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Proprietary and Confidential Information •August 18, 2020

Webinar 1: A Thoughtful Pathway Towards US Emissions Reductions

Energy Efficiency & Technology Conference Webinar Series

Proprietary and Confidential Information •

Agenda

• Welcome & housekeeping

• Energy Efficiency Awards for 2019 projects

• Overview of CenterPoint Energy’s carbon emission reduction efforts

• A Thoughtful Pathway Towards US Emissions Reductions presentation

from Rick Murphy from American Gas Association

2


Energy Efficiency Awards

3

Proprietary and Confidential Information • 4

Conservation Improvement Program

2019 Customer of the Year

Bloomington Public Schools



2019 Trade Ally of the Year

OTF Resources

5



2019 Most Innovative Project of the Year

LeSueur, Inc.

6



2019 Recommissioning Trade Ally of the Year

Sustainable Energy Savings, Inc.

7


CenterPoint Energy Company Update

Brad Tutunjian, Vice President of Regional Operations

CenterPoint Energy

8


CenterPoint Energy Carbon Policy Goals

9


Innovative Energy Leader in MN

• Conservation Improvement Program (CIP)

• Methane Emissions Reduction

• Renewable Natural Gas (RNG)

• Carbon Capture

• Minneapolis Clean Energy Partnership

• Natural Gas Innovation Act

10

A Thoughtful Pathway Towards

U.S. Emissions Reductions

CenterPoint Energy’s

Energy Efficiency and Technology Conference

August 18, 2020

11

www.aga.org/climate

http://www.aga.org/climate

Principles for Action1. All sectors of the economy should contribute to reducing greenhouse gas emissions.

2. Recognize the potential benefits of natural gas and natural gas infrastructure to reduce emissions effectively and quickly.

3. Recognize natural gas as a clean, flexible, reliable, versatile, and affordable energy source that enables the expansion of renewable and other energy technologies.

4. Remove barriers that prevent the modernization of natural gas infrastructure, which is key to lowering greenhouse gas emissions.

5. Policy should recognize that improving energy efficiency is a cornerstone strategy.

6. Policy should promote greater development and use of renewable natural gas and recognize and incent the ability of the gas system to provide substantial renewable energy seasonal storage and delivery through power to gas.

7. Expand investment into research, development, deployment, and commercialization.

8. Any effective public policy should include the option of natural gas for consumers and preserve customer choice of energy

Background

Local efforts are shaping the current U.S. climate change debate

➢$155 to $426 billionin incremental generation capacity requirements and transmission system upgrade costs

➢Overall emissions could be reduced by just

1 to 1.5%

➢Consumer energy costs could increase by:

$750 to $910 per year.

➢Cost of reducing carbon dioxide through Residential Electrification:

$572 to $806 per ton

Key Findings from Study

Actions for Achieving Future Emissions Reductions

➢ Continued Commitment to Energy Efficiency

➢ Advance the deployment of next generation technologies

➢ Develop renewable sources of supply

www.gasfounation.org

The 2019 AGF studies focused on two of the three components of the natural gas pathway towards US

greenhouse gas emissions reductions

Supply Innovation Delivery System Modernization

Demand Innovation(Efficient Use)

1 2 3

Focus of the AGF Direct-Use study

Focus of the AGF RNG study

19 companies sponsored the 2019 studies

Opportunities for Reducing GHG Emissions Through Emerging Natural

Gas Direct-Use Technologies

enovationpartners.com

2019 Study

2019 Study

Opportunities for Reducing GHG Emissions Through Emerging Natural Gas Direct-Use Technologies

This study examined the following questions

• How much could U.S. GHG emissions be reduced with next generation residential direct-use gas technologies?

• What is the expected cost ($/Metric Ton) of achieving the emissions reductions?

• What benefits would customers see?

• What type and level of support would utilities and/or regulators need to provide in order to realize the full benefits of these technologies?

• IoT thermostats (i.e. Nest, Honeywell)

• Building envelope (insulation, windows, building materials)

• Demand controls for HW systems • Thermostatically controlled low flow

shower head

Existing and emerging highly efficient technologies evaluated and selected for the study

68

• Tankless water heater -Maintenance-free approaches for tankless water heaters

• Solar-assisted heating - PV assisted domestic hot water heater (potable)

• Gas heat pump water heater• Combined Space and Water Heating

Systems*

• Ozone and cold-water washing• Energy star rated clothes dryer

• Low-cost residential gas absorption heat pump (GAHP)

• Condensing furnace• Transport Membrane Humidifier

(TMH)

• Solid oxide fuel cells*• Micro CHP – natural gas

reciprocating, sterling engine

Enovation Partners used the EIA 2019 AEO to establish the baseline for residential sector natural

gas emissions in the years 2020 and 2050

Residential Sector Natural Gas Emission Forecast by End Uses (million MT)

Enovation Partners developed and analyzed two scenarios based on moderate and high penetration levels of the

selected technologies

Baseline Moderate Penetration High Penetration

Technologies1 Per AEO2019

• Natural gas furnace (AFUE 96%)• Gas absorption heat pump (AFUE

1.4)• Gas heat pump water heater (1.3

UF)• Standard Energy Star certified

dryer (CEF 3.49)

• Gas absorption heat pump (AFUE 1.4)

• Gas heat pump water heater (1.3 UEF)

• Standard Energy Star certified dryer (CEF 3.49)

Policies2 Current policies

Current policies Current policies

SubsidiesNo new subsidies

• Moderate level of subsidies proportional to the avoided city gate cost of gas

• High level of subsidies proportional to the avoided city gate cost of gas only to the highest efficiency technologies

Scenario Description

Notes:1. Analysis considered highest efficiency technologies available at a reasonable cost. Higher efficiency technologies exist but were not studied due to their non-

commercial availability and theoretical cost. Analysis included the impact of complementary technologies like insulation and smart thermostats.2. Policies e.g. energy efficiency standards or mandates.

Highly efficient, emerging direct use technologies could reduce natural gas CO2 emissions by 40% in residential sector by 2050…

Comments

• In the Moderate and High Penetration scenarios, 60 and 101 million metric tons of CO2 respectively are reduced

• Complementary energy efficiency measures account for 2% of the emissions reductions

• Overall emission decline even though the number of installed gas heating units increase by ~36%

Focus of this study

Comments

• In the Moderate Penetration scenario reductions are achieved with savings of $51 per metric ton

• In the High Penetration scenario reductions are achieved at a cost of $66 per metric ton

• In comparison, atmospheric CO2 removal is 3x more expensive and policy driven electrification is 11x more expensive to reduce emissions than emerging natural gas technologies

…in a cost-effective manner compared to other carbon abatement options

$94-$232

Moderate Penetration

$572-$806

$66

High Penetration

Atmospheric CO2 removal

Policy Driven Electrification

-$51

Cost Comparison of Emission Reduction Pathways

($/metric ton of CO2)

Consumers using the emerging technologies modeled in the study could achieve considerable energy savings*

* National and Regional Averages in 2033 using 2020 Dollars)

2019 Study

enovationpartners.com

2019 Study

Renewable Sources of Natural Gas:Supply & Emission Reduction Assessment Study

Study Objective

To contribute a fact-based analysis and provide current data tothe ongoing policy discussions around renewable natural gasincluding projected estimates on:

▪ The supply potential of domestic RNG resources

▪ Greenhouse gas emission reduction potential

▪ RNG projected pricing

▪ Estimated cost per ton of emission reductions

RNG Technologies and FeedstocksThree Production Technologies

Nine Feedstocks

ICF modeled three scenarios, estimating a low, high and technical resource potential

Comments

▪ High resource potential scenario: 4,513 tBtu of RNG by 2040

▪ Reference point, 4,513 tBtu is 36% greater than the average annual natural gas demand in the Commercial sector

▪ Critical factors: utilization of feedstocks, technology adoption rate, and policy levers

ICF utilized established methodologies for measuring emissions attributes for renewable sources of natural gas

to develop emissions reduction potential

Results

▪ RNG resource utilization could achieve 101 to 235 MMT of GHG emission reductions by 2040 using the Binary accounting methodology

For the sake of reference …

Average Annual Carbon Dioxide Emissions (MMT) from Natural Gas Consumption in the U.S.

(2009-2018)

The emissions reduction potential in the High Resource Potential Scenario

represents over 40% of the average annual emissions from natural gas

consumption in the Commercial and Industrial sectors combined.

By 2040, ICF expects the majority of RNG to cost between $7 and $20 per MMBtu

Comments

▪ Broad range of expected costs: $7- 45/MMBtu

▪ Costs include estimates for: feedstock, biogas conditioning and upgrading, interconnection, and corresponding O&M costs

▪ There is potential for cost reductions as the RNG for pipeline injection market matures, production volumes increase, and the underlying structure of the market evolves

Supply-Cost Curve for RNG, US in 2040

$0

$5

$10

$15

$20

$25

0 500 1,000 1,500 2,000 2,500

Pro

du

cti

on

Co

st (

$/M

MB

tu)

RNG Production Potential (tBtu/y)

As an emission reduction strategy, RNG is competitive with other alternatives

Outreach Efforts to Activate the 2019 AGF Studies

For Immediate Release: December 18, 2019

Two New American Gas Foundation Studies Provide Cost-Effective Pathways for Achieving

Significant U.S. Emission Reductions Washington, D.C. – The American Gas Association (AGA) is highlighting two new studies by the

American Gas Foundation (AGF) focused on reducing greenhouse gas (GHG) emissions through the use

of emerging natural gas direct use technologies and the development of renewable natural gas. “These two studies demonstrate how we will continue to use our vast, reliable and safe natural gas

infrastructure to deliver affordable energy and drive down emissions,” said Karen Harbert, President and

CEO of the American Gas Association. “By incorporating new, highly efficient natural gas appliances

and using renewable natural gas, America’s natural gas utilities will reduce emissions along their systems

and American homes can drastically cut emissions while maintaining the warmth and comfort they have

grown to love from natural gas.” NATURAL GAS DIRECT USE TECHNOLOGIES The first study, conducted by Enovation Partners, demonstrates how widespread adoption of emerging

natural gas direct use technologies could contribute significantly to achieving deep reductions in GHG

emissions in the U.S. residential sector at much lower costs than other options under consideration. It

estimates that natural gas residential emissions could be reduced by approximately 40 percent at a very

competitive cost of $66 per metric ton of CO2 emissions. On average, consumers who install the emerging

high-efficiency technologies modeled in the study would also save $271 annually compared to existing

technologies. RENEWABLE NATURAL GAS The second study, conducted by ICF, outlines the potential domestic resource base for renewable natural

gas (RNG), the corresponding potential for emission reductions and associated costs. Notably, this study

is the first to examine power-to-gas technology as a production method for renewable natural gas. ICF estimates that by 2040 approximately 4,513 trillion Btu of RNG could be produced annually.

Additionally, this equates to a 235 million metric ton reduction in GHG emissions, or a 95 percent

reduction in emissions from the natural gas residential sector.[1] ICF found costs competitive with other

GHG emission abatement options, beginning at $55 per metric ton of CO2 emissions. Both AGF studies will serve as resources for policymakers and stakeholders to use when evaluating

options for achieving cost-effective pathways to reducing emissions. They can be found at

gasfoundation.org.

Direct Outreach to Stakeholder Groups

✓Department of Energy

✓National Labs

✓Environmental Protection Agency

✓Energy Efficiency and Environmental Advocates

✓Energy Think Tanks and Consulting Groups

✓HVAC Manufacturers and Industry Associations

✓Renewable Natural Gas Industry Associations

Questions?

Rick Murphy

[email protected]

mailto:[email protected]

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