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    Gas Starry-Eyed over Low-Emissions Future

Summary

Gas: reaching the parts of life that renewables cannot.

by: Tim Gosling

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Gas Starry-Eyed over Low-Emissions Future

Gas industry players sought to reaffirm that the blue fuel has a central role to play in the transition to renewables at a plenary panel at Gastech on September 19. And some are reaching for the stars.

However, the level of ambition depends on where you’re operating. The move to low carbon is a strong story in Europe, whose highly developed economies have their eyes fixed firmly on environmental issues. In emerging markets like Columbia, says Astrid Alvarez, CEO at Grupo Energia Bogota, economics and basic social issues form the base of the discussion.

“In Columbia we have opportunities for solar and hydro, but we are an emerging market,” she warns. “Gas must compete with coal, which is still very important and the basis for regulated pricing. Users are not willing to pay the price of gas. It all comes down to economics in emerging economies.”

That’s a key point for those in an industry that remains desperate to cast gas a central role in the transition to a global low emissions energy system.

Both environmental groups and the wider general public in developed markets like Europe tend to see gas as part of the problem. Many expect renewables will simply step over gas, and replace the evils of coal and oil in the power and transport sectors in their entirety.

“Everyone says renewables are expanding so quickly that gas will have no role,” says Steven L Edwards, CEO of Black & Veatch. “But you have to think beyond high level strategy.”

Engie executive vice-president Pierre Chareyre also recognises the different challenges the transition faces at local level. All of the panel reiterate that the versatility of gas, matched with the production and storage issues facing renewables, is key.

“The energy mix will not be the result of sharp competition between the different sorts of energy but a convergence between different solutions,” he claims. “It will depend on local situation the exact share of gas, solar, wind or even hydrogen.”

New destinations 

Further than that, players are starting to raise their ambition. Seeking to shed a designation that limits gas to a temporary role in the transition, Alvarez says that for Columbia and similar emerging markets it’s a “destination fuel”.

It’s a phrase the panel leaps upon enthusiastically, noting that gas performs diverse roles that cannot be replicated by other fuels, particularly in industries, such as fertilisers or steel.

“Just 20% of power production uses gas,” says Marcelino Oreja Arburua, CEO of Spanish TSO Enagas. “But there’s no other way to heat an oven to 1,000 degrees. We all talk about a ‘transition fuel,’ but how many years the transition’ will take? How much did we understand 50 years ago about how the world would be today?”

The transport and power sectors are on the frontline of the transition, and gas is keen to share the load with renewables.

In the personal transport space, electricity is clearly well on the way to winning the race to replace petrol and diesel. However, LNG and CNG have considerable potential to power heavy transport such as trucks and trains, and mass transit systems comprising buses and taxis.

Both the industry and policymakers must act to deliver that vision, says Arburua. “LNG for trucks will develop very strongly in the coming years,” he predicts. “But we still need to adjust our services to allow the transport industry to use gas. Spanish legislation needs to change to allow new tariffs for bunkering of LNG for the shipping industry.”

Shipping is viewed as a top option for LNG, while the transition to electric cars means gas will need to join renewables in boosting power output, claims Edwards. Chareyre suggests that if all coal plants globally converted to gas it would reduce greenhouse gas emissions by 15%, opening the way to hit Paris Agreement targets.

But that’s not about going to overnight. KPMG analysts suggest that in 15 years, when many coal and nuclear plants around Europe will be retired, renewables technology is likely to be at the point at which it can do the job on its own. Gas appears to be on a deadline then to get its foot in the door.

New frontiers

The ambition to turn gas into a permanent part of a global low emissions energy system is nothing if not grand. But even to earn wide recognition as a transition fuel requires a lot more work in advocacy. The gas industry has so far remained reticent to step out into the public spotlight to pitch its advantages over coal, let alone taking on the renewables sector.

Renewables has a very strong and passionate advocacy, points out Edwards. “The challenge for gas is to step up its own.”

Arburua recognises that “many people think the gas industry is blocking the development and growth of renewables, and gas must do more to change that.” There’s clearly a risk that attempts to place gas on a similar pedestal to renewables without significant effort to change perceptions first could dent both political and public support.

Innovation in gas could be key to that process, and to keeping gas at the forefront of the transition in the coming decades, suggests Susan Sakmar, a professor at the University of Houston Law Center.

The boasts gas could make are multiplying, says Chareyre, and could help make the potential partnership with renewables more concrete.

“Although it’s in its early stages, ‘greening’ of gas is underway, and that’s an essential component that could transform the energy system,” he asserts. “Japanese companies already working with hydrogen fuel cells,” he adds, which may be the best way to stock extraneous energy from renewables production.”

Education is even more important perhaps in countries with a relatively new gas industry and an emerging economy such as Columbia. “We’re at a different stage of economic development,” stresses Alvarez. “We have some gas reserves, but we’re still using a lot of oil and coal. We have to tell the environmental and health story to our society.”

“Renewables will continue to expand rapidly around the world, but at a different pace in different places,” says Edwards. “Gas must seek out the space in which it can innovate and remain competitive.”

And when he says space, he means space. As the privatisation of space gains pace, engine designers are working on using LNG to power rockets. Then again, Edwards adds, “it’s hard to predict the future”.