Certified Energy has taken the first step to establishing a certification system for renewable gas in New Zealand with the release of a discussion paper outlining its thinking on what should be included in the system and the rules that should govern it.
Renewable gas (primarily biomethane sourced from sustainably-sourced biomass and ‘green’ hydrogen) is gaining popularity around the world as a low-emissions alternative to natural gas and transport fuel.
“If we want to achieve our national decarbonisation goals, we need to focus our efforts on how we produce the energy we use. Renewable gases have the potential to help many large energy users to reduce their emissions, particularly where electrification is not currently an option,” Chief Executive Tim Middlehurst says.
“Companies like Firstgas, Hiringa Energy and BOC are already investigating how to bring green hydrogen onstream for consumers in New Zealand to help with the energy transition. The development of a certification system can help by incentivising new renewable gas production. Once in place, it will provide an additional revenue stream for producers by connecting them to users who recognise the benefits of supporting renewable energy and want to reduce their own emissions profile.”
The discussion paper released today outlines the proposed rules for certification, including how renewable gas certificates could be reliably tracked through the supply chain, and how certificates would be traded.
Feedback is also sought on whether to include low-carbon gas in the system, and if so, how to treat it.
“We expect demand for renewable gas is likely to outstrip supply, at least in the near-term, so it’s likely there will be interest in low-carbon gas products as an alternative to natural gas, such as hydrogen produced from low-carbon electricity,” Mr Middlehurst says.
“There is also the potential to export low-carbon gas products, which if certified and aligned with international frameworks could help with the decarbonisation efforts of other nations. We can see some benefit in creating a low-carbon certificate, so if it is included we want to have an open discussion on the thresholds that should apply.
“This consultation process is an opportunity for anyone with an interest in decarbonisation initiatives to help us develop a robust and transparent certification system for renewable gas. We look forward to making it happen.”
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Background
Biomethane
Biomethane has generally the same molecular composition as natural gas – primarily methane – but is produced from renewable processes, such as digestion of agricultural waste or recapture of methane from wastewater treatment. Biomethane is differentiated from biogas by its adherence to natural gas quality standards.
Where natural gas is replaced with biomethane from eligible feedstocks and production methods, the CO2 emissions are deemed to be biogenic. The biogenic CO2 emissions that were captured during the growth phase of the biomass are to be reported separately to Scopes 1, 2 or 3.
Another aspect for consideration is whether or not fugitive emissions from CH4 and N20 are recorded on production certificates, or whether they are seen to be zero based on the fact that the volumes will be negligible. The GHG Protocol requires fugitive CH4 and N2O emissions from biomethane combustion to be reported under Scope 1 as these emissions were not captured during the growth of the biomass. The Carbon Disclosure Project (CDP) proposes that it is pragmatic to report these as zero under scope 1, due to the low volumes being considered.
We will also need to determine a method for the classification of biomethane. Generally speaking, in order for renewable gas to be considered a renewable fuel, feedstocks must be sustainably managed. Agreed lists of acceptable feedstocks, such as that provided by the European Commission in the 2018/2001 Renewable Energy Directive (RED II), are available for reference, however we see it as preferable that a local classification is agreed.
Green hydrogen
‘Green hydrogen’ is hydrogen that has been produced from low- or zero-carbon processes, such as electrolysis. Where the electricity that goes into the electrolysis process has been certified as having zero emissions, the resulting gas product is seen to be ‘zero-carbon’.
As demand for low-carbon alternatives to natural gas and other fossil fuels is likely to outstrip supply, at least in the near-term, we expect that there will be interest for low-carbon hydrogen. Low-carbon hydrogen may be produced from low-carbon electricity, such as geothermal, and while being responsible for some emissions, this would be far lower than the alternative fuel. For this reason, creation of a certificate class differentiating low-carbon gas from the default natural gas supply but also from a zero-carbon hydrogen product may have value.
Many international certification systems have taken the approach of including a low-carbon certificate class, including the recently formulated European Standard – CertifHy. The argument for a low-carbon gas certificate class recognises and encourages the value of this production type in displacing more emissions intensive fuels. The counterargument is that allowance of low-carbon gas certificates may detract from the production zero-carbon gas, thus slowing the potential overall reduction of emissions.
If a low-carbon certificate class is supported, the question remains of what threshold the low-carbon certificate class should allow. A threshold for low-carbon certificates should be as stringent as possible, without limiting the potential for emissions displacement.
Finally, we recognise that low-carbon gas certificates may have a role when considered for export. International inter-operability is important, and that we recognise that even when low-carbon gas production is less useful in New Zealand it may still play a useful role in the decarbonisation of other nations.
Based on our impact principle, it is logical that renewable gas certification supports low-carbon gas production for as long as renewable gas demand exceeds supply. However, we recognise that zero-carbon renewable gas is preferable and should be promoted as such.
In addition, we believe that there is likely to be value in the export of low-carbon gas, and so in principle support the idea of a low-carbon renewable gas certificate class if this assists exports to be easily determinable within international frameworks.