With global leaders recently agreeing an end to fossil fuel consumption at COP28 and ambitious targets facing EU member states in both 2030 and 2040 on the road to climate neutrality in 2050, countries are seriously on the hunt for fossil fuel alternatives. While renewable energies offer a naturally clean solution to many challenges, narratives have often focused on issues around pricing challenges, storage and the cost of new infrastructure. But not all new alternative fuels face these issues, and after all there is not one form of energy generation which will rule the future.
Electric natural gas, commonly referred to as e-NG, is one of the most cost-effective e-fuels on the market. Also referred to as synthetic methane, e-NG is chemically indistinguishable from fossil natural gas, meaning that it remains extremely versatile, but has all the benefits and attributes of renewable energy. “It is the cheapest e-fuel to produce and by far the cheapest e-fuel to use as it is made entirely from renewable power such as solar or wind and sustainable CO2” Marco Alverà, CEO and Co-Founder of TES (Tree Energy Solutions) tells The Parliament. Like biomethane, e-NG’s chemical properties are the same to the ones of existing fossil natural gas and therefore offer further positives. “You can use it in existing pipelines, storage tanks, with no need for upfront additional investments into end-users industrial processes, facilitating the transition for hard to abate sectors in particular. With this we’re really turning renewable power into a green molecule that you can use where and when you need it.” This lack of need for infrastructure change has seen Alverà label e-NG as “hydrogen made easy”.
Global challenges of our time are overcome through manufacturing. The road to win the climate race is no different
e-NG is not the only sustainable alternative that will be used to replace fossil fuels. Electrification already makes up 23% of the energy mix, expected to grow to around 50% by 2050, but Alverà is careful to remind us that electrification will only get us half way. “We need fuels, and the energy transition is only going to work if we get green fuels” he explains. The remaining 50% of the energy mix are set to be made up of fuels, split between e-fuels and biofuels. These alternative fuels are set to replace coal, oil and gas, the materials which have long powered industries across the world. In particular, Alverà sees e-NG as being central to the transition in industries such as chemicals, steel, cement, glass and more. He adds that customers are also interested in TES’ e-NG in the automobile industry. “Even though they’re making electric vehicles, they still need a lot of energy as the factories which make their batteries still consume a lot of energy to make them”.
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Marco Alverà is the CEO and Co-Founder of TES (Tree Energy Solutions)
Promisingly, e-NG is already being produced across the globe, and its production could be set for further expansion. “The beauty of e-NG is that it can be produced anywhere where it is sunny and windy” Alverà informs us. For this reason, it is important for Europe to focus on both the generative potential of H2, including e-NG, as well as ensuring it can trade H2 & its derivatives seamlessly with the rest of the world by developping coordinated imports and export strategies. TES’s first import hub in Europe is currently being developed in Wilhelmshaven in Germany.
Like with many other growing industries, to achieve success and further the impact of e-NG, policy support is needed. “I think it is going to be very challenging to meet the 2030 10 million tonnes of imports and 10 million tonnes of production REPowerEU target” says Alverà, “but I think we will get there”. When asked what policymakers can do in particular, he cites recent discussions with policymakers from across the world. “What I keep telling policymakers is that all the global challenges of our time are overcome through manufacturing. The fight against climate change is no different and will only be won if we ramp up manufacturing of equipment to make these fuels cheaper and cheaper” Alverà discloses. In this context, ensuring adequate support to scale-up domestic manufacturing capacity for clean technologies and critical raw materials, while providing a mix of domestic and imported renewable energy can help secure long-term competitiveness of key EU industrial champions.
I believe that hydrogen is going through somewhat of a dot-com phase
Ensuring this fuel is cheaper than its fossil counterparts is also central to the long-term success of the energy transition. “Where it’s sunny, you can make energy which is five times cheaper than oil, but what we need to do is figure out smart ways to move this energy from where it is cheap and abundant to where it is needed. This is where e-NG can come into play”. To do this, moves need to be taken to reduce the cost of electrolysers to make the hydrogen. In turn, this would enable the costs of other tools central to energy transportation like power cables and batteries to be reduced. “If we can do this, then we can really create e-fuels that are cheaper than fossil fuels” Alverà says.
On a government level, Alverà believes that support schemes such as contracts for difference (CFDs) are the key to affordability in the transition. With these contracts, governments commit to paying the difference between the cost of the e-fuel and the cost of the fossil fuel through either committing to obligations to buy e-fuels or providing money to cover the costs of e-fuel development. “This way the market can transition” Alverà argues. This process has already begun in Europe, where the German government has already initiated the handing out of its first CfDs. “I believe there have been a number of policy shifts in the right direction” Alverà adds.
But whilst the future does look positive for e-NG, Alverà warned that we must be realistic. “I believe that hydrogen is going through somewhat of a dot-com phase. There will be a handful of serious companies that know what they are doing who will come out of this phase and be the Google, Apple and Amazon of this phase” Alverà remarked. “It’s probably going to get worse before it gets better and it may take a little longer than everyone expected” he warned.
With e-NG, we’ve already solved most of the challenges because you can use it within today’s infrastructure
In times of fear about the future, political leaders can show the way and put forward ambitious but achievable targets. These targets cannot be achieved in isolation, and working on the global stage, with partners, to further accelerate the installation of renewable capacities, which can be traded and considered for offtakers and countries across the globe, whilst relying on well-established energy systems and infrastructure, is the key to success. In addition ensuring the buy-in across sectors of the economy and from key economic partners can help the EU strengthen its global climate leadership whilst retaining its competitiveness and technological edge on H2 technologies.
Asked for one wish to make the transition towards greener fuels quicker, Alverà reiterated one key point. “With e-NG, we’ve already solved most of the challenges because you can use it within today’s infrastructure. The one key thing is about bringing down the cost of electrolysers so it’s really a wish for better, quicker and cheaper manufacturing. When we have that, we can really accelerate” he concluded.
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This article is produced in partnership with TES.