DNV GL Finds Cheaper Route to EU Carbon Neutrality
Norwegian consultancy DNV GL has found that Europe – which extends further than the European Union, for the purposes of this study – can meet the net zero carbon emissions goal of 2050 far more cheaply than the European Commission (EC's)'s equivalent 1.5TECH scenario, in a study published June 30.
Commissioned by industry group Eurogas, the new study relies a lot more heavily on decarbonised gases such as hydrogen and biogas, allowing much less building work to carry electrons, on which the 1.5TECH scenario depends. The overall result is a saving of €4.1 ($4.5) trillion by 2050.
The subsidies required to incentivise consumers to choose decarbonised energy are €10.1 trillion (80%) lower in the Eurogas scenario. But the new study requires a carbon price of about €100/metric ton as a lot of carbon capture and sequestration (CCS) capacity will have to be built to dispose of the by-products of steam methane reformation or other CCS techniques. The start of the CCS cycle is the least well known but a lot of faith is placed on technology bringing down the cost. On the other hand there is no shortage of depleted reservoirs and so on for sequestering the CO2 and the technology is known.
The solar and wind power industries, both of which will be needed to create green hydrogen at scale, also only reached commerciality in Europe after decades of investment, or subsidies, as Eurogas' secretary-general James Watson told a webinar that day. And he recalled that many grids used to carry town gas that was half hydrogen. So in some respects the future is not that alarming, although time is of the essence: no major CCS schemes are envisaged operational until the latter half of the decade.
The EC's energy directorate's head of wholesale markets, Florian Ermacora, told the webinar that energy security and competitive prices were as important as sustainability: "We cannot have prices too high," he said, which is the concern of those opposing an electrons-only approach to space heating. He said the report was very timely as the EC is working on a hydrogen strategy of its own, for publication early next month.
He too put his weight behind hydrogen as the ideal end product of gas, traded in a competitive market, but there is still a lot to be decided, such as who will pay for the hydrogen production, refurbishing and upgrading the gas distribution network, and bringing decentralised biogas into play. So far those schemes are state funded and embryonic only. Key though to success will be maintaining the balance between state aid and incentivisation, and competition.
Replacing domestic boilers as needed with those that were hydrogen-ready would allow the cost of the energy transition to be spread thinly over the coming decades, said one of the report's authors, Brent Erik Bakken, who also warned of the excessive need for variable and mostly idle renewable capacity to manage peak demand that was implied by an all-electrons approach.
Watson said the study shows that the EU can save €4.1 trillion by 2050 – an amount equivalent to Germany's annual GDP in 2018 – by using a mix of energy carriers to achieve carbon neutrality. "Major cost savings in applying this approach in the buildings sector are particularly key to saving this huge amount of money. This finding is of high importance as Europe needs funds to recover from Covid-19."
He added: "The Eurogas study shows that to achieve carbon neutrality by 2050, Europe must start the hydrogen economy now. There is no time for delay. This includes all clean hydrogen options: reforming natural gas through CCS, producing hydrogen from renewables, as well as blending it with methane. The need for CCS is not an option, it is a necessity – if we are to reach our climate ambitions."