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    [GGP] The Paris agreement: And its impact on the European gas industry

Summary

The study is assessing the impact of the Paris Agreement on the European gas industry.

by: Alexandra-Maria Bocse, EUCERS Fellow

Posted in:

Global Gas Perspectives

[GGP] The Paris agreement: And its impact on the European gas industry

Executive summary

The study is assessing the impact of the Paris Agreement on the European gas industry. It acknowledges that the measures taken by countries worldwide through their nationally determined contributions (NDCs), the EU and the climate and energy stakeholders on the continent (energy companies, investors, consumers, etc.) might not be enough to hold the global temperature increase to well below 2°C above pre-industrial levels by the end of the century. However, the study is arguing that industry (in particular the European gas majors) has taken over the last years a series of measures to respond to the Paris Agreement and climate change constraints. The study found that the Paris Agreement has impacted the industry in several ways:

• In the European context, industry has responded to both the framework provided by the Paris Agreement and the framework of the EU’s climate policies. The two frameworks are interconnected. New EU climate and energy policies, such as the Green Energy Package, have been at least partially justified by making reference to the Paris Agreement. The Paris Agreement influenced the European industry both directly and indirectly.

• The European gas industry responded by changing its business model and by trying to play a more important role in global energy governance and EU policymaking. Some changes were made ahead of the signing and entry into force of the Paris Agreement, in recognition that climate change constitutes a problem and anticipating the Agreement. The Paris Accord provided a nal con rmation that the industry needs to undergo changes.

• When it comes to changing its business model, this study found that industry is adopting a series of strategies: oil and gas majors place an increased focus on gas. However, as gas is unlikely to remain part of the energy mix on the long term in the absence of advancements in carbon capture and storage (CCS) and carbon capture, utilisation and storage (CCUS) technology, large oil and gas companies are increasingly including renewable energy in their portfolio. At the same time they are investing in research in low carbon technology (new types of energy, energy storage or CCUS). Companies have also pledged to reduce the environmental footprint of their operations and increase their energy efficiency.

• We are also witnessing a process through which conventional oil and gas companies are restructuring and splitting with one branch remaining involved in the traditional energy business and the other becoming more focused on low carbon energy and energy services.

• The study also found that industry is increasingly interested in participating in global energy and climate governance by developing initiatives such as the Oil and Gas Climate Initiative that allowed leading oil and gas companies to take an o cial joint position in the global debates on the Paris Agreement and to coordinate their work in responding to the Agreement and associated climate change policies.

• Based on elite interviews conducted with leading EU policy stakeholders, the study found that the gas industry is losing ground in the Brussels-based policymaking arena to renewable energy representatives. While the renewable sector used to be consulted in the past on EU legislation applicable to their business, they now have more opportunity to provide input on energy policy in general.

• The research also found that so far the announced withdrawal of the United States from the Paris Agreement has had little impact on the EU, who remains committed to the Paris Agreement and the EU 2030 decarbonisation targets, and on the European gas industry which intends to continue implementing its adaptation and decarbonisation plans. 

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By: Alexandra-Maria Bocse, EUCERS Fellow

Originally published by European Centre for Energy and Resource Security (EUCERS).

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