“Project Volt Gas Volt” proposes long-term financing plan to support widespread implementation of power-to-gas systems
|Project Volt Gas Volt is based on a long-term financing plan and the use of existing technologies for the large-scale conversion of surplus renewable electricity to methane, with subsequent reuse. Diagram: Isabelle Plat. Click to enlarge.|
Corinne Lepage, Member of the European Parliament (and former French Minister of the Environment) and Professor Robert Bell, Brooklyn University, City University of New York, are proposing Project Volt Gas Volt (VGV) as a technology pathway for using renewable energy to “keep the lights on” on the broadest scale without disruption, together with a long-term financing proposal for the project. Although they are targeting an initial implementation France, they see it as broadly applicable.
Project VGV uses surplus electricity generated by renewable and nuclear sources to produce hydrogen via electrolysis. The hydrogen is combined with CO2 to produce methane, which is pumped into and stored in the existing natural gas grid and used like natural gas for use in power generation, transportation, or other thermal and industrial uses. The concept is the same embodied in Audi’s e-gas project (earlier post), to which the VGV proposal makes continued reference.
|ETOGAS in the energy system. Source: SolarFuel. Click to enlarge.|
ETOGAS (formerly SolarFuel) in Stuttgart, Germany, has built a 250 KW demonstration plant for this method. Audi, along with ETOGAS, is building the first commercial-scale demonstration plant (6.3 MW). (Earlier post.)
If generated in sufficient quantities, the synthetic natural gas produced by the e-gas or VGV processes could replace the present-day uses of natural gas and perhaps ultimately most fossil fuels, Lepage and Bell argue. Stored methane could become the “battery” for renewable energy, simultaneously making hydraulic fracturing obsolete, they proposed.
Further, they note, France is unique in that its nuclear plants cannot use all the electricity they could generate, for lack of demand. If this potential production supplied the Volt Gas Volt plants, the nuclear plants could operate at nearly 100% capacity. This would help speed up the return on investment in VGV for the development costs of the energy transition. In other words, they suggest, nuclear power could thus help subsidize the transition while allowing for a reduction in the number of plants in operation.
|Dr. Hermann Pengg, head of project management e-fuels, Audi, giving a talk on energy conversion and storage using Power-to-Gas at ASPO 2012.|
Financing Project VGV: the Green Redemption Fund. Lepage and Bell propose establishing a 30-year “Green Redemption Fund” in France to support VGV. The fund would also encompass an industrial development plan. Its board of directors, the private investment instruments it sets up, and the necessary tax changes should ideally be approved by referendum and could be annulled only by another referendum, the goal being to build the necessary level of confidence, they suggest. Creation of the fund should be a condition for assuring the project’s sustainability.
There would be a commitment to lock up the investments for a period of 30 years. This commitment is made as a guarantee that the necessary amounts will be paid over time, for the sole purpose of ensuring the energy transition via a cross-generational initiative.
The following different types of financing could co-exist, they proposed:
A share of the “nuclear rent” paid by all French citizens and that must be invested in France (since the nuclear risk cannot be insured, these payments will be the nuclear industry’s guarantee of its conversion).
An annual contribution of at least €1 billion from the oil and gas industries in the form of a reallocation of public subsidies paid until now to the oil sector—which total €19 billion according to the Court of Auditors—with the rest allocated to debt reduction. Gas produced by the VGV system would be bought on this basis. Initially, synthetic methane produced by the VGV system will be more expensive than fossil gas, but ultimately will be less costly.
The allocation of emissions allowances and the carbon tax, once it is in place. A carbon tax levied directly on fossil fuels could be calculated on the BTU equivalent of the oil needed to produce a tonne of CO2. Based on the Rocard-Juppé plan, which comes to around €10 per barrel of oil equivalent, this tax would generate around €8 to €10 billion a year in France alone, and more than €100 billion if applied to the Europe of 27. This would also be the basis of the calculation of the carbon tariff on imported goods and services produced using fossil fuels.
Individual savings accounts blocked by the holder in return for an exemption from inheritance taxes. Several solutions are possible, provided these funds are locked up for 30 years and earmarked for the younger generations. Capital and interest could be blocked for 30 years and the transmission to heirs would offer attractive conditions.
Private green funds could help finance a global fund. All funds will have to be invested in green energy and that all profits will be re-invested in green energy. This could create a magnet effect and draw capital into France, they suggest.
Lepage and Bell suggest a debate should be launched to encourage allocation of the wealth tax to the fund.
The Green Redemption Fund could use COFACE-type mechanisms to secure the receivables of wind farms and solar installations. This use could multiply tenfold the amount of private financing of renewable energy installations.
The Green Redemption Fund must have investment capacities, the duo insisted—perhaps similar to REITs, for example, the American equivalent of FPI, to invest either in real estate (land or buildings) or in real estate mortgages. In the United States, this investment vehicle now covers gas pipelines and photovoltaic installations.
The Green Redemption Fund could also acquire strategic companies (national and foreign) to enable France to catch up from its delay in renewable energy.
Dr. Pengg presentation at ASPO 2012