Alternatives to Groningen gas are expensive, complex and politically sensitive

Printed below is an English translation of an article published by the Dutch Financial Times, Financieele Dagblad

Louis Hoeks Carel Grol • Economics & Politics: 25 JAN 2018

Since the earthquake at Zeerijp earlier this month everyone in politics The Hague agrees that the Netherlands should stop accelerating the use of Groningen gas. But good intentions come up against the unruly reality.

The five biggest obstacles in a row.

1. Gasless homes

Today the House is talking about a bill from Liesbeth van Tongeren (GroenLinks) to remove the obligation to connect new homes to the gas grid. The Cabinet also wants the gas connection obligation to be replaced by a heat law and that in 2021 approximately 50,000 new homes will be delivered by nature without natural gas.

However, those new houses are small beer. The pain is in the existing building: about 96% of the 7.7 million Dutch homes are currently dependent on gas for heating. There are no hard figures about the costs, says a spokesperson for Vereniging Eigen Huis. But it is certain that it will be a billion-dollar job.

2. From low to high caloric

One way to reduce the dependence on Groningen gas is to replace old-fashioned gas-fired central heating boilers with modern, hybrid ones that mainly use electricity to heat water. Another possibility is to make the gas infrastructure suitable and the approximately 14.4 million Dutch gas appliances for high-calorific import gas. That too is costly. According to a rough estimate, it is about € 9 billion.

3. The industry needs to

‘A letter written free of charge.’ This is what Hans Grünfeld, chairman of VEMW, the association of business users, said about the letter that Minister Eric Wiebes of Economic Affairs and Climate sent Friday. The VVD-minister wants that by 2022 ‘in principle’ no industrial large-scale consumers will be using Groningen gas anymore. They need to make sustainable or switch from low to high calorific import gas. The forty largest customers consume about the same as two million families.

Grünfeld does not think it is a realistic deadline. He argues in favor of initially exporting less Groningen gas. In addition, according to him, the State, trading company Gasterra and the Nederlandse Aardolie Maatschappij (NAM) – ie those who earn the most from the Groningen gas – must account for the costs of the conversion. A nitrogen plant, at € 500 million, must also be built, where import gas is mixed up to the quality of the Groningen gas. It has been discussed for years about this factory in Groningen Zuidbroek, but whether it comes is uncertain.

4. Penalty duration and technical complex

The Delft professor Ad van Wijk launched a plan for a ‘hydrogen economy‘ in the north of the Netherlands a year ago. Costs: € 25 billion. Hydrogen must become the fuel of the future. Via electrolysis from wind energy. The only question is whether hydrogen will be available in such a way to replace gas in four to five years. In addition, a new infrastructure has to be set up for it.

There are also other possibilities: all electric, heat networks with geothermal energy, hybrid heat pumps that function on biogas. Most of these billions of cost plans are at an early stage. And they also cost billions.

5. Import more

The Netherlands imported four million cubic meters of Russian gas more (almost 10%) last year than in 2016. This is the simplest, but also expensive alternative to Groningen gas. Moreover, the Netherlands will then become more dependent on Russia. It is a politically charged issue, which is also sensitive to allies like Poland and the Baltic States. They fear Moscow with its gas policy can blackmail Europe. Russia did this earlier with Ukraine in the conflict around Crimea.

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