EU Energy Policy Triangle: Old Diagram, New Perspectives

Mr. David Odling, Energy Policy Manager, Oil & Gas UK, began his talk to delegates at Gas Week 2013 by presenting a diagram that everyone was likely familiar with: the EU Energy Policy Triangle, which had reduced greenhouse gas emissions (GHG) on one point, security of supply on another, and affordability/economic competitiveness on the third.

He commented, "On this slide, there is nothing new for any of you."

Mr. Odling added, however, that he was struck by earlier remarks in the panel discussion on "the need for reality" and a remark made by a member of the European Commission, who admitted that there had been an over-emphasis on the top item of the triangle: "Reduced Emissions of GHGs." Clearly, not enough emphasis had been placed on the other elements.

"I entirely agree," he said, continuing, "and there's one thing for sure: as a former energy minister in my own country admitted, if we miss a particular target for this or that, there will be all sorts of newspaper articles, indignant speeches in parliament, and so on.

"But if the lights go out, or if consumers cannot afford gas and electricity, then we have serious social problems, governments will fall and there will be much greater difficulties, so I'm pleased to hear we're going to concentrate a bit more on the lower two items," he stated.

Mr. Odling proceeded to show a recent assessment from Exxon Mobil which showed "A Tale of Two Worlds," i.e. estimates of the makeup of energy consumption for the Organisation for Economic Co-operation and Development (OECD) countries versus non OECD countries up until the year 2040.

He noted that the diagram looked back to the year 2000, enabling one to look back at the trajectory, and that one could see the shear scale of the oil, gas and coal consumption, particularly in the non OECD side, which showed modest growth for other energy sources, like renewables, biomass and nuclear.

"Often when we think of coal and coal consumption, our minds turn to China," said Mr. Odling, "and, understandably, that is correct, because China is the king of coal consumption worldwide."

Still, he said an article he read had pointed out that in 2012, India had 95,000 megawatts of coal-generating capacity, and by the mid 2020s was expected to have 295,000 megawatts of coal capacity.

He commented, "It really does explain the dramatic rise in consumption of energy in the non OECD countries versus steadiness or even decline in the OECD.

"This is what we face in world terms," he continued, "and those of us who do have an interest in climate change, it is a worldwide problem."

Coal and coal-fired power, he contended, was the overriding problem worldwide, a solution to which was needed more than anything else.

"If I use a US military term, that means we want 'big bangs' that don't cost too many 'bucks'—a buck being a dollar, but unfortunately EU policy is, frankly, small bangs for very expensive bucks, and there is a complete disconnect in my mind between what is required."

According to Mr. Odling, it was clear that the globe needed to use more gas than coal for power generation. "Without question, that has to be true with a 20 or 30-year view and if we can develop carbon capture storage (CCS), then it could be true in the much longer term," he said.

The other thing that was missing, he said, was an emphasis on research & development of new technologies.

"Not just CCS—what about energy storage?" he asked. "We cannot store energy in bulk amount, it is physically impossible to store the sort of quantities you need to secure systems. It just cannot be done. Present renewable technologies are not going to get us there; we need new generation renewables if they are to have a serious role in future energy systems."

Then, he offered what he said was his final point. "Therefore, looking at the road to 2030, we're looking for a sensible EU policy on emissions to 2030; we're not looking for a mass of detailed and overlapping targets, which create confusion, divert resources in the wrong direction and leave people in a muddle about where to invest, because the net result is people don't invest as there's so much uncertainty.

"And it doesn't matter where you go in Europe, political uncertainty is one of the most fundamental barriers to future investment," concluded David Odling.