Europe Hopes Home-Brewed Gas Can Help Meet Growing Power Needs




  • In Business
  • 2022-01-26 06:00:12Z
  • By Bloomberg

(Bloomberg) -- Scientists and investors are turning to a billion-year-old home brew to help meet Europe's future natural gas needs and provide a way to store and deploy excess energy from solar and wind generation.

Most Read from Bloomberg

  • Stock Rebound Fails and Futures Plunge on Earnings: Markets Wrap

  • Nvidia Quietly Prepares to Abandon $40 Billion Arm Bid

  • Stocks Storm Back From 4% Rout to Close Higher: Markets Wrap

  • Mark Zuckerberg's Stablecoin Ambitions Unravel With Diem Sale Talks

  • This Red-Hot Housing Market Is Betting Interest Rates Will Never Rise

In the same way brewers use live yeast to turn sugar and starch into beer, European energy companies are relying on single-celled creatures called archaea to ferment carbon dioxide and hydrogen into methane - the main component of natural gas. The idea is to stop planet-warming emissions from escaping into the atmosphere by capturing CO₂ emitted when factories burn fossil fuels and using that to make more fuel.

The microorganisms that catalyze the process live in some of the most inhospitable places on Earth - including deeply buried gas reservoirs, where they can be fed a steady diet of industrial emissions and green hydrogen to replenish fuel reserves and store energy. From there, the methane can be injected directly into existing gas infrastructure and sent to factories, or stored underground where it effectively acts as a geochemical battery.

"Archaea are 4 billion years old and constitute the oldest metabolism we have on Earth," said Alexander Krajete, a chemist who holds patents related to the fermentation process. "They are the survivors of nature," he said, while sloshing a jar of amber broth colonized by archaea in his lab in Vienna.

Identified by U.S. scientists four decades ago as a unique domain of life, archaea populate oxygen-deprived, high pressure environments miles underwater and underground. Their green energy application is coming into focus as record prices for gas batter European consumers. Geopolitical tensions with Russia, Europe's biggest supplier of the fuel, are accelerating the search for more sustainable long-term energy solutions.

"Rather than using the fossil gas that comes over from Mr. Putin and others, we want to replace that and make it renewable," said Doris Hafenbradl, managing director of Electrochaea GmbH, a German company looking to scale up the technology. "It's a low carbon-intensity gas that we can make relatively quickly to replace the fossil version."

The technology still requires billions of euros of additional investment to become commercially competitive. And while the process creates a renewable methane cycle - by recycling hydrogen, carbon and oxygen molecules in a closed loop - the potential for renegade emissions exists. Users of the fuel who fail to account for and capture their pollution would still be contributing to global warming.

Electrochaea, located just outside Munich, raised 36 million euros ($41 million), completing its fifth funding round this month from investors including Baker Hughes Co. and Engie SA. Electrochaea has already built demonstration plants in Denmark, Hungary and Switzerland and is working on sites where hundreds of megawatt hours of green gas can be produced by mid-decade, Hafenbradl said.

One of the most ambitious archaea projects is located near Austria's border with Germany, where Europe's fourth-biggest storage operator, RAG Austria AG, has been running experiments with the archaea in its gas reservoirs. The company, whose top shareholders include utilities EVN AG and Uniper SE, is planning to tap renewable energy generated in Ukraine to produce the hydrogen needed for the process. It's a vision that will take decades to implement but will lead to a cleaner and more self-sufficient European energy system, according to RAG Chief Executive Officer Markus Mitteregger.

"We have a lot of nearby heavy industry that needs gas for heat and that produces carbon dioxide on the other end," he said. "We can create a closed gas cycle that also captures and stores emissions."

This month's decision by the European Commission to grant certain gas projects, which follow sustainable guidelines, a green label should also catalyze more archaea-induced storage investment. The label has been criticized by a key expert group for supporting an emissions-producing fuel. But Mitteregger argues that the classification will help energy companies transition to lower-emission technologies using their existing infrastructure.

The use case of archaea is also supported by one of the strongest critics of the EU's inclusion of gas and nuclear power in its taxonomy. The projects are critical for the "seasonal storage of renewable energy," said Austria's climate and energy minister Leonora Gewessler. "Solar energy is converted into green hydrogen and stored in natural gas deposits."

The value of storage is already being recognized by the market, according to Alastair Syme, managing director of energy research at Citigroup Inc. in London. While last year's wild energy price swings in Europe were largely attributed to geopolitical tension with Russia, the mismatch between renewable generation and storage capacity remains a constant threat to price stability.

"If you look at the last 12 months, you've had electricity prices that have swung from 20 euros a megawatt hour to 170," Syme said. "That spread is effectively the cost of storage. Finding long duration storage mechanisms, things that have a high level of energy content, is going to be one of the plays for hydrogen."

Still, the cost of producing hydrogen using only green energy is the biggest hurdle. Krajete, the chemist, estimated has cost about 800 euros ($900) to ferment a megawatt of gas in recent years. That's about four times more than the peak 183-euros a megawatt hour that German companies forked over in December for spot access to imported fuel.

"This is the market bias we have to confront," said Krajete, whose namesake company, Krajete GmbH, makes gear used to transform industrial emissions into CO₂ feed for archaea. "For the big energy majors it has been more profitable to make alliances in places like Russia or Norway in order to dig the fuel out. Something that is pre-fermented will usually be cheaper."

New factors could soon change the calculations that make imported fossil fuel cheaper than European home-brewed gas, including he continued rapid expansion of renewables across Europe.

For example, the new German government's green economy plan will require adding an average of more than 3 gigawatts of solar and wind annually this decade - investments that need storage to balance the electricity grid on days when the sun is shining or the wind is blowing. Rather than shutting down renewable generation, or rerouting electricity over the border, excess power can be used to generate hydrogen the microorganisms need to produce fuel.

There will also be rising demand for cleaner sources of electricity as heavy industries face higher costs for energy and carbon pollution. Krajete said home-brewed gas has the added benefit of helping those polluters recycle their emissions for the betterment of Europe's energy security.

"All those energy intensive industries are trying to move into [greener] electricity," he said. "But in order to to bridge the long-term storage gap, they'll have to move toward chemistry."

Most Read from Bloomberg Businessweek

  • The Tragicomedy of Boris Johnson Enters Its Final Act

  • The Charismatic Developer and the Ponzi Scheme That Suckered San Diego

  • Venture Investors' $1.4 Billion Bet on News Faces a Reality Check

  • How Did ID.me Get Between You and Your Identity?

  • Italy's Version of Groundhog Day in Play as Mario Draghi Eyes Shift

©2022 Bloomberg L.P.

COMMENTS

More Related News

Russia stops Finland gas flows over payments dispute
Russia stops Finland gas flows over payments dispute

OSLO (Reuters) -Russia's Gazprom on Saturday halted gas exports to neighbouring Finland, the Finnish gas system operator said, the latest escalation of an...

Lagarde Says Crypto Is
Lagarde Says Crypto Is 'Worth Nothing' and Should Be Regulated

(Bloomberg) -- European Central Bank President Christine Lagarde said crypto-currencies are "based on nothing" and should be regulated to steer people away...

First formula flights from Europe to arrive this weekend
First formula flights from Europe to arrive this weekend

The first flights of infant formula from Europe, authorized by President Joe Biden to relieve a deepening U.S. shortage, will arrive in Indiana aboard...

Singapore Still Rules China Futures Market as Hong Kong Edges In
Singapore Still Rules China Futures Market as Hong Kong Edges In

(Bloomberg) -- Six months after Hong Kong introduced equity index futures to make it easier for international investors to bet on Chinese stocks, Singapore...

BitMEX Founder Hayes Avoids Prison on Bank Secrecy Charge
BitMEX Founder Hayes Avoids Prison on Bank Secrecy Charge
  • US
  • 2022-05-20 23:22:41Z

(Bloomberg) -- BitMEX co-founder Arthur Hayes was spared from prison despite admitting he failed to guard against money laundering at the pioneering...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business