S&P Report on e-methane - TES expert commentary

The energy transition is becoming increasingly important and pervasive, driving significant changes across industries and societies worldwide. As the demand for clean energy grows, electrification will play an essential role in decarbonising many sectors. However, certain industries, such as high-temperature manufacturing, will require alternative solutions beyond electrification—solutions that rely on green molecules rather than electrons. These green molecules, such as e-methane, are crucial for meeting the specific needs of these sectors while ensuring that the transition remains timely and sustainable.

As one of the fastest to be implemented fuels of non-biological origin (RFNBO), e-NG can help ensure the transition to a hydrogen economy. e-NG (electric natural gas) is produced by combining green hydrogen with CO2 and is the green equivalent of natural gas. The green hydrogen is produced by electrolysis using renewable energy sources in regions where sun and wind are abundant. Subsequently, e-NG is produced by methanization (Sabatier process). In this way, the cost and volume restrictions in areas such as Europe can be overcome and the transport of green molecules in existing gas infrastructure can be made possible. e-NG enables the decarbonization of the industry without major conversion measures as it can be deployed through the exiting infrastructures.

A report from S&P Global on e-methane/e-NG has been recently published. The report gives an overview of the potentiality of this new e-gas to decarbonize hard-to-abate sectors through the existing infrastructure. The report gives an overview on the current global regulations on e-methane, focusing on the EU and Japan.

EU: the Renewable Energy Directive III - RED III - set a binding mandate for RFNBOs to account for at least 1% of all fuels used in the transport sector by 2030. If the CO2 used to produce e-methane comes from the right sources, then e-methane can meet the criteria to be an RFNBO.

Japan: Japan set a quota of 1% of e-methane blended in its gas consumption by 2030 and 90% by 2050, allowing long-term incentives for the industry to respond to.

Marco Alverá, CEO and Co-Founder of TES said: "The progress of e-fuels development is intrinsically tied to the clarity and ambition of regulatory targets. In regions like Japan or Canada, where the government has set clear and ambitious goals for e-fuels and renewable gases adoption, we see projects moving ahead confidently.

"Europe’s reluctance to set stronger binding targets or quotas stifles the momentum needed to scale up e-fuels production and large scale electrolyzer manufacturing and meet its climate objectives. Japan’s example shows that with the right incentives and clear direction, the industry can and will respond. For e-methane to truly flourish in the EU, we must go beyond the current debates and establish a more robust framework that provides long-term certainty for developers, investors, and buyers alike."

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