GasNaturally: A Natural Conclusion
European policymakers will have to face some questions about the future role of natural gas in the European Union. That’s one of the objectives of the first Gas Week organised at the European Parliament in Brussels, from 23-27 April.
Gas Week is a comprehensive effort to help promote the benefits of natural gas use by GasNaturally, representing seven associations throughout the gas chain.
“This is the type of initiative we would like to implement for our industry,” said François-Régis Mouton, Chairman of GasNaturally.
With over two decades of experience in the oil and gas business, and enjoying related positions at TOTAL and the World Bank, among others, M. Mouton is keen to promote the benefits of natural gas in Europe.
In his role as chairman of the gas communication task force at OGP, the International Association of Oil and Gas Producers, a consortium of oil and gas companies, and realized he was on to something bigger: helping natural gas find its place in Europe in the face of massive investments to come in the energy sector and renewables.
“After a couple of months I had thought about what I could be doing to increase the positive perceptions of natural gas – I thought it would make much more sense to work with other organizations, associations and align our messages for a better leverage,” he recalled.
”Together we decided in 2011 to launch GasNaturally as a common initiative, explained Mouton. GasNaturally now brings together OGP, Eurogas, Gas Infrastructure Europe [GIE], the European Gas Research Group [GERG], the Technical Association of the European Natural Gas Industry [MARCOGAZ], the International Group of Liquefied Natural Gas Importers [GIIGNL], and the International Gas Union [IGU]. Together, we supply hundreds of millions of customers and represent the entire gas chain
M. Mouton described GasNaturally’s key messages of which there are three.
“Gas is the quickest and cheapest way to make significant CO2 greenhouse gas reductions in the EU.
“Secondly, gas is a ideal partner for renewables; we don’t want to be misunderstood as unfriendly to renewables – we welcome them and are willing to work with them. We want to prove that,” he explained.
“Renewables need a response to their variability and natural gas is the most flexible source of power generation,” he continued. “A gas-powered plant can be turned on to full capacity within 30 minutes or so, so it’s the best response with the lowest capital costs and the lowest level of emissions.”
“The third message,” said Mouton, “is that gas provides the EU with security of supply.”
He explained that the gas initiative had been focused on the EU’s Energy Roadmap 2050 that was launched at the end of last year. “This was a major concern and focus for our initiative, to propose solutions to policymakers.”
Mouton’s got some numbers to back up GasNaturally’s positions. For example, regarding the quickest and most efficient way of making CO2 reductions, he explained: “Combined cycle gas turbines are producing 350 kilograms of CO2 per megawatt hour; compare that with the cleanest coal plant on the market which produces 850 kg, or a lignite plant which processes 1,200kg.
“So you can divide your emissions by say three or four times, and capital costs are something like half of that for coal power plants,” he added.
A recent IHS Cera study from this year, he noted, stated that if all high carbon power stations (oil and coal) could be switched overnight to modern gas-fired stations – CCGT - the EU would reduce the emissions of the power generation sector by 58% compared to 1990 levels.
“This is quite dramatic,” he commented. “We would like the EU institutions to focus on the quickest and cheapest ways to reach their goals, which mean for us in the short- and mid term, using more gas.”
But what about security of supply for Europe, if the continent is using more gas?
“Of course there are lingering concerns after what happened some years ago with the Russia-Ukraine gas crisis,” said Mouton
“This issue arose again this winter but when you have a cold wave we have significant flexibilities, including LNG supplies, reverse flow of gas which has been improved through the European Commission’s Gas Coordination Group, and through many tools like gas storage to cope with these situations.
“The EU is within economic reach of 70-80% of gas resources through pipelines and LNG. For us, the icing on the cake would be to increase the natural gas production of the EU, as it has increased in the US.”
To sum up, Mr. Mouton said that gas fits in with all of the EU’s energy objectives of security of supply, competitiveness and low carbon economies.
“What we need now,” he said, “is for the EU institutions to acknowlege the role of gas – the Commission recognized it in terms of words in the EU Energy Roadmap 2050; gas is mentioned in three different paragraphs, which is fine. But natural gas is not included in any of the six scenarios that the European Commission is using, although it is stated in their ‘no regrets’ scenario.”
But how to increase investment in gas-fired generation in Europe?
“We need investors,” replied Mr. Mouton. “To attract them, we need to have security of demand for electricity generated from gas. Today we don’t have that, because we don’t know for how long gas will be used in electricity generation. How can you convince an investor about a gas power plant when you can’t predict the duration for which it will be used. Renewables and coal will always receive priority before gas under the current market structure – it’s very difficult to make a business case.”
“Policy makers are beginning to realize that it’s not good to tell investors ‘After 2035, forget about gas’ because you have no guarantee of how much gas you will be running. Now they’re starting to think a bit more long-term and say that from 2035 we need to have carbon capture storage (CCS) up and running. We really hope that there will be enough R&D investment in the coming years to get CCS past the demonstration phase, but there’s no guarantee.
“This is another reason to try and replace higher carbon sources of emissions, in terms of electricity generation, with gas.”
According to him, investment in infrastructure must be assessed realistically, like investments in gas powered generation.
“Today,” he commented, “we don’t have a single legal framework with a long-term view which is clear enough to address that concern.”
To shed some light on those issues, GasNaturally has been organizing events, like a recent forum for EU member states representatives, bringing together representatives from 19 of the 27 EU countries and 50 natural gas industry representatives.
He said not only did those participating find it interesting, but some member states commented that such a dialogue was long overdue.
“It enlightened them as to what gas could offer,” he explained.
Gas Week 2012 kicks off on April 23. The purpose of Gas Week, according to Mouton, was to present all of the hot natural gas related topics to decision makers in Brussels.
M Mouton explained “we will have an exciting exhibition with 3D images, floor projections and videos, which will showcase the role of natural gas in contributing to a low-carbon economy. We will hear what European energy experts such as Philip Lowe, the European Commission’s Director General for Energy, Professor Vladko Panayotov, MEP, and incoming International Gas Union (IGU) President Jérôme Ferrier have to say. We will have a great number of presentations organized by GasNaturally’s members on key topics; And, as a highlight, we are organizing with Amalia Sartori, the newly appointed head of the energy and industry committee of the European Parliament, a hearing on ‘Gas and Renewables: Combining forces to help achieve Energy Roadmap 2050’, with presentations by industry, experts, NGO’s and policy makers. The head of cabinet of Commissioner Oettinger will also participate.