Engie boss: ‘Phasing-out coal, as quickly as possible’

Isabelle Kocher, the CEO of Engie, wants to “accelerate” the energy transition. After the COP23 in Bonn, she warns that Europe is “running out of time” and supports both “very high and mandatory” targets for energy savings, and for a carbon price floor.

The text below is a transcript of the interview, conducted by EURACTIV’s energy and environment editor, Frédéric Simon.

We had a very interesting debate this morning with representatives of the European Commission, a European parliamentarian, Claude Turmes, the head of the international energy agency, and then the Engie team and other people who attended, on the way to take action on the energy transition.

I was in Bonn a week ago, we must accelerate. It is a race against the clock and we are running out of time. We have completely changed our business model, we went from a business model where we were essentially an energy producer to a business model in which a big part of our job is to transform energy, and the value in that lies generating energy savings.

ENERGY EFFICIENCY : BUILDINGS

So for example we work with a building owner, it can be a public or a private actor, who decides to analyse its energy consumption in all its forms, in its building stock, and in its utilities. Generally the biggest part, about three quarters of the energy consumption, it’s not about electricity, it is heating and cooling.

We start working with the building owner  to watch all the energy uses, digitalise them, optimise them, change the systems, and there we win 30 % and sometimes more in terms of savings generated, and we share these savings with him. This is the business model.

The challenge is the same with private individuals. We have in the building stock potentially huge savings, which are probably also in the order of 30%. We provide a set of services to reach this 30%, which is more complicated because it is rare that a private home owner is ready to commit to a fifteen years plan.

So there are mechanisms to find, and build business models long enough so that, as we do in the public sector, we can engage in the long-term allowing us to find important energy savings.

SUPPORT FOR 40% TARGET

The texts that are being prepared in Brussels right now, the famous clean energy package, are very important texts that will allow us to turn the corner. We are very supportive of setting energy efficiency targets that are both very high and which are binding.

There are debates that put this at 30% or 40%. I believe that the 40% currently being promoted by a lot of parliamentarians (or at least some of them) is not very far from what France has decided. Because even if setting a goal is not enough to reach it, of course, setting an ambitious goal requires rethinking and upping ambition, and then to do some kind of retroactive planning to develop a roadmap that matches the scale of what is needed.

It allows all actors to shift their mind-set: at 40%, you really have to review the system completely and therefore to prepare a mountain race and not for a stroll in the park, if you see what I mean. It’s really a question of shifting mind-sets.

These very ambitious multiannual targets have this immense merit. But that’s not enough: you need mechanisms, you have to translate these goals into standards and norms. For  the building stock, for example, to be consistent with these goals, you need mechanisms, business models that once again allow investments in the long term.

PHASING OUT COAL ENTIRELY

Our strategy is really two-pronged. The first, we just talked about it, is working on reducing the energy use and it is here that we are growing faster. In the first nine first months of this year our activities on that side have grown by almost 10%. And then of course we work also on energy supply and we focus on low carbon activities and energies.

We have decided to stop producing electricity from coal. When we started this plan in early 2016 we were at 15% of our electricity being generated from coal at Engie. In a little more than 18 months we have already come halfway.

That means, in a number of cases, closing factories because in those territories in which they are we do not need that capacity. In Australia for example we closed a very big factory producing electricity from coal.

And then in other cases, I am thinking about a discussion with the Indonesian government, we cannot close down the plants. They are absolutely necessary to bring energy to the country, which badly needs it, so we sold the plants. It is a case-by-case approach but we are proceeding quickly in this disinvestment.

We have planned to get out of the coal as soon as possible and as I just said we have done half of that in 18 months. Now we have to find appropriate terms and conditions. There are some power plants we are still in the process of building. Engie is a responsible group who has made commitments, and who will respect them anyway.

GAS : FIT FOR STORAGE AND BECOMING GREENER

Gas plays an important role because it is probably the smarter way to store energy. My colleagues say that for storing the quantity of energy equivalent to a single gas storage facility, and we manage a number of those in the world, you would have to stack batteries up to the moon and back. It’s just an image, but there is in gas an ability to store energy that is very effective.

So we are fighting for this gas to gradually become green. That is, natural gas is essential today because it has no competitor for energy storage. And then when we think of the intermittence of renewables, we clearly have a problem.

Our use of energy does not match the profile of a solar panel’s energy production for example – at all. So you need a bridge between the two. Natural gas is necessary, and then gradually this gas needs to be greened. We work a lot on biogas – that is, the ability to avoid taking gas from the soil, which actually puts CO2 in the atmosphere, but to manufacture it, for example by fermenting agricultural waste. It’s a mechanism that works well, which is currently being industrialised.

It is still too expensive but we are working on it. And then there is hydrogen, which I think is very promising, because with renewable electrons that are becoming less and less expensive we can make hydrogen by causing the electrolysis of water.

We take water and then we separate hydrogen on one side, oxygen on the other, and create a gas that is green, and capable of storing energy. So these are all circuits there we are working on to bring down the costs. I think we can reasonably say that at the rate that things are moving that we will achieve costs that are compatible with a gas that is green, and which will play this very important role of balancing, and providing the flexibility that renewable energies do not have, and there will be no more carbon-based energy.

The scenarios of greening gas are obviously progressive. We now start to feed biogas into our pipes in France for example, and to produce biogas and hydrogen, and we are working on scenarios that make it possible to arrive at total de-carbonisation of the gas supply in the 2050s. We all have in our head that we must have decarbonised the energy system by about this time.

NORD STREAM

I have nothing against the fact that the European Union, which we called upon for years to have an ambitious energy policy, gives its vision of the infrastructures that must be put into place to achieve it.

We have to do it at the right moment, that is before launching projects, and that is earlier rather than later. There is obviously a need to absolutely avoid undermining projects or making them completely unreliable because the rules of the game change in the middle of the project.

CARBON PRICE FLOOR

If we want a de-carbonised system, and Europe has made very strong choices in not only in energy efficiency, but also on decarbonising the energy demand, you have to be consistent until the end. It is very hard for a European citizen to be told that on the one hand we put a lot of money into developing renewable energy, which was initially very expensive (and no longer is, but continues to be weighed down by its costs, which must be brought down, the first renewable facilities were very expensive) and then on the other hand we continue to power energy generation plants with coal. So there is a problem of coherence, I think it has become quite acute.

I consider it urgent to fix a sufficient CO2 price, I think it’s a minimum of 20 euros per tonne, we are very far from it as you know. And even if the market mechanism for a CO2 price in Europe is in the process of being slightly reformed, that will not be enough. So I support the proposal that was made by President Macron, which is to say: “Well, there is a market mechanism that today is not effective, so let’s leave it in place but let’s fix anyway a kind of price floor”, so that even when the price of CO2 market is too low, the guarantee assures us that it is sufficient.

GETTING POLAND ON BOARD

To do this,  some countries are showing they can go down that road. Obviously for a number of countries in which electricity generation is based strongly on coal this is a perspective that is difficult and that requires real courage.

But you know, change, and [French Finance Minister] Bruno Le Maire who organised the [economic summit] yesterday in Bercy reminded us of Churchill’s words, “Either you take the change by the hand or it will takes you by the throat.” And the sooner these countries can realise that this change is happening, and it will take place anyways, the more they will be able to anticipate it. I think it’s a transition that is absolutely necessary to start now.