North American utility customers are less likely to pay into carbon offset programs using renewable natural gas (RNG) or differentiated gas when prices are high, according to several industry executives.
Many U.S. natural gas utilities have programs that allow customers to choose whether to pay an added fee for carbon offsets, including for RNG and verified gas supplies, said some executives at the recent LDC Gas Forums Mid-Continent conference in Chicago, which had nearly 200 participants.
“We haven’t seen too much participation in willingness to pay even a small cost,” said Nicor Gas’ Michelle Carbone, who manages Gas Supply for the Naperville, IL-based company. Nicor serves 2.2 million customers in the state.
The Southern Company subsidiary offers a carbon offset program that allows customers to opt into by paying an additional fee for RNG credits and carbon offsets. The program is estimated to add $100/year to the natural gas bill for a residence.
Challenging Market
As for differentiated gas, which is verified by independent third-parties, Nicor is “challenged at this point” to include it in the portfolio, said Carbone. Differentiated gas has verified lower carbon and methane emissions, a selling point for overseas buyers with more stringent regulatory regimes.
“As competition happens…and cost comes down, I think it would be easier for us to incorporate it, but our regulator has not approved it,” Carbone said of differentiated gas.
Calgary-based Enbridge Inc., whose gas utility arm currently serves Canadian customers, has seens some willing “to accept different kinds of solutions,” said Dave Janisse, who manages Gas Supply Acquisition.
“Customers are willing to pay some level of a premium,” he said. The willingness to participate changes, though, depending on the direction of gas prices.
When gas prices surged last winter, Janisse said the higher price “really had an impact on people saying, ‘this is now affecting my cost of living,’ so they change their mind on what they would pay a premium on.”
Enbridge also has looked to reduce emissions by incorporating differentiated gas supplies. “We’re very interested,” Janisse said. “We’ve purchased it, but we’re not getting much traction from our regulator to allow us a premium on it.”
