e-NG: The synthetic natural gas that could help decarbonize shipping and heavy industry

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Marco Alverà, Chief Executive Officer and Co-Founder, Tree Energy Solutions (TES-H2)

• After COP28, peak oil is approaching and decarbonization is picking up pace.
• Innovations like renewable energy and green hydrogen are unlocking solutions that can help decarbonize some of the hardest-to-abate sectors like shipping and heavy industry.
• e-NG, a green hydrogen-based e-fuel, could be key for the transition away from fossil fuels.

Last month at COP 28, 198 countries agreed unanimously to transition away from fossil fuels. This means “peak oil” is somewhere near the horizon, and signals a pivotal shift in our global energy landscape. Each kilowatt of newly installed renewable energy nibbles away at the demand for coal, oil and eventually gas.

As solar energy prices continue to plummet, the economic argument for renewables becomes increasingly compelling. We’re witnessing solar energy rates drop to astonishing lows — the record of $10.4/MWh is just the beginning, with prices ranging from $15-20/MWh becoming the norm in many countries. The prospect of stable bids below $10/MWh is near — far below the current $40/MWh rate for Brent crude oil. In many regions, power prices, often dictated by gas plants or even diesel generators, average above $100/MWh.

This trend underscores the bright future of renewables, where the marginal cost of solar and wind energy is essentially zero.

But the decarbonization of energy extends beyond energy production. Through long-distance offshore cables, green hydrogen and the increased share of e-fuels, or very low carbon e-fuels like e-NG (electric natural gas) in the energy mix, we can integrate cheap renewable energies into our energy systems and industrial processes seamlessly.

Introducing e-NG

e-NG is a sustainable fuel that can seamlessly replace fossil natural gas because it is easy to transport and store using existing infrastructure. As we can generate it at scale by combining green hydrogen with climate-neutral CO2, e-NG offers the fastest route to dramatically reducing emissions in the global energy system.

e-NG, in particular, is one of the most pragramatic solutions to incorporate renewable energy without necessitating significant infrastructural changes. Rapidly increasing investments in e-NG and solutions like it offers not only higher economic growth but also the opportunity for regions like Africa to gain access to more affordable energy, and with it all the advantages it confers.

The appeal of e-NG and other e-fuels lies in their technological maturity and compatibility with existing systems, potentially creating a bridge between cheap green electricity sources and global end-users. This approach is evident across industries and in the energy strategies of countries like Japan and Germany, which are incorporating such technologies to augment their renewable energy use.

For instance, considering stricter greenhouse gas regulations in the maritime industry and the challenge of decarbonizing in this critical global sector, alternative fuels like e-NG become imperative. While Liquid Natural Gas (LNG) is a popular choice, e-NG stands out for its cost-effectiveness and readiness for immediate deployment. TES-H2 has assessed carbon emissions and capture at every stage of e-NG production for its project in Texas, from production to transportation through to its ultimate combustion as shipping fuel. Those findings revealed that e-NG’s entire life cycle has a net positive climate change potential of about 3.5 grams of CO2 equivalent per megajoule. That’s significantly lower than the life cycle of fossil-based fuels, which emit around 94 grams of CO2 equivalent per megajoule

By replacing fossil fuels with e-NG that has been produced using biogenic CO2, emissions are reduced by around 96%. The lifecycle analysis shows e-NG significantly reduces carbon emissions compared to conventional fuels, offering operating expense benefits to shipping companies. Ships using LNG can seamlessly transition to e-NG without infrastructural changes, aiding in meeting emission reduction goals and extending the service life of LNG fleets. With the LNG market estimated at 800 million tons and a total value of approximately $1 trillion per year, the potential of e-NG is substantial. The decreasing costs of renewable energy sources and electrolyzers enhance e-NG’s production outlook, in contrast with the broader hydrogen market, which often struggles with financing due to a lack of real-life applications.

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Creating an enabling policy environment

The strategic importance of diversifying our energy portfolio is clear in the context of the global climate agenda. Solutions like e-NG offer one of many pathways to reducing industrial carbon emissions. But they must be part of a broader, multi-faceted approach that includes policy support and financial incentives. In evaluating alternatives, it’s crucial to consider a range of factors, including scalability, carbon intensity, cost and compatibility with existing infrastructure.

The energy transition is not without its challenges. The 2023 fall in EU gas demand illustrates a complex situation. The slow yet steady adoption of electric vehicles (EVs) and heat pumps is beginning to impact fossil fuel demand. This decrease in demand is partly due to increased energy efficiency and, more significantly, a semi-permanent decline in demand from EU heavy industries. Factors such as prohibitive heating costs leading to reduced consumption, and a shift towards coal and oil-fired power generation due to last year’s energy crisis, paint a less optimistic picture of our current energy landscape.

The road to decarbonization for these industries involves developing a comprehensive strategy that includes efficient transportation and cost-effective access to clean energy.