PISTA BLOG#11(June 2022): THE ROLE OF GAS IN A GREEN ENERGY FRAMEWORK

 “IS NATURAL GAS TRULY A SUSTAINABLE GREEN POWER SOURCE ?”

                Welcome to the latest BLOG from the PISTA team. This Blog is created to shed some general focus on rapidly developing changes and the current big story in the Offshore O&G industry. Kindly use the links on our BLOGGER home page to go through the previous 10 BLOGS relating to Offshore O & G industry.

One important question making rounds in the O & G sector: “IS NATURAL GAS TRULY A SUSTAINABLE GREEN POWER SOURCE?”

A quick and simple answer may be “NO”, considering that Natural Gas is a non-renewable resource, but this issue begs some more considerations and an in-depth analysis of many other related facts.

It is a generally known fact that Natural gas is more environmentally harmful than energy sources such as coal and oil. Many countries have called for Natural gas to be included in the new legislation aimed to decarbonize energy production. However many industry experts argue that gas occupies a unique place between other fossil fuels and renewables, both relatively established and relatively less harmful.

Very similar to the older discussions about the role of Nuclear Power in the world’s future energy mix, resourcing Natural Gas has also reached this state of transition now. In the current environmentally-conscious world the increasingly desperate climate targets are forcing companies, governments, and decision-makers to consider a more sophisticated means of defining power sources.

DOES NATURE GAS DESERVE A STATUS AS A TRULY RENEWABLE POWER?

Global debates on whether natural gas truly deserves the social status and legal protections as a truly renewable power are very fierce and deliberate. And what precedent could the decision ultimately set for the future of natural gas? Let’s analyze:

NATURAL GAS: GREEN INVESTMENT OR A DYING FUEL SOURCE

In most countries (esp. in the EU) the latest changes in the tax rules have fueled many industry debates and environmental concerns with its inclusion of nuclear and natural gas as “GREEN INVESTMENTS” New guidelines on sustainable investments have been set up, which will be used to define and guide investments into green energy sources. Natural Gas is now included in the list of “TRANSFORMATIVE”, as opposed to “SUSTAINABLE”, energy sources, yet the proposal has been met with backlash from both some environmentalists and also some EU governments.

Many famous climate activists have openly spoken against the decision, labeling it a “real-life climate nightmare”, while political tensions are also simmering as nations argue the case for the inclusion, or exclusion, of the controversial resources. Let us take a deeper look at why the sources have been included, the reasons behind the backlash, and what are the long-term effects, should the new rules be implemented. Earlier in this year 2022, it is well known that the European Commission had stated: “Taking account of scientific advice and current technological progress … the Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future.”

Part of the reason is that several EU states, many of whom have either included Natural gas as a “bridge fuel” in their energy transition plans or are placing increasing stock in nuclear as a low-carbon alternative. While some countries like France, the Czech Republic, and Hungary already support nuclear power, nations such as Germany have identified gas as the alternative to fill up their future energy gaps.

Many senior Oil & Gas UK investor relations advisers have stated that Gas has a really important role both now and in the future because it is a very flexible energy source. This flexibility means it’s really important for supporting the continued growth of renewable and hydrogen which is vital to achieving global net-zero targets.

The inclusion of the Gas as a transformative energy source is subject to a strict condition that it is permissible only if “the same energy capacity cannot be generated with renewable sources”, while for nuclear the condition is that “it can only be included if, the project demonstrates that it has a plan to deal with radioactive waste.”

Despite these requirements, the inclusion has been met with some opposition from both activist groups and a few industry members.

THE ROLE OF GAS IN A GREEN ENERGY FRAMEWORK

While some argue our energy future has no space for gas, others say that gas will remain an inevitable part of international energy mixes for years to come. We need to keep in mind that the transition is not a one-day implementation; we can’t simply flip a switch and have a different system. While there is still that demand for Gas, we need to make sure that we produce it in the most low-carbon way possible.

As many nations make their way towards a cleaner future, the related outcomes will have a ripple effect on global energy investments. With a final decision on the proposal expected shortly, industry members across nations are looking forward to an example of sustainable energy action, and for an indication of which direction the Energy industry is headed.