The impact of methane leakage on the role of natural gas in the European energy transition
Limiting global warming to 1.5° requires reaching net-zero greenhouse gas (GHG) emissions by no later than 2050. According to the existing literature on energy transition, natural gas might still play a sustainable role in a carbon-neutral energy system, especially in hard-to-abate sectors, if associated with carbon sequestration processes such as carbon capture and storage (CCS).
Context
Although CO2 emissions are the focus of attention of these studies, anthropogenic methane emissions along the natural gas value chain are a major contributor to global warming, with up to 82.5 times the potency of CO2. This article aims at identifying cost-optimal European energy transition pathways, and more precisely, the role of natural gas and its derivative products when considering a two-basket GHG-neutrality objective, including both CO2 and methane emissions by 2050. Clean hydrogen (produced from low-carbon electricity via electrolysis or natural gas with abated CO2) can be considered as one of the key natural gas replacement options in different hard-to-abate sectors, but it can also be a key consumer of natural gas. Therefore, this analysis is complemented with a detailed analysis of the role of clean hydrogen in a climate-neutral Europe and its supply routes.
Questions addressed
This paper answers the following questions:
- How can the methane footprint of natural gas and its derivative products evolve through 2050 in Europe?
- What would be the optimal European energy mix and its evolution over the period to 2050 to respect climate goals?
- What is the importance of hydrogen as a low-carbon energy carrier in the European energy transition?
- How can the role of natural gas in the European energy system evolve as a function of methane abatement degree?
Methodology and modelling framework
A first-of-its-kind modelling framework containing two optimization models and a methane footprint calculation module has been developed to study the European energy transition and the role of hydrogen in it. It consists of coupling the detailed European energy system optimization model with Deloitte’s global hydrogen trade and delivery chain optimization model, HyPE (Hydrogen Pathway Explorer)[SB1] , to take into account European hydrogen import routes in an optimal manner. Moreover, this optimization framework has been reinforced with the inclusion of methane footprint of both natural gas and hydrogen imports to Europe. Therefore, the optimization goes beyond traditional carbon-neutrality assessment, and includes a two-basket GHG-neutrality target (CO2 and methane neutrality).
The study design includes the highest granularity in the energy producing and consuming sectors, including all the major primary, intermediary and final energy commodities. The analysis consists of three contrasting methane leakage scenarios: current methane leakage levels, announced policies and implementation of best available methane abatement technologies. Methane footprint calculation module considers methane leakage along the whole natural gas and its derivative products’ value chain: upstream (e.g., exploration & production, gathering & boosting, processing), midstream (e.g., transmission, liquefaction and gasification, export and import terminals) and downstream (EU-wide gas transmission and distribution) activities. The methane footprint module includes both European domestic natural gas production and the potential natural gas and hydrogen exporters to Europe.
The main findings
The conclusions of this study shed very useful light on the current European energy transition debate, notably by taking into account European post-2022 resilience and sovereignty agenda and the climate-neutrality objective that goes beyond only carbon neutrality. The key conclusions of the study are:
Renewable energies are the key building blocks for a climate-neutral energy system (up to 90% of final energy consumption in 2050). Renewable energies, electrification and clean hydrogen are no-regret solutions whose contributions are crucial, independent of the methane abatement scenario.
In a climate-neutral Europe, clean hydrogen emerges as the second biggest final energy carrier (after electrification), satisfying nearly a quarter of its final energy demand by 2050. This clean hydrogen, in turn, is produced mainly from renewables (water electrolysis with wind and solar power).
For natural gas to play a sustainable role in a net-zero Europe, not only significant carbon capture and storage capacities are needed, but also the methane leakage associated with natural gas value chain should be reduced to the absolute minimum based on best available methane abatement technologies.
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The impact of methane leakage on the role of natural gas in the European energy transition.
