High-level attendance at 6th IEF-IGU Ministerial Gas Forum

Hig h-level att endanc e at 6t h IEF-IGU Mini st erial Gas Forum

More than 100 delegates including eight Ministers and Deputy Ministers of IEF member countries, nine CEOs of IGU member companies and four heads of international organisations attended the 6th edition of this biennial event. By Luis Calvo

The International Energy Forum (IEF) and IGU convened the 6th IEF-IGU Ministerial Gas Forum on November 21-22, 2018 in Barcelona, Spain, with the theme “Inclusive Growth Towards a Sustainable Energy Future: The role of gas technologies and innovation”.

The Forum provides a platform for industry and government figures to discuss issues that affect both industry and society in relation to natural gas. It was launched in 2008 and the 6th edition was hosted by IGU Premium Associate Member Naturgy with IGU Premium Associate Member Enagás and Unión Fenosa Gas as partners.

In Barcelona, delegates debated how gas markets can better contribute to inclusive growth and a sustainable energy future and so help achieve globally shared goals faster together.

IGU President Joo-Myung (Joe) Kang (far right) addressing the Forum. On the top table with him are (from left to right) Luis Bertrán Rafecas, IGU Secretary General; Francisco Reynés Massanet, Executive Chairman, Naturgy; and Dr Sun Xiansheng, IEF Secretary General.

HE Suhail Mohamed Faraj Al Mazrouei, UAE Minister of Energy and Industry.

Taking a Mediterranean perspective on global gas market trends, plenary session discussions focused on:  The role of gas technologies in resilient low-carbon energy systems;  Gas demand growth beyond power generation;  Enhancing gas supply security and diversification.

The Forum aimed to develop a clear vision on what is needed to roll out new technologies and step up innovation that delivers inclusive growth and a healthy and sustainable energy future. Gas sector cooperation stands at the centre of the interface between maintaining global energy security, implementing nationally determined contributions to avoid catastrophic climate change and accelerating sustainable and inclusive growth and development. Therefore, dialogue among IEF member governments, IGU natural gas business leaders and energy market stakeholders around the world will become more important.

Role of gas technologies in resilient low-carbon energy systems

Delegates noted that the importance of natural gas in achieving inclusive sustainable growth and successful energy sector transformations is more widely acknowledged. They highlighted that natural gas is critical to help keep global warming within tolerable limits and improve air quality in major cities, noting that in comparison to other fossil fuels, natural gas produces less greenhouse gas emissions, negligible sulphur dioxide and airborne particulate matter and very low nitrogen dioxide emissions, while supporting the greater deployment of renewable energies and integration of other sources.

Public and private sector stakeholders should therefore enhance dialogue and cooperation to seize the opportunities that are readily available and use new gas technologies to bolster energy security and achieve climate change and sustainable development goals faster together. Delegates took note of various industry and government actions that engage the gas sector, including:  The “IEF Energy Efficiency

Knowledge Sharing Framework” proposed at the 6th IEF Asian

Energy Ministerial Roundtable in

November 2015 and launched at the 15th IEF Ministerial Energy

Forum in September 2016 with

HE Thembisile Majola, Deputy Minister of Energy, South Africa.

the support of the G20 Energy Ministers gathered under the G20 Presidency of China in 2016, that focuses on making energy supply chains more efficient and sustainable; The “Gas for Climate, A Path to 2050 Initiative” on the role of gas in a decarbonised energy system; The “Hydrogen Initiative” EU governments signed under the Austrian EU Presidency on September 18, 2018 that aims to maximise the options of sustainable hydrogen technology for the decarbonisation of multiple sectors including through the use of gas infrastructure; and The “Oil and Gas Climate Initiative” that on September 25, 2018 set a target to reduce by 2025 the collective average methane intensity of member companies’ shared upstream gas and oil operations by one-third.

Implementation of more stringent greenhouse gas emission, clean air and fuel quality standards, enables governments and industry to respond to growing demand for affordable access to reliable and modern energy services. Greater dialogue and cooperation will ensure that progress can be made in separate areas simultaneously so that technologies are deployed more rapidly in a mutually reinforcing and cost-effective manner.

Delegates called on government and industry leaders to build confidence by overcoming obstacles to gas market trade and cross-border interconnections and fostering stable and predictable conditions to accelerate the deployment of gas sector technologies such as carbon capture use and storage (CCUS), the use of hydrogen, modern gas sector infrastructure, including flexible and small-scale LNG, and explore synergies through: 

Expanding gas sector investment to serve demand growth beyond power generation alone, enhancing access to modern energy sources;

Capitalising on available gas technologies and infrastructure facilities to enable greater market share of renewables and integration of sources;

Accelerating research and development of CCUS, capturing

CO 2 to enhance efficiency and decarbonise supply chains through the use of hydrogen and the integration of biogas and other green gas technologies.

HE Tarek El Molla, Minister of Petroleum and Mineral Resources, Egypt.

Gas demand growth beyond power generation

Two years after the 5th IEF-IGU Ministerial Gas Forum, which was held in New Delhi on December 6, 2016, found that the role of gas in global energy transformations would be larger for longer than in many outlook models, ministers and industry leaders observed how government support, anchored in environmental, clean air and health standards, has in the meantime enabled significant gas market advances.

As such policies are adopted more widely, gas producer and consumer countries stand to deliver on the promise of a “Golden Age of Gas” resulting in a more secure, inclusive and sustainable world energy market for all.

Delegates noted the main trends in gas consumption that made gas the fastest growing fossil fuel. Gas is expected to increase its share in the global energy mix substantially in the next decade. Growth will shift towards the non-OECD region beyond the power sector alone, and is likely to be strongest in the maritime and road transportation, industrial and petrochemical sectors.

Developing demand from sectors beyond power generation can serve as a significant lever to enhance gas consumption globally. Two-thirds of the increase in gas consumption is forecast to be outside the power sector, with growth driven by rising demand in Asia, petrochemical applications in the United States and the Middle East, and rising mobility needs.

To keep up with the pace of gas demand growth in Asia and diversity of supply requirements in other key demand centres such as Europe, gas producers must invest in new supply facilities to cater reliably to new gas demand. Flexibility offered through new technology solutions that reduce costs and offer more optionality, as well as innovative marketing and contract terms, are important means of unlocking demand in nascent gas markets.

Achieving cost advantages through economies of scale in these new growth sectors is impossible without strong government support to leverage the required private sector investments. At the regulatory level, gas market reforms and regional integration can further help overcome hurdles such as market access constraints, inefficient price formation and rigid contract terms.

Robust and reliable policy and market signals will ensure that the

HE Mustapha Guitouni, Minister of Energy, Algeria.

required investment in gas infrastructure and storage facilities moves forward in tandem with future gas demand trends that healthy and secure world energy markets require.

Recent gas market advances show the importance of anchoring future gas demand in long-term policies focused on environmental and health standards to achieve clean air, reductions in greenhouse gas emissions and energy access goals. This will stimulate innovation and the deployment of new technologies by market actors that must compete in an increasingly integrated and competitive global energy market.

Delegates noted that potential growth markets are also markets that often lack access to capital, and that innovative public-private financing mechanisms, including international financial institutions, are key.

They also noted the importance of innovation, price incentives and policy support, in particular in respect of reducing harmful emissions and mobilising investment in infrastructure, to lower thresholds and make gas more cost-competitive.

Enhancing gas supply security and diversification

New infrastructure developments in Europe, from the Baltic to the Mediterranean, rising North American LNG exports and surging gas demand growth in Asia illustrate opportunities but also expose hurdles to enhance gas supply security and diversify markets for the world to fully capitalise on the benefits that readily available gas resources and new innovative technologies bring.

Co-dependencies between importers and exporters are increasingly governed by flexible arrangements in a currently well-supplied market. Yet to boost stable and resilient gas markets, long-term investment

Manuel Fernández Álvarez, Chief Operating Officer Gas & Power, Naturgy.

HE Dr Tawfiq Chowdhury, Adviser (Minister) to the Prime Minister, Bangladesh.

must accelerate over the next decade. Predictable and transparent market conditions including reliable price signals and regulation are vital to gas market security and trade flows in a more diverse and rapidly changing environment.

Global LNG supply is growing rapidly but new capacity is still required. By the mid-2020s, the growth in gas demand is likely to outstrip additions to supply that are lagging due to growing uncertainties, delegates found. Significant infrastructure investment is required in new growth markets to unlock gas demand growth in emerging market cities.

Finally, to realise gas market resilience there is also a need to focus on pricing and to reduce costs by enhancing supply chain efficiency and improving communication with stakeholders.

Luis Calvo is Director Advisor in the IGU Secretariat.

Renewable natural gas (RNG), as it names suggests is an equivalent fuel product to natural gas, but it is a fuel obtained from renewable resources like biomass or organic wastes and is thus neutral in CO 2 emissions. RNG is a product that contributes to combating climate change and its increased use will result in important reductions in greenhouse gas emissions when it is injected into the natural gas grid or used as a transport fuel. Its production can form part of a circular economy in the management of waste products and also offers society the possibility to produce, distribute and consume indigenously produced gas, thus, developing the local economy.

Naturgy has been working for several years on promoting RNG. The company’s activities have focussed on the realisation of pilot projects to investigate RNG production with the final ambition to maximise yields while reducing production costs. The company has participated in and continues to pursue an important number of initiatives related to the various forms of RNG, investigating: the upgrading of biogas, generated from waste or crops to produce biomethane; the gasification of biomass or crops to produce renewable synthetic gas that is then methanised to produce Bio-SNG; and also in the production of green hydrogen from electrolysis using renewable wind or solar energy, a process known as Power-toGas. These projects form part of the company’s overall commitment to evolve towards a low carbon economy.

One of its most representative projects being carried out by the company is called Unidad Mixta de Gas Natural Renovable in Spanish. This project is a joint initiative being carried out by Naturgy and the technology centre Energylab located in Vigo, Spain, in collaboration with the Bens Waste Water Treatment plant (WWTP) located in A Coruña, north-west Spain. The principal aim of the project is to investigate various new technologies to obtain improvements in the production of biogas, biomethane and in the development of a novel bio-methanisation concept. The project is financed by the European

The Methagro plant, located in Lleida, Spain.

Union within the framework of Programa Operativo FEDER Galicia 2014-2020.

Life Methamorphosis is another of the company’s projects focused on demonstrating renewable gas technologies and is financed by the EU’s LIFE+ programme. As part of this initiative, Naturgy has developed the activity Methagro for the production of high quality biomethane from biogas obtained from the digestion of agro-industrial waste and other organic wastes. The biogas upgrading plant, located at a farm situated close to Lerida in north-east Spain that principally treats pig slurry, started to operate last summer, and the biomethane produced is supplying two vehicles manufactured by Seat as part of an activity to demonstrate the advantage of biomethane as a transport fuel.

At the international level, the company also constructed the Farfana biomethane plant that has operated since May 2017. The plant is installed at the La Farfana WWTP, in Santiago de Chile and the biomethane produced is supplied to the local natural gas distribution network.

Other Spanish initiatives associated with biomethane, in which the company has participated and completed include Smart Green Gas, where an experimental biomethane plant was installed at the WWTP in Jerez de la Frontera, by the company FCC; and Arazuri, where a pilot project for the

production of biomethane was installed at the WWTP located in the municipality of Arazuri, Navarra. This project was successfully completed in 2017 and the biomethane generated was used to supply three buses and two refuse collection trucks that circulated in Pamplona.

In the field of methanisation, the company participates in the Power2Biomethane and CoSin projects investigating new technologies for the production of biomethane from carbon dioxide and hydrogen. In the latter project Naturgy participates with the Energy Research Institute of Catalonia (IREC) and collaborates with the German spin-off Ineratec GmbH, and has designed and built a pilot production plant for synthetic methane at the WWTP treatment plant in Sabadell, Spain.

The company also collaborates with institutions such as the Spanish Biogas Association and has contacts with the American Gas Association (AGA) and has analysed different biogas and biomethane upgrading plants in Germany, Denmark, Switzerland and the United States in order to better understand the technology and the challenges it presents. This input along with the company’s projects has allowed Naturgy to establish its own objectives for the future development of RNG, developing an internal road map for the future growth of this renewable fuel.