On June 15, 2023, I saw one headline and two posts that pointed
out different approaches to decarbonization. Another headline reminded that fossil
fuel demand remains high.
The first
headline was UN chief Antonio Guterres saying that fossil fuels are
incompatible with human survival. He has repeatedly put forth that sort of
rhetoric against fossil fuels. The other headline I saw was that the largest
natural gas field in Europe, the Groningen Field in the Netherlands is expected
to be shut down prematurely later this year due to increased induced seismicity,
small earthquakes caused by producing the gas that have damaged homes, quite
uncommon among gas fields but long a problem with this field. The market
reacted to the news with a 30% increase in European natural gas prices. The
price signal shows that fossil fuel natural gas is in strong demand. Here we
see that something that the UN chief says is incompatible with human survival
is in such strong demand that a shortage of it means we will pay more to get
it. I should mention that the price spike is also a result of extended outages
in some Norwegian fields this summer. Groningen was expected to shut down in
2024 anyway – the big reason is a large earthquake in 2018 – however in January
2022 gas production from the field was doubled to increase EU supply after a
cold 2021-2022 winter left EU supplies low. Now it is set to be mainly shut-in
and perhaps held in some reserve, just as the EU heating season begins.
The two posts
were by CEOs, one of a company that is the largest natural gas producer in the
U.S. and one of a company that measures, reports, and verifies, methane
emissions from the oil and gas companies. Natural gas producer EQT CEO Toby
Rice posted from Berlin, Germany, representing the Partnership to Address
Global Emissions (PAGE) in a quick video where he said that decarbonized U.S.
LNG is ready to be exported to more places in the world (or will be as more LNG
export facilities are readied) to address energy security with low carbon
supply. He also noted that NET Power’s new low carbon supercritical CO2/oxyfuel
combustion natural gas plants with carbon capture can now be built around the
world to lower life cycle carbon emissions significantly further, closer to
zero carbon. The second post was by emissions measurement, reporting, and verification
company Project Canary CEO Chris Romm, who stated simply and directly that we
should “cut the crap” and decarbonize with certified responsibly sourced gas
and LNG.
Both Guterres and
the CEOs are offering solutions. The U.N. chief has said many times we need to
stop producing fossil fuels. That is, of course, entirely impractical and unfeasible.
The CEOs offer a partial but highly practical and feasible solution:
decarbonize fossil fuels. Natural is the least carbon intense fossil fuel. If
we use it to replace coal, the most carbon intense fossil fuel, there is up to
60% or more decrease in life cycle carbon emissions. With the addition of
certified RSG that goes up a few more percent and with the efficiency improvements
of both new more efficient combined cycle natural gas turbines and the NET
Power sCO2 Cycle natural gas plants and other carbon capture projects, the
needle can be moved further. I argued in my book Natural Gas and
Decarbonization that this incremental decarbonization is likely to continue to
add improvements here and there as these industries mature. But right now, they
offer quite enough decarbonization.
I’m sure the U.N.
chief has good motives, but I wish he would stop the demonization rhetoric. As
they say, the perfect is the enemy of the good. We simply can’t stop producing
fossil fuels as they are in high demand throughout the world. But we can partially
decarbonize more of them. If these technologies get help from governments and
industries, which they are, they can be implemented faster. Permit reform will
also be helpful.
Guterres calls
for a fossil fuel phase-out and "credible exit strategy." He has been complaining all year
about the 2022 profits for fossil fuel producers: gas, oil, and coal, were all
affected, and prices rose all over the world but especially in the EU – all due
to the Russian invasion of Ukraine. Many companies profited but low prices now
are cutting into those profits. Some were taxed like the UK windfall profits
tax, which slowed U.K North Sea investment subsequently. We see from the
Groningen news that potential supply disruptions in the future will likely result
in price spikes, as happened in 2022. Nothing that drastic is precited but we
see that markets are ready to react. He did elucidate a bit more to say that big
oil and gas companies are not spending enough on clean energy investment. Of
course, there will be some natural resistance to spending more money on
something not inherently profitable. Nonetheless, his argument that the
industry should spend more is not without merit.
In addition to
that, developing countries need affordable energy and if they have domestic fossil
fuel supplies, including coal, they should be expected to produce them for domestic
consumption rather than being encouraged (coerced through unavailability of
international financing?) to abandon them. Those countries could then further
benefit from the new decarbonization technologies which are maturing in
developed countries. Many of us believe that those countries’ needs for affordable
energy to modernize electricity and industry are more important for survival
and prosperity than faster reduction of carbon emissions in the near-term.
References:
Delivering
big bold energy solutions to the world. EQT/Toby Rice. June 15, 2023. (6)
Post | Feed | LinkedIn
Project
Canary CEO: ‘Cut the Crap’ on Energy Transition, Fossil Fuels [WATCH]. Jordan
Blum. Hart Energy. June 9, 2023. Project
Canary CEO: ‘Cut the Crap’ on Energy Transition, Fossil Fuels [WATCH] | Hart
Energy
UN
chief says fossil fuels are ‘incompatible with human survival,’ calls for
credible exit strategy. Frank Jordans. AP. June 15, 2023. UN
chief says fossil fuels are ‘incompatible with human survival,’ calls for
credible exit strategy | PBS NewsHour
European
natural gas prices soar 30% as key source to close permanently after hundreds
of earthquakes. Filip De Mott. Market Insider, June 15, 2023. Europe's
Biggest Gas Field to Close After Hundreds of Earthquakes (businessinsider.com)
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