The European gas community should strengthen its efforts in promoting the role gas can play in the transition to decarbonised energy markets, according to the Oxford Institute for Energy Studies (OIES).
In the paper “The future of gas in decarbonising European energy markets: the need for a new approach” published in January, OIES's Jonathan Stern argued that while “the decarbonisation of European energy markets is ongoing and unstoppable” gas continues to be labelled “a fossil fuel, where its carbon-related advantages over other fossil fuels are viewed in the longer term (2030-50) as, at best, questionable.”
“To ensure a post-2030 future in European energy balances, the gas community will be obliged to adopt a new message,`Gas can Decarbonise', and remain competitive with other low/zero carbon energy supplies” he stressed.
The key variables which will determine the long-term future of gas in Europe will be policy and technology, as well as economics “defined as the price of gas in relation to the costs and prices of other sources of energy, impacted by policy measures such as carbon pricing” he added.
Therefore “commodity producers and exporters may either have to take the initiative on decarbonisation, or run the risk that governments and other value chain stakeholders may decide to pursue non-methane-related options” he said, adding that “if non-methane-related options are adopted, owners of gas-fired power stations, LNG regasification terminals, and storages will run the risk that their assets will be stranded before they reach the end of their useful lives.”
“Failure to decarbonise is likely to mean that the gas business of wholesale and retail gas suppliers and traders will decline, but they will be able to reorient their business(es) towards electricity” he said.
However “if decarbonisation follows a path of electrification or district heating based on renewables, gas networks could be stranded” he underlined.
Overall, “a paradigm shift in commercial time horizons and gas value chain cooperation will be necessary for the industry to embrace decarbonisation technologies such as carbon capture and storage which will eventually be necessary if gas is to prolong its future in European energy markets” Stern argued.
The European gas community “needs to devise and implement a strategy which will lead to the decarbonisation of methane starting no later than 2030” he said, adding that “failure to do so will be to accept a future of decline, albeit on a scale of decades, and to risk that by the time the community engages with decarbonisation, non-methane policy options will have been adopted which will make that decline irreversible.”