On March 18, 2016, the Enagas logo can be seen on the top of the headquarters in Madrid, Spain. REUTERS/Andrea Comas/File Photo

Reuters, November 18-As world leaders finalized a climate change mitigation agreement last week, natural gas engineer Michele Ricciardi is delving into a practical problem: Italy and thousands in Europe How the mile of pipeline safely transports hydrogen.

Italians are at the forefront of the efforts of gas transportation companies to prepare for a low-carbon future: if fossil fuels are phased out in the next few decades, gas companies believe that this does not mean that the infrastructure that hosts them must also be phased out. After countries cut off natural gas, they hope to reuse pipelines to transport zero-emission hydrogen.

The efforts of nearly two dozen companies reflect the accelerated pace of planning in the global oil and gas industry, from drillers to refineries, as governments and activists increase pressure to cut greenhouse gases, and they are eager to adapt. In addition to actual preparations, the transition also allows companies to compete with other energy sources for financing, even if they have invested billions of euros in unpredictable markets.

Hydrogen energy projects-including Snam SpA (SRG.MI) in Italy, Enagas SA (ENAG.MC) in Spain and Open Grid Europe (OGE) in Germany-will rely on huge solar farms as far away as the Sahara Desert to create energy Need to generate hydrogen from water.

These fuels will then be transported along the existing natural gas pipeline network to the industrial heartland of Europe-a 198,500-kilometer (123,300-mile) network that, if untied, can circle the equator four times.

"Once we see the Sahara sunshine in the German factory...just like the Roman road we are still walking today," Ricadi’s boss and Snam’s CEO Marco Alvera told Reuters. "Forever."

The two companies hope to form a European Hydrogen Backbone (EHB) to prevent pipeline rust from becoming what the industry calls “stranded assets”. They calculated that approximately 69% of existing pipelines can be converted to up to 81 billion euros (94 billion US dollars).

The project is one of hundreds of plans to build a hydrogen economy. The European Union stated that by 2030, the plan may involve up to 460 billion euros in investment.

The hydrogen supply network can increase energy security in Europe: the group currently relies on natural gas to meet 28% of its energy needs, with one third of the natural gas coming from Russia. Politicians recently accused Moscow of blocking supply when natural gas prices climbed to record levels. Russia stated that it has met all its contract requirements.

"I think this is a brilliant idea," EU Climate Action Commissioner Frans Timmermans told Reuters. He said that upgrading the existing natural gas network to transport hydrogen accounts for about 25% of the cost of building new infrastructure for renewable energy.

But the EU does not provide cash for joint ventures-this must come from the industry or the national government. Therefore, it will need political and industrial support.

To be successful, the natural gas pipeline network needs to be able to deliver the hydrogen mixed with natural gas to customers who can use it—such as steel manufacturers, chemical companies, and oil refineries. The supply must be safe and the quantity must be large enough to be affordable.

Eventually-if green hydrogen can be provided in large quantities-the automotive industry and home heating suppliers may also start to use it. But research shows that it will not be before 2030.

The gas grid company said that their main challenge now is that Europe does not have a regulatory framework for them to adapt to the network. Maria Sicilia, Enagas Strategy Director, said: “Regulations need to define hydrogen as a gas that can be transported and used similarly to natural gas.” She said that if regulations set standards, networks can be interconnected.

Hydrogen is the most abundant element in the universe, mainly combined with oxygen in water. But it is also one of the most flammable substances. In the past, dozens of hydrogen airships, including the Hindenburg fire in 1937, exploded or burned, leading many people to believe that hydrogen is a high risk.

Snam and other companies stated that their industry has decades of experience and first established the infrastructure, so hydrogen does not need to be more dangerous than other fuels used today. According to the German natural gas lobby group Zukunft Gas, if hydrogen leaks to the open air, it will rise and its concentration will quickly drop below the explosive level.

In the past three years, Ricadi and his team in his office near the Snam key gas flow room in Milan headquarters have combed Europe's largest natural gas transportation network to make sure it can handle natural gas. Snam stated that it is ready to spend more than 3 billion euros to replace natural gas pipelines that meet hydrogen standards.

"For the past 80 years, we have been transporting natural gas," said Ricciardi, whose job is to set standards that the industry can agree to to make pipelines safe. "Now we must use hydrogen to do this."

Flammability is only an issue. Compared with natural gas, hydrogen is also easier to leak because of its smaller molecules. Its flow pattern is different, and it can even erode certain grades of steel, making it brittle.

The required changes vary by gas network, but the company must carefully inspect the pipes to ensure that the steel is intact and the seals are sealed. Compressor stations along the way may need to be retrofitted, and the facility will be equipped with sensors to track leaks, then discharge and transfer them.

Petroleum and other industries already use hydrogen as a raw material-Germany's supply is equivalent to one-tenth of its electricity use, mainly for steel and chemicals. But this gas is made using fossil fuels and is called "gray" hydrogen [nL4N2S72U5].

The pipeline network already includes four lines connecting Algeria, Morocco, Libya and Tunisia with Spain and Italy.

"Of course, the problem now is that it is full of natural gas," said Ad van Wijk, professor of future energy systems at Delft University of Technology. But "the backbone is in place," he said. He advocated linking Europe and Africa and running the European energy system with 50% renewable energy and 50% green hydrogen.

Cost is another issue. So far, "green" hydrogen has been mainly used in experimental projects. The production cost is four to five times that of gray varieties.

In order to reduce this situation, the industry and consumers need to expand production and demand.

Snam's Alvera said that solar panels in southern Spain, the Sahara Desert and parts of the Middle East can provide cheap renewable electricity to power the electrolysis plant and pump hydrogen into the modified pipeline. According to data from the industry association Solar Power Europe, Spain is already one of the cheapest locations in Europe to produce renewable electricity, and costs are expected to drop.

At the same time, these companies said that they can also transport gas produced from fossil fuels, but will capture the resulting emissions-known as "blue" hydrogen.

Thomas Deser, senior portfolio manager at Union Investment, a large German fund, is skeptical. He believes that “before the middle of the decade, there would be no money to produce green hydrogen without subsidies.”

The hydrogen backbone is now competing for state funding. Germany is the largest energy consumer in Europe. Berlin has pledged to invest 9 billion euros to develop a green hydrogen industry by 2030, of which 2 billion euros are earmarked for increasing imports from partner countries such as Morocco, Chile, Saudi Arabia and Australia.

But electricity is another fast-growing source of relatively clean electricity, and the demand for the transmission network in Germany is also increasing. Germany plans to invest 1 billion euros in electric vehicle charging infrastructure by 2025, and there are also hundreds of millions of euros for the purchase of insurance premiums and tax deductions.

The country has the world's largest car manufacturer, Volkswagen in Wolfsburg. Although car companies are developing hydrogen fuel cell prototypes and battery cars read more, European carmakers do not regard hydrogen as their preferred power source.

Volkswagen has invested billions of euros in battery-based electric vehicle technology. It told Reuters that it believes the changes that drive mobility must be changed substantially. Volkswagen Chief Executive Herbert Diess tweeted in May that “hydrogen-fueled vehicles have proven to be not a climate-friendly solution” and that “electrification has established a place in transportation.”

Nevertheless, new demand for hydrogen is emerging: According to the Hydrogen Energy Commission and McKinsey Consulting, by July 2021, 359 large-scale projects have been announced worldwide, 80% of which are in Europe.

Snam stated that it has successfully tested a mixed combustion furnace of natural gas and 30% hydrogen at an Italian steel company.

In Milan, Ricciardi said that increasing the mixing ratio is tricky, so the standard is of utmost importance.

"We are developing a new rule book to ensure that the network can do the job," Ricciardi said. "There are a lot of rides on it."

Our standard: Thomson Reuters Trust Principles.

Subscribe to our daily featured newsletter to receive the latest exclusive Reuters reports sent to your inbox.

Reuters, the news and media division of Thomson Reuters, is the world's largest multimedia news provider, reaching billions of people around the world every day. Reuters provides business, financial, domestic and international news directly to consumers through desktop terminals, world media organizations, industry events and directly.

Rely on authoritative content, lawyer editing expertise, and industry-defining technology to build the most powerful argument.

The most comprehensive solution to manage all complex and expanding tax and compliance needs.

The industry leader in providing online information for tax, accounting and financial professionals.

Access unparalleled financial data, news, and content with a highly customized workflow experience on desktop, web, and mobile devices.

Browse an unparalleled combination of real-time and historical market data and insights from global resources and experts.

Screen high-risk individuals and entities around the world to help discover hidden risks in business relationships and interpersonal relationships.

All quotes are delayed by at least 15 minutes. Please see the complete list of exchanges and delays here.