The Green Brief, powered by Goldman Sachs – Getting real about gas

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The European Commission’s gas package, due to be published today, risks being more of a cold shower than a Christmas present for supporters and opponents of gas alike.

Over the past years, the industry and environmentalists have been locked in one of Brussels’ most polarised lobbying battles over the role of gas in the energy transition.

On the one hand, the European gas industry is pushing for the recognition of fossil gas as a stepping stone towards the elimination of coal while positioning alternatives like hydrogen and biomethane as a long-term solution to decarbonise the sector.

On the other side of the debate, green activists are leading an aggressive campaign to phase out fossil gas as soon as possible and have denounced hydrogen as a fig leaf – or worse, a diversion – by the industry to protect their bottom line and justify continued investment in gas infrastructure.

Both risk being disappointed by Wednesday’s package.

The gas industry, for starters, will have to accept a painful de-growth agenda whose destination is already clear: to meet Europe’s climate goals, gas consumption needs to drop by 25% before the end of the decade, the European Commission stated in its 2030 climate plan last year.

That means using less gas in sectors like heating, transport and industry, where low-carbon and renewable electricity is expected to increase. 

And by mid-century there will be “only a marginal role for fossil gas,” said the EU’s climate chief Frans Timmermans, with clean electricity taking the lion’s share of Europe’s energy mix. “By 2050, the share of electricity in final energy demand will at least double, bringing it up to 53%” – up to 2.5 times today’s levels, the EU executive said in its 2018 long-term climate strategy.

That may sound like a shattering defeat for the gas industry. But it begs the question: if clean electricity takes just over half of the energy cake in 2050, who takes the other half?

“Green molecules” is the answer from the gas industry. And they have a point, it must be admitted. Even the EU’s power sector lobby group, Eurelectric, has emphasised that Europe will need energy carriers other than electricity – in industry, in buildings and in transport –  because not everything can be electrified.

This is what environmental groups will have to accept. Even if it shrinks significantly, gas will not be resigned to the history books. Rather, large chunks of it will be replaced by renewable alternatives like green hydrogen and biomethane, according to the Commission’s long term scenarios.

The question, therefore, is not if Europe needs gas but whether it can decarbonise gas and whether it can do it fast enough to meet its climate goals.

Simply pushing back against the gas lobby, like environmentalists have been doing over the past years, won’t help. Rather, the industry needs to be encouraged in its effort to go green while being held accountable all along the way.

The European Commission’s gas package, hopefully, will provide a clear pathway for that to happen.

– Frédéric Simon


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This week’s top stories

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News from the capitals

DUBLIN. All Irish households to receive €100 in response to energy price rise. All households in Ireland will receive a €100 subsidy in spring next year amid a global rise in energy prices, described by the government as “unprecedented”. Read more.

PRAGUE. Czechia urges EU to award nuclear energy ‘enabling’ status. The Czech parliament issued a resolution calling for EU support on nuclear energy, stressing that “nuclear power must be fully recognised as part of the solution to the low-carbon economy” and “as a tool enabling the low-carbon transformation of the economy.” Read more.

ZAGREB. No plan B for nuclear waste storage site. The planned storage of nuclear waste on Mount Trgovska Gora, which is about 130 kilometres south of Zagreb, near the town of Dvor on the border with BiH, was discussed at a meeting with ministers in Bosnia and Herzegovina, Croatia’s Economy and Sustainable Minister Tomislav Ćorić has said.

“There is no plan B. We want to build a facility at a safe location and to the highest standards for the storage of not only waste from the Nuclear Power Plant Krško (in Slovenia, Croatia is a co-owner), but a wide range of fractions of such waste that are present throughout Croatia,” he added. According to the minister, Croatia had provided the BiH side with all documents concerning the construction of a storage facility for medium and low risk radioactive waste. (Željko Trkanjec | EURACTIV.hr)

TIRANA. Former environment minister arrested for financial crime. Former Environment Minister Lefter Koka has been arrested by Albania’s Special Court For Organised Crime and Corruption (SPAK). Read more.

DUBLIN. Fuel price protest disrupts Dublin for second time in a month. A protest against high fuel prices held by truckers in Dublin has disrupted the city for the second time in a month, as demonstraters blocked key thoroughfares. Read more.

MADRID. La Palma residents in lockdown as toxic gas sweeps west of island. Authorities on the Spanish island of La Palma confined residents living in towns adjacent to the Cumbre Vieja volcano on Monday due to poor air quality. Read more.

BUCHAREST. Romania’s new president reiterated support for nuclear energy, natural gas. In discussion with European Council President Charles Michel, President Klaus Iohannis reiterated his country’s support for nuclear energy and natural gas, as options for an affordable energy transition, as the European Commission prepares new legislative proposals. Read more.

PRAGUE. Czech minister would support Poland’s call for suspension of EU ETS. Czechia has called on the EU to solve the soaring prices of emission trading system (ETS) allowances. “We have to be sufficiently hard on the EU,” outgoing Czech Energy Minister Karel Havlíček said. Read more.

LISBON. Portuguese PM: France must increase power interconnections. There must be an increase in energy interconnections between Portugal and Spain and the Iberian Peninsula and France,  Portugal’s Prime Minister António Costa said on Thursday,  stressing that France must fulfil its commitments in this regard. Read more.

PRAGUE. Czech MEP: Changes in energy taxation could trigger massive resistance. If the EU were to implement too vigorous changes in energy taxation, it could trigger massive resistance both from citizens and companies, Ondřej Kovařík, the Czech MEP of Renew Europe group, has warned. Read more.

BRATISLAVA. Slovakia not ready for dramatic changes in automotive industry. Slovakia’s automotive industry is facing the biggest transformation in history. While other European countries are rolling out support programmes for electromobility and preparing reskilling policies for employees, Slovakia has no transformation plan and is not ready to meet the European targets in the sector. Hope is driven only by private investments, but experts warn that this may not be enough. Read more.

LJUBLJANA. Slovenia’s poorest households expected to obtain energy vouchers soon. The poorest households in Slovenia will soon receive energy vouchers to help them cope with soaring pric. This planat comes after the government has been criticised for not taking action other than bringing the price of heating oil under state control. Read more.

VILNIUS RIGA | TALLINN. Baltic states may turn eastwards for more electricity. Suffering from rapidly rising energy prices, Estonia, Latvia and Lithuania are discussing importing more electricity from Belarus and Russia. Read more.


News in brief

Late night deal on EU funding rules for cross-border energy infrastructure. Negotiators from the European Parliament, EU countries and the European Commission reached an agreement on the TEN-E regulation on Wednesday morning at 5:40 am after around 12 hours of talks.

The deal includes ending support for new natural gas and oil projects and will introduce mandatory sustainability criteria to the rules that decide what cross-border energy infrastructure is eligible for fast-tracked permitting and certain EU funds.

“In the future, no new fossil fuel projects will receive funding from the Connecting Europe Facility. Today’s deal makes sure we will invest in a green and climate-neutral future that guarantees efficiency, competitiveness and security of supply, while leaving no one behind,” said Jernej Vrtovec, Slovenian Minister of Infrastructure.

However, the deal has already been decried by environmental NGOs as it is not completely gas-free. The agreement includes allowing a transition period for natural gas infrastructure that will be used for hydrogen. Eligible projects can use a blend of hydrogen with natural gas up until 31 December 2029, with eligibility for EU funding ceasing in 2027.

“The EU has agreed to give the fossil fuel industry an early Christmas present with subsidies to build more fossil gas pipelines. Fossil gas is bad for the climate, harms our health, and is worsening the energy poverty crisis around Europe,” said Tara Connolly, senior gas campaigner at Global Witness.

Alongside this, both Cyprus and Malta got their way, with their pipelines allowed to be on the next projects of common interest list in order to connect them to Europe’s gas network. That will be a blow to lawmakers and the family of murdered journalist Daphne Caruana Galiza, who were fighting against support for a Maltese pipeline linked to a man accused of being involved with her murder. A specific reference to the exclusion of fraudulent, corrupt and conduct related to criminal organisation from EU funding has been added in response to criticism.

Most support in the TEN-E regulation will go to renewable energy, including smart grids, and creating the possibility for non-binding cooperation for offshore grid planning.

“Today’s deal is a good deal. There is a sharpened focus on the needed infrastructure to deploy a robust European backbone for the production and transport of renewable and low carbon hydrogen. We also welcome the improved role of carbon capture and storage,” said Tom Berendsen, the Parliament negotiator for the centre-right European People’s Party. “With today’s agreement, energy in Europe will become more sustainable, more securely supplied and more affordable,” he added. (Kira Taylor | EURACTIV.com)

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New Green MEP in Brussels to replace Sven Giegold. The leader of the German Greens in the European Parliament, Sven Giegold, moves to Berlin to take a top position in the administration led by Robert Habeck, Germany’s new vice-chancellor and super-minister in charge of the economy, energy and climate action.

Giegold will be replaced in Brussels and Strasbourg by Malte Gallée. Much like Giegold, Gallée is skeptical of trade agreements that do not have binding environmental and human rights protection clauses. He is also a known proponent of the right to repair for electric and electronic devices. (Nikolaus J. Kurmayer | EURACTIV.de)

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German Greens in the EU parliament have a new leader. As Sven Giegold, hitherto leader of the group moves into German federal politics, he is replaced by Rasmus Andresen.

The younger member of the Danish minority of Schleswig-Holstein will lead a German group that is more influential than ever: eleven German EU parliamentarians had co-negotiated the new German coalition treaty and their party colleagues are now in key positions in the EU’s largest state.

Especially crucial will be the new super minister Robert Habeck, responsible for economy, energy and climate protection. Andresen can boast a close connection to Habeck: they entered the parliament of Schleswig-Holstein at the same time, are from the same city and cooperated closely for years.

As the German government parties belong to the Renew Europe and Socialists & Democrats party families, he told journalists that he hoped they could be a point of connection to the German government in that formation. (Nikolaus J. Kurmayer | EURACTIV.de)

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EU countries endorse deal on 8th EAP. EU ambassadors on Friday (10 December) approved a provisional political agreement struck with the European Parliament on the EU’s 8th Environmental Action Programme (EAP). 

The 8th EAP “outlines the overall direction of the EU’s environment policy to 2030 and allows us to monitor our achievements on our path towards climate-neutrality and a zero-pollution environment,” said Andrej Vizjak, the environment minister of Slovenia, which currently holds the EU’s six-month rotating Council Presidency.

Main elements of the deal include a mid-term review in 2024 to assess progress made and a binding requirement for EU member states to report on progress made towards phasing out fossil fuels. 

But campaigners at WWF said the EU has failed to firmly commit to a deadline for phasing out fossil fuel and other environmentally harmful subsidies. “This is even more shameful because this deal is otherwise ambitious and takes big strides on strengthening future environment policy making,” said Rebecca Humphries from the WWF European Policy Office.

Among the positives outlined by WWF, the 8th EAP includes provisions for putting human and planetary wellbeing rather than GDP growth at the heart of EU policy making, and advancing towards a ‘wellbeing economy’. More here. (Frédéric Simon | EURACTIV.com).


Opinions


Upcoming events

2 FEBRUARY. Due diligence and responsible sourcing: can a common approach for all sectors work? Join this EURACTIV Virtual Conference to discuss how companies can develop tools that fit Europe’s upcoming due diligence legislation and how the European Commission can ensure a coherent approach for companies and products. Speakers to be confirmed. Programme and registration here. (Supported by the Nickel Institute)


On our radar

15 DECEMBER: Energy and nature protection package. Following the publication of its huge package of climate proposals in July, the European Commission is expected to table more energy-related files, including regulations on natural gas. Meanwhile, proposals for green mobility were unveiled yesterday. See the full list here:

Climate and energy:

  • Reducing methane emissions in the energy sector
  • Revision of the third energy package for gas
  • Revision of the energy performance of Buildings Directive
  • Commission communication: Restoring sustainable carbon cycles
  • Council Recommendation to address the social and labour aspects of the climate transition

Nature:

  • Improving environmental protection through criminal law

16-17 DECEMBER. European Council. EU leaders will meet once again and energy prices are back on the agenda. This time, however, it will be after the gas package has been tabled.

20 DECEMBER. Environment Council. EU environment ministers will meet to discuss the progress made on the environment-focused Fit for 55 files as well as discuss the battery legislation and the EU soil strategy. The European Commission will also present its proposal to prevent deforestation in European supply chains. Find the full agenda here, including progress reports (here and here) on the EU’s ‘Fit for 55’ package of legislation. 

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