Gas has grown prolifically in Europe over the past three decades. It past coal in 1996 and could pass oil in the early 2020s as Europe’s top energy source. But to remain Europe’s dominant source, it needs to prioritize decarbonization.
In early 2017, the Oxford Institute for Energy Studies’ Jonathan Stern began shining light on this issue and followed it up with a further study later that year. His third paper, “Narratives for Natural Gas in Decarbonising European Energy Markets,” conveys more urgency: “European gas stakeholders need to develop narratives which demonstrate that they can maintain a substantial place in decarbonizing European energy balances post-2030.”
Time is not on the industry’s side. Meeting COP21 climate-reduction targets for 2030 will require investments in the coming five years that treat European countries as distinct political-economic environments with unique decarbonization demands. The chicken-and-egg dilemma adds further pressure. The industry usually waits for governments to enact regulations before making investments. Such a waiting game may be too late.
The gas industry’s recent success and august supply future with LNG should not make it complacent. The intensity of public fervor over climate change is accelerating. This could leave the industry holding a bag of unburnable gas. By embracing the clean energy transition, it can win its own future as well as ours.
Coal-to-gas switching not enough
Is it a wise bet for the industry to take the 2030 Paris targets seriously? Given the decades of poor progress from international agreements on climate change, it might think twice about reorienting its business model, at great cost, on the assumption that, this time, governments are serious.
The industry’s past model – and one backed by EU governments to strengthen gas-supply security – has been to build out infrastructure that imports, transports, and stores methane. Methane allows switching from coal in providing base load power generation that can smooth out the intermittency problem of renewables.
Yet this strategy fails to imagine a decarbonized future. For starters, it locks in carbon use. Methane may be considerably cleaner than coal but it still emits carbon dioxide in the combustion process. Methane leaks throughout the value chain are also increasingly recognized as a problem. This strategy, moreover, absolves the gas industry from worrying about emissions and tapping into and intertwining its operations with the wonderful technological breakthroughs and cost-reductions in renewables.
What are the choices?
Stern identifies three main choices for decarbonizing gas. The first is using gasification to produce biogas, biomethane, or even synthetic gas (syngas) as substitutes for pure methane. Estimates range for how much this process can grow in the coming decades. But a middle-of-the-road 2030 scenario says 40 billion cubic meters per annum is possible. Biomethane is getting some attention in Europe here. Last year, Belgium, Estonia, and Ireland joined 15 others European countries in connecting biomethane plants to their national grids.
The second choice is the most viable from the supply-side: harnessing and converting excess electricity generated by renewables to produce syngas and hydrogen. Syngas can draw on ample biomass and waste. Hydrogen can harness power from all manners of renewables, which already struggles with surplus production. France started building its first power-to-gas Jupiter 1000 in 2018, the first production-scale option for the continent to produce syngas and hydrogen. Germany launched its first industrial-scale project his year after experimenting with pilot projects.
The final option, combining cleaner methane with carbon capture and storage (CCS), has the most upside. CCS has its environmental opponents, but it can achieve two things at once: arresting carbon emissions and transforming them into hydrogen. CCS has been slow to take off in Europe, partly due to the paucity of offshore storage options, yet last week Merkel identified it as crucial for Germany to reach its decarbonization goals. This is a start, but the EU needs to furnish greater financial support to developing CCS.
The time to evolve is now
Gas-to-coal switching and significant domestic supplies have been the key ingredients for gas’ past rise in Europe. These will sustain its push until 2025.
Going forward, however, individual European countries will have specific demands from a range of non-methane products. Each, after all, has a different trajectory for gas decarbonization based on its current coal reserves, wealth, policy-framework, and energy-security needs. Western European countries are depleting their coal resources and are generally further along, while others cannot afford to abandon coal, or do not have the infrastructure in place to reorient their markets like France or Germany.
The industry needs to evolve now to retain its dominance in the European market after 2025 and meet the 2030 emissions-reductions goals of COP21. If COP21 targets were enforced, the industry would, as of now, be in trouble. The EU can also play its part in encouraging the industry to look to the future through its regulatory signals. The EU’s Gas Package for the 2020 Commission, currently under review, will be a telltale signal.
Fighting climate change is a relentless pursuit. We all must keep our foot on the pedal, including the clean fossil fuel, and stay alert. Cruise control is not an option.