Low-carbon liquids and gases in energy transitions

Reducing the emissions impact of oil and natural gas supply is one element of the transition described in the SDS. But ultimately energy transitions will need truly low-carbon liquids and gases, including some that have some synergies with today’s oil and gas industry:

•low-carbon hydrogen

•biomethane

•advanced biofuels.

These fuels all have the potential to be much more widely deployed in a low-emissions energy system, but all face commercial challenges to scale up as they are, for the most part, significantly more expensive to produce than today’s oil products and natural gas.

As with many aspects of transitions, there are issues for governments to consider with respect to these low-carbon fuels and technologies, including R&D efforts, their envisaged places in future energy systems, and the regulatory frameworks and targeted support that will be required to scale up their use.

For countries considering the future of gas grids, questions about the relative importance, and respective roles, of electricity and gas networks are central to the design of energy transitions. Long-term strategies need to consider the potential for these networks to deliver different types of gases in a low-emissions future, as well as their role in ensuring energy security.

Oil and gas exporters seeking ways to guarantee long-term markets for their resources may also need to start considering carefully the potential for hydrogen, including options for its transportation to consumers, if it is to offer a long-term alternative to trade in hydrocarbons.

For its part, the oil and gas industry has extensive experience with managing multibillion-dollar projects and in handling liquids and gases.

These technologies and fuels could therefore be a good match with their existing skill sets, arguably a better match than electricity or more distributed alternative low-carbon fuels.

Low-carbon liquids and gases can for the most part take advantage of existing transmission and distribution infrastructure and can be used across the energy sector. They are particularly useful in many hard-to- abate sectors such as aviation, shipping, iron and steel production, chemicals manufacturing, high-temperature industrial heat, and longdistance and long-haul road transport. Without the support of the oil and gas industry, these technologies may never reach the level of maturity where they can supply these sectors cost-competitively.

Moving into these areas does of course come with hazards, not only related to commerciality but also from concerns about the real life-cycle environmental gains from biofuels, especially once disruptions to land use and competition with food supplies are taken into account. That is why the research is focused on commercialising fuel production from waste products and residues, rather than energy crops.

From an oil and gas company perspective, rising interest is underpinned by the affinity of these fuels with existing business models, a hedge against possible future restrictions on high-carbon fuels, and the way that low-carbon liquids and gases allow companies to reduce the carbon intensity of the energy they supply to the market.

Feedstock

Organic matter

Zero-carbon

electricity

Fossil fuel with CCUS

Electrolysis

Electrolysis

Steam reforming, methane splitting or coal gasification

Final product

Biomethane

Low-carbon

methane

Low-carbon synthetic methane*

Low-carbon

hydrogen

Global sustainable technical potential for biomethane supply, 2018

15

10

5

Source: IEA (2019), World Energy Outlook 2019, www.iea.org/weo2019.

North America

Middle East

Eurasia

Europe

Central and

South America

Asia Pacific

Africa