deliver a just transition for communities and people most at risk of harm from a market-based transition.

A disorderly, market-based process to reduce greenhouse gases by removing appliances that burn natural gas from every home and building in the United States has begun. This strategy, such as it is, intends to replace appliances that use natural gas with ones that use electricity from more renewables and other carbon free energy sources over time. Most policy advocates and community groups today are focused on the appliance aspects of the transition. The explicitly linked decay of gas demand connects these randomly distributed appliance swaps at the household level to a large, interconnected, complex fossil fuel pipeline network. The emphasis on heat pumps, stoves, water heaters, and other potentially zero-emissions appliances neglects accounting for the ultimate goal: a gas system decommissioning project.

This fossil fuel system is immense and complex: half a million gas wells are spread across 34 states, carrying gas through 3 million miles of interconnected pipelines. This infrastructure is owned by over 1500 gas pipeline companies and serves nearly 78 million customers across homes, businesses, and industrial uses. The engineering part of transitioning to a post-gas future has two halves: in front of the meter (from the well to the gas meter) and behind the meter (from the gas meter to a kitchen stove, for example). Behind the meter, relatively small Inflation Reduction Act investments and other policies are already at work. The federal incentives average out to just $70 per U.S. household. In front of the meter is an industrial engineering challenge of tremendous scale and risk — think steelworker crews with hard hats and backhoes, not electricians and contractors renovating your home. Much of this work on large scale infrastructure will occur in our cities, our streets, and our front yards.

On our way through this first decade of transition, community-led and engineering-informed planning and action with supply-side requirements in mind is imperative. We must mobilize now so that we have plenty of time to do it right.

An Engineering Systems Approach to Decommissioning the Gas Network

The United States needs a nationwide plan for how to decommission every foot of the gas pipeline network. Physical pipelines end in millions of discrete locations across the country, but market-wide building codes and household incentive programs are not designed to systemically prune back this system. Instead of taking a systems view of this pipeline network, the current policy approach to building decarbonization addresses one building or home at a time. Without greater coordination and design, the future of the gas system and its business model could resemble the present of Detroit’s water system: many miles of pipelines delivering a critical service to too few customers to sustain operations under its current operational model. The financial obligations of this possible outcome would rest primarily on the 22% of all households who already can’t pay their existing energy bills and can’t afford to switch to electrified appliances.

A system-wide plan is the only responsible path forward capable of evaluating the pipeline network and the groups of households linked together on its discrete branches. A community-led and engineering-informed plan would be equipped to include risk evaluation, risk mitigation, and project execution needs for decommissioning this system lying beneath our homes, schools, hospitals, and workplaces. With a systemic approach, the questions of a “utility death spiral” can be eliminated with a block-by-block catalog of demand reduction, a schedule of construction and industrial work crews, and revenue forecasts for corporate actors currently reacting to a lack of regulatory uniformity and market certainty.

Last year, Emily Grubert and Sara Hastings-Simon began to outline assumptions that should be examined and tested through the transitional period, and reinvigorated the urgency of questions for building decarbonization policymakers and planners. These complicate the legal and regulatory paths to decommissioning that Heather Payne catalogs in parallel. When we layer these points of view together, we can begin to more clearly see questions that need to be proactively addressed:

What critical maintenance work must happen for the gas system to prevent catastrophic failure, even as the system’s retirement is planned?
How much will critical maintenance cost, and who bears those costs before and after decommissioning?
Where are there trade-offs between critical maintenance investments and programmatic building conversion investments?
Which pipelines, in which census tracts, towns, cities, and regions are trimmed from the system, at what time, and in what sequence?
What preparation needs to be done inside people’s homes and other buildings before or concurrent to each pipeline shutdown? How does this need to be done so that no one is left behind, where they have neither gas or ability to replace gas appliances with electric appliances?

Creating an accessible and comprehensive planning process will require unprecedented coordination across multiple scales and geographies of regulatory policy, financial institutions, engineering planning and project management. While the system is vastly interconnected, oversight and planning that governs those 1500 gas pipeline companies and operators takes place at the Department of Transportation, Department of Energy, within each state’s respective Public Utilities Commission, and across other regulators at the state and local levels. For community members who want to help drive the clean energy transition or for public servants trying to lead in their cities or states, this complexity of scale and policy is a huge barrier that needs solutions.

A Market Fundamentalism Plan Is No Plan at All

It isn’t smart governance to assume that “market forces will provide” and then rely on profit-oriented actors to safely decommission the sprawling, complex, and interconnected gas system. The aforementioned investments and expanding policies like gas bans in new building construction will increase pressure on the gas system’s operating model over the next decade. From a historical perspective, having no plan for the coal industry’s business model erosion caused catastrophic and costly failure for communities, the environment, and workers. There are three significant issues in various combinations:

The protracted and predictable collapse of businesses that should have borne legal and fiscal liability for their operations
Asset sell-off from larger corporations to smaller, less-capitalized firms while marginal profits decline and marginal liabilities increase
Insufficient bond funding or private insurance capacity to cover even basic abandonment and clean up liabilities

Corporations are already reacting and following this observed pattern. The Wall Street Journal reported in April 2023 that two large, well capitalized firms, Dominion Energy (operating 14,000 miles of gas pipelines) and National Grid (operating 35,560 miles of gas pipelines) are exploring sale of some of their least desirable gas distribution systems — in North Carolina, Ohio, and across the Northeast and Western United States. NextEra Energy Partners will sell their larger pipelines in Texas and Pennsylvania. Where companies are not offloading assets, their lobbyists are promoting poorly supported claims about renewable natural gas to try making the gas system’s future appear more climate friendly.

It is possible to foresee the range of operational scenarios of the gas system in light of how big players are already positioning themselves. Through their exploration of selling assets, gas companies are signaling that they’ve performed engineering and business model analyses already. They are not waiting to act, and are beginning to actively unload those liabilities, in a predictable pattern of corporate behavior. Off the balance sheets and in the physical world, these actions make the prospects for proper pipeline decommissioning and investments in critical maintenance seem low. This disorderly process only grows the risk of companies skirting monitoring and regulation resulting in improperly abandoned pipelines or leaky pipelines that can cause explosions or release unmonitored methane to the environment.

A Managed Transition Requires Public Ownership and Attention to Detail

Corporate executives aren’t waiting to act; neither should federal, state, and city public servants and the communities who are endangered by regulatory inaction. Regulatory conditions governing fossil fuel infrastructure, financing, and ownership haven’t incorporated the lessons from the failures of the coal industry. It is unreasonable to expect private corporations to responsibly put themselves out of business without any rules in place that could achieve this outcome. Now is the time to avoid repeating the same mistakes.

As private actors signal their intent to follow the same kinds of steps taken as coal demand declined, governments should step in and municipalize ownership of the gas pipeline network. With state ownership, governments can re-organize operational priorities according to democratically defined priorities, and integrate the necessary steps for a system-wide, orderly, and safe transition. In the earlier examples of gas companies selling their assets, one firm issued the announcement claiming the sale of its pipeline assets will support their build out of renewable energy sources. Assuming public ownership as these opportunities arise could be considered a transfer that contains multiple benefits: supporting private development of renewables and enabling robust management of the decommissioning process.

The plan for a managed transition for the gas pipeline system should be detailed enough to emphasize correcting historical environmental and housing injustices, as a matter of what Olufemi O. Taiwo calls a “constructive” approach to reparations. Planned objectives can include avoiding worsening energy injustices from price spikes and shutoffs; eliminating catastrophes caused by pipeline deferred maintenance; and preventing avoidable deaths from a lack of service caused by poverty and inability to transition.

Cities and states can begin to assemble the building blocks for a system-wide plan without greater coordination, using information already available to them or obtainable from firms they regulate. This information gathering process will take significant time and energy, and each set of information can significantly enrich the analysis of tradeoffs for possible decommissioning paths. These planning pre-requisites would include research that:

Accounts for the age and quality of the existing gas grid, especially at the oldest locations on the gas distribution system. Older pieces may be the best candidates for immediate decommissioning but serve as critical connectivity to pipelines constructed more recently.
Accounts for the distributive impacts of building electrification and the people living in them. Poorer people tend to live in older housing stock due to a complicated history of redlining, and decarbonizing the oldest homes along the oldest sections of the pipeline can begin to close the gap of home quality and energy burdens.
Accounts for the need to preserve affordable housing and decommodify housing. New investments can support green social housing strategies, and can be prioritized based on socioeconomic analysis.
Accounts for other socioeconomic data about residential tenancy, demographics, and energy burden.

With greater coordination, communities and policymakers should begin to:

Develop robust industrial-engineering quality assessments of how to safely decommission the gas grid at a local, regional, then national scale.
Identify current and near-term opportunities for physical decommissioning based on a comprehensive socio-technical analysis of housing, energy, and environmental injustices.
Propose financial facilities, legislation, and regulatory policies to enact a managed transition that avoids leaving it to private negligence.

The last year for IRA implementation funds to be issued is now just 10 years away, with the majority of its investments only addressing one half of the building decarbonization challenge. A community-led and engineering-informed plan could design away from an outcome of eco-apartheid, represented by a hobbled pipeline system where everyone wealthy has disconnected and is fully electrified but the remainder of the pipeline system’s challenges are left for the poor to bear. We would arrive together – engineers, public servants, lawmakers, organizers, and advocates – right on time to meet the challenge that remains for us if we begin to design and organize for this now.

Acknowledgements: Thank you to Johanna Bozuwa, Salma Elmallah, Emily Grubert, Carlos Martin, and Patrick Bigger for feedback on this piece.