David Robinson & Associates

Specializing in public policy and corporate strategy in the energy sector.

The prospects for COP 21 and the future role of natural gas

With the Paris COP in sight, the Spanish Gas Association (Sedigas) interviewed me on my views about the objectives of the COP, what to expect from that meeting and what the remaining challenges were likely to be. They were especially interested in the role of natural gas in addressing the challenges of climate change, on the prospects for natural gas in Europe and Spain, and on the strategic challenges facing the natural gas industry in the region.  

The interview was recently published in Spanish but I thought it would be worth publishing an English version.  My answers are slightly different than in the original interview in Spanish, but tell the same story. Paris will only be considered a success if it is able to provide a clear direction for public policy to guide investors around the world. Ideally the COP would require sufficiently ambitious CO2 emission reductions commitments to be consistent with avoiding dangerous levels of climate change this century, as well a means of ensuring compliance.  Since neither of these is likely, the emphasis should be to agree on a framework for tightening greenhouse gas emission limits over time, to promote low carbon technology innovation, and to agree a financial package to support the least developed and most vulnerable countries as they address the challenges of climate change.  This COP will not solve the free-rider problem and I supports the idea of “low-carbon clubs” comprising countries that are committed to ambitious reductions in greenhouse gases. 

Natural gas has a role to play in the decarbonisation process, especially in replacing coal-based generation.  However this is unlikely to occur at current coal and gas prices, without policy measures, such as rising CO2 emission prices, withdrawal of public financial support for coal plants, and if those measures are insufficient then direct intervention as we have recently seen in the UK and the US.   I see some potential for natural gas to replace oil products in road and maritime transport, as well as in heating. However, if the EU hopes to meet its 2050 targets of reducing CO2 emissions by at least 80% compared to 1990 levels, this could mean lower demand for natural gas in many countries unless technologies such as carbon capture and storage (or use) or direct air capture are developed and can be implemented economically at scale. I also note the declining production of natural gas in the EU and conclude that more thought should be given to what new gas infrastructure is economically justified, who should bear the costs and the risk of underutilisation and how to exploit infrastructure in new ways in a decarbonising energy world.

English version