Tag Archives: carbon

Gas in households

When corporates purchase carbon credits and try to ‘offset’ their emissions, environmental groups would accuse them of greenwashing and to a certain extent, tokenism. Yet when Victoria state government bans gas in new homes from 2024, environmental groups were pleased and herald it as some degree or progress and victory.

It is easy to pass this off as a big move. Developers of new homes may have more planning restrictions. Those buying new homes will need to stop using gas. Gas demand growth from households will slow down but gas use in homes are a really tiny fraction of 17% contribution to the state’s emissions by the gas sector.

At the system level, Victoria’s grid emission factor in 2022 is actually such that it emits 4.6 times more carbon dioxide equivalent than combusting piped gas for an equivalent amount of energy. You can easily work that out by consulting the greenhouse emission factors published each year. Of course, I’m probably ignoring some of the emissions associated with the distribution part of things and also with fugitives. The reason for this big difference is the presence of coal-fired power plants on Victoria’s grid. In any case, all renewable energy injected into the grid from wind and solar will be used. Coal-fired power plants provide the baseload and gas-fired power plants usually absorb the additional load demand. What this means is that during the times (early morning or in the evenings) when you’re using electricity for heating or cooking in households, it is quite likely you’re consuming more gas fired power than solar power (whose generation peak in the mid-day).

There are questions on the efficiency of the whole process. Burning gas at power plants and converting them to electricity will result in some energy loss, and then using the electricity to convert it back to heat will mean a bit more losses (less than at the power plant of course); so heat applications for electricity isn’t all that efficient.

And then there is the question of energy bills. Whether you are consuming gas directly in the house or indirectly through electricity in the system, you are going to bear the cost of the gas that is consumed. In Australia, a large proportion of the cost of energy isn’t really in the energy itself but the share of cost that goes into infrastructure, especially that of distribution. Going full electric in households serves to help decarbonise the system only when the renewable electricity is supplied during the times when household’s demand peak. For solar, this is unlikely to be the case unless the household installs its own battery system to charge when solar generation is peak in mid-day. Batteries, additional distribution network assets to cater to peak renewable generation, are all infrastructure that will add to the cost of electricity.

So let us be honest about it: banning gas in residential use is unlikely to move the needle much in terms of decarbonisation in the electricity system right now. At least not all that much in Victoria. It is going to push the problem upstream where it can potentially be managed better. But a lot more actions will have to be taken. Would it improve indoor air quality for homes? Maybe, if your house is not properly ventilated but I doubt it is a very serious issue. Would it really reduce energy bills across the household? Quite unlikely. What it could accomplish is some degree of tokenism to pacify the groups of people who thinks it is a good idea.

Yet it is probably a setback for decarbonisation because we are narrowing ourselves to decarbonise by using a narrow set of technologies and forgetting about the ability to decarbonise gas through biomethane.

Carbon credits 101

Earlier this year, Guardian released an expose about forest carbon offsets, in particular about a handful of projects and brought a bit of an uproar in the industry. While it created more awareness about carbon credits and concerns around the quality, methodology around calculation of the emissions reductions or how the “offsets” can really be quantified, there seem to be a lot of misconception remaining around carbon markets and how they work.

First, we need to recognise that there are compliance markets and voluntary markets for carbon. And while we may sometimes call them all ‘carbon credits’, the concepts are vastly different. In compliance settings such as the EU Emissions Trading System (EU ETS), the object that is traded are actually permits or allowances. These are regulatory objects that are created arbitrarily by regulators. Basically, when the regulator says the industry is allowed to emit 100 tonnes of carbon dioxide equivalent, this 100 units becomes permits or allowances. Each unit represents the permission to emit a unit of carbon dioxide linked to a time period based on regulation.

On the other hand, there are voluntary markets; and these are where the majority of carbon credits that can constitute conceptually ‘offsets’. Putting that notion aside first, we need to recognise that those ‘credits’ are conceptually different from emission allowances. In reality, those are supposed to be like merit points awarded for good behaviour – of not emitting carbon dioxide. They are given to projects that protects rainforests, improve efficiency, manage waste more carefully, switch fuel from fossil to low-carbon ones and so on.

The manner for calculating these merit points are complex and set by various standard bodies that are structured as non-profits. In and of themselves, the credits when valued in the market encourages more of the activities that generate them. And because they inevitably entail some kind of emission reduction or even carbon removal (through some sort of sequestration), when companies buy and then retire them, they are basically trying to ‘offset’ their own emissions. The calculation of the amount of merit points was essentially what the Guardian article referenced was really criticising.

The projects in and of themselves are voluntary; and those buying the credits are not really forced to buy them by any regulators. That said, companies have been buying them in order to ‘offset’ their actual emissions and then gain the ability to pass of their products as ‘carbon neutral’ – not because they rejigged the supply chains to no longer emit carbon but because they used the credits/merit points off those projects to neutralise the demerit points they had from emitting carbon. The problem is when this is the value of the carbon emission reduction – so that companies have the ability to emit more, we really wonder if that is worthwhile.

Using the market mechanisms to spur production of something tends to be quite easy but to reduce it might be harder. This is why we have the government, public services such as the police and defence force and not leave these things to the market. Otherwise, the police could just offer bounties for anyone to catch the criminals and so on. Carbon markets are interesting but further regulation and a proper understanding of how we want to value emission reductions and count them is vital.

Big Fossil has a chance

I don’t want to call them big oil or big coal, or big gas anymore. They are big on fossil, fossil fuels. And they have a chance to make the future a better place; one that we all want to be part of. They have the opportunity; enormous opportunity to create the products and services that people need and want which will be good for them, and good for everybody else, not just good for the big fossil companies.

But to take advantage of this opportunity, they need to recognise people are not demanding for fossil fuels. They are demanding for energy, for access to energy, for cheaper energy. But that form of energy is fossil fuel, big fossil might retort. It is not. Fossil fuel is not cheap. It is not cheap because we all are paying in the form of greater natural disasters, in facing once-in-a-hundred-year floods almost every decade, in having to pay even more for heating during winters and cooling during summers. Fossil fuel is not what the world is demanding for.

Big fossil can ignore the NGOs, they can ignore the activist investors or the climate activists, and even government. Heck, they could buy out those sitting on the fence. They could even subsidize all manner of appliance, infrastructure, systems that entrench fossil fuels further. But they cannot ignore climate change; they cannot ignore the fact that we are not destroying earth with carbon emissions. We are destroying ourselves. And for what? Profits? What good are profits if that’s just creating a future no one wants to be part of?

Story of methane

I thought of writing about methane. It is a curious molecule consisting of a single carbon atom surrounded by four hydrogen atoms around it which pretty strong bonds with the carbon atom. The entire molecule is relatively small and exists in gaseous form at room temperatures. It is naturally occurring and comes out of natural processes that involves anaerobic bacteria actions. It is a fuel that can be combusted to produce carbon dioxide and water vapour.

It also happens to be a greenhouse gas. Each methane molecule is thought to have 25 times more global warming potential than carbon dioxide. Natural gas is largely made up of it; hence it is a greenhouse gas by itself though combusting it will also produce carbon dioxide which itself is a greenhouse gas though with lower potential.

The focus on carbon emissions is a result of the recognition that we have spewed so much of this particular greenhouse into the atmosphere that it is having extreme effects on the global climate due to the warming potential. The world needs to move towards low-carbon and that means having activities that are emitting less carbon dioxide into the atmosphere. In general, fossil fuel based carbon holds the largest responsibility in anthropogenic carbon emissions.

Interestingly, you could produce methane through anaerobic biological process. And cows are known to release methane into the air because of the bacteria actions in their stomach. The dairy industry therefore becomes a rather larger emitter of greenhouse gas for this reason. That is where stuff gets a bit fuzzy when you’re counting global warming potential, anthropogenic emissions and so on.

So biomethane is the methane produced through anaerobic digestion of organic matter can be captured and used as a fuel. When combusted it likewise produces carbon dioxide and water. But this carbon dioxide belongs to the short carbon cycle due to its organic/plant heritage and hence is excused from what typical constitutes carbon emissions. Yet when biomethane leaks or is released into the air, the methane’s global warming potential is counted and the carbon-equivalent emissions actually forms part of the emissions from processes whenever biomethane is used. This ‘short cycle’ argument doesn’t seem to apply.

This may not seem very consistent and can potentially create a lot of confusion around the truly ‘green’ identity of biomethane. One could see how biomethane, or renewable natural gas as it is known in the US, is going to suffer from being conflated with fossil fuel natural gas.

Real circularity

There is a collorary to our economic system in nature. It’s not considered a single subject or discipline but involves a mixture of physical geography with ecology, biology and so on. Nature is truly circular to the extent that the outputs of one system feeds into the input of another and the overall grand scheme of things is in a kind of dynamic equilibrium that eventually shifts over time.

For a while humans have mimicked nature in creating circularity in our economy. And then we gave up because it was easier to scale things up and create wastage in order to fulfill profit motives. The unequality in an economy, the more wastage is produced because production gets inevitably skewed towards satisfying a demand that is aligned more to the distribution of “means” rather than a distribution of “needs”.

Nature behaves differently because the currency of nature is multi-dimensional and rich. There is no “monetisation”; nature do not base its value on a single commodity. You can’t exchange one calorie for another easily within the diet of most animals.

Real circularity involves richness that the industrial capitalist manner of approach cannot replicate.

Subsidies and fundamentals

Huge amounts of subsidies goes into fuel and energy. The companies are not necessarily being the ones subsidised to produce the fuel but rather, domestic markets of net exporters tend to be protected somewhat from international energy prices through subsidies. The notion is to help maintain internal price stability and hence cope with cost of living.

Australia is one of the few markets who are net exporters of natural gas for example and yet do not really “shield” its domestic market from international price impacts. The result is that the recent price spike in natural gas had Australians screaming in pain and for perhaps the first times in decades, businesses and households are seriously considering disconnecting from the grid and electrifying.

But there can be a middle ground. Subsidies can exist for these energy exporters to protect their domestic users given that these exporters stand to gain when the energy price increase. How can they share these windfall with their own economy and the users in local market? The government can subsidise users but make the subsidy transparent. This way, households are not paying the full prices and they are also given information about how much the government is helping to make them affordable. At the same time, it becomes more politically acceptable to pull back on such subsidies for those heavy users who are higher on income brackets and can afford it.

For far too long, we shield the markets from the proper price signals and artificially create false sense of affordability by subsidies, we reduce the resilience of our economies and contribute further to wastage and carbon emissions. Making subsidies transparent is a great first step, towards removing this political gridlock around domestic energy tariffs.

Making the transition III

I have written about green ammonia and hydrogen before. And I might keep talking about them because they are important candidates as energy vectors in a decarbonised world. They are quite likely what is considered as the end points of the transition for the world towards zero carbon or low carbon. What does it mean to transit to green ammonia or green hydrogen? What needs to take place, and who will move first? What should the players be looking out for in order to make the switch?

We need to start defining intermediate steps for the switch. There is actually very little doubts about the inevitability of the switch. Yes there are concerns that it might be energy intensive, the costs are high, and the market is not formed yet. But realistically, most new things are like that. When the Apollo mission took up 60% of the computing power of United States in order to perform its calculations for the project, there wasn’t anyone saying the industry is not formed yet we should wait for better computers before we send man to the moon. We just viewed the mission as a series of problems to be solved, within the budget constraint.

The transition needs a budget; it can be a small one or it can be a large one. The issue is that the businesses needs to take a stance and say that climate change and the transition is a mission I want to be on, and to explore the series of problems to be solved in order to complete the mission. And we don’t wait for costs to come down before we make the transition, we take active steps towards it. That is also what leadership is about. That is really the only issue people should be considering.

So for example, if you’re providing equipment for natural gas systems – be it power generation, cogeneration, for steam methane reforming, etc. You need to start thinking about the smaller pieces of things: are your valves able to handle hydrogen? Do the membranes in your cryogenic tanks work if it was to be filled with hydrogen? What about your manpower, are they able to be trained in the safe handling of the gas? All these to prepare for the transition. You won’t be able to make the transition overnight or achieve it through a single project. It takes much smaller steps.

So start making them now.

Making the transition II

Transition means being in an in-between state, crossing over to something which is supposed to be perhaps a less temporary state. The challenge, however, is that one can get stuck in transit. Natural gas as a fuel risk being in that state because it wasn’t really adopted fast enough as a transition fuel. And now renewable electricity from solar and wind has more or less leapfrog it in terms of cost advantage. Once battery or other energy storage technology moves along the cost curve and decline sufficiently, natural gas might even be bypassed.

So the world is in a somewhat confused state. When is it right to use gas? What should be counted as alternatives for decarbonisation? In any case, gas prices are spiking now so what does it mean? Should that mean we move forward into more renewables which might even be more expensive? Or we move backward into coal?

These decisions are not meant to be made in categorically; because the entire system needs to be considered. And what is at the margin in terms of choice needs to be clearly identified. If the additional unit of power that satisfies both energy security and the quantity demanded can be obtained through renewables, it should be used. Of course if that is not available, one might have to step back into more carbon-intensive processes. Availability can also be based on budget.

Natural gas itself, needs to be displaced by greener fuels without threatening the underlying combustion technologies that underpin the gas turbines. But that is perhaps for another day.