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    Gas Clashes with Climate Goals [The Brussels Conversation]

Summary

The EU aims to reach carbon neutrality by 2050, but energy markets are not yet on track.

[The Brussels Conversation]

by: Sonja van Renssen

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Gas Clashes with Climate Goals [The Brussels Conversation]

The European Commission (EC) and 11 European Union (EU) member states have chosen not to sign a declaration on a "sustainable and smart gas infrastructure for Europe” because it is not ambitious enough on climate change.

The declaration was prepared by current holder of the rotating six-month EU presidency, Romania, as a follow-up to the “hydrogen initiative” of its predecessor Austria. It was presented to EU energy ministers at an informal meeting in Bucharest on 2 April. Yet the initiative failed to garner full support because it did not reference the ambition for Europe to reach net-zero emissions by 2050, European diplomats told NGW.

The problem is that the declaration comes in the wake of "difficult discussions” about the 2050 goal at the last formal council of EU energy ministers in Brussels in March, one diplomat said. Eastern European countries are not ready for the EU to sign up to a new long-term climate target, while the EC and other member states such as France, the Netherlands and Spain are pushing for the bloc to commit to carbon neutrality by mid-century. The divisions that appeared at the energy and subsequent environment councils were carried through to a summit of heads of state and government in mid-March, which failed to endorse the 2050 goal

Decisions not to sign the April declaration must be seen in this context. Non-signatories – France, the Netherlands, Spain, Luxembourg, Austria, Germany, Belgium, Italy, Sweden, Denmark and Ireland – do not reject the fundamental point that Europe’s natural gas infrastructure must be transformed “to accommodate increasing shares of near-zero carbon hydrogen and renewable gases,” a spokesperson for the Romanian EU presidency said. Yes, there were proposals to fine-tune the language on climate, she added, but the presidency believes that the document as it stands reflects the current “mood” on that. She has a point: even Germany has yet to endorse the 2050 goal.

Signatories of the declaration, which include companies and organisations as well as states, propose to come up with “an estimate of the share of hydrogen and renewable gases that could support the future decarbonised energy systems”. They encourage new plans to take into account "the evolutions of gas consumption and the presence of hydrogen and biogas to reduce the risk… [of] stranded assets.” Signatories also recognise that the issue of “vented and fugitive methane emissions” needs to be addressed.

Yet despite these efforts to plug into EU climate policy, the “green gas” narrative is engendering wariness as well as enthusiasm in Brussels. On the day of the informal meeting in Bucharest, the Greens in the European Parliament – which have done very well in several local elections recently – warned that the gas declaration is a head-on contradiction of the EU's climate commitments.

In a six-page position paper, they urge caution in developing policy incentives for natural gas alternatives “in the absence of long-term certainty on their technological maturity and their cost-effective potential… at least until a convincing taxonomy and solid sustainability criteria are established.” 

They argue that both the EC and the gas sector have a history of overestimating gas demand and underestimating energy efficiency. For example, in 2009, European gas network operators expected gas demand to increase by 8% from 2010-13 when it actually went down by 14%. Projections for the availability of “green” gas vary wildly with the most recent estimate of 270bn m³ in 2050 – or over half today’s EU gas consumption – more than twice an estimate by the same researchers at consultancy Navigant a year ago. Finally, the Greens dislike the lack of clarity around the term “green” gas and warn of methane leakage for all except hydrogen.

Yet even the Greens recognise that gas will be part of the European energy system in 2050. They expect "renewable gases" to meet 15-20% of final energy consumption in mid-century. There will be demand in hard-to-electrify parts of industry and transport, and heating and cooling. Moreover it will be difficult to balance a power system with 80% mostly variable renewables – think sun and wind – without at least some gas plants.

The secretary-general of European gas industry lobby group Eurogas, James Watson, looks to an EU “gas package” on the cards for 2020 as the time and place for the EC to elaborate its vision for gas in a zero-carbon Europe.

Eurogas is still formulating its wish-list for this new policy package, but Watson stresses that a lot of it will be about sector coupling – e.g. power-to-gas. This did not get detailed attention in the EU’s recently agreed Clean Energy Package on power market reform, so the gas package is the logical place to unwrap it, he says.

The EC has a big study into sector coupling underway. The question is whether it will first issue a non-legislative strategy for further reflection or use the package to plunge straight into proposals on issues such as ownership. For example, who will own and operate power-to-gas electrolysers? This debate is likely to mirror the tussle between suppliers and grid operators over storage and charging infrastructure in the power market reform. 

The European gas industry clearly does want one thing: a target for renewable gas for 2030. Eurogas has launched its own study into what this could look like and on whom it should be imposed: natural gas suppliers, national governments or the EU, for example. The results are due at the end of the year.

In the meantime, German think tank Agora Energiewende and the European “Gas for Climate” consortium, made up mainly of pipeline operators – it commissioned the Navigant study mentioned earlier – have already put out a figure of 10% by 2030. Agora also suggests a sub-target for a third of that to be green (renewable-energy produced) hydrogen.

This marks a shift away from a European gas industry that in the past generally favoured a CO2-reduction only target. It reflects the pressure the sector is under to step up and do its part to decarbonise the energy system. It will not be easy. For all its new green verve, the European gas industry as a whole has yet to commit to “actively pursue efforts to become carbon-neutral well before mid-century,” as electricity association Eurelectric has put it.

For gas, there is still a sense that the industry is not quite there yet. It is still in an “experimentation phase”, as Jean-Marc Leroy, the president of Gas Infrastructure Europe, put it in an interview last summer.

This means that the gas sector continues to be viewed with some apprehension, especially in discussions on infrastructure financing. Investments in gas infrastructure could be considered sustainable if pipelines are readily convertible to “green" hydrogen, someone close to EU talks on sustainable finance recently suggested at a discussion held under the Chatham House rule in Brussels.

Gas infrastructure remains controversial in that debate. Until the sector becomes unequivocal in its commitment to fully decarbonise, gas will remain an essential but uncomfortable part of the EC’s 2050 climate strategy.


The Brussels Conversation

Monthly column by Sonja van Renssen from the EU capital on the developments affecting natural gas.