American Electric Companies Pondering on Shifting to the Production of Renewable Energy as Natural Gas Pipeline Becomes the Object of Hatred

published: 2020-07-22 10:30 | editor: | category: News

Various states in the US are conforming to different level of engagement in renewable energy policy, and most electric companies are now more interested in gas-fired power generation from the affordable natural gas due to the majority of disinterest in the implementation of renewable energy sources, especially subsequent to the shale gas revolution. However, this status is about to undergo changes as the oil and gas pipelines in the US became the object of hatred, which resulted in the exorbitant cost for establishing natural gas pipelines. Electric companies might as well forfeit the relevant planning, and shift to the production of renewable energy sources, should this phenomenon become the new norm.

Dominion Energy announced on July 5th 2020 that it will terminate the joint venture of the Atlantic Coast Pipeline with Duke Energy. Both parties commented that the budget of the project has been substantially elevated to US$8 billion, and the lawsuits proposed by numerous land owners and environmental groups have also increased the risk of the project.

The US federal court overturned the Nationwide Permit 12, which allows oil and gas pipelines to go through rivers and wetlands, in April 2020, and a number of pipeline project, including the Atlantic Coast Pipeline, have been forced to terminate, after the permit was rejected, where the Keystone XL that sustained prolonged period of controversy, has also been severely impacted. The rejection of the permit has also affected the Permian Highway in Texas, the Mountain Valley Pipeline in Virginia, and the PennEast that connects Pennsylvania and New Jersey.

On July 6th 2020, the oil and gas pipeline industry has come under attack once again as the federal court ordered to suspend the Dakota Access Pipeline (DAPL), which was reinitiated under the executive order of Trump, on August 5th for another environmental assessment. This particular lawsuit has indicated the latest strategy of US carbon reduction activists, who had been attacking oil pipelines from the past through actual sabotage actions that only created limited damages and derived public safety concerns that resulted in backlashes at the end, and now they have move to the legal channel, where they attempt to increase the risk of investment in order to intimidate the investment funds for oil and gas pipelines.

This specific strategy has been proven effective as both Dominion Energy and Duke Energy have suspended their joint venture, and in terms of natural gas, the Northeast Supply Enhancement and Constitution Pipeline in New York has also been terminated under the opposition of the public opinion from the state. These non-economic factors have contributed to the lack of gas pipeline construction in the Northeastern US for the provision of natural gas, despite the prosperous demand in the specific energy.

Businesses Invigorated By the Increasingly Flourishing Economic Benefits in Renewable Energy

US electric companies have been transitioning to gas-fired power generation over the past 6-7 years by actively merging with natural gas companies in order to facilitate power generation through affordable natural gas from the principal operation of electricity on one hand, and obtain revenue from natural gas under stagnant growth of total electricity on the other. Nonetheless, electric companies are gradually migrating to the principal operation of electricity.

Natural gas was initially regarded as a transitional energy source in carbon reduction for coal-fired power generation, for which the promotion of carbon reduction is a preferable approach for electric companies, as the death of the US coal industry had been rung from the rapid growth of gas-fired power generation derived from the obtainment of the substantial and affordable natural gas after the 2011 shale gas revolution in the US, and coal-fired power plants have been shutting down in succession despite the enormous support from Trump. However, since coal-fired power generation is no longer a threat, natural gas itself has become the latest victim of carbon reduction activists.

Apart from the lawsuit attacks on the gas pipelines, carbon reduction activists are also prompting the government to stipulate relevant policy on terminating the use of natural gas, including the fully electric residences that are being implemented in green states such as California, which means that heaters no longer use natural gas, but rather the power generated from renewable energy sources. Virginia, part of the operating range of Dominion Energy, is also propelling the 100% green policy by 2045 since the governing of the Democratic Party. The fate of natural gas is becoming gloomy under the implementation of these policies and regulations.

Simultaneously, the continuous reduction in the cost of renewable energy sources has caught the attention of electric companies. In contrast to the relatively massive construction in pipeline that spans across extensive areas of land, the infrastructures of renewable energy are smaller and come with less controversies, along with the elevation in competitiveness for the cost of existing renewable energy sources, including the accelerated decrease in the cost of power generation and energy storage, which incentivize electric companies to once again cooperate with the carbon reduction policy by shifting from the usage of natural gas to renewable energy sources.

While terminating the Atlantic Coast Pipeline project, Dominion Energy has also announced the comprehensive sales of its affiliated natural gas assets, including the natural gas transmission and storage pipeline system that measures at 7,700km in length, as well as the 900 billion m³ natural gas storage facility, and the 25% shares from the Cove Point LNG Terminal, to Berkshire Hathaway owned by Warren Buffett for approximately US$9.7 billion, which Dominion Energy claims to be a deal that would achieve the company’s target in comprehensive zero carbon emission and natural gas by 2050.  

At first glance, these carbon reduction activists seem to have gained the victory, where their actions have become the straw that broke the camel’s back, and created a ripple effect. Though the fundamental element in the equation is that the economic benefits of renewable energy sources will only escalate continuously, and propel businesses to act accordingly, thus the efforts of these carbon reduction groups are only going to accelerate this inevitable process.

(Cover photo source: pixabay)


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