The European gas industry should “stop complaining” and ask itself what it can offer to society to help bring about the transition that people demand, writes Wim Groenendijk, Head of International and Regulatory Affairs at the Dutch transmission system operator Gasunie. “As the ones who are looking after the energy supply, we should take our responsibility.”
Whereas other parts of the world are experiencing, and celebrating, a ‘golden age of gas’, the European gas industry is going through heavy weather. Gas companies left, right and centre are complaining that the traditional business models are disappearing and that markets are ‘distorted’
But, as true as this may be, is it any use to complain? J.F. Kennedy once said: “ask not what your country can do for you, but what you can do for your country”. And we badly need this paradigm shift, this shift in mental model and in attitude. Now more than ever, instead of asking what others can do for us, the gas industry needs to consider what its own added value is, i.e. what the gas industry can contribute to the transition towards a future energy supply. And in my view we have a lot to offer.
Clearly, we are on a pathway towards a more sustainable energy supply. Why? Because society wants it! Not just politicians or policy makers, but the citizens want this. This should be a given to us. But, at the same time, we, as the ones looking after the energy supply, should take our responsibility and ensure that what society wants, is achieved in the best way possible. This also means at minimum cost to society. Why? Because if we spend less to achieve the same goals, we have money left to spend on other things that society finds important. Health care. Development. Security. Industry competitiveness. And so on.
Recent studies have shown that by using gas as the basis for the energy transition, we can achieve our emission targets at a much lower cost than we are doing at the moment. At present, outside the EU Emission Trading Scheme (ETS) we are spending some €300 to avoid the emission of one tonne of CO2. By focussing on energy efficiency we could avoid that same tonne of CO2 at zero or perhaps even negative cost. And by replacing coal by gas we would spend around €60 to avoid that same tonne of CO2. Still five times less than what we are spending now!
So my first plea would be to rebalance the instruments of EU energy policy to give energy efficiency and gas a more prominent role in the energy transition, as this will drastically reduce cost to society.
What else can gas offer? Innovation. Gas, and gas infrastructure, can and will need to reinvent itself in terms of the role they play in the energy system. And this should be done by looking at the energy system from a much more integrated point of view. Let me explain.
First of all, gas can ‘green’ itself, meaning that we can add biological sources of gas – green gas – from fermentation or gasification of organic products or waste, or by adding synthetic gases from Power to Gas processes. In Power to Gas – a field in which Germany is taking the lead – electricity from renewable sources is converted to hydrogen or even methane which is then added to the gas supply. This is 10 to 20 times as efficient as transporting electricity and offers a viable solution for storing intermittent renewable energy.
Outside the upstream sector, how much money is the European gas industry spending on R&D? On innovation?
Secondly, gas can find new applications. For example it can make a huge contribution in cleaning up the environmental impact of the transport sector, and I am referring here for example to the use of LNG (liquefied natural gas) as a fuel for ships or heavy transport, or the use of CNG (compressed natural gas) in buses or garbage disposal trucks, or taxis and so on.
Thirdly, I believe that if we apply a more system-oriented approach to our energy supply there is a lot to gain. Gas can be converted to electrons, electrons can be converted to gas, gas can be cooled to LNG or vice versa, wind and sunshine can be converted to electrons, biomass to gas or electrons. In the end all that matters is how do we get energy from where it is produced, in whatever form or shape, to where it is needed, with minimum impact on the environment and at minimum cost.
Ultimately all the installations we use in the process of converting or moving energy belong to an integrated set of infrastructure: pipelines, cables, storages, converters, transformers, LNG import terminals, small-scale LNG liquefaction installations, Power to Gas facilities and Gas Fired Power plants. Perhaps in the future this infrastructure can and will be operated by energy infrastructure companies, who do not own or control the electrons or molecules produced but sell the capacity in these installations to whoever needs it on the basis of open access models. This will help optimise the available capacities and offer the services at minimum cost.
I believe that as a gas industry we should look at ourselves first and foremost to ask what we can offer to society to help bring about the structural changes that society wants. Outside the upstream sector, how much money is the European gas industry spending on R&D? On innovation? And how are we bringing our story across? How are we involving ourselves in the debate on energy?
So it is time for our industry to wake up, have a good look around, pull together and get to work and get gas back into the picture, where it belongs. It is not too late. I am convinced that we can not only make a huge contribution to society but also secure a glorious future for our industry.
Wim Groenendijk is Vice-President International and Regulatory Affairs at the Dutch transmission system operator Gasunie. This article is based on a speech he gave at the European Autumn Gas Conference in Brussels in November.
The Dutch gas industry has recently come out with a publication that offers a unique new perspective on the various roles that gas may be able to play in the future European energy supply, based on interviews with a wide range of experts. To download a free copy click here.