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3rd London Gas & LNG Forum 2016London, 26 September 2016

Dr. Wolfgang Peters, MBA

Managing Director, The Gas Value Chain Company GmbH, Germany

Former CEO, RWE Supply & Trading CZ, a.s., Czech Republic

The Gas Value Chain Company GmbH

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COP21 - The “sudden death” of all fossil fuels?- The widespread (mis-) perception

- The INDCs for COP21 aim at GHG reductions

Energy Outlooks project high future share of fossil fuelsCurrent INDCs shortfall: the “affordable subsidy constraint”- Shortfall of current INDCs manifests “affordable subsidy constraint”

- COP21’s 5 year check-ups are counting on market maturity of renewables

Natural Gas – the low hanging fruit for material and immediate GHG reductions- COP21/INDC shortfall dictates imperative to select amongst fossil fuels

- Natural gas the “low hanging fruit” for material & immediate GHG reductions

Prospects of supply and price developments- Triple A once more: Accessibility, Abundance & Affordability

- Near global price convergence (at low level), supplier competition

- Dependency concerns – reputational damage to be overcome by market

Gas advocacy reloaded- More assertively claim its place as part of the solution

- Advocate assertively a price on carbon (merit order vs coal)

- Dare being educational on prices to help overcome reputational damage

- The conundrum: attack subsidies (i.e. renewables)?


Treaty of “COP21” (21st Conference of Parties

under the United Nations Framework

Convention on Climate Change)

Is this the „sudden death“ of all

fossil fuels including natural gas?


COP21: ‚sudden death‘ of all fossil fuels?

“COP21” is concerned with GHG Reductions

Widespread (Mis-) perception:Decarbonization (abolish all fossil fuels) „done deal“

Actual goal:Reduce green house gas (GHG) emissions to keep

temperature from rising more than +2°C (+1.5°C)

from pre-industrial levels

Implementation:Intended Nationally Determined Contributions („INDCs“);

re-assessment every 5 years



BP Energy Outlook 2016: business as usual?

First reputed energy outlook after COP21:

„BP Energy Outlook, 2016 edition“ in February 2016

Heavy criticism:

- Speaking „pro domo“ (to preserve business model)

- Cynically assuming failure of agreement of >190 political

leaders

- Ignorantly pursuing „business as usual“



Source: BP Energy Outlook 2016


Energy Outlooks project high future share fossil fuels

Source: IEA World Energy Outlook 2015


IEA “World Energy Outlook 2015”, November 2015

- ‘New Policies Scenario’: similar fuel mix conclusions as BP

- Although including 150 INDCs from COP21 participants

Energy Outlooks project high future share fossil fuels


IEA WEO 2015: Climate target will not be reached with

2015 INDCs (“Current INDC Shortfall”)

IEA acknowledges that, even with its central ‘New Policies

Scenario’ including 150 INDCs, the 2°C target will not be

reached:

“The direction of travel is changing,

but

the destination is still not 2 degrees.”

Political window-dressing or another reason?

The „affordable subsidy constraint“


“Shortfall” of INDCs manifests current “affordable

subsidy constraint” – Investment in renewables

$ 7.4 trillion in renewables = 15% of total

Pace in power generation not matched in other sectors




“Shortfall” of INDCs manifests the current “affordable

subsidy constraint” – Market maturity of renewables

required

IEA discusses milestones on the way to market maturity

Which would alleviate the “affordable subsidy constraint”




Natural gas – the ‚low hanging fruit‘ to reduce GHGs

COP21 process is “counting” on further technological

progress & cost degression of renewables.

In the meanwhile, it is imperative to materially reduce

GHGs nonetheless NOW:

GHG reduction also by “selection” amongst fossil fuels which

makes

THE CASE FOR NATURAL GAS:

“NATURAL GAS IS THE ‘LOW HANGING FRUIT’ FOR MATERIAL

AND IMMEDIATE REDUCTION OF GHGs!”


Natural gas – the ‚low hanging fruit‘ to reduce GHGs

Also with regard to the carbon budget aspect,

expansion of natural gas deployment makes sense

If you have a carbon budget target to reach in 2050,

you might just as well alleviate the budget burden NOW

as much as you can by expansion of natural gas

deployment.

Is natural gas capable of living up to the task?

Tripple A once more!


Prospects of supply & price developments

Global supply (and oil price decline) have resulted in

near global price convergence (at remarkably low levels)



Source: ICIS Heren

Serious obstacle with policymakers: reputational

damage by misuse as political weapon.



Ukrainian Crisis 2009: Andrej Budajew, “Putin’s recalcitrant bride”

Perception is reality, but (traded) market can help:

The best that can happen to gas is if perceived as

globally traded commodity like e.g. crude!

Supplier competition invited!



Source: ICIS Heren


Gas advocacy reloaded

Gas advocacy should become more assertive. Draw

self-esteem from huge GHG reduction potential.

More assertively claim its place as part of the solution

Transitory assistance is fine but not enough!

Biogas

Hydrogene from „gas-to-power“

Advocate more assertively to put a price carbon

Such that gas is above coal in power generation merit order

GHG emmissions materially reduced

Entry barriers for renewables lowered

Overcome reputational damage

Stop misuse of gas as „political weapon“

Perception is reality: Only functioning market can help

Dare educating about prices

The conundrum: attack subsidies for renewables?

Gas reduces GHGs without subsidies: attack subsidies?

At least advocate „technology-neutral“ subsidies

Article for more detailed reading under: www.usenergystream.com (CEO’s perspectives)


Dr. Wolfgang PetersManaging DirectorMobile: +49-152 5320 4362

Fax: +49-208 8484031

Mail: [email protected]

Web: www.gasvaluechain.com

THE CASE FOR GAS POST COP21

Natural gas is the „low hanging fruit“ for material and immediate reduction of

greenhouse gases

by

Wolfgang Peters


Uhlenhorstweg 17

45479 Mülheim

Germany

http://www.usenergystream.com/

mailto:[email protected]

3rd london gas & lng forum 2016gasvaluechain.com/cms/wp-content/uploads/2016/09/... · bp...

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