NATURAL GAS: A BRIDGE TO CLIMATE BREAKDOWN

The report argues that natural gas is not a viable 'bridge' fuel but rather a risk to climate stability and shareholder value. It highlights that new gas infrastructure is increasingly incompatible with the Paris Agreement's 1.5°C goal and faces significant economic threats from the falling costs of renewables and storage. The document details how utilities face 'stranded asset' risks, regulatory pressure from state and city decarbonization mandates, and customer defection to community choice aggregations and corporate clean energy contracts. It suggests that 'steel for fuel' strategies—replacing fossil fuel generation with capital investment in renewables—offer a more sustainable financial model. The report concludes by urging investors to demand better disclosure on emissions and transition plans and to support policies like performance-based regulation and securitization to facilitate a just and rapid energy transition.

• Natural gas is a significant climate risk because methane, its primary component, has approximately 84 times the global warming potential of CO2 over a 20-year period. Furthermore, U.S. methane supply chain emissions are likely close to 60% higher than EPA estimates, meaning gas-fired plants emit about 75% of the emissions of coal-fired plants per unit of energy.
• Investment in new natural gas infrastructure creates material financial risks for shareholders, including the potential for stranded assets. The U.S. is on track to spend roughly $1 trillion on new gas-fired power plants and fuel by 2030, but these assets may become obsolete or require expensive, unproven carbon capture and storage (CCS) technology to remain viable.
• Clean energy alternatives are now more cost-competitive than new natural gas. Unsubsidized wind costs $28-54/MWh and solar costs $32-44/MWh, compared to new combined cycle natural gas at $44-68/MWh. Portfolios of solar, wind, storage, efficiency, and demand response can replace new gas-fired generation in the U.S. with 'significant net cost savings' today.
• Utilities face 'customer defection' as users seek clean energy outside the traditional monopoly model. This occurs through Community Choice Aggregations (CCAs), which are authorized in nine states, and corporate initiatives like RE100, where companies commit to 100% renewable energy.
• Regulatory and policy shifts at the state and local levels are undermining the case for natural gas. Several U.S. states have adopted 100% clean or renewable energy commitments, and over 130 cities have committed to 100% clean energy grids. Additionally, 21 cities in California and one in Massachusetts have passed legislation banning or disincentivizing gas infrastructure in new buildings.
• Carbon capture and sequestration (CCS) is an unreliable strategy for decarbonizing natural gas due to high costs, limited geographical suitability, and an inability to capture more than 90% of emissions or address methane leaks.
• The 'steel for fuel' strategy, pioneered by Xcel Energy, allows utilities to substitute fuel expenses (which provide no return) with capital investment in renewables (where they can earn equity returns), creating a win-win for regulators, consumers, and shareholders.
• Current 'cost of service' regulation creates a misalignment of incentives, as it rewards investment in utility-owned assets but does not incentivize the retirement of uneconomic coal and gas plants. Performance-based regulation (PBR) is proposed as an alternative to reward outcomes like emissions reductions and reliability.

APA

Holzman, L., O’Boyle, M., & Stewart, D. (2020). NATURAL GAS: A BRIDGE TO CLIMATE BREAKDOWN. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Natural-Gas_A-Bridge-to-Climate-Breakdown.pdf

Chicago

Holzman, Lila, Mike O’Boyle, and Daniel Stewart. NATURAL GAS: A BRIDGE TO CLIMATE BREAKDOWN. Energy Innovation, 2020. https://energyinnovation.org/wp-content/uploads/Natural-Gas_A-Bridge-to-Climate-Breakdown.pdf.

Wikipedia

{{cite report |last1=Holzman |first1=Lila |last2=O’Boyle |first2=Mike |last3=Stewart |first3=Daniel |title=NATURAL GAS: A BRIDGE TO CLIMATE BREAKDOWN |publisher=Energy Innovation |date=March 2020 |url=https://energyinnovation.org/wp-content/uploads/Natural-Gas_A-Bridge-to-Climate-Breakdown.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{holzman2020natural, author = {Holzman, Lila and O’Boyle, Mike and Stewart, Daniel}, title = {{NATURAL GAS: A BRIDGE TO CLIMATE BREAKDOWN}}, institution = {Energy Innovation}, year = {2020}, month = mar, url = {https://energyinnovation.org/wp-content/uploads/Natural-Gas_A-Bridge-to-Climate-Breakdown.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }