Hydrogen Blending in the Southern Gas Corridor: Barriers and Feasibility

October 2024

Murman Margvelashvili

Research Director at World Experience for Georgia (WEG)

The Southern Gas Corridor (SGC), a critical route for natural gas from the Caspian region to Europe, is viewed as an important pillar of European Union (EU) energy security. The EU and Azerbaijan signed a Memorandum of Understanding (MoU) in 2022, aiming to double Azeri gas supply to the EU by 2027 (EC, 2022). Plans for increasing production in Azerbaijan, as well as bringing gas from Turkmenistan via the Trans-Caspian Pipeline (TCP) to the EU over an extended SGC, are underway. The SGC is also being considered for transporting green hydrogen, supporting Azerbaijan’s ambitions to produce and export renewable hydrogen to the EU.

Indeed, the MoU includes provisions to support Azerbaijan in developing renewable energy sources and exporting green hydrogen through the SGC, in line with the EU’s decarbonization strategy. Hydrogen blending into the SGC was promoted as a potential solution to gradually increase hydrogen exports in parallel with production growth. This approach was also considered for large-scale hydrogen exports from Central Asian countries, which have vast renewable energy potential (Weg, 2022). However, while promising in theory, this concept faces significant technical, regulatory, and economic challenges, complicating the feasibility of integrating hydrogen into the existing natural gas system. Therefore, separate infrastructure for hydrogen may be needed.

Source: The Ministry of Energy Azerbaijan

Hydrogen Mixing Challenges

Several critical issues arise when blending hydrogen into operating commercial gas networks.

Technical and Safety Challenges

The gas networks of downstream countries are primarily designed for natural gas, not hydrogen. Countries such as Georgia, Turkey, and Italy, which receive gas via the South Caucasus Pipeline (SCP), Trans-Anatolian Pipeline (TANAP), and Trans-Adriatic Pipeline, would face hydrogen-specific challenges such as increased leakage and metal embrittlement. Hydrogen’s small molecular size increases the risk of leaks and damages to pipeline materials like steel (NREL, 2022). Additionally, downstream infrastructure would require costly retrofitting and thorough preliminary studies.

Metering and Billing Complexities

Hydrogen’s lower energy content per cubic meter adds another layer of complexity. In countries where gas billing is based on volume, blending hydrogen into the natural gas stream would lead to customers paying the same amount for less energy. Harmonizing billing systems across multiple jurisdictions and managing customer expectations would necessitate a regulatory overhaul. This would include revising customer agreements and upgrading metering systems, making the process costly and administratively burdensome.

Need for Technical Standards

Adopting hydrogen blending requires the development and harmonization of technical standards for materials, pressure levels, and safety protocols, which currently vary across the EU, Turkey, Georgia, and Azerbaijan. Without alignment, retrofitting pipelines and upgrading compressor stations to accommodate hydrogen’s unique properties could prove prohibitively expensive. Furthermore, without a coordinated regulatory framework, the risk of infrastructure failures would increase, undermining any potential benefits of hydrogen blending.

Blending hydrogen into the general gas infrastructure dilutes its value for targeted emission reductions

Emission Reduction Uncertainty

Blending hydrogen into the SGC also raises questions about accounting for emission reductions. It may become difficult for downstream countries to calculate emissions savings and incorporate hydrogen into their decarbonization strategies. Additionally, blending hydrogen into general gas infrastructure dilutes its value for targeted emission reductions. When hydrogen is mixed into the overall gas supply, its use is spread across the entire customer base rather than being allocated to specific buyers aiming to meet decarbonization goals. This undermines the marketability of green hydrogen for emissions reduction and complicates the creation of a clear market mechanism for hydrogen as a product.

Misallocation of Hydrogen Use

Hydrogen’s greatest potential lies in decarbonizing hard-to-abate sectors like heavy industry and long-haul transport. However, blending hydrogen into the general gas supply risks its diversion to low-impact sectors such as residential heating and cooking, where its climate benefits are less obvious. This misallocation may undermine hydrogen’s potential to contribute significantly to emissions reduction, making it essential to develop dedicated hydrogen infrastructure rather than relying on existing pipelines.

Conclusion: A Strategic Shift

Given these challenges, it seems unlikely that the SGC will be able to transport significant volumes of hydrogen in the near future. Instead, the SGC will continue to play a crucial role in transporting Azeri and potentially Turkmen gas to Europe, enhancing EU energy security. For hydrogen exports from the Caucasus and Central Asia to become viable, a dedicated infrastructure, optimized for hydrogen transportation, will need to be developed. This could include pipelines, sea terminals, and other infrastructure as part of a broader Green Energy Corridor. Moreover, the EU is already developing a separate hydrogen market and system, further indicating that hydrogen export routes should be developed independently of natural gas systems (EC, 2024). While a dual-use infrastructure with convertible pipelines is technically possible, this concept requires further discussion and analysis.

References

European Commission (EC). (2022). Statement by President von der Leyen with President Aliyev. Retrieved from https://europa.eu/
Daily Sabah. (2021). TANAP could supply hydrogen to Europe. Retrieved from https://dailysabah.com
WEG (2022). Can the Southern Gas Corridor be Decarbonized?. Retrieved from https://www.weg.ge
NREL. (2022). Hydrogen Blending into Natural Gas Pipeline Infrastructure: Review of the State of Technology. Retrieved from https://www.nrel.gov/
European Commission (EC). (2024). The EU hydrogen and gas decarbonization package. Retrieved from https://europa.eu/

 

Bio: Murman Margvelashvili is a senior expert in energy policy and energy education, serving as the Research Director at World Experience for Georgia (WEG) and an Associate Professor at Ilia State University. With a PhD in High Energy Physics and almost 30 years of experience in the energy sector, his expertise covers operations, investment projects, policy analysis, and strategic planning for private companies, development agencies, and government organizations. His current focus includes energy security, energy transition, and advancing higher education in the energy field. Murman has played a key role in advising the Georgian government and international organizations on energy reforms, security, and sustainable energy policies. His international work extends to advising donors and governments in Central Asia and conducting energy policy reviews for former Soviet states as an expert for the International Energy Agency. His recent contributions include shaping Georgia’s National Energy Policy, National Energy and Climate Plan, and drafting the country’s hydrogen strategy. He is a member of several advisory councils and boards, including the Hydrogen Committee of Georgia; he is also a dedicated educator, leading programs on energy systems and sustainable development. Murman is a frequent speaker and moderator at international conferences and workshops.

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