Editorial: Taking the lead [NGW Magazine]

Two gas conferences in mid-May – Flame in Amsterdam and the Russian Gas Society conference in Berlin – hammered home three messages. First, the gas industry has to decarbonise somehow and do so as quickly as possible, or it risks being overtaken by events: some assets will be stranded, shareholder value lost.

A mix of decentralised grids, heat pumps, nuclear stations, solar and wind farms and massive energy efficiency gains could be the future, at least outside industry. But analysis paralysis grips the policy-makers, weighing up the huge costs involved and anxious to avoid the mistakes of Germany. The gas industry must act soon – at least in Europe, where it is particularly threatened – and perhaps even without public money. This is after all a long-term business and the returns for now are good. It must seize a leadership position.

Hydrogen and green gas, running alongside and eventually replacing natural gas, are likely to play a big role, as this will keep the costs down and be unintrusive.

The availability of pipelines buried underground and depleted offshore gas fields, managed by a highly skilled labour force and served by an extensive supply chain – these are the big advantages the gas industry has, from well head to burner tip. Carbon capture and use or storage may be very expensive compared with doing nothing; but so too are the other solutions, and it is known to work without damaging the physical environment.

Another message was that whatever any sector in Europe does to decarbonise will be pitifully inadequate as the world’s population heads towards the 9bn mark by 2050 and the middle classes swell in Asia and Africa, with higher, materialist expectations. More cars, tourism, air conditioning – these will all impose new demands on the global energy system, not to mention the remaining forests. So there is also an air of unreality about the objectives in Europe, which few politicians now find it wise to admit to.

And third, if we do manage to squeeze under the stated 1.5 °C bar for global warming to rise, then we will in all probability be living in a world that is unrecognisable today. National gross domestic product will fall. Fighting the rise in costs will be the armies of gilets jaunes, protesting in France for months but spreading to other countries as social inequality rises and cheap holidays abroad become for many a distant memory.

This turns the energy trilemma on its head: until someone discovers the necessary reserves of what for now we must call unobtainium, energy will be expensive, insecure and scarce all at once.

According to energy economist Dieter Helm speaking at Flame, we are already living beyond our means in terms of our carbon consumption. While the European Union pats itself on the back for cutting emissions at home, it does not consider emissions elsewhere, which rise as carbon production takes place in countries with lower environmental, health and safety regulations and the goods Europe needs are then shipped half way round the globe. As he argues, taxing consumption is the key, not production, if we are to be honest about our intentions to decarbonise.

If the UK is taken out of the EU statistically, then EU-27 emissions might not have gone down so much at all: with industrial demand down, and more gas in the power mix and zero coal for weeks on end this spring, the UK is, with all due respect to the claims of the Friday school strikes, actually punching above its weight – but not perhaps for reasons that its citizens should take pride in. At time of press, there is debate about what to do about the insolvent British Steel, for example. But home-made steel must have a smaller carbon footprint than imports.

It would be more beneficial, sooner, for society’s health if the Greta Thunberg following were to try to force governments to address legislation to reduce particulate emissions from diesel and wood chips, where doubtless much more could be done.

Who could have predicted this dramatic turnaround in the energy discourse ten or even five years ago, when the future for gas, the noble fuel, seemed so secure? Just wait until people recognise its advantages, the industry said: then our hour will come. But the people resolutely failed to recognise the benefits of ‘coal lite.’ They made their presence felt at Flame, too – while delegates heard about the benefits of a hydrogen future.

The groundswell of public and professional opinion is turning against oil and gas companies, as sovereign wealth funds pick other stocks, banks decide on cleaner lending criteria, and activist shareholders force change from within.

These have had some success in modifying behaviour – Climate Action 100+ springs to mind in the case of the Anglo-Dutch major Shell and others who have built carbon reduction targets into executives’ bonuses. This might be just the start of a harder onslaught.

Politics are also partly responsible: sanctions, punitive tariffs, discriminatory regulations and the threat of interruptions to transit flows all give gas a worse name than it deserves. Importing LNG from anywhere will also have a much higher carbon footprint than buying pipeline gas from continental neighbours.

But who can say that the supply of the raw materials needed for the renewable future – batteries, for example – will not also be constrained; not to mention the environmental risks from their disposal. It might be a hard sell for the public to keep with gas, but the industry can invest more to show now that it really is the securest and cleanest energy at that price. Money talks.