Gas could be the “ideal partner for renewable energy generation” in a future sustainable energy mix, says Remi Eriksen, head of Det Norske Veritas (DNV) and Germanischer Lloyd (GL). He calls on the energy industry to work together to help policymakers, planners and the public understand and embrace the “non-price benefits of the fuel.”
“Natural gas is seen as part of the solution, rather than the problem. We’re in a Blue Age of Gas,” the group president of the two classification societies said in a market commentary, referring to the colour of burning gas in contrast to that of burning other fossil fuels, and to the fact that “gas is not fully ‘green’ either.”
DNV GL experts are active worldwide in developing best practices for CCS, and advise customers engaged or interested in carbon capture, utilization and storage. Erikson encouraged the industry to look at the government-industry CCS value chain feasibility initiatives in Norway.
”By 2022, the Norwegian Continental Shelf could host a CO2 storage hub. Commercially, gas with CCS is technically feasible," but Eriksen cautioned "there are cost barriers as CCS technologies are still not widely deployed by industries."
Economic feasibility of gas power plus CCS is set to improve as the technology becomes more widespread through infrastructure sharing, economies of scale, and technical innovation. Yet, higher pricing of CO2 is needed to accelerate investments in these technologies.
Gas and renewables: best of ‘frenemies’
“No-one underestimates the headwinds against gas,” Eriksen said. Still, he stays positive about prospects for the fuel and forecasts that gas and renewables will be ‘frenemies’, healthy competitors and allies. Renewables do and will compete with gas, just as cheap gas can impede the development of renewables in the short term. I expect they will lean towards friendship in the long term, because gas can also provide baseload electricity to grids, complementing variable renewable power.”
Gas power generation is 50% less carbon-intensive, causes significantly less SOX and NOX emissions and involves less power plant water usage. ”The switch from coal to gas has been a growing theme in the US alongside shale gas proliferation, and we have also seen progress in other key energy-intensive markets, including the UK,” Eriksen observed.
On the supply side, abundant underutilized LNG regasification capacity and gas pipeline infrastructure offer efficient routes to market. National regulators are increasingly pushing companies to reveal the impacts of their business activities on global warming, notably because signatories to the COP21 Paris Agreement are obliged to define national decarbonization targets.
”The Paris Agreement, and the terms of its subsequent ratification, suggest an ever-more constrained path for hydrocarbons’ longer term position. Estimates of renewables’ current and future shares in the future energy mix are adjusted upward almost routinely,” Eriksen observed.
Surge in renewable energy contribution
Faster-than anticipated growth of electricity produced from renewable is one global trend pointed out by the International Energy Agency that could spark a rise in gas-fuelled generation as backup capacity. The IEA consequentially revised upwards its gas demand prognosis from just 1% annual rise since 2012 and sees now growth averaging 1.5% per year from 2015 to 2021.
However, the IEA’s medium-term forecast of growth for gas represents a stark contrast to its expectation of reduced demand for competing fossil fuels – oil and coal – over the same period.