DALL·E generated image of a clean and green Dutch town on a river, digital art

Some Gas Utilities Are Leading The Way Into The Future, Others Are Actively In Reverse

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A large part of my global approach to assessing climate solutions is to apply the insight of author William Gibsonthe future is already here, it’s just unevenly distributed. To that end, I was delighted when, in response to my recent article on a graceful strategy to sunset natural gas utilities, people pointed out two examples from the future. I wasn’t as enamored by a counter-example that was also pointed out to me.

Let’s start with the problem statement. Natural gas utilities have no future business model. They are going to wither and die. They won’t be pumping biomethane or hydrogen through their pipelines to homes and businesses in urban areas. As they fade away, without careful and strategic planning, management, and execution, they will enter a utility death spiral. That’s the situation where they have to maintain their entire distribution network and its expenses, but with fewer and fewer ratepayers.

That results in larger and larger impacts on the least well-off in society, including potential bankruptcy of utilities and loss of all service to homes as a result. This is a deeply inequitable outcome which will occur in many parts of the USA, I’m sure, although I suspect it will be rare in the rest of the developed world.

The solution is to draw up a plan to sunset the gas distribution network in a city, isolation sub-network by isolation sub-network. Those sub-networks are ones that can be isolated, hence the name, with only one or two valves being turned, either automatically or manually. Then communicate the plan clearly, communicate alternatives to natural gas heating clearly, create incentives to transition off gas aligned with the schedule, and mobilize trades and vendors to assist building and home owners to transition. Then shut off the isolation sub-network, purge it, and make it safe to ignore going forward. Rinse and repeat until all sub-networks are shut down.

It’s obvious to me, and in my experience, if something is obvious to me, many other people are way ahead of me and already doing it. But I hadn’t stumbled across any. Thankfully, people are happy to point me to good and bad examples when I share my thoughts. And so to three case studies, two for regulators and utilities worldwide to study and learn from for leading practices, and one that’s an example of a deeply out-of-touch business strategy.

First, to Europe, specifically to Utrecht, a city with some 560,000 souls in its metropolitan area and 130,000 residential and commercial buildings located in the south of the Netherlands. Ironically, given the topic, it’s famous for its medieval center. They are completely clear that by 2050 at the latest the city must be gas-free, with all connections shut down. But they aren’t waiting until then.

Visual of Utrecht's natural gas utility distribution network courtesy the municipal government
Visual of Utrecht’s natural gas utility distribution network courtesy the municipal government

They’ve established a schedule for the entire city. They’re going neighborhood by neighborhood within a district with the intent to be able to shut down districts. First will be Overvecht-Noord, a city-edge district that is, unsurprisingly, at the north end of the city. Four more housing corporations and power facilities — Woonin, Portaal, Bo-Ex, Stedin, and Energie-U — will also be transitioned by 2030.

They have clear guidance for city residents and make it obvious that district heating is a big option for neighborhoods to consider, engagement of the neighborhood in the approach that they would like to take, and a path for residents to take advantage of incentives.

They even have an interactive dashboard that allows residents to quickly find out when they will have to change by, although it wasn’t working when I tried it right now. (Learning for others: if you build an interactive tool, make sure it’s robust and that there are other ways to find the same information.)

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From the Netherlands, let’s go to almost exactly the opposite side of the world, Esperance, a town on the southern coast in West Australia. A smaller town of roughly 10,000 people, it sneered at the slow pace of its far northern compatriot, and is already natural gas-free. Of course, that had something to do with business interests, reading between the lines, as Horizon is an integrated electricity utility which owns natural gas plants, and a different firm won the contract to truck gas to the community.

Horizon established the policy for the 379 commercial and business natural gas customers in 2021 as a result, and it completed it in April of 2023.

Once again, a website, a set of clear guidance for customers, a menu of options from heat pumps to hot water heaters to stoves and ovens, a set of approved trades and financial support. Pretty straightforward, and the state government is touting it as an example for other municipalities around the country, undoubtedly with a swagger and some colorful language.

And then, and then. India. That country founded a major firm, Indian Oil, in 1959. Its 34,000 employees do everything petroleum and gas in the country, or as much as they can monopolize, at any rate. They are the city gas distribution operator for 49 geographical areas in 105 districts across 21 of 36 states and union territories. Assuming a ratio of of the population is similar, that suggests that they cover perhaps 800 million citizens.

Their annual revenue in 2022 was 7.367 trillion INR, or about $92 billion. This is a massive corporation with a market cap of about $14.5 billion, which strikes me as a bit low. Surely this massive energy firm in a country aiming to get 50% of its energy from renewables by 2030 is going great guns on decarbonization?

Well, no. Compared to the numbers above, their 70 MW of solar and 168 MW of solar capacity is clearly in the scale of greenwashing.

But what about the city gas distribution networks. Surely they must have a plan to shut those down? No. Ummm… not expand them? No, not even that.

Yes, Indian Oil is bragging about expanding its natural gas pipeline networks in cities it serves.

“IndianOil with its country-wide marketing network is now proactively expanding its natural gas infrastructure. This creation of Natural Gas ecosystem is in sync with Govt of India’s thrust on promoting a gas based economy which will reduce environmental pollution and as a cost effective fuel will also act as a catalyst for overall economic development.”

In the city of Coimbatore in the state of Tamil Nadu at the south of the sub-continent, it’s planning to lay underground gas pipeline for 212 km, develop 273 CNG stations, and connect over 900,000 homes to natural gas. It’s already put in the 75 km backbone for it apparently.

Oh, and of course Indian Oil is undertaking research in all facets of hydrogen. It’s drunk the hydrogen-for-energy chaay and as a result is working rapidly toward making energy vastly more expensive for its customers and the Indian economy. Given how much of the energy in the country Indian Oil moves, and that it hasn’t even re-branded to remove oil from its name, I suspect that it’s going to be a major problem for India’s energy transition to electricity.

And so,  the pockets of the future are small towns in Europe and Australia, while an oil and gas giant in India is pushing vastly more soon-to-be stranded assets into the ground. I hope that states, regulators, and utilities globally are paying much more attention to Utrecht and Esperance than Indian Oil.

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Michael Barnard

is a climate futurist, strategist and author. He spends his time projecting scenarios for decarbonization 40-80 years into the future. He assists multi-billion dollar investment funds and firms, executives, Boards and startups to pick wisely today. He is founder and Chief Strategist of TFIE Strategy Inc and a member of the Advisory Board of electric aviation startup FLIMAX. He hosts the Redefining Energy - Tech podcast (https://shorturl.at/tuEF5) , a part of the award-winning Redefining Energy team.

Michael Barnard has 724 posts and counting. See all posts by Michael Barnard