The effects of global warming on natural gas business
The global warming trend is clearly evident and as the average temperature rises, of course, the consumption of natural gas for heating purposes falls dramatically.
The EU’s response to climate change is to launch the Green Deal with the objective of making Europe a climate-neutral continent by 2050. As a first step, the Commission set a legally binding, minimum 55 per cent reduction in net emissions by 2030 compared to 1990 levels.
The so-called Net-zero carbon emissions is a more ambitious goal than the EU Green Deal, which in practical terms means that the quantity of carbon dioxide emitted and absorbed, for instance, removed from the atmosphere, should be the same within a year and consequently the concentration of carbon dioxide in the atmosphere should not increase.
Regardless of which directive we accept as the benchmark, it is evident that the goal can only be achieved by drastically reducing carbon dioxide emissions, which can be achieved through a series of measures to be applied in parallel. The key actions to be taken are:
- the consumption of fossil fuels, including natural gas, should be reduced in a conscious and well-planned manner and alternative, renewable energy sources should be used;
- energy efficiency should be increased;
- a gradual shift to renewable energy generation is required;
- carbon capture and storage technology should be used.
We can clearly see that there is strong pressure from both climate change and the regulatory side to reduce natural gas consumption. However, carbon neutrality efforts have serious consequences and prices. As the consumption of natural gas decreases, so does the level of utilisation of natural gas infrastructure. This leads to higher unit service charges, which results in a further reduction in the level of utilisation, for example, due to using substitute technologies, and so on. Natural gas infrastructure is entering a self-destructive spiral that requires significant investment to get out of this spiral, but neither will the EU nor financial investors finance non-forward-looking, “non-green” developments.
Required transformation of natural gas technology
The problems mentioned above mean that natural gas infrastructure operators themselves should make the breakthrough happen. Their sole escape route is to rethink existing technologies and adapt them to serve the new energy mix, in which renewables and Hydrogen will play an increasing role:
- the new facilities and the new technological parts should be designed using hydrogen-tolerant materials;
- existing technology units made of non-hydrogen-tolerant materials should be replaced or made Hydrogen-resistant using some solution (for example internal coating of pipes);
- the construction of combined-cycle power plants should be supported, even if their operation produces carbon dioxide emissions;
- fast, highly flexible underground gas storage facilities should be implemented and the flexibility of existing storage facilities should be enhanced to serve the flexible combined-cycle power generation;
- underground gas storage facilities should be made suitable for storing alternative energy, other than natural gas (for example compressed air storage);
- underground gas storage facilities that cannot be developed should be used for storing carbon dioxide;
- electrical machinery with a high consumption profile may be offered for an electricity balancing service.
All solutions listed above require additional investments and their realisations are time-consuming – except the last one we may focus on as a first possible step to support the green transition.
In the new energy mix nuclear and renewables-based power plant solutions are the accepted versions of energy production with the lowest carbon dioxide emission. The problem in the case of renewables is inflexibility, in the case of nuclear energy is limited flexibility, for instance, the ability to adapt generation to consumer demands. Using the existing scientific-technological background, matching generation with consumption at every given moment is not feasible today, so we need to find other solutions to balance the source-consumption mismatch.
At present, periods of source scarcity can be managed with fast-loading, high-efficiency, combined-cycle, natural gas-fired power plants and system-level energy storage facilities, while system-level energy storage facilities should be used during periods of source surplus.
The number and capacity of energy storage facilities are still low, requiring significant investments. The industrial technology for large-scale battery storage is not yet mature enough and the geographical location of pump-type energy storage facilities presents difficulties.
However, there is already a flexibility and balancing element in the system that can be used. Electric motor-driven compressors of the natural gas injection system with a high power consumption offer the possibility of a rapid change in electricity consumption according to the needs of the electricity Transmission System Operator.
All natural gas infrastructure operators must think carefully about how their existing high-value assets can be mobilised to support the new energy mix, either to support the change or as a means of future supply. This is of course a complex and difficult decision and subsequent implementation process, as all these changes will most likely have to be made while maintaining current operations and security of supply.
