What is ‘natural’ gas?
Natural gas is an odourless colourless mixture of four fossil gases, predominantly methane with smaller quantities of ethane, butane, and propane. It serves a range of important functions, including heating, electricity generation, transportation and industrial applications. Natural gas currently constitutes only 12% of overall energy consumption in Africa, but this share is predicted to grow in the coming years, even in renewable energy focused development scenarios. Africa is home to some of the largest natural gas deposits in the world, with Nigeria and Algeria amongst the top ten largest exporting countries globally.
How is the natural gas sector organised?
Actors in the natural gas value chain can be broadly categorised in three different segments:
- Production/generation (upstream);
- transmission (midstream);
- distribution (downstream).
Generation or production includes exploration, drilling, collection, and processing of gas. Fossil gas extracted from the earth comes with impurities such as water, oil, and trace gases. The upstream segment must therefore process these contaminants out of the product before it can be injected into the network or liquified.
Transmission is the process of transporting natural gas from the point of production to the distribution network, perhaps storing it along the way. The gas Transmission System Operators (TSOs) coordinate the flows of gas in the transmission network to keep it in balance (Figure 1).
The gas being transported is owned and shipped by energy traders and shippers through a complex and extensive system. Natural gas can either be transported through large pipelines or converted into liquid natural gas (LNG) and transported on ships (or by rail or on trucks). Where the gas is not immediately required for use in the distribution network or where traders would rather store it for resale later, it is injected into a storage facility along the transmission network.
Unlike electricity, natural gas can be stored cost-effectively for long periods of time, typically in underground reservoirs, such as salt caverns. The stability and cost-effectiveness of storing natural gas makes it a flexible energy vector, useful in balancing the electricity grid through combustion in gas fired power plants. Moreover, natural gas storage helps to account for seasonal variations in overall supply and demand and protects against security of supply concerns and price fluctuations.
‘Clean molecules’ and hydrogen
We use the term ‘clean molecules’ as a catch-all conceptual reference to abated fossil gases, decarbonised gases, renewable gases, and even emission-negative gases. These molecules are key to a renewable energy future, as a complement to renewable electricity in an integrated energy system.
The most common clean molecule is ‘biogas,’ a methane-based gas that when upgraded to ‘biomethane’ can be used interchangeably and in combination with fossil methane. Like fossil methane, biomethane is also produced from decomposition of organic matter. However, it is not considered a fossil fuel. This is because biomethane is produced from anaerobic digestion of organic matter (such as food and animal waste) above ground rather than being extracted from fossil sources in geological formations underground.
Key emerging but still relatively uncommon clean molecules include low-carbon, renewable and emission-negative hydrogen, ammonia and renewably produced syngases such as e-methanol, e-methane, and e-kerosene. This is a complicated and nuanced area, in particular due to the many ways hydrogen and hydrogen-derived gases can be produced.
At room temperature, hydrogen molecules are an odourless colourless gas with the lowest density of any gas. As we cannot directly extract gaseous hydrogen as we can with some other energy vectors, we must liberate it from other products such as methane, water, coal, and biomass. This can be done via a variety of processes ranging from highly emission intensive to renewable or even emission negative. See the matrix below for a conceptual taxonomy of different production methods. At present, virtually all dedicated hydrogen production is of fossil origin.
- Black – produced by gasification of ‘black’ coal.
- Brown – produced by gasification of ‘brown’ coal.
- Grey – produced by thermochemical conversion of fossil gas, either Auto-thermal Reforming (ATR) or Steam Methane Reforming (SMR).
- Blue – produced by ATR or SMR of fossil gas, with the addition of carbon capture (use) and storage (CCUS).
- Turquoise – produced by pyrolysis of methane (fossil or bio) driven by electricity (can be renewable) (see also Conti et al., 2021).
- Pink – produced by electrolysis of water, utilising electricity of nuclear origin.
- Green – produced via electrolysis of water, driven by renewable electricity.
- Yellow – produced by electrolysis of water, utilising grid electricity.
Hydrogen is a versatile energy vector that is relatively easy to store and transport, making it a useful complement to electricity in an integrated energy system. It has many useful applications, including as a feedstock or as fuel for aviation and shipping. It can also be used for seasonal balancing in the power sector, as well as a potential source of heat for industry, especially in hard-to-abate and electrify sectors such as steel, cement, and aluminium production. For hydrogen to have a meaningful role in these sectors moving forwards it must be of non-fossil origin.
Africa and renewable hydrogen
It is well known that Africa has some of the strongest renewable energy conditions on the planet[1], not only solar across the entire continent, but also wind in the north and at the fringes, as well as hydro on arterial rivers through the centre. The IEA predict that Africa could produce 5,000Mt[2] of hydrogen at a cost of less than 2USD/kg by 2030, utilising hybrid wind and solar power from dedicated sources.[3]
Renewable hydrogen seemingly offers a very exciting economic opportunity for African countries to claim a share of the new global energy economy, with meaningful synergies in other priority areas such as local energy access, decarbonisation, as well as social and environmental aims. The IEA envisage that USD190bn of annual investment in the energy sector will be required in the continent between 2026-2030, roughly double the current level.[4]
Exports of hydrogen and derivative products could help with this. For example, stakeholders may choose to build up multiple segments of the hydrogen value chain within a given country or region, such as producing green steel or renewable fertiliser from the green hydrogen input. These value chains are not established at scale globally, and the African continent has the resources, space, and human capacity to carve out a competitive advantage here.
As of June 2022[5],[6], 17 African renewable hydrogen projects are at the stage of an MoU or beyond, with a known combined electrolyser capacity of roughly 64 gigawatts (GW), corresponding to around 4.8Mt[7] renewable hydrogen per year.[8] If realised, this would represent a significant share of the renewable hydrogen on the global market by 2030, and with relatively little local demand forecasted for Africa in the next decade or two, this surplus would likely end up in importing regions like Europe. Nevertheless, the renewable hydrogen sector is very nascent, and it remains to be seen if and how projects will materialise in practice.
[1] International Energy Agency (IEA), (2022). African World Energy Outlook 2022, Retrieved from: https://www.iea.org/reports/africa-energy-outlook-2022/key-findings
[2] Statista, (2022). Leading gas exporting countries in 2021, by export type, Retrieved from: https://www.statista.com/statistics/217856/leading-gas-exporters-worldwide/#:~:text=Russia%20is%20the%20world’s%20leading,followed%20by%20Qatar%20and%20Norway
[3] Biogas can also be produced through other processes, such as thermogasification
[4] International Renewable Energy Agency (IRENA), (2014). Estimating the Renewable Energy Potential in Africa, Retrieved from: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2014/IRENA_Africa_Resource_Potential_Aug2014.pdf
Energy Potential in Africa, Retrieved from: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2014/IRENA_Africa_Resource_Potential_Aug2014.pdf
[5] Million tonnes.
[6] International Energy Agency (IEA), (2022). Africa Energy Outlook 2022, Retrieved from: https://iea.blob.core.windows.net/assets/6fa5a6c0-ca73-4a7f-a243-fb5e83ecfb94/AfricaEnergyOutlook2022.pdf
[7] International Energy Agency (IEA), (2022). Africa Energy Outlook 2022, Retrieved from: https://iea.blob.core.windows.net/assets/6fa5a6c0-ca73-4a7f-a243-fb5e83ecfb94/AfricaEnergyOutlook2022.pdf
[8] Baldessin, et al., (2022). Will Africa become the new green hydrogen “El Dorado”?, IHS Markit, Retrieved from: https://ihsmarkit.com/research-analysis/africa-green-hydrogen.html
[9] International Energy Agency (IEA), (2022). Africa Energy Outlook 2022, Retrieved from: https://iea.blob.core.windows.net/assets/6fa5a6c0-ca73-4a7f-a243-fb5e83ecfb94/AfricaEnergyOutlook2022.pdf (Table 2.3, p. 101)
[10] Assuming 75% electrolyser efficiency.
[11] Wanner, (2021). Transformation of electrical energy into hydrogen and its storage, Retrieved from: https://link.springer.com/article/10.1140/epjp/s13360-021-01585-8