Sustainable opportunity for the gas industry through quota for green gases

28.08.2019

The energy transition is forcing the gas industry to rethink - a short study by nymoen|strategieberatung for FNB Gas shows the potential of a quota for renewable and decarbonized gases.

The energy transition is forcing the gas industry to rethink - a short study by nymoen|strategieberatung for FNB Gas shows the potential of a quota for renewable and decarbonized gases. For the gas industry, the national climate targets represent a major challenge for its business model. Politicians are increasingly realizing that direct electrification of all sectors is not feasible, and that gas infrastructure is indispensable for achieving climate targets. However, in order to achieve an energy system that is almost greenhouse gas neutral by 2050, fossil natural gas in its present form will have to gradually disappear from the energy mix over the next 20 years. However, biomethane, green hydrogen, synthetic methane and decarbonized natural gas (so-called blue hydrogen) already offer a whole range of possible renewable or decarbonized gaseous alternatives. Despite the great potential of these new technologies, the market ramp-up has been difficult so far. One reason for this is the lack of incentives for the use of renewable gases, e.g. in the building or transport sector. Another reason is the high investment costs due to the lack of economies of scale, which have so far prevented innovative plants from being competitive. The competitive position of the power-to-gas technology is also hampered by the existing system of levies and charges, which, for example, place a heavy burden on the electricity procurement of electrolysers. Apart from lighthouse projects, such as the recently presented real laboratories, there is currently no consistent package of measures at either EU or federal level with which other green gases could be established on the market in addition to biomethane. In this context, the Association of Transmission System Operators (FNB Gas) commissioned nymoen|strategieberatung to investigate the instrument of quotas for renewable and decarbonized gases in a study, to compare it with other support models and to develop a concrete quota model. The analysis shows that such a quota system, due to its direct steering effect, is the only instrument with which a certain quantity target of green gases - and thus implicitly a CO2 reduction target - can be achieved safely and economically efficiently. The Berlin-based consulting firm also looked at feed-in tariffs, tenders and a market incentive program. Starting from a rate of 1% in 2021, the nymoen|strategieberatung proposes a gradual increase to 10% in 2030. This means that an installed electrolyser capacity of 7.5 GW can be achieved as early as 2030, which would also correspond to the scenario framework of the Gas 2020-2030 network development plan. In addition to this stimulation of the market ramp-up of new alternative technologies, the increase in demand associated with a quota could offer a new business model to numerous biogas plants that will successively fall out of the EEG in the next few years. The study also suggests that such a quota should be flanked by a market incentive programme in the early years and that the system of end consumer taxes should be reconsidered. As an energy industry expert in Berlin, nymoen|strategieberatung supports numerous clients in the energy sector in strategic corporate policy decisions, for example in the form of model calculations, potential analyses or political monitoring.