Why the EU needs binding targets for renewables and decarbonised gas for a climate-neutral Europe

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From pv magazine Germany

Eurogas has recently stated that it supports the EU’s goal of becoming CO2 neutral by 2050. What contribution can the gas industry make?

The members of Eurogas are fully committed to the European Commission’s objective of reaching carbon neutrality in 2050. We are pleased that Ursula von der Leyen, the new Commission President, has made this a clear policy priority and will work to introduce legislation for this in her first 100 days. The carbon neutrality target can be reached in the most cost effective manner and in the least socially disruptive manner by utilizing all the energy sources we have – including gas. Gas will be needed to deliver our climate objectives, and so the industry can make a major contribution as we will also undertake our own transition from natural gas to a mix of renewable and decarbonised gases in 2050.

How important would a European wide CO2 price or a CO2 tax be in this respect?

We need to find the right policy instruments to drive change to lower carbon emissions. At Eurogas, we are discussing the various options including CO2 taxes and prices. We see the development of such ideas in many countries, and it is likely that the discussion will spill over into the European context. Given the need for unanimity in Brussels on matters of taxation, the likelihood of such an EU wide tax is limited, however, individual countries are free to pursue their own taxation policies so I would expect to see national CO2 taxes developing.

What would be an EU-wide option, if it does not work with a single CO2 tax?

At Eurogas, we support the ETS and the reforms to make it more effective – this is a key to increasing the cost of carbon in Europe and to drive the switch among higher CO2 emitters. On the matter of a tax for non-ETS sectors, we are still discussing what our position will be at Eurogas – so watch for this!

A recent Fraunhofer ISE report fits this bill, with the increased use of gas-fired power plants instead of coal-fired power plants reducing CO2 emissions by one third in Germany alone in June. What would be the potential for the whole of Europe if gas-fired power plants were to increasingly replace coal-fired power plants?

This is indeed encouraging. It shows that there are low hanging fruit that can be quickly utilized to have an immediate impact on reducing CO2 emissions in Europe. In 2017, Eurogas made a study that showed switching coal power plants to gas fired power plants would result in a CO2 reduction of 45% in Europe by 2030 alone. That would certainly form the basis for an overall reduction of CO2 by 55% if lower carbon solutions were also applied in areas like transport where emissions have risen continuously in Germany over the past few years.

However, for a CO2-neutral Europe, it will not simply suffice to replace coal-fired power plants with gas-fired power plants. Green hydrogen is currently on everyone’s radr, but the technology is still in its infancy. What developments in costs and technologies do you expect in the coming years, and what contribution could green hydrogen make to delivering a CO2-neutral Europe by 2050?

Absolutely. We will need to see the development of different gases to increase the chances of hitting our carbon neutrality target. Green hydrogen, or hydrogen gas produced from renewable electricity, is one important vector that we expect to see being driven forward in the coming decade. The technology is indeed new, but the green shoots of life are being seen in the EU for the growth of this sector.

What is necessary for a rapid, successful development of the sector?

One of our members is ITM Power, an electrolyzer manufacturer, who recently increased their production site by four times. So demand is coming, what we need is a concerted industry policy to support European manufacturers of electrolyzers to ensure that Europe continues to lead in the production, not just the deployment, of clean technologies that we need to fight climate change. This will provide a social as well as an environmental benefit for Europe.

And what cost development do you expect?

Most electrolyzers are made-to-order in Europe today and so with a more automated approach we can expect cost reductions to follow the experience curve of solar quite closely. We could foresee a reduction in prices of a range of up to 70-80%, and possibly more, in the coming decade. Everything depends on the policies we put in place on both the demand and supply side. For example, France has a target of 10% renewable gas by 2030, within this there is a sub-target of 3% for green hydrogen. This kick starts demand and will result in price decreases on the production side. Eurogas supports targets for renewable and decarbonized gas for this very reason.

What other power-to-gas technologies could play an important role by 2050 that might not be on the radar today?

There are three main types of power-to-gas technologies today and we see potential for each, all are based around using electrolyzers. So this technology will be indispensable. One variety combines the hydrogen with carbon dioxide to create methane, this can then be used as per natural gas. This variety of power-to-gas may also develop strongly. Eurogas’ 2017 study could foresee a strong market for such a gas, and we are currently reviewing this in a new study that will be out in October. So I’ll happily share more details then.

The “old” EU Commission had begun to work on the gas package. This must now be continued under the new leadership. What do you expect in this respect after Ursula von der Leyen’s election?

At Eurogas we expect that the new Commission will make it a priority to ensure that the gas package is brought forward in a timely fashion, once all of the background studies are complete. We then hope that the Commission will make a commitment to targets for renewable and decarbonised gas, as well as making sure that the guarantees of origin system also works for hydrogen. We also hope that the new Commission will put industrial strategy at its core and will develop a program to support manufacturers of clean technologies in Europe – like electrolyzer manufacturers – to ensure that we keep jobs and economic growth here in Europe. This will ultimately help to build public support for the energy transition, as they will be able to see the direct benefit of the change to their household incomes.