'The Gas Industry has Woken up': Borchardt [Gas Transitions]
The deputy-director general for energy at the European Commission, Klaus-Dieter Borchardt, is optimistic about the role of the gas industry in the European energy system of the future. “For a long time”, he says, in a telephone interview, “the industry was sitting on its hands. But they have changed. We have shaken them up.”
According to Borchardt, the attitude of the gas industry towards the energy transition started to change 12 to 18 months ago, when it became clear that they had “won” the debate around the question of “molecules” versus “electrons”. After a lot of discussion, virtually everyone agrees today that “molecules” will have an important role to play in the future European energy system, says Borchardt.
Borchardt, who was responsible for the internal energy market for the last six years and has recently switched to become head of external energy policy and the Energy Union, says that extensive research has shown that moving to a 100% electrified economy would be far too expensive. “It would imply that you produce all energy with renewables, store it as electricity, transport it through the power grids and then change all the appliances that do not work on electricity. That would be a very costly exercise. The transport and distribution power lines would need to be massively expanded. And at the same time you would end up with billions of stranded assets in gas grids.”
In addition, there are some industrial processes, involving high temperatures, where electrification is virtually impossible. “Hundreds of studies have been done but they all come to the same conclusion: it’s better to have an energy transition with than without molecules.”
But what kind of molecules? They can’t be those of “unabated gas”, says Borchardt. Natural gas will have to be replaced with CO2-free alternatives, such as biogas, biomethane, or “green hydrogen” (based on renewables) or it will have to be made zero-emission with carbon capture and storage (CCS), for instance in the form of “blue hydrogen” (natural gas-based hydrogen combined with pre-combustion CCS).
Borchardt is optimistic that the European gas industry will be able to make this change. True, so far the industry has not made a great commitment to CCS, but he believes that, unlike earlier failed CCS projects, which were all based on power plants, industrial CCS processes are much more likely to succeed.
As for “green hydrogen”, this is still very costly, but Borchardt thinks costs will come down in future just as they have done with solar PV and wind energy. As an example he mentions the EU-backed H2Future project of Siemens, Voestalpine, and others that will become operational soon. “Once these projects become successful, more will follow,” he said.
He also believes that the business case of hydrogen and other alternatives can be greatly improved if we change our approach to take into account the whole value chain. “We are still looking too much in a fragmented way at different parts of the value chain. For instance, at how to produce hydrogen from renewables. But you also have to look at what you do with that hydrogen. Do you use it in fuel cells? In the chemical industry? The same goes for biomethane. Lufthansa is now doing a project where they replace 50% of kerosene with biomethane. At the end of the day if you look at the whole value chain, with some public money, you can come to a business case.”
How will the gas industry evolve in the low-carbon world of the future? Will natural gas be a bridge or a destination? Could it become the foundation of a global hydrogen economy, in combination with CCS? How big will “green” hydrogen and biogas become? What will be the role of LNG and bio-LNG in transport?
From his home country The Netherlands, a long-time gas exporting country that has recently embarked on an unprecedented transition away from gas, independent energy journalist, analyst and moderator Karel Beckman reports on the climate and technological challenges facing the gas industry.
As former editor-in-chief and founder of two international energy websites (Energy Post and European Energy Review) and former journalist at the premier Dutch financial newspaper Financieele Dagblad, Karel has earned a great reputation as being amongst the first to focus on energy transition trends and the connections between markets, policies and technologies. For Natural Gas World he will be reporting on the Dutch and wider International gas transition on a weekly basis.
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