Title: The Vital Importance of Pipeline and Transmission Infrastructure to Decarbonization
Speakers: Brooks Smith and Brian Harms
Brooks Smith (00:07):
Brian, it’s so good to be with you this morning here in Atlanta on a beautiful day. Thanks for making some time for a discussion on, among other things, infrastructure, whether it’s pipeline infrastructure or transmission infrastructure.
Brian Harms (00:19):
Yeah, no, I think that’s really good. I think everybody gets so excited about renewable energy and especially investment in renewable energy and they think about generation when it comes to power, or then maybe they think about renewable natural gas or hydrogen’s a big one now, right? You think about all these things, they’re like, oh, all exciting. You’re like, well, how do they get to people? Right. And so I think it’s very important to think about. And then on top of that, when it comes to renewables, how can renewables work with the all the above strategy of making in the capacity crunch aspects, natural gas plays a big role.
Brooks Smith (00:58):
Yeah, so I’m gonna digress from the very beginning.
Brooks Smith (01:02):
Went to my first Buc-ee’s yesterday.
Brian Harms (01:03):
Oh my goodness. Off the interstate in South Carolina.
Brooks Smith (01:05):
Buckeyes is fantastic. Yeah. But there’s a reason that Buc-ee’s is located immediately off the South Carolina exit where there’s this massive transportation artery and they have, I’m sure, projections of how many cars are gonna see that sign and get off the highway. And isn’t energy the same thing? You gotta put the generation assets in a place where you can connect to the grid.
Brooks Smith (01:29):
And in reality, our grid, our natural gas pipeline infrastructure is 50, 60, 70 years old. And I’ll set safety aside for a minute, but that’s a pretty compelling issue on its own. How do we ensure that the infrastructure is there to support the growth that we wanna see?
Brian Harms (01:49):
Yeah. I mean, that’s a very important issue, but I think you raise a good point, which is the infrastructure that we have has been built to be in the centers where we need it. And so natural gas, coal, a lot of these plants that we have that aren’t renewables based have been put where we need them more. So the centralized kind of Edisonian kind of thought process. What we have is we have that kind of structure right now, infrastructure-wise. And the renewable side of things could be something in the desert or something way out here or wherever the wind’s blowing the best might not be where the load is, i.e. the demand for power or demand for gas if it’s renewable natural gas. The farms where you have methane and it may not be exactly where you’d need the renewable natural gas.
Yeah. So it all comes down to how do you get where people are wanting to put their money investing? How do you get that to the users of these products.
Brooks Smith (02:49):
I imagine in your world, a critical component is how do you tap that solar into the grid?
Brian Harms (02:55):
Oh, yeah. And in fact, it’s interesting. It used to be that our deals were, okay, what about the revenue document, right? So the PPA, the power purchase agreement, or the rec agreement, or whatever aspects are in terms of the renewables. And it’s funny, you can get those fairly easily, more so either from the utilities through RFPs, corporates who are wanting to get involved because of ESG aspects. And so then all of a sudden, interconnects become more critical than anything else because of the updates to the grid that are needed. So there’s huge upgrade costs. And so if you haven’t modeled the appropriate amount of upgrade costs, suddenly that could decide whether your project lives or dies. And can you share it with others? Is it gonna be subsidized across the grid versus it’s just gonna be put on you? All those things become almost more critical than anything else.
Brooks Smith (03:47):
Yeah. It’s fascinating. So I’ve only had one case that went to the US Supreme Court in my professional career. And it involved one of the most intractable landscape scale impediments to new linear electric and power infrastructure Appalachian rail.
Brooks Smith (04:08):
2,200 miles from Georgia to Maine. It was enacted into a scenic and protected area years after original pipelines were in the ground and transmission lines were on the landscape. But now in order to cross over or cross under, you literally have to have an act of Congress. And it takes the whole Eastern seaboard and puts it in this very uncomfortable spot of how do you provide new utility infrastructure to our military installations?
Brooks Smith (04:42):
Most of which are up and down the East Coast. How do you get to these huge growth centers in the Southeast if you can’t navigate these odd federal land protection issues, which are critically important.
Brooks Smith (04:56):
But at some point you need to balance the need for that infrastructure –
Brooks Smith (05:01):
to keep the lights on.
Brian Harms (05:02):
Yeah, no, and it’s funny you say that because we’ve had many clients who’ve looked at adding gas pipelines just to, you know, for security purpose or for whatever purposes for just, “Hey, we want more capacity in terms of being able to supply the gas.” And then if it’s not within a state, if it’s across state lines, if it’s across county lines sometimes, suddenly it just becomes a huge problem. You got the nimbyism we were talking about before, you know, not in my backyard. Right. But it becomes a very political and difficult process to get through. And sometimes it, while all this is important, and it’s funny, because I think natural gas pipeline is extremely important, even if we’re talking about renewable energy and other things, because it’s not just about power, it’s about heating, it’s about other aspects of what that natural gas is used for.
I think you raise a very good point on the national security front because a lot of our bases, they’re transitioning, but there’s a lot of natural gas usage. And so it’s –
Brooks Smith (06:08):
And we haven’t even talked about renewable natural gas. Yeah, no, absolutely. But here we’re trying to solve an environmental challenge with an environmental opportunity, but that also needs pipeline infrastructure. Exactly. It really doesn’t matter what’s going through the pipe. Correct. It’s where is the pipe? Yes. And who supports it and who doesn’t?
Brian Harms (06:23):
Yep. Yeah, and the same with hydrogen. I’ve talked to several of our clients who are in the gas space and I always go, “Well, you’re not gonna put hydrogen in the pipeline, are you?” And well, no, I think we’re gonna be able to do that. And I’m like, “Really?” And I’m a skeptic only from hydrogen, only from the standpoint of, I mean, it’s gonna degrade or it’s gonna create issues. But a lot of people think the mix of hydrogen with natural gas could be a solution to some of the issues like renewable natural gas, hydrogen, all those things will end up creating less carbon.
Brooks Smith (06:55):
Well, I just don’t think the normal consumer –
Brooks Smith (07:00):
including any of us appreciates that even today we are so constrained that literally trucks are taking natural gas and moving it from point A bottleneck to a point end of bottleneck and putting it back into the pipe in order to avoid that otherwise intractable impediment. And that’s not a really, like, viable long-term solution to getting fuel to where it needs to go.
Brooks Smith (07:30):
could be said for anything that you put in
Brian Harms (07:33):
a pipe. Yeah. No, that’s a great point. And I think, yeah, we all have seen the politics of these huge pipelines that have either been canceled or have not been approved. I said, “But I think you were talking about one actually came through. I think you called it a unicorn, but –
Brooks Smith (07:52):
Yeah. Well, having lived and died through a couple of them, it is interesting that as part of the last debt ceiling compromise in the summer Mountain Valley pipeline received congressional authorization to be approved in the final pieces of construction completed. But I called it a unicorn because when in recent memory has Congress acted so decisively to green light a piece of critical infrastructure.
Brooks Smith (08:24):
And is that really the best use of Congress’s time to have to deal project by project? It feels like more fundamental streamlining should occur through the federal agencies with authorization from Congress to make good decisions about where we have reliability issues or capacity issues. And of course, we live in a world where everything should get a very hard look from an environmental standpoint. And if there are better alternatives, they should be rigorously reviewed. But ultimately, we need to solve our capacity and reliability issues. And if we don’t, we’re all gonna be in the dark.
Brian Harms (09:10):
Yeah, absolutely. Well, and I think to your point, it’s interesting that DOE and FERC, in terms of the power side of things, trying to find ways to facilitate more transmission. And I think they’ve been doing that. It’s some folks probably think it’s slower than it should, but I think also it’s like what I said before. It’s like you get all excited about the shiny new thing and you kind of forget that, hey, there’s this other stuff, the classic stuff that you actually need to get it there. And so, but I do think there’s some facilitation, there’s some dealing loans and things like that, that could really help, and it’s focused on transmission infrastructure, but could kind of hopefully be thought through for the transportation issue too as well.
Brooks Smith (09:51):
Yeah. I think there’s so many parallels there.
Brooks Smith (09:54):
They could follow a similar paradigm.
Brian Harms (09:56):
Yeah. And it’s probably because everybody thinks of renewable power that that’s why the transmission gets the show. But I think it’s hydrogen, hydrogen hubs, as you get into renewable natural gas, I think you get those things going then where you’re gonna end up is the natural gas would be the natural extension of kind of these policies for transmission flowing over to, gosh, flowing also. I don’t mean to be so punny, but, in any event, yeah, I think it’ll naturally go that way.
Brooks Smith (10:31):
Yeah. Well, I know we could keep talking for a while but in the interest of time, it’s been a great conversation.
Brian Harms (10:37):
Absolutely. And I hope we get to do it
Brooks Smith (10:38):
again.
Brian Harms (10:38):
No, thank you, Brooks. I really appreciate it.
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