Power-to-Gas, Hydrogen, and a Spotlight on New York's Emerging Climate and Energy Policy

Abstract

This paper examines the role of law and regulation in advancing technology-based energy decarbonization options such as hydrogen compatible networks and power-to-gas (P2G) in the context of New York’s energy and climate change mitigation goals. By exemplifying the potential of P2G and hydrogen, it underscores the need for a more comprehensive legal and regulatory framework that (i) reflects the peculiarities of gas and electricity systems (on the one hand) and (ii) facilitates a more effective and integrated energy decarbonization pathway (on the other hand). Hydrogen is an energy carrier with a significant potential to deliver zero and low-carbon energy depending on how it is produced. Also, when combined with oxygen in a fuel cell, hydrogen produces heat and electricity with only water vapor as a by-product. It has been used for several years in bespoke applications in the aeronautics, industrial, and transportation sectors. About ten million metric tons of hydrogen is currently produced in the US every year, and ninety-five percent of which is via centralized reforming of natural gas (i.e. steam methane reformation (SMR) and known as “Blue Hydrogen”) used mostly in petroleum refining and ammonia industries. Other modes of utilization include fuel cell vehicles, metals refining, and synthetic natural gas production. Notably, the P2G process leads to the production of “green hydrogen” by using electricity that would otherwise be curtailed or lost, from variable renewable energy (VRE) sources such as solar and wind. Such VRE sourced energy can be used to split water into its hydrogen and oxygen components. The ‘green hydrogen’ process is becoming increasingly relevant to the issues of (i) decarbonization of gas and electricity networks; and (ii) solving the ‘curtailment’ ‘intermittency’ and ‘storage’ challenge in an energy system where renewables are gradually playing a larger role. It may also be key to facilitating the integration of a growing share of VREs in existing networks and in the same vein helping to avoid the ‘stranded assets’ dilemma faced by operators of natural gas pipeline and storage networks which can be compatible with hydrogen or synthetic methane produced as a result. Law and regulation provide a facilitative means through which relevant institutions and operators can work towards decarbonization and develop the requisite technology-based solutions while addressing the energy policy challenges created by the increasing role of VREs. Such considerations are even more relevant for a state such as New York. Even though the state’s Clean Energy Standard revised in 2019 requires 100% carbon-free electricity by 2040; in 2019, 29% of New York's in-state generation came from renewable sources. One-third of its utility-scale net generation came from in-state nuclear power plants that are scheduled to be decommissioned soon, while it was the sixth-largest natural gas consumer in the US, and three in five households used natural gas for home heating. The emerging energy decarbonization issues can be met if, among other things, law and regulation are viewed from a functional lens. In this regard, ‘regulation’ is considered as part of a legal framework that is instrumentalist in orientation with the aim of pursuing defined energy policy objectives which typically comprise of ensuring (i) secure and reliable supplies, (ii) sustainability while protecting the environment, and (iii) ensuring that costs and rates are just and reasonable both for the suppliers and consumers. The (ii) dimension is crucial in a carbon-constrained world. Thus, the paper will consider these highlighted issues and in Part II discuss the growth and challenges with VREs in the US energy mix and then highlight potential role(s) for hydrogen and P2G as an example of innovative technology-based decarbonization solution as well as a means of efficiently integrating growing VREs in electricity context with natural gas networks. Part III will examine the regulatory issues in the regulation of gas and electricity systems in a carbon-constrained world and the challenges and potential for decarbonization by deploying hydrogen and P2G. Part IV examines New York’s emerging climate and energy regulation framework and points out the possible issues with deploying P2G and hydrogen in the state. The paper concludes by highlighting that in the pathways to decarbonization the overarching objective in determining how and what to regulate should be ‘curbing greenhouse gas emissions’. It also underscores the need to develop an integrated policy and regulatory framework that can enhance the required technologies and energy systems in the path towards decarbonization.