Oxford Institute for Energy Studies

New Oxford Institute for Energy Studies paper discusses natural hydrogen and its potential role in a net-zero carbon future. 👉 Link to research paper: https://lnkd.in/etEcnTCg Key points: 💠 Despite being the most abundant element in the universe, until recently hydrogen (H2) was believed to rarely occur in free gaseous form on Earth and was mostly found forming more complex structures in combination with other elements. This is why most of the H2 currently utilised in industrial and manufacturing processes is generated primarily from fossil fuels. 💠 Since the production of conventionally manufactured hydrogen is associated with substantial releases of carbon dioxide, there have been ongoing attempts to replace it with other forms of H2 that are less carbon-intensive. 💠 While technologies such as carbon capture, utilisation, and storage, as well as renewable-powered electrolysis, are the most popular options for generating clean hydrogen, they are still significantly more expensive, and their application remains on a small scale compared to conventional methods. Therefore, a lower cost alternative with similar or lower carbon intensity could potentially revolutionise the sector and make a significant contribution towards a net-zero carbon future. 💠 On the other hand, more recent reports of hydrogen occurrences in seeps and vents around the globe, as well as the first successful commercial production of natural hydrogen from a well drilled in Mali, have led researchers, businesspeople, and governments to suggest that exploration for natural hydrogen may have been largely neglected in the past due to a lack of specific focus on it. 💠 If this hypothesis is true, some predict multiple future discoveries of native hydrogen so abundant that they could meet the entire world‘s energy demand for centuries. In this case, geologic H2 has a chance to completely transform the energy sector and play a crucial role in achieving a net-zero carbon future. Not everyone, however, is optimistic; many believe that most naturally occurring hydrogen is unlikely to be commercially exploitable. 💠 This paper, therefore, aims to shed light on the existing knowledge surrounding geologic H2, and to evaluate its realistic decarbonisation potential. #decarbonization #energy #geologicalhydrogen #Hydrogen #nativehydrogen #netzerocarbon

Martin Lambert and Alex P. article in article in latest Oxford Institute for Energy Studies Energy Forum on Europe’s REPOWEREU Hydrogen Plan Two Years On 👉 Link to OIES Energy Forum: https://lnkd.in/eMBZ_Y3f Key points 💠 Article highlights key challenges to be addressed to promote more rapid scale up of hydrogen production 💠 EU hydrogen framework is not technology neutral with a strong preference for electrolytic hydrogen using renewable electricity with complex rules in order for the hydrogen to qualify as “Renewable Fuels of non-biological origin” though in the last 12 months there are some indications that the EU is now more open to consideration of carbon capture and storage (CCS) 💠 Full terms of the EU hydrogen regulatory framework including the definition of low-carbon hydrogen, are still being developed, which leads to continuing uncertainty for investors and in turn a reluctance to commit significant money to start building projects until there is more clarity 💠 For the foreseeable future, low-carbon hydrogen is higher cost than existing high-carbon hydrogen produced from fossil fuels without carbon capture and storage. A small number of customers may be willing to pay a price premium for a low-carbon product, but typically a hydrogen production project will need government subsidy in order to be feasible 💠 Many of the announced hydrogen production projects are being developed by relatively small companies which are likely to need external finance. Achieving subsidy support is clearly a step in the right direction, but in order to secure financing, projects will also need to have a secure offtake contract and, in some cases, the necessary midstream infrastructure in order to link supply and demand, as discussed below. Only when the entire supply chain is in place to reassure financiers that there is line of sight to a robust revenue stream will it be feasible for the project to proceed 💠 While progress is being made it is difficult to see sufficient FIDs in the next 2-3 years to be consistent with achieving the ambitious 2030 production targets #hydrogen #europe #greenhydrogen #energytransition

New Oxford Institute for Energy Studies Podcast discusses EU sanctions on Russian LNG 🎙 In this latest OIES podcast James Henderson talks to Katja Yafimava and Agnieszka Ason about the latest EU sanctions package aimed at Russian LNG 👉 Link to Podcast: https://lnkd.in/eUcHi3vj 👉 This is based on a recent OIES Energy Insight: https://lnkd.in/eirR-4cf Key points of Energy Insight: 💠 Main important element of EU's latest sanctions package against Russia is that for the first time it introduces restrictive legal measures against Russian natural gas 💠 Fact that EU decided to target Russian LNG (as opposed to pipeline gas) probably reflects its discomfort with increased European imports in 2022-2024 and a related urge to 'do something' about it 💠But EU's choice of restrictive measures is that they are unlikely to reduce and may in the short term even increase Russian LNG imports to Europe 💠 Transshipment ban is specifically targeted at LNG cargoes for onward delivery to non-EU countries 💠 Transshipment ban will not reduce the flows of Russian LNG to the EU; if some of these volumes are kept within the EU (instead of being transshipped outside through EU ports) this would increase imports of Russian LNG to EU 💠 EU transshipment ban – likely to be followed by declarations of force majeure – will not automatically invalidate the LNG supply and transshipment contracts concerned but it will create legal complications for the parties to those contracts   💠  Ban on the provision of technology, goods and services for the completion of Russian LNG projects under construction (such as Arctic LNG 2 and Murmansk LNG) could lead to cost increases and delays for these projects and especially in combination with US sanctions complicate Russian efforts to create an alternative to transshipment in EU ports 💠 While it could potentially delay availability of Russian LNG in the long term it is less clear whether it will reduce it as Russia is likely to make significant efforts to seek import alternatives (mainly from China) and develop its own domestic substitutes for western technology, goods and services, enabling LNG production and transportation 💠 All these measures reflect EU’s growing confidence in its ability to plan for a future without Russian gas but they also suggest that such future will not be immediate 💠 As long as the energy crisis is not considered to be definitively over and the EU’s political goal of phasing out Russian gas is not equally strongly supported by all member states, there will be reluctance to take more far-reaching steps to significantly reduce or stop Russian gas supplies to the EU #gas #lng #russia #eu #sanctions #energysecurity

New Oxford Institute for Energy Studies Podcast discusses EU sanctions on Russian LNG. 👉 Link to Podcast: https://lnkd.in/eUcHi3vj 👉 Link to related Energy Insight: https://lnkd.in/eirR-4cf 🎙 In this latest OIES podcast James Henderson talks to Katja Yafimava and Agnieszka Ason about the latest EU sanctions package aimed at Russian LNG. 🎙 After a brief introduction discussing the sanctions that have been imposed on Russian LNG to date, mainly by the US authorities, we look at the 14th EU sanctions package and the measures that it has introduced to curtail Russia’s activities in the LNG sector. 🎙 We discuss the three key areas impacted by the sanctions, namely a ban on LNG deliveries to specific EU terminals, although not to the EU as a whole, a ban on trans-shipment of Russian LNG for onward transport and a ban on providing good, services or technology to Russian LNG projects. 🎙 The overall conclusion is that the EU probably went as far as it could without banning the import of Russian LNG to the continent outright, and progress in any legal processes at the small number of terminals where a ban has been imposed will be instructive should the EU decide to broaden the sanctions at a later date. 🎙 In addition, it will be interesting to see how the commercial terms in trans-shipment and supply contracts are managed in the grace period to early 2025, after which the full ban will be implemented. All of our #podcasts are available on #applemusic and #spotify #CountryandRegionalStudies #EnergyPolicy #EnergySecurity #Gas #GasProgramme #Podcast

Mostefa Ouki article in latest Oxford Institute for Energy Studies Energy Forum on Financing Gas Projects in Sub-Saharan Africa 👉 Link to OIES Energy Forum: https://lnkd.in/eMBZ_Y3f Key points 💠 Prudent and sustainable development and monetisation of Sub-Saharan Africa’s gas reserves could significantly and positively change this subregion’s economies 💠 This would require rapid consistent and meaningful internal reforms addressing multi-faceted financing constraints 💠 Without these reforms Sub-Saharan Africa’s potential gas projects would continue to be considered as risky and only draw a limited pool of lenders and investors 💠 Deploying efforts to insist on Africa’s right to a “fair energy transition” reflecting the principle of “common but differentiated responsibilities” are necessary, but it is also critical that Sub-Saharan Africa’s policymakers focus on the internal reforms needed to de-risk gas development projects 💠 Policymakers need to understand that they have a short time window to act, if they really want to attract a much wider group of financing players and facilitate the development and monetisation of their existing and yet-to-be discovered natural gas potential #gas #africa #energytransition #financing #justtransition

Oxford Institute for Energy Studies paper looks at Contracts for difference (CfDs) in energy transition and how to balance market efficiency and risk mitigation 👉 Link to OIES paper: https://lnkd.in/eyygPVPF Key conclusions: 💠  Contracts for Difference (CfDs) play critical role in driving renewable energy transition by providing revenue stability and encouraging investment in low-carbon technologies 💠 Historically CfDs been successful particularly in UK where they have significantly expanded renewable capacity and reduced costs especially for offshore wind 💠 Traditional two-sided CfD model while stabilizing revenues has inherent challenges including market distortions, inefficiencies, and encouraging a ‘produce-and-forget’ mentality among generators 💠 Conventional CfDs often fail to align generators’ incentives with market signals, leading to overproduction and inefficient dispatch especially during periods of low or negative market prices and this misalignment can exacerbate grid imbalances and increase system costs 💠 Proposed reforms which decouple payout from actual generation offer promising avenues to enhance market integration and address the shortcomings of traditional models 💠 But these reforms introduce the basis risk which poses financial challenges for generators and governments alike 💠 The inherent trade-off between incentivising efficient behaviour through risk exposure and ensuring revenue stability for renewable energy projects underscores complexity of CfD design 💠 Although effect is unlikely to be uniform across generation technologies, regions and CfD types, generators, seeking predictable revenue streams, may be hesitant to embrace models that introduce basis risk 💠 Governments must balance the need for market efficiency with the financial implications of supporting renewable energy through CfDs 💠 Financial institutions and specifically consumers also play a crucial role as they ultimately bear the risks and costs associated with CfD mechanisms 💠 Policymakers must carefully navigate this trade-off considering the diverse perspectives and interests of various stakeholders #cfds #energytransition #renewables #riskmitigation #basisrisk #lowcarbontechnology

Michal Meidan article in latest Oxford Institute for Energy Studies Energy Forum on gas developments in China and the gas outlook 👉 Link to OIES Energy Forum: https://lnkd.in/eMBZ_Y3f Key points 💠 China’s gas demand has increased by an annual average of 10% between 2013 and 2023 with consumption more than doubling from 177 bcm in 2013 to 395 bcm in 2023 💠 Strong growth was driven by a combination of factors: availability of domestically produced gas to fuel industrial activities alongside policies encouraging gas consumption 💠 When gas was available at competitive prices policy makers sought to accelerate its use 💠 But just as supplies, policy and prices have enabled gas consumption, they have also, at times hindered it: When overly ambitious fuel switching policies led to supply shortages and price spikes appetite for gas waned 💠 Global market volatility and concerns about import dependence could also slow the uptake of gas in the future especially since China has abundant reserves of coal and increasingly the largest renewable manufacturing base globally and has achieved rapid deployment of wind and solar 💠 In light of these uncertainties estimates of the country’s future demand range from a very conservative 406 bcm in 2030 to a more ambitious 617 bcm that same year 💠 Views also diverge as to whether industry or power will be the main drivers of demand growth 💠 Article argues that while gas demand is likely to grow strongly in China because it is viewed as a partner fuel in the country’s energy transition, it will still be constrained by the availability of both coal and renewables 💠 Policy environment in China is enabling for gas but it is not supportive: This means that without a clear mandate to switch from coal to gas, the cost competitiveness of coal and renewables—both of which in Beijing’s eyes offer greater supply security—will limit the growth potential for gas 💠 Gas use will rise across the board, with the biggest gains in industrial consumption followed closely by the power sector, but it will always play second fiddle to coal and increasingly to renewables 💠 China’s gas demand is unlikely to reach 600 bcm in 2030, but is still poised for remarkable growth with as much as 50 bcm growth in 2024-2025; Policies, however, will remain the key driver #china #gas #renewables #coal #powersector #lng #decarbonization

Nitin Zamre article in latest Oxford Institute for Energy Studies Energy Forum on India’s energy landscape and the role of gas in its energy transition 👉 Link to OIES Energy Forum: https://lnkd.in/eMBZ_Y3f Key points 💠  India has publicly stated the aim of increasing the share of natural gas in primary energy to 15 per cent by 2030 💠  That target will be met only if the power sector becomes a major gas consumer 💠Given the price-sensitive nature of the power sector and the inroads made by renewable energy, only a prolonged low gas price scenario will make that happen 💠  Recent studies indicated that even in a low gas price scenario, the share of natural gas would be limited to just 16-18 per cent by 2040 💠  Over the next decade, natural gas (either domestic production or LNG) can be expected to incrementally replace oil products like naphtha, fuel oil and diesel in industry depending on continued reforms 💠  While natural gas has a clear edge over other fossil fuels it has much tougher competition from renewable energy and battery storage 💠  Natural gas can play an increasing role in this transition but enabling it will need policy support across the natural gas value chain #india #gas #lng #renewables #energytransition #powersector

Maria Olczak and Jonathan Stern article in latest Oxford Institute for Energy Studies Energy Forum on the EU Methane Regulation and what impact it will have on EU LNG imports 👉 Link to OIES Energy Forum: https://lnkd.in/eMBZ_Y3f Key points 💠  Over the past two years LNG has mostly been discussed in the context of security of supply. Europe's increased reliance on LNG provided the supplies needed to replace Russian pipeline gas in aftermath of invasion of Ukraine 💠  As security crisis recedes and the gas market reaches a new equilibrium, discussions on decarbonization and the greenhouse gases associated with, particularly LNG supply chains have again begun to attract increasing attention 💠  Hence, the question arises: will its new global role enable the EU to impose stricter environmental standards on LNG market players and specifically the standard proposed in the new Methane Regulation? 💠 On 27 May, the Council approved the EU Methane Regulation which will come into force over summer 2024 💠 Regulation imposes obligations on oil and gas operators, coal mine operators, importers and member states with regard to monitoring, measurement reporting and independent verification of #methaneemissions. EU is the first jurisdiction to set requirements for fossil fuel imports which will be implemented gradually from 2025-30 💠 Regulation aims at ensuring that companies exporting fossil fuels to the EU face the same MRV and mitigation requirements as EU operators. Companies failing to comply will face financial penalties set by member states and reputational damage with customers. 💠  Authors conclude that regulation of methane fills an obvious gap in EU climate policies, but it remains to be seen how high this will be on the list of priorities for the new EU Commission and member states 💠 Methane emissions reduction – a highly complex and technical topic– is not part of mainstream political discussions in Brussels and national capitals 💠 If LNG demand remains strong in Europe and is seen as endangering EU climate objectives or the EU’s image as a climate leader, more regulations and more assertive national and EU policies can be expected, as long as these measures are not seen by member states as compromising security of gas supply #lng #methaneregulation #methaneemissionsreduction #climatepolicies #energysecurity #eu #mrv #decarbonizaton

Katja Yafimava article in latest Oxford Institute for Energy Studies Energy Forum: Decarbonizing the Eu Gas Network- Is the New EU Regulatory Framework up to the Challenge? 👉 Link to OIES Energy Forum: https://lnkd.in/eMBZ_Y3f Key points: 💠  EU gas system is undergoing significant transformation in line with EU #decarbonization policies aimed at achieving legally-binding net-zero GHG emission targets by 2050 💠 EU views its future #gas system as consisting of two separate systems – one for progressively decarbonized #methane and another for #hydrogen – both developing in parallel and co- existing as part of ongoing European energy system decarbonization 💠 This vision is reflected in the EU Renewable and Natural Gases and Hydrogen (RNGH) Directive and the RNGH Regulation (the Decarbonized Gas and Hydrogen Package) 💠 Together with the TEN-E Regulation, they constitute the new regulatory framework, governing construction of, and access to, hydrogen networks, and the re-purposing and de-commissioning of, and access to, natural gas networks in the EU 💠 This framework is aimed primarily at development and operation of hydrogen system while it also amends existing rules for the natural gas system 💠 Framework will be of paramount importance for governing process of upcoming gas network transformation and ensuring that it adheres to EU vision 💠 Scale of transformation is enormous given that at present the EU gas system consists primarily of the natural gas system (networks, storage, LNG import terminals) with very little hydrogen infrastructure yet in place 💠 As far as the network component is concerned, there are 200,000 km of transmission and over 2,000,000 km of distribution natural gas pipelines, and only ~2,000 km of hydrogen networks (mostly privately owned, small capacity, unregulated lines) 💠 New framework faces challenge of enabling and supporting the development of the EU hydrogen system – including hydrogen networks – without stifling the (as yet non existent) hydrogen market 💠 There are two key criteria that the framework must meet to overcome this challenge 1️⃣ it must provide flexibility, enabling a step-by-step development of hydrogen networks, whose topology, scale and size will depend on the supply and demand for hydrogen (at present highly uncertain) and on the decarbonisation pathways chosen by (mostly) industrial users (i.e. via renewable and/or low - carbon hydrogen)while also enabling the required evolution of natural gas networks 2️⃣  It must provide assurance that gas network decarbonisation will take place in a co-ordinated manner across the EU without negatively affecting the security of natural gas supply #gas #hydrogen #eu #regulation #security