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The future of gas

The world seems to have accepted that the combustion of coal for energy supply cannot continue. Although some countries are still locked into it (most notably China), many emerging global scenarios see coal being phased out. Some say fossil gas should go the same way- especially since it can now be cheaper to generate power using renewables. The Netherlands already have a gas phase out plan, with heat pumps being ramped up instead . 

The Russian attack of Ukraine has led more to look at options like that, but it may be too hard for some countries just now, and, in any case, many scenarios see natural (fossil) gas as a transitional fuel, used in the interim to replace the use of coal, but with its use gradually being reduced via the increased use of low or zero carbon gasses of various types and by elecrification. That’s how the EU’s gas plan sees it. It also seems to be the why natural gas has been allowed into the new EC Sustainable energy investment taxonomy – if emissions from its use for power generation are abated, it can be used as an interim option. 

Everything is in flux due to the war in Ukraine, but the interim use of gas will presumably not include much shale gas- fracking is banned in several key EU countries, including France and Germany, as well as in the UK. Although, who knows, given the uncertain future now of gas imports from Russia. The Russian gas issues will not effect UK directly (it doesn’t import much gas from Russia), but it will impact on global gas prices. Interestingly, even before Russia’s invasion of Ukraine, the UK’s Net Zero Watch, the Global Warming Policy Foundations new offshoot, had called for shale gas fracking to be revived to rescue the UK from its imported gas price problems! And some MPs joined in. But its cost may be high and its environmental problems are still worrying- and, in any case, it couldn’t help in the short term. 

Whatever its source and costs, there are some nuances in how the continued acceptance of fossil gas might play out. In one option, fossil gas is converted into so-called ‘blue hydrogen’ gas, via high-temperature steam methane reformation (SMR), and the resultant CO2 gas is then captured and stored. But that overall process uses energy and it will at best only cut emissions, not avoid them entirely. For example, one study suggested that only a 48% cut would be likely. 

Arguably it would make more sense to generate so-called ‘green hydrogen’ gas via the electrolysis of water, using power from renewable sources. Then emissions would be zero. Green hydrogen is however currently more expensive than blue hydrogen, although that should change soon, with new more efficient electrolyers emerging, and renewable costs falling.  IRENA estimates that hydrogen may start competing with blue on cost in many places by the end of this decade- although it says ‘this seems likely to occur sooner in countries such as China (thanks to its low-cost electrolysers), or Brazil & India (with cheap renewables & relatively high gas prices)’. 

However, the fossil gas lobby can be expected to resist moves to green hydrogen and push for blue hydrogen, possibly admixed with fossil gas. Or maybe they will just push for simple carbon abatement- burning fossil gas with Carbon Capture and Storage . If CCS can be made to work economically and safely at scale, that could be the cheapest option after all, even if it’s not zero carbon. But CCS isn’t doing well- most projects so far have failed. And so some energy suppliers may simply default to using unabated fossil gas as an interim option, perhaps just part time, as a response to lulls in renewable availability or peaks in power demand.  

When the proportion of renewables on the grid is low (10-20%), then running fossil gas fired plants occasionally like this to meet gaps/shortfalls won’t add many emissions, and simple gas peaking/standby plants can be cheap to build and run. But, once the share of renewables starts to build up, as it will do in most the EU, to 40-50% and more, then the back-up plants will have to run more often, and the emissions from them will rise. In addition, with ever  increasing amounts of renewable capacity on the grid, there will be times when there is more power output than is needed. But that’s not necessarily a problem. The excess power from renewable plants can be converted to green hydrogen, stored and used the run the back-up peak-load matching plants, when they are needed. So it’s a zero emission system with full grid balancing of demand peaks & supply lulls. That may be some way off, and it is only one possible use for hydrogen. Some may also be used as a transport fuel, some for heating and for other power uses, although heat pumps are usually a better bet for that.  But at least we can plan ahead for the new system in the interim. 

To summarise, in the first phase, fossil gas fired power plants may be used just to balance low-level variable renewables, with no carbon abatement – the use of expensive CCS with only occasionally used peaker plants does not make much sense. As renewables expand, that enables a switch to green hydrogen production to supply zero carbon fuel to the peaker plants. Some of the green hydrogen can be used for other purposes, but the rival blue hydrogen option is a (not very low carbon) detour, slowing the transition to zero carbon green hydrogen. It’s the same for nuclear, and it’s also inflexible and costly. Some do look to producing so called pink hydrogen using power from nuclear plants to run electroylsers, but that’s an uncertain and possible costly longer term option.

There are some strategic policy issues that may confound or slow the ‘interim gas’ plan. Some countries do not want to move away from gas quickly. That, oddly, includes Germany, which, although it is expanding renewables fast and developing green hydrogen capacity, is also having problems phasing out coal at the same time as nuclear. So it still needs gas.  Several other EU countries are also reliant on gas, much of it imported from Russia, and though they might want to reduce that (and Germany has already blocked planned gas imports via the Russian Nordstream 2 pipeline in protest at the Ukrainian invasion), it may be hard to do it quickly. So, given that they also need to meet their COP 26 emission reduction targets, although not ideal, blue hydrogen may appeal to them in the interim. A bit of a short term botch then and maybe harder than expanding renewables faster- as has now been proposed in Germany.

It not just a European issue. Some African countries are also reliant on locally-derived gas for power generation, and for some, like Nigeria, gas is a lucrative export-  and they don’t want to lose that income. Despite the commitments made at CO26, and the local potential for green power, it will take some of them a while to change from gas fully to renewables and green hydrogen. But a start is being made in some places, with a 10 GW wind farm in Mauritania hopefully set soon to generate hydrogen. We may get there in the end…although plainly it is going to take a while to cut back significantly on global gas use- even with Putin’s inadvertent help in Europe. 

 

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