Supercharging Decarbonization: How Engineered Solutions Can Accelerate the Transition
As pressure mounts, energy leaders must build a more-resilient, lower-carbon energy system. Technical, digital, and engineered solutions will play a critical role in this transition, but which options are most viable?
Driving the Transition Through Diversification: The Role of Hydrogen
According to SHOCKED, one of the largest global studies conducted among the energy sector C-suite, three-quarters of energy leaders say the security of supply is the number one concern for their organisation. Although natural gas has been an important transitional fuel from coal-powered energy production, respondents cited the strong economic rebound from COVID-19 and geopolitical tensions as having contributed to the recent unpredictability of supply and price.
In fact, SHOCKED found that seven in 10 energy sector leaders say the volatility of natural gas prices over the past 12 months has accelerated their adoption of renewable energy generation assets—increasing to more than three-quarters of leaders in high-growth businesses (77%). Further indicating a strong trend toward cleaner and more diversified energy sources, 44% state that this same volatility has slowed down their adoption of coal assets and nearly all have a strategy in place to increase their renewable-energy mix.
As we hasten the shift toward low-carbon energy resources, these findings highlight the growing sense of urgency to find viable alternatives to natural gas. This raises the question of what that logical replacement for natural gas will be, while the adoption of renewables continues to scale-up. Here, the potential of hydrogen and other biofuels come to the fore as a viable transition pathway. Indeed, three-fifths of energy leaders interviewed for SHOCKED say the global energy crisis has accelerated their organisation’s investment in hydrogen over the past 12 months.
Green hydrogen is a promising contender for overcoming the energy-security issues tied to the volatility of natural gas, particularly in the context of heavy transportation, heating, and power generation. However, the transition to green hydrogen is not without its challenges. The infrastructure and supply chains for hydrogen must be developed and scaled to bring unit costs down, and the production of green hydrogen also requires large quantities of high-purity, fresh water, which may be in short supply in certain regions. Similarly, blue hydrogen, while possible at larger scale, requires the availability of sequestration locations for captured carbon dioxide.
Tapping the Latent Potential of Carbon Capture and Storage
According to SHOCKED, 76% of energy leaders believe their industry is under more pressure than any other to decarbonise. Further, SHOCKED found that three-fifths of leaders say their company is deploying carbon capture, utilization, and storage (CCUS) solutions to achieve decarbonisation targets.
CCUS refers to a variety of technologies that can play an important role in achieving global energy and climate objectives. The process involves capturing CO2 from significant production sources, such as industrial facilities or power-generation plants that use fossil fuels or biomass as fuel. Alternatively, CO2 can also be extracted directly from the atmosphere through a process called direct air capture (DAC). Once captured, the CO2 is compressed and transported through pipelines, ships, rail, or trucks to be used for various purposes, or injected into deep geological formations, such as depleted oil and gas reservoirs or saline formations, for permanent storage. DAC has the ability to be a true “removals” technology and can be deployed above storage units.
While SHOCKED found that CCUS is one of the most-deployed technological decarbonisation solutions globally, it also found that it is currently considered one of the least-effective approaches. This underscores the need to develop more full-scale CCUS projects—and to establish a track record across the world where geological or undersea storage is available and proven—to unlock the latent potential of a game-changing technology that has been available for years, but that is now increasing in relevance.
Grid-Scale and Residential Digital Solutions Addressing Energy Security
SHOCKED found that 80% of high-growth companies have identified digitalisation as an effective strategy to support the decarbonisation of energy supplies. The research also found that the energy industry’s top four areas of investment to respond to the energy crisis have been cybersecurity, digitisation, smart grids, and artificial intelligence. Taken together, not only do these digital solutions make energy systems more reliable and efficient, but they also make them more secure.
And investment in these areas is growing; 66% of energy leaders have accelerated investment in smart grids in the past 12 months. A smart grid is an electrical grid that uses digital and advanced technologies to manage the transportation of electricity from various production sources to satisfy the fluctuating energy needs of end users. By synchronising the requirements and abilities of all electricity generators, operators, end users, and market participants, smart grids can optimise the entire system’s operation, and minimise costs and environmental impacts. It can also maximise the reliability, adaptability, and resilience of the grid.
SHOCKED also found that residential smart meters—a demand-side digital solution—are known to be one of the least-deployed but most-effective decarbonisation tools globally. With 71% of SHOCKED respondents citing consumer backlash from increased energy bills as a grave threat to their business, improved utilisation of smart meters represents an under-leveraged opportunity for energy companies and government policymakers.
Coupling Energy Storage and Transmission Solutions
SHOCKED identified varying weather patterns (reducing the reliability of renewable energy output) as the third most-cited contributor to the global energy crisis. This highlights the critical role of dependable, long-duration energy-storage facilities. As weather patterns continue to become more unpredictable with the effects of climate change, investment in energy storage solutions across vectors—pumped hydro, batteries, hydrogen, compressed air, and gravity storage—will be critical to achieving a low-carbon economy. At the same time, a significant infrastructure investment for the storage of gaseous fuels has already been created, namely the pipeline network that transmits and distributes natural gas. This system can be used for, amongst other things, the conveyance and storage of hydrogen as part of a blended product with natural gas.
A changing climate also puts pressure on how we transmit energy. This is particularly problematic in regions that use renewable energy from wind and solar, and are thus most affected by varying weather conditions. For example, the U.S. state of California has been beset with wildfires caused by electrical transmission systems. Energy leaders must therefore take on the urgent challenge of coupling energy storage and transmission solutions. New, systemic solutions will be required. An example of such an approach may be including redundancy at the outset by pairing electrical and pipeline systems that can move electrical energy as hydrogen molecules. While there is a gap between mature technologies and large-scale projects that can serve as blueprints for such future developments, blending of hydrogen in natural gas is proceeding at pace and offers a promising cross-connection of electrical and natural gas grids.
Ultimately, Net Negative Must Become Our North Star
Seventy-one percent of energy leaders who participated in SHOCKED believe achieving global net zero is not enough and that “net-negative” must be our ultimate ambition. Engineered solutions hold immense promise in driving this transformation to net zero and beyond. While significant challenges remain in scaling-up new and emerging technologies, the urgent need for their adoption cannot be overstated. The next step to accelerating the adoption of future solutions is to ensure they make sense from a financial standpoint. The investment risk profile must be tied to the solutions being proposed; businesses will be more likely to invest in new technology if they can see a clear return on investment.
As the energy industry adapts and navigates a way forward, leaders will have to integrate well-thought-out design principles into new energy infrastructure and retrofit existing infrastructure to build resilience. Here, research and development teams in the world’s top energy companies, in concert with academia, have a major role to play in developing new approaches to the problems faced by the sector. With the right investment and collaboration, we can supercharge engineered solutions and pave the way for a safer, cleaner, and more-efficient energy future. Given that many of the technologies that will help us achieve not just net zero, but net negative, have not yet been developed, not only are new engineered solutions necessary, but fast adoption and deployment through a nimble, highly technical network is required.
—Tej Gidda, PhD is an educator and engineer with more than 20 years of experience in the energy and environmental fields. As GHD Global Leader—Future Energy, Tej is passionate about moving society along the path toward a future of secure, reliable, and affordable low-carbon energy. His focus is on helping public and private sector clients to set and deliver on decarbonization goals to achieve long-lasting positive change for customers, communities, and the climate. Tej enjoys fostering the next generation of clean energy champions as an Adjunct Professor at the University of Waterloo Department of Civil and Environmental Engineering.