Why Japan’s utility firms want to pull the plug on destination restrictions for LNG supply
A hardened feature of long-term LNG contracts, the destination clause, is coming under renewed scrutiny as the quest for flexibility gathers momentum.
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Reports by Yushan Lou, Zhiyuan Fan, Julio Friedmann + 3 more • January 09, 2023
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As the window of opportunity to avert the worst effects of climate change closes, rapid decarbonization efforts have been turning to novel low-carbon hydrogen applications in the fields of heat, energy storage, and fuel cell technology as a potential solution for traditionally hard-to-abate sectors. Green hydrogen, in particular, defined as hydrogen produced from water electrolysis using renewable or low-carbon electricity, has received the lion’s share of attention. By comparison, little attention has been paid to biohydrogen (Bio-H2), a type of hydrogen produced from organic waste streams (e.g., agricultural waste) that can potentially yield a carbon-removing (or climate-positive) fuel when coupled with efficient CO2 absorption and subsequent storage. Indicatively, few hydrogen supply-and-demand forecasts or high-level hydrogen strategies mention it. However, Bio-H2 presents opportunities not only to establish a cyclical hydrogen system with waste converted into energy but also to address emissions that remain after all technically and economically feasible efforts have been made to eliminate them.
This report, part of the Carbon Management Initiative at the Center on Global Energy Policy, explores the current state of play for Bio-H2 and its potential contribution to decarbonization efforts. The report begins with an analysis of the varying definitions and categorization of Bio-H2 in the literature, which may relate to its classification as both a hydrogen and a bioenergy with a diverse selection of sources and manufacturing pathways. Next, it assesses the crucial question of Bio-H2’s carbon intensity, which has additional specifications to those of blue hydrogen (defined as hydrogen manufactured from natural gas with carbon capture and storage [CCS]) and green hydrogen production, including land use, land use change, use of dedicated fuel crops (and associated land use issues), status and footprint of wastes (agricultural, forestry, and municipal), and avoided or reduced methane emissions. The report shows that if the biomass feedstock is not carefully selected and the energy consumed during its processing is not closely monitored and controlled, Bio-H2’s carbon footprint can potentially exceed that of fossil-based hydrogen today. Therefore, to avoid any potential negative climate impacts from utilizing Bio-H2, the assessment and governance of biomass feedstock for Bio-H2 manufacturing is critical.
This report also shows that the potential carbon-removing value of Bio-H2, particularly the carbon-negative hydrogen derived from biomass wastes and CCS, far outweighs its energy value and that Bio-H2 can be manufactured using technologies that are relatively mature and near commercial stage. Nonetheless, because the carbon-negative value of Bio-H2 is contingent on the use of biomass wastes, which is a constrained resource, Bio-H2 should only be employed when the capacity of other decarbonization methods is limited. Key opportunities for its application present in hard-to-abate sectors with potential for manufacturing zero carbon or even carbon-negative steel or chemicals. In regions where waste biomass is abundant and underutilized (e.g., East or Southeast Asia), Bio-H2 can also enable a circular carbon economy and offer flexible carbon management solutions. For example, local food scraps and agricultural waste (e.g., rice husk) can be converted into fertilizers (created from hydrogen-derived ammonia), which can cut carbon emissions from food production.
At present, however, the wide deployment of carbon-negative Bio-H2 still faces considerable obstacles. If policy-makers and business leaders wish to overcome these obstacles, the following recommendations may be pertinent:
When the Inflation Reduction Act (IRA) was passed in August 2022, it triggered unprecedented enthusiasm among potential hydrogen suppliers.[1] More than two years later, progress on final investment...
China’s commitment to what it calls its “dual carbon” goals of carbon neutrality by 2060 and to ammonia’s potential role as a hydrogen derivative and carrier have fostered...
Full report
Reports by Yushan Lou, Zhiyuan Fan, Julio Friedmann + 3 more • January 09, 2023