Synthetic natural gas (SNG) has been around for a few decades now, primarily using coal as an input, but SNG version 2.0, being developed in Germany by companies including Audi, is different.  It is not renewable natural gas (RNG), which is made from biogas; SNG is made from the methanation of renewably produced hydrogen.

My colleague Mackinnon Lawrence explains that RNG is produced by collecting raw biogas from anaerobic digesters, landfills, wastewater treatment facilities, etc., then stripping out the CO2 and other trace gases.  This yields pipeline quality, purified methane.  The new form of SNG, on the other hand, uses excess wind power to produce electrolytic hydrogen, which is then combined with CO2 (the methanation step) to produce another stream of pipeline-quality natural gas.

So we have one process of producing natural gas that has as a by-product CO2 and one that requires CO2 to produce natural gas.  Handy! But why could SNG be so important in the coming decades?

Out of Love

Europe is falling out of love with natural gas – at least the stuff that is extracted from the ground and tends to be imported from outside the EU.  However, one legacy of the continent’s 30-year love affair with natural gas is a very substantial natural gas infrastructure.  At the same time the European Commission has stated, without yet forming a concrete policy plan, that the entire 27 nations of the European Union will decarbonize by 2050.

EU GHG Reductions Compared to 1990 (% Reductions; 1990 = 100%):  2005-2050

(Source: Pike Research)

Long term, the European economy could well be hydrogen-based.  A recent report from the H2Mobility grouping in the United Kingdom, for example, shows that there could be 1.5 million hydrogen fueled cars on the road in the United Kingdom by 2015.  But any significant energy transition takes decades to accomplish, and there is no black and white switch approach to this.  We must move step by step and plan for the transitional steps.

Although in 2013 electrolysis is not new technology, the storage of large volumes of hydrogen, in any size and scale, is still tricky.  There are research and pilot schemes to store hydrogen at volume in salt caverns, but the scale of inter-seasonal hydrogen that could be needed to store and balance out seasonal demand is beyond the levels that we can currently achieve – that’s where SNG could come in.  Producing large volumes of hydrogen, cheaply from electrolysis using excess wind power, and then turning this into easy to store and transport natural gas, could well be the key stepping stone from the 2013 fossil fuel-based economy to the 2040 hydrogen-based economy.

The grounding of Shell’s Kulluk rig on New Year’s Day was an ill-timed event for a company that has invested 6 years and $5 billion to access vast undersea reserves of oil and natural gas in the Arctic Ocean.  Also, it may presage a reversal in the Obama Administration’s initial support of offshore drilling in the region.  Writing in Bloomberg View, Carol Browner, the former director  of the White House Office of Energy and Climate Change Policy, and John Podesta of the Center for American Progress recently cautioned that, “Following a series of mishaps and errors, as well as overwhelming weather conditions, it has become clear that there is no safe and responsible way to drill for oil and gas in the Arctic ocean.”

The Kulluk mishap came on the heels of a number of reports in 2012 of an oil and gas renaissance in the Western Hemisphere.  Earlier this month, BP released a forecast that the United States will surpass Russia and Saudi Arabia in 2013 as the world’s largest producer of crude oil and biofuels.  Russia, meanwhile, will likely pass Saudi Arabia for the second place in 2013 and hold this position until 2023, according to the U.K.-based oil major.

As widely noted, these developments challenge long-held assumptions that the energy geopolitical landscape is squarely centered on the Middle East.  One place where this shift is playing out is in the frozen Arctic, a political no-man’s land where a maelstrom of nationalism, environmental fragility, and logistical challenges is beginning to brew.

The Arctic Ocean is estimated to hold a quarter of the world’s undiscovered oil and gas reserves, beneath a body of water less than 4 times larger than the Mediterranean Sea.  The region is a global commons, meaning that jurisdiction over most of the Arctic Ocean remains up for grabs.

Hydrocarbons on Ice

Estimating exactly how much oil and gas is locked up in the region is an inexact science, but an analysis led by USGS in 2008 shows that there is a 95% likelihood that 44 billion barrels (BBO) of oil and 770 trillion cubic feet (TCF) of gas are buried under the Arctic Ocean.

If estimates hold, these resources would prove significant on the world stage.  The United States currently consumes around 7 BBO of oil and 25 TCF of gas per year.  The Arctic alone could provide enough oil to last the United States around 6 to 7 years and enough gas to last 30 years.

Onshore areas in the region are mostly explored, with some 40 billion barrels of oil (BBO), 1,136 trillion cubic feet (TCF) of natural gas, and 8 billion barrels of natural gas liquids already developed.  As recent events have shown, moving offshore presents logistical challenges and will prove to be far more expensive than oil and gas fields currently under development today, so it will likely be some time before significant resources are brought to market.

Staking Claims

While in theory, the Arctic is held for the benefit of the “common heritage of mankind,” the potential for an oil and gas bounty is luring “the Arctic Five” – Russia, the United States, Canada, Denmark (via Greenland), and Norway – northward to assess claims.

In 2007, Russia laid claim to the North Pole – and much of the oil and gas buried beneath it – by planting a flag on the sea bed 2.5 miles undersea using two mini-submarines.  Although merely symbolic in gesture, the claim raises difficult questions about sovereignty, climate change, and the future energy landscape.

Russia’s assertion that it owns much of the Arctic sea bed is based on its claims to two submerged ridges, which would secure exclusive access to extensive fossil fuel resources inside the Arctic commons and around the North Pole, under the UN Convention on the Law of the Sea (UNCLOS).

Under UNCLOS, a series of geographical zones delineate jurisdictional rights with respect to offshore resources, including oil and gas.  In the Arctic Ocean, these zones form a continuous ring around a commons area and are owned in varying proportion by the five Arctic powers mentioned earlier.  These areas are the target of development efforts thus far.  Recent gambits make it clear that momentum is squarely behind the commercial exploitation of oil and gas resources no matter the cost.

While UNCLOS represents an important development in international resource protection and cooperation, it may prove to be an enabler of a unilateral, take-all approach to deep offshore hydrocarbon resources.  The silver lining for renewables competing against oil and gas, however, is that deepwater drilling is only justified when the price of a barrel of oil is well above $100 and will face stiff opposition should environmental safety continue to be a concern.

The worldwide commercial aviation industry uses an estimated 70 billion gallons of fuel annually, producing roughly 2% of global greenhouse gas emissions.  Business-as-usual estimates for CO2 emissions from the global aviation industry projected by the International Energy Agency show increases of 3.1% per year over the next 40 years – resulting in a 300% increase in emissions by 2050.  However, the industry has taken significant strides in recent years to stabilize, and ultimately reduce, its contribution to global emissions.

Led by the International Civil Aviation Organization (ICAO), the commercial aviation industry has set two aspirational goals to guide policy: carbon-neutral growth by 2020 and a 50% reduction in industry emissions by 2050.  The integration of aviation biofuels derived from sustainable feedstocks like jatropha, camelina, municipal solid waste (MSW), and algae is a key component of achieving both goals.  Yet, national sovereignty and international agreements on the freedom of the skies are hampering efforts to impose a carbon tax that would encourage the integration of such fuels.

In an effort to compel airlines to implement emissions reduction measures, the EU rolled airline emissions into its Emission Trading Scheme (ETS) in 2008.  Originally scheduled to take effect in 2012, the market-based effort triggered direct opposition from the ICAO, which sought a global solution.  It also led the United States, China, India, Russia, Japan, and some Persian Gulf nations to threaten retaliatory trade measures.

In the United States, the aviation industry spent nearly $5 million in 2012 to support fierce political opposition, culminating in President Obama signing into law the European Union Emissions Trading Scheme Prohibition Act on November 27.  The bill gives the U.S. Transportation Secretary the power to shield U.S.-based carriers from the tax.  This effectively allows U.S. airlines to ignore the EU-imposed tax.

Blackmail, Black Market

Chinese and Indian airlines, meanwhile, refused to submit emissions data as part of the EU scheme.  China also threatened to withhold aircraft orders in excess of $3.8 billion from Airbus if the EU proceeded with the trading scheme.  The Indian government has been a staunch critic of the scheme, arguing that the EU plan would result in the formation of a black market for airline emissions credits.

Facing international pressure from major powers and key trade partners, the EU’s three most powerful members – Germany, the United Kingdom, and France – forced a 1-year postponement of the Airline Amendments to the ETS pending an anticipated agreement on a multilateral global alternative program.   The latter program is scheduled to be negotiated in the ICAO Assembly in 2013.

Although aviation’s contribution to global emissions is not overwhelming, the suspension of the ETS creates an environment of uncertainty around aviation biofuels, potentially stifling investment in drop-in conversion technologies that have yet to cross the commercial threshold.  Lack of long-term policy certainty has routinely been cited by industry sources as a key barrier to biorefinery construction and advanced biofuels scale-up.

Despite opposition to the EU plan, the U.S. government still strongly supports the development of aviation biofuels.  The Federal Aviation Administration (FAA) has called for the aviation industry to use 1 billion gallons of alternative jet fuel per year by 2018.  Moreover, the U.S. Department of Defense remains one of the most enthusiastic proponents of aviation biofuels.  Recent legislation passed by the U.S. Congress has signaled a commitment to public-private partnerships to build out domestic infrastructure for the production of advanced biofuels, including drop-in fuels compatible with existing commercial and military aircraft.

In November the U.S.  Senate voted 62-37 to strike language from the annual defense appropriations bill that would have prohibited the Department of Defense (DOD) from buying alternative fuels if they cost more than conventional petroleum-based fuels.  Estimates of commercial aviation biofuel prices are around $5 to $7 a gallon, while conventional petroleum-based fuel is around $3 per gallon.  The DOD is the largest consumer of oil in the world and in recent years has been a leading advocate and investor in advanced biofuel development.  Had the restrictive language been permitted, it would have been a crippling blow to the domestic and international aviation biofuel industries, grounding their encouraging recent advances globally.

Unlike petroleum-based fuels, biofuels have many feedstocks that can originate from almost anywhere.  The costs of distributing a specific biofuel over a wide area, however, make any specific biofuel less competitive against petroleum-based competitors that have better price points and distribution networks.  Therefore, the standardization of one biofuel from one feedstock across the globe is unlikely.  Rather, many biofuels from varying feedstocks will emerge in regional markets.

Aviation biofuels add another variable in that the purpose of aviation is to travel to different regions of the world where departure point and destination may not have the same biofuel supply originating from the same feedstock.  The present issue, though, is finding the most sustainable feedstock at the most competitive price, something many are trying to do across the globe.  Below, a roundup of aviation biofuel initiatives in selected countries.

United States

In late May, United Airlines, Boeing, the Chicago Department of Aviation, the Clean Energy Trust, and Honeywell UOP created the Midwest Aviation Sustainable Biofuels Initiative (MASBI).  The Midwest offers the largest potential feedstock for biofuel development in the country.  The initiative is meant to evaluate challenges in biofuel development as well as potential Midwestern feedstocks.  A report on initial conclusions of varying feedstock viability is due later this month.

China

In late August, the Commercial Aircraft Corporation of China announced that it will collaborate with Boeing on refining waste cooking oil into jet fuel.  China produces 29 million tons of the waste oil while consuming 20 million tons of petroleum-based jet fuel annually.  Boeing claims price parity can be achieved within 10 years.  In addition, by 2020, the Chinese Civil Aviation Authority expects 30% of the country’s jet fuel consumption to be met by biofuels.

Brazil

The long-time leading producer and consumer of sugarcane-based biofuels for the automotive market, Brazil is now taking steps to enter the aviation market.  In mid-2011 Boeing announced a partnership with Brazilian aircraft manufacturer Embraer to assess potential jet biofuels.  In April 2012, Boeing expanded its depth in the region by establishing Boeing Research & Technology-Brazil.  The center will be an innovation hub for public organizations, private sector companies, and universities to collaborate on an assortment of aerospace technologies including biofuels.

Canada

The National Research Council of Canada flew the first civil jet on 100% unblended biofuel in early November.  The jet was powered by biofuel created from a genetically engineered Ethiopian mustard seed produced by Agrisoma.  The seed will now be grown on 6,000 western Canadian acres on behalf of 40 commercial farmers.

Other significant advances in aviation biofuels are occurring in 18 other countries using a variety of feedstocks, from Camelina in Spain to woody biomass in New Zealand.  Most of these developments are in their initial research phases, and any significant penetration of biofuel into the aviation fuel supply chain is still distant.  The future of aviation biofuels is not a sure thing; however, it is conceivable to consider that airplanes will eventually fly around the world using sugarcane grown in Brazil, Ethiopian mustard seed grown in Canada, or waste cooking oil produced in China.