Day 3 Dispatch from CERAWeek: A Trip to the Innovation Agora and Other Executive Conference Discussions

A visit to the Hydrogen Hub discussion, titled Making Low-Carbon Gases: Ammonia, e-Methane, e-NG, offered insights into how the production of e-biofuels can contribute to a reduction in global carbon emissions. The panelists discussed the opportunities and challenges associated with producing e-methanol, e-ammonia, dimethyl ether (e-DME), sustainable aviation fuel (e-DME), and—importantly—natural gas (e-NG). For example, e-NG is produced by combining green hydrogen with “climate-neutral” carbon dioxide (CO2), or biogenic CO2, to produce a sustainable fuel.

The presenters shared that the main reason to be excited about e-NG is that it has the potential to replace fossil-based natural gas because it can be transported and stored using existing natural gas and LNG infrastructure. One downside, however, is the current supply limitations for biogenic CO2. In Australia, one company has installed carbon capture equipment to take CO2 captured from its LNG plants to produce e-methanol. The participants all agreed that direct air capture, or DAC, technology is critical to the success of e-biofuels. Regarding the demand for e-biofuels, several panelists noted that offtake agreements are already in place with natural gas utilities in Japan and Canada, and that exports of e-NG are scheduled for Europe.

A stop by the Carbon Hub for discussion, titled Future-Proofing Energy Assets: Repurposing for Low-Carbon, revealed that some companies are focused on retrofitting equipment so as not to strand viable assets that still have a useful life. The panelists noted that their organizations recognize the need to decarbonize but stressed that decarbonization will need to be coupled with growth.

The representative from Siemens pointed to the build out of the grid in Texas to support the expansion of solar and wind energy. He expressed the need for a continued focus on transmission infrastructure so that companies are not stranding renewables. Ultimately, the panelists agreed that it is important to build a path forward in the energy transition using existing assets, while still investing in the areas where customers want to go. They also noted the importance of staying ahead of regulations in order to be prepared for enforcement when the time comes.

Back at the Executive Conference, in one of its “Expert Zone” sessions, S&P Global presented views on the future of “global power.” The panelists discussed the electric generation feedstock mix in three regions—the United States, Europe, and Mainland China. They explained that their research shows that between 2020 and 2035, natural gas is expected to play a major role in the United States, coal is expected to be dominant in Mainland China, and Europe is expected to have an even blend of natural gas and renewables.

While more renewable plants will be built, their research also shows that new thermal plants will continue to come online across all regions during that time span, but their purpose will likely be to provide reliability and support to the intermittency of renewable power. In this case, the utilization rates of thermal plants should reduce over time even though more are being developed. In the United States, however, the rising demand for electricity from data centers and other large consumers is expected to drive continued demand for gas-fired generation.

During a presentation titled Scaling Technologies for the Future, executives from several energy companies discussed how they take ambition to reality with regard to developing clean energy projects. Among their insights, the panelists noted the following:

• The importance of collaboration and partnerships to achieve scalability, and also standardization and digitalization, which can be accelerants in bringing projects to scale. There is a belief that the industry can standardize the manufacturing of electrons, unlike with fossil fuels. The challenge, however, will be growing factories and manufacturing.
• While green electrons will grow, the world will still rely on fossil fuels. Therefore, there will be a large role for biofuels, fossil fuels with carbon capture, utilization, and storage (CCUS), sustainable aviation fuel (SAF), and other e-fuels, such as e-NG.
• Natural gas will continue to play a role in replacing global use of coal and solving for the current intermittency of renewable power.
• e-NG is particularly exciting because energy producers can use the existing natural gas infrastructure to deliver it to market, which helps reduce the overall cost of relying on e-NG. The panelists shared that their companies are working on a project to develop e-NG and transport it as LNG to international markets. Because no new infrastructure is required, this process can be price competitive with green hydrogen.
• The technologies being used today for the fossil industry can be repurposed to develop renewable energy. For example, SAF production is based on old refinery technologies. Policies should be enacted to make these technologies more cost effective. The challenge with new technologies is the time it takes to go through the maturation process (i.e., isolating and solving for the risks associated with the new technologies).
• The panelists expect AI to revolutionize project development and how companies work internally. They noted that they are still lacking the number of engineers needed to achieve net zero. However, AI can help by getting early career engineers up to speed, allowing them to help with project development on an expedited basis. The panelists emphasized that there should be no concern about AI replacing engineers—the engineering capacity required to be able to deliver energy projects at the pace and scale needed to reach net zero will still require humans.

Near the end of the evening, during a panel titled Strategies for US Natural Gas, executives from the energy industry highlighted the following:

• Due to a growing demand for natural gas, there is likely to be a shortage of natural gas storage capacity, which has not kept pace with demand. Much of this demand is tied to LNG growth opportunities in the Gulf Coast and Canada. Siting new natural gas storage is a challenge given the three-to-four-year timeline on greenfield project development.
• Major long-haul pipeline development is not over, but it is challenging to get through the US Federal Energy Regulatory Commission permitting process due to the increased involvement of intervenors and stakeholders. It is helpful if companies can use existing rights of way. However, developers and regulators remain skeptical.
• Coal provides one-third of the world’s power generation. With that much coal still operating, LNG can be viewed as part of the decarbonization process. Natural gas is an ideal partner for renewables to help address intermittency issues.
• Many traditional fossil fuel companies are invested in the energy transition through the development of onshore wind farms, renewable gas, solar, energy storage and hydrogen projects.
• Gas companies are delivering a product that is safe, reliable, affordable, and sustainable, but there is a need to look at how the product is delivered. To this point, one panelist shared that their company has entered into partnerships to better track emissions in order to understand how they can be reduced. Getting real-time measurements will help in making better decisions about how to lower emissions.
• e-NG is something that the energy industry is looking at with real interest. The prospect of using e-NG for end users in Japan and the European Union without having to rebuild the entire pipeline system is compelling.

Come back tomorrow for another dispatch from CERAWeek 2024.