Potential of gas remains promising amidst policy changes: GECF webinar speakers

Source: press release, 2 February 2022

illustration: GECF
illustration: GECF

As the world takes decisive steps on climate change, the ensuing policy changes and their effect on the world’s fastest growing fossil fuel, natural gas, were examined at an event held by the Gas Exporting Countries Forum (GECF) on Tuesday, 1 February 2022.

Entitled “Natural gas in the aftermath of COP26”, the two-part webinar enjoyed the participation of first-class speakers representing exporting countries, academia, business, and service providers. The first session reviewed the main COP26 outcomes, including possible impacts on the energy sector, in particular natural gas. The second part focused on the responses of the gas sector to what came out of Glasgow in November 2021 and on what might be on cards as the industry head towards COP27.

Setting the tone for a lively round of discussions, HE Eng. Mohamed Hamel, Secretary General of the GECF, underscored that the COP26 recommended phasedown of coal consumption could “definitely benefit natural gas”.

“Coal-to-gas switching is the least costly mitigation option in many developing countries, including in countries with large populations, and it is a key component in their Nationally-Determined Contributions (NDCs),” he said.

“However, the impact of the development of carbon markets on natural gas is a more complex question to answer,” he cautioned, adding that “it is important to consider these questions in a multifaceted and holistic manner, taking into account the necessity of a delicate balance between the three pillars of sustainable development, namely economic development, social progress and the protection of the environment, whilst responding to the need for an affordable, reliable, predictable and secure supply of energy to end-users.”

Providing the perspective of gas exporting countries, Eng. Ahmed Abdrabo, Assistant Chief of Environmental Affairs, Ministry of Petroleum & Mineral Resources of Egypt, noted that the current discourse may lead to stifled funding for new hydrocarbon projects as well as new carbon taxes on all fossil fuels. It is to be noted that the COP27 will be held in Egypt in the later part of 2022.

“We have to consider natural gas as the cleanest fossil fuel and we have to publicise this fact and try to enhance its footprint in this way,” said Eng. Abdrabo.

This resilience of gas was highlighted by the next speaker, Massimo Di Odoardo, Vice President of Gas and LNG Research at Wood Mackenzie, who asserted that COP26 delivers a positive outcome for the gas industry.

“Gas remains on course to be resilient through the energy transition. We think that the global methane pack provides a framework to accelerate reduction of scope 1 and 2 emissions, and commitments to phasing down coal paves the way for more use of gas in developing Asian markets,” he said.

Additionally, global carbon pricing frameworks could provide appropriate incentives to scale up carbon capture and storage (CCS) and blue hydrogen, he added.

The evolution of carbon markets was explored by Haege Fjellheim, Director of Carbon Research at Refinitiv, who pointed to Europe as a realistic example of carbon pricing in motion.

The next speaker, Arthur Lee, Fellow and Principal Advisor on Corporate Strategy and Sustainability at Chevron, and who also serves on the board of International Emissions Trading Association, delved deeper into Article 6 of the 2015 Paris Agreement to explore its economic potential and implementation challenges on natural gas.

“The potential benefits to cooperation in achieving the NDCs under Article 6 are large and all parties could benefit,” explained Lee, whilst adding that Article 6 could facilitate additional abatement under the Paris Agreement by 50% in 2030.

Taking part in the second session of the webinar, Tim Dixon, General Manager of IEA Greenhouse Gas R&D Programme, shed light on the prospects for carbon capture utilisation and storage (CCUS) in light of COP26. He rued the fact that despite proven technology in place, the true potential of CCUS has not manifested yet.

“You do need some policy stability for these large, capital-intensive projects to happen. We have some 27 projects (around the world), we need to go over 100 by 2035. The means to do that is there, we just need the policies in place to stimulate,” he said.

Bringing the perspective of another exporting countries and another GECF Member, Norway, Ahmed Osman, Business Development Manager for Middle East at Equinor, reaffirmed the climate ambitions of the company.

“Net-zero ambition gives new industry opportunities where technology excellence and innovation will define winners. We are changing by creating value through the energy transition,” he said.

The final panellist of the event, Sid-Ahmed Hamdani, Energy, Environment and Policy Analyst at GECF summarised the myriad steps being taken by GECF Member Countries to improve their carbon footprint as well as to enhance further the environmental credentials of natural gas.

“CCS and CCUS as well as carbon-neutral supply chain and methane emissions reduction are possible avenues,” he said.

Dmitry Sokolov, Head of Energy Economics and Forecasting Department of the GECF, thanked the record number of attendees, the participants as well as the moderator, Axel Threlfall, Editor-at-Large at Reuters.