Energy transition

The Stakes Grow Higher in Defining Green Energy

Not so long ago, defining green energy was straightforward: renewables. It may not have been quite that simple, but developing agreed-upon definitions based on science has become much more complex and contentious.

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Not so long ago, defining green energy was generally straightforward: renewables. It may not have been quite that simple, but the development of agreed-upon definitions based on science has become much more complex and contentious, even within the past year.

It’s not just a highbrow debate about semantics. The standardization of criteria or a widely accepted taxonomy is critical as the focus increases on not only greenwashing, but on the actual processes and technologies enabling what were thought of as at least “greener” energy. The hammering out of definitions is needed to keep the energy transition moving forward globally.

This scrutiny affects the options for companies seeking alternatives in carbon markets where the price of permits for emitting a tonne of CO2 is escalating. In early February, the price of CO2 permits in the EU reached a record high above 96 Euros ($109)/tonne CO2. Reuters reported that the carbon price has risen more than 200% since the start of 2021, partly due to high natural gas prices and the switch made to coal by some power generators. This resulted in higher emissions and increased the demand for permits.

In January, the EU Platform on Sustainable Finance, comprising members from utilities, banks, nongovernmental organizations, and corporations, rejected the EU Commission’s draft sustainable finance rules which proposed labeling nuclear power and natural gas as green transition fuels. Nuclear projects permitted until 2045 were to be classified as green, but only if countries can safely dispose of the radioactive waste. Gas was to be included until 2030 with emissions thresholds specified.

The EU Platform concluded that even if a gas plant stays under the emissions threshold, it “is not green at any point in its life.” Nuclear energy was acknowledged as already being part of the transitioning energy system and having near to zero greenhouse-gas emissions, but it would not meet the taxonomy’s requirement to “do not significant harm” to the environment because of the toxic waste that cannot be recycled or reused.

The EU Commission’s taxonomy will be sent to the European Parliament and Council for review.

Blue hydrogen was questioned as a transition fuel by a peer-reviewed study published in August 2021 in Energy Science & Engineering by coauthors from Cornell and Stanford universities. They wrote, “Far from being low-carbon, greenhouse-gas emissions from the production of blue hydrogen are quite high, particularly due to the release of fugitive methane. … Perhaps surprisingly, the greenhouse-gas footprint of blue hydrogen is more than 20% greater than burning natural gas or coal for heat and some 60% greater than burning diesel oil for heat, again with our default assumptions.” They added, “Our analysis assumes that captured carbon dioxide can be stored indefinitely, an optimistic and unproven assumption. Even if true though, the use of blue hydrogen appears difficult to justify on climate grounds.”

In a study published last month in the Proceedings of the National Academy of Sciences, researchers at the University of Wisconsin-Madison combined econometric analyses, land use observations, and biophysical models to estimate the realized effects of the US Environmental Protection Agency’s Renewable Fuel Standard (RFS) mandate to partially replace petroleum-based fuels with biofuels. They found that the RFS increased corn prices by 30% and the prices of other crops by 20%, which, in turn, expanded US corn cultivation by 8.7% and total cropland by 2.4% in the years following the policy’s enactment (2008 to 2016). “These changes increased annual nationwide fertilizer use by 3 to 8%, increased water-quality degradants by 3 to 5%, and caused enough domestic land use change emissions such that the carbon intensity of corn ethanol produced under the RFS is no less than gasoline and likely at least 24% higher. These tradeoffs must be weighed alongside the benefits of biofuels as decision makers consider the future of renewable energy policies and the potential for fuels like corn ethanol to meet climate mitigation goals.”

The move toward energy transition has been pivotal for our industry and many others. It could be argued that no country, business, or individual will remain unaffected by the changes in progress and yet to come. “Transition” is defined as “the process or a period of changing from one state or condition to another.” And this process will take time, effort, technology, buy-in, scientific study and verification … and consensus, which may be the most challenging piece of all.

A significant announcement demonstrating the application and acceptance of a scientific taxonomy was Santos Ltd.’s recent booking of 100 million metric tons of CO2storage capacity in the Cooper Basin in South Australia. The company believes it represents the industry’s first-ever booking to be made under SPE’s CO2Storage Resource Management System.