Biomass pyrolysis to hydrocarbon fuels in the petroleum refining context

The EU has agreed to cut its greenhouse gas (GHG) emissions by at least 80-95% by 2050 and was the driving force behind the Paris Agreement which requires net zero emissions by the middle of the century. Climate policy will require a shift away from petroleum which currently provides nearly all of transport’s energy needs. Apart from a transition towards zero emission technologies such as battery electric or hydrogen, regulators and governments across Europe are considering what role gas could play in decarbonising transport. The EU and several national governments support the use of methane in transport through regulations, tax breaks and subsidies. The gas industry - which is faced with stagnating or declining demand in other sectors in Europe - sees transport as a major growth market.

This report compiles the latest evidence on the environmental impacts of using gas as a transport fuel. The report is based on the most up to date literature, test results and data. It builds on a previous report by AEA-Ricardo but analyses in more detail issues such as the role of renewable methane (biomethane and power-to-methane) or the impact of tax policy.

Climate impacts

Gas vehicles and vessels have similar performance to other fossil fueled vehicles and vessels. Based on the latest available evidence fossil gas used in transport has no meaningful - and when including methane leakage and upstream effects in almost all cases no - climate benefits compared to petroleum based fossil fuels.

The overall (well to wheels/WTW) GHG performance identified in this study (with the medium upstream emissions) range from -12% to +9%, depending on the mode of transport. In cars, the GHG savings range from -7% to +6% compared to diesel. In heavy duty, the range is -2% to +5% compared to best in class diesel trucks and depending on the fuel and engine technology. In shipping, the figures are -12% to +9% compared to marine gas oil (MGO) but these figures are highly dependent on methane slip.

We did not find any evidence supporting the theoretical savings of gas vehicles, which are based on the lower carbon content of the fuel. In reality poor gas engine efficiency often offsets the benefit of the fuel already at tailpipe level. This points to the need for policies based on measured performance (through the EU’s official tests), not the type of fuel. Uncertainties also exist regarding methane leakage at the vehicle level and the impact of boil-off and venting is not well documented but could have a significant negative impact on gas vehicle’s environmental performance.

Methane is a very powerful greenhouse gas. Over a period of 100 years it is 28 times more potent than CO2. In 2010 methane accounted for 20% of global GHG emissions. These (550 Mt) emissions are growing annually by 25 Mt, with 17Mt of the growth linked to fossil fuel extraction.

Methane leakage - i.e. unburnt methane leaking into the atmosphere - occurs throughout the supply chain (extraction, transport, refueling) and has a large and negative impact on fossil gas’ climate impact. Currently the average fugitive methane emissions in the supply chain of fossil gas are 2.2% of fossil gas produced, ranging from 0.2% to 10%.

Recent evidence suggests that upstream methane emissions have been significantly underestimated - by up to 60%, making it likely that CNG/LNG upstream emissions and subsequently well-to-wheel or wake GHG emissions are worse than the abovementioned numbers (which are based on ‘central’ upstream emissions data). Given that methane is a very potent short term greenhouse gas any benefits from gas vehicles would only materialise several decades into 4 a study by the future, well after the EU economy would need to be fully decarbonised.

Air quality impacts

There are only limited air quality benefits from using fossil gas in road transport. Gas vehicles perform similarly to petrol cars and only marginally better than diesel cars complying with the new RDE limits. The European Commission is working on a Euro 7 limit which will further decrease or entirely eliminate any benefit gas has over diesel cars. Far greater air quality improvements could be achieved by switching to zero emission cars.

For trucks, CNG and LNG offer no meaningful benefits (NOx, PM) compared to vehicles complying with the Euro VI standard. HPDI (high pressure direct injection) truck technology has slightly higher NOx emissions. Particle number emissions are also higher in methane powered transport, compared to diesel. For ships LNG has a clear benefit compared to heavy fuel oil although similar emissions performance can also be achieved by fitting ships with after treatment systems such as SCR and DPF and using low Sulphur marine gas oil.

Renewable methane

Biomethane and power-to-methane can have (significantly) lower GHG emissions than fossil gas. However, sustainable feedstocks for biomethane (wastes, residues) are very limited and cannot be sustainably scaled. Even if we assume the maximum sustainable potential is produced and all of it is allocated to transport - this is very unlikely to happen - biomethane could only cover 6.2- 9.5% of transport’s energy needs. Currently, only around 4% of gas consumed in the EU is renewable, and this is mainly produced from crops such as maize. The gas grid has just a 0.5% share of renewables, compared to almost 30% of renewables in electricity generation. Less than 1% of biogas produced is currently used in transport.

Crop-based biogas (e.g. from maize) is associated with significant indirect land use change emissions. These impacts eliminate most of the GHG benefits compared to fossil gas. In addition there are issues relating to biodiversity and competition with food. This is why crop-based biogas is capped for transport purposes under the renewable energy directive.

Electricity based methane (power-to-methane) is inefficient and expensive (at least 5 times dearer) to produce and would greatly increase demand for renewable electricity. Renewable electricity is turned first into hydrogen and then into methane. The process efficiency is now roughly 40%, potentially increasing to 60% in a future best case, and requires considerable additional renewable electricity, which is currently not going to be available at the scale required.

This means the contribution of renewable methane will be limited. What potential exists might be better used to help decarbonise sectors that currently depend on methane (residential, industry, power) and where no new infrastructure and engines are needed. Biomethane in transport can play a niche role in local projects, with vehicles running on 100% biomethane, refueling at local biomethane production sites. A wider shift to methane will almost certainly lead to a transport sector powered by fossil gas, not renewable methane.

The economics and politics of fossil gas in transport

The business case for fossil gas in transport depends almost entirely on (fuel) tax breaks, subsidies and public support for infrastructure. CNG and LNG enjoy tax rates below the EU minimum in many EU countries, and well below the equivalent tax rates for diesel (on average for EU countries 9.51€/GJ or 76% lower than diesel and 16.21€/GJ or 85% lower than petrol). The uptake of fossil gas in transport is especially high in countries with the lowest tax rates. For instance, Italy 5 a study by consumes 60% of the methane used in European transport and accounts for 68% of CNG car sales. In Italy, the price of fossil gas at the pump is about half the price of diesel due to a CNG tax rate of 0.5% of the diesel tax rate. Without this tax benefit, the market for CNG cars would be much smaller. Similarly, if LNG would be taxed at similar levels to diesel the business case for LNG trucks would be negative.

A shift to methane use in transport would require the build-up of new infrastructure, a transition in the manufacturing sector and continued fiscal support, in particular through subsidies and tax breaks. EU domestic fossil gas production is declining (rapidly in the case of the Netherlands) and the EU is increasingly dependent on imports in particular from Russia. Creating a new market for fossil gas in transport will increase the EU’s dependence on energy imports.

Based on the available evidence the role of fossil but also renewable methane in decarbonising transport will be extremely limited and continued support for the expansion of methane as a transport fuel does not appear to be justified.