Swap operations could unlock Brazil’s RNG

  • Market: Electricity, Emissions, Natural gas
  • 15/04/24

Brazil needs to increase liquidity and establish taxation to let gas swap contracts unlock constraints on biomethane trade, industry observers said.

Gas swap operations are commercial exchanges of products between traders in different regions that do not have a way to physically deliver. For example, a biomethane plant in one region could sell to a consumer in a different, unconnected region if it is able to get that transaction mirrored in its own region — creating a "swap" of products without the need of delivery away from the local pipelines.

This mechanism could cut logistics costs for biomethane delivery and provide a way around the single largest hurdle to Brazilian biomethane market growth — a lack of connections between the biomethane plants scattered across the country and potential customers in major cities.

The main challenges for swaps in the biomethane sector are the lack of gas market liquidity to find mirror transactions in different regions and the fiscal challenge of properly taxing the operations, according to Maria Fernanda Soares, partner at the Machado Meyer law firm.

"Unlocking the tax challenge would be a better way to make this type of transaction viable, because it would be an alternative to the regulatory prohibition of injecting gas into the distribution network," she said.

Biomethane certificates attesting to its renewable attributes can also lessen logistical challenges, as buying a certificate substitutes the need for the physical delivery.

"Today, everyone in the sector believes there is a need for certification to advance so that biomethane has an environmental validation," said Marcelo Mendonça, strategy and market director for natural gas distributors' association Abegas. "Otherwise, you are just buying a more expensive natural gas molecule."

But biomethane certificates will not be enough to create liquidity between regions, said Soares: "Many companies tend to prefer buying their biomethane with the certificates included, so there would be difficulty in having enough surplus."

Under a draft of a so-called fuel of the future bill, Brazil would create a biomethane mandate with the option of using guarantees of origin to fulfill obligations. The bill still awaits senate approval.


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Q&A: Shell Oman to balance upstream with renewables


24/05/24
News
24/05/24

Q&A: Shell Oman to balance upstream with renewables

Dubai, 24 May (Argus) — Shell has been in Oman for decades now and had a front row seat to its energy evolution from primarily an oil producing nation to now a very gas-rich and gas-leaning hydrocarbons producer. Argus spoke to Shell Oman's country chairman Walid Hadi about the company's energy strategy in the sultanate. Edited highlights follow: How would you characterize Oman's energy sector today, and where do new energies fit into that? Oman is one of the countries where there is quite a bit of overlap between how we see the energy transition and how the country sees it. Oman is clear that hydrocarbons will continue to play a role in its energy system for a long period of time. But it is also looking to decrease the carbon intensity to the most extent which is viable. We need to work on creating new energy systems or new components of energy system like hydrogen and EV charging to facilitate that. It is what we would like to call a 'just transition' because you think about it from macroeconomic perspective of the country and its economic health. Shell is involved across the energy spectrum in Oman – from upstream gas to alternative, clean energies. What is Shell's overall strategy for the country? In Oman, our strategic foundation has three main pillars. The first is around oil and liquids and our ambition is to sustain oil and liquids production. At the same time, we aim to significantly reduce carbon intensity from the oil production coming from PDO. The second strategic pillar is gas, and our ambition here is to grow the amount of gas we are producing in Oman and also to help Oman grow its LNG export capabilities. The more committed we are in unlocking the gas reserves in the country, the more we can support Oman's growth, diversification, and the resilience of its economy through investments and LNG revenue. Gas also offers a very logical and nice link into blue and green hydrogen, whether in sequence or as a stepping stone to scale the hydrogen economy in the country. The last strategic pillar is to establish low-carbon value chains, predominantly centered around hydrogen, more likely blue hydrogen in the short term and very likely material green in the long term, which is subject to regulations and markets developing. How would you view Oman's potential to be a major exporter of green hydrogen? When examining the foundational aspects of green hydrogen manufacturing, such as the quality of solar and wind resources and their onshore complementarity, Oman emerges as a highly competitive country in terms of its capabilities. But where we are in technology and where we are in global markets and on policy frameworks — the demand centers for green hydrogen are maturing but not yet matured. I think there will be a period of discovery for green hydrogen globally, not just for Oman, in the way LNG started 20-30 years ago. When it does, Oman will be well-positioned to play global role in the global hydrogen economy. But the question is, how much time it is going to take us and what kind of multi-collaboration needs to be in place to enable that? The realisation of this potential hinges on several factors: the policies of the Omani government, its bilateral ties with Japan, Korea, and the EU, and the technological advancements within the industry. Shell has also been looking at developing CCUS opportunities in the country. How big a role can CCUS play in the region's energy transition? CCUS is going to be an important tool in decarbonising the global energy system. 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Indonesia plans 15mn electric vehicles on roads by 2030


24/05/24
News
24/05/24

Indonesia plans 15mn electric vehicles on roads by 2030

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Sumitomo, Reti to develop CCS project in Canada


24/05/24
News
24/05/24

Sumitomo, Reti to develop CCS project in Canada

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US poised to back New Jersey offshore wind farms


23/05/24
News
23/05/24

US poised to back New Jersey offshore wind farms

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