The Gas for Climate industry consortium has called on the European Commission to introduce a legally-binding target for the production of gas from renewable sources, saying incentives are necessary to grow Europe’s fledgling market.
Production of low-carbon gases such as biomethane and hydrogen needs to be scaled up quickly if Europe is serious about cutting emissions to net-zero by 2050, according to a new study published Wednesday (22 April).
The study, by consulting firm Guidehouse, describes potential gas decarbonisation pathways until 2050.
The centrepiece is a call to stimulate the production of biomethane and hydrogen by introducing a binding mandate for 10% of all gas in Europe to come from renewable sources by 2030.
“Large scale production of biomethane and green and blue hydrogen – transported, stored and distributed through existing gas infrastructure” can play an important role in reducing emissions by 2030, the consortium said in a statement.
“Coupling the electricity, gas and heat sectors – by linking their markets and their respective infrastructure in a better-coordinated and integrated way – provides the greatest overall benefits for the European energy system,” the study said.
Other recommendations in the study include:
- Adapting EU regulations to make gas infrastructure future-proof in an integrated energy system combining gas and electricity.
- Fostering cross-border trade and transport of hydrogen and biomethane, with clearer market rules and a well-functioning Guarantee of Origin system.
- Boosting demand for hydrogen and biomethane by broadening the EU Emissions Trading System (ETS) combined with targeted and time-bound Contracts for Difference.
The European Commission reckons that low-carbon electricity coming from renewables and nuclear will form the “backbone” of Europe’s energy system by 2050, meeting 53% of total energy demand.
But that won’t be enough to cut emissions to net-zero, the EU’s stated objective for 2050. And low-carbon gases such as biomethane and hydrogen are expected to fill a substantial part of the gap.
“Hydrogen will play a huge role,” the EU’s climate chief Frans Timmermans said last year, just days before unveiling the European Commission’s flagship Green Deal initiative.
Commission leans towards end-use targets
When it comes to supply targets, however, EU policymakers have different views.
The European Commission has already signalled its preference for end-use targets in specific sectors like chemicals, steel or transport rather than targets based on production.
“If we do see targets, I see them on the demand side,” said Klaus-Dieter Borchardt, deputy director-general at the Commission’s energy department.
“I do not see EU production targets,” he told a recent webinar hosted by the Florence School of Regulation.
This is because hydrogen is likely to develop differently across Europe, creating different national demands and needs, Borchardt said, according to S&P Global Platts.
Officials have warned about the potential harmful environmental side effects of green gases, citing the EU’s failed biofuels policy as an example.
The EU was forced to backtrack from an earlier 10% biofuels target in transport after evidence emerged that growing demand in Europe was causing deforestation in places like Indonesia.
Environmentalists are now worried the same could happen with biogas and biomethane.
“Let’s save those precious renewable and bio-gases for applications like heavy industry, long-distance transport, aviation and shipping where electrification is not possible in the short-term,” said Jutta Paulus, a German politician sitting with the Greens in the European Parliament.
Green hydrogen conundrum
Still, defenders of supply targets argue a similar approach could be adopted with biomethane and so-called green hydrogen produced from renewable electricity.
Daan Peters is energy director at Guidehouse, the consulting firm that produced the study. According to him, a target for renewable gas production could be introduced as “a sub-target” under the EU’s renewable energy directive, which mandates a 32% share for renewables by 2030.
Crucially, it “would not compete with existing renewable electricity scale-up plans” because the current 32% target in the directive will be increased to meet the bloc’s higher climate ambition for 2030, he argued.
In the early stages up to 2030, “most of the target would be met by biomethane,” with green hydrogen gradually scaling up afterwards until it dominates the market, Peters said.
“We expect that green hydrogen will ultimately be cheaper and the dominant form of hydrogen,” Peters told EURACTIV in emailed comments, saying “two-thirds of EU hydrogen consumption would be green hydrogen” by 2050.
“Yet a full-scale acceleration of green hydrogen already during the 2020s would be suboptimal,” he warned, because additional renewable power will be needed to satisfy growing demand for electricity.
“A too early large scale-up of green hydrogen by diverting too much renewable power from direct electricity too soon may even lead to a net increase in emissions,” added Peters.
In the meantime, the EU market would be supplied with “grey” hydrogen coming from natural gas, part of which could be made carbon-free using CO2 capture and storage technology – so-called “blue” hydrogen.
“Blue hydrogen is much cheaper than green hydrogen today but we expect that by 2040 green hydrogen becomes cheaper,” Peters said.
[Edited by Benjamin Fox]