European Policy: Gas at the Center, or not?

Speakers at the European Autumn Gas Conference in Paris, France were discussing whether or not natural gas belonged at the center of the energy policy agenda. For most in the audience, the answer was likely a resounding “yes.”

But when you’re preaching to the choir, a little devil’s advocacy is not a bad thing.

Guy Broggi, Senior Advisor to Director LNG at Total S.A. provided a bit of skepticism.

“I don’t think it’s clearly affordable,” he said of natural gas. “If you compare to other fuels, I’m not sure gas is the cheapest fuel.”

“If you compete with coal, it’s a dead story,” Mr. Broggi continued. “If you compete with oil you have some room to maneuver. It can compete in the transportation arena. The competition fuel for gas is crude oil.”

He said that Europe was seen as a “big cake” by gas sellers like Norway, Russia, Qatar, and Nigeria whom he noted were are all meeting in Doha at the time of the conference. “My point here is if sellers and buyers want to have better usage of gas, it’s a non starter if price remains at this level. 

“If it’s a transport fuel, a lot remains to be done.”

Mr. Broggi was followed by an address from Beate Raabe, Secretary-General at Eurogas, an organization which represented companies and associations within the industry that were engaged in the wholesale and retail distribution of gas.

She noted that gas emitted 50% less CO2 than coal, at half the cost per kW.

“It’s not all about Fukushima,” she said of a policy emphasis on natural gas, but about climate change, and reducing emissions.

Ms. Raabe introduced Eurogas’ approach to the European Union’s “Roadmap 2050.”

“The way you can reduce emissions opens you up to a number of options and enables you to make choices,” she explained, saying energy efficiency was one useful tool, via behavior changes and so on.

“Gas can play a role, will play a role in a post Fukushima world, but we have to ask a number of questions and implement a number of options. The public in the end will decide which energy they are going to buy.”

Raabe noted that Russia’s Prime Minister Vladimir Putin was clear about the role of gas. “But if you look at others they are not so sure about the role of gas. They are asking ‘what about security of supply, diversity of supply and internal market?’”

Professor Jonathan Stern, Chairman and Senior Research Fellow, Natural Gas Programme at the Oxford Institute for Energy Studies said there were arguments that the gas industry was not addressing.

“This is what I’m taking away,” he said, “that gas is the best option, the cheapest option.

“The difficulty that I see is when you look at the predictions from all the non traditional energy sources, what national governments, NGOs set out, all these projections see a declining role for gas, so the arguments for natural gas are not getting through. The industry is seen as complacent.”

“The industry needs to make fewer claims and more commitments,” he added.

He noted that carbon capture-ready plants were only pending implementation for 2030, which made it look like everyone was waiting around, not doing anything for 20 years.

“If we don’t have even a demonstration project, how can we demonstrate this is how it’s done?” asked Professor Stern. “It’s good to see stronger support for more experimentation with gas as a transportation fuel.

“If gas is really going to move to the center of the policy agenda, the industry has got to stop talking to itself and start talking to governments and NGOs. It must show that even in times of uncertainty it can find a way forward,” he concluded.

In the Q&A that followed, a member of the audience asked about natural gas filling in for nuclear following the disaster at Fukushima.

“Everybody thought it was a natural alternative,” recalled Total’s Guy Broggi. “It’s a country by country answer. Knowing Japan, they will not get stuck with LNG. They may devise a new policy, will change their concept of power – I’m not sure they will rely only on natural gas and LNG.”

Another query from delegates was whether there should be a more widespread effort in support of shale gas.

Eurogas’ Beate Raabe commented: “Shale gas happens to occur in countries that don’t have conventional sources, that rely on gas from Russia. But you see that in countries like Bulgaria the public is resistant to shale gas. It’s very subtle in its roots and I think the heat has to be taken out of the discussion on shale gas and has to be seen in a wider context. If we look at the IEA estimates the potential is huge and each country will have to decide on it or not. We are just at an exploration stage - first of all we need to establish how much is in the ground and how much can be produced economically.”