Coupling the electricity, gas, and heat sectors – by linking their markets and their respective infrastructure in a better-coordinated and integrated way – provides the greatest overall benefits for the European energy system. The European Green Deal can accelerate the transition by (i) mandating 10 percent gas supply from renewable sources by 2030, by (ii) enabling EU-wide trade and transport of biomethane and hydrogen, and by (iii) strengthening the EU ETS a new study finds.
The Gas for Climate consortium which consists of ten leading European gas transport companies (Enagás, Energinet, Fluxys Belgium, Gasunie, GRTgaz, ONTRAS, OGE, Snam, Swedegas, and Teréga) and two renewable gas industry associations (European Biogas Association – EBA and Consorzio Italiano Biogas – CIB) have published the ‘Gas Decarbonisation Pathway 2020-2050′ study by Guidehouse (formerly called Navigant).
In this time of unprecedented public health challenges and economic pressure, climate change mitigation and economic recovery must go hand in hand. In the aftermath of the current health crisis, the required EU and national stimulus packages should also be seen as a three-fold opportunity for Europe. Beyond creating economic growth, stimulus packages can drive forward the energy transition and create sustainable jobs, said the CEOs of the twelve Gas for Climate members.
Transition to the lowest cost climate-neutral integrated energy system
Renewable gas is all gas produced from renewable sources. This includes biomethane in the form of upgraded biogas produced by anaerobic digestion (AD) of agricultural biomass and organic wastes, biomethane produced from thermal gasification of woody residues, hydrogen produced from renewable electricity, and synthetic methane produced from renewable hydrogen.
The new study is an analysis of the transition towards the lowest cost climate-neutral system by 2050. Such a fully integrated energy system was described in the Gas for Climate study “Gas for Climate: The optimal role for gas in a net-zero emissions energy systems” published in 2019.
That study analyzed the 2050 net-zero emissions EU energy system and concluded that using a smart combination of renewable electricity and renewable gas, transported stored and distributed through gas infrastructure, can deliver climate neutrality at the lowest societal cost.
A scenario with an optimal quantity of biomethane and hydrogen achieves about EUR 217 billion in cost savings each year by 2050 across the EU compared to a ‘minimal gas’ scenario. Ensuring a smart combination of renewable gas and electricity will be the optimal way to decarbonise the EU energy system, with the system becoming fully renewable.
Increased investments can accelerate renewable gas production
This new ‘Gas Decarbonisation Pathway 2020-2050′ study shows that already in the 2020s, biomethane production can be accelerated by increased investments in anaerobic digestion (AD) and upgrading facilities and by thousands of farmers implementing innovative concepts of sustainable agriculture to produce biogas through double cropping and by adopting organic fertilization and precision farming.
Also, during the 2020s the first large blue hydrogen projects are expected to emerge while a solid business case for green hydrogen develops. Energy efficiency and renovations of buildings ramp up fast, and hybrid heating solutions are actively propagated towards 100 million hybrid heat pumps by 2050.
Heavy industries are anticipated to use “natural reinvestment cycles” to convert facilities into net-zero emissions sites using hydrogen and biomethane alongside renewable electricity.
Heavy road transport is decarbonised with a rapidly growing role for hydrogen fuel cell and electric trucks, and trucks running on bio-CNG and bio-LNG. Ocean shipping increasingly uses liquefied natural gas (LNG), paving the way for bio-LNG. Aviation starts taking up biokerosene and synthetic kerosene based on green hydrogen.
The share of renewables in electricity generation increases from 35 percent in 2019 to 60-70 percent by 2030. Gas-fired power plants will complement this, increasingly running on renewable gases.
Climate and energy policies needed
However, the study points out that the future energy system will need better integration of electricity, heat, and low carbon gases and their respective infrastructures. It highlights that additional EU climate and energy policies are needed to position Europe on the road to net-zero by 2050.
Its central and aspirational Accelerated Decarbonisation Pathway examines which investments and innovations have to take place in order to achieve a 2030 greenhouse gas (GHG) reduction target of minus 55 percent and climate neutrality by 2050.
The European Green Deal can facilitate these developments, which will accelerate emission reductions, create sustainable EU jobs, and create first-mover advantages for EU industry by:
- Adapting the EU regulatory framework to make gas infrastructure future proof in an integrated energy system. It will be a key asset for the sustainable and cost-efficient decarbonisation of the European economy;
- Stimulating the production of biomethane and hydrogen by a binding mandate for 10% gas from renewable sources by 2030;
- Fostering cross-border trade and transport of hydrogen and biomethane and clarifying market rules for green and blue hydrogen including for hydrogen transport. A well-functioning Guarantee of Origin system will be crucial in this;
- Incentivising demand for hydrogen and biomethane by strengthening and broadening the EU Emissions Trading System (ETS) combined with targeted and time-bound Contracts for Difference CfD).
In order to facilitate the transition, existing gas grids will be made ready for renewable and low carbon gas, including the creation of a European hydrogen backbone infrastructure largely based on retrofitted existing gas infrastructure. The proposed policy measures support and accelerate these developments.
Our new study offers a pathway towards cost-effective and resilient energy system integration. We support the transition to a fully renewable energy system in which biomethane and green hydrogen play a major role in a smart combination with renewable electricity and Europe’s well-developed existing infrastructure. We also recognise that blue hydrogen can accelerate decarbonisation efforts and highlight the ability of biomethane combined with CCS to create negative emissions, said Gas for Climate group member CEOs.
