NPC Studies: Natural Gas, Hydrogen and America’s Energy Future

Mark Green
Posted April 25, 2024
Headline #1 – America’s Vast Natural Gas Resource: America has a lot of natural gas. According to a new National Petroleum Council (NPC) study released this week, “Resource estimates provide more than 100 years of production at current rates. The shale revolution has more than doubled U.S. production since 2005 and kept U.S. prices down. The low energy cost coupled with the legacy infrastructure provides universal access for energy equity.”
Headline #2 – Natural Gas’ Critical Role: The same NPC study said natural gas will continue to be crucial to America’s energy and economic security beyond 2050, under all scenarios projected by the U.S. Energy Information Administration (EIA).
Headline #3 – Hydrogen’s Potential, If … A second NPC report this week said hydrogen can play an important role in reducing U.S. carbon emissions, but additional policies and incentives are needed to deploy it at the scale necessary to support the U.S. net zero target by 2050.
The two topics are connected in that hydrogen produced from low-methane intensity natural gas with carbon capture and storage (CCS) – to filter away carbon – is the most economically feasible low-carbon option available – and key to meeting the Biden administration’s hydrogen production goals as well as broader decarbonization goals. Taken together, the NPC reports underscore a piece of an all-of-the-above energy approach that is important to America’s energy future – if Washington gets its act together.
The NPC is an important advisor to the U.S. Energy Department, and historically its reports have had significant weight in policymaking. Both the new reports are responses to direct requests from Energy Secretary Jennifer Granholm. It’s clear government sees our industry as part of the solution.
The first NPC study, on reducing greenhouse gas (GHG) emissions from the natural gas supply chain, certainly fits with oil and natural gas companies’ efforts to reduce methane emissions – seen in initiatives that include The Environmental Partnership’s eight action programs. Methane emissions from U.S. onshore oil and natural gas operations have fallen 37% since 2015, while oil and natural production increased 39%.
API President and CEO Mike Sommers:
“Today’s reports reinforce the critical role of America’s energy workforce in powering our economy, supporting U.S. security and driving innovation needed to reduce GHG emissions – both now and in the future. The U.S. oil and natural gas industry is leading the world in accelerating methane detection, reduction and reporting technology and is poised to unleash low-carbon hydrogen energy at scale.
“To fully leverage America’s energy advantage and advance climate progress, continued collaboration between energy producers and policymakers will be essential. These studies lay important groundwork for harmonized federal methane regulations and for a clear and consistent permitting process for energy infrastructure, and we look forward to working with both federal and industry stakeholders and communities across the country to advance these recommendations.”
Highlights from the natural gas study:
Emissions reduction pathways
A range of strategies encompassing policy measures, regulatory frameworks, voluntary initiatives, technological advancements, and market-driven mechanisms offer pathways to mitigate methane emissions.
But any course identified by the council would require large infrastructure buildout for emissions reduction projects – including electrification, CCS, and potentially low carbon intensity (LCI) hydrogen. Permitting reform and community engagement would be critically important as well.
Key recommendations
- Promote U.S. energy and economic security. The federal government should use consequential analysis and diplomacy to recognize GHG emissions reduction investments for lower emissions U.S.-exported products, including liquefied natural gas (LNG). Industry and government should engage to develop durable policy.
- Promote societal considerations and impacts awareness.
- Incorporate more measurement into multiple areas of emissions management.
- Advance detection and other technologies for emissions reduction.
- Leverage life cycle assessments throughout the natural gas supply chain.
Highlights from the hydrogen study:
Hydrogen’s key role
LCI hydrogen is an important solution for reducing U.S. carbon emissions in hard-to-abate sectors including the industrial, transportation and power sectors – at a lower cost to society than some other alternatives.
While current policies – under the Inflation Reduction Act and Infrastructure Investment and Jobs Act – have stimulated interest in developing a low-carbon hydrogen industry, they are not enough to deploy LCI hydrogen at the scale necessary to support U.S. net zero targets by 2050.
NPC’s report said LCI hydrogen could abate approximately 8% of U.S. carbon emissions by 2050, but significant and immediate actions beyond current policies are needed to support U.S. net zero goals. Hydrogen demand would need to increase seven-fold compared to the current market to enable a cost-effective path to net zero in the U.S. by 2050.
The LCI hydrogen production mix will be driven by multiple production pathways, with natural gas in tandem with CCS playing a dominant role for years to come, comprising more than 70% of the announced capacity in the U.S. to date.
Key recommendations
They include:
- Establish an economy-wide price on carbon before current incentives, such as the 45V hydrogen tax credit, expire. This should be phased in and market-based, applicable to imports as well as domestic production, with a rebate for exports. The price should be visible, predictable and transparent. Why? A price on carbon would enable all low-carbon technologies to compete on the basis of emissions abatement per unit of energy, delivering cost-effective emissions reductions.
- Consider a national low carbon intensity industry standard to address GHG emissions from both the industrial and transportation sectors.
- Establish (Congress and the administration) linked life cycle fuel and well-to-wheels CO2 standards.
- Enact general permitting reform that includes streamlining low-carbon hydrogen projects.
- Construct open-access interstate hydrogen pipelines and authorize the Federal Energy Regulatory Commission to regulate unblended and blended hydrogen pipelines.
- Commit to strengthening social considerations, transformative community engagement and net positive outcomes.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.