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    From the Editor: Mixed blessings [GasTransitions]


Readers from the natural gas industry will probably find this issue of Gas Transitions a mixed bag. Or perhaps I should say a mixed blessing? In any case, it may pay to see what is going on in the low-carbon gas space at this moment! [Gas Transitions Volume 1, Issue 11]

by: Karel Beckman

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Natural Gas & LNG News, World, Top Stories, Insights, Premium, Editorial, Gas Transitions, Energy Transition

From the Editor: Mixed blessings [GasTransitions]

Let us go over some of the many highlights. First let’s look at the United States. Unlike many other governments, the US administration has not formulated a “national hydrogen strategy”. However, this has not prevented the US Department of Energy from coming up up with a “national hydrogen plan”, as you can read on page 36. And it’s rather a promising plan.

One thing that is special about it is that it is based on the uniquely extensive existing hydrogen (and natural gas) infrastructure the US has at its disposal. If the country is able to make use of these assets and skills, it can quickly jump ahead in the hydrogen game. The US is already number one worldwide in carbon capture and storage (CCS) – see page 36 – so it has an ideal pole position to quickly grow its “blue” hydrogen production. The DoE’s plan fortunately stays clear of ideology: it expresses no preference for either “blue” or “green” hydrogen.

Another distinctive characteristic of the DoE plan is that it focuses on support for research, development and demonstration (RD&D) rather than on hydrogen production subsidies. At this stage of the game, that may well be the smart thing to do. It is, indeed, exactly the approach that the prestigious Florence School of Regulation (FSR) is recommending for the EU!

In a new set of reports, called “Cost-effective decarbonisation study”, the experts of the Florence School of Regulation write that if Europe wants to bring down costs of hydrogen production, it needs to give priority to RD&D funding. For production subsidies, they say, it is too early.

Their recommendations are worthy of notice: the Florence School of Regulation (FSR) is a highly influential institution in Europe. It is the place where the liberalisation of the EU gas market was designed! When these people turn to the emerging hydrogen market, Brussels is inclined to listen. For this issue of Gas Transitions, we interviewed three of the authors of the new report, including former EU Energy Commissioner Andris Piebalgs. (Page 4)

In addition to making the case for RD&D support, the FSR experts also advocate a “colour-blind” approach to the EU’s hydrogen support policies. In other words, as one of them puts it: “Let the market decide what is the best way to reach the climate objectives,” regardless of whether that’s “blue” or “green” hydrogen.

That surely is another piece of welcome news. I should add, though, that the authors do express doubts as to whether blue hydrogen can have a role in the EU in the net-zero world after 2050, since CCS is only 90% emission-free.

But maybe that is something to worry about later. Countries like Norway, the Netherlands and the UK are forging ahead with blue hydrogen projects, and even Germany, which does not have a very fossil-fuel-friendly political climate, may come on board, now that the German Greens, as we report on page X, have decided blue hydrogen is needed to meet the country’s climate objectives.

Meanwhile, in Australia, the signs are all green for green hydrogen. As we report on page 9, in the last few months, a series of stupendous renewable energy-based hydrogen projects have been announced down under. A “stampede” into green energy and hydrogen, as one reporter called it. To mention just one example: mining giant Fortescue Metals says it wants to build no less than 235 GW of renewable capacity, mostly wind and solar, with which it intends to make hydrogen.

Impressive numbers, but what may work in Australia may not necessarily work in more densely populated countries with fewer renewable energy resources. Independent energy expert Roger Arnold, who has no financial interest in any industry, writes a highly thoughtful analysis, in which he fact-checks, as far as possible, the potential of green and blue hydrogen. He concludes that when it comes to hydrogen made from “surplus” renewables – and even from “dedicated” renewable plants – the potential of green hydrogen is limited compared to the blue version. You can read his insightful article on p. 31.

There is a lot more to learn in this last issue of Gas Transitions in 2020. Thank you very much for your interest. As always we welcome your feedback. And we would like to take this opportunity to wish you a blessed 2021.

Karel Beckman, editor-in-chief