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GasNaturally President Marco Alverà Interviewed at Flame

Posted by on 29 May 2018
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Marco Alverà is the president of GasNaturally, a partnership of six associations representing the European natural gas value chain. We caught up with him at Flame to discuss decarbonisation, the cold war between electrons and molecules, and the need for smarter policy.

Do you think the gas industry today is ready for decarbonisation. Does the public realise what is involved and how big the challenge is?

“I think what came out of some of the studies we were debating on the panel was very refreshing. First, I think decarbonisation is something we need to achieve at a global scale, and certainly the policy-makers in Europe are ahead of the curve. With America slowing down its own trajectory, I think there’s an even greater role and potentially opportunity for Europe, and for the industry. What I think is that, as we approach the details of how we decarbonise, we will get to some tricky points. What the debate today was about was trying to make the conversation a conversation not of black and white alternatives but of solutions that need to work together.”

Okay, so where do you see the tricky points? What do you point to?

“I think it’s very tricky if you continue with this sort of cold war between electrons and molecules, where it’s either-or. When people try to pursue a full electrification agenda we’re missing out big opportunities. We’re missing out the opportunities that we have by still using gas, clean gas and green gas as part of the solution. It’s a lot cheaper: we have a study by Ecofys which indicates that it could be up to 140bn Euros per year cheaper, mainly in heating, just to use clean gas for a portion of the heating. There’s a similar study from Pöyry that talks about an aggregate NPV of 1.5 trillion Euros in savings that you would get by keeping some gas in the energy mix, still pursuing a full decarbonisation strategy.”

And yet in the panel that you were on, you were getting a bit of opposition to that.

“Yes. Probably today there are still very different views. We’re looking at two sides of the same coin. Some people are saying decarbonisation at any cost, and a whole set of other people, including a lot of the industrial companies and associations and consumers, are saying ‘we need cheap energy’. Europe is spending three times as much as America on its energy right now, and this is not really sustainable. It’s not going to make Europe any more competitive compared with America. So the priority should be to reduce energy costs and at the same time to decarbonise. So some of the pushback we were having is linked to the fear that I understand some people have around infrastructure that gets locked in, and then becomes a barrier to getting rid of gas altogether. I think what policy makers should really focus on is being fit for the future. What we need to avoid now is to take one path that prevents us from any technological evolution that will happen.”

Are you suggesting that policy makers have to build in more money for R&D?

“Absolutely, that is a key word. We have underinvested. We need to invest more in CCS, we need to invest more in hydrogen, we need to invest more in power to gas. We have talked to a number of renewables companies that are very keen to use gas as a means of transporting their energy, because when you use gas instead of electricity it costs sometimes even ten times less. So if you’re producing a lot of wind offshore, it may be cheaper to turn that wind into gas and then use a pipeline to transfer it. That’s just one example of some of the conversations that are going on.”

You’re talking about gas being in the mix, but in very different ways as we move into the future. Is it possible to look ahead for five or ten years, and talk about the mix that you see then?

“What we see is a demand outlook that is, let’s call it stable for argument’s sake. But what we also see in Europe is a very rapid decline of European production. So the need for extra imports of natural gas is quite significant. If we look at the last four years, imports increased 30% - which is a very large amount. So that’s where we need the new infrastructure – to create new sources of gas. This will also lower gas prices, which is a priority for some people, and it will also help to decarbonise, as gas becomes more competitive than coal. Of course a working ETS helps on that front as well.”

You mentioned in your panel the word ‘pragmatic’ probably about three or four times. I wonder whether you feel that pragmatism is lacking, or just needs to be more front and centre.

“I think when I hear ideology, whenever I hear people talking about electrification as a means, I think there’s a risk. We need to think about lowering the carbon footprint – which is a global problem, it’s not a European problem – in the most effective way. So it’s not about which technology; we have to be technologically indifferent, and we need to sit down. We have in Europe great examples of CBA’s, of cost-benefit methodologies. These are a proven and tested ways to decide what the best option is. And before investing numbers which are staggering – today we heard someone talking about 8 trillion as the cost of full electrification – we have to ask ourselves what is the cheapest way to achieve decarbonisation.”

So it’s non-EU partners as well that you’re going to need to involve?

“We absolutely need to involve non-EU countries. And that’s in order to achieve a 2°C target for warming, but also because we have some very low hanging fruit in these countries. If you’re in a country in North Africa, and you’re currently burning a lot of gas in inefficient turbines, and you have a lot of sun, and you have a lot of land, you would welcome someone from Europe investing to build solar panels there. And the cost of that CO2 reduction is maybe 30, 40, or 50 Euros per tonne. The cost of turning the hotel we’re standing in from gas heating to electric heating is probably more like 500 or 600 Euros per tonne. So as Europeans, because it’s a global issue we need to find a global solution. We need to make sure that we’re not closing our factories and putting energy security at stake just to achieve maybe a hundred percent target here, while having other parts of the world that are not achieving any progress.”

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