Low Carbon Fuel Standard and Natural Gas

Christopher A. Cavanagh, PE

Director New Products & Services

Electricity and Gas Service Areas - US

Distributes electricity to 3.3 million customers

Services 1.1 million customers of Long Island Power Authority (LIPA)

Provides natural gas to 3.5 million customers

Currently owns over 4,000MW of generation

Blue – Electric Purple – Gas Orange – Gas &

Electric•National grid is the 2nd largest energy delivery company ion the US, based on customer numbers; includes the servicing of LIPA’s 1.1 million customers

National Grid Background with Alternative Fuels

CompressedNaturalGas

National Grid delivers > 30 Million gasoline gallons equivalent to annually more than 4,000 commercial vehicles at 40 stations

Hydrogen and Blends

New Hydrogen and CNG Fueling Station at the Town of Hempstead, Long Island

Plug-in Hybrid & Battery Electric Vehicles

Evaluation of interactivity of PHEV’s and BEV’s in NY, RI & MA included in National Grid’s Smart Grid Proposal under ARRA.

Natural Gas Vehicles & Climate Change

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.00

Diesel Natural GasDiesel Gallon(w /10% eff.

Penalty)

Natural GasDiesel Gallon(no penalty)

Gasoline Natural Gas(GasolineGallon)

Renew ableGas (Diesel

Gallon)

Renew ableGas

(GasolineGallon)

gra

ms

CO

2 e

per

gal

lon

10% below Diesel

•Source: NGV America

Potential for CNG as an Option for the LCFS

NG supports the development of regional LCFS in order to account for the social cost of carbon and create a more level playing field for low carbon fuels. As such, it will enable CNG fuel providers to generate credits and clearly creates long term opportunities as follows:

The market for those credits is hard to quantify Factors need careful review based on Northeast conditions The market will differ from California due to lower diesel and

gasoline prices in the northeast (typically 15¢ per gallon for diesel and 55¢ for gasoline ) see eia.doe.gov

Natural Gas supply to the northeast is domestic and diverse and deliverability is improving through new sources and bio-methane. CNG vehicles make use of underutilized infrastructure

The potential for alternatives with better life-cycle economics but more capital intensive requirements improves with a lower (more aggressive) carbon standard.

Recommendations for a Low Carbon Fuel Standard

1. The policy should consider whether the carbon intensity standard be initially set below all conventional fuels currently available from mandated entities in order to encourage investment in infrastructure with longer paybacks.

2. There should be no exemptions allowed from a suppliers carbon calculation based on the end-use of the fuel.

3. The final legislation should definitively state that providing credits under this program will not cause dis-qualification for any other funding source, public or private including tax credits for fuel or infrastructure or future carbon credits. (i.e. getting a LCFS credits isn’t “double dipping”)

4. Ownership of credits should be flexible available to any service provider along the fueling value chain, from utility to fueling station owner/operator to vehicle owner/operator.