Page 5 - EurOil Week 25

EurOil COMMENTARY EurOil

Gas producers want
a role in Germany’s
hydrogen strategy, but
the government sees
renewables as the only
option.

but this project is at a less advanced stage. In The German government aims to end the
addition, Belgium’s Fluxys and Russia’s Novatek use of coal-fired power completely by 2038, but
are working to build a 400mn cubic metre per faces mounting pressure from environmental
year transhipment and bunkering plant. groups to bring the deadline forward. Cheap gas
supplies will provide it with a greater economic
How much is too much? incentive for doing so. It has vowed to turn off all
While German gas needs will very likely grow its nuclear power plants (NPPs) much sooner, by
over the next decade, there are still concerns the end of 2022, providing another boost to gas
about the true benefits of new LNG facilities, demand. These factors strengthen the case for
which is why the projects have generally strug- adding LNG capacity.
gled to move forward.
Germany already has significant spare import Hydrogen future
capacity at pipelines and this is anticipated to In the longer term, the government wants to see
grow after the launch next year of Russia’s 55 hydrogen gradually supersede natural gas. It is
bcm per year Nord Stream 2 pipeline. It also has hoped that infrastructure built for gas transport
access to LNG imports arriving in many neigh- can be steadily repurposed for flowing hydrogen.
bouring countries such as the Netherlands, In their statement, RWE and GLT said they had
Belgium and France. Some of the terminals in also agreed to jointly explore opportunities for
these countries have traditionally struggled with developing the fuel.
underutilisation, with experts arguing that the Germany’s gas industry has called for there to
market is already too crowded to support addi- be greater focus on deriving hydrogen from gas.
tional capacity in Germany. This includes so-called blue hydrogen, where
This said, these terminals and others across hydrogen is split from gas using steam-methane
Europe have seen much higher rates of utili- reforming, with the resulting CO2 emissions
sation over the past year, as low prices have being re-used or stored underground or off-
encouraged customers to switch from piped shore. Another option is turquoise hydrogen,
gas to LNG. These low prices have also boosted where hydrogen is extracted from gas using
overall demand for gas in Europe, by encour- pyrolysis and solid carbon is produced as a use-
aging countries to shut down costlier coal- ful by-product.
fired capacity and ramp up gas-fired power If Germany commits to producing hydrogen
generation. on an industrial scale using these techniques,
This has been clearly seen in Germany, which then this adds to the benefit of developing new
recorded a 23.3% year-on-year surge gas imports LNG import infrastructure. But for the time
in March, despite warm weather and coronavi- being, the government’s stance is against gas-de-
rus (COVID-19) related lockdowns coming into rived hydrogen. Its new strategy only provides
force. Uniper in late May said it had decided to support for green hydrogen, produced from
bring the 561-MW Irsching-4 and Irsching-5 water using renewable energy. The number of
gas-fired power plants back online this October, regasification projects that are realised may
one year earlier than anticipated, citing low gas depend on whether the government rethinks
prices. this strategy. ™

Week 25 25•June•2020 www. NEWSBASE .com P5