Dethroning King Coal: Comment
Is the gas industry finally waking up to the prospect that the world doesn’t owe it a living? Has it finally realised that in this ‘post-truth’ age it cannot rely on rationality to secure an increasing share of the global energy market but that it has to start bellowing that while gas should be at the heart of the answer, the crucial argument is that coal is at the heart of the problem?
For those attending the European Autumn Gas Conference at The Hague November 15-16, it would be quite natural to conclude from their rhetoric that many of the Captains and the Kings of the Great Gas Industry were, in Europe at least, sounding the retreat in the face of the extraordinary twin challenge posed by the de facto alliance of coal and renewables in Germany.
They would have been wrong.
What came through at The Hague was a clarion call to throw down the gauntlet, to depose “King Coal” and to start to forge new alliances in which gas partnered with renewables to tackle the challenge of carbon emissions and climate change.
There were two particularly striking interventions. The first came from the veteran deal maker Philip Lambert who, effectively admonishing both himself and the audience, proclaimed in a keynote address November 15: “We are pathetic at defending our fuel.”
Lambert, a survivor of the London smogs of the 1950s, took aim at coal, decrying its “atmospheric litter” and blaming it for the smog that routinely descends on Beijing and which last week blanketed Delhi. For all its focus on reducing carbon emissions, Lambert argued, the COP 21 summit in Paris in 2015 “never once mentioned smog.”
Lambert continued: “We’re losing the battle because we are not keeping it simple. “We should say that we are more interested in carbon emissions than the renewables industry is.”
But while Lambert took aim at the renewables industry for simply being interested in renewables for their own sake, he backed partnering with the renewables industry to tackle carbon emissions and climate change, voicing particular approval for offshore wind power.
As for the future, gas should challenge the status quo. There is a market out there, Lambert insisted. A 5% shift to gas from all other fuels – but coal was what he clearly had in mind – would result in China consuming an extra 165bn m³/yr of gas and India using an extra 35bn m³/yr.
The second – equally provocative – intervention came from the group executive vice-president at France’s Engie, Didier Holleaux.
“We think that as an industry we will miss the boat,” said Holleaux, opening the conference sessions November 16. “The conditions for investment in gas will not be met so that many countries will go from coal and oil to investment in renewables. The failure of ETS (the European Union’s Emissions Trading System) is a disaster for the industry, it means we will never displace coal.”
But it didn’t appear as if Holleaux expected to be taken literally. After all, this was a conference stuffed with references to the exaggerations of the Brexit war in the UK and Donald Trump’s campaign for the US presidency. So after slamming the European Commission for failing to take into account the question of emissions, he moved firmly on to the offensive, advocating a positive course for the industry.
Didier Holleaux
(Credit: Linkedin)
On the core issue of the role that gas should play in tackling climate change, Holleaux had this to say: “We need to fight for it in Europe with a better market design and regulation and consistent national policies.”
What was needed, he said was a four-stage plan.
“First we need a serious carbon process.
“Second we need to target coal. We need to eliminate coal from European industry and from European power generation, if we want to give gas a change in the European economy.
“Third, we need to make gas greener. Everything from biogas to sim-gas has to be put in place as quickly as possible.
“Fourth, we need to prepare for hydrogen. Hydrogen is the way to replace gas in the next ten to twenty years.”
Holleaux wanted the industry to start making arguments that would appeal to people; in effect, to follow the Brexit and Trump approach of appealing to emotions at least as strongly as it sought refuge in rationality. “The gas industry is too discreet,” he said. “We always consider making the case for gas is too difficult, that it’s not for the public at large, but for small fora, for governments.
“Why do we keep on trying to go back to a failed system when it would be much simpler to go to something else such as a floor as in Britain – highly effective when introduced last year – or a carbon tax?”
Brexit, he said, provided an opportunity to re-address fundamentals. After all, he argued, it was the traders and financiers of the City of London that had favoured ETS. What was needed now was a “a system that sets a minimum of carbon tax of €50/metric ton, at least in the medium term, and €100 in the long term.”
“Personally, I think that a carbon tax is the only way to achieve that,” he declared.
In sum, the Engie executive concluded, a completely different approach was needed: “Instead of negotiating for gas, go for ‘Kill Coal’ and a carbon tax.”
It was a simple slogan and produced a rapid response. From the floor came a succinct, comment from one of the most experienced gas analysts around: James Ball: “Hate speech works; you have to be able to hit people.”
And there was a similar response from one of the session moderators, Chris Hawkes, the Safety Director of the International Association of Oil and Gas Producers. He began by noting that the compilers of the Oxford English Dictionary had just announced that their ‘Word of the Year‘ was ‘post-truth’ – a neat term used to describe circumstances in which objective facts are less influential in shaping public opinion than emotional appeals.
Hawkes concluded: “The post-truth of the oil and gas industry is that facts don’t necessarily matter. All that matters is emotion. So we do need to get out there and make the case for gas.”
John Roberts, chief analyst