Demand and end uses of renewable and lowcarbon gases cover multiple sectors and subsectors, including industry, transport, built environment, and power. A distinction should be made between the physical consumption of renewable gases and the virtual allocation and transfer of certificates or GoO related to the renewable attribute of renewables. The total CO₂-eq. emissions in the EU amounted to 4.6 billion tonnes in 2017 (Figure 3.1). The gross final energy consumption in the EU was around 12,328 TWh (1,162 bcm) in 2017. Apart from the energy supply sector, the industry, transport, and built environment sectors are the largest share of both emissions and final energy consumption in the EU.
3. Demand and end-use of renewable and low carbon gases
- The industry sector is responsible for approximately 25% of the EU’s final energy consumption and accounted for about 19% of total CO₂-eq. emissions in the EU in 2017.
- The transport sector is responsible for approximately 31% of the EU’s final energy consumption and accounted for about 20% of total CO₂-eq. emissions in the EU in in 2017.
- The built environment sector is responsible for approximately 27% of the EU’s final energy consumption and accounted for about 12% of total CO₂-eq. emissions in the EU in 2017.
Over 23 TWh of European biomethane was used across demand sectors in 2018. Of this about 20 TWh was used through injection in the gas distribution and transmission grids, making up about 0.4% of European gas transported through infrastructure.
Biomethane can substitute natural gas across demand sectors through physical demand or it can be virtually allocated in specific sectors through an appropriate GoO system. The EU natural gas demand in 2018 was 4,577 TWh (NCV), mainly used in buildings, industry, and power generation (Figure 3.2).111 In 2018, some 0.4% or approximately 20 TWh of all gas transported through Europe’s gas infrastructure consists of biomethane (grid-injected biomethane) (see also chapter 4).2
Figure 3.3 illustrates an estimated overview of biomethane use per sector for selected EU countries based on analysis by REGATRACE.14 In Germany, biomethane is predominantly used for electricity production in combined heat and power (CHP) units, whereas in Italy, the government encourages biomethane consumption in the transport sector. Most countries do not have reliable data on biomethane end-use applications and do not necessarily apply similar counting methods.14
Green and blue hydrogen can substitute grey hydrogen in existing (industrial) processes or can be used as feedstock in new hydrogen-based processes and applications. In 2018, around 276 TWhLHV113 of (grey) hydrogen was consumed in Europe, with Germany, the Netherlands, Poland, and Belgium the top four consumers.
(Grey) hydrogen has been used for many years in various industrial processes on the demand side. In 2018, around 276 TWhLHV of (grey) hydrogen was consumed in Europe, with Germany, the Netherlands, Poland, and Belgium the top four consumers. The remainder of the produced hydrogen is predominantly used to generate heat. Almost all grey hydrogen in Europe is consumed by industry in the refining (45%) and ammonia production (34%) sectors (Figure 3.4).113 The latter has resulted in experience with handling and using hydrogen, including the development of local and regional pipeline infrastructures around the world, including parts of Europe. This experience and existing infrastructure will help develop new hydrogen production and end-use routes, allowing green and blue hydrogen to benefit from these existing assets.
Hydrogen demand sectors in Germany (22%), the Netherlands (14%), Poland (9%), and Belgium (7%) combined use about half of total EU hydrogen demand (Figure 3.5).98
This chapter identifies key trends regarding demand and end uses of biomethane and green and blue hydrogen in industry, transport, and the built environment, following the approach as laid out in chapter 1. The following sections detail the key trends per sector and indicate the status of each key trend towards achieving the required pathway developments in the early 2020s-2030.2
3.1 Industry sector
Early developments are taking place in the EU refining and chemicals sectors, with ongoing investigations regarding the adaptation of grey hydrogen production to blue hydrogen and the substitution of grey hydrogen for green hydrogen in existing processes. Additional attention is required to further boost these developments.
New hydrogen processes are in the demonstration and early commercial stages in the European iron & steel sector, which is in line with the required developments towards 2030. These processes include direct injection of hydrogen into blast furnaces and using hydrogen for the direct reduction of iron.
Biomethane is gaining interest as a feedstock or energy carrier across industry sectors, either as an energy carrier when biomethane is injected in the natural gas grid, through integration of biomethane production in industry processes, or as a feedstock to produce high value chemicals.
Almost all (predominantly grey) hydrogen in the EU is used in industry.46, 98 Hydrogen is mostly used as industrial feedstock in the oil refining and chemicals (fertiliser) production sectors and as fuel in the (metal) process industry (Figure 3.7).46 About 45% of industrial hydrogen consumption is used for oil refining for hydrocracking and hydrotreating processes to provide energy and desulphurisation.98
This is followed by ammonia production (34%) (ammonia is an important material in the fertiliser industry).46, 114 The remaining share of industrial hydrogen demand comes from other chemicals and energy production, including methanol production. Only a small share of existing hydrogen feedstock is used in other industrial processes, including steelmaking and metal welding (less than 8%).49
Developments in the industry sector in the early 2020s are focused on those sectors that are most emissions-intensive and hard to decarbonise— specifically the oil refining, chemicals, and iron and steel sectors. The oil refining sector uses hydrotreating and hydrocracking processes.2 The chemical industry provides essential products and materials to many different downstream sectors.2 The oil refining and chemicals sectors (including the pharmaceutical sector) were responsible for about 126 Mt of CO₂-eq. emissions in 2015.115 A large share of these emissions can be attributed to the required fossil-based feedstocks, such as natural gas (e.g. for ammonia production) or crude oil (e.g. for diesel and gasoline production through refining). The European steel sector is one of the most carbon-emitting and energy-consuming sectors in Europe, through the use of coal and other fossil fuels for steelmaking. The European steel sector accounts for 216 Mt of CO₂ emissions in 2015 which is about 5% of European CO₂-eq. emissions.116
This section details the key trends regarding the use of biomethane and green and blue hydrogen in the industry sector (Figure 3.6). In the early 2020s, developments will focus on starting off substituting grey hydrogen feedstock with blue or green hydrogen in existing processes, starting to implement new processes that use hydrogen as feedstock, and increasing adoption of biomethane across industry applications. The following paragraphs detail each key trend and indicate the status of each key trend towards achieving the critical decarbonisation timeline of the early 2020s-2030.
3.2 Transport sector
The uptake of renewable and low-carbon gases in road transport and fuelling infrastructure is emerging in the EU. Increasing deployment of bio-CNG/LNG and early stage hydrogen developments are taking place in the heavy road transport sector. The adoption of CNG and LNG vehicles grew by 5% and 35% annually since 2016 for buses and heavy freight trucks, respectively. Currently, biomethane use in Europe already represents 17% of all the gas used in road transport.
Early stage hydrogen developments are taking place in the EU shipping sector. Several pilots are ongoing to test maritime applications of hydrogen fuel cells, mostly in Northern Europe. LNG use in shipping is growing, as LNG bunkering facilities for ships are increasingly being established across the EU (supported by the TEN-T regulation).
The number of gas fuelling stations in the EU is growing. LNG and hydrogen fuelling stations are still limited but experienced a significant step up over the last year and CNG fuelling stations are gradually increasing.
Decarbonising the transport sector requires a switch to alternative fuels, either through fuels that do not emit CO₂ or through fuels for which the CO₂ is of biogenic origin. Electrification through battery and hydrogen fuel cell technologies and sustainable (liquid) biofuels, such as biomethane (bio-CNG/LNG) and biokerosene, are seen as solutions to achieve this switch. Electrification has been identified as the dominant pathway solution for light road vehicles and for part of the shipping sector.2 In contrast, for long haul and heavy transport such as freight, coaches, and (inter)national shipping, hydrogen and (bio)CNG/LNG are expected to be among the most societally cost-effective solutions, alongside sustainable liquid biofuels. In aviation adoption of non-fossil fuels is expected to only scale-up starting from 2030.²
Although the role of renewable and low-carbon gases in transport is still limited in Europe, its contribution could grow fast. This section details the key trends regarding the use of biomethane and green and blue hydrogen in the transport sector (Figure 3.10). Developments in the early 2020s will focus on those fuels and modes of transport that are most promising to decarbonise in this period, including bio-LNG/CNG and hydrogen in trucks, buses, and shipping, which is in line with the pathways report:
- Switching oil-based fuels to gaseous fuels (CNG, LNG and hydrogen). These fuels are at different stages of development for road transport and shipping.
- Increased adoption of renewable and lowcarbon gases, both as a pure gas and as a blend with natural gas (CNG and LNG). The following paragraphs detail each key trend and indicate the status of each key trend towards achieving the critical decarbonisation timeline in the early 2020s-2030.
The following paragraphs detail each key trend and indicate the status of each key trend towards achieving the critical decarbonisation timeline in the early 2020s-2030.
3.3 Built environment sector
Early developments are taking place to increase building renovation levels in the EU. The Renovation Wave for Europe was announced by the European Commission in October 2020. The weighted annual energy renovation rate in the EU is only around 1%, with deep renovations only being carried out in 0.2% of the building stock annually.
In Europe, emerging trends are seen with the uptake of hybrid heating technologies. Early deployment of hybrid heating solutions in the built environment is taking place. In 2017, around 18,000 hybrid heat pumps were installed in Europe and uptake is gaining momentum, particularly in Italy and France. Also, recently several gas DSOs have started to intensively explore the potential of using gas grids to distribute hydrogen (e.g. to decarbonise heat), referencing TSO plans for a European Hydrogen Backbone.
The building stock in Europe is heterogeneous and relatively old; about 85% of buildings date from before 2001.144 Most of those existing buildings are not energy efficient.145 In 2017, up to 97% of existing buildings
required renovation to meet energy efficiency level A.146 The average cost of renovation depends on the governing climate, the type of building, and increases steadily with renovation depth.147
Space heating and domestic hot water use about 3,600 TWh148 annually and can be provided by a range of energy sources and energy carriers. This demand is mostly met by fossil fuels. In Europe, about 44% of energy in the built environment used for space heating is natural gas (Figure 3.19 Share). This percentage varies between countries and regions depending on available resources, access to infrastructure, building heating and cooling needs, and the prevailing climate.149 For example, natural gas is used to meet about 84% of residential heat demand in the Netherlands, while this is only about 57% and 42% in Italy and Germany, respectively.150 The use of renewable gases is—next to electrification, insulation, and reduction of energy demand—key to decarbonising the European heating demand in the built environment.
The building insulation level and energy carrier for space heating and hot water provision will determine the applicable efficient heating technologies:
→ New or deeply renovated buildings can efficiently apply all-electric, low temperature heating technologies such as all-electric heat pumps. If such installations become widespread, these technologies require implementation of new appliances and adaptations of existing electricity infrastructure and grid connections to accommodate new demand peaks and integrate high levels of renewable electricity.6
→ For buildings with an existing natural gas connection, hybrid heating solutions using electricity and renewable gas can be used to decarbonise, requiring less extensive renovation and system adaptation efforts compared to full electrification.2 Biomethane can be injected into the gas grid without major system upgrades and can be easily used from a technical and equipment perspective in building heating applications, such as condensing boilers or hybrid heat pumps, without changes for consumers.151 In addition, several gas DSOs have recently started to intensively explore the potential of using gas grids to distribute hydrogen, referencing TSO plans for a European Hydrogen Backbone. Hydrogen can be blended with natural gas or dedicated hydrogen networks can be set up (see chapter 4).
Decarbonisation and renovation of the built environment is challenging because of the high abatement cost for deep renovations, the high number of buildings requiring renovation (>97%), the dispersed ownership of the building stock, and the potential construction of new infrastructure. This section details the key trends regarding the use of biomethane and green and blue hydrogen to decarbonise the built environment (Figure 3.18). Developments in the early 2020s focus on accelerating building renovation levels in Europe and developing and increasing the adoption of hybrid heating technologies. The following paragraphs detail each key trend and indicate the status of each key trend towards achieving the critical decarbonisation timeline of the early 2020s-2030.