Hydrogen retrofits for EU gas system cheaper than newbuild: GIE

 

 

 

  • COAL | ELECTRIC POWER | LNG | NATURAL GAS | PETROCHEMICALS

 

  • 13 May 2020 | 14:00 UTC

 

  • Brussels

 

 

HIGHLIGHTS

GIE plans study on costs, policy needs by end-2020

EC plans energy sector integration strategy June 24

EC mulls need for specific, hydrogen-market rules

Brussels — Retrofitting existing EU infrastructure to accommodate hydrogen and other low-carbon gases will be cheaper than building from scratch, according to the executive leading trade body Gas Infrastructure Europe's work on future LNG terminals.Receive daily email alerts, subscriber notes & personalize your experience.

 

The EU's natural gas and LNG industry is looking to avoid stranded assets and stay relevant as the European Commission pushes for more decarbonized gases such as hydrogen in the mix to help the EU become climate neutral by 2050.

"We don't know the costs yet for retrofitting LNG terminals to use hydrogen -- most of the work so far has focused on gas grids," Thierry Deschuyteneer, head of GIE's "Terminal for the Future" working group, told a Euractiv webinar on Wednesday.

But he was confident that it would be cheaper than building a new hydrogen-compatible import terminal.

GIE's future terminals working group plans to publish a detailed study in the fourth quarter looking at technology costs and benefits, and make policy recommendations "as many of the technologies are not mature yet," Deschuyteneer said.

GIE represents European gas infrastructure operators, including grid, storage and LNG.

Deschuyteneer said the GIE working group was looking at different pathways to decarbonizing LNG, including directly at the terminals. He thought this could be a temporary solution that could scale up the EU's hydrogen economy quickly.

Other options included greening the upstream sector, importing hydrogen produced cheaply outside Europe via upgraded LNG terminals, and using other low-carbon energy carriers, such as ammonia or methanol.

Deschuyteneer added that LNG terminal investments are usually depreciated over 20-30 years, compared with around 50 years for gas pipelines. This meant even terminals being built now could be retrofitted in 20 or 30 years to adapt to new energies, reducing the risk of becoming a stranded asset.

Changing the rules

The EC's policy challenge is navigating between creating stranded assets and locking in fossil fuels, its energy department's principal adviser, Tudor Constantinescu, told the webinar.

It plans to unveil an EU energy system integration strategy on June 24 looking at how to optimize links between renewable power and decarbonized gases, with hydrogen as a central element.

The EC plans to follow up with formal draft legislation "to have market rules in place to support decarbonized gases," Constantinescu said.

These rules would have to meet the hydrogen sector's needs so that hydrogen could flow freely across Europe, he said.

The EC sees hydrogen becoming an important fuel for heavy goods vehicles, rail transport and aviation, and for carbon intensive industry such as steel and refineries.

"It could be more effective to have a dedicated hydrogen infrastructure," rather than just adapting existing gas assets, Constantinescu said.

Trade body Hydrogen Europe's secretary-general Jorgo Chatzimarkakis agreed that the EU could need a "hydrogen backbone" grid, potentially along with dedicated CO2 and ammonia pipelines.

A pure hydrogen grid could need a specific EU hydrogen market design, perhaps going beyond what the EC is currently considering, he said.

Deschuyteneer added that the EU would need a market framework that encouraged non-EU countries to invest in green energy for export to the EU.