The Natural Gas Supply Association (NGSA) announced on December 3 that it supports a national carbon pricing policy, becoming what it believes to be the first US oil and gas trade group to come out in favor of a carbon tax.

"We want to create a clean energy future that is affordable for all and we believe a price on carbon will help get us there," said Dena Wiggins, president and CEO of NGSA. "Pricing carbon will help reduce carbon emissions now, while encouraging the development of innovative technologies like carbon capture that will drastically reduce or even eliminate emissions in the future."

NGSA has not developed its preferred carbon tax program, such as a specific price on carbon or what carbon-emitting sources would be taxed, said Wiggins. "We do think it should be broadly applied to all emitting sectors… and it should be geographically broad as well," she told reporters in a briefing.

In addition to informing lawmakers about its new position, Wiggins said NGSA can reach out across the regulatory community on the issue. "I'm very active in NARUC [National Association of Regulatory Utility Commissioners]," she said. Also, NGSA will incorporate its new position in communications to the media and through social media, she said.

Acknowledging that a national carbon tax is unlikely in the current political environment, Wiggins said that NGSA is looking closely at the state and regional approaches that are under consideration, such as by the PJM ISO and by New York ISO. "We believe a national carbon pricing plan across all sectors would achieve the best results, but if states are designing individual approaches to reducing emissions right now, we urge them to incorporate a price on carbon in power markets, ideally coordinated with other states. But we will not interrupt [state or regional progress] in search of the ideal," she said.

Proceeds from the carbon tax should be rebated to households, Wiggins said, a policy that would match proposals from Democrats.

Unanimous Support

Wiggins told reporters that support from NGSA members is unanimous. "We wouldn't come out with this otherwise," she said.

It's significant, she said, that that idea came up organically, as NGSA was looking at how to respond to various new pricing programs being proposed by RTOs and ISOs. "This process started fairly narrowly [on RTO and ISO comments]. But we worked it through with our members," she said. "When we talked with our members, we realized that there is a shared understanding of… moving towards a low-carbon future. This came together quickly, in about a month or six weeks."

NGSA is not taking a position on any of the proposals from RTOs and ISOs today, though Wiggins didn't rule out that level of interaction at a later date. NGSA did submit comments to the New York Public Service Commission recently on its statewide energy plan, and it included a general acknowledgement of the potential benefits of a carbon tax plan.

"I think we will get more granular as time goes on," she said.

NGSA's priority, in addition to the carbon tax and rebate, is that it be complemented by the elimination of subsidies that have been granted to no-carbon resources. "Some of the direct subsidies, such as for nuclear power, in some states—those are policies we have been adamantly opposed to," she said. "We believe a carbon tax would replace those subsidies and be applied across all energy sources."

In addition to recognizing that natural gas is a low-carbon power resource, Wiggins said that the carbon tax would reflect that natural gas supports growth in renewable energy because it provides reliability that renewables can't match. "States have fairly aggressive renewable energy targets, and I think we are a good partner," she said.

Reprinted from PointLogic News. For more natural gas news from IHS Markit, visit the PointLogic website.

Kevin Adler is an Editorial Director, Natural Gas at IHS Markit

Posted 13 December 2019