Discussion Paper

Reasons for powerfuels as missing link to reaching climate targets

Chapter 3.2

Direct use of renewable energies (including electricity, but also biomass) and energy efficiency are important pillars of the energy transition. However, for some sectors and applications these pillars are insufficient to realise significant reduction of GHG emissions.

Powerfuels have the potential to become the third pillar of the energy transition, not as substitute, but as complement to the other two pillars. The Alliance strongly believes that powerfuels will be a “missing link” (IRENA, 2018a, p. 16) to achieve net-zero global greenhouse gas emissions through a cost-efficient transition.

Reasons for powerfuels as missing link to reaching climate targets

Particularly, powerfuels can contribute significantly to the energy transition worldwide in the following ways:

1. Powerfuels allow to reduce GHG emissions of applications that cannot be directly electrified and provide additional options for those sectors that are currently mainly supplied with fossil fuels.

2. Reducing the cost of the energy transition by capitalising on the given energy infrastructure. Powerfuels can be transported, distributed and stored within existing systems, thus limiting the need for new investment and providing options for long-term storage.

3. Leveraging the global potential of renewable energies and materialising economic gains of international trade. Powerfuels are fully tradeable on global scale at relatively low cost of transportation. This opens options for countries with high energy needs, but limited space and/or potential for renewable energy sources and could help to diversify supply of energy importers. This also provides new carbon-neutral export opportunities for countries with high renewable energy potential and fossil business today.

4. Opening new options for de-fossilization of consumers’ existing applications where alternative abatement measures are unfeasible (economically, technologically) or where investment cycles are long. Powerfuels provide additional abatement option, which could enhance social acceptability of climate policy measures.

Powerfuels are climate-friendly solutions for applications with no viable alternatives

2017 World's Largest-10 Carbon-Emitting Countries Picture: Based on EU EDGAR Database (Joint Research Centre (European Commission), 2018)

Chemical energy carriers such as powerfuels and fossil fuels have a very high energy density. As shown in the figure (right), this is particularly true for liquid fuels, but also with regard to gaseous carriers. This characteristic translates into a major advantage of chemical energy carriers compared to electricity, particularly when very high amounts of energies are needed (Perner, Bothe, Lövenich, Schaefer, & Fritsch, 2018, p. 11). From today’s technology perspective direct electrification is even unfeasible for some applications. Therefore, it will be difficult to achieve significant CO2  reductions in these applications. This holds particularly for:

1. Aviation
2. Maritime shipping
3. Non-electrical rail transport
4. Heavy-duty long-distance road transport
5. Steel production
6. Heavy Machinery used in sectors such as Agriculture, Construction, Mining etc.
7. Dispatchable power generation (Power-to-gas-to-Power).
8. High-temperature industrial process heat

Graph showing the gravimetric (kWh/kg) and volumetric (kWh/L) energy density of various energy carriers Picture: Own graphical representation based on (Perner et al., 2018, p. 11) and (Sterner & Stadler, 2017)

As powerfuels are climate-friendly (in case the carbon originates from DAC, powerfuels are carbon-neutral), the widespread substitution of fossil fuels with powerfuels in these sectors could strongly contribute to the defossilization and to the reduction in GHG emissions.

Furthermore, there are many industries that rely on fossil fuels as raw or non-energy input materials. Here again powerfuels could contribute to the reduction of GHG emissions.

1. Replacing hydrogen from steam reforming of natural gas with green hydrogen
2. Feedstock/precursors for chemical industry
3. Fertilizer production (Ammonia synthesis uses natural gas feedstock)
4. Steel production (using hydrogen as reducing agent)

Powerfuels reduce the cost of energy transition by making use of existing infrastructures and providing long-term storage options (World Energy Council - Germany, 2018, p. 20)

Common energy storage options compared with respect to storage capacity and the duration of storage Picture: based on (Sterner & Stadler, 2017; World Energy Council - Germany, 2018)

On a molecular level, powerfuels are equal to their “conventional counterparts”. Therefore, powerfuels can capitalize on the existing and well-established infrastructure for transportation, distribution and storage of fossil fuels (e.g. oil and gas pipelines, storage facilities, refinery equipment and international shipment). Because of utilising existing infrastructure, significant cost savings could be achieved. For example, recent studies focussing on Germany indicate that - with regard to 2050 - the reliance on a broader technology mix (including powerfuels) could lead to substantial cost savings compared to high electrification scenarios because of the continued use of gas and liquid fuel transport infrastructure (Deutsche Energie Agentur, 2018), (Bothe, Janssen, van der Poel, & Eich, 2018).

Using the existing infrastructure also for powerfuels, instead of constructing new infrastructure (power grids for example) could increase social acceptance. Furthermore, powerfuels could accelerate the speed of energy transition. Due to the same or similar molecular structure, powerfuels can be gradually integrated/mixed within the existing flows of fossil energy carriers already today (drop-in). This enables a quick partial introduction of powerfuels in the short and medium term, without the need for change of existing appliances/equipment and therefore guarantees smooth transition paths since end-user behaviour does not need to change (World Energy Council - Germany, 2018, p. 23). For example, synthetic methane can be injected without limitations within the existing gas grids even today. Synthetic propane can be utilised in the existing infrastructure, especially in rural areas that are not connected to the natural gas grid. Hydrogen can be injected up to a certain limit today based on the end-use application. Similarly, synthetic liquid fuels produced through the Fischer-Tropsch process can be blended with conventional ones.

Another major advantage in this regard is that the existing storage facilities for fossil fuels can also be used for powerfuels (e.g. gas caverns, oil deposits, storage tanks in households and commercial applications). This is important as with the increasing reliance on electricity produced from fluctuating RES, large-scale storage solutions will be needed in countries with intermittent weather conditions (daily and seasonal). Batteries and pumped storage hydro plants are efficient options for short and mid-term periods. However, long-term options to seasonally store RES production are still missing. Powerfuels are able to close this gap and could thus enhance the security of supply of countries (World Energy Council - Germany, 2018, pp. 19–20).

Powerfuels can utilise the worldwide renewable electricity production potential as they can be transported and traded globally

Like their fossil counterparts, powerfuels can easily be transported without major limitations. This also holds for long-distance transport. (transportation costs are relatively low and infrastructure is well-established). Therefore, powerfuels are perfectly suitable for global commodity trade.  There are a lot advantages linked to this characteristic:

As electricity costs are a major cost component of powerfuels, countries with favourable conditions for RES will have a cost advantage. Powerfuels could help these countries to materialise this advantage, as powerfuels allow to indirectly export large amounts of locally produced renewable electricity. This could promote economic development and increase the GDP of many countries, as explained here.

Analogously, powerfuels allow countries with limited potential/limited space for RES, but high energy needs to import climate-friendly energy carriers. Depending on the cost-differences in the production of powerfuels for different countries, this may lead to enormous savings compared to self-production of powerfuels. Also in this regard, powerfuels could increase social acceptance of the transformation of today’s energy system, as they could limit the land usage associated with RES.

Alternatives for the import of RES are less promising than powerfuels (World Energy Council - Germany, 2018, p. 26). Direct import of renewable electricity requires an expansion of today’s electricity networks, which comes at high cost. Furthermore, the possibility for long-distance transmission of electricity is limited. Import of biomass or biofuels, might be limited due to the competition with food production).

Today, the global supply of fossil fuels is relatively concentrated and the energy import strategies of many countries rely on few suppliers. As the global potential for RES is by far more distributed, there are many more potential suppliers. This opens importers the opportunity to further diversify their procurement strategies, reducing their dependency on single suppliers and increase stability.

Powerfuels accelerate the de-fossilization of consumers’ existing technical devices and applications

Powerfuels are completely comparable to their fossil counterparts on molecular level and could thus be used in existing end-user applications without any restrictions. Powerfuels are arguably better than fossil counterparts because of their carbon-neutral nature and are also purer since they do contain impurities, thereby increasing the efficiency and lifetime of end-use equipment. For example:

  • Synthetic methane and hydrogen could substitute natural gas in the residential heating sector
  • Synthetic propane can substitute its fossil counterpart without limitations, whether in domestic (cooking and heating), automotive or leisure applications.
  • Synthetic diesel could be used for cars with combustion engines
  • Synthetic heating oil could replace fossil heating oil in the residential heating sector

For these applications, powerfuels allow to continue their usage in a climate-friendly way. Naturally, there are and will be additional technology options for the above mentioned applications (e.g. heat pumps, BEV). However, the adoption rate of these new technologies depends on the regulatory framework and economic affordability. Hence, in the medium-term a mix of conventional and new technologies for these applications are expected, thus highlighting the need for technology openness. With regard to the building sector, renovation rates are relatively low and existing heating systems are only exchanged at long intervals. Furthermore, heat pumps are mainly applicable in buildings with well-insulated envelopes (Strategieplattform Power-to-Gas, 2018a). Therefore, the use of powerfuels in existing assets does not contradict the advantages that might come with a modernisation of these devices (e.g. by increased energy efficiency of a more modern equipment). They rather provide additional options, where the range of alternative technical solutions is inhibited, thus accelerating the de-fossilization of these applications. This could also lead to higher social acceptability with regard to the energy transition because end-users are empowered to contribute to climate change mitigation without investments in new applications.

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