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    From the Editor: In 2021 natural gas takes centre stage [GasTransition]


In the gas industry, the “future role of gas” has been an important topic for many years now, and you may even think you have “heard it all before”. But for policymakers, NGOs and the larger public, it is a topic that is only beginning to take centre stage. [Gas Transitions Volume 2, Issue 1]

by: Karel Beckman

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Natural Gas & LNG News, Top Stories, Insights, Premium, Editorial, Gas Transitions, Energy Transition

From the Editor: In 2021 natural gas takes centre stage [GasTransition]

Up to now, coal and oil have been in the spotlight of the climate and energy debate. But they are fading now. Coal has become anathema for most, and oil is only tolerated on the assumption that it will be gradually replaced as transport becomes electrified.

That leaves natural gas as the last fossil fuel standing.

Its fate, however, is by no means as clear as that of coal and oil. Certainly it is not sealed yet.

One reason for this is the very fact that it will be the last fossil fuel remaining in the mix. It is by no means clear whether the world can get along without fossil fuels, at least not in the 21st Century. A fossil fuel “backup” – in the broadest sense of the word – is likely to be needed for a long time to come. Gas, as the most versatile and least CO2-intensive of the fossil fuels, seems the best option to play this role.

For one thing, this seems to be the way China, the coming economic superpower, is going. As we report in our news section, the research arm of state energy firm CNPC forecasts in its annual energy outlook that Chinese coal demand will fall sharply from 2025 on, oil demand will be capped around 2025, whereas natural gas is seen as “a key bridge fuel over the next two decades with a 2.8% per annum demand increase”.

Countries like the U.S., Japan and South Korea will invest heavily in renewable energy, like China, but will also not forego gas – if only in the form of “blue” hydrogen – for the foreseeable future.

What about Europe? Here the month of December saw an intense struggle over the future role of gas coming to a head. The bickering ended, as might be expected, with various compromises, as we report elsewhere in this issue.  

The outcomes are not at all bad for gas. The European Commission clearly wants to keep natural gas – in the form of blue hydrogen – in the picture, perhaps partly thanks to the leadership of EU climate czar Frans Timmermans, a Dutch national. The Netherlands is one of a number of EU Member States that insist on an important role for blue hydrogen, against the opposition of countries like Spain and Portugal, which are blessed with ample solar power resources, and so naturally favour the green hydrogen variant.

Interestingly, Poland, heavily reliant on coal, has now indicated that it views gas as “one of the answers” to its decarbonisation task. This could mean that a massive coal-to-gas switch is on the cards in Eastern Europe.

Germany is still betting primarily on green hydrogen, even though that means the country will have to set up “partnerships” throughout the world to make sure that countries with ample space and renewable resources build sufficient electrolysis capacity to be able to export hydrogen to Germany.

Not a simple matter, as a new report from the renowned Fraunhofer Institute makes clear. The Fraunhofer researchers warn that the complexity of developing large-scale imports of green hydrogen is underestimated, which could mean that Germany will yet have to turn to blue hydrogen in the future. (See article on page X.)

Certainly other low-carbon alternatives are hard to come by. For many people concerned with the climate and with the preservation of nature, the massive increase in woodburning which is now taking place in Europe and some Asian countries, as a replacement of coal, is not the right answer.

Several “green” NGOs have issued stark warnings about the increasingly heavy toll coal-to-wood switching is taking on forests in Eastern and Northern Europe and in North America. Nor is woodburning CO2-free of course: it comes with large emissions of carbon dioxide, which are “compensated for” on paper, but not very likely in reality.

Our main interview in this issue is with Luca Franza, a natural gas expert who has written an impressive Ph.D. that will be of interest to many of our readers, on how the liberalisation of the EU gas market has impacted energy relations between Europe and Russia. One of Franza’s conclusions is that the gas industry has been on the defensive unnecessarily over the supposed geopolitical role of natural gas, which he say has been vastly exaggerated.

Franza, who last year made a switch from Clingendael International Energy Programme (CIEP) in The Hague to the Italian Institute of International Affairs in Rome, notes that in the current climate debate around the role of natural gas, the gas industry is “yet again on the defensive”. His recommendation for the industry: look carefully at the opportunities arising from decarbonisation policies and position yourself in the right way to seize them.

It seems sensible advice for 2021. Like it or not, natural gas will be pushed into the limelight of the energy and climate debate. This will make the right positioning more important than ever.