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Interview: European gas network operators preparing for greener future

Highlights

Infrastructure use to be 'very different': GIE head

Gas grid can be used to carry green gas, hydrogen

Current system 'well-developed, meshed, diversified'

London — Gas network operators across Europe are working to prepare the continent's vast gas network to carry carbon-free "green" gases in the future, the head of industry group Gas Infrastructure Europe said.

GIE secretary general Boyana Achovski told S&P Global Platts in an interview that the way Europe's gas infrastructure is used "will be very different in the future".

With the EU set firmly on a road toward a decarbonized future, there has been concern about the fate of Europe's gas infrastructure in coming decades, with the risk of the system being rendered effectively obsolete.

But industry has been vocal about the continued use of the system.

"Today's gas infrastructure is efficient and available, and we need to use this asset efficiently," Achovski said.

"Affordable decarbonization can only be achieved through utilization of both energy carriers -- gas and electricity -- and this can only be done by using of the existing gas infrastructure," she said.

"GIE members are working on innovative techniques to facilitate all kinds of gaseous energy carriers -- from biomethane sustainably produced within and outside our borders, via green hydrogen produced from excess electricity from wind farms or PV installations, to synthetic methane."

"Our strategy is to better use existing infrastructure rather than to develop new solutions from scratch. So, using pipelines, storages and LNG infrastructure is part of our long-term vision," she said.

GREEN GAS

Earlier this year, a grouping of European gas grid operators said there was a bigger role than thought for renewable gases in Europe's decarbonization efforts, with infrastructure needed to allow for some 270 Bcm/year of 'green' gas usage by 2050.

Under the umbrella of the Gas for Climate initiative -- formed in 2017 to analyze and create awareness about the role of renewable and low-carbon gas -- the TSOs said existing infrastructure could be used to transport cleaner gas in the future.

Achovski said green gas is already traded between Denmark, Germany and Austria and there was a growing interestin gas consumers to be able to purchase greener gases.

"Numerous studies have been made on the viability of using the existing gas infrastructure to transport and store gases that have low or no carbon content -- biomethane, hydrogen and synthetic methane," she said.

The studies all concluded that gas would be needed in a "fair" energy transition and that it would be essentialas fuel for the European economy.

Achovski said another key question in the replacement of natural gas with carbon-free gases is where the production takes place.

She said it could be done close to distribution centers (the old "city gate"), in which case natural gas would have to be shipped there using existing infrastructure and CO2 would have to be transported back toward logistical centers for use or storage. That would generate new business for TSOs.

Or it could be done in large-scale plants at market entry points (the interface between the upstream and transport system), in which case the transport system will have to be eventually converted to hydrogen compatibility.

Large-scale carbon capture, use and storage (CCUS) can also play a role.

"The technical aspects are known. It is just the commercial side of things that needs to be developed," Achovski said.

STORAGE CAPACITY

Existing gas storage facilities also have a key role to play in a decarbonized Europe.

"This capacity can be used to store various green and decarbonized gases, as well as hydrogen, and provide long-range energy storage via power-to-gas -- thus complementing battery technologies," Achovski said.

However, there are issues around storage that need to be addressed, she said, if existing capacity is not to beclosed due to poor economics.

"The current level of storage capacity in Europe is essential for the high security of supply level we have, which is also essential to provide the flexibility needed to balance Europe's ever-increasing renewable energy production."

"With no changes in the regulatory framework for gas storage market, the market will [reach] a sub-optimal level in terms of storage capacity," she said.

GIE members have called for the European Commission to revisit the regulatory framework around storage, including recognizing the strategic value of facilities and incentivizing new storage or the maintaining of existing sites.

Despite the challenges, when asked about the current state of Europe's gas infrastructure in general, Achovski said it was "well-developed, meshed and diversified".

She also said the EU "ensures the balance" of the global LNG market thanks to its large LNG import and gas storage capacity.

"The volume of LNG traded is growing both at European and international levels and unlike ever before, over thepast few months Europe has played the role of global market balancer."

But, Achovski said, it was "essential" for LNG to be able to reach all parts of Europe.

-- Stuart Elliott, Stuart.Elliott@spglobal.com

-- Edited by Daniel Lalor, daniel.lalor@spglobal.com