Energy for Prosperity: WEC Panel Sees Hope

Cutting the amount of carbon emissions globally without punishing consumers with high prices is a tough circle to square, but it is do-able as long as everyone works together, a panel at the World Energy Congress in Doha broadly agreed September 9. Access to energy is improving and the value from energy is being spread more evenly across the value chain now, they heard. 

But so much coal fired generation is newly built -- in Asia, the average age of a plant is just 11 years -- the implication remains that another three or four decades of heavy emissions lie ahead. As the head of the International Energy Agency Fatih Birol said, the biggest demand growth for electricity is air conditioning, so two pieces of low-hanging fruit would be to replace coal with gas in power generation and install only the most efficient air conditioning units. But both targets have obvious difficulties, such as compensation for the owners of the coal plant that is taken offline early. 

Further, there is very little co-operation going on at a government level at the moment. With trade tensions between the US and China persisting and the UK intending to leave the European Union soon, there is not much leadership to leverage any collaboration on technology. And without advances in technology, such as carbon capture and storage and hydrogen, there is little prospect of affordably achieving the colossal reductions in emissions that the Paris Agreement requires. Nobody seems to expect the temperature increase limit of 1.5 degrees centigrade to be achieved on the basis of what is happening today, speakers said. 

The speakers were mostly from the world of gas, but included the head of the International Renewable Energy Association (Irena), Francesco La Camera, who said that his organisation was ready to talk to the oil and gas industry too, to find a cleaner future, including the potential for hydrogen to make a difference. But he also talked about the dramatic falls in renewable energy prices that will soon make wind and solar the cheapest sources of electricity, even if problems remain about the cost of storage to back up intermittency. 

Another possible fuel, which Japan is experimenting with, is ammonia: a small coal-fired plant is being retrofitted to burn ammonia. This also happens to be the world's most traded chemical, which has the potential to simplify the supply chain, rather than complicate it as hydrogen will. As greener and greener sources of energy are fed into the supply chain, the energy mix improves.

Speaking at another panel session, Didier Holleaux at French Engie sang the praises of biogas, but conceded that for the time being, its use depends on subsidies and in these difficult economic times, those will not last forever. He said: "We need a long-lasting solution."

Coal must be the first to go from the energy mix, argued Total CEO Patrick Pouyanne, whose company has got its weighted cost of production down to just $25/barrel. Eni's CEO Claudio Descalzi agreed. But oil and gas will be needed for decades and it would be wrong to imagine that prices will not go up as unconventionals play a bigger role. That means deepwater as well as shale oil, Pouyanne said, which means higher prices. Gas however is abundant and affordable, he said.

However Descalzi was downbeat, praising his industry's capacity for talk but not action. In fact it is not just the energy industry, but society generally and policy-makers in particular, who need to take action. Carbon trading is a case in point: it drives industry away from the European Union into less regulated countries with lower production costs. Refining in Europe is coming under the same pressures, he said.