Gas is frequently touted by experts as a necessary bridge in the transition between a fossil fuel dependent economy and one based on clean energy and greater efficiency. Some industry commentators are concerned, however, that in the race to replace coal with gas, massive infrastructure projects are being funded, locking the world into gas for far longer than needed and distracting attention away from cleaner technologies

Demand for oil will peak in 2023, while natural gas will take over as the biggest energy source in 2026, and by 2050 the world’s primary energy mix will be split equally between fossil and non-fossil sources, forecasts the latest energy transition report from Norway-based energy consulting and services firm DNV GL. “Gas is a better option. It is definitely needed in the short and medium term, while the longer-term prospects depend on whether we succeed with carbon capture,” says Sverre Alvik, programme director at DNV GL. Carbon capture and storage (CCS) continues to struggle to be an affordable option for commercial scale application and the increased use of gas without this technology would certainly put the world’s ambitions to keep global warming below the danger level of 1.5C out of reach. “Natural gas is the cleanest of the fossil fuels and so if we still need a fossil fuel as a supplement to renewable energy longer term, then it makes sense to look at gas,” says Jens Nærvig Pedersen, senior analyst at Danske Bank. “We cannot store wind and solar energy today, so natural gas makes a good supplement.” Alvik agrees the current energy system is not ready to have all types of fossil fuels phased out in the near future. “Renewables are cheap to build,” but they need to be scaled up at a rate which is not realistic in the short term, he adds. It is, however, far from essential to have dedicated wind and solar storage to reduce the use of gas. Already over ten years ago, Denmark’s power system operator produced an analysis demonstrating the entire western half of the country could reliably provide 70% of electricity needs from wind alone without storage (see The not so essential role of electricity storage) Brian Vad Mathiesen, energy planning professor at the University of Aalborg, Denmark believes a new way of thinking is required. “The way we have designed the energy system at present means we are not preparing for a future where we should use less gas in some sectors and more in others. If we do not focus on end consumption, then we risk using far more natural gas than we need to and then gas will be here for the long term,” he says. Today, enormous amounts of natural gas are used in industry and heating systems in Europe. “In industry we need to switch to wind and solar energy, electrify as much as we can, and, coupled with energy efficiency, we can then reduce dependency on gas,” says Vad Mathiesen. In terms of the heating sector, he underlines the need to use surplus heat from all sources, including industry, power plants, renewable energies, geothermal and solar. Instead of following this path, though, the current strategy, in Europe at least, is to focus on expanding gas infrastructure and, in some places, to replace coal with natural gas, says Vad Mathiesen. We are extending, instead of reducing, our dependency on natural gas, he adds. He proposes gradually phasing out the use of natural gas in heating, using more gas in power plants instead of biomass and using more biogas in industrial sectors where electrification is not possible. Denmark is seen as a green energy leader, yet “nothing is being done to promote district heating for the 300 000 to 400 000 homes that today have natural gas”, says Vad Mathiesen. He would like to see the collective gas supply being gradually replaced by collective district heating which is largely based on renewable energy in Denmark.

Climate commitments

None of the future energy scenarios in line with the commitments of the Paris climate agreement show increasing gas demand, underlines a recent report from E3G, an independent think tank with offices across Europe and in the US. Indeed, most show a sharp decline in gas volumes compared to today. With this in mind, there seems no justification for expanding gas networks, in particular infrastructure aimed at increasing imported gas. “We already have a big oversupply of gas infrastructure, particularly import capacity,” says Lisa Fischer, senior policy advisor at E3G. Politicians and industry often justify such growth on energy security grounds and the need to diversify Europe’s energy sources, she adds. But a new gas pipeline has a lifespan of up to 80 years and investing in new infrastructure makes little sense when the goal is for a decarbonised energy system. She wants policy makers to pay more attention to whether forward-looking projections align with climate policies and whether money would not be better spent, for example, on energy efficiency. “Today, EU politicians often use projections drawn up by infrastructure operators to take decisions,” says Fischer. A source of information unlikely to be unbiased. Like Vad Mathiesen she underlines the need for a change in the thinking around energy, calling for more focus on market design and how to create markets for greater flexibility, demand side response, combinations of renewables and batteries, and how all this can compete with gas supply and lead to more, not less, energy security. Fischer acknowledges fossil gas will be needed for a while, with a switch to green gases over time. But since the supply of green gases is restricted, more thought needs to go into where their use adds most value with more attention on “prioritising resources” and costs. Fischer cites transportation, particularly shipping, as one area where green gases could be important to reduce emissions. E3G highlights the resource availability constraints of producing biogas since crop-based bioenergy resources risk competing with food production, and while future costs of green gases are uncertain, current costs are considerably higher than fossil gas. It is a question of how we manage the transition, says Fischer. “We don’t want high energy prices,” which would be bad for the economy and consumers, but over expenditure in unwanted gas infrastructure could result in just that, she warns.

Given there will be much less volume, it probably makes more sense to think about decommissioning, rather than building, to reduce the costs of maintaining and operating the system

Baltic Pipe

An example of a new gas infrastructure project, which is being considered with little thought for long-term needs, is the Baltic Pipe project, says Vad Mathiesen. This is expected to start supplying gas from Norway to Poland and Denmark by the end of 2022. It could expand Europe’s gas transmission capacity by up to 10 billion cubic metres of gas per year and is deemed by the EU as a key infrastructure projects of common interest to the continent as a whole. But Vad Mathiesen suggests geopolitics rather than energy policies are behind its construction and compares it to the controversial Nord Stream 2 pipeline, which, if built, would double the capacity of gas brought from Russia to Germany. He rues the “short-sighted focus” of politicians. “It is as if they completely neglect the costs of these projects and ignore what could have been gained had the same amount been invested elsewhere.” The coal-to-gas switch, which the Baltic Pipe is expected to help in Poland, is likely to continue in the short term, but competition from renewables could make this a temporary trend. “In particular when it comes to electricity, renewables are already cheaper than new gas and will become cheaper than existing gas over the next decade,” says Fischer. And while money is spent on gas, there remains a significant clean economy financing gap. The EU High-Level Expert Group on Sustainable Finance estimates about €180 billion is needed in additional yearly investments in sectors such as renovation and energy efficient buildings, renewable energy generation and transmission, and low-carbon transportation to reach the target to reduce CO2 emissions by 40% in all sectors of the EU economy by 2030. During the current EU budget, which runs from 2014-2020, about €4 billion a year is spent on fossil fuels, largely gas, says Fischer.

New energy in old pipes

In the 1980s, Denmark invested DKK 55 billion (€7.4 billion) in infrastructure to bring natural gas to its shores from the North Sea. The gas industry still sees plenty of future potential in using the infrastructure. Susanne Juhl, CEO of HMN Naturgas, projects gas will play an important role, not just in the transition period, but as a solid backbone of a future green energy system. The gas infrastructure is almost paid off, has fairly low maintenance costs and the tariffs for using the network will be very low in a few years, she says. Juhl also invokes the potential for using gas infrastructure to “carry many different energy sources, for example biogas, hydrogen and hopefully other synthetic gases longer term” and for energy storage. “With known technology, electricity cannot be stored as it is a perishable good, which needs to be used immediately. One way to store electricity is by producing hydrogen by electrolysis, known as power-to-gas, when there is plenty of electricity and prices are cheap. Methanised hydrogen could be produced from renewable electricity and injected into the gas networks. This could then be used directly through the gas system or stored in the grid or in our gas storages,” she says. James Watson, CEO of lobby group SolarPower Europe, who will become Secretary General of the European Association of Natural Gas Industries in January 2019, agrees with this vision. He says the EU solar industry “believes there is a future for power to gas, power to x, and green hydrogen in an energy system dominated by solar power”. He adds: “We can imagine the use of the existing gas infrastructure for green hydrogen and it appears this is the most cost effective way to deliver the energy transition. We will need not only green electrons, but also green molecules if we are to see solar at the heart of the energy system.” Fischer, though, remains sceptical and says industry forecasts suggest demand for sustainable green gases in the future will be around only a quarter of today’s total demand for gas. “We definitely do not need lots of large-scale new infrastructure going forward,” she says. Given there will be much less volume, it probably makes more sense to think about decommissioning, rather than building, to reduce the costs of maintaining and operating the system , says Fischer. She also questions whether current infrastructure will be suitable for future gases given “green gases will come from many different places, biogas for example, is produced very locally”. Finally, the potential to feed large quantities of hydrogen into the gas infrastructure system is not so simple since significant investments are likely to be needed to adapt existing gas pipes to make sure they avoid the permeation and leaking of hydrogen, she suggests. “I totally agree we need green gases and bio-gases, but it is also clear to me we will not need the same amount of natural gas in the future or use natural gas the way we do today,” says Vad Mathiesen. “There are both technically and economically better alternatives.”

Writer: Karin Jensen