In focus: Balancing act between energy security and net-zero goals

While the offshore industry is constantly adopting methods and finding new ways to pave the way for a transition to a low-carbon future, the global energy crisis has forced nations around the globe to ponder whether they need to choose between energy security and net-zero goals. Can both be obtained simultaneously? This is the question on everyone’s mind.

Since the current energy crisis has become a prevailing concern throughout the world, many still consider that continuing with the extraction of fossil fuels is the most efficient way to combat this crisis due to the belief that renewables and other low-carbon and clean energy sources do not yet have the capacity to achieve this.

With no end to the Ukraine crisis in sight, countries worldwide appear to be increasingly torn between two seemingly contrasting notions of attaining energy security and reaching net-zero targets. For countries looking to diversify their gas supply and strengthen energy security, tackling both entails a balancing act between fossil fuel and clean energy projects.

As measures to ensure energy security take the world by storm, the transition to clean energy sources takes a backseat in some countries, as demand outpaces supply due to sanctions imposed on Russia over the war in Ukraine. Just last Friday, Poland moved to diversify its gas supplies through a ten-year gas sales deal with Norway’s state-owned giant Equinor to further strengthen its energy security, while the week behind us brought the inauguration ceremony for the Baltic Pipe project, which is expected to deliver Norwegian gas to Poland via Denmark.

The ceremony was held by Poland’s gas transmission system operator (TSO) GAZ-SYSTEM and its Danish partner Energinet at the gas compressor station in Goleniów. This project is on track to be operational with partial capacity from 1 October while the full capacity is anticipated from the end of November, more than one month ahead of the initially planned commissioning on 1 January 2023.

Furthermore, the UK’s plans to become an energy exporter by 2040, which are to be supported by launching a new oil and gas licensing round, expected to lead to over 100 new licences, and lifting the moratorium on shale gas production, also show that the time to give fossil fuels marching orders is not yet upon us. This is compounded by the UK’s plans to accelerate various energy projects, including five oil and gas developments: Murlach, Cambo Phase 1, Talbot multi-well subsea tie-back to the Judy platform, Affleck redevelopment, and Victory.

As the government believes that energy security sits alongside emissions reduction goals, it is pursuing a balancing act by also planning to scale up several carbon capture and storage (CCS), hydrogen, and offshore wind projects.

Another project, showcasing the winds of change which are sweeping across the oil and gas sector, opted for a balancing act to meet the domestic demand for natural gas in the Netherlands and Germany. As reported earlier this week, ONE-Dyas, a Dutch E&P player, made a final investment decision (FID) together with partners EBN and Hansa Hydrocarbons for the development of a gas field in the North Sea.

Described as the largest investment in natural gas development in the Netherlands in the past 15 years, the project entails the N05-A platform, which will be powered entirely on wind energy from the nearby Riffgat wind farm, reducing the carbon footprint of the project.

While Europe has been the frontrunner in the clean energy arena over the past few years, the U.S. is ramping up its efforts to pursue the green shift thanks to the Biden administration, which is setting the wheels into motion to accelerate the clean energy deployment. In line with this, the rising tide of hydrogen projects is expected to provide stepping stones to net-zero by serving as one of the main drivers of the energy transition.

The U.S. has certainly recognised its value and is embarking on creating regional clean hydrogen hubs (H2Hubs) across America, as part of a larger $8 billion hydrogen hub programme funded through President Biden’s Bipartisan Infrastructure Law. To enable this, the U.S. Department of Energy (DOE) opened applications a few days ago to select six to ten hubs for a combined total of up to $7 billion in federal funding.

Jennifer M. Granholm, U.S. Secretary of Energy, remarked: “These H2Hubs are a once-in-a-generation opportunity to lay the foundation for the clean hydrogen future President Biden is building—one that will lift our economy, protect the planet, and improve our health.”

Hydrogen will also play a role in the new Energy Security and Industry Accelerator (ESIA) agreement, which was inked between Germany and the United Arab Emirates (UAE) in the week behind us. This deal, which was welcomed by Olaf Scholz, is expected to accelerate projects related to energy security, and decarbonisation, enabling “the swift implementation of strategic lighthouse projects on the focus areas of renewable energies, hydrogen, LNG and climate action.”

Moreover, Italy will be the home of HyMed, “the world’s largest floating offshore wind and green hydrogen production project,” according to Aquaterra Energy and Seawind Ocean Technology, which signed an agreement for this project’s development, as reported at the start of the week. The two firms plan to produce 3.2 GW of electricity from the project with more than 1 GW being green hydrogen once production units are fully operational. The project completion is targeted by 2027 and green hydrogen is expected to be transported onshore by pipeline or by vessels to global markets.

Anne Haase, Renewables Director at Aquaterra Energy, underscored: “With governments and business recognising the value of hydrogen as a vital resource for net zero initiatives, energy security, and guarding against volatile natural gas prices, we are hugely excited by the opportunities for production presented by this new partnership.”

The shipping sector has demonstrated through multiple developments over the past week that it does not entertain any alternatives to the green shift. While the shipowners burn the midnight oil on their quest to decarbonise their fleet, pursuing conversion options to green fuels, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping confirmed that converting containership vessels to alternative fuels – methanol or ammonia – is technically and economically feasible, as shown by the results of the  ‘Green Fuels Optionality Project.’

This project looked into the technical requirements and costs of converting containerships, bulkers and tankers from fuel oil to methanol/ammonia or LNG to ammonia. The findings of this project highlighted that converting from LNG to ammonia is less complex than converting from fuel oil to ammonia, as many of the gas-related systems required for ammonia are already in place.

Therefore, the report outlined: “The additional costs of preparing a vessel for LNG, a larger tank for ammonia operation, and then converting to ammonia make this strategy relatively expensive. However, based on a normalised fuel market situation, operating on LNG rather than fuel oil before conversion offers fuel cost savings.” 

Meanwhile, the BMT-led Ocean Energy Smart Grid Integration project, which aims to increase the use of renewable energy while reducing the dependence on diesel power generation, entered full-scale testing at the Sustainable Marine’s substation in Nova Scotia. To this end, teams are connecting solar, tidal, and other energy sources to the BMT Smart Grid Controller to regulate and distribute power to a microgrid.

Jason Hayman, Sustainable Marine’s CEO, said: “Our joint mission is to trial and prove up technologies which ultimately help decarbonise and drive greater energy independence for island and remote coastal communities. We believe the results will provide further evidence demonstrating the real value of tidal energy as a clean and predictable renewable energy source, which offers a complementary power profile to more established renewables such as wind and solar, ultimately bringing greater stability to the future green energy mix.”

These developments certainly showcase the inroads being made on the energy transition pathway over the past week, but the global energy crisis has shaken the foundations of energy security and net-zero commitments and the approaching winter is bound to test them even further, especially in Europe.