Determining the Comparative Value of Carbon Abatement Pathways in Residential Space Heating

Abstract

Residential space heating accounts for a large portion of the total annual home energy use. The main source of energy for residential space heating in the U.S. comes from natural gas but where this is not available heating oil or propane may also be used. The current use of fossil natural gas for the residential space heating sector is in need of a change to support a rapid reduction in greenhouse gas (GHG) emissions. This presentation presents the results of a project analyzing renewable energy pathways at various stages of development and commercialization with the current natural gas pathway scenario. The first of the three pathways is renewable natural gas (RNG) that is derived from biogas via anaerobic digestion of dairy manure and food waste. The second pathway involves renewable hydrogen that would be blended into the RNG. The last scenario will look into the widespread use of air source heat pumps. For all scenarios the net present value (NPV) will be calculated using techno-economic analysis methodology, which is where the carbon abatement will be represented as a revenue stream using the social cost of carbon (SCC). Both the fossil natural gas and RNG derived via anaerobic digestion pathways will have their NPVs calculated with a 2020 investment start date as they are either commercialized or currently being commercialized, whereas the renewable hydrogen and air source heat pumps NPVs will be calculated with a 2025 investment date as the projected commercialization timeline. The future year (if any) where the renewable pathway NPV surpasses the fossil pathway NPV will also be calculated. Of the three renewable energy pathways air source heat pumps potentially yield the lowest carbon abatement costs and then the renewable hydrogen blended with RNG and lastly the RNG produced via anaerobic digestion scenario.

Keywords: Carbon abatement; techno-economic analysis; investment timing; social cost of carbon; net present value; renewable natural gas; renewable hydrogen; air source heat pumps