Molecules – The Eurogas Newsletter (October 2019)

A letter from Eurogas President Philippe Sauquet

Although many disputed or even willfully ignored the strong connection between human activity and global warming, the science behind it is now settled and we should be thrilled by the near-universal consensus regarding the need to tackle the situation. It is time now to design and implement the solutions that can fix the problem. To achieve on that it’s critical we keep the key facts about decarbonisation in mind, as I outline below.

Our advocacy for a positive role for natural gas in the energy transition seems to be triggering an impassioned hostility that has turned both the most zealous defenders and the most fervent opponents of fighting climate change into allies. For the first group, natural gas contains carbon and must therefore be banned from all human use. The second group wants to protect other fossil fuels from gas as a feasible alternative. Natural gas is abundant worldwide, reduces air and water pollution, is the lowest-carbon fossil fuel and is affordable in most geographies. Importantly, it will provide flexibility to boost the share of renewables in the energy mix well above today’s scant levels.

The two sides claim that natural gas doesn’t emit less greenhouse gas than other fossil energy sources. The basics of chemistry state that natural gas molecules have just one carbon atom per four hydrogen atoms. So its combustion will always emit less carbon dioxide. Opinions can’t change the laws of physics and chemistry. And the legitimate appeals for the gas industry to be ever more vigilant about managing facility leaks can’t obscure the fact that all industries have a responsibility to adopt best environmental practices. Oil companies still have lots of room to improve, especially with regards to flaring the gas from their reservoirs and preventing oil spills. Coal producers must also halt the gas leaks in their mines and shrink their footprint.

In a fresh twist, the two sides have now come together to claim that natural gas actually pollutes the air more than other fossil fuels. Some reports claim that heavy-duty vehicles running on LNG emit more fine particulates than other hydrocarbon transport fuels and that they spew out up to five times more nitrogen oxides (NOx), a highly toxic gas. However, the best scientific research has always shown that the combustion of natural gas emits less soot and fewer particulates than the burning of heavier, harder-to-filter oil. For example, the French Environment and Energy Management Agency (ADEME) and the French Petroleum and Alternative Energies Institute (IFPEN), conducted a real-life driving test in southeastern France, proving that trucks running on natural gas emit 40% less of NOx.

It would probably be easier to shrug and let people say what they like. But the European gas industry must remind the public that natural gas is a real opportunity for the world. It can quickly and drastically cut carbon emissions as well as air and water pollution. Gas can achieve this at an acceptable cost while replacing other fossil fuels in power generation and transport in conjunction with renewables. That would slowly but surely usher in a carbon-neutral world for future generations.

Eurogas President Philippe Sauquet

The Madrid Forum

On 23 and 24 October, the European gas sector gathered for the 33rd European Gas Regulatory Forum in Madrid to discuss opportunities and challenges relating to the energy transition and the gas market. Following the Madrid Forum in June, which focused on strategic consideration of the role of gas in a carbon neutral energy system, this Madrid Forum returned to its traditional focus on market regulation to advance the internal gas market. The call for a long-term regulatory framework, based on a sector coupled vision of the energy system that strengthens the role of the market in delivering the transition was the common theme of Eurogas’ contributions.

Concretely, our three focus areas have been as follows:

Terminology: Together with six other gas associations covering transmission and distribution system operators, as well as biogas and hydrogen, Eurogas presented an updated proposal for a unified gas terminology for renewable, low-carbon and decarbonised gases.

ACER: Eurogas welcomed ACER’s proposal to improve the implementation and effectiveness of the Gas Target Model, including improvements to the powers of ACER, and calls for the creation of a level-playing field through more cost-reflective gas and electricity end-user tariffs to ensure cost-effectiveness of end-user investment choices.

Guarantees of Origin: Eurogas also presented a set of recommendations to strengthen the role and value of Guarantees of Origin, aiming for a harmonized system across the EU that covers and promotes the uptake of all renewable and decarbonised gases.

Eurogas now looks forward to the preparation of the next Madrid Forum in April 2020 which will once again focus on the upcoming legislative package aimed at delivering on the EU’s decarbonisation objectives.

 Andreas Guth is the Policy Director at Eurogas.

Eurogas Central and Eastern European Conference (CEEC)

The fifth CEEC, a flagship Eurogas event, took place in Riga on 7-8 October and this year’s focus was on gas market integration. This issue is particularly relevant in the Baltics region where a common gas market between Finland, Estonia and Latvia will be established on 1 January 2020 and negotiations are ongoing for Lithuania to join later.

The integration of the gas market will lead to increased competition among suppliers and sources and increased access to Klaipėda LNG terminal. It will ensure non-discrimination of supply routes, prevent tariffs within the integrated market area, boost tariff transparency and ultimately lower prices for consumers. TSOs in Finland, Estonia and Latvia agreed to sign a commercial agreement implementing an ITC (compensation mechanism) which will distribute entry capacity booking revenue among TSOs based on national demand. In light of this important regulatory development, conference participants discussed the relevance of gas infrastructure, LNG, storage and diversified supply routes in terms of building a more robust energy system.

Eurogas secured the attendance of Latvian Prime Minister Arturs Krišjānis Kariņš and the US Secretary of Energy Rick Perry as speakers. Prime Minster Kariņš focused his opening remarks on the EU’s shift towards a CO2-neutral economy, adding that “the gas industry has an important role in this transition as part of the drive towards lowering CO2 emissions”. US Secretary of Energy Rick Perry underlined the potential of Latvia to become an energy hub for the region. He stressed “energy diversity and energy security are essential to maintain our democratic independence and economic prosperity.” Bringing an EU wide perspective, Eurogas President, Philippe Sauquet highlighted the need for more awareness that “natural gas can be more and more mixed with biogas and hydrogen to further lower gas carbon intensity while keeping an affordable cost for consumers.”

 Felica Mester is Eurogas Policy Advisor Wholesale.

Eurogas President Philippe Sauquet with Arturs Krišjānis Kariņš, Prime Minister of Latvia

United States Energy Secretary Rick Perry speaking at CEEC.

More pictures from CEEC here.

Deal or no deal – European Commission delayed

For some it is only a formality, for others a bumpy ride or a major hurdle. In recent years Commissioner hearings have become a testament to the Parliament’s growing institutional strength in appointing the EU Commissioners and their President. That card was played with gusto this time with Romania’s nominee for transport and Hungary’s for enlargement refused outright by the Parliament’s Legal Committee and a third refused after her hearing. The latter was France’s appointee Sylvie Goulard, Commissioner-designate for a mammoth portfolio covering internal market, defence and space.

While successful Commissioners sailed through their hearings with varying degrees of smoothness, climate change and the energy transition were high up on the agenda. This saw discussions around fast developing vectors such as hydrogen, the need to use existing infrastructure, and alternative solutions for transport. Energy taxation and the European Green Deal featured prominently too, granted with a lack of detail besides a pledge to clarify its contents within 100 days.

Initially expected to span November into February, the “100 day” commitment for legislative proposals is now poised to be delayed by at least a month as new Commissioners-designates put forward by Hungary and France will need to be endorsed by the President of the Commission and confirmed by Parliament. Whilst Romania still considers its options, we can safely say that Parliament hasn’t said its last word, but then again neither have Member States…

Nicolas Jensen is Eurogas Policy Manager tackling issues related to distribution, sustainable finance and development of new types of gases.

Financing the transition

There is an increasing awareness among stakeholders on the critical role of private investment in ensuring secure, sustainable, competitive and affordable energy supplies to citizens and business across Europe, along the path to attain a climate-neutral economy by 2050. The massive investment needed in sustainable solutions will require more than ever a conducive financial climate in Europe, coherent with the relevant surrounding EU sectoral policies, objectives and programs. The energy sector is called to play a critical role in the transition, and the gas industry is fully aware of the contribution it can offer to further improving air quality, substantially reducing CO2 emissions and increasing the use of natural, renewable, low-carbon and decarbonised gases, thus offering flexible solutions to the entire energy system and ultimately ensuring a viable path for the transition to a climate neutral economy. As a consequence, the legislative proposals under the EU Action Plan on Sustainable Finance and the ongoing review of the EIB lending criteria for the energy sector will be crucial in our view in creating the right investment climate in Europe to attain these ambitious objectives and in defining the way financial and industrial resources will be directed in the short and medium term. For these reasons Eurogas attaches the greatest importance to these initiatives, while believing that the key objectives of EU energy policy should be upheld and pursued, in particular security of supply and energy affordability.

Valeria Palmisano is chair of the Transparency and Market Integrity TaskForce at Eurogas, which covers topics related to financial regulation and sustainable finance issues.

Welcome GasLog

Eurogas is pleased to announce that GasLog Ltd recently joined as  a member. GasLog is international owner, operator and manager of LNG carriers providing support to international energy companies as part of their LNG logistics chain. Their owned fleet consists of 34 LNG carriers, including 26 ships on the water and eight LNG carriers on order.  We look forward to working with this important player in our sector.

Eurogas Secretary General James Watson with Phil Corbett of GasLog Ltd

Events – Coming up

European Annual Gas Conference (EAGC) remains Europe’s most renowned commercial & strategic gas conference, attended by over 300 of the most senior executives from the world including major energy customers and end-users, IOCs, NOCs, TSOs, traders and policy-makers as the preferred platform to network with peers, review trends, question policy and agree future strategy. This event will take place from 5-7 November in Paris. James Watson, Eurogas Secretary General will lead a roundtable at this event on 6 November on “Renewable & Decarbonised ‘Green Gas’ Strategies”.

The European Utility Week with co-located event POWERGEN Europe 12-14 November, Paris.
Eurogas is pleased to be a partner of this year’s edition of the European Utility Week and POWERGEN Europe. The European Utility Week is a large end-to-end energy industry event.  With an expected audience of over 18,000 international power and smart energy professionals. POWERGEN Europe attracts attendees from all of the largest and most influential power providers, utilities, governments and solution providers. It has established itself as the centre point for the power generation sector.

The conference will have 300+ C-Level attendees, bringing together decarbonisation policy makers, key industry stake holders, regulators, grid operators, carbon & energy intensive industries, innovators in the field, and leading service companies.
The two-day summit will address approaches for accelerating the roll out of innovative decarbonising technologies.

The European Utility Week with co-located event POWERGEN Europe 12-14 November, Paris.
Eurogas is pleased to be a partner of this year’s edition of the European Utility Week and POWERGEN Europe. The European Utility Week is a large end-to-end energy industry event.  With an expected audience of over 18,000 international power and smart energy professionals. POWERGEN Europe attracts attendees from all of the largest and most influential power providers, utilities, governments and solution providers. It has established itself as the centre point for the power generation sector.

ACI’s 5th Future of Biogas Europe Conference will be taking place in Amsterdam, The Netherlands, on 13 – 14 November. The two day event will bring together senior executives and experts from the full value chain to provide a forum for all parties active in the field of anaerobic degradation of organic matter and renewable energy production in the form of biogas. Power producers, technology providers, agricultural sector, food and beverage industry, waste industry and leading technology and solution providers are all impacted by the development of Biogas. The conference will provide a forum to discuss the latest challenges and developments making an impact on the industry. Andreas Guth, Eurogas Policy Director is speaking on 13 November.

Consumer behaviour & climate change: Can heating make a difference? 21 November, Brussels. Organised by Euractiv, this high-level debate will discuss how consumers can help the environment by changing their habits, with a special focus on their heating habits. This event will examine the different options for decarbonising the heating sector, looking into technology and innovation.

James Watson, Secretary General of Eurogas will be one of the speakers to examine the challenges that the consumers are facing.

Over 200 exhibitors from the “gas and water world” are expected in gat|wat 2019 (26-28 November) in Cologne. Congress and trade fair visitors will have the opportunity to obtain first-hand information on new products and services. In addition, The Silent Stage at the dialogue fair will offer specialist lectures to visitors on all three days on new technologies, infrastructure, digitisation and innovation. For the first time, the established Water Industry Innovation Forum, an event of the Water Innovation Circle (WIC) of DVGW and DWA, will also take place at this event. Innovative formats such as theme tables, speed dates and business breakfasts will enrich the trade fair.

Organised by the Sustainable Energy Council, The World Hydrogen Fuels Summit is taking place in Amsterdam (The Netherlands) on 10-11 March 2020, aiming to advance the conversations between industry and government, particularly in efforts to address real-world needs and key barriers to deployment. The two day event will provide a practical approach to infrastructure, developing international integrated hydrogen supply chains, covering everything from hydrogen production to storage, transportation, and use. The overarching theme for 2020 will emphasise the effort for international collaboration showcasing the world’s most promising projects and global solutions. Eurogas is a supporting association of this event.

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