THE SOURCE - Summer 2017 - 21

electrifying of building end-users is
deemed "an important strategy to
reduce building emissions" with the
targets being natural gas furnaces and
hot water heaters. Ever evolving electric
heat pumps are deemed the solution.
There are at least two important
weaknesses in the strategy, holding
aside any discussion of whether it is
born of environmental overreach. The
first is technological change. Reliance
on alternative energy will require
technological breakthroughs that we
cannot see on the horizon today. The
2016 White House paper recognized
that energy transformation will
require: "(1) rapidly scaling investment
in low-carbon innovation to delivery
lower-cost technology options and
(2) implementing decarbonization
policies that continue to drive the
deployment of efficient, low-carbon
energy technologies." Judging from
government-funded research successes
in the past-such as in fracking-there
is reason to be hopeful. But betting the
economy on their timely emergence
would be imprudent.
Second, a decarbonized energy
future is very likely to be much
more costly. Absent technological
breakthroughs, alternative energy
technologies will continue to be more
costly in the U.S. relative to natural gas.
Few believe that the U.S. will not be
generating electricity with natural gas
in 2050, but some see space heating as
being phased out. Today, natural gas
is in 61 million American homes. That
loss of load would strand natural gas
distribution investment. It would be
replaced by new, costly electric grid
investment that would lead to higher
and higher electric rates.
In the context of energy efficiency
and the residential natural gas furnace
rulemaking, we saw an apparent
disregard for impact on those Americans
who could least afford higher home
heating costs. Several parties accused
DOE of glossing over the impact of
the proposed rule on low-income
Americans in its cost benefit analyses.
After reviewing the technical analysis
sponsored by APGA and the American

Gas Association, in November 2016 the
American Association of Blacks in Energy
asked DOE to delay any rule until impacts
on low-income consumers have been
fully understood.
Finally, there are many unanswered
questions about the reliability of
the electric grid and the wisdom of
becoming a completely electrified
society. These matters are receiving
increasing attention.
The potential impact of the electrify
movement on public gas systems is
as clear as it is unimaginable. It would
be a slow death. A business climate
hostile to natural gas direct-use would
mean that public gas systems would
be selling a service that increasingly
consumers would not want, could not
afford, or would be unable to purchase.
Absent government intervention in
the marketplace, or unusually strongly
held cultural opinion, consumers
generally will choose the lowest cost
service. Natural gas appears to have a
dominant position for the foreseeable
future. Technological change in heat
pumps could alter that equation. DOE's
proposed furnace rule could alter that
equation because it would outlaw
all but the smallest non-condensing
furnaces; and consumers in the south
find those to be the most economic
home heating solution now. DOE agrees
that consumers there will not choose
more expensive condensing furnaces to
replace worn out condensing furnaces.
Any of these events or a combination
will erode a gas distributor's market over
time. The life-cycles and replacement
costs of appliances like furnaces suggest
it will take a lot of time. But like time,
the erosion will be inexorable. As units
of service decrease, the per unit rate of
distribution rises, and the cost advantage

of natural gas direct-use disappears, thus
hastening the death spiral. In that future,
one day the mayor decides to form a task
force to determine whether it will be less
costly to the city to supply the remaining
municipal gas customers with an electric
heat pump and close down the moneylosing municipal gas distributor.
Conclusion
Since 2005, because of energy
efficiency measures, CO2 emissions
from buildings in the U.S. have declined
16 percent according to DOE-even
as building space has increased
substantially. Therefore, it is puzzling
that the electrify movement overlooks
the basic efficiency proposition of
natural gas direct-use. Burning natural
gas to generate electricity to heat
homes and hot water is simply much less
efficient than using existing distribution
systems to send the natural gas to
buildings directly.
This reveals that the assault on
natural gas direct-use is part of a broader
political assault on oil and gas extraction,
production, and consumption, which
has become a multi-layered political and
emotional issue as domestic production
has soared and neared population
centers at a time of climate change. The
electrification refrain fits on that song
sheet and is being sung more and more
frequently. The Trump Administration's
emphasis on developing domestic fossil
fuels will cause those "green" voices to
get louder.
A happier chorus for all Americans
includes the efficiency, reliability, and
low cost of natural gas end use. Energy
diversity has less risk for the nation's
economy. Direct use of natural gas in the
long run is the most prudent strategy
for America.

Burning natural gas to generate electricity
to heat homes and hot water is simply
much less efficient than using existing
distribution systems to send the natural
gas to buildings directly.
THE SOURCE | SUMMER 2017, VOL. 9, ISSUE 4 21



Table of Contents for the Digital Edition of THE SOURCE - Summer 2017

First Person
APGA Events
Q&A: Representative Walden
A Conversation with an APGA Member
Look Out Your Window
Winning Insight into Gas Losses
Electrify, Electrify
Furnace Rule Update
Legislative Outlook
The Pipeline
Marketing Matters
At Last
THE SOURCE - Summer 2017 - bellyband1
THE SOURCE - Summer 2017 - bellyband2
THE SOURCE - Summer 2017 - cover1
THE SOURCE - Summer 2017 - cover2
THE SOURCE - Summer 2017 - 3
THE SOURCE - Summer 2017 - 4
THE SOURCE - Summer 2017 - 5
THE SOURCE - Summer 2017 - 6
THE SOURCE - Summer 2017 - 7
THE SOURCE - Summer 2017 - 8
THE SOURCE - Summer 2017 - First Person
THE SOURCE - Summer 2017 - APGA Events
THE SOURCE - Summer 2017 - 11
THE SOURCE - Summer 2017 - Q&A: Representative Walden
THE SOURCE - Summer 2017 - A Conversation with an APGA Member
THE SOURCE - Summer 2017 - 14
THE SOURCE - Summer 2017 - 15
THE SOURCE - Summer 2017 - Look Out Your Window
THE SOURCE - Summer 2017 - 17
THE SOURCE - Summer 2017 - Winning Insight into Gas Losses
THE SOURCE - Summer 2017 - 19
THE SOURCE - Summer 2017 - Electrify, Electrify
THE SOURCE - Summer 2017 - 21
THE SOURCE - Summer 2017 - Furnace Rule Update
THE SOURCE - Summer 2017 - Legislative Outlook
THE SOURCE - Summer 2017 - 24
THE SOURCE - Summer 2017 - 25
THE SOURCE - Summer 2017 - The Pipeline
THE SOURCE - Summer 2017 - Marketing Matters
THE SOURCE - Summer 2017 - 28
THE SOURCE - Summer 2017 - At Last
THE SOURCE - Summer 2017 - 30
THE SOURCE - Summer 2017 - cover3
THE SOURCE - Summer 2017 - cover4
THE SOURCE - Summer 2017 - outsert1
THE SOURCE - Summer 2017 - outsert2
THE SOURCE - Summer 2017 - outsert3
THE SOURCE - Summer 2017 - outsert4
THE SOURCE - Summer 2017 - outsert5
THE SOURCE - Summer 2017 - outsert6
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