How Natural Gas Can Support the Uptake of Renewable Energy UNITED NATIONS ECONOMIC COMMISSION for EUROPE
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How Natural Gas can Support the Uptake of Renewable Energy UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE How natural gas can support the uptake of renewable energy ECE ENERGY SERIES No. 66 UNITED NATIONS GENEVA, 2019 ©2019 United Nations All rights reserved worldwide Requests to reproduction excerpts or to photocopy should be addressed to the Copyright Clearance Center at copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to: United Nations Publications, 405 East 42nd St, S-09FW001, New York, NY 10017, United States of America. Email: [email protected]; website: https://shop.un.org. The findings, interpretations and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the United Nations or its officials or Member States. The designation employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Mention of any firm, licensed process or commercial products does not imply endorsement by the United Nations. This publication is issued in English and Russian. United Nations publication issued by the United Nations Economic Commission for Europe. ECE/ENERGY/130 UNITED NATIONS PUBLICATION Sales No.: E.20.II.E.15 ISBN: 978-92-1-117229-4 eISBN: 978-92-1-004658-9 ISSN: 1014-7225 eISSN: 2412-0022 ii Acknowledgments This publication is one of the outcomes of the project called “Improved understanding of the UNECE member States on the role of natural gas in achieving 2030 Agenda for Sustainable Development and the Paris Climate Agreement” that complements the project “Strengthening capacity of the UNECE member States to achieve the energy-related Sustainable Development Goals”. The Project was led by Iva Brkic under strategic guidance and advice of Scott Foster, Director of the Sustainable Energy Division. The Project was run under the auspices of the UNECE Committee on Sustainable Energy and served to support the programme of work of two respective subsidiary bodies of the Committee on Sustainable Energy – Group of Experts on Gas and Group of Experts on Renewable Energy. This publication was drafted by independent consultant John Roberts. The author and the project team wish to thank to the Chairs and Secretaries of the Group of Experts on Gas, Francisco Garcia de la Flor and Branko Milicevic, and Group of Experts on Renewable Energy, Nazir Ramazanov and Gianluca Sambucini, for input provided and facilitation in engagement with their respective Groups of Experts. The UNECE Secretariat thanks to the following external researchers and experts who contributed with background papers and technical inputs to this work: Jorge Blazquez, BP, London, UK; Vladimír Budinský, Vice Chair Group of Experts on Cleaner Electricity Systems; Alex Buyruk, Eurogas, Brussels, Belgium; Graeme Beardsmore, Hot Dry Rocks Pty Ltd, University of Melbourne, Parkville, Australia; Lucie Berger, European External Action Service, Geneva, Switzerland; Julian Bowden, Oxford Institute for Energy Studies, Oxford, UK; Peter Canciani, Central European Initiative, Trieste, Italy; Alberto Levy Ferre, Inter- American Development Bank, Washington DC, USA; Phil Grainger, IPIECA, London, UK; Rafael Guerra Román, Enagas, Madrid, Spain; Sigurd Heiberg, Petrad Foundation, Stavanger, Norway; Denis Hicks, High Delta, London, UK; Elbert Huijzer, Alliander, Arnhem, Netherlands; Nicolas Jensen, Eurogas, Brussels, Belgium; David Kramer, Energy Charter Secretariat, Brussels, Belgium; Łukasz Kroplewski, PGNiG, Warsaw, Poland; Alan Lau, Anglo-Euro Developers, Singapore; Francisco Laverón, Iberdrola, Bilbao, Spain; Giacomo Luciani, Graduate Institute for International and Development Studies, Geneva, Switzerland; Gustav Melin, Swedish Bioenergy Association, Stockholm, Sweden; Tatiana Mitrova, Skolkovo Energy Centre, Moscow, Russia; Lorena Perez-Bajo, IPIECA, London, UK; Kamila Piotrowska, International Association of Oil and Gas Producers, London, UK; Tatiana Polyanichkina, Korem, Nur-Sultan, Kazakhstan; Konstantin Romanov, Gazprom, Moscow, Russia; Ralph Sims, Massey University, Palmerston North, New Zealand; Jan Stambasky, Research Centre for Renewable Gases, Vienna, Austria; David Tonge, IBS Research and Consultancy, Istanbul, Turkey; Charles Teplin, Rocky Mountain Institute, Colorado, USA; Wouter Terlouw, Navigant, Chicago, Illinois, USA; Ángel Landa Ugarte, Iberdrola, Bilbao, Spain; Frank Wouters, Wouters Ltd, Masdar City, Abu Dhabi, UAE; Katja Yafimava, Oxford Institute for Energy Studies, Oxford, UK. Disclaimer: The document does not necessarily reflect the position of reviewers and partners listed above who provided their comments and helped to develop this publication. iii Contents Acknowledgments.................................................................................................................... iii Executive Summary ................................................................................................................... v 1. Introduction ........................................................................................................................... 1 2. The Immediate Future for Gas from Now to 2030 ................................................................ 2 3. The Longer-Term Future for Gas – Beyond 2030 ................................................................ 3 3.1. The Prospect of Hydrogen .............................................................................................. 4 3.2. The Prospect of CCUS .................................................................................................... 5 3.3. The Existential Threat ..................................................................................................... 6 4. The Baseload Issue and the Role of Natural Gas in Compensating for the Intermittency of Renewable Energy ................................................................................................................. 6 4.1. The United Kingdom ...................................................................................................... 8 4.1.1. The Baseload Issue in the United Kingdom .......................................................... 10 4.1.2. The United Kingdom and Net Zero Emissions by 2050 ........................................ 12 4.2. Germany ........................................................................................................................ 13 4.2.1. Germany’s Climate Package .................................................................................. 13 4.2.2. The Case of Irsching .............................................................................................. 14 4.3. Russia ............................................................................................................................ 16 4.3.1. Coal’s Enduring Power ......................................................................................... 17 4.3.2. Gazprom Looks to Hydrogen................................................................................. 18 4.3.3. A Call for Incentives .............................................................................................. 20 4.4. Central Asia .................................................................................................................. 21 4.5. Different Regions, Different Trajectories ..................................................................... 22 5. Conclusion ........................................................................................................................... 23 Abbreviations ........................................................................................................................... 26 References ................................................................................................................................ 27 List of Figures Figure 1. Gas Use in the UNECE Region under the P2C and Reference Scenarios Figure 2. Coal’s Advantage in Russia Figure 3. Electricity Generation Mix in Russian Federation under the P2C and Reference Scenarios Figure 4. Electricity Generation Mix in Central Asia under the P2C and Reference Scenarios iv Executive Summary Gas will play a major role in addressing climate change. In the UNECE region, by far the most important contribution that gas can make will be in the form of ‘green’ or ‘blue’ gas that has been largely or totally decarbonised, rather than as natural gas used for power generation or as feedstock for petrochemical products. Such development requires significant advances in the technologies and costs of carbon capture and storage (CCS) as well as the development or adaption of infrastructure to cope with new fuels, notably hydrogen. The most immediate issue for natural gas remains its relationship with renewable energy. This is the theme of this paper, the first in a series. A second paper addresses the ability of natural gas to replace other fossil fuels and a third the prospect for new markets and opportunities for natural gas.1 The reduced cost of renewables and increased demand for flexibility in electricity distribution systems mean that in much of the UNECE region, the absolute requirement for any significant increase in gas will be limited. Gas producers might seek to increase their market share in the UNECE region by