The Energy Trilemma - The Obstacles for Gas in the Energy Mix, According to DNV GL
Last week, the CEO of DNV GL's Oil and Gas division said that gas would play an important role in the world's energy mix.
Speaking at the International Gas Union (IGU) Forum in Høvik, Norway, and in a statement following the event, Elisabeth Tørstad said that her company predicted that gas would factor into the energy mix as a transition fuel that would help to meet low-carbon aims for three decades to come.
"As the world struggles to meet the high energy demand while still developing scalable renewables and a low-carbon infrastructure, gas offers the greatest benefits for the foreseeable future," she said. "When planning for the next 30 years, gas should play an important role."
Following Ms.Tørstad's statement at that conference, Natural Gas Europe spoke to Martin Layfield, Global Gas Segment Leader for DNV GL, to find out more about why the company considers gas such an important tool for achieving climate aims and what that means in practical terms for the industry.
NGE: You recently released a statement that says gas is the best bridging fuel in the transition toward a lower carbon future. Why is it so much better than, say, coal or oil?
Gas is the cleanest fossil fuel, for example emitting in the order of half the carbon emissions of coal. In the context of security of supply and connecting energy hungry nations to energy efficiently, gas resources and infrastructure to supply across the gas value chain are abundant.
Nations need energy now and gas offers the opportunity to connect markets through a number of global supply routes and infrastructure options, for example pipeline gas, LNG, and a variety of other options to compress for ease of transportation.
NGE: In that same statement, it said that your firm sees a potential for the growth of gas in transportation. Can you tell me more about how you envisage that role growing for gas?
There is increasing demand for LNG as a ship fuel, driven by legislation in some regions for cleaner shipping and also because of the techno-economic advantages gas as a marine fuel can bring. The two main enablers for a global business in LNG as a fuel are the market need (i.e. the development of the LNG-fuelled fleet and LNG as fuel in other arenas) and the development of a LNG bunkering infrastructure, which is typically subject to the "chicken & egg" problem.
However, we have seen impressive growth in the number of LNG-fuelled ships with the number now standing at over 70 with a similar volume on order. This is a very strategic area for DNV GL with the majority of vessels classed by us, and we are working hard to assist the industry to join the dots, so to speak, between the shipping, infrastructure, and commercial management.
We have recently revised our Recommended Practice for bunkering to include advice for quality measurements and quantity metering of LNG fuel supply (which can be downloaded here) and have worked with a number of ports globally to assess the requirements and feasibility for bunkering operations.
Beyond shipping, we also see opportunities for LNG as transport fuel on roads and also for industrial fuel and power production. Further, we also believe there is greater viability for much smaller scale volumes of LNG conversion and delivery to remote locations. For example, capturing gas from flaring operations and liquefying it offers very good potential here and a further way to demonstrate the greener credentials of gas.
NGE: Ms. Tørstad said at the International Gas Union Forum that more obstacles need to be overcome to reach the goal of a sustainable energy mix. Can you expand more on those obstacles and what they mean practically?
Obstacles exist in a number of different forms, of course: economic, geo-political, technical, uncertainty in regulations etc. However, we think of the obstacles in terms of the energy "trilemma": Society expects energy to be greener, more reliable and affordable. As a consequence, we must change the way we generate, transmit, distribute and use energy if we are to attain a sustainable future.
It is very clear that gas will make a significant contribution to a greener future in countries which have been heavily reliant upon coal-fired power generation. This has been demonstrated through improvements in the U.S. from shale gas growth and displacement of coal and which has also driven down the price of gas for consumers. Other countries will have greater benefits realised through a greater mix of renewable energy. It is therefore important that we strike a truly global balance which is why the output from COP 21 can make a difference.
NGE: Ms. Tørstad also emphasised the need for investment, even in these challenging times for the sector. What sort of investment is needed and why is it so important for the future?
We are in an industry that has benefited from continuous investment in innovation, particularly as the technical risks of projects have increased. One obvious example of this is deeper water exploration.
The future is no different and arguably more crucial. Technical risks and the need for the upmost standards in safety won't change but these need to be sustained in a low oil price environment and upon an environmentally sustainable pathway. To that end, assuring the same things we have always strived for as an industry needs to be done cost effectively and under a greater level of global scrutiny of the environmental impacts. This surely adds up to much greater investment in innovation if the industry is to continue to succeed!
NGE: What else can the gas industry do to ensure, not just the survival, but the sustainable growth of gas for the future?
Well we see three things as being important: Collaboration, not just within the gas industry but across industries. Collaboration on projects between organisations and also with policy makers can help to ensure investments are optimised.
Secondly, technology is very important in contributing to sustainable growth and the future role gas can play alongside renewables. This will be important downstream to balance supply and demand. Technology will continue to be important to make sure gas is even cleaner than today and demonstrate to policy makers and lobbyists that gas can continue to play a vital role way into the future.
Finally, policy and regulation has to play a part. This is where global pricing for CO2 and subsidies can enter the debate and play a part, to cite just two examples.
About the company: DNV's Oil & Gas business provide a broad range of services, from technical assurance; marine assurance and advisory; risk management advisory and offshore classification. Our 3,500 employees combine broad industry expertise, multidisciplinary skills and innovation to solve complex challenges for our customers, with a vision to have a global impact for a safe and sustainable future.
Further, DNV GL also has other business areas such as Maritime, Energy, Business Assurance and Software where we provide classification and technical assurance, independent expert advisory services, and we also provide certification services to customers across a wide range of industries. With our origins stretching back to 1864, our reach today is global. Operating in more than 100 countries, our 15,000 professionals are dedicated to helping our customers make the world safer, smarter and greener.