Molecules – The Eurogas Newsletter (September 2019)

Molecules – The Eurogas Newsletter (September 2019)

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As the summer sun melts away and the familiar rain returns to Brussels, not everything has stayed the same. Indeed much change is afoot in this political centre, with notable implications for the energy sector in Europe.

In July, the European Parliament supported Ursula von der Leyen’s candidacy as new Commission President, with commentators suggesting this will be the greenest Commission to date. There are some simple reasons for this. Firstly, the Commission President-elect has made significant promises that could fundamentally alter the approach to energy policy in the coming five years.

Some of these commitments have been packaged together and given the moniker a ‘Green Deal’. It will be the responsibility of the new Executive Vice-Preisdent Frans Timmermans, from the socialist party, to deliver these – and quickly. Ms von der Leyen committed to delivery within 100 days from the 1 November.

Within this sit three significant legislative proposals: 1) a 2050 carbon neutrality target; 2) increasing the 2030 carbon emission reduction target from 40% to 55%; and 3) including the aviation, maritime and building sectors in the Emissions Trading System (ETS).

Each represents a major statement of intent, and there are differing views as to how these three major policies could be enacted. For example, the inclusion of buildings (and therefore heating) in the ETS could lead to complications. Of the 28 Member States, 18 have already declared specific targets for integrating renewables into the heating and cooling sector in their countries within their National Energy and Climate Plans. These targets range from an 18% increase of renewables in the heating mix in Slovakia, to 80% in Estonia. To date, it is unclear what would happen to these national targets. In addition, the outgoing Commissioner for Energy Miguel Arias-Cañete, has indicated that increasing the 2030 carbon reduction target to 55% could result in reopening much of the Clean Energy Package in order to increase targets also in Renewables and Energy Efficiency. As a result, agreeing the carbon neutral target for 2050 may be the simplest of all three to deliver. In Eurogas we have announced our support for this target, and encourage legislators to provide a framework that will deliver this target respecting the full potential of gas.

Indeed, one of the main areas of the Commission’s focus in the last few months has been preparation for the ‘Decarbonisation Package’ – previously informally referred to as the ‘Gas Package.’ While it seems this may now be delayed to 2021, it remains crucial to the delivery of any of the targets set by the European Commission under any so-called Green Deal. This package has the opportunity to build a framework for gas to deliver the much needed carbon emission reductions – and set the course for further decarbonisation to 2030 and beyond. The new Commission must consider this as crucial; gas continues to offer solutions to many of the challenges we face.

An example of this is the decarbonisation of ‘hard-to-reach’ sectors such as maritime transport, Liquefied Natural Gas (LNG) is key. Forecasts suggest that maritime transport is set to triple by 2030. Thus by replacing bunker oil in shipping with LNG, we can deliver immediate climate benefits from reduced emissions. A second example is the continued – and scientifically supported – need for Carbon Capture and Storage (CCS). Three of the four pathways that the Intergovernmental Panel on Climate Change (IPCC) has put forward as pathways to meet the 1.5 target use CCS. The fourth is the most expensive – and disruptive. To quote the UK Climate Change Committee, CCS is a necessity not an option. It is encouraging to see that the European Commission has recognised this. Commission President-elect von der Leyen noted in her Mission Letter to Energy Commissioner designate Kadri Simson, that gas and CCS will have a notable role to play in achieving the carbon reduction targets.

It may be highly challenging to deliver specific policies within 100 days. However, the first 100 days could focus on establishing the overall level of ambition for industry and society, while commencing work quickly on the best policy tools to get there.

James Watson, Secretary General, Eurogas

The 5th edition of Eurogas Central and Eastern European Conference (CEEC), taking place on 7-8 October in Riga is organised with the kind support of Latvijas Gāze and Conexus Baltic Grid. This event will address the issue of “The Baltic Region: Setting the pace for gas market integration”, with a particular focus on the functioning of the regional gas market, as well as the potential of LNG and the value of storage.

Rick Perry (US Secretary of Energy), Arturs Krišjānis Kariņš (Prime Minister of Latvia), Ralfs Nemiro (Minister of Economics of Latvia) and Philippe Sauquet (President of Eurogas) are announced.

Join us for the interesting and engaging debate! 
Registration is open here.

On 7 August, Eurogas Secretary General James Watson went to ITM Power’s electrolyser factory in Sheffield to gain insight into the growth and development of this vital renewable technology. The electrolysers turn renewable electricity from solar and wind into gas, (the so-called power to gas vector. This type of gas is commonly referred to as ‘green hydrogen’. The factory has produced numerous electrolysers that are now used around the world, both in gas grids and in the transport sector.

Business is developing for ITM Power. They will soon relocate to a factory producing over 1GW of electrolysers a year. This will be the world’s largest, and it is vital that regulations support Europe showing this type of leadership in clean energy development. Injecting hydrogen into some grids in Europe remains problematic from a regulatory point of view, but if we are to deliver on the promise of renewable and decarbonised gas, this must change.

Particularly as the development of electrolysers is currently being led by European companies – providing Europe with a fantastic opportunity develop and own the technology it needs to fight climate change. The new industrial ‘Green Deal’ must look at how it will be possible for European companies to maintain leadership in vital clean technologies to provide jobs, wealth and growth from the energy transition.

ITM Power are a case in point. Their success drives business for supplier companies located in the area, and in turn results in increasing economic benefits for the whole region. These are opportunities for society that we must not squander. Just as batteries have been championed through the battery alliance, so too much we champion this technology. One key difference is that Europe is currently leading in this field, and thus we have the chance to enhance our leadership. Let’s not waste it!

On 11 September, Eurogas Secretary General James Watson visited Wärtsilä’s LNG engine factory in Vasaa, Finland for the announcement of a new state-of-the-art 200 million Euro factory.

This investment would allow production to remain in Europe, as with over 3000 direct employees the factory is a core element of the economy of the surrounding area. In addition, the European need for LNG ship engines is growing, as more and more freight is predicted for the next decade (estimates suggest a tripling of maritime trade by 2030.)

LNG can reduce the carbon footprint of this activity considerably and help reach the IMO carbon reduction targets for shipping. As such, LNG engines made in Europe are a good example of technological leadership that can support reducing carbon emissions, while providing economic benefit to Europe. Wartsila invest over 160 million Euros every year in Research and Development (R&D) to continuously improve the efficiency of the engines, which in turn reduce CO2 emissions. Some of these engines include turbo chargers – which can be the size of a small house! – that increase efficiency to reduce emissions further still.

Europe should be proud to develop these technologies. They offer solutions for targeting climate change that can be used at a global level and stimulate our own economy, demonstrating opportunities through the energy transition.

On 9 September, the newly elected Eurogas President Philippe Sauquet of Total visited Brussels for a number of political and media meetings, including Maroš Šefčovič, the European Commission Vice-President for the Energy Union. With the new Commission being discussed as ‘the greenest Commission’ we have seen to date, Mr Sauquet was keen to emphasise Eurogas’ support for climate neutrality targets, and highlight how gas can play a critical role in helping the EU succeed in its ambitious goals.

Many of the meetings focussed on the role of gas in energy transition and a sustainable future, as well as specifics such as upcoming gas legislation, industrial strategy, and building a strong gas market. Eurogas continues to call for the introduction of an EU-wide binding target for renewable and decarbonised gas, which we believe can underpin a number of these areas.

Speaking with both Reuters and Politico, Mr Sauquet emphasised that curbs on lending by the European Investment Bank (EIB) and others could slow the switch from coal-fired to less polluting gas-fired power plants and harm the bloc’s climate ambitions. The interviews also covered innovative gas technologies and LNG developments.