The role of gas in an increasingly electrified decarbonised energy system is coming under growing scrutiny, given its considerable potential. Clearly in favour of gas is the presence of an existing infrastructure but it too needs to move from a fossil fuel to low carbon base and questions arise as to how much and what types of gases are possible and at what cost.
To respond to these and other issues in a European context, Navigant Consulting has completed a comprehensive study, updating and expanding an earlier study, for regional gas companies in the Gas for Climate consortium.
The goal is a net zero emissions energy system by 2050 and to achieve this the study considers two distinct scenarios, ‘minimal gas’ and ‘optimised gas’, with the two differing in the extent of the role of renewables and low carbon gas. In the ‘optimised gas’ scenario, renewable and low carbon gas can be used to its full potential, whereas in the ‘minimal gas’ scenario, renewable and low carbon gas use is limited to those sectors where no alternatives are available.
Thus, the ‘minimal gas’ scenario decarbonises the EU energy system assuming a large role for direct electricity use in the buildings, industry and transport sectors, with some biomethane being used to produce high temperature industrial heat. Renewable electricity is produced from wind, solar and hydropower, combined with solid biomass power. The ‘optimised gas’ scenario also has a strongly increased role of direct electricity in the buildings, industry and transport sectors. But also it finds that renewable and low carbon gas will be used to provide flexible electricity production and heat to buildings in times of peak demand, to produce high temperature industrial heat and feedstock, and to fuel heavy road transport and international shipping.
Renewable gas potential
What do these scenarios reveal? First and not surprisingly, full decarbonisation of the energy system requires substantial quantities of renewable electricity. Electricity production is projected to more than double and renewable electricity production from wind and solar PV to increase ten-fold compared to today.
This strong growth in wind and solar PV requires dispatchable electricity production by either solid biomass or gas, as battery seasonal storage is unrealistic even at strongly reduced costs. Likewise, full decarbonisation of high temperature industrial heat requires gas.
To meet these demands, the study finds that it is possible to sustainably scale-up renewable gas, i.e. biomethane, power to methane and ‘green’ hydrogen (from renewables), at strongly reduced production costs. However, because green hydrogen is currently expensive and its ramp-up is linked to the speed of growth of wind and solar to necessary levels, ‘blue’ hydrogen produced from natural gas combined with carbon capture and storage (CCS) can serve as a ‘bridge’ with early scale-up potentially accelerating decarbonisation.
In the ‘optimised gas’ scenario, a total of 2,880TWh of renewable gas – comprised of 1,170TWh renewable methane (1,010TWh biomethane and 160TWh power to methane) and 1,710TWh hydrogen – is allocated to the buildings, industry, transport and power sectors. This corresponds to about 270bn cubic metres of natural gas (energy content).
By 2050, all biomethane can be zero emissions renewable gas, in the sense that any remaining lifecycle emissions can be compensated by negative emissions created in agriculture on farms producing biomethane, according to the study. Moreover, with the replacement of blue hydrogen by green hydrogen towards 2050, when the production costs of both should be similar, the energy system could then become fully renewable.
The ‘optimised gas’ scenario is also the more cost effective and the study finds that compared to ‘minimal gas’, it achieves savings for society projected at €217bn annually across the energy system by 2050. Per unit of energy the cost savings are greatest in the heating of buildings, where renewable gas is used combined with electricity in hybrid heat pumps. The use of renewable gas in electricity production also generates significant savings because it avoids costly investments in solid biomass power or costlier battery seasonal storage.
For both scenarios the total annual costs are estimated at more than €2trn. However, most of these costs are not additional costs related to decarbonisation but are regular energy system costs and transport vehicle costs that also exist today, the study notes.
With the potential for hydrogen to become the major renewable gas it is key that blue hydrogen is enabled by policy makers to take the bridging role towards green hydrogen, the report states. While the technical potential for blue hydrogen based on using permanent carbon capture and utilisation in the EU is small, blue hydrogen based on applying CCS can be scaled up to very large quantities within a relatively short timeframe. However, limited political acceptance today is a barrier to scaling up such CCS.
To ensure that blue hydrogen will be a net-zero emissions gas in 2050, the remaining 5–10% of uncaptured CO2 needs to be compensated elsewhere in the energy system by then. This can be done by using biomethane in combination with CCS. With the 2050 estimated cost of blue hydrogen comparable to green hydrogen, proactive policy to ensure the greening of hydrogen supply is required.